SL2 NETHERHALL LTD

Executive Summary

SL2 Netherhall Ltd exhibits a weak financial position characterized by negative net assets and escalating long-term debt, raising significant solvency and liquidity risks. While current asset growth and timely statutory compliance are positive signs, the company requires close scrutiny of its debt structure and operational viability. Investors should proceed cautiously, focusing due diligence on cash flow sustainability and debt obligations.

SL2 NETHERHALL LTD - Analysis Report

Company Number: 13889038

Analysis Date: 2025-07-20 19:06 UTC

1. Risk Rating: HIGH
   The company’s financial position shows net liabilities and substantial long-term loans relative to its small equity base, indicating elevated solvency risk.

2. Key Concerns:

• Negative Net Assets: The company reported net liabilities of £21,688 at the 2024 year-end, worsening from negative equity of £10,046 the prior year. This signals accumulated losses and erosion of shareholder funds.
• High Long-term Debt: Loans due after more than one year increased markedly from £100,000 to £400,000 within a year, creating potential solvency pressure and interest burden.
• Low Cash Reserves: Despite increased current assets (primarily work in progress), cash on hand declined from £19,272 to £12,002, raising liquidity concerns given current liabilities and debt obligations.

3. Positive Indicators:

• Growing Current Assets: Current assets rose significantly to £399,234 driven by work in progress, suggesting ongoing operational activity and potential revenue recognition.
• No Overdue Filings: The company is up to date with statutory accounts and confirmation statement filings, indicating regulatory compliance and governance discipline.
• Experienced Directors: The board comprises professionals including a solicitor and property developer, which may support sound management and strategic oversight.

4. Due Diligence Notes:

• Clarify the nature and terms of the £400,000 long-term loan, including interest rates, repayment schedule, and lender identity.
• Examine work in progress valuation policies and contract backlog to assess realism of current assets and revenue prospects.
• Review cash flow statements and projections to evaluate liquidity management and short-term payment capacity.
• Investigate the causes of accumulated losses and whether there is a viable plan to restore profitability and equity.
• Confirm no director disqualifications or legal issues affecting governance and operational stability.