MEJW LIMITED

Executive Summary

MEJW Limited exhibits a recovery in net asset value supported by investment property revaluation but faces significant liquidity challenges evidenced by very high current liabilities versus minimal current assets. The company’s reliance on substantial related party debt and persistent negative retained earnings are key risks that require detailed scrutiny. However, compliance with filing deadlines and asset appreciation are positive signs amid these concerns.

MEJW LIMITED - Analysis Report

Company Number: 13526126

Analysis Date: 2025-07-29 15:43 UTC

1. Risk Rating: MEDIUM

The company shows improvement in net assets and shareholders' funds in the latest year, moving from a negative net asset position to a modest positive one. However, the extremely high current liabilities compared to minimal current assets indicate liquidity risk. The reliance on related party borrowings also adds to financial risk, despite active trading status and up-to-date filings.

2. Key Concerns:

• Liquidity imbalance: Current liabilities (£976,783) vastly exceed current assets (£1,382) leading to a net current liability of approximately £975,401, which suggests potential cash flow difficulties in meeting short-term obligations.
• High related party debt: The company owes £973,027 to a related party (Eclipse (Batley) Limited), indicating dependency on intercompany financing which may not be sustainable or commercially favourable.
• Negative retained earnings: The profit and loss reserve remains significantly negative (£-37,872), reflecting accumulated losses or deficits that may constrain operational flexibility.

3. Positive Indicators:

• Asset base growth: Fixed assets increased to £987,034 from £827,023, primarily driven by investment property revaluation and additions, indicating potential asset value appreciation.
• Improved equity position: Shareholders’ funds have moved from a negative £6,464 to a positive £6,399, reflecting a turnaround in net worth.
• Timely compliance: The company is active with no overdue statutory filings, indicating good regulatory compliance and governance.

4. Due Diligence Notes:

• Investigate the nature and terms of the related party borrowing from Eclipse (Batley) Limited, including repayment schedules and interest terms.
• Review cash flow forecasts and working capital management plans to assess how the company intends to address significant current liabilities.
• Examine the assumptions behind the investment property valuation and the sustainability of rental income, given that turnover is rental income.
• Confirm the directors' and shareholders' plans to cover accumulated losses and support the company’s going concern status.