KNAPP LEGACY LTD

Executive Summary

Knapp Legacy Ltd is a newly established social care company showing early signs of financial improvement with a modest profit recorded in the latest year. However, the company still operates with negative net assets and working capital deficits, indicating ongoing liquidity and capital risks. Credit is recommended on a conditional basis with active monitoring of profitability, cash flow, and balance sheet strengthening.

KNAPP LEGACY LTD - Analysis Report

Company Number: 14121924

Analysis Date: 2025-07-29 14:16 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Knapp Legacy Ltd is an active private limited company operating in social work activities without accommodation. The company has been trading since May 2022 and shows signs of improving profitability, moving from a net loss to a modest profit in the latest year. However, it currently reports negative net assets (£-23,229) and net current liabilities (£-28,403), indicating a weak balance sheet and liquidity strain. The director is a Chartered Accountant and sole shareholder, which suggests competent management oversight. Given the company’s improving trading results but ongoing capital deficiency and working capital deficits, credit should be extended on a conditional basis with close monitoring and possibly supported by personal guarantees or other credit enhancements.

2. Financial Strength:

• The company has intangible fixed assets (franchise fee) of £29,400 and tangible assets of £983, totaling £30,383 in fixed assets.
• Current assets total £32,877 (including cash of £18,764) against current liabilities of £61,280, resulting in a net current liability position of £28,403.
• Non-current liabilities (bank loans) stand at £24,963.
• Net liabilities total £23,229, though this is an improvement from the prior year’s £36,743 deficit.
• Shareholders’ funds remain negative, reflecting accumulated losses primarily from initial periods of operation.
  The balance sheet shows a company still in early growth phase with capital deficiency but a trend towards reduction in losses and improved net asset position.

3. Cash Flow Assessment:

• Cash holdings of £18,764 provide some liquidity buffer.
• Debtors are £14,113, but trade debtors are low (£188), suggesting that the majority are other debtors possibly prepayments or receivables with longer terms.
• Current liabilities are high relative to current assets, indicating working capital pressure.
• The company carries bank loans of £37,150 (total current and non-current), which require servicing.
• Operating lease commitments amount to £18,900 for the coming year, adding to fixed cash outflows.
  Overall, cash flow is tight but the company has improved cash balances and a modest profit in the latest year, implying an improving ability to meet short-term obligations.

4. Monitoring Points:

• Continued improvement in profitability and moving towards positive net assets.
• Working capital management, especially reducing current liabilities and improving debtor collections.
• Cash flow sufficiency to service bank loans and lease commitments without overdrawing.
• Any changes in director/shareholder support, given current negative equity.
• Timely filing of accounts and returns to maintain good compliance standing.