Company Number: 13014691

Analysis Date: 2025-07-20 12:54 UTC

1. Risk Rating: MEDIUM
   Justification: Carnaval Spirits Ltd is a micro-entity with very limited turnover and modest net assets. While it meets filing obligations timely and remains active, the low revenue figures and volatile profitability present moderate solvency and liquidity risks. The company’s financial scale and recent losses warrant caution but do not indicate immediate distress.

2. Key Concerns:

• Low Turnover and Profitability: Turnover remains minimal (£5,552 in 2023) with a small positive profit following a prior year loss, indicating fragile operational sustainability.
• Declining Net Assets and Current Assets: Net current assets have decreased significantly from £12,087 in 2022 to £3,870 in 2023, suggesting reduced liquidity and potential cash flow constraints.
• Limited Capital Base: Share capital is nominal (£2), which, combined with low retained earnings, limits financial resilience to absorb shocks or support growth.

3. Positive Indicators:

• Timely Compliance: All statutory filings, including accounts and confirmation statements, are up to date with no overdue submissions.
• Positive Net Current Assets: Despite the small scale, the company maintains positive net current assets, indicating it can meet short-term liabilities.
• Sole Director Stability: The remaining director, Mr Mikki Patel, has been in position since incorporation with no indication of disqualification or governance issues.

4. Due Diligence Notes:

• Investigate the reasons behind the significant reduction in current assets and net assets from 2022 to 2023 and assess whether this reflects cash burn or asset write-downs.
• Review the company’s business model viability given the very low turnover and prior losses, including customer base, contracts, and market positioning.
• Clarify the ownership structure and control dynamics, particularly following the resignation of Mr Luke Ainsley Ralph who held substantial shareholding and voting rights.
• Confirm absence of contingent liabilities or off-balance sheet commitments not disclosed in the accounts.
• Assess the sufficiency of working capital to fund ongoing operations and potential plans for capital injection or financing.