ORCHID TEXTILES LTD

Executive Summary

The financial data for Orchid Textiles Ltd reveals acute solvency and liquidity challenges, with net liabilities and significant negative working capital in the latest year. While statutory compliance is maintained, the deteriorating financial position suggests operational and financial instability that warrants thorough investigation before investment consideration.

ORCHID TEXTILES LTD - Analysis Report

Company Number: 12451587

Analysis Date: 2025-07-29 14:04 UTC

1. Risk Rating: HIGH
   The company exhibits significant solvency risk as evidenced by its negative net assets and net current liabilities in the latest financial year. The abrupt decline from positive net assets in prior years to a material deficit indicates severe financial distress.

2. Key Concerns:

• Negative Net Assets: The net assets have deteriorated from £4,909 in 2024 to -£6,863 in 2025, indicating liabilities exceed assets markedly.
• Severe Liquidity Shortfall: Current liabilities (£17,117) far exceed current assets (£933), resulting in a large negative working capital of -£16,184, which raises immediate concerns about meeting short-term obligations.
• Declining Fixed Assets and Overall Financial Position: Fixed assets have been decreasing over the years, and total assets less current liabilities turned negative, reflecting erosion in company value and potential operational challenges.

3. Positive Indicators:

• The company remains active with no overdue filings, showing compliance with statutory obligations.
• The director and sole significant controller, Mr. Zahid Mahmood, has been consistent since incorporation, suggesting stable ownership and governance continuity.
• The company operates in multiple related SIC code areas (retail, wholesale, manufacture), potentially providing diversified revenue streams.

4. Due Diligence Notes:

• Investigate reasons behind the sharp deterioration in net assets and working capital from 2024 to 2025, including any extraordinary expenses, losses, or write-downs.
• Review cash flow statements or management accounts (if available) to assess ongoing liquidity and operational cash generation capacity.
• Confirm whether there are any contingent liabilities or off-balance sheet obligations not reflected in the accounts.
• Examine the company’s business model viability given the financial distress, including customer base, supplier relationships, and competitive position.
• Verify director’s plans for financial recovery or restructuring, and whether any external financing arrangements are in place or forthcoming.