SCRATCH THE SURFACE LTD

Executive Summary

SCRATCH THE SURFACE LTD exhibits financial volatility with a notable turnaround from net liabilities to modest net assets within one year, raising some medium-level solvency concerns. The company maintains compliance with filings and shows improved working capital, but low capitalisation and director changes warrant further investigation. Overall, cautious monitoring and deeper due diligence on recent financial restructuring and governance are recommended before investment.

SCRATCH THE SURFACE LTD - Analysis Report

Company Number: 12443947

Analysis Date: 2025-07-29 20:22 UTC

1. Risk Rating: MEDIUM
   The company shows a recent return to positive net assets after reporting substantial net liabilities the previous year. This volatility raises concerns about financial stability, although the current micro-entity status and small scale limit absolute exposure.

2. Key Concerns:

• Financial Volatility: The company reported significant net liabilities (£18,472) as of 29 February 2023, reversing to a modest net asset position (£1,369) by 29 February 2024, indicating potential financial distress or restructuring.
• Low Capitalisation: Share capital is minimal (£443.21), which may limit the company’s ability to absorb shocks or invest in growth.
• Director Turnover and Concentration: One director resigned recently (July 2024), and control is concentrated with two individuals owning between 25-50% shares each, which may impact governance and operational continuity.

3. Positive Indicators:

• Timely Filings and Compliance: No overdue accounts or confirmation statements, suggesting good regulatory compliance.
• Improved Working Capital: Net current assets improved from negative £19,433 (2023) to positive £720 (2024), indicating better short-term liquidity management.
• Consistent Workforce: Maintained an average of 4 employees over two years, suggesting operational stability at a small scale.

4. Due Diligence Notes:

• Investigate the cause of the significant net liabilities reported in 2023 and the measures taken to restore positive net assets in 2024.
• Review cash flow statements and any related party transactions to assess liquidity risks not visible in balance sheet data.
• Confirm the reasons for director resignation and assess impact on strategic direction and governance.
• Examine customer concentration, contracts, and revenue streams given the small scale and volatility in financial position.
• Verify the nature of fixed assets and whether any impairment or disposals occurred between 2023 and 2024.