Company Number: 13099857

Analysis Date: 2025-07-20 15:29 UTC

Credit Opinion:
DECLINE. Flush Energy Limited exhibits significant financial distress evidenced by deep negative shareholders' funds (£-6.07m in 2024) and persistent net current liabilities (£-3.54m in 2024). The company’s liquidity position has deteriorated markedly year-on-year with cash dropping from £902k in 2023 to under £28k in 2024. Large creditor balances, including preference shares treated as debt bearing a cumulative 20% dividend, and contingent liabilities with unresolved legal action, present material risks. Despite management’s assertion of going concern based on investor negotiations, there is insufficient tangible evidence of sustainable cash flow or financial recovery. Given these factors, the company’s ability to service new or existing debt is highly uncertain.

Financial Strength:
The balance sheet shows a weakening financial position. Fixed assets decreased slightly from £4.31m to £3.98m, but the company is heavily leveraged with current liabilities exceeding current assets by over £3.5m and non-current creditors surpassing £6.5m. Shareholders’ funds are deeply negative, indicating accumulated losses. The company’s capital structure is burdened by high preference share liabilities classified as debt with onerous dividend obligations, undermining equity cushions. The presence of contingent liabilities related to potential success fees and deferred consideration linked to legal disputes adds further uncertainty to the balance sheet strength.

Cash Flow Assessment:
Liquidity is constrained. The sharp reduction in cash reserves (from £902k to £27.8k) alongside rising trade and other creditors indicates cash flow stress. Negative net current assets highlight working capital shortfall, increasing risk of payment delays. Debtors have also reduced substantially, suggesting potential collection issues or decreased sales. The company’s reliance on convertible loan notes and investor funding to maintain operations suggests operating cash flows are inadequate to meet obligations. Uncertain timing on milestone payments and legal outcomes further complicate cash flow forecasting.

Monitoring Points:

• Progress and outcomes of ongoing investor negotiations and potential equity injections.
• Resolution of contingent liabilities, especially legal issues concerning deferred consideration and milestone success fees.
• Ability to generate positive operating cash flow and improve working capital metrics.
• Status and servicing of preference share dividends and convertible loan notes.
• Changes in debtor collection efficiency and creditor payment terms.
• Management actions to reduce financial leverage and improve liquidity.