WHITBURN RISK SOLUTIONS LIMITED

Executive Summary

Whitburn Risk Solutions Limited is currently experiencing financial distress marked by negative working capital and shareholders’ funds, indicating liquidity and solvency challenges. While investments have increased, the company relies heavily on related party loans, underscoring the need for improved cash flow management and capital restructuring. Immediate actions focusing on liquidity improvement, equity restoration, and operational efficiency are critical to stabilise financial health and ensure sustainable growth.

WHITBURN RISK SOLUTIONS LIMITED - Analysis Report

Company Number: 14194332

Analysis Date: 2025-07-29 15:16 UTC

Financial Health Assessment of WHITBURN RISK SOLUTIONS LIMITED

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1. Financial Health Score: D

Explanation:
The company currently shows signs of financial distress, with negative net current assets and shareholders’ funds indicating a liquidity crunch and an erosion of equity capital. While it is still an active business, the balance sheet reveals an unhealthy financial position that requires immediate attention to avoid worsening conditions.

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2. Key Vital Signs

Metric	2023 Value (£)	Interpretation
Debtors (Receivables)	1,219,116	High receivables indicate customers’ money owed to the company but risk of collection delays.
Current Liabilities	2,506,474	Significant short-term obligations; more than double the receivables, posing liquidity stress.
Net Current Assets	-1,287,358	Negative working capital (“symptom of distress”) means the company cannot cover short-term debts.
Total Assets less Current Liabilities	-97,134	Negative net assets suggest liabilities exceed assets, indicating insolvency risk if prolonged.
Shareholders’ Funds (Equity)	-97,234	Negative equity means accumulated losses exceed invested capital; a critical financial alarm.
Fixed Assets (Investments)	1,190,224	Investments in subsidiaries/assets are growing, but not immediately liquid for cash needs.
Related Party Loans (Net)	Net owed to related parties ~ £2,307,366 (owed - owed by)	Significant inter-company funding with interest, showing dependence on related entities for financing.

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3. Diagnosis: What the Financial Data Reveals

• Liquidity Issues: The company is facing a liquidity squeeze as evidenced by negative net current assets of over £1.28 million. This indicates the company’s “cash flow pulse” is weak; current liabilities exceed current assets, meaning it may struggle to pay bills and creditors on time without additional cash inflows.

• Negative Equity: Shareholders’ funds are in the red (-£97,234), a serious “symptom” indicating that losses have accumulated beyond the initial share capital, and the company is technically insolvent on a balance sheet basis. This situation can limit the ability to raise external finance and shake stakeholder confidence.

• Dependency on Related Parties: The company has large amounts owed to and from related parties, showing reliance on intra-group financing to maintain operations. While this can provide short-term relief, it is not a sustainable standalone solution for financial health.

• Growth in Investments: Fixed asset investments nearly doubled from £565,846 in 2022 to £1,190,224 in 2023, indicating strategic acquisition or capital deployment. However, these are illiquid and do not immediately improve cash flow.

• No Audit but Compliant: The company benefits from small companies’ exemptions reducing compliance burden, but this also means less external scrutiny over financials.

• Young Company: Incorporated in mid-2022, the company is still in the early stages of its lifecycle, which often involves initial losses and investment phases but requires close monitoring to ensure sustainable growth.

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4. Recommendations: Actions to Improve Financial Wellness

1. Improve Liquidity Management:

   • Accelerate collection of debtors to convert receivables into cash more quickly.
   • Negotiate longer payment terms with creditors to ease immediate cash outflows.
   • Explore short-term financing options with favourable terms to bridge working capital gaps.

2. Address Negative Equity:

   • Consider a capital injection from shareholders or related parties to restore positive equity and strengthen the balance sheet.
   • Review investment strategy to ensure acquisitions or investments generate returns that improve profitability.

3. Reduce Dependency on Related Party Loans:

   • Develop independent revenue streams and cash flow to reduce reliance on group financing.
   • Formalise loan agreements with clear repayment plans and interest terms to improve transparency and governance.

4. Implement Cost Controls and Profitability Measures:

   • Review operational expenses to identify and cut unnecessary costs.
   • Increase revenue through targeted marketing or expanding client base to improve profit margins.

5. Regular Financial Monitoring:

   • Establish monthly financial “health checks” focusing on cash flow forecasts and key ratios to detect early warning signs.
   • Engage financial advisors or accountants to assist with restructuring plans if necessary.

6. Communication with Stakeholders:

   • Keep investors, lenders, and suppliers informed about the company’s financial strategy and plans to improve stability.

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Explanation of Technical Concepts (Medical Analogies)

• Healthy Cash Flow: Like a steady heartbeat, consistent incoming cash keeps the business alive. The company’s negative net current assets suggest a weak pulse, potentially leading to “circulatory failure” where obligations cannot be met.

• Negative Equity: Comparable to a patient whose vital organs are failing—shareholders’ funds below zero mean the company’s financial “immune system” is compromised.

• Liquidity Squeeze: Similar to dehydration, insufficient liquid assets cause stress on the business, impairing its ability to operate effectively.

• Related Party Loans: These are like blood transfusions from family members—helpful temporarily but not a long-term cure.

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