Company Number: 13738258

Analysis Date: 2025-07-19 11:55 UTC

1. Risk Rating: HIGH
   Justification: The company consistently shows significant negative net current assets over multiple years, indicating a liquidity shortfall and potential difficulty meeting short-term obligations. Despite investment in a subsidiary, the working capital position remains weak with current liabilities greatly exceeding current assets.

2. Key Concerns:

• Liquidity risk: Net current liabilities exceed £79k as of 2024, with cash balances under £1,000, suggesting inadequate liquid resources to cover imminent debts.
• Reliance on group debtors: £3,000 of current assets are amounts owed by group undertakings, which may not be readily collectible or certain.
• Negative retained earnings and very low equity base (£387 in 2024) imply weak financial resilience and potential solvency challenges if losses continue.

3. Positive Indicators:

• The company is current with all statutory filings and not overdue on accounts or confirmation statements, reflecting compliance with regulatory requirements.
• The investment in the subsidiary shows a significant net book value (£80,098) and the subsidiary itself reported profits in 2024 (£114,926), which may provide future financial support or value realization.
• Directors appear stable and have long-term control, with no indication of disqualifications or governance issues.

4. Due Diligence Notes:

• Assess the nature and collectability of amounts owed by group undertakings to confirm liquidity assumptions.
• Investigate the company’s cash flow forecasts and plans to manage or reduce current liabilities, especially given the persistent negative working capital.
• Review any contingent liabilities or off-balance sheet risks that may exacerbate solvency concerns.
• Evaluate the subsidiary’s operational performance and cash flow contribution potential to the parent company.
• Consider the underlying reasons for continued losses or negative retained earnings and the directors’ strategy for financial recovery.