OLD KILN TRADING LTD

Executive Summary

OLD KILN TRADING LTD is currently in a fragile financial state, marked by persistent negative working capital and shareholders' funds, indicating ongoing liquidity and solvency challenges. Immediate actions focusing on cash flow management, cost control, debt restructuring, and exploring new revenue streams are critical to stabilizing the company’s financial health and avoiding insolvency risk.

OLD KILN TRADING LTD - Analysis Report

Company Number: 13816039

Analysis Date: 2025-07-29 16:50 UTC

Financial Health Assessment for OLD KILN TRADING LTD (Year ended 31 March 2024)

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1. Financial Health Score: D

Explanation:
The company shows signs of financial distress with consistently negative net current assets and shareholders' funds over the past four years. The worsening working capital position and increasing liabilities relative to assets indicate a fragile financial state, close to insolvency risk. The score "D" reflects a need for urgent financial management and strategic intervention to avoid further deterioration.

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2. Key Vital Signs

Metric	2024 (£)	2023 (£)	Interpretation
Fixed Assets	2,729	2,737	Minimal long-term assets, stable but low value.
Current Assets	9,159	9,336	Limited liquid resources, slight decrease.
Current Liabilities	59,438	41,858	High short-term debts, increasing sharply.
Net Current Assets	-50,279	-32,522	Negative working capital (symptom of distress).
Total Assets Less Current Liabilities	-47,550	-29,785	Negative net assets, indicating insolvency risk.
Shareholders' Funds	-47,550	-29,785	Negative equity, indicating accumulated losses.

Interpretation:

• Negative Net Current Assets ("working capital deficit") means the company owes more in the short term than it owns in liquid assets, a classic symptom of liquidity strain.
• Growing Current Liabilities suggest increasing short-term obligations, potentially due to borrowing or unpaid bills.
• Negative Shareholders’ Funds reflect accumulated losses, signaling the company’s net worth is below zero—a critical red flag.
• Fixed Assets are minimal and stable, indicating limited tangible asset backing.

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3. Diagnosis

The financial "vital signs" of OLD KILN TRADING LTD reveal a company struggling with liquidity and solvency. The persistent negative working capital and shareholders’ funds point to ongoing operational losses or cash flow challenges. This is akin to a patient with chronic symptoms that have not been addressed, leading to worsening condition over time.

• The company operates in Event Catering, a sector that can be sensitive to external shocks (e.g., economic downturns, Covid-19 impacts), possibly explaining financial strain.
• The increase in current liabilities without a corresponding increase in current assets suggests over-reliance on credit or delayed payments.
• Negative equity means the company’s liabilities exceed its assets, putting it at risk of creditor actions if the situation does not improve.
• The average number of employees increased from 8 to 12, which might add to overhead costs without yet generating sufficient revenue to offset expenses.

In medical terms, OLD KILN TRADING LTD is showing symptoms of financial distress that, if untreated, could progress to insolvency.

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4. Recommendations

To improve financial wellness and restore health, the company should consider:

1. Cash Flow Management:

   • Tighten control on cash collections and payments.
   • Negotiate longer payment terms with suppliers or seek early payment discounts from clients.

2. Cost Reduction:

   • Review staffing and overheads to align with revenue generation.
   • Consider temporary cost-cutting measures to preserve cash.

3. Debt Restructuring:

   • Engage with creditors to restructure liabilities, possibly converting short-term debt into longer-term arrangements to ease immediate pressure.

4. Revenue Enhancement:

   • Explore new market opportunities or diversify services to boost income.
   • Leverage the company’s location and expertise in event catering to build stable client relationships.

5. Equity Injection:

   • Consider capital injection by existing shareholders or new investors to improve the balance sheet and reduce insolvency risk.

6. Professional Advice:

   • Seek advice from financial advisors or insolvency practitioners early to explore turnaround options.

The company must act promptly; otherwise, it risks "financial collapse," akin to a patient whose untreated condition leads to critical failure.

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