Risk Analysis: CLEAN HEALTHY HANDS LIMITED (06785571)

1. Risk Rating: HIGH

The company is technically insolvent on a balance sheet basis, with net liabilities of £2,185 as at 31 December 2024, having deteriorated from positive net assets of £14,788 just two years prior. Net current liabilities of £14,509 present a material liquidity concern, and the consistent erosion of the asset base over 2023-2024 raises questions about ongoing viability without external support or capital injection.

2. Key Concerns

Technical Insolvency The company has moved from net assets of £14,788 (2022) to net liabilities of £2,185 (2024). Under UK company law, directors of an insolvent company must consider their duties under Section 122(1)(b) of the Insolvency Act 1986 and the risk of wrongful trading under Section 214. The accounts contain no going concern statement or explanation of how the company intends to meet its obligations.

Severe Liquidity Shortfall Current assets of £32,143 (plus £1,094 prepayments) are materially insufficient to cover current liabilities of £47,746. This produces a current ratio of approximately 0.67:1, meaning the company cannot cover its short-term debts from its liquid assets. All liabilities fall due within one year, with no long-term debt restructuring evident.

Accelerating Deterioration The decline has accelerated: net assets fell by £9,300 in 2023 and a further £7,673 in 2024. Total assets have declined by 30% from their 2022 peak (£63,765 to £44,467), suggesting either trading losses, asset write-downs, or cash depletion—impossible to determine definitively from micro-entity accounts, which is itself a concern.

3. Positive Indicators

Longevity and Survival Track Record The company has traded for over 15 years since incorporation in January 2009 and has previously recovered from negative net asset positions (2018: -£1,358; 2019: -£351) to achieve positive net assets. This suggests resilience and the potential for cyclical recovery.

Regulatory Compliance Accounts and confirmation statements are filed and up to date, with no overdue filings. This indicates the directors are maintaining their statutory obligations, which is typically a positive governance signal.

Stable Ownership Structure The company is controlled by the Newby family (Jonathan owns 75%+; Graham owns 50-75%), with three family directors. Family-owned businesses may benefit from shareholder forbearance on debts, effectively providing informal working capital support.

Low Fixed Overhead Base With only 2 employees and micro-entity status, the company operates with minimal fixed costs, which may provide flexibility to adjust operations during difficult periods.

4. Due Diligence Notes

Director Loans and Related Party Balances Micro-entity accounts are not required to disclose related party transactions or director loan balances. Given the family ownership structure, it is essential to determine whether the £47,746 in current liabilities includes amounts owed to the directors (which may be subordinated or forgiven) or to arm's-length creditors (which cannot). This single factor could fundamentally change the risk assessment.

Nature of Current Liabilities The breakdown between trade creditors, HMRC liabilities, and other creditors is unavailable. If a significant portion represents HMRC debt (VAT, PAYE, Corporation Tax), this elevates risk considerably given HMRC's enforcement powers and potential personal liability for directors.

Profitability and Cash Flow Micro-entity accounts do not require a profit and loss account or cash flow statement. The P&L reserve has not been delivered to the Registrar. Understanding whether the net asset decline stems from trading losses, increased borrowing, or asset write-downs is critical.

Going Concern Basis The accounts contain no explicit going concern assessment or directors' statement regarding future viability. For a company with net current liabilities of £14,509, clarification on how the company intends to trade through this position is essential—particularly whether there are informal funding commitments from shareholders or related parties.

Creditor Payment Behaviour No information is available on whether the company is meeting its obligations to trade creditors on time, or whether there is evidence of stretching payment terms—a common early warning indicator of cash flow distress.