Company Number: 12800967

Analysis Date: 2025-07-20 14:57 UTC

1. Credit Opinion: CONDITIONAL APPROVAL

Clementine 2020 Limited has demonstrated a significant turnaround in financial position in the most recent year, moving from negative net assets and working capital to positive figures. However, the company carries a substantial long-term debt burden (£290k) relative to its modest net assets (£3.9k) and small share capital (£30). The recent increase in current assets and cash position is encouraging, but the company remains highly leveraged with bank loans and hire purchase liabilities. Credit approval can be considered conditionally, subject to continued monitoring of cash flow generation and debt servicing ability. Additional safeguards such as periodic financial updates and covenant compliance may be advisable.

2. Financial Strength

The balance sheet shows a marked improvement from prior years. Net current assets improved from a negative £33k in 2023 to a positive £169k in 2024, driven by a rise in current assets (£299k) including cash (£147k) and stock (£131k). Fixed assets increased to £143k due to capital additions. However, the company’s total liabilities remain significant, with long-term borrowings of £290k (including secured debt of £50k). Net assets improved from a deficit to a small positive £3.9k, reflecting retained earnings moving from negative to positive. The balance sheet is still relatively weak with low equity cushion and high gearing, implying limited financial resilience.

3. Cash Flow Assessment

The cash balance increased substantially from £31.5k to £147.5k, indicating improved liquidity. Current liabilities also rose but are well covered by current assets, resulting in strong net working capital. The presence of hire purchase liabilities and bank loans indicates ongoing financing costs and repayment obligations. Absence of detailed profit and loss data limits full cash flow assessment, but the increased cash and working capital suggest improved short-term liquidity. The company should maintain focus on converting debtors and stock efficiently and managing creditor terms to sustain liquidity.

4. Monitoring Points

• Debt servicing capacity: Monitor interest and principal repayments on £290k long-term debt, especially secured loans.
• Working capital management: Track debtor collection and stock turnover to maintain positive net current assets.
• Profitability trends: Obtain regular income statements to verify sustainable earnings to support debt coverage.
• Capital structure: Watch for equity infusion or debt reduction to improve financial strength and reduce leverage.
• Director conduct and governance: No adverse records noted; ensure continued prudent financial stewardship by current directors.