THE DEVELOPMENT STUDIO LIMITED

Executive Summary

The Development Studio Limited has shown a positive turnaround in net assets and is compliant with statutory filings, indicating improving financial and governance stability. However, its micro-entity status, limited capitalization, and previous years’ negative equity highlight moderate solvency and liquidity risks. Careful review of underlying profitability and liabilities is recommended to fully assess operational sustainability.

THE DEVELOPMENT STUDIO LIMITED - Analysis Report

Company Number: 12538321

Analysis Date: 2025-07-19 12:05 UTC

1. Risk Rating: MEDIUM
   The company has demonstrated a notable turnaround from negative net assets in previous years to positive net assets in the latest financial year ending 31 March 2024. However, the micro-entity scale, modest equity base (£5,814), and relatively tight net current assets (£7,188) suggest limited financial buffer. The company’s small size and thin capitalization introduce moderate solvency and liquidity risk.

2. Key Concerns:

• Low Capitalization and Equity Base: With total shareholders’ funds at £5,814, the company has limited capacity to absorb financial shocks or losses.
• Volatile Working Capital Position: Prior years showed net current liabilities and negative net assets, indicating periods of liquidity strain. Although improved in 2024, the working capital remains modest relative to liabilities (£40,143 current liabilities).
• Limited Operational Scale: Average headcount of 2 persons and micro-entity status restrict operational scalability and resilience. The company may be vulnerable to business interruptions or a downturn in its niche market of building project development (SIC 41100).

3. Positive Indicators:

• Recent Financial Recovery: The company reversed prior losses, moving from negative net assets (-£2,311 in 2023) to positive net assets (£5,814 in 2024), indicating improved financial health.
• Timely Compliance: No overdue filings; accounts and confirmation statements are up to date, suggesting sound governance and regulatory compliance.
• Stable Management: Directors have been in position since incorporation with no public records of disqualifications or governance issues, promoting continuity.

4. Due Diligence Notes:

• Review detailed profit and loss data (not filed publicly) to understand the drivers behind the significant improvement from losses to profitability.
• Investigate the nature and terms of current liabilities (£40,143) to assess short-term obligations and repayment risk.
• Confirm whether the company has ongoing contracts or pipeline projects supporting revenue sustainability.
• Evaluate dependency on principal directors and any related party transactions, given the small scale and shared address of directors.
• Assess any contingent liabilities or off-balance-sheet commitments not disclosed in the micro-entity accounts.