KBG ENGINEERING LIMITED

Executive Summary

KBG Engineering Limited maintains a solid net asset base and positive working capital but exhibits a marked decline in cash reserves that warrants caution. The company’s ability to convert increased sales into cash and manage liquidity will be critical to support credit facilities. Conditional approval is recommended with ongoing monitoring of cash flow and debtor management.

KBG ENGINEERING LIMITED - Analysis Report

Company Number: 13654510

Analysis Date: 2025-07-29 16:53 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   KBG Engineering Limited shows a stable balance sheet with positive net assets and working capital, indicating an ability to meet short-term obligations. However, a notable decline in cash reserves from £255,681 in 2023 to £54,669 in 2024 raises liquidity concerns. The company operates in a niche manufacturing sector which may be sensitive to economic cycles but has shown growth in tangible assets and debtors, suggesting expanding operations. Credit approval should be conditional on monitoring cash flow closely and obtaining updated management forecasts to ensure ongoing debt servicing capability.

2. Financial Strength:
   The company’s net assets remain healthy at £210,896, supported by tangible fixed assets of £54,247 and consistent shareholder equity. The reduction in net assets compared to prior year (£258,805 in 2023) is attributable mainly to reduced cash balances rather than operational losses, indicating no immediate solvency risk. Current liabilities have decreased significantly, improving the net current asset position to £156,649 from £229,621. Overall, the capital structure appears sound for a small, relatively young enterprise.

3. Cash Flow Assessment:
   Cash on hand has declined sharply by approximately £201k year-on-year, despite an increase in trade debtors from £103,343 to £145,133. The high debtor balance relative to cash suggests potential delays in cash collection or increased credit sales. Current liabilities have dropped from £129,403 to £43,153, easing pressure on short-term liquidity. While working capital remains positive, the reduction in cash necessitates close scrutiny of cash conversion cycles and debtor ageing to prevent liquidity strain.

4. Monitoring Points:

• Debtor collection efficiency and aging profile to detect any credit risk build-up
• Cash flow forecasts and actual cash inflows/outflows to monitor liquidity trends
• Changes in creditor payment terms and any build-up of overdue liabilities
• Business performance indicators in manufacturing sectors 28921 and 25110, especially order book and contract completion status
• Director management actions regarding cash management and working capital policies