TEINDLAND WIND FARM LIMITED

Executive Summary

TEINDLAND WIND FARM LIMITED is currently in a development-heavy phase with significant capitalised intangible assets but showing net liabilities and low cash reserves, indicating financial strain. The company's survival relies heavily on continued support from its parent entity, with ongoing efforts needed to convert development into operating revenue and improve liquidity. Focused management of cash flow, debt restructuring, and moving projects into production are critical to restoring financial health.

TEINDLAND WIND FARM LIMITED - Analysis Report

Company Number: SC689060

Analysis Date: 2025-07-29 20:51 UTC

Financial Health Assessment for TEINDLAND WIND FARM LIMITED

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1. Financial Health Score: C

Explanation:
TEINDLAND WIND FARM LIMITED exhibits a moderate financial health profile. The company shows growth in intangible assets and liabilities, with net liabilities persisting on the balance sheet. Its reliance on significant related-party (group undertakings) debt and limited cash reserves suggests moderate financial stress but with potential support from its parent company. The going concern assumption is maintained, supported by parental backing, which mitigates immediate distress concerns but highlights some vulnerabilities.

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2. Key Vital Signs

Metric	2023 Value (£)	2022 Value (£)	Interpretation
Intangible Assets	870,448	546,041	Growth indicates ongoing development activity.
Cash at Bank and in Hand	11,576	66,946	Sharp decrease; low liquid cash reserves.
Debtors (Current Assets)	46,559	10,997	Increase shows more receivables or prepayments.
Current Liabilities	24,605	16,713	Increased short-term obligations to meet.
Net Current Assets	33,530	61,230	Positive but shrinking working capital.
Long-Term Creditors (Group Debt)	925,317	622,350	Large and rising related-party debt, interest-bearing at 7.5%.
Net Liabilities (Net Assets negative)	-21,339	-15,079	Company is technically insolvent on a balance sheet basis.
Share Capital	1,000	1,000	Minimal equity base.
Profit and Loss Reserve	-22,339	-16,079	Accumulated losses, increasing over time.

Interpretation of Vital Signs:

• Intangible Assets Growth: Reflects capitalisation of project development costs, expected to generate future economic benefits. This is typical for early-stage renewable energy projects under construction or development.
• Low Cash Reserves: Cash decreased significantly, potentially indicating high capital expenditure or cash outflows exceeding inflows.
• Net Current Assets Positive but Declining: Indicates the company can currently meet short-term obligations but liquidity is tightening.
• High and Increasing Group Undertaking Debt: The company is heavily reliant on funding from its parent or group undertakings, with interest costs adding to expenses and liabilities.
• Net Liabilities: The company’s total liabilities exceed its assets, a symptom of financial distress or early-stage investment heavy business.
• Losses Accumulating: Retained losses indicate the company has yet to reach profitability and is investing heavily in development.

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3. Diagnosis: Financial Condition Assessment

TEINDLAND WIND FARM LIMITED resembles a patient in the early stages of a long-term, capital-intensive treatment plan. The company is in a developmental phase, as evidenced by the substantial intangible assets related to project development and capitalised borrowing costs. This is common in utility infrastructure projects like wind farms, where upfront investment is large and returns are expected over a long operational life.

However, the balance sheet "symptoms" indicate some financial strain:

• Net liabilities (negative equity) suggest the company is not yet profitable and is reliant on external funding to sustain operations.
• Low cash balances and increasing current liabilities point to tightening liquidity, which could stress operational flexibility.
• Heavy reliance on group undertakings debt means the company’s survival depends on continued support from its parent, European Energy UK Limited.

The directors acknowledge this by stating the company is a going concern due to expected ongoing support, much like a patient relying on a caregiver during recovery.

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4. Recommendations: Actions to Improve Financial Wellness

1. Strengthen Liquidity Management:

   • Improve cash flow forecasting to avoid liquidity crunches.
   • Explore short-term financing or optimize working capital to increase cash buffers.

2. Plan for Debt Repayment or Restructuring:

   • Engage with the parent company to develop a clear timetable for reducing intercompany debt or converting some debt into equity to improve net asset position and reduce interest burden.

3. Accelerate Revenue Generation:

   • Move projects from development to operational phase to start generating sustainable operating cash flow and profits.
   • Focus on commissioning and connecting the wind farm to the grid as soon as viable.

4. Cost Control and Efficiency:

   • Monitor interest capitalisation and project development costs to avoid cost overruns.
   • Limit non-essential expenditures until profitability improves.

5. Regular Financial Monitoring:

   • Implement robust financial reporting and early warning systems to detect worsening liquidity or solvency issues.
   • Maintain transparent communication with stakeholders about financial status and plans.

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Executive Summary