Company Number: 13202760

Analysis Date: 2025-07-29 16:55 UTC

Financial Health Assessment for PASTURETEC LTD (As of 31 March 2024)

---

1. Financial Health Score: D

Explanation:
PASTURETEC LTD is currently showing signs of financial distress. The company has accumulated significant losses leading to negative net assets and shareholders' funds. The liquidity position has deteriorated compared to the previous year, with negative net current assets indicating working capital pressure. The company’s cash reserves are modest relative to current liabilities, which could constrain operational flexibility. The overall picture is concerning but not beyond recovery if corrective actions are taken promptly.

---

2. Key Vital Signs (Critical Financial Metrics):

Metric	2024 Value (£)	Interpretation
Current Assets	597,915	Reasonably high, but includes stock and debtors which may not be quickly liquidated.
Cash at Bank	40,609	Low cash balance indicates limited readily available funds ("healthy cash flow" is weak).
Debtors	311,314	High receivables; risk of cash flow delays if collections are slow.
Current Liabilities	659,220	Exceeds current assets, causing a negative working capital ("symptom of liquidity distress").
Net Current Assets (Working Capital)	-61,305	Negative working capital is a red flag for short-term solvency.
Total Assets Less Current Liabilities	33,744	Positive but sharply lower than prior year, indicating erosion of buffer.
Creditors > 1 Year	335,823	Significant long-term liabilities adding to financial burden.
Net Assets / Shareholders’ Funds	-313,035	Negative equity signals accumulated losses eroding the company’s capital base.
Retained Losses (P&L Reserve)	-333,055	Reflects cumulative losses over the company’s short life.

Other notable points:

• Fixed assets increased modestly, with capital expenditure on plant and equipment, but depreciation is significant.
• The company has a small issued share capital (£20) with a £20,000 share premium, indicating limited equity injection.
• The average number of employees has increased from 6 to 9, implying rising operational costs.
• Directors acknowledge material uncertainties regarding going concern, reflecting awareness of financial strain.

---

3. Diagnosis: What the Financial Data Reveals About Business Health

Symptoms of Distress:

• The negative net current assets and low cash reserves show liquidity stress, implying difficulty meeting short-term obligations without new cash inflows or refinancing.
• Negative net assets and shareholders’ funds indicate the company is "underweight" in terms of capital—losses have consumed all equity, which may reduce creditor confidence and limit borrowing capacity.
• High debt levels, both short and long term, create a burden of fixed obligations that the company must service regardless of profitability.
• Increasing operating losses (cumulative loss of £153k in FY2024) suggest the business model is currently unprofitable, possibly due to revenue shortfalls, high costs, or ineffective cost management.
• Stock levels remain high but are declining, which may signal attempts to reduce inventory or potential impairment risk.
• Debtor balances are sizeable; if collection is slow or impaired, cash flow problems will worsen.
• The company operates in environmental consulting and online retail sectors, which may have variable cash conversion cycles and competitive pressures.

Overall Diagnosis:
PASTURETEC LTD is currently in a financially fragile state, akin to a patient with chronic underlying illness manifesting acute symptoms. The company must urgently address liquidity challenges and stem losses to avoid worsening its financial condition. Without intervention, the risk of insolvency or forced restructuring increases.

---

4. Recommendations: Specific Actions to Improve Financial Wellness

1. Enhance Cash Flow Management:

   • Accelerate debtor collections through stricter credit control and incentives for early payment.
   • Review payment terms with suppliers to extend liabilities where possible without damaging relationships.
   • Consider short-term financing options (e.g., overdrafts, invoice factoring) to smooth liquidity gaps.

2. Cost Rationalization:

   • Analyze operational costs, especially labor and overheads, aiming to reduce expenses or improve efficiency.
   • Evaluate stock levels for excess or obsolete inventory and implement tighter inventory management controls.

3. Capital Restructuring:

   • Consider equity injection from existing or new shareholders to strengthen the capital base and improve solvency ratios.
   • Engage with creditors to negotiate restructuring of long-term debts or more favorable repayment terms.

4. Strategic Review:

   • Assess the profitability of business segments (environmental consulting vs. retail) and focus on higher-margin or growth areas.
   • Explore new revenue streams or partnerships to improve turnover and margin.

5. Governance and Monitoring:

   • Implement robust financial monitoring with regular cash flow forecasting and scenario planning to detect issues early.
   • Directors should maintain transparency with stakeholders and prepare contingency plans to maintain going concern status.

---