NOISEGATE STUDIOS LTD

Executive Summary

Noisegate Studios Ltd has experienced a sharp decline in liquidity and net worth over the last year, with negative working capital signaling immediate financial stress. While fixed assets remain stable, the erosion of cash and receivables suggests operational challenges that require urgent cash flow management and strategic review. Prompt action to improve liquidity, control costs, and restructure liabilities is essential to restore financial health and ensure sustainable future growth.

NOISEGATE STUDIOS LTD - Analysis Report

Company Number: 12431120

Analysis Date: 2025-07-20 18:54 UTC

Financial Health Assessment for NOISEGATE STUDIOS LTD (FY ending 31 March 2024)

1. Financial Health Score: C-

Explanation:
The company shows signs of financial distress based on its current year's financials. While historically it had a strong position, the latest year’s key liquidity and net asset metrics have deteriorated significantly. The negative net current assets (“working capital”) and a steep decline in net assets signal symptoms akin to "financial fatigue" or "circulatory problems" in a business, where cash flow and short-term obligations are out of balance. This warrants cautious monitoring and remedial action.

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2. Key Vital Signs

Metric	2024 Value	2023 Value	Interpretation
Current Assets	£22,347	£79,779	Sharp decline, indicating reduced liquidity and fewer short-term resources available.
Cash at Bank	£18,991	£55,439	Healthy cash flow is critical; significant drop here suggests cash constraints.
Debtors	£3,356	£24,340	Reduction in receivables may mean fewer sales or more aggressive collection; risk if sales dropped.
Current Liabilities	£28,042	£48,203	Decrease in short-term debts, but still exceeds current assets, causing negative working capital.
Net Current Assets	-£5,695	£31,576	Negative working capital signals the company’s “short-term pulse” is weak—unable to cover immediate debts with current assets.
Net Assets (Equity)	£5,795	£45,235	Drastic reduction in net assets indicates erosion of business value and retained earnings.
Share Capital	£100	£100	Nominal share capital; equity mainly from retained earnings.
Fixed Assets (Net Book Value)	£14,193	£16,863	Slight decline; assets are relatively stable but not enough to offset liabilities.

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3. Diagnosis: What the Financial Data Reveals

• Liquidity Crisis (Symptoms of Distress): The company’s current assets, especially cash and receivables, have dropped sharply while current liabilities remain substantial, resulting in negative working capital. This is akin to a patient with poor blood circulation—there isn't enough liquid "oxygen" (cash/resources) flowing to meet immediate demands (short-term debts). This can lead to operational stress and difficulty in meeting creditor obligations on time.

• Erosion of Net Worth: Net assets have shrunk from over £45k to below £6k within one year, indicating either significant losses, write-downs, or reserves depletion. This loss of “financial muscle” weakens the company’s ability to absorb shocks or invest in growth.

• Stable but Aging Fixed Assets: Tangible fixed assets have depreciated slightly but remain fairly consistent. They represent the company’s “structural health” but are insufficient to cover current liabilities or reverse liquidity problems.

• Declining Receivables: The steep fall in debtors could indicate reduced sales or more stringent credit controls. If sales dropped, this points to a weakening market position or operational slowdown.

• No Audit Requirement: Being a small company with exemption from audit means less external scrutiny, which can be a risk factor if internal controls are weak.

• Directors’ Control: The company is controlled by two directors, suggesting decision-making is centralized but also potentially less diversified in perspective.

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4. Recommendations: Actions to Improve Financial Wellness

1. Strengthen Liquidity:

   • Improve cash management by accelerating debtor collections and negotiating extended payment terms with suppliers.
   • Consider short-term financing options such as overdrafts or revolving credit facilities to cover immediate cash needs.
   • Monitor cash flow daily to prevent liquidity shocks.

2. Cost Control and Profitability Review:

   • Conduct a thorough review of expenses and operational efficiency to identify cost-saving opportunities.
   • Evaluate pricing strategy and sales channels to boost turnover.

3. Balance Sheet Restructuring:

   • Explore options to reduce current liabilities, possibly through negotiated settlements or refinancing.
   • Consider capital injections or equity funding to restore net asset base and financial resilience.

4. Strategic Business Review:

   • Assess market conditions in performing arts support, conference organising, sound recording, and video production sectors to identify growth or diversification opportunities.
   • Review contractual terms and client concentration to reduce risk.

5. Regular Financial Monitoring:

   • Implement monthly management accounts and KPIs to detect early warning signs of distress.
   • Engage with financial advisors to periodically review financial health and compliance.

6. Governance and Compliance:

   • Although audit exemption applies, consider voluntary external review or internal controls enhancement to ensure financial accuracy and stakeholder confidence.

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Executive Summary