BARCO PUBS LTD

Executive Summary

BARCO PUBS LTD is currently experiencing early signs of financial strain, with negative net assets and working capital challenges indicating liquidity pressures. While cash reserves have improved, the company must urgently focus on cash flow management and liability control to prevent further deterioration. Proactive financial restructuring and operational adjustments are recommended to restore the company’s financial health and ensure sustainable operations in the competitive public houses and bars sector.

BARCO PUBS LTD - Analysis Report

Company Number: SC688658

Analysis Date: 2025-07-29 20:42 UTC

Financial Health Assessment for BARCO PUBS LTD (Year ended 28 February 2024)

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1. Financial Health Score: D

Explanation:
BARCO PUBS LTD exhibits signs of financial distress as of its latest accounts. The company has slipped from a positive net asset position (£10,227 in 2023) to a negative net asset position (£-3,136 in 2024), indicating a net insolvency on paper. Additionally, the company has a marginally negative working capital (net current assets of -£154) and increasing liabilities, which are symptoms that the business is under strain and facing liquidity challenges. While not yet in formal insolvency, these signs warrant caution and immediate remedial action to restore financial health.

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2. Key Vital Signs

Metric	2024 Value	2023 Value	Interpretation
Net Assets (Shareholders’ Funds)	-£3,136	£10,227	Negative net assets point to solvency concerns.
Net Current Assets (Working Capital)	-£154	£21,223	Slightly negative working capital indicates potential liquidity issues.
Current Assets	£85,467	£70,089	Increased current assets mainly due to higher debtors.
Current Liabilities	£85,621	£48,866	Sharp increase in short-term obligations, a red flag.
Cash in Hand	£16,093	£8,410	Improved cash balance is a positive sign but still low relative to liabilities.
Long-Term Liabilities	£16,261	£26,276	Decreased long-term debt but overall liabilities remain high.
Debtors (Receivables)	£64,224	£56,679	High receivables may affect cash flow if not collected timely.
Tangible Fixed Assets (Net)	£16,394	£18,864	Slight decrease due to depreciation; assets remain moderate.
Number of Employees	19	20	Stable workforce size.

Interpretation of Vital Signs:

• The negative net asset position is a "symptom of distress" indicating the company’s liabilities now exceed its assets.
• Working capital turning negative is a "warning sign" of cash flow pressure, possibly due to increased short-term creditors and tax/social security liabilities that have nearly doubled.
• Cash reserves have improved but remain modest compared to immediate liabilities; this is a "fragile pulse" for liquidity.
• High debtor balances suggest revenue is being booked but may not be fully converted to cash yet, putting strain on day-to-day operations.
• Reduction in long-term liabilities is somewhat positive but overshadowed by increased current liabilities.

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3. Diagnosis

BARCO PUBS LTD shows early symptoms of financial stress. The negative net asset base is akin to a patient whose vital organs are functioning below normal thresholds. The company is managing to keep operations running, supported by cash and receivables, but the rising current liabilities—especially tax and social security obligations—indicate pressure points that could lead to liquidity crises if not addressed.

The increase in debtors coupled with rising creditors suggests a mismatch in cash inflows and outflows—a classic sign of working capital strain. While the company is not yet in a critical state such as administration or receivership, the financial "vital signs" point to a need for intervention to prevent deterioration.

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4. Recommendations

Immediate Actions:

• Improve Cash Flow Management: Accelerate debtor collections and negotiate extended payment terms with suppliers to ease working capital pressure.
• Address Tax and Social Security Liabilities: Engage proactively with HMRC to manage liabilities and avoid penalties or enforcement action.
• Cost Control: Review operating expenses and workforce utilisation to reduce overhead without compromising revenue-generating capacity.
• Financial Restructuring: Consider options to inject equity or refinance debt to restore positive net assets, especially given the minimal share capital (£2).
• Regular Financial Monitoring: Implement tight cash flow forecasting and monthly financial reviews to detect and manage emerging issues early.

Medium to Long Term:

• Business Model Review: Analyze profitability drivers and margins in the highly competitive pubs and bars sector; explore diversification or value-added services.
• Asset Utilisation: Evaluate fixed assets for potential impairment or sale to improve liquidity.
• Stakeholder Communication: Maintain transparent communication with lenders, shareholders (notably Mr. Ryan Clark holding 25-50% control), and suppliers to build trust and negotiate terms.
• Plan for Growth or Stabilisation: Depending on market conditions, either focus on stabilising the business or seek opportunities for expansion when financial health improves.

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