TRACE PROJECTS LIMITED

Executive Summary

Trace Projects Limited exhibits weak financial health characterized by negative net assets and working capital deficits, along with minimal cash reserves. The company’s deteriorating financial position and poor liquidity profile indicate a high risk of default, leading to a credit decline recommendation. Close monitoring of liquidity and any external support is essential if credit reconsideration is contemplated.

TRACE PROJECTS LIMITED - Analysis Report

Company Number: 13525329

Analysis Date: 2025-07-20 14:10 UTC

1. Credit Opinion: DECLINE
   Trace Projects Limited demonstrates weak financial health with persistent negative net assets and net current liabilities over the last three years. The company has minimal cash reserves (£17 at year-end 2024) and current liabilities significantly exceeding current assets, indicating poor liquidity and an inability to cover short-term obligations reliably. As a private company limited by guarantee with no share capital, it relies heavily on the directors or members for support and lacks equity buffer. The company’s financial trajectory shows deterioration from a net asset deficit of £277 in 2021 to £2,941 in 2024. Given the negative equity position, negative working capital, and absence of significant cash flow, the risk of default on any credit facility is high. There is no evidence of business growth or improved financial management; thus, credit facilities should not be approved without substantial mitigating factors or guarantees.

2. Financial Strength:
   The balance sheet reveals a consistent and worsening deficit in net assets (from -£277 in 2021 to -£2,941 in 2024). Current liabilities remain high relative to current assets, resulting in negative net current assets (working capital) of -£2,941 in 2024. The company’s cash position has almost depleted from £9,901 in 2021 to just £17 in 2024, undermining liquidity. The absence of fixed assets and reliance on current asset cash balances suggest limited collateral value. Shareholders’ funds are negative, reflecting accumulated losses and no retained profits to support operations or absorb losses. Overall, the financial strength is poor, with weak solvency and balance sheet erosion.

3. Cash Flow Assessment:
   The company’s cash flow position is extremely weak, with cash on hand effectively nil at £17. Negative net current assets indicate that short-term liabilities cannot be met by current assets, resulting in working capital deficiency. This suggests a high risk of liquidity stress and potential difficulties in meeting immediate payables or funding operations without external support. The absence of positive cash flow generation or improved liquidity metrics over recent years signals ongoing cash management challenges.

4. Monitoring Points:

• Monitor changes in cash reserves and working capital position closely to detect any improvement or further deterioration.
• Watch for any material changes in liabilities or creditor terms that could affect liquidity.
• Review any incoming funding or guarantees from members or directors to support operations.
• Keep track of company filings for timely submission and any indications of financial restructuring or distress.
• Observe turnover trends and contract acquisition to assess potential for revenue growth and cash inflows.