ENIGMA INNOVATION AND DEVELOPMENT LTD

Executive Summary

ENIGMA INNOVATION AND DEVELOPMENT LTD has shown a notable improvement in its financial health in the latest year, recovering from previous challenges with positive working capital and net assets. While the company remains small and lean, continued prudent financial management is essential to sustain this recovery and build resilience for future growth.

ENIGMA INNOVATION AND DEVELOPMENT LTD - Analysis Report

Company Number: 13115002

Analysis Date: 2025-07-20 13:30 UTC

Financial Health Assessment Report for ENIGMA INNOVATION AND DEVELOPMENT LTD

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1. Financial Health Score: C

Explanation:
The company shows mixed financial indicators with recent improvement after previous distress. While the latest year reflects positive net current assets and net assets, the history of negative net assets and current liabilities exceeding current assets in prior years signals past liquidity and solvency challenges. The small scale of operations and fluctuating asset base warrant close monitoring to ensure sustained improvement.

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2. Key Vital Signs

Metric	2024 (£)	2023 (£)	Interpretation
Fixed Assets	1,494	1,992	Slight decline in long-term asset value; stable.
Current Assets	1,001	2,176	Sharp reduction, potentially lower cash or receivables.
Current Liabilities	539	3,346	Significant reduction, positive sign of lower short-term debts.
Net Current Assets (Working Capital)	462	-1,170	From negative working capital to positive, indicating improved liquidity.
Total Assets Less Current Liabilities	1,956	822	Improvement in overall asset coverage after short-term debts.
Net Assets (Equity)	636	-438	Recovery into positive equity, implying restored solvency.
Share Capital	1.00	1.00	Minimal share capital, typical for micro-entities.

Interpretation of Vital Signs:

• Liquidity (Working Capital): The positive net current assets in 2024 mark a healthy cash flow "heartbeat," showing the company can meet near-term obligations. This is a vital sign of improved operational health compared to previous years' "symptoms" of liquidity distress.
• Solvency (Net Assets): The turnaround from negative equity to positive net assets suggests the company has started to "heal" its balance sheet, reducing accumulated losses or increasing retained earnings.
• Asset Base: The fixed assets have slightly decreased but remain stable, indicating no major capital losses or write-downs.
• Debt Levels: A dramatic fall in current liabilities signals successful management of short-term debts and obligations, reducing financial strain.

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3. Diagnosis

ENIGMA INNOVATION AND DEVELOPMENT LTD has shown signs of financial distress in the years 2022 and 2023, with negative net assets and working capital deficits—analogous to symptoms of an unhealthy financial "patient" struggling to cover immediate debts. However, the 2024 accounts reveal a positive shift: net current assets have turned positive, and net equity has improved significantly. This indicates recovery and a stabilizing financial condition.

The company operates as a micro-entity with limited share capital and a small workforce (averaging one employee including directors), implying a lean operational model. Its industry activities in educational support services and management consultancy typically require lower capital intensity but depend on reliable cash flow.

The absence of audit requirements and the use of micro-entity provisions limit the depth of financial transparency, but current data suggest the company is emerging from prior financial strain.

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4. Recommendations

To strengthen the company’s financial wellness and ensure sustained recovery:

1. Maintain Positive Working Capital: Continue to monitor and manage current assets and liabilities closely to keep cash flow healthy. Avoid overextending credit or accumulating short-term debts.
2. Build Equity Cushion: Retain profits where possible to build shareholders’ funds, creating a buffer against future downturns. Consider small capital injections if needed to support growth.
3. Cost Control: As a micro-entity, controlling operating expenses will be critical to maintaining financial stability. Review costs regularly for efficiency.
4. Strategic Growth Planning: Align business development activities with cash availability to avoid liquidity crunches. Explore opportunities in existing SIC classes (education support and consultancy) to enhance revenue streams.
5. Regular Financial Review: Even though exempt from audit, consider voluntary reviews or financial health checks to identify early warning signs and manage risks proactively.
6. Strengthen Financial Reporting: Prepare and maintain comprehensive management accounts periodically to track performance beyond statutory filings.

These steps will help ensure the company’s financial health strengthens further, avoiding relapse into prior distress.

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