B&K LEISURE LTD

Executive Summary

B&K Leisure Ltd displays a weak financial position characterized by persistent negative net assets and significant liquidity shortfalls, raising concerns about its ability to meet short-term obligations. Despite increased cash balances, the company’s negative working capital and accumulated losses indicate high credit risk and limited resilience to economic downturns. Without improvement in profitability or capital structure, the company is unsuitable for new credit facilities at this time.

B&K LEISURE LTD - Analysis Report

Company Number: 12578250

Analysis Date: 2025-07-20 13:13 UTC

1. Credit Opinion: DECLINE

B&K Leisure Ltd presents a concerning financial profile for credit consideration. Despite being an active private limited company operating in the hospitality sector (public houses, bars, and licensed restaurants), the company shows persistent negative net assets and shareholders’ funds for multiple years, currently at approximately -£321k. The significant current liabilities (£1.335 million) heavily outweigh current assets (£436k), resulting in a large negative working capital position (-£898k). Such a liquidity deficit indicates potential difficulties in meeting short-term obligations and servicing new or existing debt without additional capital injections. The lack of audit and reliance on small companies’ regime accounts limits financial transparency. While cash balances improved markedly to £352k, the overall financial trajectory remains negative, with net liabilities improving only slightly from prior years but still substantial. The directors control the business jointly, but there is no evidence of capital restructuring or profitability turnaround. This raises concerns about business resilience, especially given the hospitality sector’s exposure to economic fluctuations. Therefore, credit risk is high, and approval for new credit facilities cannot be recommended at this stage.

2. Financial Strength:

• Fixed assets total £577k, mainly short-leasehold property and equipment, showing some investment in operational infrastructure.
• Current assets of £437k include cash (£352k), debtors (£33k), and stock (£52k).
• Current liabilities are very high at £1.335 million, indicating significant short-term obligations, likely including trade payables and possibly short-term borrowings or accruals.
• Negative net current assets (-£898k) and net liabilities (-£321k) reflect a weak balance sheet with insufficient liquidity to cover immediate liabilities.
• Shareholders’ funds remain negative, evidencing accumulated losses and no equity cushion.
• The company has increased fixed assets and cash balances over the last year but has not addressed the underlying capital deficiency.

3. Cash Flow Assessment:

• Cash position improved substantially from £99k to £352k, suggesting better cash management or cash injections.
• However, the high current liabilities relative to current assets and negative working capital point to ongoing liquidity pressure.
• Debtors have decreased, which may improve cash inflows.
• No detailed cash flow statements are provided, but the large short-term liabilities suggest potential timing mismatches or reliance on creditor financing.
• The company’s ability to service debts depends on continued cash flow from operations or external support.

4. Monitoring Points:

• Monitor current ratio and net working capital trends closely to detect improvements or further deterioration.
• Watch cash flow statements and operating profit margins to assess operational performance and debt servicing capacity.
• Review any changes in creditor terms or additional borrowing that could worsen liquidity.
• Track management actions regarding capital restructuring or profitability improvements.
• Evaluate sector-specific risks, including consumer demand volatility and regulatory changes affecting hospitality.