Company Number: 12770590

Analysis Date: 2025-07-29 19:03 UTC

1. Credit Opinion: DECLINE
   Hillside Coffee Limited shows persistent losses with negative net assets worsening to -£19,723 for the year ended July 2024. The company’s turnover declined sharply by about 35% year on year (from £24,373 to £15,833), signaling weakening sales performance. Current liabilities and longer-term creditors total £54,820 with minimal working capital (£3,698), indicating liquidity constraints. Given the ongoing losses, negative equity, and modest asset base, the company currently lacks the financial strength and cash flow adequacy to service new credit facilities reliably.

2. Financial Strength:
   The balance sheet reveals negative shareholders’ funds at -£19,723, deteriorating from -£15,069 the prior year, reflecting accumulated losses and erosion of capital. Fixed assets are stable at around £37,454 but are overshadowed by liabilities exceeding £54,000. Current assets (£3,698) are low relative to short-term obligations, and provisions for liabilities increased to £6,055, indicating potential future outflows. Overall, the company’s financial structure is weak, with negative equity and insufficient asset coverage for liabilities.

3. Cash Flow Assessment:
   Operating cash inflows are limited due to low turnover and losses of £5,034 in the most recent period. Current assets primarily consist of modest cash and receivables, insufficient to cover current liabilities, although creditors due within one year show zero in the latest accounts, which might indicate deferred payments or reclassification. Staff costs have dropped significantly, possibly reflecting cost-cutting, but cost of materials and other charges remain substantial. The company’s working capital position is fragile, raising concerns about its ability to meet short-term obligations without external support.

4. Monitoring Points:

• Turnover trends and gross margin changes to assess revenue recovery or further decline.
• Movement in net current assets and liquidity ratios to monitor short-term financial health.
• Changes in creditor balances and provisions to detect worsening payment terms or contingent liabilities.
• Any equity injections or debt restructuring efforts by management to improve solvency.
• Director’s statements or strategic plans addressing turnaround or growth prospects.