POLEGATE HEARING CARE LIMITED

Executive Summary

POLEGATE HEARING CARE LIMITED faces liquidity and solvency challenges, evidenced by negative working capital and a drastic decline in shareholders' funds. Prompt focus on cash flow management, equity reinforcement, and debt restructuring is essential to regain financial health and support sustainable operations.

POLEGATE HEARING CARE LIMITED - Analysis Report

Company Number: 13119148

Analysis Date: 2025-07-29 20:11 UTC

Financial Health Assessment for POLEGATE HEARING CARE LIMITED

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1. Financial Health Score: D

Explanation:
The company exhibits worrying signs of financial distress, primarily due to persistent negative working capital (net current assets), declining shareholders’ funds, and a significant drop in cash reserves. Although the business remains active with some assets, these "symptoms of distress" indicate liquidity challenges and potential solvency risks if not addressed promptly.

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2. Key Vital Signs

Metric	2024 (£)	2023 (£)	Interpretation
Current Assets	6,079	14,424	Sharp decline, indicating reduced liquidity
Cash and Bank Balance	5,072	13,821	Healthy cash flow deteriorated substantially
Debtors (Receivables)	1,007	603	Slight increase, positive but small scale
Current Liabilities	13,658	19,450	Decreased but still high compared to assets
Net Current Assets (Working Capital)	(7,579)	(5,026)	Negative and worsening — liquidity strain
Total Assets less Current Liabilities	117	5,235	Shrinking net asset base, close to break-even
Shareholders’ Funds	117	5,235	Drastic reduction, eroding equity cushion
Tangible Fixed Assets	7,696	10,261	Declining, possibly due to depreciation or disposals

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3. Diagnosis: Financial Condition Assessment

Liquidity Weakness ("Short of Breath")
The company’s current assets have plummeted by over half, notably cash reserves which are the lifeblood of operational health. This shrinking cash pool coupled with negative net current assets shows the company is struggling to cover its short-term debts — a classic symptom of liquidity stress. This "breathlessness" in cash flow could threaten day-to-day operations if not reversed.

Eroding Equity ("Thinning Bloodline")
Shareholders' funds have dropped sharply from £5,235 in 2023 to £117 in 2024. This shrinking equity means the company has far less financial cushion to absorb losses or shocks. A near-zero equity base signals that creditors increasingly back the company’s finances, raising solvency concerns.

Asset Depletion ("Withering Muscle")
Tangible fixed assets have declined, reflecting ongoing depreciation and possibly asset sales or underinvestment. The company may be losing its "muscle" in productive capacity, impacting its future revenue-generating ability.

Debt Management ("Still Carrying Heavy Weight")
Current liabilities remain sizable, though reduced from the prior year. The presence of bank loans (£5,000) on the balance sheet adds to financial burden and interest obligations. High current liabilities relative to current assets indicate the company is carrying a heavy weight it struggles to lift.

Operational Scale and Ownership
The company is small and young (incorporated in 2021) with two directors who are also shareholders. This close ownership can be a strength for swift decision-making but also means financial risks are concentrated.

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4. Recommendations for Financial Wellness

1. Improve Liquidity ("Restore Healthy Circulation")

   • Prioritize cash flow management: accelerate debtor collections, negotiate extended payment terms with suppliers, and reduce unnecessary expenses.
   • Consider short-term financing options such as an overdraft or invoice factoring to relieve immediate cash pressure.

2. Strengthen Equity Base ("Build Stronger Bones")

   • Explore capital injection from existing shareholders or external investors to rebuild equity and improve solvency.
   • Retain earnings by controlling costs and improving profitability rather than distributing dividends.

3. Asset and Debt Restructuring ("Lighten Load and Repair")

   • Review fixed assets for possible sale of non-core items to generate cash.
   • Negotiate with lenders for restructuring or refinancing debt to ease repayment terms.

4. Operational Efficiency ("Boost Vital Functions")

   • Focus on increasing sales in core hearing aid retail and medical goods sectors while controlling overheads.
   • Monitor key financial indicators monthly to detect early warning signs.

5. Professional Advice

   • Engage a financial advisor for cash flow forecasting and debt structuring.
   • Consider regular financial health check-ups to ensure recovery efforts are effective.

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Summary

POLEGATE HEARING CARE LIMITED is currently showing signs of financial distress, notably weakened liquidity and a significantly reduced equity base, which together suggest the company is struggling to sustain its financial health. Immediate actions focusing on cash flow improvement, equity strengthening, and prudent debt management are critical to restore stability and avoid deeper financial "illness."