CLEMO COLLECTIVE LTD

Executive Summary

CLEMO COLLECTIVE LTD has a solid asset base but faces liquidity challenges and a high debt burden relative to equity. The company is in an early stage with negative working capital, requiring careful cash flow and debt management to ensure ongoing financial health. Strategic focus on improving liquidity and controlling costs will enhance its financial stability and growth potential.

CLEMO COLLECTIVE LTD - Analysis Report

Company Number: 14597610

Analysis Date: 2025-07-29 13:13 UTC

Financial Health Assessment for CLEMO COLLECTIVE LTD

---

1. Financial Health Score: C

Explanation:
CLEMO COLLECTIVE LTD shows a mixed financial condition. The company has significant fixed assets indicating investment in long-term resources, which is positive. However, it also carries substantial long-term liabilities, and current liabilities exceed current assets, resulting in negative working capital. This imbalance suggests cautious monitoring is necessary to maintain operational liquidity and solvency. The overall condition is stable but with signs of financial strain.

---

2. Key Vital Signs

Metric	Value (£)	Interpretation
Fixed Assets	479,108	Strong asset base, likely property or equipment holdings.
Current Assets	4,337	Very low liquid resources available to meet short-term needs.
Current Liabilities	51,900	Short-term debts to be paid within one year.
Net Current Assets	(47,563)	Negative working capital — a symptom of liquidity stress.
Creditors >1 year (Long-term liabilities)	385,413	Substantial long-term debt burden, possibly mortgage or loans.
Net Assets (Equity)	46,132	Positive but modest shareholder equity; cushion exists but limited.
Number of Employees	2	Micro business scale, with lean staffing.

Vital Signs Interpretation:

• The fixed assets suggest the company owns or leases property or similar assets, consistent with its SIC code for real estate letting/operation.
• However, the negative net current assets indicate the company does not have enough short-term assets to cover its immediate liabilities, a "symptom of liquidity distress."
• The high long-term liabilities compared to equity signals financial leverage that might strain future cash flows if income does not cover debt servicing.
• The modest shareholders' funds show some equity buffer but may be insufficient to absorb significant financial shocks.

---

3. Diagnosis

CLEMO COLLECTIVE LTD is like a patient with a strong skeletal frame (fixed assets) but a weak circulatory system (liquidity). The company’s heavy reliance on debt financing (long-term creditors of £385k) to hold its asset base shows it is "leveraged." While fixed assets are valuable, the lack of liquid assets and negative working capital imply a risk of cash flow difficulties if short-term obligations come due without sufficient income or refinancing options.

Given the company was incorporated recently (2023) and is a micro-entity with only two employees, it is likely in an early development or investment phase — acquiring assets and setting up operations but not yet generating robust cash flow. This is not uncommon but requires careful management to avoid financial distress.

The absence of an audit and limited financial disclosures is typical for micro-entities but limits insight into profitability and cash flow trends. The directors appear to comply with statutory requirements and have prepared accounts under standard micro-entity provisions.

---

4. Recommendations

• Improve Liquidity Management: Focus on increasing current assets, especially cash or receivables, to cover short-term liabilities. Consider negotiating better payment terms or arranging short-term credit lines as a buffer.
• Debt Servicing Plan: Develop a clear plan for managing and repaying the significant long-term liabilities. Assess whether refinancing or restructuring options are available to reduce interest burden or extend maturity.
• Monitor Cash Flow Closely: Regular cash flow forecasting and monitoring will help detect early warning signs of distress and enable proactive action.
• Build Equity Base: If possible, consider capital injections or retained earnings accumulation to strengthen shareholders' funds and reduce reliance on external debt.
• Operational Efficiency: With only two employees, ensure that operational costs are tightly controlled and aligned with revenue generation to improve profitability.
• Prepare for Growth: As a micro business in real estate letting, focus on generating stable rental income streams to support debt payments and improve financial resilience.

---