Risk Analysis: BLUE ORANGE ARTS LTD

1. Risk Rating: HIGH

Justification: The company has experienced a 58% decline in net assets in a single year (from £20,592 to £8,657), combined with two recent director resignations, a non-operational website, and zero reported employees. While technically solvent, the trajectory and operational indicators suggest significant financial and operational stress for a company with minimal capital reserves.

2. Key Concerns

a) Severe Deterioration in Financial Position Net assets fell from £20,592 (FY2024) to £8,657 (FY2025) — a reduction of £11,935. Current assets more than halved from £19,712 to £9,246, and net current assets dropped from £25,843 to £10,646. For a micro-entity with total assets of only £11,609, this rate of erosion is critical and leaves virtually no margin for further losses.

b) Recent Director Resignations Two directors resigned in close succession — Haina Qarithe Al-Saud (March 2026) and Kurly Marwaha (May 2026). While resignations can occur for benign reasons, the timing alongside financial deterioration raises questions about confidence in the company's direction or viability. This also concentrates control further in the hands of Mark Webster, who already holds significant influence.

c) Operational Viability Questions The company reports zero employees across both FY2024 and FY2025, and the website displays only a holding page ("Site will be available soon"). For a company classified under performing arts and operation of arts facilities, these indicators suggest the business may not be actively trading or may be operating at a minimal level, raising questions about how fixed costs and obligations are being met.

3. Positive Indicators

• Filing Compliance: Accounts and confirmation statements are filed and up to date with no overdue items, indicating the directors are maintaining statutory obligations.
• Positive Net Assets: Despite the decline, net assets remain positive at £8,657 — the company is not technically insolvent.
• Longevity: The company has been active since 2011, demonstrating over 13 years of continuous operation, which suggests some resilience or community support.
• Appearance of Fixed Assets: FY2025 shows £2,363 in fixed assets (nil in FY2024), suggesting some investment in the business during the period.
• Limited Liability Structure: As a company limited by guarantee with no share capital, the liability of members is capped, which provides a defined risk boundary.

4. Due Diligence Notes

a) Cash Position and Liquidity Breakdown The accounts do not separately disclose cash figures for FY2025. Given that current assets have more than halved, understanding how much remains in cash versus debtors is essential. In FY2017, cash represented nearly all total assets (£22,788 of £24,557); a similar pattern may hold, meaning liquidity could be extremely tight.

b) Nature of the £11,935 Decline Micro-entity accounts provide no profit & loss statement. It is unclear whether the net asset decline stems from operating losses, asset write-downs, or reclassification. Requesting management accounts would clarify whether this reflects trading deficits or one-off adjustments.

c) Deferred Income and Accruals Accruals and deferred income stand at £4,352 (down from £5,251). This likely represents grant income received in advance or prepaid ticket revenue. Understanding the terms and conditions attached — particularly any repayment obligations — is important for assessing true liability exposure.

d) Related Party Transactions and Director Loans Mark Webster appears as both director and secretary, and is the sole PSC with "significant influence or control." Given the concentration of control and the financial deterioration, any director loans (either owed to or by the company) should be examined. Micro-entity accounts do not require disclosure of these.

e) Grant Funding Dependency Arts organisations of this nature typically rely on Arts Council England or local authority grants. Understanding the company's funding pipeline, any recent grant applications, and whether funding has been reduced or lost would be critical context for the financial decline.

f) Operational Status Clarification The non-functional website and zero employees suggest the theatre may be dormant or operating intermittently. Confirming whether the venue is actively hosting performances, and at what frequency, would help assess whether this is a temporary downturn or a structural viability issue.