CONNECTED SECURITY GROUP LIMITED

Executive Summary

CONNECTED SECURITY GROUP LIMITED demonstrates a growing equity position and operational expansion but is currently experiencing liquidity challenges, as evidenced by significant negative working capital. The company remains solvent but must improve cash flow management and reduce short-term liabilities to avoid financial distress. With targeted actions to enhance liquidity and operational efficiency, the company's financial health outlook can improve significantly.

CONNECTED SECURITY GROUP LIMITED - Analysis Report

Company Number: 12562907

Analysis Date: 2025-07-29 15:42 UTC

Financial Health Assessment: CONNECTED SECURITY GROUP LIMITED (as of 30 April 2024)

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1. Financial Health Score: C (Moderate Concern)

Explanation:
The company shows an improving net asset position and shareholder funds over a five-year period, indicating some growth and accumulation of equity. However, the presence of significant current liabilities exceeding current assets (negative net current assets) signals liquidity stress—a critical symptom that warrants attention. The company has increased its workforce from 2 to 5 employees, which may contribute to operational expansion but also higher fixed costs. Overall, the financial health is moderate but with notable symptoms of financial strain.

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2. Key Vital Signs

Metric	2024 Value	Interpretation
Fixed Assets	£33,904	Stable investment in long-term assets; asset base is consistent.
Current Assets	£3,855	Low short-term assets; reduced from previous year (£5,490).
Current Liabilities	£75,088	High and growing short-term obligations; exceeds current assets.
Net Current Assets (Working Capital)	-£71,233	Strong negative working capital indicating liquidity risk.
Total Net Assets (Equity)	£61,529	Positive and growing equity base, showing retained earnings growth.
Share Capital	£100	Minimal initial capital; growth depends on retained profits.
Employee Count	5 employees	Increased staffing may indicate growth or higher operational costs.

Interpretation:

• Liquidity: The company’s current liabilities exceed current assets by a large margin, indicating a liquidity shortfall—akin to a patient with poor hydration and compromised circulation. This may impair ability to meet short-term obligations on time.
• Solvency: Despite liquidity concerns, net assets are positive and growing, suggesting underlying solvency and that the company is not insolvent but operating with strained cash flows.
• Asset Stability: Fixed assets are steady, showing no significant disposals or investments. This indicates a stable physical or capital base.
• Growth: Increasing net assets and employee numbers suggest business expansion, but the strain on current assets and liabilities may reflect growing pains or delayed receivables/payables management.

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3. Diagnosis

Underlying Condition:
CONNECTED SECURITY GROUP LIMITED exhibits symptoms of a business growing its equity and workforce but with significant liquidity challenges. The negative working capital is a red flag indicating the company may struggle to cover immediate debts, potentially relying on delayed payments or external financing. This “cash flow distress” symptom can lead to operational difficulties if not managed promptly.

The positive and increasing net assets reflect profitability or capital injections over time, suggesting the company is fundamentally solvent. The stable fixed assets show the company maintains its investment in long-term operational capacity.

Potential Causes:

• Elevated short-term liabilities possibly due to supplier credit terms, accrued expenses, or short-term loans.
• Decreasing current assets might reflect slow collection of receivables or low cash levels.
• Expansion in employees may increase payroll and other overheads, stressing cash flow.

Risk Level: Moderate. The company is not insolvent but needs to address liquidity to avoid future financial distress.

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4. Recommendations

To improve financial wellness and resolve symptoms of liquidity strain:

1. Improve Cash Flow Management:

   • Accelerate collection of receivables; consider incentivizing early payments.
   • Negotiate extended payment terms with suppliers to better align cash inflows and outflows.
   • Implement tighter controls on cash disbursements and monitor cash daily.

2. Review and Reduce Current Liabilities:

   • Identify and prioritize repayment of short-term debts to reduce pressure on working capital.
   • Explore refinancing options to convert some current liabilities into longer-term debt.

3. Increase Current Assets:

   • Build cash reserves to buffer against short-term obligations.
   • Manage inventory and other current assets efficiently to avoid tying up cash unnecessarily.

4. Operational Efficiency:

   • Evaluate employee productivity relative to cost to ensure workforce expansion yields proportional revenue growth.
   • Consider cost control measures to avoid escalating overheads.

5. Financial Planning:

   • Prepare detailed cash flow forecasts to anticipate liquidity shortages and plan accordingly.
   • Engage with financial advisors or banks early if additional funding is needed.

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