Company Number: SC693794

Analysis Date: 2025-07-29 18:51 UTC

1. Risk Rating: MEDIUM
   The company shows a significant decline in net assets and working capital over the last fiscal year, which raises concerns about its financial stability. However, it remains solvent with positive net assets and no overdue filings, mitigating immediate risk.

2. Key Concerns:

• Declining Net Assets: Net assets decreased from £4,915 in 2023 to £1,221 in 2024, indicating erosion of equity possibly due to losses or increased liabilities.
• Reduced Liquidity: Net current assets dropped sharply from £6,492 to £2,313, suggesting tightening short-term liquidity and potential cash flow pressure.
• Lease Commitments: The company has non-cancellable operating lease obligations of £7,098 within one year, which could strain resources if cash flow is insufficient.

3. Positive Indicators:

• Compliance: Accounts and confirmation statements are up to date with no overdue filings, indicating good regulatory compliance.
• Ownership and Control: The majority shareholder and director is an active individual with clear control, which can aid decisive management.
• Stable Workforce: The average number of employees remained constant at 4, suggesting operational continuity.

4. Due Diligence Notes:

• Profitability and Cash Flow: Investigate the absence of a profit and loss account and request management accounts to understand earnings trends and cash flow.
• Lease Impact: Assess the impact of lease payments on liquidity and explore potential renegotiations or alternatives.
• Director Advances: Review details of director advances and repayments for any related party risks or cash flow implications.
• Growth and Market Position: Explore the company’s market position in online retail of calligraphy products and its growth prospects considering the decline in net assets.
• Financial Projections: Obtain financial forecasts and budgets to evaluate sustainability and plans to restore equity levels.