DISCO CAT INVESTMENTS LIMITED

Executive Summary

Disco Cat Investments Limited presents a high-risk profile primarily due to significant liquidity shortfalls and minimal equity relative to liabilities, despite holding a valuable investment property. While regulatory compliance is current and governance appears straightforward, the company’s operational sustainability is questionable without additional financing or asset monetization. Further due diligence on asset valuations, director loan terms, and cash flow dynamics is essential before considering investment exposure.

DISCO CAT INVESTMENTS LIMITED - Analysis Report

Company Number: 13124847

Analysis Date: 2025-07-19 12:43 UTC

1. Risk Rating: HIGH
   Disco Cat Investments Limited exhibits significant solvency and liquidity risks due to negative net current assets and reliance on director loans and bank borrowings to cover short-term liabilities. The net assets are nominally positive in 2024 but only marginally so (£214), reflecting very weak equity backing relative to liabilities.

2. Key Concerns:

• Liquidity Risk: The company has current liabilities (£314,387) vastly exceeding current assets (£2,101), resulting in a net current liability position of approximately -£312,286, indicating an inability to meet short-term obligations from liquid assets.
• Solvency Risk: While fixed assets (notably investment property valued at £310,005) form the bulk of the asset base, these are illiquid and may not be readily convertible to cash to cover liabilities, especially given the small equity buffer.
• Reliance on Director Loan: A substantial portion (£86,249) of current liabilities is a director’s loan, potentially signaling dependence on insider funding to sustain operations and meet creditor demands, which may not be sustainable long term.

3. Positive Indicators:

• Investment Property Asset: The company holds an investment property valued at £310,005 at fair value, which is a tangible asset of substantial value relative to the company’s size and liabilities, providing some underlying asset security.
• Compliance and Status: The company is active, not in liquidation or administration, and filings (accounts and confirmation statement) are up to date with no overdue returns, indicating regulatory compliance and governance discipline.
• Single Director and PSC Alignment: The director and sole person with significant control is the same individual, which may facilitate streamlined decision-making and accountability.

4. Due Diligence Notes:

• Valuation and Marketability of Investment Property: Verify the current fair market value and liquidity of the investment property to assess realistic recoverable value in a distressed scenario.
• Terms and Conditions of Director Loan: Investigate the nature, repayment terms, and security (if any) of the director’s loan account to understand its impact on cash flow and creditor priority.
• Cash Flow and Profitability Trends: Obtain more detailed financial statements including profit and loss accounts and cash flow statements to assess operational performance, revenue generation, and ability to service debt.
• Future Financing Plans: Clarify whether the company has plans or access to additional funding or restructuring to address the negative working capital and marginal equity position.
• Contingent Liabilities or Obligations: Check for any off-balance sheet liabilities or potential tax exposures not disclosed that could further strain financial stability.