ZAPKAM LIMITED
Company number 06239798 · Monitor this company
This analysis was written by an AI from the company's public filings. It may contain errors or omissions and is not financial or professional advice.
CREDIT ANALYSIS: ZAPKAM LIMITED
1. Credit Opinion: CONDITIONAL — with significant reservations
The credit opinion is CONDITIONAL with a strong leaning toward decline for any unsecured exposure. Zapkam Limited presents material credit concerns driven by severely eroded net worth, persistent negative working capital, and rapidly escalating liabilities. The company's balance sheet has deteriorated dramatically over the past five years, with net assets falling 98.6% from a peak of £186,059 (2020) to just £2,621 (2025). While the cash position has improved, the overall financial structure is fundamentally weak, and the company is technically insolvent on a current liabilities basis. Any credit facility would require robust security, personal guarantees from Mr Pedrick, and restrictive covenants.
2. Financial Strength: CRITICAL CONCERN
Balance Sheet Deterioration
The trajectory of net assets over the review period is deeply concerning:
| Year | Net Assets | Change | Cash |
|---|---|---|---|
| 2020 | £186,059 | — | £103,222 |
| 2021 | £137,196 | -26.3% | £81,293 |
| 2022 | £6,607 | -95.2% | £103,038 |
| 2023 | £19,214 | +190.8% | £132,544 |
| 2024 | £1,857 | -90.3% | £69,180 |
| 2025 | £2,621 | +41.1% | £214,928 |
The near-total erosion of equity—from £186,059 to £2,621—signals either sustained trading losses, dividend extractions, or liability accumulation that has consumed virtually all shareholder value. The share capital remains at just £1, meaning there is no capital buffer whatsoever.
Liability Growth
Total liabilities have surged from £50,000 (2020) to £328,498 (2025)—a more than sixfold increase. Current liabilities of £328,498 now dwarf current assets of £223,393, producing net current liabilities of £(105,105). This is a structurally weak position for any creditor.
Asset Composition Concern
While tangible fixed assets have increased from £70,349 to £164,619, the nature and realisable value of these assets is unclear. The company holds only £1,000 in stock and £7,465 in debtors—meaning current assets are overwhelmingly cash-dependent (£214,928 of £223,393). If cash is restricted or earmarked, liquidity evaporates almost entirely.
Provisions
Provisions for liabilities have increased from £5,801 to £29,771. The nature of these provisions is not disclosed in the abbreviated accounts, but the fivefold increase warrants investigation—this could relate to warranty claims, litigation, or other obligations.
3. Cash Flow Assessment: CAUTIOUS
Liquidity Position
The current ratio stands at approximately 0.68x (£223,393 ÷ £328,498), well below the 1.0x threshold typically required for credit comfort. The quick ratio (excluding stock) is marginally better at 0.68x, but this still indicates the company cannot cover short-term obligations from liquid assets.
Working Capital Deficit
The working capital deficit of £105,105 means the company is reliant on ongoing cash generation, creditor forbearance, or additional funding to meet obligations as they fall due. This is a classic indicator of financial distress.
Cash Movements
The cash balance of £214,928 appears healthy on the surface, but context is critical: - Cash increased from £69,180 to £214,928 (a £145,748 increase) - However, debtors fell from £44,470 to £7,465 (a £37,005 decrease) - This may indicate improved collections—or it could suggest revenue contraction with customers paying down balances
Without the profit and loss account (which the director has elected not to file), we cannot determine whether the cash improvement is operational or structural.
Creditor Payment Risk
With current liabilities of £328,498 and the company's reliance on maintaining its cash position, any disruption to trade or cash flow could create an immediate solvency crisis. The company's ability to service new debt obligations is questionable given the existing liability burden.
4. Monitoring Points
| Metric | Current Position | Target/Concern Threshold |
|---|---|---|
| Net Assets | £2,621 | Must remain positive; any loss creates negative equity |
| Current Ratio | 0.68x | Minimum 1.0x for credit comfort |
| Net Current Liabilities | (£105,105) | Must move toward positive working capital |
| Cash | £214,928 | Monitor for depletion below £100,000 |
| Total Liabilities | £328,498 | Track trajectory; any acceleration is a red flag |
| Provisions | £29,771 | Investigate nature; further increases are concerning |
Additional Monitoring Requirements:
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Full P&L Disclosure: Request complete profit and loss accounts to understand trading profitability. The current filing exemption prevents visibility into whether the business is operationally viable.
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Nature of Current Liabilities: Breakdown required—how much relates to trade creditors, HMRC, director loans, or other obligations? The composition significantly affects risk assessment.
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Related Party Transactions: White Cat Investments Limited (the 75%+ PSC) may have inter-company balances. These need identification and assessment for recoverability.
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Cash Quality: Confirm whether the £214,928 cash balance is unrestricted and available for operational use, or whether it includes customer deposits, restricted funds, or other encumbrances.
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Asset Realisability: Obtain details of the £164,619 in tangible fixed assets to assess realisable value and whether they could provide security.
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Director Remuneration: Investigate whether the equity erosion is partially attributable to director remuneration or dividends rather than trading losses.
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Provisions Detail: The increase from £5,801 to £29,771 requires explanation—potential contingent liabilities could materialise.
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Trade Creditor Ageing: Understand payment terms and whether the company is experiencing creditor pressure or stretching payments.
Additional Risk Factors
Key-Person Dependency: Mr W Pedrick is the sole director. His incapacity would create immediate governance and operational risk.
Minimal Share Capital: £1 share capital provides no meaningful equity cushion and suggests limited commitment of personal capital.
Unaudited Accounts: The financial statements are unaudited and prepared under the small companies regime, reducing assurance on their accuracy.
No P&L Visibility: The director has elected not to include the profit and loss account, which is a significant transparency concern for creditors.
Industry Risk: The company operates in custom sports kit manufacturing and retail—a sector vulnerable to discretionary consumer spending and economic cycles.