B&H DIGITAL LTD

Risk Rating: MEDIUM

Justification: The company shows a significant net asset recovery in FY2025 after a near-total erosion in FY2024, but remains highly leveraged with non-current creditors far exceeding equity. Filing compliance is clean and current liquidity ratios are acceptable, but the underlying cause of the FY2024 net asset collapse requires urgent clarification.

Key Concerns

1. Severe Net Asset Volatility in FY2024
   Net assets dropped from £80,933 (FY2023) to just £4,729 (FY2024) – a decline of 94%. While FY2025 shows recovery to £72,306, the FY2024 figure is a major red flag that could indicate a substantial loss, large dividend extraction, or asset impairment. The micro-entity accounts provide no profit/loss information to explain this.

2. High Leverage Relative to Equity
   Non-current creditors of £280,200 exceed net assets (£72,306) by a factor of nearly 4x. Total liabilities (£442,536) are 6.1x shareholders' funds. This thin equity cushion leaves the company vulnerable to adverse trading conditions or rising interest costs.

3. Limited Financial Transparency
   As a micro-entity, the company is not required to disclose turnover, cost of sales, or profit figures. The lack of cash or debtor/creditor ageing data makes it impossible to assess true liquidity or operating cash flow generation. The website describes a printing business – a sector with competitive pressures and potential digital disruption.

Positive Indicators

• Current Ratio Improvement
  Current assets of £306,777 against current liabilities of £160,710 give a ratio of 1.91, suggesting adequate short-term coverage (though composition unknown).
• Recovery in Net Assets
  FY2025 net assets of £72,306 are a marked improvement from FY2024's £4,729, indicating the business may have stabilised.
• Compliance Record
  All filings (accounts and confirmation statement) are up to date with no overdue items. No director disqualifications are recorded.
• Stable Workforce
  Average employee count has remained at 10 for two consecutive years, suggesting operational consistency.

Due Diligence Notes

1. Investigate FY2024 Net Asset Collapse
   Request management accounts or director's explanation for the drop from £80,933 to £4,729. Determine whether this resulted from trading losses, dividend payments, or asset write-downs.

2. Clarify Nature of Non-Current Creditors
   Identify whether the £280,200 represents bank debt, director loans, hire purchase obligations, or other financing. Check for any charges or security registered against company assets.

3. Obtain Cash Flow and Profitability Data
   The micro-entity accounts hide turnover and profit. Request at least a summary profit/loss account and cash flow statement for the last three years to assess operating performance and cash generation.

4. Review Director Conduct and PSC Stability
   Though no disqualifications are shown, confirm the two PSCs (Xxxxxxxname shown to subscribers 50-75%, Xxxxxxxname shown to subscribers 25-50%) remain aligned. Note that one director (Xxxxxx Xxxxxxxxname shown to subscribers) resigned in November 2025 – ascertain the reason.

5. Check for Asset Encumbrances
   Fixed assets increased from £198,913 to £208,065. Confirm whether these are owned outright or subject to hire purchase/leasing arrangements that may affect the balance sheet.

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