KHAMELEON PRODUCTIONS LIMITED

Executive Summary

KHAMELEON PRODUCTIONS LIMITED is demonstrating a stable financial condition with positive working capital and strong liquidity at its early stage of operation. The company is currently relying heavily on director loans, which should be addressed by seeking diversified funding sources and improving financial reporting as the business grows. With these measures, the company is well-positioned to maintain financial wellness and capitalize on future industry opportunities.

KHAMELEON PRODUCTIONS LIMITED - Analysis Report

Company Number: 14804017

Analysis Date: 2025-07-20 13:52 UTC

Financial Health Assessment of KHAMELEON PRODUCTIONS LIMITED

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1. Financial Health Score: B

Explanation:
KHAMELEON PRODUCTIONS LIMITED shows early-stage financial stability with positive net current assets and shareholder equity. The company holds a healthy cash position relative to liabilities, which is a good sign of liquidity. However, the presence of director-related creditor balances and modest working capital means there is room for improvement before the company can be considered financially robust. The company is still at a nascent stage (incorporated in 2023), which naturally limits the historical financial data available for a deeper prognosis.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Current Assets	73,508	Healthy short-term assets, mostly cash
Cash	73,272	Strong cash reserves indicating liquidity
Debtors	236	Very low receivables; minimal credit risk
Current Liabilities	50,685	Short-term obligations present, manageable
Net Current Assets	22,823	Positive working capital; suggests operational liquidity
Shareholders’ Funds	22,823	Equity capital supports the business
Director Loan (Creditor)	83,388	Significant amount owed to director; potential internal financing

Interpretation of Vital Signs:

• Liquidity (Cash and Net Current Assets): The company enjoys a "healthy cash flow" with cash almost covering all current liabilities, leaving a positive net current asset balance. This reduces the risk of immediate liquidity distress.
• Working Capital: Positive net current assets indicate the company can meet short-term debts without raising capital.
• Leverage: While there is no bank borrowing, the director has lent significant funds to the company, which is recorded as a creditor balance of £83,388. This internal financing is common in startups but could be a symptom of external funding constraints.
• Revenue and Profitability: The accounts do not disclose turnover or profit figures explicitly, but the positive retained earnings (£22,723) suggest some profitability or at least net gains retained in the first year of trading.

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3. Diagnosis

KHAMELEON PRODUCTIONS LIMITED appears to be in a stable but early-stage financial condition, akin to a patient showing good baseline health but still in the early phases of development. The "healthy cash flow" indicates the company has enough liquidity to cover its short-term obligations, which is a critical component of financial wellness. However, the reliance on director loans as a key source of funding could be a warning sign ("symptom of financial strain") if external revenues and financing do not grow to replace this over time.

The company operates in the performing arts and motion picture casting industry, which can have variable cash flows and project-based income. This industry characteristic means maintaining liquidity is essential to weather the irregular income cycles.

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4. Recommendations

To strengthen financial wellness and ensure sustainable growth, the company should consider the following actions:

• Diversify Financing Sources: Reduce dependency on director loans by exploring external funding options such as grants, investor equity, or bank financing when appropriate. This will improve financial independence and lower risk.
• Enhance Revenue Tracking and Profitability: Begin detailed monitoring and reporting of turnover and profit margins to identify operational efficiencies and growth opportunities.
• Improve Debtor Management: Although debtor balances are low now, as the business grows, establish robust credit control policies to keep receivables at a healthy level and avoid liquidity issues.
• Plan for Cash Flow Variability: Given the project-based nature of the industry, maintain a cash reserve buffer to manage periods of low receipts. Consider cash flow forecasting as a routine management tool.
• Monitor Related Party Transactions: Keep transparency and formal agreements regarding director loans to avoid conflicts of interest and ensure compliance with regulatory standards.
• Prepare for Growth: As the company grows, ensure accounting systems and internal controls evolve to handle increased complexity, including timely financial reporting and tax compliance.

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