CHRIS SIMONS WEALTH MANAGEMENT LTD

Executive Summary

Chris Simons Wealth Management Ltd shows solvent but strained financial health due to significant cash depletion and negative working capital. Immediate focus on liquidity enhancement and profitability improvement is critical to restore financial stability and support sustainable growth.

CHRIS SIMONS WEALTH MANAGEMENT LTD - Analysis Report

Company Number: 13313076

Analysis Date: 2025-07-19 12:42 UTC

Financial Health Assessment for CHRIS SIMONS WEALTH MANAGEMENT LTD (as at 30 April 2024)

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1. Financial Health Score: C

Explanation:
The company shows signs of financial strain compared to the previous year. While it remains solvent with positive net assets, there is a noticeable deterioration in liquidity and working capital. The sharp decline in cash reserves and net current assets signals symptoms of distress in day-to-day financial operations. The company’s intangible assets dominate its balance sheet, which can be a risk if these assets do not translate into ongoing cash inflows. Overall, the business is stable but with warning signs that need addressing to prevent further decline.

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2. Key Vital Signs:

Metric	2024 Value (£)	2023 Value (£)	Interpretation
Net Assets	151,457	200,132	Positive but declined by ~24%; still solvent but a loss of equity indicates reduced financial strength.
Shareholders’ Funds	151,457	200,132	Mirrors net assets; reduction driven by losses impacting retained earnings.
Cash at Bank	1,080	22,022	Drastic drop (~95%); indicates weak cash flow and potential liquidity concerns.
Current Assets	13,211	38,792	Fell sharply; debtor balance also down moderately.
Current Liabilities	13,691	11,023	Increased liabilities reduce liquidity; current liabilities now slightly exceed current assets.
Net Current Assets (Working Capital)	-480	27,769	Negative working capital is a red flag; company may struggle to meet short-term obligations.
Intangible Fixed Assets (Goodwill)	148,333	168,333	Represents most of the asset base; amortization reducing book value yearly.
Tangible Fixed Assets	3,604	4,030	Small portion of assets; minor reduction.
Profit & Loss Reserve	-48,543	132	Shift to a significant accumulated loss; indicates operational or non-operational losses.
Average Number of Employees	3	0	Increase in human resources; potential rise in operating expenses.

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3. Diagnosis: Financial Condition Analysis

• Liquidity and Cash Flow: The most concerning symptom is the collapse of cash reserves from £22,022 in 2023 to just £1,080 in 2024. Coupled with current liabilities exceeding current assets (negative working capital), this suggests the company is under liquidity stress. In medical terms, the company’s "blood flow" (cash flow) is severely restricted, risking "organ failure" (inability to pay short-term debts).

• Profitability and Reserves: The profit and loss reserve turning negative by £48,543 indicates the company has either incurred losses or distributions exceeding profits during the year. This "immune system failure" reflects an inability to generate sufficient profits to support business sustainability.

• Asset Composition: The company’s asset base is heavily weighted toward intangible fixed assets (goodwill of £148,333). While goodwill can represent valuable business relationships or brand value, it is non-liquid and subject to amortization—acting like a "chronic condition" that erodes net asset value over time without generating immediate cash.

• Operational Scale: The increase from zero to three employees suggests growth or scaling-up efforts. This could have contributed to higher expenses and cash outflows, resembling the increased metabolic demands of a growing organism.

• Shareholders’ Equity: The reduction in shareholders’ funds from £200,132 to £151,457 mainly due to losses undermines the company’s financial "immune reserve," lowering its ability to withstand shocks.

• Filing and Compliance: No overdue filings and an active status indicate good "administrative health," reducing regulatory risks.

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4. Recommendations: Actions to Improve Financial Wellness

1. Enhance Liquidity Management:

   • Prioritize improving cash flow by accelerating debtor collections and negotiating extended payment terms with creditors.
   • Consider short-term financing or overdraft facilities to stabilize cash reserves, akin to administering emergency fluids in clinical care.

2. Cost Control and Profitability Review:

   • Conduct a detailed profitability analysis to identify and reduce unprofitable activities or excessive overheads, especially related to new employees.
   • Explore revenue enhancement strategies to reverse the negative profit reserve trend.

3. Asset Utilization and Impairment Assessment:

   • Review the recoverability of intangible assets (goodwill) to ensure no impairment is necessary, as overvalued goodwill can mask underlying issues.
   • Consider whether fixed assets are optimally deployed to support revenue generation.

4. Working Capital Optimization:

   • Implement tighter inventory and receivables controls to maintain positive net current assets.
   • Regularly monitor working capital ratios for early detection of liquidity stress.

5. Financial Forecasting and Stress Testing:

   • Develop cash flow forecasts to anticipate liquidity bottlenecks and plan accordingly.
   • Scenario planning will help the company prepare for adverse conditions.

6. Stakeholder Communication:

   • Transparently communicate current financial challenges and improvement plans to shareholders and creditors to maintain confidence.

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Summary

Chris Simons Wealth Management Ltd is currently solvent but exhibits symptoms of financial distress, notably a sharp decline in cash reserves and negative working capital. The deterioration in profitability and equity signals an urgent need for improved liquidity management and cost control. With proactive measures focusing on cash flow optimization and operational efficiency, the company can stabilize its financial health and build resilience for future growth.