DIRECT EASTERN LIMITED

Risk Rating: MEDIUM — The company holds a positive and growing net asset position and has repaid its long-term bank loan, but short-term liquidity is constrained: current creditors exceed current assets, and cash covers only a small proportion of obligations falling due within one year.

Key Concerns: - Tight short-term liquidity: At 31 March 2026, creditors due within one year were £427,527 against current assets of £305,919, producing net current liabilities of £121,608. Cash at bank was £23,539, equivalent to roughly 5.5% of current creditors. - Significant related-party debtor: The accounts show £124,865 owed by an associate company, White Rose Bridalwear Ltd, representing a substantial portion of total debtors of £187,380. The abridged accounts do not disclose repayment terms, security, or any impairment provision. - Limited operational visibility: The accounts state that the average number of employees during the year was nil, and the income statement was not delivered because abridged accounts were filed. This restricts assessment of revenue, profitability, and cash generation.

Positive Indicators: - Net assets and shareholders’ funds have increased over the reported period, reaching £977,770 at 31 March 2026. - The long-term bank loan of £345,444 outstanding at 31 March 2025 was repaid during the year, leaving no creditors due after more than one year. - Statutory filings are current, with no overdue accounts or confirmation statements. - The balance sheet includes freehold property with a net book value of approximately £1.2 million.

Due Diligence Notes: - Request the full profit and loss account and directors’ report to evaluate trading performance, margins, and operating expenses, as these are not included in the abridged filing. - Examine the aged debtor ledger and terms relating to the associate company balance of £124,865, including any security or impairment provisions. - Obtain an updated valuation of the freehold property; the accounts indicate the last open-market valuation was performed on 30 July 2020. - Clarify the composition of current creditors (£427,527), including any amounts due to related parties, HMRC, or trade suppliers, and the company’s repayment plan. - Confirm how day-to-day operations are conducted given the reported nil average number of employees.