Company Number: 13382863

Analysis Date: 2025-07-29 14:25 UTC

1. Risk Rating: MEDIUM

The company shows a recent turnaround from net liabilities to a modest positive net asset position, which reduces immediate solvency concerns. However, the presence of significant long-term liabilities (£10,000) and low equity (£239) in a micro-entity with limited capital and a single employee points to cautious risk. The limited scale and narrow financial base suggest potential vulnerability to cash flow shocks or operational disruptions.

2. Key Concerns:

• High Long-Term Liabilities Relative to Equity: The company has £10,000 in creditors due after more than one year against very low shareholders' funds of £239, indicating a leveraged position that could pressure solvency if income declines.
• Negative Equity History: Prior years showed net liabilities and negative shareholders’ funds, which may reflect past operational losses or capital erosion.
• Single Director and Employee: Operational dependence on one individual (the director) who is also the sole employee may pose sustainability risks and governance concerns, particularly if key person risk materializes.

3. Positive Indicators:

• Improved Net Asset Position in Latest Year: The company moved from negative equity in previous years to positive net assets (£239) at 31 May 2024, suggesting some financial improvement.
• No Overdue Filings: Both accounts and confirmation statements are up to date, demonstrating compliance with statutory filing requirements.
• Stable Industry Classification and Active Website: The business operates in niche creative textile manufacturing with an active online presence, indicating ongoing operations and market engagement.

4. Due Diligence Notes:

• Examine Nature and Terms of Long-Term Liabilities: Clarify the composition, repayment terms, and covenants associated with the £10,000 creditors due after more than one year to assess refinancing or default risks.
• Review Cash Flow and Profitability Trends: As filings are limited to micro-entity accounts, seek additional management accounts or bank statements to evaluate operational cash flow sufficiency and sustainability.
• Assess Operational Dependency: Investigate contingency plans or succession considerations given the single director/employee structure, including any plans for scaling or diversification.
• Verify Completeness and Accuracy of Financials: Given the absence of an audit and micro-entity accounting exemptions, confirm that reported figures accurately reflect the company’s financial position.