Investment Risk Analysis: MAKE A MATERIAL DIFFERENCE LTD

1. Risk Rating: HIGH

The company has operated with negative net assets for at least eight consecutive years, with total liabilities exceeding total assets by £127,781 as at 30 November 2024. Net current liabilities of £74,004 indicate a severe liquidity shortfall, meaning the company cannot meet its short-term obligations from current assets. While there has been a modest improvement in the net asset position year-on-year, the fundamental financial structure remains deeply compromised.

2. Key Concerns

Concern 1: Chronic Technical Insolvency

The company has reported negative shareholders' funds in every year for which data is available (2015-2024), with cumulative deficits consistently exceeding £100,000 since 2017. The net liability position of £127,781 against total assets of only £78,243 represents a significant capital deficiency. This is not a temporary or cyclical condition—it is a persistent structural feature of this business.

Concern 2: Severe Liquidity Deficit

Current assets of £72,620 are insufficient to cover current liabilities of £147,542, yielding a current ratio of approximately 0.49:1. The net current liability position of £74,004 means the company requires £74,004 in additional working capital just to meet its near-term obligations. This level of liquidity shortfall creates material uncertainty about the company's ability to continue trading as a going concern.

Concern 3: Uncertain Creditor Financing Model

The company is entirely dependent on creditor financing, with £206,942 in total liabilities (£147,542 current + £59,400 non-current) against minimal equity of £30 in share capital. The nature of these creditors is unclear from the micro-entity accounts—specifically whether they include director loans, related-party balances, or trade creditors. The long-term creditor figure of £59,400 has remained unchanged between 2023 and 2024, suggesting it may be a related-party loan rather than a commercial obligation.

3. Positive Indicators

• Year-on-Year Improvement: Net assets improved from £-140,835 to £-127,781 (approximately £13,054 improvement), suggesting the business generated some level of profitability during the period, despite the absence of a filed profit and loss account.
• Current Asset Growth: Current assets increased from £55,023 to £72,620, a 32% improvement, potentially indicating improved trading activity or cash collection.
• Regulatory Compliance: Accounts and confirmation statements are filed on time with no overdue status, and the company remains Active. This suggests the directors are maintaining basic administrative compliance.
• Operational Longevity: The company has traded since 2013, indicating some level of operational sustainability despite the persistent financial challenges.
• Stable Workforce: Employee count has remained at 2 for both 2024 and 2023, suggesting operational stability at a micro level.

4. Due Diligence Notes

1. Going Concern Basis: The accounts contain no explicit going concern statement or disclosure of material uncertainty. Given the net liability position, investigation should focus on whether director or shareholder support letters exist that underpin the company's ability to continue trading. The absence of such disclosure in micro-entity accounts is permissible but concerning.

2. Creditor Composition: The identity and nature of both current and non-current creditors requires clarification. Specifically: - Is the £59,400 long-term creditor a director or shareholder loan? - What portion of the £147,542 current liabilities represents trade creditors versus related-party balances? - Are any creditors secured against company assets?

3. Profit and Loss Performance: The directors have elected not to include a profit and loss account. The improvement in net assets (£13,054) suggests profitability, but the magnitude and sustainability of any trading profit cannot be assessed without revenue and cost data.

4. Related Party Relationships: The PSC structure shows three individuals each holding 25-50% of shares. The relationship between these parties and the nature of any financial support they may be providing should be investigated. Lady Onslow's involvement as both a director and PSC raises questions about whether her status provides access to external financial resources.

5. Volatile Asset Base: Total assets have fluctuated significantly over the years (ranging from £7,541 in 2016 to £170,040 in 2018), which is unusual for a micro-entity in food services. The drivers of this volatility—whether driven by inventory, receivables, or cash balances—should be understood.

6. Industry Context: SIC code 56290 (Other food services) is a competitive, low-margin sector. The company's financial structure appears inconsistent with typical food service operations, which generally require positive working capital to fund stock and payroll cycles.