Company Number: SC762782

Analysis Date: 2025-07-29 12:59 UTC

1. Risk Rating: HIGH

Justification: Coastal Connection Limited exhibits significant liquidity risk due to current liabilities substantially exceeding current assets by £785,911. The company relies heavily on a large director loan (£974,630) to finance operations, indicating potential cash flow constraints. As a very recently incorporated entity (less than 1.5 years old), it has limited operating history to demonstrate sustainability.

2. Key Concerns:

• Liquidity Deficit: Net current liabilities of £785,911 highlight a cash flow and short-term solvency risk.
• Heavy Reliance on Director Loan: Nearly £1 million owed to directors, interest-free and repayable on demand, suggests dependency on related party funding which may be unsustainable or subject to call.
• Limited Operational Track Record: Incorporation in March 2023 means limited financial history; first set of accounts unaudited and small company exemption taken, reducing transparency.

3. Positive Indicators:

• Positive Net Assets and Shareholders’ Funds: Despite working capital issues, the company reports net assets of £146,113 indicating some equity buffer.
• Fixed Assets Base: Significant tangible (£797k) and intangible (£135k) asset base could support operations or be leveraged.
• No Overdue Filings: The company is compliant with statutory filing deadlines and confirmation statements, reducing regulatory risk.
• Clear Industry Focus: Operating in sea and coastal passenger water transport with an active website and social media presence suggests an established market positioning.

4. Due Diligence Notes:

• Investigate the nature, terms, and enforceability of the director loan and contingency plans if called.
• Review cash flow forecasts and working capital management strategies to understand how liquidity deficits will be resolved.
• Obtain detailed trading performance and contract/customer pipeline to assess operational sustainability.
• Confirm no director disqualifications or governance issues given director’s significant control and loan exposure.
• Validate asset valuations and ability to convert fixed assets to cash if required.