ACORN GREEN INVESTMENTS NO 2 LIMITED

Executive Summary

ACORN GREEN INVESTMENTS NO 2 LIMITED shows a stable but fragile financial condition, heavily reliant on group funding and with minimal cash reserves. The company maintains positive net assets and working capital but faces risk due to substantial long-term liabilities and dependency on external support. Strengthening liquidity and reducing reliance on intercompany financing are critical steps to improve financial resilience and ensure sustainable growth.

ACORN GREEN INVESTMENTS NO 2 LIMITED - Analysis Report

Company Number: 13804430

Analysis Date: 2025-07-29 20:58 UTC

Financial Health Assessment: ACORN GREEN INVESTMENTS NO 2 LIMITED

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1. Financial Health Score: C

Explanation:
The company demonstrates a moderately stable financial position with positive net assets and working capital. However, the heavy reliance on intercompany debt and financial liabilities, along with minimal cash reserves, signals caution. The presence of redeemable preference shares and significant long-term creditors indicates potential financial stress if group support diminishes. Overall, the financial health is fair but requires close monitoring and proactive management to maintain going concern status.

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2. Key Vital Signs

Vital Sign	Metric (2023)	Interpretation
Net Assets (Shareholder Funds)	£84,660	Positive but modest equity base; improved from £100 in 2022.
Current Assets	£2,110,114	Strong current assets mainly driven by debtors (intercompany receivables).
Cash on Hand	£515	Extremely low cash liquidity, a symptom of constrained immediate cash availability.
Current Liabilities	£7,528	Low short-term liabilities, indicating minimal immediate debt pressure.
Net Current Assets (Working Capital)	£2,102,586	Healthy working capital indicating the company can cover short-term obligations comfortably.
Non-Current Liabilities	£2,017,926	Substantial long-term liabilities, including redeemable preference shares and loans.
Debtors (Amounts owed by group companies)	£1,961,988	Very high intercompany receivables, showing dependence on group funding and transactions.
Profit and Loss Reserve	£84,560	Accumulated profits suggest some retained earnings despite recent start-up phase.
Going Concern Status	Confirmed by directors	Dependent on continued financial support from parent/group companies, introducing risk.

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3. Diagnosis: Financial Health Interpretation

The company's financial "vital signs" portray a business in the early stages of development ("newborn") with a balance sheet weighted heavily towards intercompany receivables and long-term financial liabilities.

• Symptoms of distress: Minimal cash reserves ("weak pulse" of liquidity) and a high level of long-term debt owed to group entities and preference shareholders. This suggests the company is functioning largely as a financing vehicle within a group structure rather than a standalone operational entity generating independent cash flows.

• Positive signs: Healthy working capital and positive net assets indicate that current obligations can be met, and the company is not insolvent. The presence of accumulated profits in the P&L reserve shows some financial progress.

• Underlying condition: The company’s survival and financial health are critically dependent on the ongoing support from its parent and group companies, which provide funding and guarantees. This creates a "chronic condition" where external support is essential for continued operation.

• The auditor’s unqualified opinion supports the accuracy of the financials and the directors’ assessment of going concern, but the narrative warns of potential risk if group support falters.

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4. Recommendations: Prescriptions for Financial Wellness

1. Enhance Cash Liquidity:

   • Increase cash reserves to provide a healthier "heartbeat" of immediate liquidity. Consider negotiating better payment terms or accelerating receipt of intercompany debt payments.

2. Manage Long-Term Debt:

   • Develop a clear plan to reduce reliance on redeemable preference shares and loans from the group. Explore refinancing options or equity injections to improve balance sheet strength and reduce financial liabilities.

3. Diversify Funding Sources:

   • Reduce dependency on group funding by seeking external investors, lenders, or operational revenues to provide a more stable and independent financial foundation.

4. Improve Transparency and Monitoring:

   • Regularly review the company’s cash flow forecasts and debt maturity profiles to anticipate any "symptoms" of liquidity stress early, allowing for timely interventions.

5. Strengthen Operational Performance:

   • If applicable, increase operational revenues or activities to generate independent cash inflows, reducing the chronic dependency on intercompany funding.

6. Contingency Planning:

   • Prepare for scenarios where group support might be reduced or withdrawn, including cost control measures or restructuring plans to maintain viability.

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