Company Number: 13003649

Analysis Date: 2025-07-29 13:33 UTC

1. Risk Rating: MEDIUM
   Justification: Although Northern Cutting Services Ltd shows positive net assets and equity, there is a significant increase in long-term liabilities which raises concerns about solvency. The company’s liquidity position is modest with current liabilities exceeding current assets but net current assets reported positive due to possible misclassification or timing differences. The company is solvent but the financial structure warrants monitoring.

2. Key Concerns:

• Rising long-term liabilities: Creditors due after more than one year increased sharply from £135k (2023) to £203k (2024), which may indicate increased debt or deferred obligations impacting solvency risk.
• Modest liquidity: Current assets (£154k) are less than current liabilities (£203k), but net current assets are shown as positive (£28k), indicating possible timing or classification issues that should be clarified to assess short-term cash flow adequacy.
• Declining net assets: Net assets declined from £165k (2023) to £149k (2024), potentially reflecting losses or increased liabilities, which may affect capital buffer and financial resilience.

3. Positive Indicators:

• Positive net assets and shareholders’ funds still maintained, indicating the company retains equity cushion.
• Consistent filing compliance: Accounts and confirmation statements are up to date without overdue filings, showing good regulatory compliance.
• Stable operational scale: Average employees remained constant at 6, indicating operational stability without significant downsizing.

4. Due Diligence Notes:

• Review detailed notes on creditor composition, especially the nature and terms of long-term liabilities to understand refinancing risk or covenant obligations.
• Clarify the apparent discrepancy between current assets/liabilities and net current assets to confirm liquidity status.
• Examine profit and loss statements or reserves movements to understand reasons for net asset decline.
• Investigate the director’s track record and any contingent liabilities or off-balance sheet risks not disclosed in micro-entity accounts.
• Evaluate cash flow statements if available to confirm operational cash generation and ability to service debts.