WORK ON WATER LIMITED

Risk Rating: MEDIUM
Justification: While the company demonstrates a stable net asset position and healthy current ratio on paper, there is a significant concentration of current assets within debtors, coupled with very low cash reserves. The historical decline in net assets from £360k in 2020 to £131k in 2025, alongside a reduction in headcount, raises questions about the sustainability of current operational levels without relying heavily on the timely collection of outstanding debts.

Key Concerns: * Debtor Concentration and Liquidity Risk: Current assets stand at £165,393, but £155,816 (approximately 94%) is tied up in debtors. Cash at bank is only £8,852. This extreme imbalance means the company's ability to meet its near-term liabilities (£56,456) is almost entirely dependent on the collectability of these debts. If a significant portion of the debtors' book is ageing, disputed, or related to a single customer, cash flow could quickly become strained. * Historical Erosion of Net Assets: Net assets have fallen substantially from £360,548 in 2020 to £131,363 in 2025. Because the company files abridged accounts, the profit and loss account is not visible, making it impossible to determine whether this erosion is due to sustained trading losses, significant asset write-downs, or large dividend extractions by the shareholders. * Operational Contraction and Asset Ageing: The average monthly employee count dropped from 2 to 1 in the latest period. Furthermore, the tangible assets—specifically the boats (£55,824 original cost) and hire equipment (£20,000 original cost)—are heavily depreciated, with net book values of just £1,157 and £141 respectively. This suggests the asset base may be nearing the end of its useful life, potentially requiring capital expenditure to sustain the "sale and hire of jetty systems" business.

Positive Indicators: * Regulatory Compliance: The company is fully up to date with its filing obligations at Companies House. Accounts made up to 31 March 2025 were filed on 18 December 2025, and the confirmation statement is not overdue, indicating good administrative governance. * Positive Working Capital: Despite the debtor concentration, the current ratio is approximately 2.9 (Current Assets £165,393 / Current Liabilities £56,456). If the debtors are fully recoverable, the company has a comfortable margin to meet its short-term obligations. * Stabilisation of Net Assets: Although net assets have dropped significantly from their 2020 peak, they have plateaued over the last three years (£130,790 in 2023, £132,607 in 2024, and £131,363 in 2025), suggesting the period of rapid decline has potentially halted.

Due Diligence Notes: * Debtor Profile: It is critical to investigate the composition of the £155,816 debtor balance. An analyst should request an aged debtor report to check for overdue invoices and assess whether any debts are related to the director or the Person with Significant Control (PSC). * SIC Code Discrepancy: The registered SIC code is 47791 ("Retail sale of antiques including antique books in stores"), but the director's report in the filed accounts states the principal activity is "the sale and hire of jetty systems." The company's previous name was "Stormforce Marine Limited". An investor should clarify the actual trading activity and consider whether the SIC code requires updating at the next confirmation statement. * Related Party Relationships: The sole director is Julian Whyte, but the PSC owning over 75% of shares and voting rights is Miss Georgina Carley. It should be established whether there are related party transactions or outstanding loans between the company and these individuals, which could explain the high debtor balance or the historical decline in net assets. * Capital Expenditure Plans: Given the heavily depreciated state of the hire equipment and boats, it would be prudent to inquire about the company's CapEx strategy and whether management intends to replace these critical assets in the near term, which would require significant cash outflow.