Company Number: 13888210

Analysis Date: 2025-07-20 16:48 UTC

1. Credit Opinion: DECLINE

Grass Gains Ltd currently demonstrates significant financial distress and weak creditworthiness. The company has posted negative net assets and shareholders' deficit (£-43,174) as of 31 December 2024, indicating insolvency on a balance sheet basis. Working capital is negative (£-16,051), with current liabilities exceeding current assets, which raises concerns about liquidity and the ability to meet short-term obligations. The company has also increased long-term liabilities (bank loans £18,000 and other creditors £10,000) recently, which may exacerbate cash flow strain. Director loans totaling £326,576 further reflect reliance on insider funding rather than external financing. Overall, the financial position reveals ongoing losses and erosion of equity, with no evidence of profitability or net asset recovery. Given this profile, the company is a high credit risk with insufficient financial resilience to support new credit facilities.

2. Financial Strength:

The balance sheet is weak and deteriorating. Tangible fixed assets are minimal (£877), and current assets have declined from £406,861 (February 2024) to £311,783 (December 2024), largely due to a significant drop in trade debtors (£216,726 to £13,843) and stock fluctuations. Current liabilities remain high (£327,834), driven by substantial amounts owed to directors (£326,576) classified as "other creditors," which may not be readily collectible or sustainable. The company’s net liabilities position of £43,174 indicates negative equity and insolvency concerns. Shareholders’ funds have swung from a positive £49,089 in February 2024 to a negative position by December 2024, reflecting losses and potential cash burn. The increase in bank loans to £18,000 also adds financial leverage and repayment obligations. Overall, the financial strength is weak with a high risk of default on creditor payments.

3. Cash Flow Assessment:

Liquidity is constrained. Cash balances are low (£15,057) compared to current liabilities, representing less than 5% coverage of short-term debts. Negative net current assets indicate working capital deficits, suggesting operational cash outflows exceed inflows or that cash is tied up in stock and debtor collections are limited or delayed. The steep decline in trade debtors implies potential collection issues or reduced sales activity. Reliance on director loans for funding suggests external financing is either unavailable or insufficient, increasing refinancing and liquidity risk. The company employs only three people, indicating a small scale but possibly limited capacity to generate cash internally. Without a positive operating cash flow or improved working capital management, the company faces challenges servicing liabilities or new credit.

4. Monitoring Points:

• Net current assets and working capital trends: Watch for improvement or further deterioration.
• Trade debtor collection efficiency: Monitor ageing and recovery to assess cash inflows.
• Director loan balances and repayment plans: Review related party funding sustainability.
• Profitability indicators (once available): To evaluate turnaround prospects.
• Bank loan covenant compliance: Ensure no breach of lending terms.
• Stock levels relative to sales: To prevent overstocking or obsolescence.
• Filing of next accounts and confirmation statements: To confirm ongoing compliance and business activity.