FENSTER TRADE FRAMES LIMITED - Risk Assessment

1. Risk Rating: HIGH

The company is balance-sheet insolvent with negative net assets of (£73,704) that have deteriorated significantly from (£19,568) in the prior year. Liquidity is critically impaired with only £1,060 in cash against current liabilities of £357,912, and going concern is explicitly dependent on creditor support. Multiple structural financial weaknesses present serious solvency concerns.

2. Key Concerns

Concern 1: Technical Insolvency and Worsening Net Asset Position

Net assets have moved from positive £46,885 (2023) to negative (£19,568) in 2024 and further deteriorated to (£73,704) in 2025. Shareholders' funds now stand at (£73,904), meaning accumulated losses have fully eroded the £200 share capital and created a significant deficit. This trajectory indicates the company cannot meet its obligations from its own resources.

Concern 2: Critical Liquidity Shortfall

Cash has declined from £161,752 (2017) to just £1,060 (2025), representing a 99.3% reduction over eight years. Net current liabilities stand at (£252,467), with current assets of £105,445 dwarfed by current liabilities of £357,912. The current ratio of approximately 0.29:1 is critically below the 1.0:1 threshold, indicating the company cannot cover short-term obligations without external support.

Concern 3: Going Concern Dependency

The accounts explicitly state the company "relies upon the financial support of its creditors, particularly the loan from its Holding Company and its bankers to facilitate a continuation of its trading activity." This admission, combined with the directors' agreement to "only withdraw from their loan accounts in small tranches, as and when cashflow permits," confirms the business is not self-sustaining and is dependent on continued forbearance from lenders and the parent entity (Fenster Bifold Limited).

3. Positive Indicators

• Substantial Freehold Property Asset: The company holds a freehold property with a net book value of £533,997, which provides underlying asset backing that exceeds the net liabilities deficit. This tangible asset may offer security for lenders and potential recovery value.

• Long Operating History: Incorporated in 1993, the company has traded for over 30 years, suggesting established market presence and operational continuity in the glazing sector (SIC 43342).

• Parent Company Support: Fenster Bifold Limited owns more than 75% of shares and provides intercompany funding of £134,923 (current) as part of the group structure. This related-party support appears ongoing and is a factor in the going concern assessment.

• Regulatory Compliance: Accounts and confirmation statements are filed on time with no overdue status. The company maintains proper filing obligations and has not triggered any regulatory concerns.

• Stable Workforce: Employee count has remained consistent at 13 for both 2024 and 2025, suggesting operational continuity.

4. Due Diligence Notes

1. Intercompany Debt Terms: The amounts owed to group undertakings (£134,923 current + any long-term element within "other creditors") should be investigated. Specifically, whether these are demandable or have formal repayment terms, and whether Fenster Bifold Limited has provided a written commitment to continue supporting the company.

2. Bank Loan Security and Covenants: Bank loans total £354,497 (£40,374 current + £314,123 long-term). The nature of security (likely the freehold property), covenant compliance status, and any breach notifications should be examined. The significant increase in short-term bank borrowings (from £16,500 to £40,374) warrants investigation.

3. Tax Liability Increase: Taxation and social security liabilities more than doubled from £30,654 to £71,320. This should be clarified—is this deferred tax, outstanding HMRC liabilities, or accrued obligations? Given the insolvency position, preferential creditor claims from HMRC could be material.

4. Director Resignations: Two directors (Linda Dempsey and Andrew Michael Dempsey) resigned on 5 April 2026, shortly after the accounts were approved on 16 April 2026. The timing and reasons for these resignations should be investigated, particularly whether they signal concerns about the company's viability.

5. Freehold Property Valuation: The property is carried at £533,997 net book value. Given this asset underpins the entire balance sheet, an independent current market valuation should be obtained to confirm whether this value is recoverable and sufficient to cover secured liabilities.

6. Group Structure and Contingent Liabilities: Fenster Bifold Limited as the 75%+ shareholder should be assessed for its own financial health, cross-guarantees, and whether group-wide support is sustainable. Any contingent liabilities or guarantees provided by this company within the group should be identified.

7. Profitability: The income statement has not been delivered (permitted under small company regime), making it impossible to assess trading profitability, margins, or the rate of cash burn. Requesting management accounts would be essential for any investment decision.

8. Trade Creditor Days: Trade creditors of £78,084 against the limited cash position suggests potential stretching of supplier terms. Assessment of whether trade creditors are being paid within terms is important for operational sustainability.