TEAM GREENS SOUTH LTD

Executive Summary

TEAM GREENS SOUTH LTD is currently experiencing liquidity strain and a significant reduction in net worth, indicating financial distress. Immediate actions to improve cash flow, restructure debt, and rebuild equity are essential to restore financial health and ensure sustainable operations. Proactive management and close financial monitoring will be critical to reversing the current downward trend.

TEAM GREENS SOUTH LTD - Analysis Report

Company Number: 13452178

Analysis Date: 2025-07-29 12:41 UTC

Financial Health Assessment Report: TEAM GREENS SOUTH LTD

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1. Financial Health Score: D

Explanation:
TEAM GREENS SOUTH LTD shows clear signs of financial distress in its latest financial year (2023). The company's net current assets have turned negative, indicating liquidity problems, and net assets have significantly declined compared to the prior year. While not in immediate crisis, the downward trend and current liabilities exceeding current assets suggest a weak financial condition that requires urgent attention.

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2. Key Vital Signs

Metric	2023 Value (£)	2022 Value (£)	Interpretation
Fixed Assets	13,767	15,911	Slight decline in long-term asset base, possibly asset disposals or depreciation.
Current Assets	6,968	11,661	Significant reduction in liquid and short-term assets, indicating cash and receivables have dropped.
Cash at Bank	1,026	355	Cash balance increased slightly but remains low, posing a risk for day-to-day operations.
Debtors (Receivables)	5,942	11,306	Almost 50% decrease, may indicate collection efforts or loss of clients/orders.
Current Liabilities	10,004	4,524	More than doubled, indicating increased short-term obligations, which is a warning sign.
Net Current Assets (Working Capital)	-3,036	7,137	Shift from healthy positive working capital to negative, signaling liquidity issues and potential difficulty meeting short-term debts.
Long-Term Creditors	9,383	12,474	Reduced long-term debt but still substantial relative to asset base.
Net Assets (Equity)	1,348	10,574	Sharp decline in net worth, a symptom of accumulated losses or write-downs.
Shareholders' Funds	1,348	10,574	Mirrors net assets, highlighting a weakened equity cushion.
Director Advances	4,504	10,790	Director loans reduced but still significant, showing reliance on owner financing.

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3. Diagnosis: What the Financial Data Reveals

• Liquidity Stress: The transition from positive to negative net current assets is akin to a patient whose vital fluid levels have dropped dangerously low. The company’s current liabilities now outstrip its liquid assets, indicating difficulty in covering short-term obligations. This "symptom" points to tight cash flow and potential solvency concerns if the trend continues.

• Erosion of Net Worth: The significant reduction in net assets (from £10,574 to £1,348) signals accumulated losses or asset impairments. This is analogous to weakening immune strength in a patient — the company’s financial buffer against shocks is now minimal.

• Reduced Receivables: The nearly 50% drop in debtors may indicate improved collections or loss of business volume. If it's the latter, it signals reduced revenue pipeline and potential shrinking market presence.

• Increased Short-Term Debt: Doubling of current liabilities, including bank borrowings and tax liabilities, suggests the company is accruing more short-term obligations than it can comfortably pay. This is a red flag for financial distress.

• Reliance on Director Funding: The director’s loan account remains a significant liability, showing continued dependence on owner financing. While helpful short-term, this is not a sustainable long-term solution.

• Asset Base Stability: Fixed assets are relatively stable but slightly declining, showing no significant reinvestment or expansion, which might be a sign of cautious or constrained capital expenditure.

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4. Recommendations: Steps to Improve Financial Wellness

1. Improve Liquidity Management:

   • Prioritise collection of outstanding receivables and tighten credit terms to customers.
   • Reduce unnecessary expenditures to conserve cash.
   • Explore short-term financing options or overdraft facilities with favourable terms to ease cash flow pressure.

2. Restructure Debt:

   • Engage with lenders to negotiate longer repayment terms on short-term debts, converting some current liabilities into longer-term obligations to ease immediate cash demands.

3. Strengthen Equity Base:

   • Consider capital injection from shareholders or external investors to rebuild net assets and provide a financial cushion.

4. Operational Review:

   • Conduct a detailed review of the business model and cost structure to identify areas for efficiency improvements or revenue growth opportunities.
   • Evaluate contracts and client relationships to stabilise or grow the receivables base.

5. Regular Financial Monitoring:

   • Implement monthly cash flow forecasting and financial health checks to catch symptoms of distress early and respond proactively.

6. Director Support:

   • While director advances have helped, formalising these as loans with clear terms or converting to equity can improve transparency and financial structure.

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