Company Number: 13257944

Analysis Date: 2025-07-20 18:25 UTC

Financial Health Assessment for Halton Castle Limited

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1. Financial Health Score: D

Explanation:
Halton Castle Limited shows signs of significant financial distress as of the latest financial year ended March 31, 2024. The company has moved from a positive net asset position of £5,758 in 2023 to a negative net asset position of £-7,784 in 2024, indicating a decline in financial health. The working capital is deeply negative, pointing to liquidity issues. Given these symptoms, the company's financial health scores a D, reflecting a warning that immediate financial attention is required to avoid further deterioration.

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2. Key Vital Signs

Metric	2024 Value (£)	2023 Value (£)	Interpretation
Net Assets (Shareholders' Funds)	-7,784	5,758	Negative net assets indicate liabilities exceed assets; a symptom of balance sheet stress.
Net Current Assets (Working Capital)	-13,164	-967	Deeply negative working capital means current liabilities exceed current assets by a large margin; signals liquidity distress.
Cash at Bank	13,123	23,424	Cash balance dropped by ~44%, reducing the "cash buffer" for operations.
Fixed Assets (Tangible)	5,380	6,725	Decrease in fixed assets could indicate asset disposals or depreciation.
Current Liabilities	36,491	35,206	Slight increase in short-term debts; pressure on immediate obligations.
Debtors	5,249	5,475	Stable, but relatively small compared to liabilities.
Stock	4,955	5,340	Slight reduction in inventory levels.

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3. Diagnosis

The financial "symptoms" paint a concerning picture for Halton Castle Limited, a company operating in the public houses and bars sector (SIC 56302). The company started with a healthy financial "pulse" in 2021 with strong working capital and positive net assets, but by 2024, the company is showing clear signs of financial distress:

• The negative net assets indicate the company’s liabilities now exceed the total assets, akin to an internal organ failure where the company’s financial foundation is compromised.
• The deeply negative working capital is a critical symptom: the company may struggle to meet short-term obligations, risking insolvency without corrective measures.
• The sharp decline in cash reserves limits the company's ability to maintain smooth day-to-day operations and buffer against unexpected expenses.
• The consistent level of director’s loan account (£3,000) suggests reliance on internal financing, which may not be sustainable.
• The absence of audit (due to small company exemption) means some financial risks might not be fully visible; however, the disclosed figures are sufficient to indicate current distress.
• The company’s turnover and profitability data are not detailed here, but the balance sheet results suggest losses have accumulated.

In medical terms, the company is in a state of "financial shock" requiring urgent intervention to restore health.

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4. Recommendations

To stabilize and improve financial wellness, Halton Castle Limited should consider the following steps:

1. Immediate Cash Flow Management:

   • Tighten control on cash inflows and outflows.
   • Accelerate collection of debtors and manage stock levels carefully to free up cash.
   • Negotiate extended payment terms with suppliers to ease short-term cash pressures.

2. Capital Injection or Debt Restructuring:

   • Seek additional equity financing from shareholders or external investors to restore positive net assets.
   • Explore restructuring existing debts, including the director’s loan, to improve liquidity.

3. Cost Reduction and Operational Efficiency:

   • Review all operating expenses to identify potential savings without compromising core business functions.
   • Assess fixed asset utilization and consider selling non-essential assets to generate cash.

4. Financial Monitoring:

   • Implement regular financial health checks, akin to ongoing health monitoring, to detect early warning signs.
   • Prepare detailed cash flow forecasts to anticipate and mitigate liquidity risks.

5. Professional Advisory:

   • Engage with financial advisors or turnaround specialists who can assist in restructuring and strategic planning.

6. Risk Management:

   • Address any underlying operational issues causing losses, such as declining sales or market competition.

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