Company Number: 13291389

Analysis Date: 2025-07-20 11:32 UTC

Financial Health Assessment for BROOK AND LEWIS TREE SURGEONS LTD

As at 31 January 2024

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1. Financial Health Score: C (Fair)

Explanation: The company demonstrates a stable but weakening financial position. While it maintains positive net assets and working capital, there is a noticeable decline in total net assets and fixed assets over the latest year, suggesting emerging stress. The score reflects a need for careful monitoring and strategic action to restore financial resilience.

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2. Key Vital Signs (Critical Financial Metrics)

Metric	2024 (£)	2023 (£)	Interpretation
Fixed Assets	22,248	36,419	Declined by ~39%, indicating asset sales or impairment, potential reduction in operational capacity.
Current Assets	12,355	20,432	Decreased, reducing liquidity availability.
Current Liabilities	11,233	13,205	Slightly decreased, but still near current assets, tight liquidity position.
Net Current Assets (Working Capital)	1,122	7,227	Sharp reduction, signals weaker short-term financial health and cash flow constraints.
Creditors (Due after 1 year)	13,044	22,305	Decreased long-term liabilities, which may reduce future financial burden but could also reflect debt repayments.
Net Assets (Equity)	9,264	20,301	Nearly halved, indicating loss of retained earnings or capital erosion.

Interpretation:
The company’s working capital, the lifeblood of day-to-day operations, has significantly diminished, signaling "symptoms of distress" in managing short-term obligations. The marked reduction in fixed assets suggests disposal or depreciation, potentially impairing revenue-generating capacity. Meanwhile, shrinking net assets (or shareholder funds) reflect accumulated losses or capital withdrawals, "akin to a patient losing strength."

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3. Diagnosis: Overall Financial Condition

BROOK AND LEWIS TREE SURGEONS LTD, operating in the landscape service sector as a micro-entity, shows signs of financial weakening. The company remains solvent with positive net assets and working capital but is experiencing a declining asset base and equity.

• The healthy cash flow witnessed in prior years is under pressure, with working capital falling sharply from £7,227 to £1,122, indicating tightening liquidity.
• The reduction in fixed assets by nearly 40% could reflect necessary asset disposals to meet obligations or a scaling back of operational capacity.
• The significant drop in shareholders’ funds (net assets) from £20,301 to £9,264 resembles a patient losing reserves needed to weather future financial shocks.
• Staff numbers have halved (from 2 to 1), suggesting reduced operational scale or cost-cutting measures.

Underlying Causes (Symptoms):

• Possible decline in profitability or increased expenses not visible due to micro-entity accounts not filing full profit and loss statements.
• Asset sales or write-downs may be a defensive reaction to liquidity needs.
• The company may be facing tighter market conditions or reduced demand in its sector.

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4. Recommendations: Specific Actions to Improve Financial Wellness

• Restore Working Capital: Focus on improving short-term liquidity by accelerating receivables, managing payables prudently, and controlling inventory levels if applicable. Consider negotiating extended payment terms with creditors to ease cash flow.
• Asset Management Review: Evaluate fixed assets to ensure they are optimally utilized. Avoid further unnecessary disposals that could impair operational capacity. Review asset maintenance to prolong asset life.
• Profitability Enhancement: Although detailed P&L data is unavailable, management should review cost structures and pricing strategies to improve margins. Consider diversification of services or targeting new markets to increase revenues.
• Financial Planning and Forecasting: Develop cash flow forecasts and budgets to anticipate funding needs and avoid liquidity crises. Engage with financial advisors if necessary.
• Capital Injection: If feasible, consider additional equity investment or loans to rebuild shareholders’ funds and strengthen the balance sheet.
• Monitor Key Metrics Regularly: Set up regular financial health checks focusing on working capital, asset turnover, and net asset levels to detect early signs of distress.

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Medical Analogy Summary

The company’s financial "vital signs" are showing early symptoms of distress: reduced liquidity (working capital), asset depletion, and shrinking equity reserves. These indicators suggest the company is in a "fair condition" but vulnerable to shocks without corrective measures. Proactive management is essential to avoid a "financial illness" worsening into insolvency.

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