Company Number: SC706236

Analysis Date: 2025-07-20 14:51 UTC

1. Risk Rating: HIGH
   The company shows a negative net asset position as of its latest financial year, with net current liabilities and shareholders' deficit increasing. The operating loss in the most recent year after previously profitable years suggests deteriorating financial stability.

2. Key Concerns:

• Negative Net Assets: Shareholders' funds declined from a positive £36k (2023) to a deficit of nearly £3.8k (2024), indicating erosion of equity.
• Operating Loss in 2024: The company moved from a £38.7k profit in 2023 to a £39.9k loss in 2024, with administrative expenses nearly doubling, signaling cost management or revenue issues.
• Working Capital Deficit: Net current assets moved from a small negative £9k to a significant negative £57k, raising liquidity concerns and potential difficulty meeting short-term obligations.

3. Positive Indicators:

• Revenue Growth: Turnover increased by approximately 41% from £373k (2023) to £525k (2024), showing top-line growth.
• Tangible Assets: The company has invested in tangible assets, increasing the carrying amount to over £53k, which may support operational capacity.
• No Overdue Filings: Accounts and confirmation statements are up to date, showing compliance with regulatory filing requirements.

4. Due Diligence Notes:

• Investigate Causes of Increased Administrative Expenses: Review management accounts and expense breakdown to understand the sharp rise in costs in 2024.
• Assess Cash Flow and Loan Terms: Examine cash flow forecasts and related party loan arrangements (£39k) to evaluate liquidity risk and repayment capacity.
• Understand Debtor Composition: The large increase in other debtors (£64k) versus trade debtors (£2k) should be clarified for collectability and risk.
• Review Market Conditions: Given the hotel industry SIC code, evaluate external factors impacting profitability, such as tourism trends or local economic conditions.
• Directors’ Background and Governance: Confirm that all directors are in good standing and review any related party transactions for potential conflicts of interest.