ECS SOURCE LTD

Executive Summary

ECS Source Ltd has demonstrated a noteworthy recovery in financial position in the latest accounting year after two years of negative net assets, reflecting improved liquidity and solvency. However, the company remains small in scale with concentrated ownership and a brief trading history, which introduces medium risk from a financial stability and governance perspective. Further due diligence on cash flow, operational performance, and governance arrangements is advisable before investment consideration.

ECS SOURCE LTD - Analysis Report

Company Number: 13482169

Analysis Date: 2025-07-19 12:44 UTC

1. Risk Rating: MEDIUM
   The company has demonstrated a significant turnaround from negative net current assets and shareholders’ funds in previous years to positive figures in the latest financial year. However, the relatively low absolute financial values and the short trading history since incorporation in 2021 warrant caution.

2. Key Concerns:

• Historical insolvency indicators: For the first two years, the company showed negative net current assets and negative shareholders’ funds, indicating potential solvency challenges during its early trading period.
• Limited scale and resources: Current assets and cash balances remain modest (£20k and £11k respectively), which may constrain the company’s ability to absorb shocks or finance growth.
• Reliance on a single director and shareholder: Ms Yik Sze Tsang holds 75-100% ownership and voting rights, concentrating control and potentially limiting governance diversity.

3. Positive Indicators:

• Recent financial improvement: The year ended 30 June 2024 shows a positive net current asset position (£12,406) and positive shareholders’ funds, suggesting better liquidity and solvency compared to prior years.
• Compliance with filing requirements: No overdue accounts or confirmation statement filings, indicating good regulatory compliance and governance discipline.
• Low operational complexity: With only one employee and small scale, operational risks related to workforce or complex structure appear limited.

4. Due Diligence Notes:

• Investigate the factors behind the turnaround from negative to positive net assets, including any capital injections, debt restructuring, or significant operational changes.
• Review the company’s cash flow statements and profit & loss data (not included here) to assess ongoing operational sustainability and revenue trends.
• Consider the impact of director’s dual role as sole significant controller on decision-making, and whether appropriate internal controls and risk management are in place.
• Confirm the nature of trade debtors and creditors to evaluate working capital quality and counterparty risk.
• Verify the business model alignment with SIC codes 52290 (other transportation support activities) and 47190 (other retail sale in non-specialised stores) for consistency and market positioning.