ECOLUTIA SERVICES LTD — Investment Risk Assessment

Company No. 06812607 | Active | Incorporated 2009 | SIC 36000 (Water collection, treatment and supply)

1. Risk Rating: MEDIUM

The most recent financial data available for review (FY2015) shows a company with a strengthening balance sheet, positive working capital, and a consistent record of retained profits. However, the detailed financials supplied are approximately ten years old — while registry data indicates accounts to 31 December 2025 have been filed, those figures are not available here. Combined with historically material leverage and full ownership by a foreign parent, the absence of current financial visibility prevents a lower rating. There is no evidence in the supplied data of distress, filing non-compliance, or governance failure.

2. Key Concerns

a) Staleness of available financial data The most recent extracted balance sheet is for the year ended 31 December 2015. Although the company appears current with its filings (accounts to 31 December 2025 recorded as filed; nothing overdue), the underlying figures are not present in this dataset. All solvency and liquidity conclusions below are therefore historical and cannot be assumed to reflect the present position. This is the single most significant limitation of this assessment.

b) Leverage relative to equity base At FY2015, total liabilities stood at £2.04m against shareholders' funds of £832k — a gearing ratio of roughly 2.5x. Of this, £1.74m was due after more than one year. The abbreviated accounts do not disclose whether this debt is bank borrowing or intragroup funding from the parent, which materially changes the risk profile. The trend was positive (long-term creditors reduced by ~£755k during 2015), but the structure and terms of this debt remain unknown.

c) Wholly-owned subsidiary of a foreign parent Ecolutia Services AG holds more than 75% of shares. This creates dependency on group-level decisions regarding funding, dividends, transfer pricing, and strategic direction. There is no visibility of the parent's financial strength in the supplied data, and subsidiary fortunes can change quickly if group priorities shift.

3. Positive Indicators

• Sustained equity growth: Net assets increased every year from £94,634 (2011) to £831,942 (2015) — a near ninefold improvement, implying consistent profitability and profit retention.
• Strong implied FY2015 result: The P&L reserve rose by approximately £403k during 2015 (subject to any dividend movements), a substantial result relative to the equity base.
• Healthy working capital: Net current assets were positive throughout and reached £423,036 at FY2015, with a current ratio of approximately 2.4x.
• Deleveraging: Creditors due after one year fell from £2.49m to £1.74m during FY2015.
• Filing compliance: No overdue accounts or confirmation statements; active status maintained since incorporation in 2009 — over 16 years of continuous operation.
• Tangible asset base: £2.15m net book value of plant and machinery at FY2015, consistent with a capital-intensive water treatment business.

4. Due Diligence Notes

1. Obtain FY2016–FY2025 accounts — particularly the most recent filing — before any investment decision. This is essential.
2. Identify the nature of long-term creditors: bank facilities versus parent loans; review the Companies House charges register for any security granted, and check for covenants or maturity cliffs.
3. Assess the parent: obtain financial statements for Ecolutia Services AG and clarify any cross-guarantees, intragroup balances, or support arrangements.
4. Review related-party transactions in the full accounts for transfer pricing or dividend extraction.
5. Debtor quality: debtors rose ~70% in FY2015 (£197k → £336k); request an aged debtor analysis to confirm this reflected growth rather than collection issues.
6. Fixed asset movements: £507k of assets (cost) were disposed of in FY2015 with no accumulated depreciation released — clarify the nature and proceeds of these disposals.
7. Audit status: accounts are unaudited under the small companies exemption; consider requesting management accounts or independently prepared financials for recent years.
8. Regulatory standing: verify environmental permits and any sector-specific compliance relevant to water treatment activities (SIC 36000).
9. Directors: no disqualification or insolvency records appear in the supplied data, but this should be independently verified for all three current directors.