SCOTT & BROWNS HOTEL LTD

Executive Summary

Scott & Browns Hotel Ltd has demonstrated improving financial stability since formation, with growing net assets and shareholder funds. However, ongoing negative working capital and significant lease obligations present liquidity risks that warrant conditional credit approval with monitoring. Close attention to cash flow and debtor management is critical to ensure timely debt servicing and operational resilience.

SCOTT & BROWNS HOTEL LTD - Analysis Report

Company Number: 13110722

Analysis Date: 2025-07-20 15:29 UTC

1. Credit Opinion: CONDITIONAL APPROVAL. Scott & Browns Hotel Ltd shows improving net assets and reduced current liabilities year-over-year, indicating strengthening financial position since inception in 2021. However, the company has persistent negative net working capital (current liabilities exceed current assets) which poses liquidity risk. The directors’ active involvement and increasing shareholder funds are positive, but close monitoring of short-term liquidity and ability to meet operating lease commitments is advised before extending credit.

2. Financial Strength: The company’s net assets increased from £53.9k in 2023 to £80.7k in 2024, reflecting retained earnings growth and reduction in liabilities. Fixed assets are tangible and depreciating as expected. Share capital remains constant at £10k, providing a modest equity buffer. The company is categorized as a small entity, filing under the small companies regime with total exemption from audit. The balance sheet shows improving solvency but the negative net current assets (£-15.9k in 2024) highlight short-term funding pressures.

3. Cash Flow Assessment: Cash at bank improved slightly from £21.3k to £22.5k, but remains modest relative to current liabilities of £74.6k, implying potential cash flow tightness. Debtors increased to £36.2k, which may support liquidity if collected timely. Operating leases present significant ongoing commitments (£70k due within 1 year and £309k total), which could strain cash flows. The company needs to maintain tight working capital management and ensure timely collections to avoid liquidity stress.

4. Monitoring Points:

• Net current asset position and liquidity ratios, especially cash vs short-term liabilities.
• Debtor days and collection efficiency to ensure receivables convert to cash promptly.
• Ability to meet operating lease obligations without compromising working capital.
• Consistency in profitability to build retained earnings and equity cushion.
• Any changes in director conduct or control structure that may impact governance or credit risk.