TREADSTONE SECURITY SERVICES LIMITED

Risk Rating: MEDIUM Justification: While the company remains solvent with a strong net current asset position and reduced liabilities in the latest period, there are notable concerns regarding a significant recent contraction in the balance sheet, an overdue confirmation statement, and a lack of financial transparency due to micro-entity filing exemptions. The concentration of power in a single director/PSC also elevates operational risk.

Key Concerns: * Significant Contraction in Net Assets: The company experienced a material decline in its financial position over the last two years. Net assets fell from a peak of £214,969 in 2022 to £132,138 in 2024—a drop of approximately 38%. Current assets alone dropped by £61,243 (from £211,564 to £150,321) in the most recent year. Without a profit and loss account, it is impossible to determine whether this contraction is due to trading losses or deliberate dividend extraction by the owner, but the scale of the decline warrants scrutiny. * Compliance and Administrative Lapse: The company's Confirmation Statement is currently marked as overdue. While this may appear minor, failure to maintain basic statutory filings can result in Companies House penalties, ultimately risking the company being struck off the register. It also raises questions regarding the internal governance and administrative discipline of the sole director. * Financial Opacity and Key-Person Dependency: The company files as a micro-entity, utilizing the minimal disclosure regime. Combined with the fact that there is only one director (Steven Damien Bone) who also holds more than 75% of the shares, there is a high concentration of control and a distinct lack of independent oversight or financial transparency.

Positive Indicators: * Solid Short-Term Liquidity: Despite the recent decline in assets, the company's liquidity position appears reasonably healthy. As of November 2024, net current assets stood at £130,107, comfortably covering current liabilities of £20,214. * Decreasing Liabilities: Total liabilities have decreased consistently over the past three years, dropping from £46,014 in 2022 to £20,214 in 2024. This indicates the company is actively de-leveraging and is not taking on unsustainable short-term debts. * Longevity and Operational Stability: Incorporated in 2007, the business has operated for over 17 years, demonstrating a long-term ability to survive market cycles. The recent increase in average employee count from 3 to 4 also suggests the core business is still actively functioning and slightly expanding its workforce.

Due Diligence Notes: * Investigate the Decline in Net Assets: It is crucial to request internal management accounts or bank statements to determine the root cause of the £45k drop in net assets during the latest financial year. An analyst must establish whether the company is experiencing declining profitability or if the director is extracting accumulated profits as dividends. * Clarify Overdue Confirmation Statement: Directly inquire with management regarding the overdue Confirmation Statement. Ensure that the necessary filing is completed promptly to mitigate the risk of administrative dissolution by the Registrar. * Composition of Current Assets: The filed accounts do not provide a breakdown of current assets. It is recommended to ascertain how much of the £150,321 is held as cash versus trade debtors. In the private security sector, high trade debtors could indicate slow-paying clients, which could quickly translate into cash flow pressures. * Key-Person Risk: Given that Mr. Bone is the sole director and PSC, due diligence should include an assessment of succession planning or key-person insurance, as the entire operational and governance structure relies on a single individual.