THE KITCHEN GARDEN PIZZA COMPANY LTD

Executive Summary

The Kitchen Garden Pizza Company Ltd shows signs of improving financial health but remains in a net liability and working capital deficit position, indicating moderate credit risk. Approval is possible with conditional terms and close liquidity monitoring due to the company’s micro size and early stage of growth. Management changes and asset investments suggest positive strategic intent, but cash flow pressures require ongoing scrutiny.

THE KITCHEN GARDEN PIZZA COMPANY LTD - Analysis Report

Company Number: 12557994

Analysis Date: 2025-07-29 14:44 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   The Kitchen Garden Pizza Company Ltd is a micro private limited company operating licensed restaurants. The company has shown some improvement in assets and net position over the last financial year, moving from negative net assets of £44,330 in 2023 to negative £22,978 in 2024. However, the company still reports net liabilities and significant current liabilities exceeding current assets, indicating working capital pressure and liquidity risk. The absence of long-term creditors suggests no major long-term debt burden. Given its micro size and early stage (incorporated in 2020), the credit risk is moderate but manageable with close monitoring and possibly secured or limited credit facilities. Approval is conditional on maintaining liquidity and improving profitability.

2. Financial Strength:
   The balance sheet shows improvement with fixed assets increasing substantially from £9,797 to £56,596, indicating investment in property, equipment, or other long-term assets. Current assets improved to £22,659 from £1,678, but current liabilities remain high at £143,933, resulting in a net current liability position of -£79,674 (an increase in working capital deficiency). The company’s net assets remain negative at -£22,978, though this is an improvement from -£44,330. Shareholders’ funds are negative, reflecting accumulated losses. The increase in prepayments and accrued income to £41,600 (not separately stated in liabilities) may reflect advance payments or deferred revenue, but overall the net liability position signifies ongoing financial strain.

3. Cash Flow Assessment:
   Net current liabilities and high short-term creditors relative to current assets indicate tight liquidity. The increase in average employees from 5 to 7 suggests expanding operations, which could strain cash flow if not matched by revenue growth. The company’s recent director appointment in July 2024 may reflect management strengthening. There is no evidence of long-term debt or provisions, which reduces fixed financial costs. However, the working capital deficit requires careful cash flow management to meet obligations promptly. The company needs to maintain or improve cash inflows from operations to reduce reliance on short-term credit.

4. Monitoring Points:

• Track monthly cash flow and working capital position to anticipate liquidity shortfalls.
• Monitor trade creditors and payment history to suppliers for any signs of distress or delayed payments.
• Review profitability trends in upcoming accounts to assess if negative equity is reducing.
• Observe management actions for cost control and revenue growth, especially after the new director appointment.
• Confirm timely filing of accounts and compliance to avoid penalties or regulatory issues.