HATCH STREET LTD

Executive Summary

Hatch Street Ltd is experiencing ongoing financial stress characterized by negative working capital and net liabilities, signaling liquidity and solvency challenges. Although recent current asset improvements offer some relief, the company requires immediate cash flow management and capital support to stabilize and improve its financial health. Without proactive measures, the company risks further deterioration in financial condition.

HATCH STREET LTD - Analysis Report

Company Number: 12767744

Analysis Date: 2025-07-29 18:59 UTC

Financial Health Assessment for Hatch Street Ltd

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1. Financial Health Score: D

Explanation:
The company shows persistent net current liabilities and negative net assets over the past five financial years, indicating ongoing liquidity challenges and an erosion of shareholders’ funds. While there is a slight improvement in the latest year, the overall financial position remains strained, justifying a below-average grade.

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2. Key Vital Signs

Metric	2024 (£)	Interpretation
Current Assets	7,110	Cash and short-term assets have increased, a good sign of liquidity improvement.
Current Liabilities	8,476	Short-term debts remain high, exceeding current assets.
Net Current Assets (Working Capital)	-1,366	Negative working capital indicates potential difficulty meeting short-term obligations.
Net Assets (Shareholders’ Funds)	-1,366	Negative equity reveals the company has accumulated losses or liabilities exceeding assets.
Trend (5 years)	Persistently Negative	No turnaround in financial health; liabilities consistently outweigh assets.

Interpretation:

• Healthy cash flow would show positive net current assets, but Hatch Street Ltd has symptoms of distress with negative working capital.
• The increase in current assets in 2024 is a positive sign but insufficient to offset liabilities.
• Negative net assets signal the company is technically insolvent on a balance sheet basis, which is a serious concern for creditors and stakeholders.

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3. Diagnosis

Hatch Street Ltd’s financial data reveals a company under financial strain. The persistent negative net current assets and shareholders’ deficit point to ongoing cash flow difficulties and an inability to build equity. Despite the slight increase in current assets in the latest year, the company remains reliant on external funding or creditor forbearance to meet obligations.

The absence of fixed assets in the balance sheet suggests limited tangible resources to leverage or sell to improve liquidity. The company is operating in a niche "Other business support services" sector (SIC 82990), which could be competitive and may require reinvestment for growth, yet the financials do not reflect such investment capacity.

Overall, this company is showing chronic financial symptoms such as undercapitalization and liquidity pressure, with no strong indications of recovery in the near term without strategic intervention.

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4. Recommendations

Immediate Actions:

• Improve Cash Flow Management: Tighten credit control, expedite receivables, and negotiate longer payment terms with creditors to improve working capital.
• Cost Control: Review and reduce overheads and discretionary spending to preserve cash.
• Capital Injection: Consider bringing in additional equity funding or shareholder loans to restore positive net assets and enhance solvency.
• Explore Financing Options: Short-term working capital facilities or invoice financing might ease liquidity constraints, but must be managed prudently to avoid excessive debt.

Medium to Long-Term:

• Business Model Review: Assess pricing, market positioning, and service offerings to increase profitability.
• Asset Acquisition: Acquire or invest in assets that can generate stable returns or collateral for loans.
• Regular Financial Monitoring: Implement monthly financial reviews focusing on cash flow forecasts and key metrics to catch symptoms early.
• Engage Professional Advice: Seek expert guidance on restructuring or growth strategies to avoid deterioration into insolvency proceedings.

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Medical Analogy Summary

Hatch Street Ltd is currently exhibiting symptoms of financial distress similar to a patient with chronic illness. The liquidity "vital signs" are weak, with a negative working capital akin to low blood pressure indicating insufficient resources to sustain operations. Without intervention—such as a "treatment plan" involving cash flow improvement and capital infusion—the prognosis remains guarded, with risk of insolvency "critical condition."

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