Company Number: 13830123

Analysis Date: 2025-07-20 13:29 UTC

1. Risk Rating: HIGH
   Justification: The company shows a net liability position as at 31 March 2024, with negative shareholders' funds (-£22), despite reporting strong current assets. The presence of significant accruals/deferred income nearly equal to total current assets indicates potential cash flow timing issues. Large director loans and substantial dividends paid despite the negative net assets raise concerns about financial stability and sustainability.

2. Key Concerns:

• Negative Net Assets and Shareholders’ Funds: The company transitioned from positive net assets (£25,851) in 2023 to a slight net liability (-£22) in 2024, signaling erosion of equity which is a red flag for solvency.
• High Accruals/Deferred Income (£210,163) vs Current Assets (£303,187): This large deferred income liability closely offsets current assets, potentially constraining liquidity and implying that cash inflows may be deferred or not yet realized.
• Significant Director Loans and Dividends: Directors have advanced large unsecured loans (£50k each outstanding) to the company, and paid themselves dividends totaling £231,332 during the year despite negative net assets, which may suggest governance or cash management issues.

3. Positive Indicators:

• Current Assets Well in Excess of Current Liabilities: Net current assets of £209,137 indicates ability to cover short-term liabilities on paper.
• No Overdue Filings: Both accounts and confirmation statements are filed on time, indicating compliance with statutory requirements.
• Stable Directors with Control: Two directors clearly identified as significant controllers, which may imply stable management and decision-making continuity.

4. Due Diligence Notes:

• Investigate the nature and timing of the large accruals and deferred income balance to assess cash flow impact and revenue recognition practices.
• Review director loan agreements to understand terms, repayment expectations, and potential risks if loans are called in or impaired.
• Examine the rationale and timing of dividend payments amid declining net assets and any related party transactions.
• Confirm whether the company has sufficient working capital to sustain operations given the micro-entity scale and recent financial changes.
• Assess the business model and revenue streams in the IT consultancy sector to evaluate operational sustainability and growth prospects.
• Verify absence of any director disqualifications or regulatory issues beyond available data.