Credit Analysis: Codis Maya Limited

1. Credit Opinion: CONDITIONAL

The company presents a mixed credit profile. On the positive side, it has a 22-year trading history, a substantial cash position of £146,039, and appears to operate with minimal overhead (single employee, low fixed assets). However, several factors warrant caution: net assets declined by approximately £7,300 year-on-year (from £20,847 to £13,517), indicating losses in the current period; accruals have ballooned from £7,631 to £60,600 — a concerning eightfold increase that suggests unpaid obligations are accumulating; and the business remains heavily dependent on director loans (£80,089) for funding. Any credit facility should be limited, well-secured, and subject to conditions addressing the accruals buildup.

2. Financial Strength

Balance sheet health is fragile but not distressed.

The equity base is extremely thin at £13,517 against total liabilities of £145,671, giving a debt-to-equity ratio of approximately 10.8:1. While the company has shown a general upward trajectory in net assets over the past decade (from £1,489 in 2016), the year-on-year decline from £20,847 to £13,517 reverses gains made in FY2024 and signals potential pressure on profitability.

The company carries £160,000 in fully amortised goodwill on the balance sheet (net book value nil), suggesting a prior acquisition that has contributed nothing to current asset backing.

Key concern — accruals: The jump in accruals from £7,631 to £60,600 is the single most concerning balance sheet movement. This warrants immediate clarification. Possible explanations include deferred professional fees, unpaid supplier invoices, or accrued tax obligations. If these accruals represent genuine short-term obligations, the company's working capital position (£31,171) would be severely eroded upon settlement.

Director loans total £80,089 (down from £108,989), indicating the director has been withdrawing loan balances — potentially converting debt to equity via profit retention, or simply repaying herself. This reduces the cushion of subordinated debt available to other creditors.

3. Cash Flow Assessment

Liquidity is superficially strong but deteriorating.

Cash at bank stands at £146,039, which exceeds current liabilities of £145,671 — technically a 1:1 current ratio including cash. However, this is misleading because £60,600 of the current liabilities are accruals of uncertain timing. If those accruals fall due for payment, cash would drop to approximately £85,439 against remaining current liabilities of £85,071 — effectively zero working capital headroom.

The working capital position (net current assets) has declined from £42,363 to £31,171, a 26% reduction year-on-year. Combined with the decline in cash (£14,247 outflow) and rising inventory (£4,836 increase), the cash flow dynamics suggest the business is consuming rather than generating cash.

Inventory increased from £15,565 to £20,401 — a 31% build-up. For a jewellery manufacturer, this could indicate slow sales or deliberate stockpelling of raw materials (gold, silver, gemstones). Either way, it ties up working capital. Inventory turnover cannot be calculated without turnover figures (P&L not filed), but the stock build warrants investigation.

Trade debtors rose modestly from £6,810 to £9,686, which is proportionate and not alarming for a business of this size.

4. Monitoring Points

1. Accruals composition: Request a breakdown of the £60,600 accruals balance. If this includes unpaid taxes, supplier invoices, or professional fees due within 12 months, it represents a material liquidity risk.

2. Director loan trajectory: Monitor whether director loans continue to be drawn down. Further reductions in subordinated director debt will weaken the creditor position. Consider requesting a subordination agreement as a condition of any facility.

3. Profitability: The company files filleted accounts with no P&L, so profitability is not visible from public filings. The decline in retained earnings (from £20,846 to £13,516) implies a loss of approximately £7,330 for the year. Request management accounts to assess trading performance and confirm whether this is a one-off or a trend.

4. Inventory turnover: Monitor whether the inventory build is converting to sales or becoming obsolete/dated stock. For jewellery, material costs (precious metals) can fluctuate significantly, creating margin pressure.

5. Cash runway: At the current rate of cash consumption (~£14,000/year), the £146,039 cash position provides roughly 10 months of runway before the buffer is exhausted — assuming no accruals are called. This is adequate but not generous.

6. Filing compliance: Accounts and confirmation statements are current and not overdue. The company uses an external accountant (SA Ledgers Ltd) as secretary, which provides some governance comfort.