WRM MEDIA LTD

Risk Rating: MEDIUM While the company demonstrates a solid net asset position and positive working capital, the rating is driven by significant intercompany exposure and a recent decline in both cash reserves and retained earnings. The concentration of current assets in a single subsidiary debtor introduces material liquidity risk if that entity experiences financial distress.

Key Concerns: - Intercompany Debtor Concentration: £332,000 of the £472,558 due within one year (approximately 70% of total debtors) is owed by Purr and Mutt Limited, a 100% subsidiary. This represents 47% of total current assets. The recoverability of this balance is entirely dependent on the financial health of that single entity. - Declining Cash and Retained Earnings: Cash at bank has fallen significantly from £507,818 in 2023 to £216,840 in 2025. Concurrently, profit and loss reserves dropped from £344,470 to £325,528 in the latest period, indicating either a trading loss or aggressive dividend extraction that has depleted liquidity. - Intercompany Creditor Obligations: The company owes £160,286 to group undertakings (up from £90,141 in 2024). This represents a substantial portion of current liabilities and suggests increasing reliance on group financing, which could be called upon or restructured at short notice.

Positive Indicators: - Strong Net Asset Position: Net assets stand at £340,634 as of January 2025. The company has maintained a positive net asset position consistently over the 9-year history provided, indicating underlying structural stability. - Healthy Working Capital: Excluding the long-term liabilities, net current assets are £343,510, which comfortably covers current liabilities of £357,938 when the intercompany debtor is assumed recoverable. - Regulatory Compliance: The company is active, has never been marked as overdue for filings, and accounts are filed under the "Total Exemption Full" category, meaning full balance sheet details are available for scrutiny.

Due Diligence Notes: - Subsidiary Financial Health: An immediate review of the latest filed accounts for Purr and Mutt Limited is required to assess its solvency, profitability, and ability to repay the £332,000 intercompany debt. - P&L Reserve Reduction: Investigate the exact cause of the £18,942 reduction in profit and loss reserves. Determine whether this represents a statutory loss for the year or a dividend/distribution to shareholders. - Data Compliance: Given the nature of the business (SIC 63110 - Data processing, hosting and related activities, and website description mentioning "Email Marketing" and "Lead Generation"), verify the company's compliance with UK GDPR and the Data Protection Act 2018, as regulatory fines in this sector can pose an existential risk. - Group Structure: Map the wider group structure to understand the relationships between WRM Media Ltd, Purr and Mutt Ltd, and the entities to which the £160,286 is owed, to assess cross-guarantees or parent company cash sweeps.