Investment Risk Analysis: S.T.E.E.R - THE ENTERPRISE ACADEMY (08440792)

1. Risk Rating: HIGH

Justification: The company has moved from a solvent position (£23,626 net assets in 2024) to a significantly insolvent position (-£48,208 net assets in 2025), representing a deterioration of approximately £71,834 in a single year. Current liabilities now exceed current assets by £73,894, creating severe solvency and liquidity concerns. As a company limited by guarantee with no share capital, the entity has limited options to raise equity finance to address this deficit.

2. Key Concerns

Concern 1: Severe Insolvency Risk

The company's net assets have swung from +£23,626 (March 2024) to -£48,208 (March 2025). Total liabilities (£93,120) now exceed total assets (£44,912) by a substantial margin. Under the Companies Act 2006, directors of an insolvent company must consider whether the company can continue trading, and failure to do so may constitute wrongful trading. The magnitude and speed of this deterioration raises questions about whether appropriate corrective actions are being taken.

Concern 2: Critical Liquidity Position

Current assets have nearly halved (from £36,086 to £19,226) while current liabilities have more than doubled (from £43,733 to £93,120). Net current liabilities of £73,894 mean the company has minimal short-term liquidity to meet obligations. This pattern—declining liquid resources against rapidly increasing near-term creditors—is a classic distress signal. The company appears unable to service its trade creditors and other short-term obligations from its existing resource base.

Concern 3: Significant Workforce Reduction

Employee headcount dropped from 20 to 13 (a 35% reduction) between 2024 and 2025. While this may reflect cost-cutting measures, it could equally indicate contract losses, funding withdrawal, or operational contraction. For an educational support services provider, workforce reduction typically signals reduced service delivery capacity and may impair future revenue generation.

3. Positive Indicators

• Filing Compliance: Accounts and confirmation statements are filed on time with no overdue status, suggesting the directors remain engaged with statutory obligations.

• Operational Longevity: The company has been active since 2013, demonstrating over a decade of operational history and suggesting some resilience or stakeholder support through prior periods.

• Historical Solvency: The company maintained positive net assets from 2017 through 2024, indicating the current insolvency is a recent development rather than a chronic condition. Prior to 2025, the trajectory was generally improving (net assets grew from £261 in 2017 to £23,626 in 2024).

• Governance Structure: Seven officers (including both directors and a secretary) suggest a broader governance framework than many micro-entities, potentially providing oversight capacity.

4. Due Diligence Notes

Urgent Investigation Items:

a) Going Concern Basis: The accounts contain no explicit going concern statement or directors' assessment of the company's ability to continue trading. Given the insolvent balance sheet, clarification is needed on whether the company can meet its debts as they fall due, and whether any external financial support (director loans, guarantees, or funding commitments) underpins continued operations.

b) Nature of Liabilities: The £93,120 in current liabilities requires detailed examination. Specifically: - Are these trade creditors, accrued costs, or related-party loans? - Is there any long-term debt reclassified as current? - Are there any contingent liabilities not reflected on the balance sheet?

c) Revenue and Loss Analysis: The profit and loss account has not been filed (as permitted under the micro-entity regime). Understanding the scale of the operating loss that generated the £71,834 net asset deterioration is essential. Key questions include whether this reflects a one-off write-down or ongoing trading losses.

d) Funding and Contract Status: Given the SIC code (85600 – Educational support services), the company likely depends on grants, contracts, or commissioning income. Investigation is needed into: - Whether any major funding stream has been lost or reduced - The status of current contracts and pipeline - Dependency on any single funding source

e) Related Party Transactions: With seven officers and a company limited by guarantee, related-party lending or guarantees may be material. The accounts provide no disclosure on this matter.

f) People with Significant Control: The PSC register shows only a generic statement rather than named individuals. This may indicate non-compliance with PSC notification requirements, or that the company is still determining its PSCs. Clarification is required.

g) Registered Office: The registered address (Tondu House Farm) appears residential/agricultural. This may indicate a home-based operation, which is not unusual for micro-entities but warrants understanding of the operational setup.