Company Number: SC741862

Analysis Date: 2025-07-20 17:15 UTC

1. Risk Rating: HIGH

Justification: The company exhibits significant liquidity risk due to substantial current liabilities exceeding current assets by over £1.2 million as of the latest financial year end. Additionally, the heavy reliance on bank loans and amounts owed to group undertakings, combined with negative working capital, raises concerns about its ability to meet short-term obligations. Although net assets remain positive, a marked decline from the prior year and accumulated losses reflected in profit and loss reserves further underline solvency challenges for this relatively young company.

2. Key Concerns:

• Liquidity Deficit: Negative net current assets of £1,227,731 in 2024 indicate cash flow strain and potential inability to cover near-term liabilities.
• High Borrowings: Total loans of £573,750 secured by fixed and floating charges, plus over £1 million owed to group undertakings, represent leverage risks and dependency on related party funding.
• Declining Net Assets & Loss Reserves: Net assets dropped from £315,759 in 2023 to £208,815 in 2024 while accumulated losses increased, signaling operational losses and erosion of equity.

3. Positive Indicators:

• Compliance with Filings: No overdue accounts or confirmation statements, demonstrating regulatory adherence to filing deadlines.
• Small Company Reporting: Utilizes exemption from audit under small companies regime, consistent with its scale and reporting category.
• Active Operations: The company is active with a stable director appointment and engaged in telecommunications activities, a sector with growth potential.

4. Due Diligence Notes:

• Review cash flow statements and profit & loss details (currently not included) to assess operational cash generation capacity and profitability trends.
• Investigate the nature and terms of loans from group undertakings and bank loans, including repayment schedules, interest rates, and security arrangements.
• Examine impairment assessments of fixed asset investments (£1.87 million) to confirm valuation and potential risk of write-downs.
• Assess any contingent liabilities or off-balance sheet obligations that may impact financial stability.
• Confirm director and shareholder governance practices, especially considering the major control by Mr Stuart Leslie.