Credit Analysis: PLAYBACK STUDIO LTD

1. Credit Opinion: DECLINE

This is an automatic DECLINE. The company is currently in Liquidation status. A company in liquidation is being formally wound up and has ceased trading as a going concern. It has no capacity to service new debt obligations, and any credit extended would effectively rank alongside existing unsecured creditors in the liquidation process with negligible prospect of recovery.

The financial data, while showing a seemingly solvent balance sheet with net assets of £445,358, is irrelevant for new lending purposes given the liquidation status. The trajectory into liquidation was likely precipitated by the deterioration visible in the latest accounts — net assets fell by £87,098 (16.4%) in the year to May 2025, driven by current liabilities increasing by £66,585 while current assets declined by £19,999.

2. Financial Strength

Despite the liquidation status, for completeness:

Balance sheet context: The company showed strong asset growth from 2016 (£63,991 net assets) through to 2024 (£532,456), suggesting a previously successful education business. However, the significant deterioration in 2025 — with liabilities growing 38% year-on-year while assets contracted — indicates the business hit severe difficulties, likely cash flow pressures that ultimately led to the liquidation filing.

The current ratio (current assets / current liabilities) fell from approximately 4.0x to 2.8x, still nominally healthy but deteriorating rapidly.

Share capital remains minimal at £500, with retained profits comprising virtually all equity — typical of an owner-managed business that has reinvested profits.

3. Cash Flow Assessment

Working capital position (2025): - Current Assets: £685,512 - Current Liabilities: £241,141 - Net Current Assets: £444,371

The working capital position appears superficially strong. However, the composition of current assets is unknown (micro-entity accounts do not require breakdown between debtors, cash, and other current assets). Given the move into liquidation, it is reasonable to infer that a significant portion of current assets may be illiquid or irrecoverable — likely trade debtors that proved uncollectable or work-in-progress that could not be converted to cash.

The 38% increase in creditors due within one year (£174,556 to £241,141) signals the company was unable to meet its obligations as they fell due — the classic cash flow insolvency trigger.

Employee numbers reduced from 6 to 5, suggesting cost-cutting measures were attempted but insufficient.

4. Monitoring Points

While no monitoring is required for a DECLINE decision, the following observations are relevant for any exposure to related parties or directors:

• Director conduct: All three directors (Okobia, Hill, Goulbourne) remain listed as current officers. Each holds 25-50% of shares and voting rights. Any credit applications from these individuals or associated ventures should receive enhanced scrutiny.
• Confirmation Statement overdue: The overdue confirmation statement (due 2026-02-12) indicates administrative failure, consistent with a company in liquidation.
• Creditor claims: Creditors totalling £241,141 will be seeking recovery from the liquidation process. The asset base of £686,499 includes £987 in fixed assets, suggesting the majority is in current assets — recoverability will depend on debtor quality and any intangible assets.
• Related-party exposures: The three equal shareholders may have personal guarantees or cross-guarantees with other entities that warrant investigation if they present as borrowers elsewhere.