GALLTOW LTD

Executive Summary

GALLTOW LTD is currently experiencing financial distress characterized by negative net assets and working capital deficits, indicating liquidity and solvency challenges. Immediate actions to improve cash flow, manage debt, and rebuild equity are essential to prevent further deterioration and support a sustainable recovery.

GALLTOW LTD - Analysis Report

Company Number: 13146442

Analysis Date: 2025-07-29 21:03 UTC

Financial Health Assessment of GALLTOW LTD as at 31 December 2023

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1. Financial Health Score: D

GALLTOW LTD currently holds a financial health grade of D, indicating concerning financial distress signs. The company is grappling with negative net assets and persistent working capital deficits, signaling a fragile financial condition that requires prompt attention to avoid deterioration into insolvency risks.

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2. Key Vital Signs

Metric	2023 Value	Interpretation
Net Current Assets (Working Capital)	-£5,583	Negative working capital shows liquidity strain; unable to cover short-term liabilities fully.
Net Assets (Equity)	-£12,773	Negative equity signals more liabilities than assets; a symptom of financial distress.
Cash Balance	£3,859	Cash on hand is low compared to liabilities, indicating tight cash flow and limited buffer.
Current Liabilities	£9,442	Significant short-term obligations that could pressure cash flow.
Long-term Liabilities	£18,637	Large loan balance falling due in more than one year; dependence on external financing.
Share Capital	£2.00	Minimal share capital; limited equity cushion.
Tangible Fixed Assets	£11,447	Company has invested in fixtures and equipment, but these are depreciated assets.
Director's Loan Account	£3,734 (creditor)	Owes director funds, indicating internal financing support.
Company Size & Category	Small	Total exemption full accounts filed; limited disclosure but enough data for assessment.
Industry	Food services (take-away, unlicensed cafes)	Sector sensitive to economic cycles and consumer spending.

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3. Diagnosis: What the Financial Data Reveals

• Liquidity Stress ("Healthy Cash Flow" is lacking):
  The company is showing negative net current assets (-£5,583), meaning it does not have enough short-term assets (cash and receivables) to cover immediate debts. This is a classic symptom of liquidity strain, akin to a patient with low blood pressure — the business may struggle to meet day-to-day obligations, risking operational disruptions.

• Balance Sheet Distress (Negative Net Assets):
  With net liabilities of -£12,773, the company’s liabilities exceed its assets, indicating a weakened financial foundation. This "structural deficit" implies that even if current operations improve, the company must address its accumulated losses or debts to regain financial health.

• Loan Dependency & Debt Burden:
  The company carries a long-term loan of £18,637, likely from a government-backed COVID Bounce Back Loan Scheme, evidenced by the 0% interest in year one and 2.5% thereafter. While this loan provides breathing space, it adds financial strain in the medium term, like a patient reliant on medication to stabilize a chronic condition.

• Declining Asset Base and Depreciation:
  Fixed assets have declined from £19,674 (2022) to £11,447 (2023) due to depreciation, indicating aging equipment or lack of reinvestment, which may impair future operational capacity.

• Management Changes and Ownership:
  A recent change in directors and majority ownership by Mr. Martin John Keys (75-100% control) suggests potential strategic shifts or restructuring. Stability in leadership is crucial for recovery, but management transitions can also introduce uncertainty.

• No Audit Requirement (Small Company Exemption):
  Accounts are unaudited, which limits external assurance on financial accuracy but is common for companies of this size.

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4. Recommendations: Prescriptions for Financial Wellness

1. Improve Liquidity Management:

   • Prioritize increasing cash flows through improved receivables collection and cost control.
   • Consider negotiating extended payment terms with creditors to ease short-term liquidity pressure.
   • Explore short-term financing options if necessary but cautiously to avoid overleveraging.

2. Address Negative Equity:

   • Develop a realistic business plan to generate profits and rebuild retained earnings.
   • Evaluate whether a capital injection from shareholders or a debt-to-equity swap could stabilize the balance sheet.

3. Debt Restructuring and Monitoring:

   • Engage with lenders early to discuss repayment schedules, especially for the Bounce Back Loan as interest costs will rise.
   • Monitor cash flow forecasts regularly to ensure the company can meet loan obligations.

4. Operational Efficiency:

   • Assess fixed asset utilization and consider disposing of non-essential assets to raise cash.
   • Explore operational improvements in the food services segment to increase margins and sales volume.

5. Leadership Stability and Strategic Focus:

   • Ensure clear and consistent communication from management to restore stakeholder confidence.
   • Leverage the new director’s expertise to drive turnaround strategies.

6. Regular Financial Monitoring:

   • Implement monthly financial reviews focusing on cash flow, working capital, and debt levels to detect early symptoms of distress.

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