KINGFISHER TELECOM LTD

Executive Summary

Kingfisher Telecom Ltd demonstrates strong liquidity and working capital with substantial cash reserves, supporting its ability to meet short-term obligations. However, the company has experienced a notable decline in net assets due to accumulated losses, indicating operational challenges in generating profits. Credit approval is recommended on a conditional basis with close monitoring of profitability, cash flow, and debtor management to ensure financial stability going forward.

KINGFISHER TELECOM LTD - Analysis Report

Company Number: 13799831

Analysis Date: 2025-07-29 19:24 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Kingfisher Telecom Ltd is an active private limited company operating in the telecommunications sector since late 2021. The company shows a solid cash position and strong net current assets, indicating good liquidity. However, the company has recorded a significant decline in net assets from £862k in 2022 to £596k in 2023 primarily due to accumulated losses reflected in the P&L reserves. The company has a small amount of long-term debt (£1,000) and no overdraft, which suggests conservative financial management. Given these factors and the early stage of the business, credit approval can be considered conditional on monitoring future profitability and cash flow trends to ensure the losses do not continue to erode equity.

2. Financial Strength:

• The balance sheet shows net assets of £596k as at 31 Dec 2023, down from £862k the previous year, reflecting a P&L reserve deficit increase from -£137k to -£404k.
• Fixed assets are minimal (£14.7k), with the majority of assets held as current assets (£677k), predominantly cash (£621k).
• Current liabilities increased to £94.7k from £26.2k, driven largely by trade creditors, but net current assets remain strong at £583k.
• Share capital is nominal (£1), but shareholders’ funds are reported at £1 million, which likely reflects share premium or capital injection.
• The ultimate controlling party is Atom Ltd (Hong Kong), which may provide some strategic support.
  Overall, the company’s balance sheet is liquid but shows an erosion in retained earnings, indicating operational losses or investment in growth.

3. Cash Flow Assessment:

• Cash on hand remains high (£621k), albeit down from £870k the prior year, which supports operational liquidity and short-term obligations.
• Debtors increased substantially to £55.7k from £8.4k, suggesting increased trading activity but also potential credit risk exposure to customers.
• Trade creditors have increased to £82.8k, indicating possibly extended supplier credit terms or increased purchases.
• The strong net current assets and cash position suggest the company has sufficient working capital to meet short-term liabilities.
• Lack of overdrafts or significant borrowings reduces financial risk.

4. Monitoring Points:

• Profitability trends: ongoing losses reduce equity and may impact long-term sustainability.
• Debtor collection periods and credit risk management, given the increase in trade debtors.
• Supplier payment terms and creditor days to understand working capital cycle management.
• Cash flow forecasts and burn rate considering the reduction in cash reserves.
• Any changes in ownership structure or additional capital injections from Atom Ltd or other parties.
• Filing of future accounts and confirmation statements on time to maintain compliance and transparency.