SOUL ISLAND LTD

Executive Summary

SOUL ISLAND LTD is currently in a financially distressed state with negative net assets and working capital deficits, signaling solvency and liquidity challenges. While there has been a slight improvement from the prior year, urgent actions to improve cash flow, reduce liabilities, and bolster equity are critical to avoid further financial deterioration. With focused operational and financial management, the company can stabilize and improve its financial health.

SOUL ISLAND LTD - Analysis Report

Company Number: 13188022

Analysis Date: 2025-07-29 15:49 UTC

Financial Health Assessment Report for SOUL ISLAND LTD

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1. Financial Health Score: D

Explanation:
SOUL ISLAND LTD is currently exhibiting signs of financial distress. The company’s net assets have been negative for the last two reporting periods, indicating a balance sheet "illness" akin to a patient with critically low blood pressure — a warning sign for solvency concerns. The persistent negative net current assets ("working capital deficit") suggests liquidity problems, which could impair the firm's ability to meet short-term obligations. While not yet in formal insolvency proceedings, the financial “symptoms” call for urgent remedial action.

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2. Key Vital Signs (Critical Financial Metrics & Interpretation):

Metric	2024	2023	Interpretation
Current Assets	£682	£1,184	Very low cash and receivables; “depleted energy reserves”.
Current Liabilities	£5,000 (long-term) + £3,857 (short-term)	£5,000 (long-term) + £7,230 (short-term)	High liabilities relative to liquid assets; “debt burden”.
Net Current Assets (Working Capital)	-£3,175	-£6,046	Negative working capital; “symptom of liquidity stress”.
Net Assets (Equity)	-£8,175	-£11,046	Negative net worth; “balance sheet anemia”.
Share Capital	£10	£10	Minimal equity cushion; “fragile immune system”.

• Trend: The company’s net assets have improved slightly from -£11,046 (2023) to -£8,175 (2024), indicating some recovery but still deeply negative.
• Shareholders’ Funds mimic net assets, showing persistent accumulated losses.
• Current assets decreased by approximately £500 from 2023 to 2024, further constraining liquidity.
• Current liabilities have decreased from £7,230 (2023) to £3,857 (2024), suggesting partial reduction of short-term debts.

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

SOUL ISLAND LTD is currently in a financially distressed state characterized by:

• Negative net assets and shareholders’ funds for two consecutive years, indicating that liabilities exceed assets — a critical "heart condition" for corporate health.
• Negative working capital, meaning the company does not have enough liquid assets to cover its immediate debts — a “cash flow blockage” that could impede day-to-day operations.
• The company is classified as a Micro entity, meaning it is small in scale with minimal filing requirements, but even at this scale, the financial condition is weak.
• The company has a single director and employee, suggesting limited operational scale and possibly limited capacity to generate revenue.
• The sector (Management consultancy other than financial management) typically relies on human capital and contracts to generate cash flow, but the company’s financials don’t reveal strong cash reserves or working capital.
• The slight improvement in net assets from 2023 to 2024 is a positive sign but insufficient to classify the company as financially healthy.
• The share capital is nominal (£10), indicating minimal initial funding — the company may be relying on debt or shareholder loans to survive.
• No evidence of audit requirements or off-balance-sheet liabilities reduces complexity but also limits external financial assurances.

In summary, SOUL ISLAND LTD’s financial “vitals” reflect a business struggling with solvency and liquidity, akin to a patient suffering from chronic fatigue and nutrient deficiency, requiring immediate intervention to prevent further deterioration.

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4. Recommendations: Specific Actions to Improve Financial Wellness

1. Improve Cash Flow and Liquidity
   The company must urgently address its negative working capital by generating cash inflows or restructuring payables. Consider:

   • Accelerating debtor collections or securing prepayments.
   • Negotiating extended payment terms with creditors.
   • Reducing discretionary expenses.

2. Assess and Reduce Debt Burden
   The presence of £5,000 long-term liabilities with minimal assets requires examination:

   • Explore debt refinancing options with more favorable terms.
   • Consider equity injections from shareholders or external investors to improve the capital base.

3. Enhance Capital Structure
   Increase share capital or bring in new capital from investors to strengthen the balance sheet and improve solvency ratios.

4. Operational Efficiency and Revenue Growth
   As a management consultancy, focus on:

   • Winning new contracts or clients to boost revenues.
   • Streamlining operations to reduce fixed costs, especially considering only one employee/director is currently active.

5. Regular Financial Monitoring
   Implement monthly cash flow forecasts and financial reviews to detect early signs of distress and manage liquidity proactively.

6. Seek Professional Advice
   Engage financial advisors or accountants specialized in turnaround and restructuring to develop a recovery plan and avoid insolvency risks.

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Medical Analogy Summary:
The company’s financial “patient” shows clear symptoms of distress—low liquidity, negative equity, and working capital deficits—which if untreated, could lead to “financial collapse.” Immediate intervention focusing on cash flow management, debt restructuring, and capital strengthening is essential to restore financial health and prevent a crisis.

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