CONVERTING SOLUTIONS LTD

Executive Summary

Converting Solutions Ltd shows signs of operational continuity and recent investment in fixed assets but faces liquidity challenges with negative working capital and increased borrowings. While regulatory compliance is maintained, the decline in net assets and rising liabilities warrant further investigation to assess the company’s ability to meet short-term obligations and sustain operations.

CONVERTING SOLUTIONS LTD - Analysis Report

Company Number: 12553826

Analysis Date: 2025-07-19 12:26 UTC

1. Risk Rating: MEDIUM
   The company exhibits a moderate risk profile primarily due to its deteriorating liquidity position and increased borrowing, despite maintaining positive net assets and active trading status.

2. Key Concerns:

• Liquidity Decline: Current liabilities have risen sharply to £10,894 against current assets of only £4,347, resulting in negative net current assets of £-2,966 as of April 2024, compared to positive net current assets previously. This indicates potential short-term cash flow stress.
• Increased Borrowing and Lease Obligations: The company has taken on significant finance lease liabilities (£10,894 non-current and £3,040 current) within the latest financial year, which could increase fixed obligations and strain cash flows.
• Reduced Net Assets and Retained Earnings: Net assets decreased from £7,871 in 2023 to £4,657 in 2024, primarily due to a reduction in retained earnings, which may reflect trading losses or asset write-downs impacting financial stability.

3. Positive Indicators:

• Ongoing Operations and Compliance: The company is active, with up-to-date filings for accounts and confirmation statements, indicating regulatory compliance and no immediate governance concerns.
• Tangible Asset Growth: Significant investment in tangible fixed assets (£18,605 in 2024 up from £307 in 2023) suggests expansion or upgrading of operational capacity, which may support future revenue growth.
• Single Director with Consistent Tenure: Mr. John Ramsden has been the sole director since incorporation, providing continuity in leadership.

4. Due Diligence Notes:

• Review the company’s profit and loss accounts (not filed publicly due to small company exemption) to understand the cause of declining retained earnings and assess profitability trends.
• Investigate the nature and terms of the finance lease and hire purchase agreements to evaluate repayment schedules and impact on cash flow.
• Assess debtor quality and ageing, especially the increase in other debtors to £1,016, to identify any collection risks.
• Clarify whether the recent tangible asset additions are financed through leasing only or if there are other off-balance-sheet liabilities.
• Confirm no director disqualifications or regulatory issues beyond public Companies House data.