SAFARI CHILDCARE RUNWELL LIMITED

Executive Summary

Safari Childcare Runwell Limited shows encouraging signs of financial recovery with improved net assets and a healthy cash balance, despite ongoing liquidity challenges reflected in negative working capital. The company is growing its workforce and operations, which requires vigilant cash flow and cost management to sustain this positive trajectory. Addressing short-term liabilities and reducing reliance on group funding will be critical for continued financial wellness.

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Company Analysis

This analysis is opinion only and should not be interpreted as financial advice.

SAFARI CHILDCARE RUNWELL LIMITED - Analysis Report

Company Number: 14156229

Analysis Date: 2025-07-29 13:21 UTC

Financial Health Assessment for Safari Childcare Runwell Limited


1. Financial Health Score: C

Explanation:
The company shows signs of recovery from previous financial distress but still carries vulnerabilities. The shift from negative net assets to a modest positive net asset position and improved working capital indicates progress. However, the ongoing negative net current assets ("working capital deficit") and reliance on group undertakings for liabilities suggest liquidity constraints and some operational risks remain. The Grade C reflects a cautious but improving financial condition.


2. Key Vital Signs

Metric 2024 Figure Interpretation
Net Assets (Equity) £6,922 Improved from negative equity last year, signaling reduced insolvency risk
Net Current Assets (Working Capital) -£8,215 Negative working capital indicates potential short-term liquidity stress
Cash at Bank £51,637 Healthy cash balance providing buffer for immediate expenses
Current Liabilities £65,328 High short-term obligations, mainly owed to group undertakings
Debtors £5,476 Moderate receivables; cash collection efficiency important
Fixed Assets (Net Book Value) £15,137 Indicates investment in tangible assets but depreciating
Share Capital £100 Nominal, typical for small private companies
Employee Count 12 (up from 1) Significant increase in workforce, reflecting business growth

3. Diagnosis: What The Numbers Reveal

  • Recovery Signs:
    The company transitioned from net liabilities (£-9,395 in 2023) to net positive assets (£6,922 in 2024), indicating the balance sheet is healing. This is a key "vital sign" of improving financial health.

  • Liquidity Concerns:
    Despite a healthy cash balance, the negative net current assets reveal that current liabilities exceed current assets by over £8k. This is a symptom of potential short-term liquidity stress, akin to a patient with a strong heartbeat but low oxygen levels—cash is present but obligations are high.

  • Reliance on Group Funding:
    The majority of current liabilities (£58,291) are owed to group undertakings, suggesting internal financing is supporting operations. This internal "life support" is helpful but potentially risky if group support weakens.

  • Growing Workforce and Operations:
    Increasing average employees from 1 to 12 signals business expansion and increased operating expenses. This is a positive symptom of growth but requires careful cash flow management to avoid overextension.

  • Asset Utilization and Depreciation:
    Fixed assets decreased slightly, partly due to depreciation, but reflect ongoing investment in plant and machinery necessary for childcare operations.

  • No Audit Required:
    The company qualified for audit exemption under small companies rules, simplifying compliance but reducing external scrutiny.


4. Recommendations: Actions to Improve Financial Wellness

  • Improve Working Capital Management:
    Focus on reducing current liabilities and/or increasing current assets. This could involve negotiating longer payment terms with suppliers or accelerating debtor collections to reduce the "working capital deficit."

  • Enhance Cash Flow Forecasting:
    With expansion and increased employees, implement rigorous cash flow monitoring to ensure the "healthy cash flow" continues and short-term obligations can be met comfortably.

  • Diversify Financing Sources:
    Reduce dependency on group undertakings by exploring external financing options or reinvesting profits to build independence.

  • Cost Controls:
    Monitor operating expenses closely, especially payroll and lease commitments (£26k+ in future lease payments), to avoid cash strain.

  • Strategic Growth Planning:
    Continue to assess the scalability of the business model given the increased staff and operational footprint, ensuring growth is sustainable.

  • Maintain Compliance and Transparency:
    Keep filing accounts and confirmation statements on time to avoid penalties and maintain stakeholder confidence.



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