Company Number: 13032417

Analysis Date: 2025-07-20 11:36 UTC

Financial Health Assessment: Kent Asbestos Solutions Limited (as at 30 November 2023)

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1. Financial Health Score: D

Explanation:
The company’s financial health score is graded as D due to persistent net liabilities, negative net current assets, and erosion of shareholder funds. These "symptoms" indicate financial distress and an unhealthy balance sheet position, although the company remains active and operational. While the business has some operating history and turnover, the worsening liquidity position and accumulated losses are concerning.

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2. Key Vital Signs

Metric	2023 Figure	Interpretation
Turnover	Not disclosed for 2023, £67,844 in 2022	Modest revenue for a micro business; growth trajectory unclear.
Fixed Assets	£1,410	Low-value fixed assets, typical for a service business in environmental consulting.
Current Assets	£10,083	Includes cash and receivables; increased from prior year indicating some recovery.
Current Liabilities	£19,308	High short-term obligations, significantly greater than current assets — a "symptom of liquidity strain".
Net Current Assets (Working Capital)	-£9,225	Negative working capital; signals cash flow pressure to cover short-term debts.
Total Assets Less Current Liabilities	-£7,815	Negative net operating assets; business liabilities exceed asset base.
Net Assets / Shareholders’ Funds	-£8,840	Negative equity; accumulated losses have eroded the initial capital.
Share Capital	£1.00	Nominal share capital typical for micro-entity but offers little buffer.
Employees	1	Very small operation, low fixed overheads.

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3. Diagnosis

Kent Asbestos Solutions Limited displays symptoms of financial distress primarily due to:

• Negative Working Capital: The company owes significantly more than it can cover in the short term, making it vulnerable to liquidity shocks. This is akin to a patient with poor circulation—cash is not flowing smoothly to meet obligations.

• Eroded Equity: Shareholders' funds have turned negative, reflecting accumulated losses or liabilities exceeding assets. This is a critical "vital sign" showing the company’s balance sheet is weakened.

• Revenue and Scale: While turnover in 2022 was modest but reasonable for a micro company, no turnover was reported in the latest year, which may suggest operational challenges or reporting lag. The business is small with one employee, limiting operational flexibility.

• Asset Base: The company holds minimal fixed assets, typical for its consulting activities, so asset impairment risk is limited but also means it relies heavily on intangible assets and goodwill, which are not reflected in the balance sheet.

Overall, the company is struggling to maintain liquidity and solvency, which are essential for ongoing viability. The current financial "symptoms" suggest the company is in a vulnerable state but not yet insolvent or in formal distress such as liquidation or administration.

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4. Recommendations

To improve financial wellness and restore a healthy balance sheet, the company should consider the following actions:

1. Strengthen Liquidity:

   • Improve cash flow management by accelerating debtor collections and controlling creditor payments where possible.
   • Explore short-term financing options (e.g., overdraft, invoice financing) to bridge working capital gaps.

2. Increase Capital Base:

   • Inject additional equity capital if feasible to restore positive net assets and provide a cushion against losses.
   • Alternatively, consider shareholder loans with clear repayment terms to bolster funds.

3. Revenue Growth and Cost Control:

   • Focus on increasing sales and diversifying clients to generate consistent turnover.
   • Review overheads and operating expenses to ensure they align with current revenue levels.

4. Financial Monitoring:

   • Implement regular financial reviews to track key indicators such as liquidity ratios, cash burn rate, and profitability.
   • Use forecasts and budgets to anticipate and mitigate future cash flow problems.

5. Professional Advice:

   • Seek advice from financial and legal advisors if liquidity issues persist to explore restructuring or turnaround strategies.
   • Consider early engagement with insolvency practitioners if the situation worsens.

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Medical Analogy Summary

Kent Asbestos Solutions is currently showing symptoms of financial distress akin to a patient with poor circulation and weakened vital organs. The company’s "circulatory system" (cash flow) is impaired by high short-term debts, and its "immune system" (equity buffer) is compromised, leaving it vulnerable to external shocks. Early intervention through liquidity support and capital strengthening is critical to prevent progression to a more severe condition such as insolvency.

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