Company Number: SC677660

Analysis Date: 2025-07-20 19:04 UTC

1. Risk Rating: HIGH
   The company exhibits significant solvency and liquidity risks given its large and growing net current liability position, reliance on related party loans, and negative working capital despite substantial investment property assets.

2. Key Concerns:

• Severe Negative Net Current Assets: Net current liabilities have more than doubled from £1.8m in 2022 to £4.25m in 2023, indicating acute short-term liquidity stress. Current liabilities are dominated by amounts owed to related parties (£4.03m).
• Related Party Debt Exposure: Over 94% of current liabilities are amounts owed to related parties, interest-free and repayable on demand, which creates a significant dependency risk and potential for sudden calls on liquidity.
• Declining Net Assets and Equity: Shareholders’ funds have decreased from £743k in 2022 to £264k in 2023, indicating erosion of equity buffers and potential financial deterioration.

3. Positive Indicators:

• Stable Investment Property Valuation: The company holds investment property valued consistently at £4.6m, which forms the bulk of its assets and could provide collateral or liquidity if realizable.
• No Overdue Filings: The company is compliant with filing deadlines for accounts and confirmation statements, reflecting good regulatory adherence.
• Going Concern Statement: Directors assert going concern status based on expected financial performance and cash flows, indicating management confidence in navigating current challenges.

4. Due Diligence Notes:

• Verify the terms, conditions, and enforceability of related party loans, including any written agreements or repayment plans.
• Assess the actual liquidity position beyond balance sheet figures, including cash flow forecasts and potential for asset monetization.
• Evaluate the sensitivity of investment property valuations to market conditions and any encumbrances, especially given the floating charge and specific charge held by Santander.
• Review management and board minutes regarding financial strategy to address negative working capital and equity decline.
• Investigate the relationship and financial position of the ultimate parent company (Neviswave Limited) and the controlling party for potential support or risk transmission.