BACCHANALIA LIMITED
Company number 03597289 · Monitor this company
This analysis was written by an AI from the company's public filings. It may contain errors or omissions and is not financial or professional advice.
Credit Analysis: BACCHANALIA LIMITED
1. Credit Opinion: APPROVE
Rationale: Bacchanalia Limited presents a strong credit profile characterised by consistent profitability, robust liquidity, and a well-capitalised balance sheet. The company demonstrates a decade-long trajectory of growth in net assets (from £1.66m in 2015 to £5.85m in 2024), strong cash generation, and minimal leverage. The 26-year trading history, premium client base, and retainer-based revenue model provide additional comfort. The auditor's going concern opinion is unqualified with no material uncertainties noted. This business would qualify for favourable terms on standard commercial facilities.
2. Financial Strength
Balance Sheet Assessment: STRONG
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Net Assets | £5.85m | £5.08m | £3.95m |
| Shareholders' Funds | £5.85m | £5.08m | £3.95m |
| Total Liabilities | £1.13m | £1.79m | £0.91m |
| Net Current Assets | £4.56m | £3.86m | £3.95m |
- Gearing: Negligible. The company operates with virtually no debt. Liabilities are predominantly trade creditors and current liabilities, which have decreased from £1.79m to £1.13m year-on-year.
- Asset Quality: Current assets of £5.69m (including £2.74m cash and £2.95m debtors) dominate the balance sheet. Fixed assets include an investment property of £1.13m providing additional security.
- Net Worth Trend: Consistent and impressive growth—net assets have increased every year for the past decade, demonstrating retained earnings and prudent financial management.
- Share Capital: Minimal at £500, indicating growth has been funded through retained profits rather than equity injections—a positive indicator of organic profitability.
Concerns: Debtors of £2.95m warrant attention. For a £14.3m turnover business, this represents approximately 75 days of revenue. The quality and ageing of this debtor book should be verified, though the strong cash position mitigates collection risk.
3. Cash Flow Assessment
Liquidity Position: EXCELLENT
| Metric | 2024 (15 months) | 2023 (12 months) |
|---|---|---|
| Cash at Bank | £2.74m | £2.71m |
| Operating Profit | £1.62m | £1.24m |
| Profit Before Tax | £1.75m | £1.27m |
| Dividends Paid | £600k | Not disclosed |
- Cash Conversion: Strong. Cash balances have grown consistently from £0.84m (2016) to £2.74m (2024), demonstrating reliable cash generation from operations.
- Working Capital: Net current assets of £4.56m provide substantial headroom. The current ratio (current assets ÷ current liabilities) is approximately 5.0x, indicating excellent short-term liquidity.
- Operational Cash Generation: The business generated £1.62m operating profit on £14.3m turnover (11.3% margin), with interest income of £124k supplementing this. The gross margin of 78.22% is exceptional for a services business and reflects the premium positioning.
- Dividend Policy: £600k in dividends were paid—reasonable relative to profits and leaving significant retained earnings for reinvestment.
Cash Flow Observations: The 2024 period covers 15 months (transitioning from September to December year-end), which somewhat inflates year-on-year comparisons. Annualised turnover would be approximately £11.5m, still representing growth. The interest income of £124k suggests surplus cash is being managed actively.
4. Monitoring Points
| Metric | Current Status | Watch Threshold |
|---|---|---|
| Net Assets | £5.85m | Below £5.0m |
| Cash Position | £2.74m | Below £1.5m |
| Operating Margin | 11.32% | Below 8% |
| Gross Margin | 78.22% | Below 70% |
| Debtor Days | ~75 days | Above 90 days |
| Current Ratio | 5.0x | Below 2.0x |
Key Monitoring Considerations:
-
People Dependency: The strategic report identifies key employee loss as a principal risk. As a creative communications agency, revenue is inherently tied to talent. Monitor staff retention and recruitment costs.
-
Macroeconomic Sensitivity: The business operates in discretionary marketing/PR spend. While the premium/luxury focus provides some resilience, a significant economic downturn could impact client budgets.
-
Geographic Expansion: The group is expanding into the Middle East. Monitor capital requirements and whether this expansion is being funded from cash flow or requires additional facilities.
-
Debtor Quality: With £2.95m in debtors, request regular ageing analysis. Concentration risk (top 5 clients as percentage of revenue) should be assessed.
-
Group Structure: The presence of a corporate director (name shown to subscribers) and non-controlling interests suggests a complex group structure. Inter-company exposures and guarantees should be mapped.
-
Accounting Period Change: The transition from September to December year-end creates a 15-month period. Future comparisons should normalise for this to avoid misinterpretation of trends.