FRIENDLY INTEGRATED SOLUTIONS LIMITED

Risk Rating: HIGH Justification: The company exhibits chronic insolvency, with negative net assets persisting for at least a decade. As of March 31, 2025, net assets stand at -£70,607 and shareholders' funds are deeply negative at -£70,707. While recent operational improvement is evident, the company remains entirely dependent on the forbearance of long-term creditors and the realization of current debtors to maintain viability.

Key Concerns: - Chronic Insolvency: The balance sheet is fundamentally weak. The company has reported negative net assets in every financial year provided spanning back to 2016. Total liabilities exceed total assets by a significant margin, indicating that the company cannot cover its debts if they were called in immediately. - Concentrated Long-Term Debt: Creditors falling due after more than one year total £99,490. Within this, "Other loans" account for a static £61,142 (unchanged from the prior year). This suggests the presence of related-party or director loans propping up the business, which may not be prioritized for repayment and carry implicit subordination risks for institutional creditors. - Rising Trade Debtors: Current assets are heavily skewed towards trade debtors, which increased by 31% from £23,951 in 2024 to £31,450 in 2025. Debtors now represent over 70% of total current assets. If collection is delayed or defaults occur, the company's fragile liquidity position would deteriorate rapidly.

Positive Indicators: - Return to Profitability: Although the Profit & Loss account is not explicitly detailed, the movement in the P&L reserve shows a significant improvement—reducing accumulated losses from £100,126 to £70,707, implying a profit of approximately £29,419 for the 2025 year. - Improved Working Capital: Net current assets shifted from a liability of -£10,794 in 2024 to a positive £12,828 in 2025. The current ratio has improved from 0.72 to approximately 1.4, indicating a much healthier short-term liquidity position. - Cash Generation: Cash at bank increased substantially from a critically low £445 in 2024 to £9,863 in 2025, demonstrating stronger operational cash generation. - Regulatory Compliance: The company is actively filing its accounts and confirmation statements on time, with no overdue flags, which suggests the director is maintaining basic statutory compliance.

Due Diligence Notes: - Nature of "Other Loans": Investigate the £61,142 classified under "Other loans >1yr". It is highly probable these are director or shareholder loans. Confirmation is required on whether these loans are subordinated and if there are any formal repayment demands or security attached to them. - Going Concern Status: Given the negative net assets, the accounts should contain a going concern note or a formal letter of support from the directors/shareholders indicating their willingness to fund the company's ongoing operations. - Debtor Ageing: Request a breakdown of the £31,450 trade debtors. Given the size of the debtor book relative to cash and the company's previous liquidity constraints, assessing the collectability and days sales outstanding is critical. - PSC Shareholding Discrepancy: The People with Significant Control register lists three individuals as owning between 25% and 50% of the company's shares each. Mathematically, this implies a minimum shareholding of 75% to 150%, which is inconsistent. Clarification on the actual shareholding structure and any formal shareholder agreements is recommended.