BABYLON ENTERTAINMENT LTD

Executive Summary

Babylon Entertainment Ltd shows signs of financial distress, with negative net assets and working capital deficits, though cash reserves have improved. Immediate focus on capital infusion, cost management, and improved liquidity is essential to restore financial health and ensure ongoing viability.

BABYLON ENTERTAINMENT LTD - Analysis Report

Company Number: 12568663

Analysis Date: 2025-07-20 13:10 UTC

Financial Health Assessment: Babylon Entertainment Ltd (Year Ended 30 April 2024)

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1. Financial Health Score: D

Explanation:
The company exhibits symptoms of financial distress, primarily negative net assets (shareholders’ deficit) and working capital deficiency. While there is some increase in cash on hand, the overall financial position indicates challenges in liquidity and solvency, meriting a below-average grade.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Current Assets	16,147	Cash (£12,563) is healthy but modest; debtors stable at £3,584.
Current Liabilities	30,151	High short-term obligations exceeding assets, indicating liquidity stress.
Net Current Assets	-14,004	Negative working capital signals inability to meet short-term debts comfortably.
Net Assets (Shareholders’ Funds)	-14,004	Negative net worth points to accumulated losses and insolvency symptoms.
Cash Increase (YoY)	+8,703	Cash improved from £3,860 to £12,563, a positive sign of cash flow management.
Debtors Stability	3,584	Debtors consistent, no significant increase suggesting stable receivables management.
Share Capital	2	Minimal equity base, limiting buffer for absorbing losses.

Interpretation of Vital Signs:

• Negative net assets and working capital deficit are classic “symptoms of distress,” suggesting the company is under financial strain and potentially struggling to fund operations without additional external support.
• The increase in cash is a “healthy pulse,” indicating some cash flow improvement or financing, but it is not sufficient to offset liabilities.
• Low share capital limits financial resilience.

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3. Diagnosis

Babylon Entertainment Ltd is showing clear signs of financial stress consistent with an early to moderate stage of financial illness:

• Liquidity: The company has a “weak heartbeat” in terms of liquidity. Current liabilities more than double current assets, indicating it may struggle to pay immediate debts without refinancing or improved operational cash inflows.
• Solvency: Negative net assets reflect accumulated losses eroding shareholder equity, a warning “symptom” of potential insolvency risk if losses continue.
• Operational Efficiency: Debtors remain stable, and cash has improved, showing some management effort to stabilize cash flow, but the high creditors and accruals suggest ongoing obligations that may be difficult to manage.
• Going Concern: The directors prepared accounts on a going concern basis, but the financial data suggest a need for caution and active financial management to avoid worsening conditions.

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4. Recommendations

To improve Babylon Entertainment Ltd’s financial wellness, the following steps are critical:

1. Improve Working Capital Management:

   • Accelerate collection of receivables and review credit terms with customers.
   • Negotiate extended payment terms with suppliers to ease short-term cash demands.

2. Increase Equity or Obtain Financing:

   • Consider raising additional equity capital or securing long-term financing to shore up the balance sheet and improve solvency.
   • Engage with directors/related parties for possible financial support or loans.

3. Cost Control and Revenue Enhancement:

   • Review operating expenses rigorously to cut non-essential costs.
   • Explore new revenue streams or marketing initiatives to boost turnover and cash flow.

4. Financial Monitoring:

   • Implement monthly cash flow forecasting and financial health review to detect worsening symptoms early.
   • Engage professional advice if necessary to restructure debts or assess turnaround options.

5. Transparency and Compliance:

   • Continue timely filing of accounts and returns to maintain regulatory compliance and avoid penalties.

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Executive Summary

Babylon Entertainment Ltd is currently experiencing financial distress with negative net assets and working capital deficits, indicating liquidity and solvency challenges. Although cash reserves have improved, the company must urgently focus on working capital management, cost control, and possibly raising fresh capital to stabilize and recover financial health. Without prompt action, the risk of financial deterioration remains significant.