FRONTIER DIGITAL LTD

Executive Summary

Frontier Digital Ltd shows strong financial health with excellent liquidity and positive equity, reflecting stable and prudent financial management typical of a growing IT consultancy. The company is well-positioned for sustainable growth, provided it maintains careful cash flow and credit control.

FRONTIER DIGITAL LTD - Analysis Report

Company Number: SC730608

Analysis Date: 2025-07-29 16:25 UTC

Frontier Digital Ltd: Comprehensive Financial Health Assessment

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1. Financial Health Score: A-

Explanation:
Frontier Digital Ltd displays strong financial "vital signs" with healthy liquidity, robust net assets, and positive working capital. The company's balance sheet reveals a solid equity base and well-managed current liabilities relative to current assets. While it is a young company (incorporated 2022), its financial metrics indicate stable management of resources and a sound financial footing. Minor points such as modest fixed asset depreciation and small provisions exist but do not detract significantly from overall health.

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2. Key Vital Signs

Metric	Value (2024)	Interpretation
Current Assets	£471,033	Strong short-term asset base supporting liquidity
Cash Balance	£342,635	Healthy cash reserves, good for operational flexibility
Debtors	£128,398	Moderate receivables; manageable and not overly stretched
Current Liabilities	£86,183	Low relative to current assets, indicating good short-term solvency
Net Current Assets (Working Capital)	£384,850	Indicates sound liquidity; company can comfortably cover short-term debts
Net Assets (Equity)	£389,097	Positive net worth, reflecting accumulated retained earnings and shareholder funds
Share Capital	£2.29	Very minimal share capital, typical for startups; most value is in retained earnings
Provisions	£934	Small provision, suggests prudent recognition of potential liabilities
Fixed Assets (Net)	£5,181	Low fixed assets, typical for IT consultancy; focus on intangible/people assets
Employee Count	9 (average)	Small team, consistent with micro/small business profile

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3. Diagnosis: Financial Vital Signs & Symptoms Analysis

• Liquidity ("Healthy Cash Flow"): The company has a strong cash position (£342k) and net current assets significantly exceed current liabilities, indicating it can meet immediate obligations comfortably. This is a key sign of financial wellness and operational stability.

• Capital Structure: The minimal share capital (£2.29) is offset by accumulated profits, reflected in substantial shareholders’ funds (~£389k). This signals that the company has been profitable or retained earnings are building, which strengthens its equity base.

• Asset Management ("Lean Fixed Assets"): Fixed assets are low, which is typical for a consultancy where value lies in intellectual capital rather than physical assets. Depreciation charges are consistent and do not signal impairment or distress.

• Receivables ("Moderate Debtor Risk"): Trade debtors have slightly decreased from the previous year but remain stable. No significant overdue debts are noted, implying effective credit management.

• Provisions and Deferred Tax: Small provisions indicate prudent recognition of potential liabilities, and the minimal deferred tax suggests limited tax timing risks.

• Operational Health: The company continues to operate with consistent employee numbers and no overdue filings, suggesting good governance and operational discipline.

• Directors & Control: Two main directors hold significant control (25-50%), which aligns with good oversight and clear governance structure.

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4. Prognosis: Future Financial Outlook

Given the company's current strong liquidity, positive equity, and prudent financial management, the prognosis is positive. The company appears capable of sustaining operations and funding growth initiatives. However, as a young company focused on IT consultancy, continual monitoring of receivables and cash flow will be essential to avoid "symptoms of distress" such as delayed payments or rising current liabilities.

The company should maintain focus on:

• Growing retained earnings to build a stronger equity buffer
• Managing debtor days to ensure cash inflows remain timely
• Monitoring provisions and tax liabilities prudently
• Investing selectively in fixed assets or innovations that support business scalability

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5. Recommendations: Actions to Enhance Financial Wellness

• Maintain Strong Cash Flow Controls: Continue monitoring cash inflows and outflows closely to preserve liquidity. Consider cash flow forecasting for better planning.

• Strengthen Credit Control: Tighten debtor management policies to reduce risk of late payments, which could strain liquidity.

• Build Equity Capital: Although retained earnings are solid, consider strategies for equity growth (e.g., reinvestment of profits, cautious fundraising) to enhance financial resilience.

• Optimize Provisions and Tax Planning: Review provisions regularly to ensure liabilities are accurately reflected and optimize tax positions with expert advice.

• Leverage Digital Assets: As an IT consultancy, invest in intangible assets such as software and staff training to improve service offerings and competitive edge.

• Governance and Compliance: Maintain punctual filings and transparent director reporting to avoid regulatory risks.

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Executive Summary

Frontier Digital Ltd exhibits robust financial health with strong liquidity, positive net assets, and prudent management of liabilities. The company’s financial "vital signs" reflect stability and capability to meet short-term obligations comfortably. Continued focus on cash flow management and debtor control will support sustained growth and operational resilience.