Company Number: 13100110

Analysis Date: 2025-07-20 11:43 UTC

1. Risk Rating: MEDIUM
   The company demonstrates some solvency and liquidity concerns evidenced by a negative net current assets position in the latest year. However, net assets and shareholder funds have increased year on year, and the company remains active with no overdue filings, which mitigates immediate risk.

2. Key Concerns:

• Liquidity Deterioration: Current liabilities (£8,092) exceed current assets (£2,144) at 2023 year-end, resulting in a working capital deficit of £5,948. Cash has fallen sharply from £21,025 in 2022 to £691 in 2023, indicating potential short-term cash flow stress.
• Reliance on Directors' Loans: Significant portion of current liabilities (£5,266) comprises directors’ loan accounts, reduced from £15,950 in 2022. Dependence on such loans to meet obligations may mask underlying cash flow weaknesses.
• Deferred Tax Liability Increased: Deferred tax provision more than doubled to £2,708, which could impact future profitability and cash flows if not managed appropriately.

3. Positive Indicators:

• Growth in Net Assets: Net assets and shareholders’ funds increased from £4,246 in 2022 to £7,942 in 2023, showing an improvement in overall financial position despite liquidity issues.
• No Filing or Compliance Issues: All statutory accounts and confirmation statements are up to date with no overdue filings, indicating good governance and regulatory compliance.
• Stable Management and Ownership: Directors have been in place since incorporation, and significant control is evenly split between two directors, supporting stable leadership.

4. Due Diligence Notes:

• Review cash flow statements and management accounts for post-year-end cash position and liquidity trends to assess if working capital deficits are recurring or temporary.
• Investigate the nature, terms, and repayment plans of directors’ loan accounts to understand the sustainability of reliance on these loans.
• Examine reasons for the increase in deferred tax liability and expected future tax obligations.
• Assess turnover and profitability trends (not disclosed here) to determine operational sustainability, especially given the industry (sound recording and music publishing).
• Confirm no contingent liabilities or off-balance sheet obligations that may affect solvency.