Investment Risk Analysis: NG15 LTD (04213449)

1. Risk Rating: MEDIUM

Justification: While the company has demonstrated a strong recent recovery in net assets, moving from negative equity (£-35,062 in 2022) to a positive position (£154,338 in 2025), the historical volatility in its balance sheet, significant related-party transactions, conflicting PSC registrations, and a sharp year-on-year increase in current liabilities raise material concerns that require further investigation before capital commitment.

2. Key Concerns

Concern 1: Extreme Balance Sheet Volatility and Recent Insolvency Risk

The financial history reveals dramatic swings. Net assets deteriorated from £346,283 (2018) to negative figures for three consecutive years (2021-2023), with the worst position at £-35,062 in 2022. The company was technically insolvent during this period (liabilities exceeding assets). While the recovery to £154,338 by 2025 is encouraging, the magnitude and speed of these swings raises questions about earnings quality, asset valuations, and whether the recovery is sustainable or dependent on exceptional items.

Concern 2: Sharp Increase in Current Liabilities

Current liabilities jumped from £20,677 (2024) to £103,809 (2025) – an approximately 400% increase year-on-year. This coincides with a significant increase in current assets (from £108,096 to £250,400), but the source and nature of this new liability burden is unclear from micro-entity accounts. If a substantial portion of current assets consists of trade debtors rather than cash, the company may face working capital pressure if those debts are not recovered timely.

Concern 3: Related-Party Transactions and Conflicting PSC Data

The latest accounts disclose £21,204 in purchases from PropertyAdd Ltd, a company controlled by director Shaun Cranstone. This represents a material transaction for a micro-entity. Additionally, the PSC register contains conflicting entries: multiple listings for "Fcc Electrical Wholesalers Limited" and "F C C Electrical Wholesalers Limited" (likely the same entity with formatting variations) each claiming 25-50% ownership, while "Scc Design Ltd" claims 75%+ ownership. These overlapping and potentially contradictory PSC declarations suggest governance and record-keeping concerns.

3. Positive Indicators

Positive 1: Strong Net Asset Recovery

The company has rebuilt its balance sheet from a negative net asset position to £154,338 in two years, suggesting either improved trading performance, capital injections, or asset revaluations. This demonstrates resilience and potential operational turnaround.

Positive 2: Positive Working Capital Position

Net current assets stand at £151,974 (2025), indicating the company can meet its short-term obligations from current assets. This is a meaningful improvement from prior years and provides a buffer against liquidity stress.

Positive 3: Regulatory Compliance

Accounts and confirmation statements are filed on time with no overdue filings. The company has maintained active status since 2001 and demonstrates basic corporate governance discipline in its filing obligations. The accounts were approved and signed by both directors on 22 July 2026.

4. Due Dilence Notes

Item 1: Composition of Current Assets

The micro-entity accounts do not break down current assets between cash, trade debtors, and other items. Given the significant increase to £250,400, it is essential to understand what proportion is readily realisable cash versus potentially illiquid or aged debtors. Request full accounts or management accounts to assess the quality of current assets.

Item 2: Nature and Terms of Current Liabilities

Clarification is needed on the £103,809 in creditors due within one year. Key questions: How much relates to trade creditors versus related-party loans or director loans? Are there any formal repayment schedules or demand clauses? If a significant portion is owed to directors or connected parties, this may be more flexible but also represents concentration risk.

Item 3: Related-Party Transaction Terms

The £21,204 paid to PropertyAdd Ltd (controlled by director Shaun Cranstone) should be examined for commercial reasonableness. Request: details of services provided, benchmarking against market rates, and whether similar transactions are expected to continue. Note 5 states transactions were "on normal commercial terms" but this assertion requires independent verification.

Item 4: PSC Register Reconciliation

The PSC register requires urgent clarification. The apparent duplication of Fcc/FCC Electrical Wholesalers Limited and the conflicting ownership percentages (multiple entities claiming 25-50% plus Scc Design Ltd claiming 75%+) must be resolved. This may indicate administrative error, recent restructuring, or more complex ownership arrangements than disclosed.

Item 5: Driver of 2021-2023 Insolvency Period

Investigate the root cause of the negative net asset position during 2021-2023. Was this driven by trading losses, asset write-downs, or reclassification of liabilities? Understanding the nature of this deterioration is critical for assessing whether the current recovery is structural or cyclical.

Item 6: Interconnections Between Director Entities

Both directors have significant external business interests (Robin Combellack with FCC Electrical Wholesalers Ltd and associated entities; Shaun Cranstone with PropertyAdd Ltd, PIM System Ltd, and SCC Design Ltd). Assess the extent of inter-company trading, cross-guarantees, or shared financial obligations that could create contagion risk.