Investment Risk Analysis: Coppergate Clinic (Formerly Face Etc) Ltd

1. Risk Rating: LOW

Justification: The company demonstrates a robust balance sheet with net assets of £3.12M (up from £2.44M prior year), positive working capital of £1.22M, and minimal long-term creditor exposure at £81.9K. The 20-year operating history and consistent asset growth trajectory support operational stability. However, specific balance sheet movements—particularly the near-doubling of debtors and significant cash decline—warrant targeted scrutiny, preventing an unqualified low-risk assessment.

2. Key Concerns

Concern 1: Debtors Surge and Cash Decline

Trade debtors increased from £747,076 to £1,396,666—an 87% increase year-on-year. Concurrently, cash fell from £862,945 to £566,114—a 34% decline. This divergence raises questions about whether reported revenue growth is converting to cash, or whether there is collection difficulty, potential bad debts, or related-party balances inflating the debtor position. Without P&L disclosure (filleted accounts), the relationship between turnover and debtor days cannot be verified.

Concern 2: PSC Register Ambiguity

The Persons with Significant Control register lists two corporate entities (Aoonea Ltd and Artemis Aesthetic Medical Ltd) each claiming ownership of "more than 75% of shares" and voting rights, plus an individual (Mrs Sharon Catherine Moore) with the same threshold. This is structurally inconsistent—multiple parties cannot each hold 75%+ of the same share capital. This may reflect sequential ownership changes not yet reconciled, or a filing error, but it introduces uncertainty regarding ultimate control and related-party exposure.

Concern 3: Extraordinary Balance Sheet Growth Trajectory

Net assets grew from £53,752 (2021) to £3,119,055 (2025)—a ~58-fold increase in four years. While the 2021 position appears atypical (lower than both 2020 and prior years, suggesting possible write-downs or reorganisation), the scale and pace of subsequent growth is exceptional. The freehold property valuation of £1.42M (not depreciated) is the dominant asset. Clarification is needed on whether this reflects revaluation, acquisition, or whether the growth is sustainable operating performance versus one-off balance sheet restructuring.

3. Positive Indicators

• Strong Net Asset Position: Net assets of £3.12M provide substantial buffer against liabilities. Shareholders' funds have grown consistently over the 10-year trackable period (with the 2021 dip as the only exception).

• Healthy Working Capital: Net current assets of £1.22M (up from £607K) indicate the company can meet short-term obligations comfortably. Current liabilities have decreased from £1.13M to £845K.

• Minimal Long-Term Debt: Creditors falling due after more than one year total only £81.9K, indicating the business is not leveraged and has no significant debt servicing burden.

• Freehold Property Ownership: The £1.42M freehold interest (not depreciated, suggesting it is held at cost) provides asset security and removes lease dependency for the clinic premises.

• Regulatory Compliance: Accounts and confirmation statements are filed on time, with no overdue filings. The company has maintained active status for over 20 years since incorporation in 2004.

• Employee Growth: Average employee numbers increased from 19 to 20, suggesting controlled expansion rather than cost-cutting.

4. Due Diligence Notes

Priority Investigations:

1. Debtor Composition: Request full breakdown of the £1.4M debtor balance—specifically the split between trade debtors, related-party balances, and other receivables. Confirm aged debtor profile and provision adequacy.

2. Cash Flow Reconciliation: Obtain cash flow statement or reconstruct from balance sheet movements to understand why cash declined by ~£297K while net assets grew by ~£675K. Identify whether capital expenditure (additions of £146K to tangible assets plus £9.6K to investments), debtor increases, or other factors drove the cash reduction.

3. PSC Clarification: Resolve the inconsistency in the PSC register. Confirm current ultimate beneficial ownership and whether Aoonea Ltd and Artemis Aesthetic Medical Ltd are related entities. Review the ownership history post-2021 rebranding.

4. Freehold Property Provenance: Determine when and how the freehold property was acquired. The 2022 financial year shows the first appearance of significant fixed assets (~£1.4M), suggesting a property purchase or reclassification. Confirm whether independent valuation supports the carrying value.

5. 2021 Anomaly: Investigate the dip in net assets to £53,752 in 2021 (down from £74,575 in 2020 and £208,974 in 2019). This coincides with the rebranding period and may reflect restructuring, impairment, or inter-company transactions.

6. Profit & Loss Performance: As filleted accounts omit the P&L from the public record, request full management accounts to assess trading profitability, margin trends, and the relationship between revenue growth and asset expansion.

7. Related-Party Transactions: Given the corporate PSCs, request disclosure of all related-party transactions including loans, service agreements, and inter-company trading.

8. Industry Regulatory Compliance: Given SIC codes covering specialist medical practice activities (86220), verify compliance with CQC registration requirements and any professional regulatory obligations for the clinical aspects of the business.