Company Number: 12525203

Analysis Date: 2025-07-20 13:29 UTC

Financial Health Assessment: OAKTREE POWER LIMITED

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1. Financial Health Score: C

Explanation:
The company shows stable operations with solid net assets and shareholder equity, but also exhibits symptoms of financial strain such as a significant accumulated loss and declining net assets compared to the prior year. The financial "vital signs" suggest cautious optimism but highlight underlying stresses that need addressing to restore full financial wellness.

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2. Key Vital Signs

Metric	2023 Value (£)	2022 Value (£)	Interpretation
Net Assets (Shareholders’ Funds)	980,529	1,810,559	Net assets have decreased by about 46%, indicating a weakening equity base which is a symptom of financial distress.
Called-up Share Capital	1,043,931	1,043,931	Constant; stable capital base.
Share Premium Account	2,459,107	2,459,107	Constant; reflects past equity injections.
Profit & Loss Reserve	-2,522,509	-1,692,479	Increasing accumulated losses (negative reserve) indicate ongoing operational losses - a key symptom of financial strain.
Current Assets	1,636,752	2,812,633	Significant drop (~42%) mainly from reduced cash and debtors, signaling tightening liquidity.
Current Liabilities	844,428	1,010,603	Decreased, but still substantial short-term obligations.
Net Current Assets (Working Capital)	792,324	1,802,030	Working capital reduced by more than half, indicating less buffer to cover short-term debts - a warning sign.
Intangible Assets (Software Development)	178,543	0	New investment in intangible assets suggests reinvestment into core technology – a healthy sign.
Tangible Assets	9,662	8,529	Small increase; stable physical asset base.
Cash at Bank	819,263	1,638,349	Cash reserves halved, indicating tightening cash flow and potential liquidity concerns.
Turnover	Not disclosed	Not disclosed	Unable to assess revenue generation and operational profitability directly.

Additional Notes:

• The company operates in the electricity trade sector (SIC 35140), a capital-intensive and regulated industry, where strong cash flow and capital backing are essential.
• Directors include financiers and experienced professionals, suggesting competent governance.
• The company benefits from a shareholder structure with significant control from a parent company and a key individual investor.

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3. Diagnosis: Financial Condition

Oaktree Power Limited shows a fragile financial condition with mixed vital signs:

• The accumulated losses (P&L reserve) growing from approx. -£1.69m to -£2.52m reveal ongoing losses that erode shareholder equity. This is akin to a patient with a chronic illness whose condition is worsening over time.
• The net assets have dropped almost by half, a symptom of financial strain reducing the company’s “immune system” or resilience to shocks.
• Working capital reduced significantly, reflecting a squeezed liquidity position, similar to a patient with reduced blood flow to vital organs — the company may struggle to meet short-term obligations if this continues.
• However, the company has invested in intangible assets (software), indicating active development and commitment to growth, which is a positive sign like a patient responding to treatment.
• Cash reserves halved, which is concerning for operational health and may limit the ability to cover unexpected expenses or invest in growth opportunities.
• The directors’ statement confirms going concern status with backing from founding investors willing to provide bridging finance, which acts like a support system preventing collapse during recovery.
• Absence of audit and limited disclosure of turnover and profit/loss details restricts a full diagnostic picture but the provided data points to a company in a vulnerable but not critical state.

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4. Recommendations: Prescription for Financial Wellness

1. Strengthen Cash Flow Management:

   • Implement tighter controls on receivables and payables to improve liquidity.
   • Explore short-term financing or working capital facilities to maintain healthy cash flow.
   • Monitor cash burn rate closely to avoid liquidity crises.

2. Address Accumulated Losses:

   • Develop a clear profitability roadmap with cost control and revenue growth targets.
   • Consider revisiting pricing strategy or service offerings to improve margins.
   • Engage with investors for potential capital injections or restructuring if losses continue.

3. Enhance Financial Transparency:

   • Consider voluntary audit or more detailed financial reporting to build stakeholder confidence.
   • Track and report key performance indicators periodically for early detection of financial stress.

4. Leverage Intangible Asset Development:

   • Continue investing in software and technology development to build competitive advantage and future revenue streams.
   • Protect intellectual property and explore monetization opportunities.

5. Maintain Investor and Director Support:

   • Keep communication channels open with investors and directors to secure ongoing financial and strategic backing.
   • Utilize their expertise to navigate the energy sector’s challenges and capitalize on net-zero opportunities.

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Summary

Oaktree Power Limited exhibits symptoms of financial strain with declining net assets and increasing losses, yet maintains positive signs from active intangible asset investment and investor backing. The company’s financial health is fragile but stable enough with proper management intervention to restore robustness. Immediate attention to cash flow and loss reduction is critical for recovery and sustainable growth.