PROJECT CONNECT LIMITED

Executive Summary

PROJECT CONNECT LIMITED demonstrates stable but declining financial health characterized by a significant drop in cash reserves and net assets, signaling tightening liquidity and reduced financial resilience. Immediate attention to cash flow management, profitability assessment, and working capital optimization is recommended to restore and maintain financial wellness. With proactive measures, the company can stabilize its financial condition and support future growth.

PROJECT CONNECT LIMITED - Analysis Report

Company Number: 13384568

Analysis Date: 2025-07-20 17:58 UTC

Financial Health Assessment: PROJECT CONNECT LIMITED

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1. Financial Health Score: C

Explanation:
The company shows a mixed financial picture with adequate liquidity but declining net assets and working capital over the most recent year. While there are no immediate liquidity crises ("healthy cash flow" remains), the "symptoms of distress" include a significant reduction in cash reserves and net assets compared to previous years, which suggests potential challenges in sustaining operational expenses or funding growth without external support. The overall financial condition is stable but warrants caution and proactive management to prevent deterioration.

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2. Key Vital Signs

Metric	2025 (£)	2024 (£)	Interpretation
Current Assets	28,997	68,150	Sharp decline, primarily in cash, indicating reduced liquidity buffer.
Cash at Bank & In Hand	27,597	64,394	Significant fall, a critical measure of immediate financial health ("cash pulse").
Debtors	0	2,067	Reduction to zero may indicate faster collections or lower sales on credit.
Current Liabilities	17,886	35,512	Decrease, which is positive, indicating less short-term debt pressure.
Net Current Assets	11,111	32,638	Decrease highlights lower working capital ("weakened financial stamina").
Net Assets (Equity)	11,111	32,638	Reduced shareholders' funds reflect lower retained earnings or losses ("shrinking reserves").
Share Capital	100	100	Stable, indicating no recent equity injections.
Average Employees	2	2	Stable workforce size, no expansion or contraction.

Additional Notes:

• The company operates in "Public order and safety activities" and "Management consultancy," sectors that may require steady cash flow to maintain contracts and service levels.
• The financial statements are unaudited abridged accounts within the small company regime, limiting detailed insight into profitability or cash flow beyond balance sheet figures.

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3. Diagnosis

• Liquidity Health: While cash levels remain positive, the significant drop in cash and current assets from £68,150 to £28,997 is a red flag. This "weakening pulse" suggests the company may be using cash reserves possibly to cover operational costs or meet liabilities due to reduced income or increased expenditure. The reduction in current liabilities is positive but insufficient to fully offset cash depletion.

• Working Capital: Net current assets have dropped from £32,638 to £11,111, indicating a diminished buffer to cover short-term obligations. This symptom suggests the company might face tighter liquidity in the near term if the trend continues.

• Equity Position: Net assets have decreased by about two-thirds since last year, from £32,638 to £11,111, signaling that retained earnings or profits have been substantially reduced or losses incurred. This decline weakens the company’s financial "immune system" to absorb shocks or fund expansion.

• Profitability & Cash Flow: The lack of detailed profit and loss data (abridged accounts do not include P&L) limits ability to assess operational profitability directly. However, the shrinking reserves imply limited profitability or potential losses.

• Operational Stability: A consistent headcount of 2 suggests stable operations without expansion or contraction, which may reflect cautious management in response to financial pressures.

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4. Recommendations

1. Cash Flow Management:

   • Develop a detailed cash flow forecast to anticipate liquidity shortfalls early.
   • Tighten credit control and optimize debtor collections to improve cash conversion.
   • Explore cost control measures to reduce unnecessary expenses without impairing core operations.

2. Profitability Analysis:

   • Prepare a full profit and loss account to identify loss-making areas or declining revenue streams.
   • Consider pricing strategies or diversification to increase turnover and stabilize income.

3. Working Capital Optimization:

   • Renegotiate payment terms with suppliers to improve cash timing without damaging relationships.
   • Monitor stock levels closely to avoid overstocking and free up cash tied in inventory.

4. Capital Structure Review:

   • Evaluate the potential to raise additional equity or obtain short-term financing to bolster working capital and provide a financial cushion.
   • Engage with financial advisors for potential grants or funding relevant to public order and consultancy sectors.

5. Strategic Planning:

   • Regularly review the business model to adapt to market changes affecting public order and management consultancy services.
   • Focus on sustainable growth strategies aligned with financial capacity.

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