Company Number: 14367306

Analysis Date: 2025-07-29 12:42 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   South Space Studios Ltd shows improving financial health with net assets increasing from £205 to £17,584 within 18 months, indicating early-stage growth. The company maintains positive net current assets (£28,540), suggesting it can meet short-term liabilities. However, as a micro-entity incorporated recently (2022), with a small capital base (£4 share capital) and limited operating history, the credit risk remains moderate. Approval is conditional on continued positive cash flow and management maintaining prudent financial controls.

2. Financial Strength:
   The balance sheet reflects a modest but improving position. Current assets rose significantly to £110k, while current liabilities increased to £81.7k, leaving net current assets of £28.5k. Net assets and shareholder funds also grew from £205 to £17,584, indicating accumulation of retained earnings or capital injection. The absence of long-term liabilities reduces financial risk. The company operates within micro-entity reporting thresholds, limiting detailed insight into profitability or debt structure.

3. Cash Flow Assessment:
   Positive net working capital (£28.5k) implies sufficient liquidity to cover short-term obligations. The increase in current assets suggests improved cash or receivables, but the material accruals and deferred income (£10,956) may impact available cash flow timing. Lack of audit and limited disclosures restrict detailed cash flow analysis. Monitoring of receivables turnover and creditor payment terms is recommended to ensure ongoing liquidity.

4. Monitoring Points:

• Track future annual accounts to confirm sustained profitability and growth in equity.
• Monitor working capital trends, especially receivables and payables cycles.
• Observe any increases in liabilities that could strain liquidity.
• Watch director conduct and company filing compliance to mitigate operational risks.
• Review impact of any changes in ownership or control given concentration of control by two directors.