CHEW VALLEY DISTILLERY LTD

Executive Summary

Chew Valley Distillery Ltd exhibits significant financial distress as shown by negative working capital and net liabilities, indicating liquidity problems and erosion of equity. Immediate focus on improving cash flow, securing additional capital, and strict financial management is critical to restore health. The company’s lean size offers some operational resilience, but a turnaround plan is urgently needed for sustainable recovery.

CHEW VALLEY DISTILLERY LTD - Analysis Report

Company Number: 12512156

Analysis Date: 2025-07-29 14:04 UTC

Financial Health Assessment for CHEW VALLEY DISTILLERY LTD as of 31 March 2024

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1. Financial Health Score: D

Explanation:
The company exhibits significant signs of financial distress with persistent net liabilities and negative working capital. While it remains operational with no overdue filings, the balance sheet portrays ongoing financial strain affecting its stability and solvency, warranting a below-average health grade.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Fixed Assets	30,764	Moderate investment in long-term assets, fairly stable.
Current Assets	61,691	Cash, inventory, and receivables available to cover short-term obligations.
Current Liabilities	106,433	High short-term debts and payables exceeding assets.
Net Current Assets (Working Capital)	-44,742	Negative value; indicates liquidity issues and cash flow stress.
Total Assets Less Current Liabilities	-13,978	Negative, showing overall asset base cannot cover short-term debts.
Creditors Due After One Year	13,337	Long-term debt still burdensome.
Net Liabilities (Shareholders’ Funds)	-34,415	Negative equity; company owes more than it owns, a symptom of financial distress.
Average Number of Employees	2	Small workforce consistent with micro company status; low overhead.

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3. Diagnosis: What the Numbers Reveal About Business Health

• Liquidity Stress ("Weak Pulse"): The company’s current liabilities nearly double its current assets, resulting in a large negative working capital (-£44,742). This suggests difficulty meeting short-term obligations without additional funding or asset sales.

• Negative Net Assets ("Underlying Illness"): The persistent negative net assets (around -£34k) for the past three years indicate accumulated losses or ongoing cash burn, eroding shareholders' equity and indicating the business has been operating "below par" financially for an extended period.

• Stable Fixed Assets ("Organ Support"): Fixed assets have remained relatively stable (£30k-£33k), which shows the company has maintained its investments in equipment or property necessary for operations, indicating some asset stability.

• Financial Trend ("Chronic Condition"): Comparing 2021 and 2024, the company moved from positive net assets (£9,989 in 2021) to negative territory, reflecting ongoing financial deterioration. This trend is concerning, indicating the business is not yet on a recovery path.

• Small Scale Operation ("Low Metabolic Demand"): With only two employees, the company maintains a lean operation, which might help control costs but also limits growth capacity.

• Ownership and Control ("Strong Governance"): The company’s ownership is concentrated among three individuals, with Amy Louise Kelly holding majority control, and all directors are actively involved. This concentrated control can facilitate quick decision-making but also concentrates risk.

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4. Recommendations: Specific Actions to Improve Financial Wellness

• Improve Liquidity ("Revive the Circulation"):

  • Enhance cash flow management by accelerating debtor collections and negotiating longer payment terms with creditors.
  • Consider short-term financing options to cover immediate liquidity gaps.
  • Review inventory management to free up tied-up cash.

• Address Negative Equity ("Strengthen the Heart"):

  • Inject fresh equity capital from shareholders or external investors to restore net asset position.
  • Alternatively, consider restructuring debts to reduce liabilities or extend repayment terms.

• Cost Control and Revenue Growth ("Boost Vital Functions"):

  • Explore opportunities to increase sales or diversify product lines to improve top-line revenue.
  • Scrutinize operational expenses and overheads for possible reductions.

• Financial Monitoring ("Regular Checkups"):

  • Implement rigorous monthly financial reviews to monitor cash flows, working capital, and profitability.
  • Engage with financial advisors or mentors to develop a turnaround plan.

• Prepare for Contingencies ("Emergency Preparedness"):

  • Develop contingency plans in case liquidity worsens, including cost cuts or business model adjustments.

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Summary

The financial "vital signs" of Chew Valley Distillery Ltd reveal a company struggling with liquidity and negative net worth, akin to a patient with a weak pulse and underlying chronic illness. Immediate interventions to restore cash flow and equity are essential to avoid further deterioration. While the company maintains stable fixed assets and lean operations, without corrective action its financial health may continue to decline.