STAR INDUSTRIAL TOOLS LIMITED
Company number 00711361 · Monitor this company
This analysis was written by an AI from the company's public filings. It may contain errors or omissions and is not financial or professional advice.
Risk Assessment: STAR INDUSTRIAL TOOLS LIMITED
1. Risk Rating: HIGH
The company is technically insolvent with net liabilities of £52,358 and shareholders' funds of £-62,358 as at 31 December 2024. Net current liabilities of £41,978 indicate an immediate liquidity crisis, and the going concern basis is explicitly conditional on continued creditor support. The financial trajectory over the past three years shows a severe and accelerating deterioration.
2. Key Concerns
a) Technical Insolvency and Going Concern Dependency Net assets have moved from a positive £1,151 in 2023 to negative £52,358 in 2024. The accumulated P&L deficit now stands at £62,358. Critically, the accounts explicitly state that the going concern basis is "dependent upon the continued support of the company's creditors." This conditional language is a significant red flag — if creditor support is withdrawn, the company would be unable to continue as a going concern.
b) Severe Liquidity Crisis Current liabilities (£165,497) substantially exceed current assets (£123,519), resulting in net current liabilities of £41,978. Cash has collapsed from £101,201 in 2021 to just £2,064 in 2024 — insufficient to meet even near-term obligations. Trade creditors (£23,088), other taxes/social security (£28,008), and bank overdrafts (£14,560) create immediate payment pressures that cash holdings cannot service.
c) Unexplained Surge in Other Creditors "Other creditors" within one year increased dramatically from £47,519 to £99,841 — a rise of approximately £52,322. This single category now represents 60% of current liabilities and requires urgent clarification. This could indicate reclassification of long-term debt to current, director loans, or related-party obligations being called in.
3. Positive Indicators
- Long Corporate History: Incorporated in 1961, the company has survived multiple economic cycles, suggesting operational resilience and stakeholder relationships that may facilitate ongoing creditor support.
- Filing Compliance: Accounts and confirmation statements are filed on time with no overdue status, indicating administrative discipline and regulatory compliance.
- Tangible Asset Base: The company holds £71,072 in tangible fixed assets, including freehold land (£21,369 at cost, not depreciated) and plant & machinery (£49,703 net book value). This provides potential collateral or realisation value.
- Trade Debtors: £78,634 in trade debtors (up from £62,015) represents a potential cash conversion opportunity, though collectability must be verified.
- Active Operations: The company continues to operate with 7 employees and maintains manufacturing operations (SIC 28490).
4. Due Diligence Notes
| Item | Investigation Required |
|---|---|
| Other creditors composition | Request full breakdown of the £99,841 other creditors due within one year. Determine how much represents director loans, related-party balances, or reclassified long-term debt. |
| Creditor support commitments | Obtain written confirmation from key creditors (particularly "other creditors") regarding their intention to continue supporting the company and not demand repayment. |
| Trade debtor quality | Assess age analysis and recoverability of the £78,634 trade debtors. Significant deterioration in cash alongside rising debtors may indicate collection issues. |
| Stock realisability | Stocks decreased from £67,025 to £37,500. Verify whether this reflects genuine sales or write-downs, and assess whether remaining stock is saleable at book value. |
| Long-term creditor profile | Other creditors after one year (£45,670) decreased from £63,760. Clarify terms, security, and whether any acceleration clauses exist that could push more debt current. |
| Secured borrowings | Bank borrowings are secured by a charge over book debts. Understand the facility terms, covenant compliance, and whether the bank is supportive. |
| Director remuneration and loans | Determine whether directors are drawing income and whether director loans feature in the "other creditors" categories. |
| Provisions | £9,450 in provisions (down from £10,500) — clarify nature and expected timing of outflows. |
| 2024 trading performance | The P&L account is not delivered to the Registrar. Request full profit and loss information to understand the scale of the 2024 loss that drove the £53,509 deterioration in retained reserves. |