SPICE LOUNGE (DEVON) LTD

Executive Summary

SPICE LOUNGE (DEVON) LTD is a micro-entity operating a licensed restaurant with a stable employee base and positive net assets. However, recent financials indicate tightening liquidity and reduced net asset value, which warrants further investigation into profitability and cash flow management. No regulatory or filing issues are evident from available data, but ongoing monitoring is advised given the sector's typical volatility.

SPICE LOUNGE (DEVON) LTD - Analysis Report

Company Number: 13123082

Analysis Date: 2025-07-20 12:21 UTC

1. Risk Rating: MEDIUM
   Justification: The company shows a decline in net assets and net current assets over recent years, with a notable drop from £38,835 in 2023 to £30,712 in 2024 for net assets, and a sharper decline in net current assets from £8,988 to £1,683. While still solvent, the narrowing working capital buffer poses liquidity concerns in the short term. The small scale of operations and micro-entity status limit detailed financial transparency.

2. Key Concerns:

• Liquidity tightening: Current liabilities increased while current assets decreased slightly, reducing net working capital significantly, which could strain day-to-day cash flow.
• Declining net assets: A drop of over £8,000 in net assets within one year may indicate operational losses or asset impairments not detailed here.
• Limited cash reserves: No explicit cash figure disclosed for 2024; prior year cash was modest (£4,045), raising questions about immediate liquidity availability.

3. Positive Indicators:

• Positive net assets and net current assets: The company remains solvent with assets exceeding liabilities.
• Consistent fixed asset base: Fixed assets have remained relatively stable, suggesting no heavy write-downs or disposals.
• Stable workforce: Employee numbers steady at 5, indicating operational continuity without drastic scaling down.

4. Due Diligence Notes:

• Review detailed profit and loss account to understand causes of net asset decline and assess profitability trends.
• Assess cash flow statements if available to confirm liquidity position and timing of liabilities.
• Investigate debtor quality as prior years show substantial debtors which may impact cash realization.
• Verify that all statutory filings continue to be timely to confirm regulatory compliance.
• Consider the business impact of the COVID-19 pandemic or other external factors given the hospitality sector SIC code (licenced restaurants).