LEGACY WATER LTD

Executive Summary

Legacy Water Ltd is a small private water supply company showing persistent negative equity and liquidity constraints, with current liabilities exceeding current assets by a significant margin. Despite minor improvements, the financials indicate insufficient resources to service debt or sustain operations without additional funding. Given these factors, credit approval is declined due to elevated risk of default.

LEGACY WATER LTD - Analysis Report

Company Number: 13155834

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

1. Credit Opinion: DECLINE

Legacy Water Ltd demonstrates significant financial distress with persistent negative net current assets and shareholders' funds, indicating insufficient liquidity and equity. Despite a marginal improvement from FY2024 to FY2025, the company remains heavily undercapitalized with current liabilities approximately twice the current assets. The absence of employees and minimal fixed assets suggest a very small operating scale or early-stage development, which may limit operational cash flow generation. Without clear evidence of profitability or substantial cash inflows, the company’s ability to service debt or meet commercial obligations is highly questionable. Thus, extending credit would involve high risk and is not recommended.

2. Financial Strength:

The balance sheet reveals ongoing losses, with shareholders’ funds deteriorating from approximately -£5.43k in 2024 to -£3.26k in 2025, still negative but showing slight improvement. Current liabilities are substantial (£6,172) relative to current assets (£2,730), resulting in a negative working capital position (-£3,442). Fixed assets are minimal (£180 net book value), indicating limited tangible collateral. The small share capital of £2.00 confirms minimal equity injection. Overall, the company’s financial structure is weak with limited ability to absorb shocks or support debt financing.

3. Cash Flow Assessment:

Cash on hand is low (£1,107) and although improved from prior year (£271), it is insufficient to cover short-term liabilities. Debtors (£1,623) represent a moderate receivables position but may not be readily convertible to cash. The absence of employees suggests no payroll outflows but also potentially limited revenue-generating activity. Negative net current assets highlight liquidity strain and potential cash flow mismatches. The company’s cash flow position is fragile, with reliance on external funding or capital injection likely required to meet obligations.

4. Monitoring Points:

• Monitor monthly cash flow reports to detect liquidity pressures early.
• Track debtor collections and aging to ensure timely conversion to cash.
• Review creditor payment terms and any negotiation efforts to ease short-term liabilities.
• Assess any changes in business operations or capital structure that may improve financial viability.
• Watch for director or shareholder funding injections or asset disposals that strengthen the balance sheet.
• Stay alert to any late filings or regulatory compliance issues as indicators of distress.