Investment Risk Analysis: RAISE THE BAR LIMITED

1. Risk Rating: MEDIUM-HIGH

The rating reflects a significant deterioration in the company's financial position in the latest fiscal year, with net assets declining by 67% and cash reserves continuing a sustained multi-year downward trend. While the company remains solvent and operational, the trajectory is concerning and warrants close monitoring.

2. Key Concerns

a) Severe Erosion of Net Assets Net assets fell from £615,262 (FY2024) to £203,117 (FY2025) – a decline of £412,145 or approximately 67%. Retained earnings mirror this drop (£615,238 to £203,093), indicating the company incurred a substantial loss during the period. This is the most significant year-on-year decline in the ten-year dataset.

b) Persistent Cash Deterioration Cash has declined consistently over five consecutive years:

Cash has fallen by 80% from its FY2021 peak. At the current burn trajectory, and without a return to profitability, the company faces material liquidity risk within 12-18 months.

c) Thin Working Capital with Debtors Concentration Risk Net current assets stand at only £70,623. Trade debtors of £714,049 represent approximately 79% of current assets. If a material portion of these receivables proves uncollectible or experiences delayed payment, the company's ability to meet current liabilities (£831,804) would be severely compromised. The current ratio of approximately 1.08:1 provides minimal buffer.

3. Positive Indicators

a) Regulatory Compliance The company is fully compliant with all filing obligations. Accounts for FY2025 were filed on time (approved 26 May 2026, with a due date of 31 May 2027), and the confirmation statement is current. No overdue filings or regulatory concerns are evident.

b) Workforce Growth Average employee numbers increased from 84 to 91 during FY2025, suggesting the business continues to operate and potentially expand its service delivery capacity. This is typically inconsistent with a company in terminal decline.

c) Debt Reduction Bank loans and overdrafts reduced from £133,292 to £80,453 during the year, indicating the company is not relying on expanding bank debt to fund operations. Taxation liabilities also decreased (from £301,746 to £258,363).

d) Long Operating History Incorporated in 2004, the company has traded for over 20 years and has previously recovered from a weaker financial position (net assets were as low as £155,429 in FY2017 before recovering).

4. Due Diligence Notes

a) Profitability and Loss Magnitude The income statement has not been delivered (permitted under Section 444 for small companies), which obscures the scale and nature of the loss. Understanding whether the loss is operational, driven by one-off items, or related to impairment/write-downs is essential. Request full management accounts.

b) Parent Company Relationship Raise The Bar Group Limited holds >75% of shares and voting rights. Investigate: - Whether intercompany transactions exist within the £351,407 "other creditors" balance - The financial health of the parent entity and whether group support is available - Whether the loss reflects group restructuring or transfer pricing

c) Trade Debtors Quality With £714,049 in trade debtors (up from £886,531, though still substantial), assess: - Ageing profile of receivables - Bad debt provision adequacy - Concentration risk (top 5 customers as percentage of debtors)

d) "Other Creditors" Composition Other creditors increased from £311,162 to £351,407. Clarify the nature of these obligations – whether they include director loans, deferred income, or intercompany balances.

e) Intangible Assets Intangible assets of £110,038 (net of amortisation) with original cost of £343,248 require scrutiny. Development costs are being amortised over "nil years" according to the accounting policy note, which appears to be an error or incomplete disclosure. Understand what these intangibles represent and whether further impairment is likely.

f) Provisions Provisions of £44,107 exist on the balance sheet. Understand what these relate to and whether additional provisions may be required.