ME&U UK TRADING LTD

Executive Summary

ME&U UK Trading Ltd shows substantial liquidity and solvency challenges with large negative working capital and increasing deficits, placing it at high financial risk. Despite this, timely statutory compliance, an unqualified audit, and parent company support provide mitigating factors. Further due diligence on funding and operational performance is essential to evaluate ongoing viability.

ME&U UK TRADING LTD - Analysis Report

Company Number: 13055559

Analysis Date: 2025-07-20 14:30 UTC

1. Risk Rating: HIGH
   Justification: The company exhibits very significant net current liabilities and negative shareholders’ funds that have materially worsened over recent years. The negative net current assets position (over £6.2 million as of 31 December 2023) indicates a severe liquidity shortfall and inability to meet short-term obligations from current assets. This, combined with large amounts owed to group undertakings and persistent losses, suggests high solvency risk.

2. Key Concerns:

• Severe Negative Working Capital: Current liabilities exceed current assets by a large margin (£7.6m vs £1.39m), indicating liquidity stress.
• Growing Accumulated Losses: Retained earnings deficit increased from approx. £4.2m to £6.3m over the past year, signaling ongoing operational losses.
• High Related Party Debt: Majority of current liabilities (£6.46m) are amounts owed to group undertakings, raising questions about financial dependence on parent or related entities and potential exposure to group risks.

3. Positive Indicators:

• Accounts Filed On Time: No overdue filings or confirmation statements, indicating compliance with statutory requirements.
• Unqualified Audit Report: Auditor’s report is unqualified, suggesting financial statements present a true and fair view within the scope of the audit.
• Support from Parent: The directors’ report states the parent company (Mr Yum Holdings Pty Ltd) will continue to support the company for at least 12 months from the audit signing date, indicating some backing to maintain going concern.
• Operating in a Growth Sector: The company operates in interactive leisure and entertainment software development (SIC 62011), a sector with growth potential.

4. Due Diligence Notes:

• Review Funding Arrangements: Investigate the terms and sustainability of the amounts owed to group undertakings and the nature of the support from the parent company.
• Cash Flow Analysis: Obtain detailed cash flow forecasts and bank statements to assess liquidity management and timing of creditor payments.
• Operational Performance: Request management accounts and turnover trends to understand whether losses are expected to continue or if a turnaround plan is in place.
• Director & Governance Stability: Monitor recent director appointments and resignations (notably one director resigned in July 2024) for any governance issues or changes in strategic direction.
• Related Party Transactions: Examine disclosures for related party transactions and potential risks of reliance on intra-group financing.

Executive Summary:
ME&U UK Trading Ltd demonstrates high financial risk due to severe negative net current assets and mounting accumulated losses, compounded by significant indebtedness to related parties. However, the company maintains compliance with filing requirements and benefits from stated parental support, which may provide some short-term stability. Close scrutiny of funding arrangements and operational viability is recommended to fully assess sustainability.