POWERHOUSE PYROTECHNICS LTD

Executive Summary

Powerhouse Pyrotechnics Ltd presents a fragile credit profile with deteriorating liquidity and negative equity within two years of incorporation. The company currently lacks adequate working capital to sustain operations without external support. Credit facilities are not recommended until financial stability improves and liquidity risks are mitigated.

POWERHOUSE PYROTECHNICS LTD - Analysis Report

Company Number: 14838507

Analysis Date: 2025-07-29 15:04 UTC

1. Credit Opinion: DECLINE
   Powerhouse Pyrotechnics Ltd exhibits a deteriorating financial position with negative net assets and net current liabilities as of the latest accounting period. The company moved from positive net current assets and equity in 2024 (£5,364) to negative net current assets and shareholders' funds in 2025 (-£11,819). This indicates potential liquidity stress and an inability to meet short-term obligations. Given the early stage of the company (incorporated 2023) and the negative working capital position, there is a high risk of default on credit facilities without additional capital injection or significant operational improvement.

2. Financial Strength:
   The balance sheet shows a sharp decline in financial strength over the latest 12-month period. Total current liabilities more than doubled from £11,487 to £25,287 while current assets dropped slightly. The resulting net current liability of £11,820 suggests the company is overleveraged on a short-term basis. Negative shareholders’ funds highlight erosion of equity value. The company is a micro entity with minimal fixed assets and only one employee, indicating a fragile capital structure heavily dependent on short-term funding or owner support.

3. Cash Flow Assessment:
   The significant increase in current liabilities compared to current assets signals a liquidity crunch. Negative net current assets imply insufficient working capital to cover immediate debts, potentially leading to payment delays or supplier credit issues. No off-balance sheet arrangements are disclosed that might mitigate liquidity risk. The sole director’s background as an entertainer rather than a financial professional may limit sophisticated cash flow management. There is no audit or external verification of financials, increasing uncertainty.

4. Monitoring Points:

• Track quarterly cash flow forecasts and actuals to detect liquidity improvements or worsening.
• Monitor changes in current liabilities and any new short-term borrowings.
• Watch for capital injections or related party loans from the controlling shareholder.
• Review any overdue payments or supplier disputes that may arise from working capital constraints.
• Assess operational performance and revenues as the company matures.
• Confirm timely filing of accounts and returns to avoid regulatory penalties.