KHARIS CHANGE WORKS CIC

Executive Summary

KHARIS CHANGE WORKS CIC is currently in a fragile financial state common to early-stage community interest companies, with negative working capital and minimal cash reserves. Immediate focus on securing funding and developing revenue streams is essential to restore financial health and ensure sustainability. With targeted action, the company has potential to improve its financial condition and fulfill its community mission effectively.

KHARIS CHANGE WORKS CIC - Analysis Report

Company Number: 15126397

Analysis Date: 2025-07-20 11:34 UTC

Financial Health Assessment for KHARIS CHANGE WORKS CIC (Year Ended 30 September 2024)

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1. Financial Health Score: Grade D

Explanation:
KHARIS CHANGE WORKS CIC is in its first financial year, showing signs of initial startup phase distress. The company’s current liabilities exceed its current assets, resulting in negative working capital and net assets. The company has minimal cash and no fixed assets or revenue-generating assets. This indicates a fragile financial condition typical of an early-stage entity. The D grade reflects the need for urgent strengthening of liquidity and capital structure to avoid insolvency risks.

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2. Key Vital Signs

Metric	Value	Interpretation
Fixed Assets	£0	No long-term assets, typical for a new company
Current Assets	£25	Very limited liquid resources, essentially just cash
Current Liabilities	£51	Short-term debts exceed liquid assets, creating working capital deficit (-£26)
Net Current Assets (Working Capital)	-£26	Negative working capital signals potential liquidity strain
Total Net Assets (Equity)	-£26	Negative equity indicates accumulated losses or initial setup costs not yet recovered
Cash Position	£25	Minimal cash buffer, vulnerable to cash flow shocks
Employees	0	No staff costs yet, but also no operational scale
Profit & Loss Account Reserve	-£26	Reflects an initial loss or expenses exceeding income

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3. Diagnosis: Financial Symptoms and Underlying Health

• Symptoms of Financial Distress:
  The company exhibits "symptoms" of early-stage financial stress, including negative working capital and net assets. This is analogous to a patient with low blood pressure and dehydration: the company is undercapitalized and lacks financial reserves to support ongoing operations.

• Liquidity Concerns:
  With only £25 in cash and £51 in short-term liabilities, the company faces a risk of being unable to meet its immediate financial obligations without additional funding or income. This "cash flow" is not yet healthy or stable.

• Absence of Revenue and Assets:
  The company has not generated meaningful income or acquired assets, which is typical for a new community interest company in its first year. The minimal client activity reported suggests limited operational traction so far.

• Governance and Control:
  The company has an active board with a controlling director holding 75-100% voting rights. Governance structures appear established but the company must focus on financial sustainability.

• No Staff Yet:
  Zero employees indicate low fixed costs, which helps conserve cash but also signals that the company has not scaled operations.

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4. Prognosis: Future Financial Outlook

• Short-Term Outlook:
  Without significant inflows of cash, grants, or income, the company’s financial "vital signs" will remain weak. The risk of insolvency exists if liabilities grow or cash inflows do not materialize.

• Medium to Long-Term Outlook:
  The company must build a sustainable revenue model or secure funding to restore positive working capital and net assets, akin to a patient needing intravenous fluids to regain strength.

• Potential for Improvement:
  As a community interest company, access to grants, donations, or social investment could improve liquidity. Developing more client engagements and scaling services will be critical.

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5. Recommendations: Prescription for Financial Wellness

• Increase Liquidity:
  Seek additional funding sources — grants, donations, or social investment — to bolster cash reserves and cover short-term liabilities.

• Build Revenue Streams:
  Accelerate client acquisition and service delivery to generate sustainable income. Consider marketing and outreach strategies to expand the client base.

• Cost Management:
  Maintain tight control over expenses. Avoid taking on new liabilities until cash flow stabilizes.

• Financial Monitoring:
  Implement regular cash flow forecasting and financial review meetings to detect early signs of distress and enable timely interventions.

• Governance Practices:
  Leverage the active board to oversee financial planning and risk management. Transparency and accountability in financial reporting will build stakeholder confidence.

• Explore Partnerships:
  Collaborate with other community organizations or health service providers to share costs and expand service reach.

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