Company Number: 12783095

Analysis Date: 2025-07-29 18:26 UTC

1. Risk Rating: MEDIUM
   The company shows improving net asset position and positive working capital, suggesting a degree of solvency. However, the presence of significant long-term deferred consideration liabilities and relatively low cash reserves relative to current liabilities pose liquidity risks. The company is small and relatively young with limited equity, which constrains financial resilience.

2. Key Concerns:

• Deferred Consideration Liability: £183k of deferred consideration due after one year represents a material future obligation that could pressure cash flows or require refinancing.
• Low Cash Balances: Cash holdings (£7.7k) are low compared to current liabilities (£164k), indicating potential short-term liquidity challenges without reliance on receivables or stock.
• Shareholder and Director Exposure: A large director’s loan account (£158k) classified as a current liability signals potential reliance on director funding and related party exposure.

3. Positive Indicators:

• Strong Net Current Assets: Significant net current assets (~£192k) driven by a high stock level and some debtor balances provide working capital buffer.
• Improving Net Assets: Net assets have grown from negative to £22.7k over 4 years, showing gradual equity strengthening.
• Compliance: No overdue filings for accounts or confirmation statements indicate good regulatory compliance and governance standards.

4. Due Diligence Notes:

• Investigate the nature and terms of the deferred consideration to understand timing, triggers, and associated risks.
• Review the quality and liquidity of stock and trade debtors to assess realisable value and collection risk.
• Clarify the director’s loan account arrangements, repayment plans, and related party transactions.
• Confirm revenue trends and profitability given limited disclosures on turnover and profit & loss figures in the accounts.
• Consider management plans for cash flow management and financing given low cash reserves relative to liabilities.