Company Number: 13246579

Analysis Date: 2025-07-20 16:39 UTC

1. Credit Opinion: DECLINE
   Herio Ltd shows a significant deterioration in liquidity and net asset position during the latest financial year ending March 2024. The company’s net current assets swung from a positive £7,280 in 2023 to a negative £2,274 in 2024, indicating working capital deficits. Cash on hand has plummeted from £17,747 to just £191. These indicators suggest weak short-term financial flexibility and an elevated risk of cash flow constraints, undermining the company’s ability to meet short-term obligations reliably. The company is still relatively young (incorporated 2021) and operates in the motion picture production sector, which can be volatile. The director’s loan account has shifted from a liability to a receivable, but this is unsecured, interest-free, and repayable on demand, so it does not materially strengthen creditworthiness. Overall, the financial trajectory is negative and insufficient to support new credit exposure without substantial additional security or guarantees.

2. Financial Strength:
   The balance sheet shows minimal net assets of only £100 as of March 2024, down sharply from £7,286 the prior year. Fixed assets are negligible at £2,374, and current liabilities remain high at £7,527, exceeding current assets of £5,253. The shareholder’s funds equal the net assets and are barely positive, indicating minimal equity buffer. The company’s capital base is weak, and the erosion of working capital suggests operational or collection issues. The director is the sole controller and shareholder, which concentrates control but also risk. No audit was performed, and the company qualifies for small company exemptions, limiting detailed financial disclosure.

3. Cash Flow Assessment:
   Cash flow is a major concern. The cash balance has almost been depleted from £17,747 to £191 in one year, highlighting a severe liquidity squeeze. Debtors increased slightly but remain modest at £5,062, and there is a large reliance on the director’s loan account (£2,597 receivable). Current liabilities are substantial and include trade creditors, accruals, and other creditors. Negative net current assets indicate the company may struggle to cover short-term liabilities. The director’s loan repayment within 9 months post-year end is positive but does not materially alleviate immediate liquidity concerns. Overall, cash flow management appears weak, and the company may face difficulties in sustaining operations without additional funding.

4. Monitoring Points:

• Monitor quarterly cash flow statements and bank balances to detect further deterioration.
• Watch debtor collection periods closely to ensure timely cash inflows.
• Track reduction in current liabilities or increase in current assets to improve working capital.
• Review director’s loan account movements and any external funding injections.
• Monitor operational performance and turnover trends to assess business sustainability in the volatile media production sector.
• Confirm timely filing of statutory returns and accounts to ensure regulatory compliance.