Company Number: SC736342

Analysis Date: 2025-07-20 18:45 UTC

1. Risk Rating: HIGH
   Rysco Corrosion UK Limited exhibits significant solvency and liquidity risks, evidenced by persistent and increasing net current liabilities and negative shareholders' funds. The company is undercapitalized with current liabilities substantially exceeding current assets by £461,787 as of June 2024, up from £189,385 in the previous year.

2. Key Concerns:

• Negative Net Current Assets: The working capital deficit has more than doubled year-over-year, indicating ongoing cash flow challenges and potential difficulties meeting short-term obligations.
• Growing Creditors and Related Party Debt: Current liabilities increased sharply from £275,884 to £881,822, with a large portion (£485,084) owed to group undertakings, suggesting reliance on intra-group financing that may not be sustainable.
• Negative Shareholders Funds: The company’s equity position has deteriorated to a deficit of £440,143, highlighting accumulated losses and raising concerns about long-term financial viability.

3. Positive Indicators:

• Revenue Growth Reflected in Debtors: Trade debtors increased significantly from £26,707 to £355,118, indicating rising sales or contract activity which could translate into future cash inflows if collected efficiently.
• Tangible Fixed Asset Growth: The company has invested in tangible fixed assets, which increased from £11,712 to £21,645, potentially supporting operational capacity expansion.
• No Overdue Filings: The company is current with its statutory filings, demonstrating regulatory compliance and good governance on administrative matters.

4. Due Diligence Notes:

• Investigate the nature and terms of amounts owed to group undertakings to assess the sustainability and risks of related party financing.
• Review the company's cash flow projections and debtor collection efficiency to evaluate if working capital deficits can be managed or mitigated.
• Clarify the company's business model, contract pipeline, and profitability prospects to gauge operational sustainability given current financial stress.
• Confirm details of any contingent liabilities or off-balance sheet obligations related to leases or other commitments that may exacerbate liquidity pressures.
• Assess the parent company's financial strength and willingness to support the UK entity given the deficit in equity and net liabilities.