Company Number: 13484216

Analysis Date: 2025-07-29 19:38 UTC

1. Risk Rating: MEDIUM
   L9 Lounge Limited shows improvement in net assets and working capital in the latest financial year, indicating some recovery from prior losses. However, the company’s relatively low cash balance and recent history of losses warrant caution regarding liquidity and operational stability.

2. Key Concerns:

• Liquidity Position: Cash on hand is only £568 (2024), which is low relative to current liabilities of £1,911, potentially indicating cash flow constraints despite positive net current assets driven by stock valuation.
• Profitability and Historical Losses: The company reported negative shareholders’ funds and net assets in prior years (2021 to 2023), only turning positive in 2024 largely due to stock valuation rather than cash or earnings strength, raising questions about sustainable profitability.
• Reliance on Directors and Control: One director controls 75-100% of shares and voting rights, with the other controlling 25-50%, indicating concentrated ownership and control which may increase governance risk if operational difficulties arise.

3. Positive Indicators:

• Improved Net Assets: The company moved from negative net assets (£-443 in 2023) to positive £6,117 in 2024, suggesting improved financial health.
• No Overdue Filings: Accounts and confirmation statement filings are up to date, indicating compliance with statutory requirements and management diligence.
• Stable Operational Sector: Operating in the public houses and bars sector, which, if managed well, can generate steady cash flows and benefit from post-pandemic recovery trends.

4. Due Diligence Notes:

• Investigate the composition and valuation basis of stock (£7,460 in 2024), as it significantly impacts net current assets and net assets.
• Review cash flow statements and bank reconciliations to assess actual liquidity and ability to meet short-term obligations.
• Assess business model viability and profitability trends beyond balance sheet improvements, including turnover and margins.
• Examine director backgrounds and governance structures given the concentrated ownership and recent director resignation.
• Verify tax liabilities and provisions, especially as corporation tax of £1,411 appears for the first time in 2024 creditors.