RECTORY SSB (1) LIMITED

Executive Summary

RECTORY SSB (1) LIMITED exhibits a high-risk profile primarily due to significant working capital deficits, negative equity, and dependence on repayable interest-free loans from related parties. While it holds a valuable investment property and complies with filing requirements, the financial structure raises concerns about solvency and liquidity stability. Further investigation into related party support, cash flows, and asset valuations is recommended to fully assess the company’s financial sustainability.

RECTORY SSB (1) LIMITED - Analysis Report

Company Number: 13909827

Analysis Date: 2025-07-20 17:09 UTC

1. Risk Rating: HIGH

This rating is based on the company's persistent negative net assets, significant current liabilities far exceeding current assets, and reliance on interest-free loans from related parties that are repayable on demand. These factors indicate solvency and liquidity challenges that could threaten the company's ability to meet short-term obligations without external support.

2. Key Concerns:

• Negative Net Assets: The company shows net liabilities of approximately £81,000 as of the latest financial year, reflecting accumulated losses or deficiencies in equity capital.
• Working Capital Deficit: The company’s current liabilities (£699,015) substantially exceed current assets (£112,672), resulting in a net current liability position of £586,343. This suggests an inability to cover short-term debts from liquid resources.
• Dependence on Related Party Loans: Large interest-free loans from the parent company and fellow subsidiary, repayable on demand, constitute a significant portion of liabilities. The absence of formal loan terms or security raises questions about the stability of funding and risk of sudden calls for repayment.

3. Positive Indicators:

• Investment Property Asset: The company holds an investment property valued at £1.17 million, which is a substantial fixed asset that could provide future rental income or capital appreciation.
• No Overdue Filings: Both accounts and confirmation statements are filed on time with no overdue reports, indicating compliance with regulatory requirements.
• Established Corporate Control: The parent company holds majority control (75-100%) and appoints directors, which may provide governance oversight and potential financial backing.

4. Due Diligence Notes:

• Review Parent Company Financials: Assess the financial strength and willingness of Croydon Five Limited to continue providing financial support, given the reliance on related party loans.
• Examine Loan Agreements: Investigate the terms, security, and enforceability of the intercompany loans, including the risk if repayment is demanded.
• Cash Flow Analysis: Obtain detailed cash flow projections to evaluate the company’s ability to service debt and operational costs from rental income or other sources.
• Investment Property Valuation: Confirm the valuation method and marketability of the investment property to ascertain its realizable value.
• Profit and Loss Account: Although not filed, request access to profit and loss details to understand operational profitability and drivers of losses.