Company Number: SC660040

Analysis Date: 2025-07-20 13:00 UTC

Financial Health Assessment for BROADSTONE NETWORK LTD

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1. Financial Health Score: C-

Explanation:
The company shows a mixed financial condition with modest current assets relative to liabilities but persistent net losses reflected in negative shareholders' funds (equity). While liquidity appears stable (positive net current assets), the overall net asset position is negative, indicating accumulated losses or liabilities exceeding assets—a symptom of financial strain. The score reflects a cautious outlook, requiring attention to restore equity and strengthen capital structure.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Current Assets	14,307	Adequate short-term assets to cover immediate obligations
Current Liabilities	12,370	Short-term debts are slightly lower than current assets
Net Current Assets (Working Capital)	10,307	Healthy cash flow buffer; indicates ability to meet short-term liabilities comfortably
Total Net Assets (Equity)	-2,063	Negative net assets indicate accumulated losses or debts exceeding assets—a symptom of financial distress
Share Capital	1.00	Minimal capital injection; very low equity base
Average Employees	2	Small workforce consistent with micro entity classification

Trend Analysis:

• The company’s net assets have been negative in alternate years (2022 and 2024), showing volatility and a lack of consistent profitability or capital retention.
• Positive net current assets across recent years indicate that, operationally, the company maintains sufficient liquidity, but the long-term solvency is questionable due to negative equity.

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3. Diagnosis: Financial Condition Overview

• Liquidity (Vital Sign: Net Current Assets): The company maintains a healthy short-term liquidity position, as current assets exceed current liabilities by a comfortable margin (net current assets around £10k), indicating "healthy cash flow" and ability to meet immediate financial obligations. This is a positive "heartbeat" for the company’s day-to-day survival.
• Solvency (Vital Sign: Net Assets & Shareholders’ Funds): The negative net asset position (-£2,063) is a "symptom of distress," suggesting that accumulated losses or long-term liabilities outweigh the company's assets. This indicates potential underlying issues such as past unprofitable trading years or insufficient capital injection.
• Capital Structure: Minimal share capital (£1) and negative retained earnings place the company in a fragile position regarding its capacity to absorb shocks or invest for growth.
• Operational Size: Being a micro-entity with just two employees and small asset base aligns with its niche industry (video production activities), but also highlights limited scale and potential vulnerability to market fluctuations.
• Director Changes: Recent director change in December 2024 could signify strategic shifts or attempts to improve governance and performance.

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4. Recommendations: Steps to Improve Financial Wellness

1. Strengthen Capital Base:
   Consider a capital injection or equity financing to improve the net asset position and provide a stronger financial cushion against future losses or liabilities.

2. Profitability Enhancement:
   Conduct a thorough review of operational efficiency and cost structure to enhance profitability. Explore avenues to increase revenue or diversify services in video production to boost margins.

3. Debt Management:
   Review long-term liabilities (creditors due after more than one year) to manage or restructure debts where possible, reducing financial strain and improving solvency.

4. Cash Flow Monitoring:
   Maintain the healthy working capital position by vigilant cash flow forecasting and managing receivables/payables effectively to avoid liquidity crunches.

5. Strategic Governance:
   Leverage the recent change in directorship to introduce stronger financial controls, business strategy adjustments, and possibly seek external advisory support.

6. Regular Financial Review:
   Implement quarterly financial health check-ups to detect "symptoms" early and respond proactively to emerging financial risks.

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