Company Number: 12792819

Analysis Date: 2025-07-19 12:13 UTC

1. Risk Rating: MEDIUM

Justification: Adventure Bars Mid Limited shows an improving financial position with positive net current assets and net assets as of the latest accounts. However, the company operates in the hospitality sector, which can be volatile, and had significant negative working capital in prior years. The reliance on intra-group balances and the relatively low share capital also warrant caution.

2. Key Concerns:

• Working Capital Volatility: The company moved from negative net current assets (£-312k in 2022) to a positive position (£118k in 2023), indicating some volatility in liquidity management. The large debtor balance, mostly owed by group undertakings (£1.14m), poses risk if intra-group funding is disrupted.

• Concentration of Control and Group Dependence: Nightcap Limited owns 75-100% of shares and controls the company’s board appointments. Significant amounts owed to and from group companies indicate operational and financial dependence on the parent group, which may impact standalone sustainability.

• Limited Share Capital and History: With a nominal share capital of £100 and incorporation in 2020, the company has a short operational history and limited equity buffer to absorb shocks or losses, typical of small private companies in a competitive sector.

3. Positive Indicators:

• Improved Financial Position in Latest Year: The company reported net assets of £562,876 and positive net current assets as at July 2023, showing recovery from prior years’ deficits.

• Profitability and Going Concern Confirmation: The directors have confirmed the going concern basis in the accounts, supported by the group’s refinancing and cash reserves. The company reported profit before tax (£422k) and positive tax charges indicating taxable profits.

• Compliance and Filing Status: The company is active with no overdue accounts or confirmation statements, indicating good regulatory compliance and governance practices.

4. Due Diligence Notes:

• Review Intra-Group Balances: Examine the nature and recoverability of the large debtor balances owed by group undertakings and the amounts owed to group companies to assess credit risk and cash flow implications.

• Assess Group Support and Covenant Risks: Evaluate the parent group’s financial health, refinancing arrangements, and covenant terms since the company’s going concern relies on group forecasts and liquidity.

• Operational Metrics and Sector Risks: Given the hospitality SIC code (56302), analyze recent trading performance, impact of economic factors (inflation, consumer spending), and the company’s strategy to mitigate sector volatility.

• Director Changes and Governance: Consider implications of recent director appointments and resignations on management stability and operational continuity.

• Deferred Tax and Provisions: Clarify the deferred tax charge and provisions changes, as these affect future cash flows and tax liabilities.