Company Number: 13195159

Analysis Date: 2025-07-19 12:23 UTC

Financial Health Assessment of PROTECT5 LTD (Year Ended 31 March 2024)

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1. Financial Health Score: D

Explanation:
The company exhibits significant financial distress as indicated by negative net current assets and net liabilities. The deterioration from a positive net asset position in 2023 to a deep negative in 2024 signals a critical need for remedial financial management. While the company is still operational, its financial "vital signs" resemble a patient with acute symptoms requiring urgent care.

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2. Key Vital Signs

Metric	2024 Value	Interpretation
Fixed Assets	£573	Minimal long-term assets; consistent with micro entity scale.
Current Assets	£1,450	Very low liquidity; sharp decline from £10,686 in 2023.
Current Liabilities	£12,727	High short-term obligations; slightly improved from £14,624 in 2023.
Net Current Assets	-£11,277	Negative working capital indicates inability to cover short-term debts.
Total Assets Less Current Liabilities	-£10,704	Company owes more than its total assets; insolvency "red flag."
Net Assets / Shareholders' Funds	-£10,704	Negative equity; shareholders' funds wiped out, indicating accumulated losses.
Employees (Average)	1	Small workforce; possibly reducing overhead costs but limited operational capacity.

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3. Diagnosis: Financial Condition and Symptoms Analysis

• Liquidity Crisis: The sharp drop in current assets from £10,686 to £1,450 accompanied by persistent high current liabilities (£12,727) is a symptom of a severe liquidity shortage. Like a patient with low blood pressure, the company lacks the cash flow to meet immediate obligations.

• Negative Working Capital: Net current assets at -£11,277 denote that short-term liabilities far exceed liquid assets, a classic symptom of financial distress that can lead to insolvency if not addressed.

• Eroded Equity / Net Assets: The company moved from a positive equity position (£3,174) in 2023 to a deeply negative one (-£10,704) in 2024. This mirrors a patient who has lost vital reserves and is now in critical condition, indicating accumulated losses or unaddressed debts.

• Reduced Workforce: Average employees dropped from 4 to 1, suggesting cost-cutting measures or operational downsizing, possibly to conserve cash but also potentially reducing revenue-generating capacity.

• Micro-Entity Status: As a micro-entity, reporting requirements are minimal, but this also means less financial buffer and limited access to external financing.

• Operational Focus: The mix of SIC codes (security systems service, temporary employment, advertising, unlicensed carrier) suggests a diversified but possibly unfocused business model, which might dilute management attention and resources.

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4. Prognosis: Future Financial Outlook

Without decisive action, the company is at risk of insolvency due to inadequate liquidity and negative net worth. The symptoms of distress indicate that current operations are not generating sufficient cash flow to service liabilities or rebuild equity. The prognosis depends heavily on:

• Ability to improve cash collections or inject fresh capital.
• Managing or restructuring liabilities.
• Optimizing operational efficiency to restore profitability.

If these measures are not implemented, the company could face formal insolvency procedures such as administration or liquidation.

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5. Recommendations: Prescriptions for Recovery

• Urgent Cash Flow Management: Implement strict cash flow forecasting and control mechanisms. Prioritize collection of receivables and negotiate extended terms with creditors to ease short-term pressure.

• Capital Injection: Consider shareholder loans, equity injection, or external financing to restore positive net assets and working capital.

• Cost Rationalization: Review all operating expenses, especially staffing and overheads, to align costs with current revenue levels without compromising essential functions.

• Focus on Core Activities: Streamline business operations around the most profitable and sustainable SIC-coded activities to improve operational focus and revenue generation.

• Regular Financial Monitoring: Adopt monthly financial reviews to detect early warning signs and respond promptly.

• Professional Advice: Engage insolvency practitioners or turnaround specialists if the financial condition deteriorates further.

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Executive Summary