Company Number: 14837809

Analysis Date: 2025-07-29 16:03 UTC

1. Risk Rating: MEDIUM
   Windsong Ltd is a recently incorporated company (May 2023) engaged in building project development with a modest net current asset position and positive shareholder equity. However, significant current liabilities relative to current assets, minimal cash holdings, and accumulated losses reduce its immediate financial robustness, warranting a medium risk rating.

2. Key Concerns:

• Liquidity Risk: The company holds only £929 in cash against current liabilities of approximately £1.94 million, relying heavily on inventory (stocks) and debtor collections to meet short-term obligations. This poses a cash flow risk if stock sales or debtor payments are delayed.
• Accumulated Losses: The profit and loss reserves are negative (£205,436), indicating the company has incurred losses since inception, which may impact its ability to sustain operations without additional funding.
• Concentration of Control: A single corporate entity, Hybrid Living Ltd, controls 75-100% of shares and voting rights, which could present governance risks and limit minority protections.

3. Positive Indicators:

• Shareholder Funds: Despite losses, the company maintains positive total equity of £134,565, reflecting capital injection (£340,001 share capital) that supports solvency.
• No Overdue Filings: The company is current with its statutory accounts and confirmation statement submissions, indicating compliance with regulatory filing obligations.
• Industry Activity: Operating in building project development (SIC 41100) with substantial stocks (£1.92 million) suggests active business operations with tangible assets in inventory.

4. Due Diligence Notes:

• Investigate the nature and liquidity of the stock balance to assess how quickly it can be converted to cash and at what margin, considering potential impairments.
• Review the composition and aging of debtors (£153,369) to evaluate collectability risks.
• Clarify the terms and servicing requirements of the bank loan (£1.68 million), including interest rates, maturities, and covenants.
• Understand the relationship and transactions between Windsong Ltd and its parent company Hybrid Living Ltd, particularly any financial support or guarantees in place.
• Explore the business plan and future funding strategies to determine how the company intends to address accumulated losses and liquidity needs.