ALCOM RENEWABLES UK LIMITED

Executive Summary

ALCOM Renewables UK Limited faces significant financial challenges with negative net assets and high current liabilities indicating liquidity strain. The company depends heavily on related party support to continue as a going concern. Strategic capital strengthening and improved cash flow management are critical to recovering financial stability.

ALCOM RENEWABLES UK LIMITED - Analysis Report

Company Number: 13799255

Analysis Date: 2025-07-29 20:57 UTC

Financial Health Assessment for ALCOM RENEWABLES UK LIMITED

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1. Financial Health Score: D

Explanation:
ALCOM Renewables UK Limited’s financials show significant distress signs, primarily due to a large negative net asset position and high current liabilities exceeding current assets by a wide margin. While the company remains active and has ongoing support from a related entity, its balance sheet exhibits symptoms of financial strain, warranting a below-average grade.

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2. Key Vital Signs

Metric	2023 Value	Interpretation
Current Assets	£18,415	Minimal liquid assets, mostly cash, indicating some short-term liquidity but very limited.
Cash at Bank	£18,315	Positive sign of cash availability, but small in relation to liabilities.
Debtors	£100	Very low trade receivables, suggesting limited sales or collection issues.
Current Liabilities	£109,054	High short-term obligations creating liquidity pressure.
Net Current Assets (Working Capital)	-£90,639	Negative working capital indicates inability to meet short-term debts with current assets.
Net Assets (Equity)	-£90,639	Negative equity signals that liabilities exceed assets, a critical red flag.
Shareholders’ Funds	-£90,739	Reflects accumulated losses and financial distress.
Related Party Debt	£104,566 owed to Alcom PTE Ltd	Heavy reliance on related party financing to sustain operations.

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3. Diagnosis: Financial Health Overview

The company is exhibiting symptoms of financial distress, with a balance sheet heavily tilted towards liabilities. Negative net assets imply that the company’s debts surpass its total assets, a classic indicator of insolvency risk if not managed carefully. The large related party loan is supporting the company’s liquidity, suggesting external financial aid is crucial for ongoing operations.

The going concern statement in the accounts relies on continued support from Alcom PTE Ltd, indicating the company’s survival is currently dependent on this backing. The absence of an audit and the company’s small size classify it under the "small companies regime," but this does not lessen the significance of the negative net asset position.

The limited current assets, mostly cash, suggest the company does not have significant operational assets or stock, consistent with its environmental consulting activity. However, the mismatch between current liabilities and assets signals a potential cash flow "blockage," where the company may struggle to pay debts as they become due without additional funding.

Employees and directors have been consistent over the years, but the wage cost in 2023 (£46,620) and pension contributions add to the cash outflow pressures.

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4. Recommendations: Steps to Improve Financial Wellness

1. Strengthen Capital Structure:
   Explore ways to convert related party debt into equity or secure additional equity investment to improve the net asset position and restore balance sheet health. Negative equity undermines stakeholder confidence and limits borrowing capacity.

2. Improve Working Capital Management:
   Focus on reducing current liabilities through negotiation with creditors and better cash flow forecasting. Consider extending payment terms or restructuring short-term debts to ease liquidity strain.

3. Enhance Revenue Generation and Receivables:
   The very low debtor balance suggests either limited sales or fast collections. Drive business development efforts to increase sales volumes and ensure timely invoicing and collections to build a more stable cash inflow.

4. Formalise External Support:
   Document and formalise the financial support arrangements with Alcom PTE Ltd to provide transparency and assurance to creditors and stakeholders, ensuring the going concern assumption remains valid.

5. Cost Control and Efficiency:
   Review employee costs and overheads carefully to align expenses with revenue realities. Monitor pension and other commitments to avoid unexpected financial burdens.

6. Prepare for Audit and Compliance:
   Although currently exempt, preparing for future audits as the company grows will improve financial discipline and stakeholder trust.

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Medical Analogy Summary

ALCOM Renewables UK Limited currently exhibits symptoms of financial distress akin to a patient with a weak cardiovascular system: low liquidity (cash flow), negative net assets (critical organ failure), and heavy reliance on external support (life support machine). Immediate intervention in capital restructuring and cash flow management is essential to stabilize the condition and restore financial health.

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