COLLECTIVE MINDS LTD

Executive Summary

Collective Minds Ltd has improved its financial position significantly over recent years, moving from negative to positive net assets. The company’s liquidity is currently supported largely by director loans, which creates some dependency risk. Conditional approval is recommended, with close monitoring of liquidity and director loan arrangements to ensure sustainable creditworthiness.

COLLECTIVE MINDS LTD - Analysis Report

Company Number: 12566196

Analysis Date: 2025-07-29 15:53 UTC

1. Credit Opinion: APPROVE with CONDITIONS
   Collective Minds Ltd demonstrates improving financial strength and positive net asset growth over recent years, shifting from negative equity in 2020 and 2021 to a healthy net asset position of £29,262 in 2024. However, the company shows a significant increase in current liabilities, primarily due to a substantial director loan of £34,124 as of 2024, which could pose a risk if the director's support is withdrawn. The company has only one employee and operates in management consultancy, which typically has lower capital intensity and moderate cash flow volatility. Approval is recommended subject to ongoing monitoring of director loan accounts and ensuring timely repayment or formalisation of these loans.

2. Financial Strength:

• Net Assets have grown from a negative £2,082 in 2020 to a positive £29,262 in 2024, indicating an improving equity base.
• Net Current Assets increased significantly to £29,262 in 2024 from £10,077 in 2023.
• The rise in current liabilities from £10,441 in 2023 to £28,682 in 2024 is mainly due to director loans (£34,124), which are informal borrowings from the director rather than external debt.
• Share capital remains minimal at £100, indicating limited external equity investment.
  Overall, the balance sheet shows strengthening but relies heavily on director funding.

3. Cash Flow Assessment:

• Cash on hand dropped sharply from £20,518 in 2023 to £580 in 2024, which may indicate tight liquidity or reinvestment in business operations.
• Despite low cash balance, the company has strong net current assets thanks to substantial director loans classified as current liabilities.
• The working capital position is positive, but the company depends on the director’s financial support for liquidity.
• With only one employee and low overheads, operating cash flow requirements may be modest, but monitoring liquidity closely is essential to ensure ongoing payment capability.

4. Monitoring Points:

• Director loan account: Ensure clarity on repayment terms and confirm the director’s ongoing support or transition to external financing.
• Cash balances and operating cash flow: Watch for sustained low cash reserves and evaluate if they impact payment of short-term liabilities.
• Profitability trends: Review profit and loss accounts when available to confirm ongoing earnings support equity growth.
• Filing and compliance: Continue monitoring prompt filing of accounts and confirmation statements to avoid regulatory risks.