Investment Risk Analysis: MOJO LTD (05187660)

1. Risk Rating: HIGH

Justification: Despite a recent improvement in net assets from negative to positive territory, the company exhibits significant volatility in its financial position over the past decade, a dramatic deterioration in cash reserves, and a balance sheet heavily reliant on uncertain debtor recoveries. The combination of historical insolvency indicators and current liquidity pressures warrants a high risk classification.

2. Key Concerns

Concern 1: Severe Cash Deterioration

Cash at bank has fallen from £88,715 (YE Jan 2024) to £11,635 (YE Jan 2025) — an 87% decline representing a £77,080 cash drain. For a company with 13 employees and ongoing operational obligations, this leaves minimal liquidity buffer. The cash position has historically been precarious (as low as £173 in YE Jan 2020), suggesting the 2024 cash figure may have been atypical rather than representative of sustainable operations.

Concern 2: Debtor Concentration and Quality Risk

Debtors surged from £5,861 to £59,982 year-on-year. Critically, this balance comprises: - £22,500 due from group undertakings (related party) - £30,674 classified as "other debtors" (nature unspecified) - Only £295 represents trade debtors

Approximately 88% of the debtor book is non-trade in nature, raising serious questions about collectibility, related party dependency, and whether these balances represent genuine arm's-length commercial activity. If these debtors prove irrecoverable, net assets would return to negative territory.

Concern 3: Historical Solvency Volatility

The company's net assets position has oscillated dramatically over the past decade:

This pattern indicates the company has operated with negative net assets for the majority of the past decade, only returning to positive territory in recent periods. The current positive position appears fragile and dependent on debtor realisation.

3. Positive Indicators

• Net Assets Recovery: The movement from -£2,665 to £28,891 represents a meaningful improvement, driven primarily by liability reduction rather than asset inflation.
• Current Liability Reduction: Current creditors fell from £107,301 to £58,561, including the elimination of director loans (£15,517 to £0) and a significant reduction in amounts owed to group undertakings (£40,066 to £66).
• Regulatory Compliance: Accounts and confirmation statements are filed on time with no overdue filings. The company has maintained active status throughout its 20-year history.
• Long-term Debt Reduction: Bank loans falling due after one year reduced from £12,000 to £4,000, indicating structured debt repayment.
• Operational Continuity: Maintained consistent employee count (13 staff) suggesting stable operations through volatile financial periods.

4. Due Diligence Notes

Priority Investigations:

1. Director Discrepancy: The latest accounts are signed by "Ms S T Xxxxxxxname shown to subscribers, Director" yet the Companies House register shows only Xxxxxx Xxxxxxxxname shown to subscribers and Xxxxxx Xxxxxxxxname shown to subscribers as current directors. This discrepancy requires immediate clarification — it may indicate a recent appointment not yet reflected in filings, or an irregularity in the signing of statutory accounts.

2. Group Structure and Related Party Transactions: The significant intercompany balances (both receivable and payable) indicate MOJO LTD operates within a group structure. The identities, financial health, and relationships with these group undertakings must be established to assess whether the £22,500 due from group undertakings is recoverable and whether the reduction in amounts owed to group undertakings represents genuine settlement or merely balance reclassification.

3. Nature of "Other Debtors": The £30,674 classified as "other debtors" represents a material balance (40% of total assets) with no disclosure of nature, age, or recoverability. This requires direct investigation with management.

4. Tax Liability Position: Taxes and social security payable increased from £28,549 to £41,715 (47% increase), now representing 71% of current liabilities. Clarification is needed on whether this relates to VAT, corporation tax, or PAYE, and whether payment arrangements are in place with HMRC.

5. Registered Office Inconsistency: The Companies House registered address (Stonehouse, GL10 3RQ) differs from the address in the latest filed accounts (Stroud, GL5 4SR). This should be verified to ensure compliance with statutory requirements.

6. Cash Flow Sustainability: Given the 87% cash decline, projected cash requirements versus anticipated inflows should be modelled, with particular attention to the timing and certainty of debtor collections.

7. Profitability Assessment: The filed accounts are filleted (no P&L delivered), meaning operational profitability cannot be directly assessed from public records. The improvement in retained earnings from -£2,765 to £28,791 suggests a profit of approximately £31,556, but this should be confirmed and the quality of earnings evaluated.

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