ARCHITECTURE FOR THE SENSES LTD

Executive Summary

Architecture for the Senses Ltd is currently financially distressed with negative net assets and a significant working capital deficit, raising concerns about its ability to service debt or meet immediate liabilities. The company relies heavily on director support for liquidity and has shown poor financial management practices. Given these factors, credit is not recommended until clear evidence of financial recovery and stronger governance is demonstrated.

ARCHITECTURE FOR THE SENSES LTD - Analysis Report

Company Number: 13884151

Analysis Date: 2025-07-29 18:27 UTC

1. Credit Opinion: DECLINE
   Architecture for the Senses Ltd demonstrates significant financial distress evidenced by a large negative net asset position (£-18,212 as of 29/02/2024), a substantial working capital deficiency (£-19,476), and mounting current liabilities (£31,517) surpassing current assets. The company’s deterioration from a positive net asset and working capital position in the prior year to a deficit in the latest year raises serious concerns about its ability to meet short-term obligations and service any debt. Furthermore, the director’s note that dividends were declared in contravention of the Companies Act and that no further distributions will occur until profits are restored indicates poor financial management and governance practices. The company’s going concern status depends on continued shareholder support, which is uncertain from a credit risk perspective.

2. Financial Strength:
   The balance sheet shows diminishing fixed assets and a sharp increase in current liabilities relative to current assets, leading to negative net current assets of nearly £20k. Shareholders' funds turned negative within two years of incorporation, reflecting accumulated losses (profit and loss reserve of £-18,213). The company’s equity erosion and reliance on director loans (£13,813 owed to the director) further weaken its financial foundation. This fragile financial position undermines the company’s resilience against economic or industry downturns.

3. Cash Flow Assessment:
   Cash at bank has decreased from £8,343 to £4,730 year on year, indicating liquidity stress. The significant increase in current liabilities, combined with negative working capital, suggests the company may struggle to meet immediate payment obligations without external support. Debtor balances have also declined, which could reflect lower sales or collection issues. The company is highly reliant on shareholder funding to maintain operations, which is an additional risk factor.

4. Monitoring Points:

• Monitor cash flow closely, especially liquidity ratios and timing of debtor collections versus creditor payments.
• Watch for any further increase in current liabilities or continued erosion of working capital.
• Track the director’s financial support and any changes in shareholder funding arrangements.
• Review future filings for evidence of operational improvement, profitability, and restoration of positive net assets.
• Observe compliance with Companies Act regarding dividend payments and distribution policies.