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.