Company Number: 13118338

Analysis Date: 2025-07-20 13:58 UTC

1. Risk Rating: HIGH
   Justification: The company exhibits significant negative net current assets (working capital deficits) exceeding £600,000, indicating liquidity constraints. Current liabilities are heavily reliant on director loans, which may not be sustainable or easily collectible. Despite owning tangible fixed assets (property) valued over £1 million, the mismatch between short-term liabilities and current assets suggests solvency risk in the near term.

2. Key Concerns:

• Liquidity Shortfall: Current liabilities of £621,184 vastly exceed current assets of £2,224, resulting in a net current liability position of approximately £619,000 as of January 2024, worsening from prior years. This signals potential cash flow strain to meet immediate obligations.
• Reliance on Director Loans: Over £619,000 of current liabilities are loans from directors, which may be subject to repayment demands or withdrawal, posing refinancing risk. The company appears dependent on director funding to cover short-term debts.
• Minimal Equity Buffer: Shareholders’ funds stand at only £21,836, representing a thin equity cushion relative to overall liabilities. This limited capital base restricts the company’s ability to absorb losses or access external financing.

3. Positive Indicators:

• Substantial Tangible Fixed Assets: The company holds tangible fixed assets (land and buildings) valued at over £1 million, which could potentially be leveraged or sold to improve liquidity if necessary.
• Regular Filing Compliance: Accounts and confirmation statements are up to date with no overdue filings, indicating good regulatory compliance and governance standards.
• Stable Management: The company has consistent directors since incorporation with no reported disqualifications, supporting operational continuity.

4. Due Diligence Notes:

• Investigate terms and conditions of director loans: Are these repayable on demand? Are they interest-bearing? Assess the likelihood and timing of repayment requests.
• Review cash flow forecasts and working capital management to understand how the company plans to address ongoing liquidity deficits.
• Examine the valuation and marketability of the fixed assets to determine their realisable value and potential to mitigate solvency risk.
• Confirm no hidden contingent liabilities or off-balance sheet obligations that could worsen financial position.
• Assess customer and supplier relationships and revenue streams to evaluate operational sustainability given low cash balances.