Company Number: 13868912

Analysis Date: 2025-07-20 12:14 UTC

1. Risk Rating: MEDIUM
   Justification: Majesty Films Limited is a recently incorporated private limited company with a very small net asset base (£1) and current liabilities almost equal to current assets, indicating very tight working capital. The company has no retained earnings or equity buffer and depends heavily on related party transactions and tax credits. However, there are no immediate signs of insolvency or overdue filings (except a late accounts filing), which moderates the risk level.

2. Key Concerns:

• Minimal Net Assets and Equity: The company's net assets and shareholders’ funds stand at only £1, reflecting a very fragile balance sheet with no retained profits or reserves to absorb losses.
• Liquidity Tightness: Current assets (£1,650,623) just cover current liabilities (£1,650,622) leaving a negligible net current asset position of £1, indicating minimal liquidity buffer and potential cash flow vulnerability.
• Dependence on Related Party and Tax Credits: Significant debtor balances relate to group undertakings (£132k) and tax recoverable (£143k), indicating reliance on intra-group funding and government tax credits rather than independent cash generation.

3. Positive Indicators:

• Active Status with No Insolvency Proceedings: The company is active, not in liquidation, administration, or receivership.
• Experienced Directors: Both directors are film producers, consistent with the company’s SIC code for casting activities, suggesting relevant industry expertise.
• Parent Company Control: Altitude Film Entertainment Ltd owns 75-100% of shares and voting rights, providing a potential financial and operational support structure.
• Compliance with Regulatory Filings: Although accounts filing is overdue, the confirmation statement is up to date, which suggests reasonable compliance with basic statutory obligations.

4. Due Diligence Notes:

• Investigate the nature and collectability of the £983k debtor balance, particularly amounts owed by group undertakings and tax recoverables.
• Review cash flow forecasts and management plans given the minimal net current assets and low cash balance (£82k).
• Assess intercompany arrangements with Altitude Film Entertainment Ltd for financial support or guarantees.
• Confirm the status and timing of overdue accounts filing and reasons for delay to evaluate governance and compliance risk.
• Understand the amortisation and realisation plans for the £585k production costs (stocks) and how this impacts future revenue recognition and profitability.