CODEYOURFUTURE LABS LIMITED

Executive Summary

CodeYourFuture Labs Limited has strong liquidity supported by significant cash reserves but minimal equity and net assets, reflecting reliance on its parent charity for funding. The company’s ability to service debt appears adequate in the short term, but financial resilience is limited by a thin capital base and ongoing distributions to the parent. Conditional credit approval is advised with close monitoring of cash flows, related party funding, and profitability improvements.

CODEYOURFUTURE LABS LIMITED - Analysis Report

Company Number: 13232479

Analysis Date: 2025-07-29 15:15 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   CodeYourFuture Labs Limited demonstrates a stable cash position with significant liquid assets relative to current liabilities, indicating an ability to meet short-term obligations. However, the company's net asset base is minimal (£100), and the equity position is negligible, reflecting a very thin capital buffer. The company is relatively new (incorporated 2021) and operates in a niche education and employment placement sector, which can be sensitive to economic cycles. Its continued reliance on funds owed to its parent charity and distributions paid to the parent suggest limited operational profitability and dependence on external funding. Credit approval is recommended on the condition of continued close monitoring of cash flows and external funding, as financial resilience is modest.

2. Financial Strength:
   The balance sheet shows almost no fixed assets and only current assets, dominated by cash (£608k in 2024). Current liabilities closely match current assets, resulting in net current assets of only £100. Shareholders' funds are minimal at £100, indicating very low equity and no retained earnings. The company has improved from a negative net asset position in 2021 to a positive but marginal one in recent years. The significant amounts owed to and from the parent charity highlight dependency on related party transactions rather than independent financial strength. The small capital base limits the company's ability to absorb financial shocks.

3. Cash Flow Assessment:
   The company holds strong cash reserves relative to liabilities, with cash increasing from £573k in 2023 to £608k in 2024, showing good liquidity. Debtors are small but increased to £46,790 in 2024, which may slightly affect liquidity if not collected promptly. Current liabilities are largely deferred income and amounts owed to the parent charity, which could impact cash flow if repayment terms change. Working capital is positive but minimal (£100), indicating tight short-term financial flexibility. Overall, liquidity is adequate, but the reliance on parent funding should be managed carefully.

4. Monitoring Points:

• Track cash balances and liquidity quarterly to ensure ongoing ability to meet short-term obligations without increasing dependency on related parties.
• Monitor debtor collections to avoid cash flow disruptions, especially given the increase in trade debtors in 2024.
• Review deferred income and creditor balances with the parent charity to assess sustainability and repayment terms.
• Watch for profitability improvements and build of equity to strengthen the balance sheet over time.
• Observe any changes in funding arrangements or distributions to the parent that may stress cash flows.