Company Number: 12786110

Analysis Date: 2025-07-20 15:17 UTC

Financial Health Assessment for CREATIVE NH LIMITED

---

1. Financial Health Score: D

Explanation:
The company displays several concerning financial symptoms, including persistent net liabilities, significantly negative working capital, and reliance on shareholder funding to maintain operations. While not yet insolvent, the financial "vital signs" suggest distress and vulnerability, warranting a below-average grade.

---

2. Key Vital Signs

Metric	Latest (31 Dec 2023)	Interpretation
Net Assets (Equity)	-£747,073	Negative equity indicates the company owes more than it owns—a sign of financial strain.
Net Current Assets (Working Capital)	-£1,569,233	Strongly negative working capital—a symptom of liquidity stress and potential inability to meet short-term obligations.
Current Liabilities	£1,775,329	High level of short-term debts relative to assets.
Cash at Bank	£65,566	Low cash reserves relative to liabilities—a weak "pulse" of cash flow health.
Fixed Assets	£822,160	Significant investment in long-term assets, but these are less liquid for immediate needs.
Share Capital	£1.00	Minimal share capital, indicating limited initial equity injections.
Trend in Net Assets	From -£372,416 (start 2023) to -£747,073 (end 2023)	Worsening net asset position, signaling increased financial distress over the year.
Number of Employees	48	Moderate size for a licensed restaurant, indicating operational scale.

---

3. Diagnosis: Financial Condition Overview

Symptoms of Distress:

• Negative Equity and Eroding Net Assets: The company’s net liabilities have doubled over the financial year, indicating it is "running a fever" financially. Persistent losses or accumulated deficits have drained shareholder equity, raising the risk of insolvency if not remedied.

• Severe Liquidity Strain: The working capital is deeply negative, meaning current liabilities far exceed current assets. This is akin to a patient with low blood volume—there is insufficient "cash and receivables" to cover immediate debts. The drop in cash from £538k to just £65k during the year shows a sharp decline in liquidity reserves.

• Heavy Short-Term Debt Load: Current liabilities remain very high (~£1.8 million), putting strain on the company’s ability to finance day-to-day operations without additional support.

• Asset Base Concentration: The bulk of the company’s assets are fixed, particularly leasehold property and fixtures, which are not easily converted into cash quickly. This illiquidity can exacerbate short-term cash flow problems.

• Going Concern Statement: Directors acknowledge the negative equity but cite shareholder facilities that provide working capital support for at least 12 months. This is comparable to a patient on life support—it’s sustaining current operations but requires ongoing assistance.

---

4. Recommendations: Path to Financial Wellness

Immediate Actions:

• Strengthen Liquidity: Prioritize increasing cash reserves. This might involve accelerating debtor collections, negotiating extended payment terms with creditors, or injecting additional shareholder funds.

• Cost and Expense Review: Analyze operating costs, including staffing and overheads, to identify potential savings. With 48 employees, workforce optimization could improve the "metabolic rate" of the business.

• Debt Restructuring: Engage with creditors to restructure current liabilities, potentially converting short-term debts into longer-term obligations to ease immediate payment pressure.

• Asset Utilization: Evaluate the fixed asset base to determine if any underutilized assets can be sold or leveraged to generate cash without disrupting operations.

Medium to Long-Term Strategies:

• Profitability Improvement: Reassess pricing, menu offerings, and marketing strategies to improve turnover and margins. A healthier "revenue heartbeat" is critical.

• Equity Injection: Consider raising equity capital to restore positive net assets. Fresh capital would act like a transfusion, strengthening the company’s financial foundation.

• Regular Financial Monitoring: Implement rigorous monthly cash flow forecasting and financial analysis to detect early symptoms of distress and respond proactively.

---

Summary

CREATIVE NH LIMITED is currently exhibiting signs of financial distress characterized by negative equity, weak liquidity, and high short-term debt. While operations continue with shareholder support, the company’s financial health requires urgent attention to avoid deeper impairment. Focused efforts on liquidity management, cost control, debt restructuring, and capital strengthening are essential to restore financial wellness.