Company Number: 13910147

Analysis Date: 2025-07-20 17:07 UTC

1. Risk Rating: HIGH
   The company exhibits a significant deterioration in its financial position over the last reported year, including large negative net current assets and net liabilities. The severe working capital deficit and the negative shareholders’ funds suggest serious solvency and liquidity issues.

2. Key Concerns:

• Severe working capital deficit: As of 31 May 2024, the company’s current liabilities (£919k) substantially exceed its current assets (£447k), resulting in a negative net current assets position of approximately £472k. This indicates potential short-term liquidity stress.
• Negative net assets and shareholders’ funds: Net liabilities stand at £460k, and shareholders’ funds are negative by over £1.1 million, reflecting accumulated losses and erosion of equity capital, which raises solvency concerns.
• Rapid increase in creditors and tax liabilities: Current liabilities more than doubled from £418k to £919k year-on-year, with a notable rise in taxation and social security creditors (£274k in 2024 vs. £73k in 2023), suggesting possible cash flow challenges and delayed payments.

3. Positive Indicators:

• Growing business scale: The company increased its workforce from 7 to 14 employees year-on-year, indicating operational expansion.
• Increasing trade debtors: Trade debtors rose from £177k to £304k, implying higher sales activity, although this also ties up cash in receivables.
• Tangible fixed assets growth: Net tangible fixed assets increased modestly, showing investment in plant and equipment that may support business operations.

4. Due Diligence Notes:

• Examine cash flow statements and creditor aging schedules: To assess the timing and nature of payables and receivables and understand liquidity constraints more fully.
• Investigate causes of accumulated losses: Review profit and loss data (currently unavailable) to identify if losses stem from operational issues, exceptional charges, or other factors.
• Assess tax liabilities: Clarify the nature and expected settlement of the increased taxation and social security creditors to evaluate any risk of HMRC enforcement or penalties.
• Review director and shareholder support: Given the negative equity, explore whether the major shareholders (two entities owning 50-75% each) or directors have provided financial support or intend to do so.
• Confirm operational status and contracts: Evaluate the sustainability of business contracts and revenue streams given the financial strain.

Regulatory compliance is satisfactory, with no overdue filings and all accounts and confirmation statements up to date. The company is recently incorporated (2022) and operates in the exhibition and fair organiser sector (SIC 82301).