CIRCLE-8 TEXTILE ECOSYSTEMS LIMITED

Executive Summary

Circle-8 Textile Ecosystems Limited’s financial position has deteriorated significantly over the last year, transitioning from positive net assets to substantial net liabilities and negative working capital. The company displays liquidity stress and weakened financial resilience, undermining its ability to service debts or absorb shocks. Credit approval is not recommended until clear evidence of financial recovery or capital support is demonstrated.

CIRCLE-8 TEXTILE ECOSYSTEMS LIMITED - Analysis Report

Company Number: 12667228

Analysis Date: 2025-07-20 16:56 UTC

1. Credit Opinion: DECLINE

Circle-8 Textile Ecosystems Limited demonstrates significant financial distress as of the latest accounts dated 31 December 2023. The company has moved from a positive net asset position (£118k in 2022) to a substantial net liability position (-£142k in 2023). The current liabilities have increased markedly to £218,561, almost six times the previous year, while current assets have decreased by over 50%. Such a deterioration in liquidity and solvency raises concerns about the company’s ability to meet short-term obligations and service any new credit facilities. Given the negative working capital position (-£142,946) and negative shareholders’ funds, the company currently lacks financial resilience and creditworthiness.

2. Financial Strength:

The balance sheet reveals a severe weakening in financial strength. Fixed assets are minimal (£613) and declining slightly, indicating limited tangible collateral value. The large increase in current liabilities is driven by other creditors (£202,951), which may include accrued expenses or short-term borrowings. The company's shareholders’ funds have swung from a positive £118k to a negative position of -£142k, reflecting accumulated losses and erosion of equity. This indicates net liabilities and potential insolvency risk if the trend continues. The company’s share capital remains nominal (£200), showing no recent equity injections to bolster the financial position.

3. Cash Flow Assessment:

Cash at bank has dropped sharply from £149,885 to £58,468 in one year, revealing significant cash outflows or operational challenges. Debtors increased slightly but remain modest compared to liabilities. The negative net current assets show that current liabilities exceed current assets by a large margin, suggesting liquidity stress. Without additional capital or improved cash generation, the company faces difficulty in meeting short-term debts, which may compromise ongoing operations or creditor payments.

4. Monitoring Points:

• Monitor quarterly cash flow statements closely to assess liquidity trends.
• Watch the level and composition of current liabilities, especially "other creditors" which have surged.
• Track management actions regarding cost control or capital injections to restore equity.
• Review turnover and profitability figures in future filings to confirm if the business model is recovering.
• Evaluate any changes in directors or significant control that might impact governance and financial strategy.

Executive Summary: