Company Number: 12722046

Analysis Date: 2025-07-29 16:28 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Hi Bar Ltd is an active private limited company operating in the unlicensed restaurant and café sector. The company shows positive net assets but a sharp reduction in working capital in the latest financial year, signaling some liquidity tightening. While the business is small with modest fixed assets and a stable employee base, the erosion of net current assets from £5,984 in 2023 to £214 in 2024 raises concerns about short-term cash flow sufficiency. Approval is recommended on the condition that the client provides updated cash flow forecasts and demonstrates continued profitability or cash inflows to cover current liabilities promptly.

2. Financial Strength:
   The balance sheet indicates total net assets of £5,688 as at 31 July 2024, down from £11,154 the previous year. Fixed assets have remained stable (~£5,474), but current assets fell from £17,090 to £12,285, mainly due to a decline in trade and other receivables (now £1,882). Current liabilities increased slightly to £12,071. The equity base remains positive but has halved, reflecting retained earnings decline. The company is classified as small and benefits from exemptions from audit and detailed reporting, limiting insight into profitability trends. Overall, the balance sheet is adequate for a small business but shows signs of financial contraction that warrant monitoring.

3. Cash Flow Assessment:
   Cash on hand is £12,285, roughly equal to current liabilities of £12,071, indicating very tight liquidity and minimal buffer to meet short-term obligations. The net current assets dropped significantly from £5,984 to £214 in one year, which may reflect slower collections or increased payables. The company employs three staff and has manageable fixed asset depreciation charges, but limited cash reserves imply potential vulnerability if receivables or sales slow further. Close attention to working capital management and cash conversion cycles is necessary to avoid liquidity stress.

4. Monitoring Points:

• Monthly cash flow forecasts and actual cash position updates to ensure current liabilities are covered.
• Receivables aging and collection efficiency given the low debtor balance and cash constraints.
• Profitability trends or margin pressures in the café sector that could impact retained earnings and reserves.
• Any changes in director or ownership status that may affect company control or creditworthiness.
• Timely filing of accounts and confirmation statements to avoid compliance risk.