SCRAPP LTD

Executive Summary

Scrapp Ltd demonstrates high risk due to its significant and worsening negative net asset position and large current liabilities exceeding current assets, indicating solvency and liquidity concerns. While statutory filings are current and ownership is clear, the company’s financial health and operational sustainability require detailed scrutiny. Further due diligence on financial performance and management plans is recommended before considering investment.

SCRAPP LTD - Analysis Report

Company Number: SC688652

Analysis Date: 2025-07-29 20:42 UTC

1. Risk Rating: HIGH
   The company exhibits significant solvency risk with persistently negative net assets and shareholders’ funds, which deteriorated markedly from -£21,631 in 2022 to -£59,205 in 2023. Net current liabilities have also grown substantially, indicating an inability to cover short-term obligations from current assets.

2. Key Concerns:

• Severe Negative Net Assets and Equity: The company’s net liabilities position suggests accumulated losses and potential insolvency issues.
• Large Current Liabilities vs. Limited Current Assets: Current liabilities of £71,978 in 2023 vastly exceed current assets of £8,846, creating a working capital deficit of -£63,132. This signals liquidity stress and potential cash flow problems.
• Rapid Deterioration in Financial Position: The worsening balance sheet over recent years, with increasing liabilities and declining equity, raises concerns about operational sustainability and financial management.

3. Positive Indicators:

• No Overdue Filings: The company is up to date with its accounts and confirmation statement filings, reflecting compliance with statutory requirements.
• Active Status and Clear Ownership: The company remains active with a clear controlling entity (Scrapp Inc.) holding 75-100% ownership, which may provide access to support or capital.
• Minimal Fixed Assets but Recognized: Some tangible fixed assets are recorded (£3,927), indicating limited but existing operational resources.

4. Due Diligence Notes:

• Examine the Profit & Loss Account: As the profit and loss account was not delivered with the accounts, it is important to review it to understand the income, expenses, and causes of losses.
• Assess Cash Flow and Financing Arrangements: Investigate how the company is funding its operations given the large current liabilities and negative working capital—specifically any loans, related party transactions, or guarantees from the parent company.
• Review Director and Management Plans: Understand management’s strategy for addressing the deteriorating financial position, including any restructuring, refinancing, or operational changes.
• Clarify Nature of Current Liabilities: Detailed breakdown of current liabilities is essential to assess urgency and risk of enforcement actions by creditors.

Operational Stability: The company is small with low employee numbers and operates in a niche business support sector, but financial instability undermines operational sustainability without clear evidence of turnaround.

Regulatory Compliance: No overdue returns or accounts and no indication of governance issues or director disqualifications are apparent, suggesting satisfactory regulatory compliance to date.