KLAUS ECOHOMES LIMITED
Company number 06952152 · Monitor this company
This analysis was written by an AI from the company's public filings. It may contain errors or omissions and is not financial or professional advice.
Commercial Credit Assessment: KLAUS ECOHOMES LIMITED
1. Credit Opinion: DECLINE
Reasoning: The balance sheet has deteriorated significantly in the latest period, with net assets falling 61% from £234,457 to £91,942. Current liabilities nearly doubled to £1.526M, creating a dangerously thin working capital position for a construction business. The debt-to-equity ratio stands at approximately 16.6:1, indicating extreme leverage. Combined with a history of volatile asset swings, micro-entity filing opacity, and governance concerns (overdue confirmation statement), the credit risk is unacceptable on an unsecured basis.
2. Financial Strength: WEAK
Balance Sheet Volatility: The company demonstrates extreme balance sheet instability over the review period:
| Year | Net Assets | Year-on-Year Change |
|---|---|---|
| 2016 | £15,536 | - |
| 2017 | £17,456 | +12.3% |
| 2018 | £146,631 | +740.5% |
| 2019 | £56,293 | -61.6% |
| 2020 | £346,811 | +515.9% |
| 2021 | £62,304 | -82.0% |
| 2022 | £141,231 | +126.7% |
| 2023 | £177,082 | +25.4% |
| 2024 | £234,457 | +32.4% |
| 2025 | £91,942 | -60.8% |
This volatility is abnormal and suggests the business may be project-based with lumpy revenue recognition, or there are significant related-party transactions distorting the balance sheet.
Leverage Concern: Total liabilities of £1.526M against net assets of £91,942 produces a debt-to-equity ratio of approximately 16.6:1. This is exceptionally high and leaves virtually no margin for adverse trading conditions.
Share Capital: Only £100 in issued share capital, meaning the P&L reserve of approximately £91,842 represents nearly all equity. This provides minimal cushion against losses.
3. Cash Flow Assessment: POOR
Working Capital Position:
| Metric | 2025 | 2024 | Movement |
|---|---|---|---|
| Current Assets | £1,692,991 | £1,101,405 | +53.7% |
| Current Liabilities | £1,526,233 | £807,289 | +89.1% |
| Net Current Assets | £166,758 | £294,116 | -43.3% |
| Current Ratio | 1.11x | 1.36x | Deteriorating |
The current ratio of 1.11x is inadequate for a construction/joinery business, which typically requires 1.5x+ due to cyclical cash flows, retention provisions, and project timing mismatches.
Critical Concern: Current liabilities grew by £718,944 (89.1%) in a single year. Without a profit & loss account (micro-entity exemption), we cannot determine whether this represents trade creditors, director loans, HP/lease commitments, or other obligations. This opacity is problematic for credit assessment.
Asset Composition Unknown: We cannot determine what proportion of current assets comprises trade debtors versus cash. In the construction sector, significant debtor books can mask liquidity problems if collections are slow or disputed.
Long-term Liabilities: Creditors due after one year decreased from £168,855 to £127,147, which is the only positive trend visible. However, this may simply reflect reclassification to current liabilities.
4. Monitoring Points
If credit were to be considered (with adequate security), the following metrics require close monitoring:
-
Trade Debtor Ageing: Request aged debtor reports quarterly. Construction debtors can become impaired rapidly.
-
Creditor Composition: Obtain breakdown of the £1.526M current liabilities to understand trade creditor days, HP commitments, and any director loan balances.
-
Profitability: Micro-entity accounts provide no P&L. Request management accounts to confirm the business is trading profitably and not eroding the already thin equity base.
-
Confirmation Statement Filing: The overdue confirmation statement (due 17 July 2026, currently overdue) suggests administrative neglect. Monitor for resolution.
-
Related Party Transactions: Given the asset volatility and single director structure, investigate whether significant related-party balances exist within current assets/liabilities.
-
Fixed Asset Decline: Fixed assets dropped from £109,196 to £52,331. Determine whether this reflects depreciation, disposal, or impairment, and assess whether the asset base supports ongoing operations.
-
Sector Exposure: Monitor UK construction/joinery sector conditions, particularly housebuilding activity in the Cornwall/Southwest region.
-
Key Person Risk: Single director (Mr B K Mihell) creates concentration risk. Confirm succession planning and key-person insurance.
Additional Risk Factors
- Micro-Entity Filing: Minimal disclosure requirements prevent meaningful analysis of trading performance, cash flow generation, or contingent liabilities.
- No Audit: The company claims audit exemption, meaning figures are director-prepared without independent verification.
- PSC Register: Only a generic statement provided, not specific PSC details. This reduces transparency regarding ultimate control.
- Employee Count: Two employees for a business with £1.7M in assets suggests heavy reliance on subcontractors, introducing operational and IR35 compliance risks.