CODE IN THE CONTEXT LTD

Executive Summary

Code In The Context Ltd is a small, micro-entity IT consultancy showing positive net current assets but a marked decline in liquidity and net assets over the latest financial year. While the company remains solvent and compliant with filings, the significant decrease in working capital and equity raises medium-level concerns regarding operational sustainability and cash flow stability. Further investigation into the causes of financial deterioration and business prospects is recommended before any investment decision.

CODE IN THE CONTEXT LTD - Analysis Report

Company Number: 13628009

Analysis Date: 2025-07-29 12:49 UTC

1. Risk Rating: MEDIUM
   The company shows a significant decline in net assets and current assets from prior years, which suggests a weakening financial position. While it is not insolvent and has positive net current assets, the downward trend in liquidity and equity is a concern.

2. Key Concerns:

• Sharp Decline in Current Assets: Current assets decreased from £71,328 in 2023 to £12,120 in 2024, a substantial reduction that may indicate cash flow stress or asset disposals.
• Significant Reduction in Net Assets and Shareholders’ Funds: Net assets fell from £57,206 in 2023 to £18,994 in 2024, signaling potential losses or distributions that have eroded capital.
• Director Loan Activity: The director loan of £2,760 was fully repaid during the year. While this is positive, the existence of director loans can sometimes signal financial dependency on management and warrants scrutiny.

3. Positive Indicators:

• Positive Net Current Assets: Despite the decline, net current assets remain positive at £11,771, indicating the company can meet its short-term liabilities at the reporting date.
• Compliance and Timely Filings: The company is current with both accounts and confirmation statement filings, showing good regulatory compliance.
• No Audit Requirement: The company qualifies for micro-entity exemption and has no audit requirement, consistent with its size and turnover, reducing administrative burden.

4. Due Diligence Notes:

• Investigate the cause of the significant drop in current assets and net assets between 2023 and 2024 to assess sustainability of operations and cash flow management.
• Review the nature of the company's working capital, including cash balances and receivables, to understand liquidity risk.
• Assess the business model viability and revenue trends since inception in 2021, noting that one employee including the director suggests limited operational scale.
• Confirm the absence of any contingent liabilities or off-balance sheet exposures not reported in the accounts.
• Evaluate any related party transactions, especially director loans and repayments, for potential financial stress signals.