Company Number: 13971486

Analysis Date: 2025-07-20 17:08 UTC

Financial Health Assessment: ADDEY & GARRETT LTD (Year ending 31 March 2024)

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1. Financial Health Score: D

Explanation:
The company exhibits clear symptoms of financial distress, notably negative net assets and negative working capital. While it holds valuable fixed assets in the form of investment property, its current liabilities significantly exceed current assets, indicating liquidity challenges. The financial position is unstable but not yet critical insolvency. A score of D reflects a concerning health status requiring urgent attention to avoid deterioration.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Fixed Assets	280,205	Strong asset base primarily in investment property, which is appreciating (fair value up £12k).
Current Assets	3,342	Very low liquid assets; cash is only £930, limiting ability to meet short-term obligations.
Current Liabilities	177,650	High short-term debt creates pressure on liquidity; immediate payments exceed cash availability.
Net Current Assets (Working Capital)	-119,111	Negative working capital signals a liquidity "symptom"—the company cannot cover short-term debts.
Total Assets Less Current Liabilities	161,094	Positive reflects that fixed assets cover current liabilities, but this does not ease liquidity stress.
Long-term Liabilities	177,650	Secured loan against investment property; manageable if rental income or asset value supports repayment.
Net Assets / Shareholders' Funds	-16,556	Negative equity indicates accumulated losses or funding deficits; company "balance sheet is unhealthy."
Cash on Hand	930	Critically low cash reserves; "heart rate" of company liquidity is weak.
Debt Profile	Secured loan: £177,650	Loan secured on property; no interest reported; however, repayment terms may strain cash flow.

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3. Diagnosis

The financial "vitals" reveal the company has a strong "skeleton" in fixed assets (investment property valued at £280,000) that has appreciated modestly over the year. However, the "circulatory system"—reflected by working capital and cash—is severely compromised. The company holds liabilities, both short-term and long-term, that far exceed its liquid resources.

Negative working capital and net liabilities indicate that ADDEY & GARRETT LTD is experiencing liquidity distress. It cannot cover its immediate debts from current assets, implying dependency on refinancing, asset sales, or additional capital injections to meet short-term obligations. The negative shareholders' funds show accumulated losses or insufficient equity funding, weakening the company's financial "immune system."

The loan secured on the investment property provides some stability but also presents a fixed obligation that may limit financial flexibility. The lack of employees and non-interest bearing loans from directors may indicate a lean operational structure but also reliance on related party financing.

Overall, the company is under financial strain but holds valuable property assets that, if managed well or leveraged appropriately, could support a recovery. The current financial condition is fragile, akin to a patient with vital organ strength (asset base) but poor blood flow (liquidity).

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4. Recommendations

To improve financial wellness and stabilize the company’s condition, the following actions are advised:

1. Improve Liquidity (Cash Flow "Boost"):

   • Accelerate debtor collections and manage creditor payments to improve net current assets.
   • Explore short-term financing options or restructure current liabilities to ease cash flow pressure.

2. Asset Utilization:

   • Consider leveraging the investment property further through refinancing or sale and leaseback arrangements to raise cash without losing operational control.
   • Review property management to maximize rental income or returns from the asset.

3. Capital Injection:

   • Inject equity capital to restore positive net assets and strengthen the balance sheet. This could be through shareholder loans or new investment.
   • Director or related party loans could be formalised with repayment schedules or converted to equity if possible.

4. Cost Control and Business Activity:

   • Since there are no employees, ensure operational costs remain minimal and align with revenue generation.
   • Develop or improve revenue streams linked to property letting and management to generate healthy cash flow.

5. Financial Monitoring:

   • Implement rigorous monthly cash flow forecasting to detect liquidity issues early.
   • Maintain transparent financial records to facilitate timely decision-making and compliance.

6. Professional Advice:

   • Consult financial advisors or insolvency practitioners proactively if liquidity pressures worsen to explore turnaround or restructuring options.

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