Company Number: 13177907

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

1. Risk Rating: MEDIUM

Justification: Happy Days Creative Ltd shows solid growth in net assets and working capital over recent years, backed by strong cash balances. However, the company has significant finance lease obligations and deferred tax liabilities, which elevate solvency and liquidity risks moderately. There are no overdue filings or governance issues noted, but the reliance on finance leases and operating lease commitments warrants monitoring.

2. Key Concerns:

• Significant finance lease and hire purchase obligations totaling approximately £29k due over the next five years, which could strain cash flows if revenue fluctuates.
• Large deferred tax liability of £12.9k recognized in the latest accounts, indicating potential future tax cash outflows.
• High operating lease commitments escalating from £9k to £99k within one year and up to £66k over the next five years, representing a substantial fixed cost burden.

3. Positive Indicators:

• Strong improvement in net assets from £9.4k in 2021 to £132.7k in 2025, reflecting profitable operations and retained earnings growth.
• Healthy net current assets of £95k and a robust cash balance of £136.8k as at the latest year end, supporting good short-term liquidity.
• No overdue statutory filings with Companies House and an active status with transparent ownership and director information.
• A reasonable asset base with tangible fixed assets of £73.6k supporting operational capacity in the photography and creative services sector.

4. Due Diligence Notes:

• Review detailed cash flow statements and profit and loss accounts to confirm operational cash generation and sustainability of earnings.
• Assess the terms and conditions of finance leases and operating leases to understand future cash commitments and flexibility.
• Investigate the nature and timing of deferred tax liabilities to anticipate tax payment schedules.
• Verify the customer concentration and debtor aging profile given the increase in debtors to £9.9k, ensuring no collection risks.
• Confirm that the director’s related party transactions, if any, are at arm’s length given the close personal control by the Brooker family.