PSSB LIMITED

Risk Rating: MEDIUM Justification: While PSSB LIMITED is a long-established company with an excellent history of regulatory compliance, its most recent financial year (ending 31 May 2025) reveals a sudden and severe shift in its capital structure. Short-term liabilities have surged by over £69,000, compressing the current ratio to approximately 1.02 and causing a 60% decline in shareholders' funds. This abrupt departure from its historically conservative balance sheet introduces notable solvency and liquidity uncertainties that require investigation.

Key Concerns - Surge in Short-Term Creditors: Creditors due within one year exploded from £6,355 in 2024 to £75,644 in 2025. This single line item fundamentally changes the risk profile of the business, creating immediate liquidity pressure and raising questions about the source and terms of this new debt. - Sharp Decline in Shareholders' Funds: Net assets/shareholders' funds dropped from £55,561 to £22,079 in a single year. Because the company files as a micro-entity and omits a profit and loss account, it is impossible to determine from the face of the accounts whether this erosion was caused by significant trading losses, a large dividend distribution, or a reclassification of shareholder loans. - Extremely Tight Liquidity: Current assets (£77,308) now barely cover current liabilities (£75,644). The margin of safety is exceptionally thin. If current assets contain illiquid stock or slow-paying debtors, or if creditors demand prompt repayment, the company could face an immediate cash flow crisis.

Positive Indicators - Corporate Longevity: Incorporated in 2001, the company has over two decades of operational continuity, suggesting resilience and established market presence. - Regulatory Compliance: The company is fully up to date with its filing requirements. The 2025 accounts were approved and signed on 27 January 2026, well ahead of the statutory deadline, and the confirmation statement is current. - Asset Investment: Despite the liability concerns, total assets have grown to £97,723 (up from £67,607 in 2024), and fixed assets nearly doubled from £10,758 to £20,415. This indicates the company is still investing in long-term operational capacity. - Historical Cash Reserves: In prior years (e.g., 2021-2023), the company maintained strong cash positions relative to its size (e.g., £82,615 in 2023), indicating a historically conservative and cash-generative business model.

Due Diligence Notes - Nature of the Creditor Increase: It is critical to determine the origin of the £69,289 increase in short-term creditors. Is this trade payable accumulation, a short-term bank loan, or a loan from the directors/persons with significant control (PSCs)? If it is a director loan, repayment terms may be more flexible than standard commercial debt. - Composition of Current Assets: The 2025 balance sheet does not break down current assets. Investigate how much of the £77,308 is held as cash versus debtors or stock. Given the historically high cash balances, a shift towards debtors would imply a further strain on working capital. - Driver of Equity Erosion: Clarify the reason for the £33,482 drop in shareholders' funds. Requesting internal management accounts or bank statements will help ascertain whether the business is trading at a loss or if equity was extracted via dividends. - Related Party Transactions: Given the tight ownership structure (Lauren Spark >75%, Joseph Quinn 25-50%, Anne Quinn 25-50%), assess the extent of related-party transactions. Transactions between the company and the Quinn/Spark families could significantly impact cash flow priorities.