DEADLOCKED ENTERTAINMENT LTD

Executive Summary

DEADLOCKED ENTERTAINMENT LTD has shown improvement from prior financial distress by eliminating current liabilities and stabilizing its net assets at zero. However, the absence of tangible assets and minimal capital leaves the company financially fragile with tight profit margins. Focused efforts on building cash reserves, managing costs, and strengthening the balance sheet are essential to enhance its financial health and future growth prospects.

DEADLOCKED ENTERTAINMENT LTD - Analysis Report

Company Number: 13274199

Analysis Date: 2025-07-20 12:50 UTC

Financial Health Assessment of DEADLOCKED ENTERTAINMENT LTD

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1. Financial Health Score: C

Explanation:
DEADLOCKED ENTERTAINMENT LTD shows signs of emerging from financial distress but remains fragile. While recent accounts (year ended 31 March 2024) report a near break-even position, the company has historically operated with negative net assets and liabilities exceeding current assets. The absence of fixed and current assets combined with minimal share capital points to limited financial cushioning. The company’s financial "vital signs" indicate cautious optimism but require close monitoring and strategic management to strengthen its financial "immune system."

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2. Key Vital Signs

Metric	2024 Value	Interpretation
Turnover	£83,951	Slight growth from previous year (£69,450), indicating improving "energy" or revenue generation ability.
Profit/Loss for Period	-£562	Near break-even; minor loss after previous profitable year. Signals fragile but stabilizing health.
Fixed Assets	£0	No long-term assets; limited capital investment or asset base. Potential vulnerability.
Current Assets	£0	No liquid or short-term assets on books; "healthy cash flow" absent.
Current Liabilities	£0	No short-term debts now, an improvement from prior years (£1,745 in 2023), indicating reduced immediate obligations.
Net Current Assets	£0	Zero working capital; no buffer to cover unexpected short-term expenses.
Net Assets / Shareholders’ Funds	£0	Recovered from negative position (-£3,660 in 2023) to zero; balance sheet "weight" neutral.
Share Capital	£2	Nominal capital; minimal financial "muscle" for absorbing shocks.
Employee Count	0	No employees reported, indicating possible reliance on contractors or directors; lean operational structure.

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3. Diagnosis: Business Health Overview

• Symptoms of Distress Previously:
  In 2021-2023, the company displayed a clear symptom of financial stress with negative net assets between -£1,745 and -£3,660 and current liabilities exceeding current assets. Such a condition implies the company was "underweight" financially, potentially relying on director loans or external support to meet obligations.

• Recent Recovery Signs:
  By 2024, the balance sheet shows zero net assets but no current liabilities, indicating that the company may have settled outstanding debts or restructured liabilities. However, the absence of current and fixed assets means the company is operating without tangible financial reserves or equipment.

• Profitability and Cash Flow:
  The slight loss of £562 after staff and material costs against a turnover of nearly £84k suggests tight margins and limited profitability. The company has not benefited from any COVID-19 support grants, which could have been a financial lifeline.

• Operational Structure:
  The lack of reported employees but significant staff costs likely indicates reliance on external contractors or directors. This lean setup reduces fixed overheads but may limit scalability.

• Financial Immunity:
  Very low share capital and minimal assets imply the company has limited ability to withstand economic shocks, unexpected expenses, or downturns. This fragile financial immunity demands careful cash flow management.

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4. Recommendations: Improving Financial Wellness

1. Build Cash Reserves:
   Establish a buffer of cash or liquid assets to cover at least three months of operating expenses. This is akin to building a "healthy immune system" to weather short-term disruptions.

2. Asset Acquisition:
   Consider investing in essential fixed assets or intellectual property to strengthen the balance sheet and provide operational leverage.

3. Enhance Profitability:
   Review cost structure, especially "Other charges" (£45k in 2024) which appear high relative to turnover, to improve margins and move from break-even to positive profit.

4. Increase Share Capital or Financing:
   Inject additional equity or secure low-cost financing to improve net asset position and provide financial muscle for growth initiatives.

5. Monitor Liabilities:
   Maintain current low liability levels and avoid accumulating payables that could strain liquidity.

6. Strategic Growth Planning:
   With turnover showing modest growth, consider strategic marketing, partnership, or diversification to sustain and accelerate revenue increases.

7. Governance and Reporting:
   Continue timely filings and transparent reporting to ensure compliance and maintain stakeholder confidence.

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Medical Analogy Summary

Think of DEADLOCKED ENTERTAINMENT LTD as a patient who was previously anaemic and underweight financially but has recently gained some strength and stability. The company is no longer in immediate financial distress but remains vulnerable due to a lack of reserves and assets. Like a patient recovering from illness, it needs proper nutrition (cash reserves), regular exercise (profit improvement), and medical check-ups (financial monitoring) to regain full health and resilience.

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