VISUAL INTELLIGENCE GROUP LTD

Executive Summary

Visual Intelligence Group Ltd is experiencing significant financial distress, characterized by negative working capital and eroded equity, mainly funded by increasing director loans. Immediate focus on cash flow management, capital injection, and cost control is essential to prevent insolvency and restore financial health.

VISUAL INTELLIGENCE GROUP LTD - Analysis Report

Company Number: 14518616

Analysis Date: 2025-07-20 17:09 UTC

Financial Health Assessment: VISUAL INTELLIGENCE GROUP LTD

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1. Financial Health Score: D

Explanation:
The company currently shows significant financial distress, evidenced by persistent negative net assets and worsening working capital deficits over the last two years. Despite being active and operational, the company's financial "vital signs" indicate symptoms of liquidity strain and capital erosion. This results in a below-average financial health grade of D, reflecting a need for urgent remedial action to restore stability.

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2. Key Vital Signs

Metric	2024	2023	Interpretation
Cash on Hand	£1,276	£1,280	Extremely low cash reserves indicate limited liquid resources—"weak pulse".
Current Liabilities	£15,115	£4,287	Sharp increase in short-term obligations signals growing financial pressure.
Net Current Assets (Working Capital)	(£13,839) (negative)	(£3,007) (negative)	Negative working capital is like "shortness of breath"—company owes more than it owns in the short term.
Net Assets (Equity)	(£13,066) (negative)	(£2,065) (negative)	Negative equity indicates "chronic illness"—liabilities exceed total assets.
Shareholders' Funds	(£13,067)	(£2,066)	Reflects accumulated losses, signaling erosion of owner’s capital.
Fixed Assets (Tangible)	£773	£942	Small asset base; depreciation further reduces net book value.
Director Loans (Short-term Debt)	£15,115	£3,833	Reliance on director loans to meet liabilities suggests external financing constraints.

Interpretation:
The company's financial vital signs reveal clear symptoms of distress: insufficient cash flow, increasing short-term debts, and a worsening negative net asset position. The overdraft or loan from the director has quadrupled in a year, highlighting a dependency on internal financing to cover operational needs. The lack of employees indicates either a very small or passive operation, which may limit revenue generation capacity.

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3. Diagnosis

Underlying Financial Health:

• Liquidity Crisis: The company is operating with severely negative working capital, meaning it does not have enough short-term assets to meet short-term liabilities. This is a critical symptom that, if untreated, can lead to insolvency.
• Capital Erosion: Negative net assets and shareholders' funds show that accumulated losses have eroded the equity base, putting the company "in the red" for net worth.
• Over-reliance on Director Loans: The increase in short-term borrowing from the director is a "life support" measure, indicating limited access to external funding or insufficient operating cash flows.
• Limited Asset Base: Tangible fixed assets are minimal and declining due to depreciation, indicating a limited cushion or collateral for borrowing.
• No Employees: Operating without staff may reduce overhead costs but may also indicate limited operational capacity or early stage business development.

Overall:
The company is in a fragile financial state, showing signs comparable to a patient with chronic illness exacerbated by acute symptoms. Without intervention, the risk of financial failure or forced restructuring is high.

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4. Recommendations

1. Urgent Cash Flow Management:

   • Develop a detailed cash flow forecast to identify upcoming liquidity crunch points.
   • Prioritize payments to reduce current liabilities, especially any high-interest or urgent debts.

2. Capital Injection or External Financing:

   • Consider additional equity investment or seek external loans to improve the capital base and reduce dependency on director loans.
   • Explore grants or government support schemes for micro/small businesses in the creative industry.

3. Cost Control and Revenue Enhancement:

   • Review operational expenses to cut non-essential costs.
   • Investigate new client acquisition or diversified revenue streams to boost income.

4. Financial Restructuring:

   • Engage with creditors to renegotiate payment terms to ease short-term pressure.
   • Explore formal restructuring options if debts cannot be managed in the near term.

5. Financial Reporting and Monitoring:

   • Maintain timely and accurate financial records to monitor progress and maintain compliance.
   • Consider professional financial advice or mentoring to improve financial planning.

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