ARKA LEARNING LIMITED

Executive Summary

ARKA LEARNING LIMITED, incorporated in 2023, presents high financial risk due to a substantial working capital deficit and negative equity within its first year. The company relies heavily on intra-group funding, with current liabilities dominated by amounts owed to group undertakings. While filings are up to date and directors express confidence in group support, significant concerns remain regarding liquidity and operational sustainability that warrant thorough further investigation.

ARKA LEARNING LIMITED - Analysis Report

Company Number: 15054807

Analysis Date: 2025-07-20 12:53 UTC

1. Risk Rating: HIGH
   Justification: The company shows significant negative net current assets (£-455,472) and net liabilities (£-251,994) just over one year since incorporation. Current liabilities vastly exceed current assets, primarily due to amounts owed to group undertakings (£436,328). Such a large imbalance between short-term liabilities and assets indicates high solvency and liquidity risk without clear evidence of immediate funding or repayment plans.

2. Key Concerns:

• Severe Working Capital Deficit: Current liabilities exceed current assets by over £450k, signaling potential inability to meet short-term obligations without external support.
• Reliance on Group Funding: £436k owed to group undertakings dominates liabilities, suggesting dependence on intra-group loans rather than independent cash flow generation.
• Negative Equity Position: Net liabilities of approximately £252k indicate the company’s liabilities surpass its total assets, a red flag for financial stability.

3. Positive Indicators:

• Active Status with No Overdue Filings: The company is active and has made all required filings on time, indicating compliance with Companies House requirements.
• Going Concern Statement Supported by Group: Directors cite reasonable expectation of continued operations due to group company support, which may mitigate immediate solvency concerns.
• Tangible Fixed Assets Base: The company holds £271k in tangible fixed assets, which could potentially be leveraged or sold if needed.

4. Due Diligence Notes:

• Investigate terms and conditions of the £436k owed to group undertakings: maturity, interest rates, repayment schedule, and any formal agreements.
• Review cash flow forecasts and plans for improving liquidity given the large working capital deficit.
• Confirm the nature and valuation basis of tangible fixed assets, and assess their realizable value under stress scenarios.
• Understand the business model and revenue generation plans as no turnover figures are disclosed and the company is newly incorporated.
• Assess the group structure and financial health of Keystone Education Holdings Limited (the 75-100% shareholder) for support capacity.
• Verify director and management experience and any related party transactions that may pose conflicts or risks.