RHYS HUGHES LTD

Executive Summary

Rhys Hughes Ltd is currently facing significant financial stress, demonstrated by negative net assets and working capital deficits, which pose a high solvency and liquidity risk. Although statutory filings are up to date and management appears competent, the substantial debt burden and erosion of equity require careful scrutiny. Further due diligence focusing on debt obligations, cash flow viability, and profitability is essential before considering investment.

RHYS HUGHES LTD - Analysis Report

Company Number: 13185470

Analysis Date: 2025-07-19 13:03 UTC

1. Risk Rating: HIGH
   The company exhibits a high risk profile primarily due to significant net liabilities, persistent negative shareholders' funds, and current liabilities exceeding current assets leading to negative working capital. These factors suggest potential solvency and liquidity challenges.

2. Key Concerns:

• Negative Net Assets and Shareholders’ Funds: The net assets have deteriorated from a positive £22,012 in 2021 to negative £15,431 in 2024, indicating accumulated losses or impairment issues undermining the company's financial stability.
• Negative Net Current Assets (Working Capital Deficit): Current liabilities (£59,344) exceed current assets (£35,279) as of 2024, resulting in a net current liability of £-24,065, which raises concerns about the company’s ability to meet short-term obligations.
• Large Long-Term Creditors: Creditors falling due after more than one year remain substantial at £320,000, indicating a heavy debt burden that may pressure cash flows and restrict operational flexibility.

3. Positive Indicators:

• No Overdue Filings: Both accounts and confirmation statements are filed on time, demonstrating compliance with statutory requirements and good governance practices.
• Established Directors with Relevant Backgrounds: The directors include a financial adviser and a business person, which may provide competent management oversight.
• Amortisation of Goodwill: The company is systematically amortising goodwill over its estimated useful life, reflecting adherence to accounting policies and transparent financial reporting.

4. Due Diligence Notes:

• Examine Debt Structure and Covenants: Investigate the terms, interest rates, and repayment schedules of the substantial long-term creditors to assess refinancing risks or potential breaches.
• Cash Flow Analysis: Review detailed cash flow statements and forecasts to determine if the company has sufficient liquidity to meet current liabilities and operational needs.
• Profitability and Revenue Trends: Since income statement details are not filed, request underlying financial performance data to understand the source of accumulated losses and prospects for turnaround.
• Going Concern Assessment: Despite directors’ assertion of going concern, verify external evidence such as banker support or creditor agreements supporting this assumption.
• Goodwill Impairment Risks: Evaluate whether the goodwill carrying value is supported by recoverable amounts given the net liabilities position.