ENGINEERED COMPOSITES HOLDINGS LIMITED

Executive Summary

Engineered Composites Holdings Limited exhibits significant solvency and liquidity risks due to persistent negative working capital and net liabilities, largely funded through intercompany loans. While statutory compliance and fixed asset holdings are positive factors, the company’s financial stability is precarious and warrants thorough due diligence on asset quality and funding arrangements. The directors have acknowledged material uncertainties about the company’s going concern status, underscoring the need for careful monitoring.

ENGINEERED COMPOSITES HOLDINGS LIMITED - Analysis Report

Company Number: 13644011

Analysis Date: 2025-07-19 12:32 UTC

1. Risk Rating: HIGH
   The company shows persistent and significant net liabilities, negative net current assets, and increasing current liabilities, indicating a high risk to solvency and liquidity despite being active and up to date on filings.

2. Key Concerns:

• Negative Net Current Assets: The company has a large and growing working capital deficit (e.g., -£1.79m in 2025), a critical liquidity red flag suggesting it may struggle to meet short-term obligations.
• Negative Shareholders’ Funds and Net Assets: The company’s equity position deteriorated from -£41k in 2021 to -£11k in 2025, with a worrying trend of net liabilities despite holding significant fixed assets.
• Reliance on Intercompany Loans: Over £2m is owed to group undertakings within current liabilities, reflecting dependency on related party financing rather than operational cash flow, which can be unstable or unsustainable.

3. Positive Indicators:

• No Overdue Filings: The company’s accounts and confirmation statements are filed on time, indicating compliance with statutory requirements and no governance lapses.
• Substantial Fixed Assets: The company holds significant fixed assets (£1.78m) consistently over the years, which may represent investment in subsidiaries or long-term holdings, potentially recoverable or valuable.
• Majority Shareholder Control: A single controlling person owns 75-100% of shares with full voting rights, which may simplify decision-making and facilitate swift actions if needed.

4. Due Diligence Notes:

• Investigate the nature and recoverability of the fixed assets and investments, especially the subsidiary Platinum Capital Partners (Investments) Limited, which shows a significant drop in reserves and no profit reported.
• Assess the terms, security, and sustainability of intercompany loans and bank facilities, including the ability and willingness of related parties to continue funding.
• Review cash flow forecasts and management plans addressing the material uncertainties related to going concern as disclosed by directors, including contingencies for the working capital shortfall.