Company Number: 12456012

Analysis Date: 2025-07-29 20:51 UTC

1. Risk Rating: LOW
   KNB TRADE LTD demonstrates solid financial health with positive net assets and net current assets, indicating good solvency and liquidity. The company’s filings are up to date, and there are no indications of regulatory or governance issues.

2. Key Concerns:

• Decline in cash balance: Cash decreased significantly from £257,170 in 2022 to £56,241 in 2023, which could indicate changes in operational cash flow or investment activity that warrant monitoring.
• Reduction in employee headcount: Average employees fell from 55 in 2022 to 42 in 2023, potentially reflecting operational restructuring or cost-cutting measures that may impact business continuity.
• Concentration of control: The sole director and 75-100% shareholder is the same individual, presenting a governance concentration risk that could affect decision-making transparency.

3. Positive Indicators:

• Strong net current assets of £263,776 as of 2023 year-end, indicating adequate short-term liquidity to meet obligations.
• Positive and growing shareholders’ funds, increasing from £204,246 in 2022 to £305,869 in 2023, showing retained earnings accumulation and balance sheet strengthening.
• No overdue filings with Companies House; accounts and confirmation statements are current, demonstrating good regulatory compliance.
• The company operates in the licensed restaurant sector with a relatively stable asset base and tangible fixed assets supporting operations.

4. Due Diligence Notes:

• Investigate the reason for the sharp decrease in cash reserves during 2023, whether due to capital expenditures, debt repayments, or other uses.
• Review debtor balances (£505,370 in 2023) for collectability and aging to assess liquidity risk related to receivables.
• Assess the impact of the reduced workforce on operational capacity and cost structure.
• Confirm the absence of any director disqualification or regulatory actions against the sole director.
• Review detailed profit and loss information (not filed) to understand profitability trends and cash flow generation.