BROADOAK HERITAGE LTD

Executive Summary

Broadoak Heritage Ltd is showing persistent financial distress characterized by negative working capital, low cash reserves, and accumulated losses, though it demonstrates year-on-year improvement. Urgent focus on cash flow management and capital strengthening is essential to avoid liquidity crises and move towards sustainable profitability.

BROADOAK HERITAGE LTD - Analysis Report

Company Number: 13224485

Analysis Date: 2025-07-29 14:04 UTC

Financial Health Assessment of BROADOAK HERITAGE LTD as of 30 June 2023

1. Financial Health Score: D

Explanation:
The company is showing persistent net current liabilities and negative shareholders’ funds, indicating financial distress. Although there is an improvement compared to the prior year, the company remains in a fragile state with working capital deficits and accumulated losses.

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2. Key Vital Signs

Metric	2023 Value (£)	2022 Value (£)	Interpretation
Current Assets	355,745	193,052	Increased, mainly stocks and debtors, suggesting growth or accumulation of inventory and receivables.
Cash at Bank	73	12,957	Critically low cash balance, a symptom of poor liquidity.
Debtors	148,697	51,185	Significant increase, potentially slow collection or higher sales on credit.
Current Liabilities	362,299	238,055	Increased, reflecting higher short-term obligations.
Net Current Assets (Working Capital)	-6,554	-45,003	Negative but improving; working capital deficit signals liquidity stress.
Shareholders’ Funds (Equity)	-6,654	-45,103	Negative but improving; accumulated losses still erode net worth.
Stock (Work in Progress)	206,975	128,910	Substantial inventory, likely tied to ongoing projects.

Interpretation:

• The company’s liquidity vital sign is weak, with almost no cash on hand and current liabilities exceeding current assets.
• Debtors and stock levels are high, which may be tying up cash resources and evidencing inefficient working capital management.
• The negative equity reflects accumulated losses since incorporation, indicating the company has not yet reached profitability.
• Improvement from 2022 to 2023 in net current assets and shareholders’ funds is a positive symptom but still indicates distress.

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3. Diagnosis

BROADOAK HERITAGE LTD is in a state of financial distress but showing signs of incremental improvement. The company operates in the development of building projects (SIC 41100), which typically requires substantial working capital to finance ongoing projects.

Symptoms of distress include:

• Persistent negative working capital indicating that short-term obligations exceed liquid assets, risking payment delays or reliance on external funding.
• Very low cash balances, which is a critical symptom indicating potential cash flow problems.
• Large increase in debtors and stock could mean slow receivables collection and inventory turnover, tying up valuable cash resources.
• Negative shareholders’ funds reflecting cumulative losses and no retained earnings cushion.

These symptoms suggest the company is under strain to maintain liquidity and solvency, but the year-on-year improvement shows management efforts may be stabilizing the situation.

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4. Prognosis

If current trends continue, the prognosis is cautiously optimistic but still uncertain. The reduction in net current liabilities and smaller equity deficit suggest the company is moving toward financial stabilization. However, without improving cash flow and working capital management, the company risks liquidity crises, which could lead to insolvency if not addressed.

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5. Recommendations

To improve the financial wellness of BROADOAK HERITAGE LTD, the following actions are advised:

• Improve Cash Flow Management:
  Introduce tighter credit control to accelerate debtor collections, and negotiate better payment terms with suppliers to ease short-term cash outflows.

• Optimize Inventory Levels:
  Review work in progress and stock management to reduce excess inventory and convert stock into cash faster, relieving cash tied in unsold assets.

• Strengthen Capital Base:
  Consider injecting fresh equity or securing longer-term financing to improve net assets and reduce reliance on short-term liabilities.

• Cost Control:
  Monitor and reduce overheads and project costs to move toward profitability and reduce accumulated losses.

• Regular Financial Monitoring:
  Track key liquidity and solvency ratios monthly to detect early warning signs and adjust operations proactively.

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Executive Summary