Risk Analysis: MODA. LIMITED (04920214)

1. Risk Rating: MEDIUM

Justification: While the company remains technically solvent with positive net assets, there is a clear and accelerating deterioration in its financial position. Net assets declined by 40.6% in the most recent year (from £3,710 to £2,204), continuing a downward trend. The micro-entity filing status severely limits transparency into the underlying causes. The company's historical insolvency in 2012 (negative net assets of -£3,848) and a data gap between 2012-2016 add uncertainty. However, the company has maintained continuous operations for over 21 years, remains current on filings, and maintains a positive working capital position.

2. Key Concerns

a) Rapid Deterioration in Net Assets Net assets fell from £3,710 (2023) to £2,204 (2024), a decline of £1,506 or 40.6%. This follows a pattern of volatility—net assets have fluctuated between £1,696 and £3,785 over the past eight years. The 2024 position represents the second-lowest net asset figure in the available history. Without a profit and loss account (micro-entity exemption), the driver of this decline—whether trading losses, asset write-downs, or director withdrawals—cannot be determined from filed data.

b) Zero Employees in an Advertising Agency The company has reported zero employees consistently across the comparative period, yet operates under SIC code 73110 (Advertising agencies). This raises questions about whether the company is actively trading, functioning as a personal service vehicle, or is effectively dormant despite filing as active. An advertising agency with no workforce suggests either minimal/intermittent activity or heavy reliance on subcontractors, which introduces operational and reputational risk.

c) Historical Insolvency and Data Gaps In 2012, the company reported negative shareholders' funds of -£3,848 with total liabilities of £13,406 against total assets of £8,246—a severely insolvent position. There is then a four-year gap in available financial data (2012-2016), during which the company returned to positive net assets by 2016 (£2,018). This gap obscures whether the company underwent restructuring, received capital injections, or utilized mechanisms like a voluntary arrangement. The trajectory from insolvency to recovery is undocumented.

3. Positive Indicators

a) Filing Compliance The company is current on all statutory obligations. Accounts for the year ending 31 October 2024 were approved on 21 July 2025, with the next filing deadline of 31 July 2027. The confirmation statement is also up to date. There are no overdue filings, no indications of regulatory action, and the company maintains active status.

b) Positive Working Capital Despite the year-on-year decline, the company maintains net current assets of £1,346 (current assets of £5,493 against current liabilities of £4,147). The current ratio stands at approximately 1.32:1, indicating the company can meet its short-term obligations as they fall due. This is a meaningful improvement from the 2012 position where current liabilities significantly exceeded current assets.

c) Longevity and Stability of Governance Incorporated in 2003, the company has over 21 years of continuous registration. The director (Hugh Barry Croad) and secretary (Marilyn Louise Croad) appear to have maintained consistent governance throughout. No director disqualification records are evident, and the PSC register shows clear, transparent ownership with Mr. Croad holding over 75% of shares and voting rights. The absence of frequent officer changes suggests stability in management.

4. Due Diligence Notes

a) Trading Status Verification Confirm whether the company is actively trading or effectively dormant. The combination of zero employees, micro-entity size, and an advertising agency classification warrants verification. Request management accounts or VAT returns to assess actual revenue generation.

b) Nature of Fixed Assets Fixed assets increased from £475 to £858 in 2024. Given the business classification and absence of employees, determine what these assets represent—whether tangible assets (equipment, property interests) or intangible assets, and whether they hold realizable value.

c) Creditor Composition Current liabilities increased from £3,792 to £4,147. Micro-entity accounts do not disclose whether these are trade creditors, director loans, or other obligations. If a significant portion represents director loans, this could indicate the company is reliant on shareholder financing. Conversely, if these are trade creditors, it may suggest difficulty in meeting supplier terms.

d) 2012-2016 Recovery Narrative Investigate the circumstances of the company's recovery from insolvency. This may involve reviewing earlier filed accounts, checking for any historical charges or satisfaction records, and understanding whether capital was injected by the director or whether liabilities were restructured.

e) Related Party Transactions Given the concentrated ownership structure (Mr. Croad holds >75% of shares and voting rights), assess whether there are related party transactions, director loans, or inter-company balances that could affect the company's financial position. Micro-entity accounts are not required to disclose these.

f) Cash Position Trend The 2012 accounts showed cash of £5,315. Current asset composition for recent years is unavailable. Understanding how much of the £5,493 in current assets is cash versus debtors would clarify liquidity quality.

g) Commercial Viability Assess whether the company is generating sufficient revenue to cover operating costs. With net assets of only £2,204 and no employees, question whether this entity serves a genuine commercial purpose or functions primarily as a vehicle for the director's personal activities.