COOL SOLUTIONS (UK) LIMITED
Company number 03821437 · 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.
Commercial Credit Assessment: COOL SOLUTIONS (UK) LIMITED
1. Credit Opinion: CONDITIONAL
Recommendation with stipulations. The company demonstrates a strongly positive financial trajectory with significant equity growth and profitability, but presents material concerns around liquidity, debtor concentration, and group structure that require mitigation before full credit approval.
Key reasoning: - Net assets grew 82% from £1.02M (2020) to £1.86M (2021), indicating robust trading performance - Retained profits increased by £838K in a single year, demonstrating strong cash generation capability - However, cash reserves are critically thin at £12,359 for a £3.8M asset business - The company is a subsidiary of Cool Holdings Limited (>75% ownership), creating potential for cash extraction or intercompany obligations that could impair repayment
Conditions for approval: - Personal guarantees from directors Baron and Underwood - Updated financial statements for 2022-2024 periods (accounts appear overdue for current visibility) - Debtor verification and aging analysis - Confirmation of no material intercompany balances payable to parent - Facility limit not to exceed £250K without further review
2. Financial Strength Analysis
Balance Sheet Summary (2021)
| Item | 2021 £ | 2020 £ | Movement |
|---|---|---|---|
| Tangible Fixed Assets | 2,004,089 | 1,305,207 | +53.5% |
| Net Current Assets | 1,441,397 | 837,036 | +72.2% |
| Long-term Liabilities | (1,277,449) | (963,170) | +32.6% |
| Provisions | (309,122) | (158,643) | +94.8% |
| Net Assets | 1,858,915 | 1,020,430 | +82.2% |
Equity Position
- Share capital: £200,000 (unchanged)
- P&L reserve: £1,658,915 (up from £820,430)
- Shareholders' funds: £1,858,915
Assessment: STRONG - The balance sheet shows genuine equity growth, not leverage-driven expansion. The P&L reserve growing by £838K represents real retained earnings, indicating the business is generating and retaining profits rather than distributing them. Tangible assets increasing by £699K suggests fleet investment, which is appropriate for a freight transport operator.
Concerns: - Provisions nearly doubled to £309K - nature unclear but could indicate pending liabilities - Long-term liabilities increased by £314K, likely reflecting vehicle financing (hire purchase referenced in accounts) - Gearing (total liabilities to equity) stands at approximately 1.97x, which is elevated but manageable for an asset-heavy transport business
3. Cash Flow Assessment
Liquidity Analysis
| Metric | 2021 | 2020 |
|---|---|---|
| Current Assets | £3,831,878 | £3,686,072 |
| Current Liabilities | £2,390,481 | £2,849,036 |
| Current Ratio | 1.60x | 1.29x |
| Cash | £12,359 | £6,828 |
| Net Current Assets | £1,441,397 | £837,036 |
Assessment: MIXED - The current ratio has improved from 1.29x to 1.60x, and current liabilities reduced by £459K, indicating active debt reduction. However, the cash position is critically thin.
Debtor Concern - CRITICAL
Debtors of £3,777,572 represent 98.6% of current assets. This is an unusually high concentration that raises questions: - Is this trade debtors or intercompany balances? - What is the aging profile? - What is the historical bad debt experience?
For a freight transport business, this level of debtors suggests either: 1. Significant contract work with slow-paying customers 2. Intercompany receivables from Cool Holdings Limited group entities 3. Potential collection issues
Working Capital Cycle Risk: If debtors are not collecting promptly, the business could face cash pressure despite appearing profitable. Cash conversion is the key vulnerability.
Cash Generation Trajectory
| Year | Cash |
|---|---|
| 2015 | £91 |
| 2016 | £3,625 |
| 2017 | £31 |
| 2018 | £241 |
| 2019 | £620 |
| 2020 | £6,828 |
| 2021 | £12,359 |
Cash has improved but remains minimal relative to the balance sheet size. The business appears to operate on a near-zero cash model, reinvesting or distributing generated funds. This provides no buffer for unexpected outflows.
4. Monitoring Points
Critical Metrics to Watch:
- Cash Position: Must be monitored monthly. Any deterioration below £5K would be a red flag for immediate liquidity crisis
- Debtor Days: Request quarterly aging reports. Target collection below 60 days. Any increase in debtors >90 days requires escalation
- Intercompany Balances: Confirm whether Cool Holdings Limited owes or is owed funds. Parent company extraction could impair repayment capacity
- Provisions: Clarify nature of £309K provisions - if related to litigation or contractual disputes, this could crystallize into cash outflows
- Filing Compliance: Latest detailed accounts available are 2021. Ensure 2022-2024 accounts are filed promptly. Current accounts information suggests 2024 year-end filed, but detailed financial data is not available in this review
Ongoing Covenants (if facility approved):
- Minimum current ratio of 1.30x
- Maximum gearing of 2.5x
- No material intercompany loans payable without prior consent
- Quarterly management accounts to be provided
- Notification of any legal proceedings exceeding £50K
Business Resilience Considerations:
- Sector Risk: Freight transport is sensitive to fuel costs, economic cycles, and driver availability. The company has operated since 1999, suggesting resilience through multiple downturns
- Asset Backing: £2M in tangible assets provides collateral security, likely comprising vehicles and potentially property
- Group Dependency: Being a subsidiary of Cool Holdings Limited means strategic decisions may prioritize group interests over individual entity creditors