Company Number: 13748640

Analysis Date: 2025-07-29 12:58 UTC

1. Risk Rating: HIGH

Justification: The company exhibits significant liquidity and solvency concerns. Current liabilities exceed current assets by a wide margin (£540k vs £70k), resulting in negative net current assets of approximately £470k. The total debt load, including substantial long-term bank loans (£722k), is high relative to net assets (£294k). The company’s financial position indicates potential difficulties in meeting short-term obligations.

2. Key Concerns:

• Negative working capital: The company’s current liabilities substantially exceed current assets, indicating potential cash flow pressures.
• High leverage: The company carries significant debt, with long-term bank loans more than double its net assets, increasing solvency risk.
• Related party balances: The company owes over £321k to a related party (J M Clark Ltd), which may indicate dependency or financing risk that could impact operational stability if terms change.

3. Positive Indicators:

• Investment property growth: The company’s investment property asset increased from £800k to £1.56M in 2023, showing asset base growth.
• Profit retention: Retained earnings increased, contributing to a rise in shareholders’ funds from £108k to £294k, indicating some profitability or capital injection.
• Compliance: Accounts and confirmation statements are filed on time with no overdue filings, demonstrating regulatory compliance.

4. Due Diligence Notes:

• Verify the nature and terms of the related party debt to J M Clark Ltd, including repayment schedules and security arrangements.
• Assess cash flow forecasts and liquidity management plans, given the large negative net current assets position.
• Understand the company's strategy for servicing and reducing bank loans, and whether refinancing or capital injections are anticipated.
• Review any contingent liabilities or provisions that may affect solvency beyond the £73.9k provisions noted.
• Confirm the valuation methodology and market assumptions for the investment property, as this asset underpins the company's net asset value.