Company Number: 14739505

Analysis Date: 2025-07-29 13:04 UTC

1. Risk Rating: MEDIUM

Justification: SPJ CLIMBING TWO LIMITED shows an improving financial position with positive net assets reported for the year ending March 2025, reversing a prior negative equity position. However, the company has significant long-term liabilities including a substantial director’s loan account, and the business is relatively young (incorporated 2023), which poses operational and financial risks. The current ratio and net current assets position are healthy, but ongoing liquidity and solvency depend on continued profitability and repayment of debt.

2. Key Concerns:

• High level of director’s loan (£310k+), representing a significant reliance on related party funding that may impact financial flexibility.
• Past negative equity as recently as March 2024 indicates prior solvency issues; although resolved, this history signals potential volatility.
• Relatively large long-term bank loans (£115k) combined with short-term liabilities necessitate robust cash flow management.

3. Positive Indicators:

• Strong turnaround from negative net assets (-£32k) in 2024 to positive net assets (£224k) in 2025, reflecting profitability (£256k profit for the year).
• Healthy cash reserves (£212k) and strong net current assets (£185k) as of March 2025 support liquidity.
• Business operates in the sports facilities sector (SIC 93110), a potentially stable market with recurring customer base.
• No overdue filings; company remains compliant with statutory requirements.

4. Due Diligence Notes:

• Review detailed terms and repayment schedule of director’s loan and bank loans to assess refinancing or repayment risks.
• Analyze cash flow statements and profit & loss accounts (not filed) to verify sustainability of profitability and underlying revenue streams.
• Investigate customer concentration and contract stability in the sports facilities sector.
• Confirm absence of litigation or contingent liabilities that could affect solvency.
• Evaluate management plans for future capital expenditure and working capital needs given recent asset additions.