ST MICHAEL'S VINEYARD LTD

Executive Summary

ST MICHAEL'S VINEYARD LTD is currently facing liquidity challenges evidenced by negative working capital and rising short-term liabilities, despite a solid asset base and positive equity. Immediate focus on cash flow management and cost control is essential to stabilize finances. With proactive measures, the company can maintain its growth trajectory and improve overall financial health.

ST MICHAEL'S VINEYARD LTD - Analysis Report

Company Number: 13550366

Analysis Date: 2025-07-20 12:05 UTC

Financial Health Assessment: ST MICHAEL'S VINEYARD LTD (2024 Financial Year)

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1. Financial Health Score: C

Explanation:
ST MICHAEL'S VINEYARD LTD shows some healthy signs such as positive shareholder equity and growth in fixed assets, but also exhibits notable symptoms of financial strain, particularly a worsening liquidity position evidenced by negative net current assets. The company’s financial health is moderate but requires attention to avoid deterioration.

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2. Key Vital Signs

Metric	2024	2023	Interpretation
Fixed Assets	£156,776	£122,308	Growing investment in long-term assets ("healthy structural growth"). Positive sign of expanding vineyard or facilities.
Current Assets	£32,653	£20,442	Increase in short-term assets, but still relatively low for operational needs.
Current Liabilities	£79,418	£17,127	Sharp increase in short-term debts ("symptom of cash flow stress"). Could indicate higher short-term obligations or delayed payments.
Net Current Assets (Working Capital)	-£46,765	£3,315	Shift from positive to significantly negative working capital ("danger sign" for liquidity). The company may struggle to cover immediate liabilities.
Total Assets less Current Liabilities	£110,011	£125,623	Decline reflects increased current liabilities impact; still positive but shrinking buffer.
Shareholders’ Funds (Equity)	£108,116	£123,913	Moderate decrease indicating some erosion of retained earnings or capital. Still solid equity base but trending downwards.

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3. Diagnosis

• Liquidity Distress: The most concerning symptom is the steep increase in current liabilities coupled with a drop into negative working capital. This suggests the company may be facing short-term cash flow constraints, potentially from increased payables, short-term borrowing, or operational delays in converting assets to cash.

• Asset Foundation: Fixed assets have grown steadily, which is a good sign that the company is investing in productive capacity or vineyard development. This is a structural strength ("healthy backbone") but fixed assets are less liquid and can’t easily be used to meet immediate cash needs.

• Equity Erosion: The decline in shareholders’ funds, while not critical yet, points to some retained losses or dividends paid that exceed profits. This could mean the business is either reinvesting less profitably or facing operational challenges.

• Micro-entity Status: The company operates at a micro scale with only 2 employees and limited filing requirements, which means the financials are simplified but also indicates limited scale and resources.

• Industry Context: Operating in wholesale of alcoholic beverages and grape growing, the business likely has seasonal and capital-intensive characteristics. This may explain some current liability buildup if preparing inventory or dealing with cyclical cash flows.

Overall, ST MICHAEL’S VINEYARD LTD displays symptoms of financial strain primarily around liquidity and cash management, although its asset base and equity remain positive. The financial health is moderate but trending towards caution.

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4. Recommendations

1. Improve Working Capital Management:

   • Review and negotiate payment terms with suppliers to extend payables where possible.
   • Accelerate collection of receivables or increase cash sales to boost current assets.
   • Monitor inventory levels closely to avoid overstocking and tie-up of cash.

2. Cash Flow Forecasting:

   • Implement regular cash flow forecasting to anticipate and manage short-term liquidity needs.
   • Consider short-term financing options (overdraft, invoice financing) to smooth cash flow gaps if necessary.

3. Cost Control and Profitability:

   • Analyze operating expenses to identify areas to reduce costs without harming growth.
   • Explore opportunities to increase sales margins or diversify revenue streams within core agricultural and wholesale activities.

4. Equity Preservation:

   • Avoid unnecessary distributions or drawings by owners to maintain equity strength.
   • Consider capital injection if liquidity issues persist, either from existing shareholders or external investors.

5. Strategic Asset Utilization:

   • Evaluate fixed assets for potential leasing or sale of any non-core assets to free up cash.
   • Leverage asset base for securing better financing terms if needed.

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