SOURCETHERMAL LTD

Executive Summary

Sourcethermal Ltd has demonstrated some financial improvement since inception, moving from negative equity to a modest positive net asset position. However, persistent negative net current assets and significant long-term liabilities highlight liquidity and solvency risks that warrant monitoring. The company’s small operational scale and sole director control emphasize the need for ongoing due diligence on cash flow and business prospects to assess sustainability.

SOURCETHERMAL LTD - Analysis Report

Company Number: SC733252

Analysis Date: 2025-07-20 14:11 UTC

1. Risk Rating: MEDIUM
   The company shows some improvement in net assets but continues to operate with net current liabilities, indicating potential liquidity constraints. Being a micro-entity with limited financial history and only one employee also reflects a modest operational scale which may increase vulnerability.

2. Key Concerns:

• Liquidity Risk: Negative net current assets (£-4,543) as of the latest year-end suggest the company may face challenges meeting short-term obligations without additional financing.
• Solvency Risk: Although net assets improved to £3,379 from a deficit, significant long-term creditors (£16,497) indicate ongoing liabilities that need careful management.
• Operational Scale: With only one employee and limited fixed assets, the company’s operational capacity and resource base appear minimal, possibly constraining growth and resilience.

3. Positive Indicators:

• Improved Net Asset Position: A turnaround from negative equity in prior years to positive shareholders' funds provides some evidence of financial strengthening.
• Compliance: No overdue filings for accounts or confirmation statements demonstrate adherence to regulatory requirements.
• Experienced Director: The sole director is a Chartered Engineer with full control, indicating clear leadership and technical expertise aligned with the company’s consultancy activities.

4. Due Diligence Notes:

• Review the nature and terms of the long-term creditors to understand repayment schedules and any potential refinancing risks.
• Assess cash flow statements (if available) to evaluate operational cash generation and the company’s ability to cover current liabilities.
• Investigate business pipeline and client base to appraise future revenue prospects given the small employee count.
• Confirm no undisclosed contingent liabilities or related party transactions that could impact financial stability.
• Verify the director’s plans or capital injection strategies to address liquidity shortfalls.