AHG3 LTD

Executive Summary

AHG3 LTD exhibits significant financial distress characterized by negative net assets and worsening liquidity, indicating symptoms of financial illness. Immediate cash flow management and capital restructuring are critical to stabilizing the company's condition and avoiding insolvency risks. Without prompt action, the outlook remains precarious.

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Company Analysis

This analysis is opinion only and should not be interpreted as financial advice.

AHG3 LTD - Analysis Report

Company Number: 13125784

Analysis Date: 2025-07-29 20:04 UTC

Financial Health Assessment for AHG3 LTD (as of 31 January 2024)


1. Financial Health Score: D

Explanation:
The company exhibits significant signs of financial distress, reflected in a negative net asset position and deteriorating working capital. The score "D" indicates that while the company is still operational, its financial health is weak and requires immediate intervention to prevent further decline.


2. Key Vital Signs

Metric Latest (2024) Previous (2023) Interpretation
Current Assets £4,109,996 £4,504,280 Decreasing liquidity buffer; still substantial cash/receivables.
Current Liabilities £4,642,741 £2,363,625 Sharp increase in short-term obligations; stress on cash flow.
Net Current Assets -£526,106 £2,154,528 Negative working capital; immediate liquidity concern.
Net Assets (Equity) -£565,568 -£38,472 Growing deficit; liabilities exceed assets.
Share Capital £2.00 £2.00 Minimal paid-in capital; limited equity cushion.
Account Category Micro Micro Small scale business under simplified reporting rules.
Industry Buying/selling own real estate Same Asset-heavy sector; capital intensity likely high.

Interpretation of Vital Signs:

  • Healthy Cash Flow: The negative net current assets indicate the company may have "symptoms of distress" in liquidity, meaning it potentially struggles to meet short-term debts as they fall due.
  • Balance Sheet Weakness: The net asset deficit is worsening and substantial, indicating the company's liabilities exceed its assets by over half a million pounds as of the latest accounts. This is a red flag often associated with insolvency risk.
  • Rising Short-Term Liabilities: The nearly doubling of current liabilities in one year signals increasing operational or financial obligations, possibly due to borrowing or supplier credit, which could strain cash flow further.

3. Diagnosis

AHG3 LTD is currently in a fragile financial state. The company’s balance sheet shows a worsening equity position from a small deficit to a significantly negative net asset position, indicating the company is "unwell" financially and trending towards insolvency risks if no corrective measures are taken. The negative working capital reflects "symptoms of liquidity stress," where current liabilities exceed current assets, potentially impairing the company's ability to pay its debts on time.

The increase in current liabilities without a corresponding increase in current assets suggests that the company may have taken on additional short-term debt or obligations without improving liquid resources, exacerbating the cash flow crunch. The lack of audit and filing under micro-entity provisions limits detailed insight into profitability or cash flow performance, but the balance sheet signs alone warrant caution.

The presence of experienced directors and significant shareholders owning 25-50% stakes indicates committed ownership, but the financial signals suggest urgent action is required to stabilize the company's "financial health."


4. Recommendations

Immediate Actions:

  • Cash Flow Management: Conduct a detailed cash flow forecast to identify timing and magnitude of payment obligations. Prioritize payments and negotiate extended terms with creditors to ease short-term liquidity pressure.
  • Cost Control: Review and reduce discretionary expenses; consider operational efficiencies to limit further increase in liabilities.
  • Capital Injection: Explore options for fresh equity investment or shareholder loans to bolster net assets and improve solvency.
  • Debt Restructuring: Engage with lenders to restructure existing debt, possibly converting short-term liabilities into longer-term arrangements to relieve immediate cash demands.

Medium-Term Strategies:

  • Asset Review: As the company operates in real estate trading, evaluate the portfolio for underperforming or non-core assets that could be sold to improve liquidity and reduce debt.
  • Financial Reporting: Even under micro-entity rules, consider enhanced internal reporting to monitor financial health more closely and anticipate distress signals.
  • Governance and Oversight: Directors should increase oversight of financial controls and risk management to prevent further deterioration.

Warning: If negative net assets and liquidity issues persist without remediation, the company risks insolvency proceedings. Early engagement with insolvency practitioners for advice may be prudent to explore all restructuring options and protect stakeholder interests.



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