Company Number: 13037945

Analysis Date: 2025-07-29 16:56 UTC

1. Risk Rating: HIGH
   Red Sky Renovations Limited exhibits significant solvency concerns, as evidenced by persistent and increasing net liabilities exceeding £35,000 in prior years and reaching over £62,000 in the latest financial year. The company's current liabilities far exceed its current assets, indicating poor liquidity and potential difficulty meeting short-term obligations.

2. Key Concerns:

• Negative Net Assets and Shareholders' Funds: The company’s net liabilities have more than doubled over three years, reflecting ongoing losses or capital erosion.
• Significant Long-Term Creditors: Creditors due after more than one year increased substantially from £40,612 to £70,051, indicating reliance on extended debt financing that may be unsustainable.
• Very Limited Scale and Resources: With only a single employee and micro-entity status, the company likely has limited operational capacity and financial flexibility to address its challenges.

3. Positive Indicators:

• Timely Filing and Compliance: The company is up to date with its accounts and confirmation statement filings, indicating compliance with statutory obligations and no immediate governance red flags.
• Stable Directorship: The sole director has been consistent since incorporation, with no records of disqualification or governance issues.
• No Indication of Formal Insolvency Proceedings: The company remains active and not subject to liquidation, administration, or receivership.

4. Due Diligence Notes:

• Examine Profit and Loss Details: The absence of delivered profit and loss accounts limits insight into revenue generation, cost structure, and loss drivers—these should be requested.
• Clarify Nature and Terms of Long-Term Creditors: Understanding creditors’ identity, repayment terms, and any associated covenants is critical to assessing solvency risk.
• Assess Cash Flow Trends: Given limited data, request cash flow statements or management accounts to evaluate liquidity and operational cash generation.
• Review Director’s Plans: Investigate any strategic plans for turnaround, capital injection, or restructuring to mitigate financial distress.