WRIGHT SHEET METAL LTD

Executive Summary

Wright Sheet Metal Ltd is currently facing high financial risk due to persistently negative net assets, significant liquidity shortfalls, and increased long-term debt. While the company remains compliant with filing requirements and shows minor operational profitability, the negative working capital and dividend distributions amid losses raise material concerns regarding its ability to meet obligations and sustain operations without corrective measures.

WRIGHT SHEET METAL LTD - Analysis Report

Company Number: 13888212

Analysis Date: 2025-07-20 16:48 UTC

1. Risk Rating: HIGH
   The company exhibits significant solvency and liquidity risks, with net liabilities, substantial current liabilities exceeding current assets, and recurring negative net current assets. The presence of long-term creditors further exacerbates financial strain.

2. Key Concerns:

• Negative net assets worsening from -£40,656 (2023) to -£184,169 (2024), reflecting accumulated losses and eroded shareholder equity.
• Current liabilities (£695k) substantially exceed current assets (£322k), resulting in a large negative working capital position (-£372k), indicating liquidity stress and potential difficulties meeting short-term obligations.
• Introduction of £129k non-current creditors in 2024, suggesting reliance on longer-term debt financing which may increase financial risk if operating cash flows are insufficient to service debt.

3. Positive Indicators:

• The company maintains a reasonable cash balance (£238k) relative to its current assets, indicating some liquid resources to meet immediate demands.
• Directors have complied with filing obligations on time with no overdue accounts or confirmation statements, implying satisfactory regulatory compliance and governance in administrative matters.
• The business is still generating a small profit in the latest period (£1,487), indicating some operational ability to generate income despite losses overall.

4. Due Diligence Notes:

• Investigate the nature and terms of the £129k long-term creditor balance to understand repayment obligations and covenants.
• Review detailed cash flow statements and budgets to assess the company’s ability to meet ongoing working capital needs and debt servicing.
• Examine reasons for the large dividends declared (£291k in 2023 and £145k in 2024) despite negative equity and losses, as this may reflect distributions beyond sustainable levels that weaken financial stability.
• Consider the relationship and financial arrangements with associated investments (£342k) shown on the balance sheet, including the impact on overall financial health.
• Evaluate the directors’ plans or strategies to restore profitability and improve balance sheet strength given current financial challenges.