Company Number: 12401572

Analysis Date: 2025-07-29 15:50 UTC

1. Risk Rating: HIGH
   Justification: The company exhibits significant negative working capital (net current liabilities exceeding £177k) and consistently large current liabilities relative to current assets. The large loan balance (£493k) due after one year, combined with minimal liquid assets (cash and debtors total approximately £20.5k), raises substantial concerns about the company's ability to meet short-term obligations without refinancing or asset disposals.

2. Key Concerns:

• Liquidity Shortfall: Repeated negative net current assets indicate ongoing cash flow stress, with current liabilities (~£197k) vastly outweighing cash and receivables (~£20.5k). This mismatch could lead to difficulties in meeting immediate financial commitments.
• High Leverage: The company carries substantial long-term debt (£493k), which, despite being due after one year, represents a significant financial burden relative to shareholders’ funds (~£13.5k). This high leverage amplifies insolvency risk if earnings or asset values deteriorate.
• Small Equity Base: Shareholders’ funds remain very low and just marginally positive, indicating limited buffer to absorb losses or adverse financial shocks. The company’s retained earnings have grown but remain minimal relative to liabilities.

3. Positive Indicators:

• Asset Base Stability: The company owns tangible fixed assets (land and buildings) valued at £683,863 with no depreciation change year-over-year, indicating asset stability and potential collateral value.
• Compliance with Filings: Accounts and confirmation statements are up to date with no overdue filings, suggesting sound regulatory compliance and good governance in administrative matters.
• Active Directors and Clear Ownership: There are two active directors with disclosed significant control, providing transparency on control and management structure.

4. Due Diligence Notes:

• Cash Flow Analysis: Review detailed cash flow statements and bank statements to assess operational cash generation and the adequacy of liquidity management.
• Debt Terms and Covenants: Investigate the nature, covenants, and repayment terms of the £493k bank loan, including any refinancing plans or security arrangements against the tangible assets.
• Valuation and Marketability of Fixed Assets: Confirm current market value, encumbrances, and liquidity of the property assets held to understand their realisable value under distress scenarios.
• Profitability and Revenue Streams: Obtain the income statement and management accounts to evaluate operational sustainability and profit margins, absent from the current filing.
• Director Background Checks: Verify the conduct and creditworthiness of directors, given the company’s financial stress and to identify any potential governance risks.