KINSELLA WATERS CONSTRUCTION LTD

Executive Summary

Kinsella Waters Construction Ltd is facing significant financial challenges marked by negative working capital and net assets, indicating liquidity and capital deficits. While operational and compliant with filings, urgent action is needed to improve cash flow, reduce costs, and potentially infuse capital to restore financial health and ensure long-term viability.

KINSELLA WATERS CONSTRUCTION LTD - Analysis Report

Company Number: 13889775

Analysis Date: 2025-07-20 18:38 UTC

Financial Health Assessment for Kinsella Waters Construction Ltd (as of 30 June 2024)

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1. Financial Health Score: D (Needs Attention)

Explanation:
The company exhibits clear symptoms of financial distress, including negative net assets and working capital deficits. While the business is operational and not overdue on filings, the financial "vital signs" indicate underlying weaknesses that must be addressed promptly to avoid further deterioration.

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2. Key Vital Signs

Metric	2024 Value	Interpretation
Fixed Assets	£49	Very low tangible assets; minimal investment in equipment or property.
Current Assets	£527	Low current assets, entirely in cash; no debtors (receivables) recorded this year.
Current Liabilities	£1,563	Short-term debts exceed current assets, indicating liquidity stress.
Net Current Assets (Working Capital)	-£1,036	Negative working capital—a critical symptom of cash flow difficulties to meet short-term obligations.
Net Assets (Shareholders’ Funds)	-£987	Negative equity indicates the company owes more than it owns; a sign of financial strain.
Share Capital	£100	Small capital base; limited cushion against losses.
Profit & Loss Reserve	-£1,087	Accumulated losses or deficit, suggesting sustained past losses or write-downs.
Cash	£527	Cash on hand is insufficient to cover liabilities due within one year.

Trend Comparison:

• In 2023, the company had positive net assets (£150) and positive working capital (£55).
• Over one year, there has been a dramatic shift to negative net assets and working capital, signaling rapid deterioration.
• Debtors decreased from £1,010 to zero, which may indicate issues in collecting revenue or a drop in sales.

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3. Diagnosis: Financial Condition Overview

The company is currently exhibiting clear symptoms of financial distress:

• Liquidity Crisis: The negative working capital indicates the company does not have enough short-term assets to cover immediate liabilities. This is akin to a patient with insufficient blood supply to vital organs—cash is the lifeblood of business operations, and here it is dangerously low relative to obligations.

• Capital Erosion: Negative net assets reveal that the company’s liabilities exceed its total assets, reflecting accumulated losses. This condition can be compared to a weakened immune system—without intervention, the company risks insolvency.

• Revenue and Receivables Concern: The absence of debtors (accounts receivable) in 2024, compared to previous years, could suggest declining sales or ineffective credit management, which are critical symptoms of operational stress.

• Asset Utilization: Fixed assets are minimal and depreciating, implying limited investment or aging equipment which may hamper operational efficiency and future growth.

• Company Status: The company is active, has timely filings, and two directors with significant control. However, the financials suggest these directors must urgently address the financial health.

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4. Recommendations: Path to Recovery

To improve financial wellness and stabilize the company, the following actions are advised:

1. Improve Cash Flow Management:

   • Implement tighter credit control to ensure timely collection of receivables.
   • Negotiate extended payment terms with suppliers to ease immediate cash pressure.
   • Consider short-term financing options (overdraft or invoice financing) to bridge liquidity gaps.

2. Cost Control and Operational Efficiency:

   • Review and reduce non-essential costs and overheads to preserve cash.
   • Analyze project profitability rigorously to prioritize higher-margin contracts.

3. Capital Injection:

   • The company should explore injecting additional equity capital or securing external funding to restore positive net assets and provide a financial buffer.

4. Strategic Review:

   • Directors should conduct a strategic review of business operations, market positioning, and future contracts to identify growth opportunities and risks.

5. Regular Monitoring:

   • Establish monthly financial reporting to track liquidity and profitability closely, enabling early detection of adverse trends.

6. Professional Advice:

   • Engage financial advisors or turnaround specialists to assist in restructuring efforts if necessary.

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Medical Analogy Summary

Kinsella Waters Construction Ltd currently shows signs of a "financial patient" in distress with symptoms of liquidity shortfall ("low blood flow") and capital depletion ("weakened immune system"). Immediate intervention is critical to avoid a progression to insolvency, akin to a patient needing urgent care to recover vitality.

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