SKTK DEVELOPMENTS LIMITED

Executive Summary

SKTK Developments Limited is currently experiencing significant financial distress, with negative net assets and very limited cash available, indicating liquidity and solvency issues. While fixed assets provide some stability, the company needs urgent cash flow management, debt restructuring, and capital infusion to recover financial health. Without intervention, the prognosis points to increased risk of insolvency despite some minor improvements in working capital.

SKTK DEVELOPMENTS LIMITED - Analysis Report

Company Number: 13061587

Analysis Date: 2025-07-20 13:32 UTC

Financial Health Assessment for SKTK DEVELOPMENTS LIMITED

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1. Financial Health Score: D

Explanation:
The company exhibits significant financial distress signs, primarily negative net assets and shareholder funds indicating insolvency on a balance sheet basis. While there are some positive signs such as stable fixed assets and slightly improved net current assets, the overwhelming liabilities and lack of cash buffer point to a weak financial condition. This places the company in a below-average health category, warranting urgent attention.

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2. Key Vital Signs

Metric	2023 Value (£)	Interpretation
Cash at bank	66	Critically low cash balance, indicating strained liquidity and poor "cash flow health"
Current Liabilities	164,122	High short-term obligations; a "symptom of distress" if not matched by current assets
Net Current Assets	539	Positive but minimal working capital; a slight improvement over previous years but still fragile
Fixed Assets (Tangible)	59,843	Stable asset base (land and buildings), considered a "backbone asset" for future operations
Total Assets less Current Liabilities	60,382	Shows some buffer above short-term liabilities but overshadowed by long-term debt
Creditors (Over 1 Year)	164,122	Large long-term liabilities, indicating high leverage and potential solvency risk
Net Assets / Shareholders Funds	-103,740	Negative equity, a critical "red flag" symptom of insolvency and potential going concern issues
Share Capital	10	Nominal share capital, minimal equity injection

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3. Diagnosis

SKTK Developments Limited is currently in a fragile financial state characterized by negative net assets and a very low cash position. The company’s fixed assets (land and buildings) remain stable but are heavily outweighed by creditors, especially long-term liabilities, indicating a high debt burden.

The minimal positive net current assets in 2023 suggest a slight improvement in short-term liquidity compared to previous years, where net current assets were negative. However, the extremely low cash reserves (only £66) highlight a "critical symptom" of liquidity strain that could impair operational capability and meeting immediate obligations.

Overall, the company appears to be "financially unwell with symptoms of distress" such as high gearing (debt to equity imbalance), low liquidity, and negative shareholder funds. The ongoing losses or accumulated deficits reflected in the negative profit and loss reserve suggest the company has not yet returned to profitability or equity stability since incorporation in 2020.

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4. Recommendations

• Urgent Cash Flow Management: Implement strict cash flow monitoring and forecasting to avoid liquidity crises. Explore short-term financing or working capital facilities to build a healthier cash buffer.

• Debt Restructuring: Engage with creditors to negotiate terms for long-term liabilities to reduce immediate pressure and improve solvency metrics.

• Capital Injection: Consider raising additional equity capital or shareholder loans to restore positive net assets and strengthen balance sheet resilience.

• Asset Utilisation Review: Evaluate the productivity and potential monetisation of fixed assets (land and buildings) to generate cash or reduce debt.

• Profitability Focus: Review business operations and contracts to enhance revenue recognition and control costs, aiming to reverse the accumulated losses.

• Professional Advice: Seek advice from insolvency practitioners or financial consultants early to plan restructuring or turnaround strategies before symptoms worsen.

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