Company Number: SC683581

Analysis Date: 2025-07-29 19:25 UTC

1. Risk Rating: HIGH

Justification: I & L Rooney Ltd demonstrates significant solvency and liquidity concerns primarily due to very large current liabilities exceeding current assets by a wide margin (net current liabilities of £382,585 in 2025). The company carries substantial long-term debt (£500,242) secured against assets, with fixed charge over property and floating charge on all assets, indicating reliance on borrowed funds. Negative working capital and ongoing losses (implied by retained earnings growth being minimal over years despite asset disposals) raise material risk of financial distress.

2. Key Concerns:

• Persistent negative net current assets: The company’s current liabilities consistently exceed current assets by a large amount, indicating potential liquidity shortfall to meet short-term obligations.
• Heavy bank borrowings secured on company assets: Over £500k of bank loans with fixed and floating charges limit financial flexibility and increase risk if cash flows deteriorate.
• Disposal of investment property and reduction in fixed assets: The company disposed of a £206k investment property during the year, possibly signalling asset sales to meet liabilities, which could undermine future earnings capacity.

3. Positive Indicators:

• Increasing net assets and shareholders’ funds: Despite liquidity issues, net assets improved from £125k to £133k, showing some equity value preservation.
• Directors appear stable and have professional backgrounds (pharmacist and teacher), which may suggest prudent management.
• Timely filing of accounts and confirmation statements with no overdue filings or compliance issues noted.

4. Due Diligence Notes:

• Investigate the nature and terms of the bank loans, including repayment schedules, covenants, and interest costs.
• Review cash flow statements (not provided) to assess operating cash generation and ability to service debt.
• Obtain details on the reasons for investment property disposal and whether similar asset sales are planned.
• Understand the company’s business model and revenue sources given it operates as a holding company (SIC 64209) but has no employees.
• Clarify any contingent liabilities or off-balance sheet obligations not disclosed in accounts.
• Confirm status of subsidiary investments valued at £864,525 and their financial health.