DERBY HOUSE FABRICS LTD

Executive Summary

Derby House Fabrics Ltd is currently experiencing financial distress, with negative net assets and working capital as of the latest accounts, posing a high solvency risk. While it maintains compliance with filing requirements and operational continuity, the significant decline in liquidity metrics necessitates careful scrutiny of its cash flows and management's recovery plans before considering investment. Continued monitoring and detailed due diligence are recommended given the deteriorating financial position.

DERBY HOUSE FABRICS LTD - Analysis Report

Company Number: 12812835

Analysis Date: 2025-07-20 16:46 UTC

1. Risk Rating: HIGH
   The company exhibits clear signs of financial distress, notably net current liabilities and negative net assets as of the latest accounting period. The deterioration from a positive net asset position in 2022 to a negative position in 2023 raises significant solvency concerns.

2. Key Concerns:

• Negative Net Assets and Working Capital: As of 31 December 2023, the company has net current liabilities of £1,137 and net assets of -£1,137, indicating it owes more than it owns in liquid assets. This undermines its ability to meet short-term obligations.
• Declining Asset Base: Current assets have decreased from £7,057 in 2022 to £3,711 in 2023, suggesting potential cash flow constraints or inventory/debtor issues.
• Minimal Share Capital and No Audit: Share capital is nominal (£3), and the company has taken advantage of audit exemptions, limiting external assurance on financial accuracy and potentially masking underlying operational issues.

3. Positive Indicators:

• No Overdue Filings: Both accounts and confirmation statements are up to date, demonstrating compliance with statutory requirements and governance discipline.
• Stable Employee Count: The company maintains a consistent workforce of 2 employees, suggesting operational continuity despite financial pressures.
• Active Status and No Liquidation: The company remains active and is not in liquidation or administration, indicating ongoing business operations and potential for recovery.

4. Due Diligence Notes:

• Investigate the underlying reasons for the decline in current assets and shift to negative working capital in 2023, including cash flow statements if available.
• Review management plans or board minutes addressing financial difficulties or turnaround strategies.
• Confirm the status and role of directors, particularly after the recent resignation of one director in October 2023, to assess governance stability.
• Explore trading performance and receivables/payables aging to identify operational risks.
• Evaluate if any contingent liabilities or off-balance sheet obligations exist that may further impact solvency.