Company Number: SC684089

Analysis Date: 2025-07-29 19:12 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Eden Pharmacy Services Limited is an active private limited company operating as a dispensing chemist. The company has been in operation since December 2020 and recently expanded its management team. However, the balance sheet shows net liabilities of £98k as at 31 March 2024, with significant borrowings (£553k long-term loans and £25k short-term loans). Despite showing growth in fixed assets and current assets, the company has a negative working capital position (£295k deficit), indicating liquidity constraints. Approval is recommended on a conditional basis, requiring close monitoring of cash flow and debt servicing capability, as the company is currently reliant on external financing and has yet to demonstrate positive equity or net profitability.

2. Financial Strength:

• Fixed assets increased substantially to £750k, driven mainly by intangible assets (goodwill of £731k) reflecting acquisition or business combination.
• Current assets total £228k including cash of £77k and trade debtors of £94k; however, this is insufficient to cover current liabilities of £523k, leading to a negative net current assets position.
• Long-term liabilities of £553k suggest considerable external debt, contributing to net liabilities (£98k negative shareholders’ funds).
• The company is in an early growth phase, but the financial structure is currently leveraged with weak equity base and negative net assets.

3. Cash Flow Assessment:

• Cash at bank is £76.7k, which is low relative to current liabilities of £523k and total debt obligations.
• Trade debtors have increased to £93.6k, but collection risk and timing will be critical for liquidity management.
• Negative working capital indicates potential strain in meeting short-term obligations without additional financing or operational cash inflows.
• No profit and loss data was included, but accumulated losses reflected in reserves suggest ongoing operational losses or investment phase.
• Monitoring cash conversion cycle and availability of committed credit lines is essential.

4. Monitoring Points:

• Liquidity ratios, particularly current ratio and quick ratio, to track improvements in working capital.
• Debt servicing ability including interest coverage and principal repayments relative to operating cash flow.
• Profitability trends once full P&L data is available, focusing on EBITDA and net margins.
• Cash flow forecasts and actual cash collections from debtors.
• Any further capital injections or refinancing arrangements to support liquidity.
• Director and shareholder changes, as governance stability is important in turnaround phases.