Company Number: 13054663

Analysis Date: 2025-07-20 11:53 UTC

1. Risk Rating: MEDIUM
   The company demonstrates modest net current assets and positive net assets, indicating some solvency. However, the reduction in net assets from £21,382 (2023) to £12,707 (2024), the existence of provisions, and relatively high current liabilities compared to current assets raise moderate concerns about liquidity and operational resilience.

2. Key Concerns:

• Declining Net Assets: A noticeable decrease in net assets (~40% drop) within one year suggests erosion of equity and potentially declining profitability or asset impairments.
• Provisions for Liabilities: Recognition of provisions (£5,109) in 2024, absent in prior years, indicates new or previously unrecognized obligations that may impact cash flow.
• Tight Working Capital: Current liabilities (£43,376) nearly match current assets (£46,461), leaving a narrow net current asset margin (£3,085), which may constrain short-term liquidity.

3. Positive Indicators:

• Positive Net Assets: Despite the decline, the company remains solvent with net assets of £12,707 and shareholder funds of the same amount.
• Increasing Cash Balance: Cash increased from £20,697 in 2023 to £27,485 in 2024, which supports immediate liquidity.
• Compliance and Timeliness: The company is active, has no overdue filings for accounts or confirmation statements, and complies with small company reporting requirements, reflecting good governance practices.
• Owner Involvement: The sole director and 75-100% controlling shareholder appears engaged, possibly facilitating swift decision-making.

4. Due Diligence Notes:

• Investigate the nature and expected timing of the provisions recognized in 2024, including any contingent liabilities or legal claims.
• Review recent profitability trends and cash flow statements to understand causes of net asset decline and assess operational sustainability.
• Assess the adequacy of working capital management, given the narrow current asset margin and reliance on trade debtors and stock.
• Consider the impact of fixed asset depreciation and additions on the company’s operational capacity and capital expenditure plans.
• Confirm absence of director disqualifications or regulatory sanctions given sole director control.