Risk Analysis: AIRPROTEKT LIMITED

1. Risk Rating: MEDIUM

Justification: While the company maintains positive net assets and adequate liquidity ratios, there is a persistent multi-year decline in shareholders' funds and cash reserves that warrants attention. The company remains solvent and appears to have parental financial support, but the downward trajectory in key financial metrics over the past five years suggests underlying operational challenges that require monitoring.

2. Key Concerns

i) Persistent Erosion of Shareholders' Funds

The P&L reserve has declined from £626,369 (2021) to £398,239 (2025), representing an accumulated deterioration of approximately £228,000 over four years. This strongly suggests the company has been generating consistent trading losses. Shareholders' funds have fallen from a peak of £718,247 (2020) to £405,383 – a 43.6% decline. This sustained erosion, if continued, will materially impair the company's financial resilience.

ii) Significant Cash Decline

Cash at bank has fallen from £772,543 (2019) to £336,861 (2025) – a 56.4% reduction over six years. While £336,861 remains a meaningful sum, the consistent year-on-year depletion (with only minor exceptions) raises questions about whether the business is generating sufficient operational cash flow to sustain itself without parental support or asset realisations.

iii) Substantial Stock Increase

Stocks have increased by 134% from £66,079 (2024) to £154,413 (2025). Given the declining revenue indicators (reduced trade debtors and cash), this inventory build-up may signal slow-moving or impaired stock rather than anticipated demand. Stocks now represent 27.5% of total assets, up from 10.4% the prior year, warranting scrutiny over valuation and obsolescence risk.

3. Positive Indicators

• Positive Net Assets: The company retains £405,383 in net assets, providing a meaningful buffer against short-term liabilities. The current ratio stands at approximately 3.58:1, indicating comfortable liquidity.

• Parental Financial Support: The interest-free loan from Xxxxxxxname shown to subscribers Metals Limited (£140,241) with no set repayment date provides financial flexibility. The reduction in this balance from £190,241 suggests the parent is not increasing its exposure and the company is reducing its dependency.

• Low Trade Creditor Position: Trade creditors of just £1,055 suggest the company is meeting its supplier obligations promptly, with no evidence of payment stress.

• Regulatory Compliance: Accounts and confirmation statements are filed on time with no overdue items. The company has maintained a 30-year track record since incorporation in 1994.

• Minimal External Debt: There are no bank borrowings or third-party debt instruments visible in the accounts, limiting financial leverage risk.

4. Due Diligence Notes

a) Profitability Assessment

The accounts filed under the small companies regime do not include a profit and loss account. The declining P&L reserve strongly indicates accumulated losses, but the magnitude and causes of annual trading results should be investigated directly with management. Understanding whether losses stem from operational issues, one-off write-downs, or strategic decisions is essential.

b) Stock Composition and Valuation

The 134% increase in stocks requires investigation. Specifically: the composition of stock (raw materials vs. finished goods), ageing profile, whether provisions for obsolescence are adequate, and whether this represents anticipated future contracts or impaired inventory.

c) Related Party Relationships and Group Structure

The company is a subsidiary of Xxxxxxxname shown to subscribers Metals Limited, with ultimate control by R S Xxxxxxxname shown to subscribers. The relationship with NoxProtekt Limited (subsidiary) and the nature of inter-company transactions should be understood. Specifically: whether Airprotekt is being managed as a going concern or is in managed run-off, and the parent's strategic intentions.

d) Trade Debtors Decline

Trade debtors fell from £188,420 to £58,979 – a 68.7% reduction. This could indicate improved collections, reduced sales, or a shift in business mix. Correlating this with revenue trends would clarify whether the business is contracting.

e) Business Activity Verification

The SIC code (38110 – Collection of non-hazardous waste) combined with only 2 employees and the company's name (Airprotekt, suggesting air purification/environmental technology) raises questions about the accuracy of the classification or the nature of current operations. Clarification of the actual trading activity is recommended.

f) Tangible Fixed Assets

The company holds no net tangible fixed assets (plant and machinery is fully depreciated). This may limit operational capability and suggests the company may be asset-light by design or has ceased capital investment.

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