EQUILIBRIUM FORESTRY LTD

Executive Summary

Equilibrium Forestry Ltd presents a mixed financial profile with negative net assets driven by substantial long-term liabilities, which elevates solvency risk. The company remains compliant with statutory filings and shows increased current assets, but lack of employees and limited equity suggest operational constraints. Further inquiry into creditor arrangements and cash flow dynamics is necessary to fully assess financial sustainability.

EQUILIBRIUM FORESTRY LTD - Analysis Report

Company Number: SC653363

Analysis Date: 2025-07-29 20:51 UTC

1. Risk Rating: MEDIUM
   Justification: The company shows signs of financial stress with negative net assets and reliance on long-term creditors, but it remains compliant with filing requirements and is operationally active. The micro-entity scale limits data depth, but the presence of significant long-term liabilities exceeding net current assets raises solvency concerns.

2. Key Concerns:

• Negative Net Assets: As of the latest accounts, net assets stand at -£268, indicating the company’s liabilities exceed its assets, which is a red flag for solvency risk.
• Large Long-Term Creditors: The company reports £15,000 in creditors due after more than one year, which is substantial relative to total assets and equity, potentially indicating reliance on debt financing that may pressure cash flows.
• Lack of Employees and Operational Scale: The company reports zero employees and minimal share capital (£100), which may suggest limited operational capacity and dependency on the director or contractors, raising questions about sustainability and growth prospects.

3. Positive Indicators:

• Timely Compliance: The company is up to date with both accounts and confirmation statement filings, showing good regulatory discipline.
• Increase in Current Assets: Current assets increased significantly from £685 in 2023 to £15,090 in 2024, which could indicate improved liquidity or receipt of funding during the year.
• No Audit Requirement: As a micro-entity, the company benefits from simplified reporting obligations, reducing administrative burdens and costs.

4. Due Diligence Notes:

• Investigate the Nature of the £15,000 Long-Term Creditors: Clarify creditor identity, repayment terms, interest obligations, and any associated covenants that may impact financial flexibility.
• Review Cash Flow and Income Generation: Given the negative equity and absence of employees, assess how the company generates revenue and manages operational expenses.
• Director’s Role and Financial Support: Explore the extent of director involvement, including any personal guarantees or funding, as well as future business plans to improve financial health.