THE FAIRGROUND CAFÉ LTD

Executive Summary

THE FAIRGROUND CAFÉ LTD demonstrates ongoing liquidity challenges and a fragile financial position with minimal equity and persistent negative working capital. While statutory compliance is maintained, the reliance on director loans and lack of retained earnings heighten solvency risk. A thorough review of cash flows, debtor quality, and profitability is recommended to assess operational viability.

THE FAIRGROUND CAFÉ LTD - Analysis Report

Company Number: 12782770

Analysis Date: 2025-07-29 15:09 UTC

1. Risk Rating: HIGH

Justification: The Fairground Café Ltd exhibits persistent net current liabilities and minimal net assets over a four-year period, indicating ongoing liquidity pressures and a weak equity base. The company shows negligible retained earnings and a small share capital, suggesting limited financial resilience to absorb shocks. The presence of director loans indicates reliance on related-party funding, which may not be sustainable long-term. These factors present a heightened risk of solvency and operational instability.

2. Key Concerns:

• Negative Working Capital: The company has reported net current liabilities each year since 2021, with current liabilities exceeding current assets by £191 in 2024, which may impair its ability to meet short-term obligations.
• Minimal Net Assets and Equity: Shareholders’ funds remain at a nominal £101 in 2024, unchanged from prior years, indicating no accumulated profits and minimal buffer against losses.
• Director Loans: Outstanding loans from the director total £2,066 (repayable on demand), representing a reliance on informal financing that may not be sustainable or indicative of underlying cash flow problems.

3. Positive Indicators:

• Timely Filing and Compliance: The company is active, with no overdue statutory filings for accounts or confirmation statements, suggesting compliance with Companies House requirements.
• Stable Employee Base: The company employs approximately 5-6 persons, which implies operational continuity.
• Small Asset Base with Tangible Fixed Assets: The company holds modest tangible fixed assets (plant and machinery valued at £292), reflecting some investment in operational infrastructure.

4. Due Diligence Notes:

• Cash Flow Analysis: Investigate detailed cash flow statements to understand operational cash generation and dependency on director loans or external financing.
• Debtors Quality: Review the composition and collectability of debtors (£2,773 in 2024) given their significant proportion of current assets, including any aging analysis.
• Profitability and Business Model: Since the profit and loss account is not filed publicly, obtain management accounts or internal financial reports to assess profitability, margins, and sustainability of the café business.
• Contingent Liabilities or Off-Balance Sheet Items: Check for any contingent liabilities, guarantees, or related party transactions that may affect financial stability.
• Director Conduct: Confirm the background and conduct records of the director to ensure no adverse governance issues.