Company Number: 14121028

Analysis Date: 2025-07-29 14:15 UTC

1. Risk Rating: HIGH
   The company exhibits significant solvency and liquidity risks as evidenced by persistent negative net assets, substantial current liabilities exceeding current assets by a wide margin, and a large secured bank loan relative to asset values.

2. Key Concerns:

• Negative Net Assets: The company’s shareholders’ funds are negative (£-16,083 at 31 May 2024), indicating accumulated losses or insufficient equity backing.
• Working Capital Deficit: Current liabilities (£470,205) exceed current assets (£43,372) by over £426,000, suggesting potential cash flow constraints to meet short-term obligations.
• High Reliance on Secured Debt: Bank loans of £799,621 secured on investment property represent significant leverage, and with net liabilities present, there may be risk to creditor security if property values decline.

3. Positive Indicators:

• Increasing Investment Property Value: The company’s principal asset, investment property, increased in valuation from £791,367 to £1,210,371 over the year, indicating potential asset appreciation.
• Profitable Year in 2024: The company reported a profit of £8,930 for the year ended 31 May 2024, a positive movement from prior years’ losses, suggesting some operational improvement.
• Compliance with Filings: All statutory accounts and confirmation statements are up to date and not overdue, reducing regulatory compliance concerns.

4. Due Diligence Notes:

• Verify the valuation methodology and market comparability for the investment property to assess realism and stability of asset values.
• Investigate terms, interest rates, and covenants attached to the bank loans, including repayment schedules and any potential refinancing risks.
• Review cash flow forecasts and debtor aging to evaluate the company’s ability to meet ongoing liabilities, especially given the material working capital deficit.
• Confirm that there are no undisclosed contingent liabilities or related party transactions that could further impact solvency.
• Assess director’s plans or shareholder support for recapitalization or financial restructuring given the negative equity position.