Risk Analysis: Capstone Property Recruitment Limited

1. Risk Rating: HIGH

Justification: The company is balance-sheet insolvent with net liabilities of £202,938 and a negative cash position, indicating it cannot meet obligations from its own resources without continued creditor and bank forbearance. While there has been a modest improvement from the prior year, the fundamental solvency position remains severely compromised.

2. Key Concerns

a) Balance Sheet Insolvency Net assets are deeply negative at £-202,938 (2024), with shareholders' funds of £-247,938. This represents a dramatic deterioration from positive net assets of £176,241 in 2022. The company is technically insolvent on a balance sheet basis and relies entirely on creditor and lender support to continue trading.

b) Severe Liquidity Shortfall Current assets of £93,086 are dwarfed by current liabilities of £283,865, creating a net current liabilities position of £-190,779. The cash position is negative at £-48,072, indicating the company is operating in overdraft with no cash reserves. The current ratio is approximately 0.33:1, well below the minimum threshold for financial stability.

c) Unexplained Dramatic Deterioration in 2023 The swing from positive net assets of £176,241 (2022) to negative £-271,107 (2023) represents a deterioration of approximately £447,000 in a single year. The filed accounts are filleted (no profit & loss statement delivered), making it impossible to identify the specific cause of this collapse from the available data.

3. Positive Indicators

• Year-on-Year Improvement: Net liabilities reduced from £-271,107 (2023) to £-202,938 (2024), an improvement of £68,169, suggesting some recovery or restructuring progress.
• Directors' Loan Repayment: Directors' loan accounts in creditors reduced from £78,951 (2023) to £170 (2024), indicating directors have substantially repaid amounts owed to the company.
• Accounts Filed on Time: The latest accounts (made up to 30 December 2024) are not overdue, with next due date of September 2027, suggesting ongoing administrative compliance.
• Continued Trading: The company remains active with 15 employees and is still generating trade debtors of £93,270, indicating ongoing business operations.

4. Due Diligence Notes

a) Source of 2023 Deterioration: The accounts are filed under the small companies regime with no income statement delivered. It is critical to understand what drove the massive loss in 2023—whether trading losses, write-downs, or exceptional items. The "Exceptional Items" note (Note 12) in the filed accounts appears truncated, which is concerning.

b) Going Concern Basis: There is no explicit going concern statement visible in the filed accounts. Given the net liabilities and negative cash position, confirmation should be sought that the directors have assessed going concern and have a reasonable basis for believing the company can continue trading.

c) Bank Facilities: The company has bank loans of £69,306 due after more than one year and £89,070 in bank loans and overdrafts due within one year. The terms, security, and renewal terms of these facilities are critical to understanding whether ongoing support is available.

d) Related Party Intercompany Balances: Note 11 shows amounts owed to Capstone Property Recruitment (Interim) Limited (£20,204.77) and Capstone Recruitment Inc. (£35,414.40). The reversal from amounts owed from these entities in 2023 to amounts owed to them in 2024 requires investigation to understand the nature of intercompany support or obligations.

e) Confirmation Statement Overdue: The confirmation statement was due by 21 August 2026 and is marked as overdue. While this may be an administrative matter, it raises governance concerns and could indicate operational stress.

f) Subsidiary Performance: The company owns 100% of CAPSTONE PROPERTY RECRUITMENT (INTERIM) LIMITED, held at a carrying value of £44,968 with no impairment provision. The financial health of this subsidiary and its impact on the group should be assessed.