Company Number: 14027589

Analysis Date: 2025-07-29 20:21 UTC

Financial Health Assessment Report for BIOPHONICA LTD

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1. Financial Health Score: D

Explanation: BIOPHONICA LTD demonstrates significant signs of financial distress, primarily due to a large working capital deficit and negative shareholders’ funds. While the company is still active and compliant with filing deadlines (no overdue accounts or returns), the balance sheet reveals serious liquidity challenges. This score reflects critical symptoms that need urgent attention to restore financial wellness.

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2. Key Vital Signs

Metric	Latest Value (FY 2023)	Interpretation
Current Assets	£10,281	Very low; mostly debtors including VAT receivable.
Cash at Bank	£45	Extremely low cash reserves; unhealthy cash flow.
Current Liabilities	£195,458	Very high short-term obligations; risk of default.
Net Current Assets	-£185,177	Negative working capital; symptom of liquidity strain.
Shareholders’ Funds	-£185,177	Negative equity; indicates insolvency on a balance sheet basis.
Debtors	£10,236	Majority is VAT receivable, which may not be immediately accessible cash.
Number of Employees	2	Small operational scale; micro-business size.

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3. Diagnosis

The financial "vital signs" of BIOPHONICA LTD reveal a company in a precarious state:

• Severe liquidity stress: The company’s cash reserves are almost nonexistent (£45), while current liabilities are nearly £200k. This creates a "symptom" of cash flow crisis that threatens the company’s ability to meet immediate obligations.

• Negative working capital: The deficit of £185k in net current assets means the company owes significantly more in the short term than it can cover with its liquid assets. This is a critical warning signal akin to a patient unable to meet basic metabolic needs.

• Negative shareholders’ funds: The equity position is deeply negative, indicating accumulated losses or capital injections that have not restored net asset value. This is a sign of financial "illness" that, if untreated, risks insolvency.

• Reliance on VAT debtor: A large portion of the current assets (£10,136) is VAT recoverable, which may not be immediately convertible to cash. This reduces the practical liquidity available.

• Micro business scale: With only 2 employees, the company is in early stages or operating on a small scale, which can limit its ability to generate cash inflows quickly.

• No audit requirement: As a small company, accounts are unaudited, which means less external verification but also less financial cost.

Overall, BIOPHONICA LTD is showing symptoms of financial distress requiring urgent intervention. The company is not yet in formal insolvency but is at risk if the working capital situation does not improve.

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4. Recommendations

To restore healthy financial function and avoid further deterioration, the following actions are advised:

1. Improve Cash Flow Management

   • Accelerate collection of receivables, particularly ensuring VAT refunds are expedited.
   • Negotiate extended payment terms with creditors to ease immediate cash outflows.
   • Explore short-term financing options (e.g., overdraft, invoice factoring) to bridge liquidity gaps.

2. Capital Injection

   • Consider raising additional equity or shareholder loans to restore positive net assets.
   • Engage significant controllers (Amanda Hill, On Purpose Group Ltd, Joanne Sermon) for financial support or restructuring.

3. Cost Control

   • Review operational expenses carefully; reduce non-essential costs to conserve cash.
   • Monitor payroll and other fixed costs given the small employee base.

4. Financial Monitoring and Reporting

   • Implement rigorous monthly cash flow forecasting to detect and manage liquidity risks proactively.
   • Seek professional advice on restructuring options if cash flow issues persist.

5. Strategic Review

   • Evaluate the business model and revenue streams to identify opportunities for growth or diversification that can strengthen financial resilience.

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Medical Analogy Summary

BIOPHONICA LTD’s financial health displays "symptoms of distress" akin to a patient with critically low blood pressure and poor circulation (liquidity). The negative net current assets and shareholders’ funds are like a failing heart struggling to pump life-sustaining cash flow. Immediate "treatment" with capital injections and cash flow management is essential to prevent "organ failure" (insolvency).

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