Company Number: 12383863

Analysis Date: 2025-07-20 18:28 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   OM35 Limited shows signs of financial stress with a negative net asset position (£-3,911 as of 31 Jan 2024) and declining equity from prior years. The company’s liabilities, particularly long-term bank loans (£25,724), remain significant compared to its modest fixed assets and shrinking current assets. However, the company remains active, compliant with filing deadlines, and under the control of a single director with significant influence. Conditional approval is recommended subject to monitoring cash flow closely and obtaining assurances on debt servicing plans.

2. Financial Strength:
   The balance sheet reveals weakening financial strength over the last two years. Net assets dropped from a positive £301 in 2023 to a deficit of £3,911 in 2024, driven by a reduction in current assets from £45,363 to £23,396 and a decrease in cash reserves from £21,057 to £2,050. The fixed assets are minimal (£983), and the company relies heavily on debt financing (long-term loans £25,724). Shareholders' funds have eroded, indicating the company is currently undercapitalized.

3. Cash Flow Assessment:
   Cash at bank has significantly decreased from £21,057 to £2,050, raising concerns about liquidity and the ability to meet short-term obligations. Current liabilities have decreased to £2,566 (mainly taxation and social security), which is manageable against current assets, yielding positive net current assets of £20,830. However, the sharp reduction in cash and debtors suggests cash flow pressures. The company must demonstrate consistent cash inflows to cover debt repayments and operational costs.

4. Monitoring Points:

• Liquidity trends: Monitor cash balances and working capital changes quarterly.
• Debt servicing: Confirm regular repayment of bank loans and any covenant compliance.
• Profitability and reserves: Track net profit/loss trends and P&L reserve recovery.
• Director actions: Watch for any additional capital injections or restructuring plans by the sole director.
• Receivables quality: Evaluate debtor collection and potential write-offs impacting liquidity.