Company Number: 13134637

Analysis Date: 2025-07-29 16:58 UTC

1. Risk Rating: HIGH

Justification: The company exhibits significant liquidity risk, with current liabilities far exceeding current assets by nearly £12 million in the latest financial year, indicating potential difficulty in meeting short-term obligations. Although net assets remain positive, this is largely supported by investment property revaluation, which may not be readily convertible to cash. The company also posted a loss before taxation in the latest year. These factors collectively elevate the risk profile.

2. Key Concerns:

• Severe negative net working capital: Current liabilities of £18.37 million against current assets of £6.39 million, resulting in a net current liability position of £11.99 million as of 30 September 2023.
• Operating loss of £630,727 before taxation in 2023, contrasting with prior year profitability, suggesting potential operational or market challenges.
• High interest payable (£1.51 million) indicating substantial debt servicing costs, which could pressure cash flows.

3. Positive Indicators:

• The company holds significant investment property assets valued at £16.64 million, which have appreciated and provide a solid asset base.
• Shareholders' funds remain positive at £4.32 million, indicating retained equity despite losses.
• The business is active and compliant with filing deadlines, with no overdue accounts or confirmation statements, reflecting good regulatory compliance.
• Audit opinion is clean with no reservations on going concern, suggesting auditor confidence in management's assessment.

4. Due Diligence Notes:

• Investigate the nature and terms of the company's debt, particularly the composition and maturity of the large current liabilities and interest-bearing loans.
• Assess the liquidity profile and cash flow projections to understand how the company plans to manage short-term liabilities exceeding current assets.
• Review underlying assumptions and details of investment property valuations to gauge the reliability and realizable value of these assets.
• Examine the operational model and revenue streams, especially the sustainability of income from sales and rentals that generated turnover of £1.36 million.
• Clarify the reason for the significant increase in current liabilities from £1.38 million in 2022 to £18.37 million in 2023, and review any contingent liabilities or provisions.