HERMITAGE DESIGN AND BUILD LTD

Executive Summary

HERMITAGE DESIGN AND BUILD LTD shows early signs of financial strain with negative working capital and reliance on director loans, indicating liquidity and solvency challenges. Immediate action to improve cash flow and secure external funding is essential to stabilize the company's financial health and support sustainable growth.

HERMITAGE DESIGN AND BUILD LTD - Analysis Report

Company Number: 15112816

Analysis Date: 2025-07-20 11:32 UTC

Financial Health Assessment for HERMITAGE DESIGN AND BUILD LTD

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1. Financial Health Score: D

Explanation:
The company shows clear symptoms of financial distress in its first year, with negative net current assets and net liabilities indicating a fragile financial condition. While early-stage companies often face startup strain, this level of imbalance suggests urgent attention is needed to stabilize liquidity and solvency.

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2. Key Vital Signs

Metric	Value	Interpretation
Fixed Assets	£530,352	Relatively high investment in long-term assets (likely property). Indicates capital-intensive base.
Current Assets	£908	Extremely low liquid assets. Indicates very limited cash or short-term resources available.
Current Liabilities	£531,390	High short-term debts. Suggests immediate obligations significantly exceed liquid assets.
Net Current Assets	£-530,482	Negative working capital. The company struggles to cover short-term liabilities with current assets.
Net Assets (Equity)	£-130	Negative equity, indicating liabilities exceed total assets. A sign of financial distress.
Director's Loan Account	£527,790 owed to director	Indicates that the director has lent substantial funds to the company, supporting liquidity. This is an internal liability, interest-free and repayable on demand, suggesting reliance on director funding.

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3. Diagnosis: Financial Condition Overview

HERMITAGE DESIGN AND BUILD LTD is a newly incorporated micro-entity operating in the real estate sector through buying and selling its own properties. The company’s financial "vital signs" present a concerning picture similar to a patient showing symptoms of acute financial stress:

• The very low current assets (£908) against high current liabilities (£531,390) means the company has insufficient liquid resources to cover its short-term debts, a symptom of poor liquidity and potential cash flow problems.
• The negative net current assets (-£530,482) is a classic symptom of working capital deficiency, potentially hindering day-to-day operational capability.
• The negative equity (-£130) indicates the company’s liabilities slightly exceed its assets, which can be a red flag for solvency issues.
• The large director loan (£527,790) reflects a reliance on internal financing to maintain operations, which, while helpful short-term, is not a sustainable substitute for healthy cash flow or external financing.
• The absence of employees and the micro-entity status suggest early-stage operations with limited operational scale so far.

Overall, the company is in a financially vulnerable state, relying heavily on director funding to keep afloat and lacking sufficient liquidity to meet immediate obligations without external support or improved cash generation.

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4. Recommendations: Actions to Improve Financial Wellness

1. Improve Liquidity Management:
   The company must urgently increase its liquid assets or reduce short-term liabilities. This might involve renegotiating payment terms with creditors, accelerating receivables, or injecting additional capital.

2. Formalize Director Loan Terms:
   Given the reliance on director loans, formalizing repayment schedules and potentially converting part of the loan into equity could enhance the balance sheet and reassure stakeholders.

3. Seek External Funding:
   Explore external financing options such as bank loans, investor equity, or grants to diversify funding sources beyond director lending.

4. Develop Cash Flow Forecasts:
   Implement detailed cash flow projections to anticipate future liquidity needs and avoid surprises, enabling proactive financial planning.

5. Asset Utilization Review:
   Since fixed assets are significant, consider whether these assets are generating expected returns or if some could be liquidated or leveraged more effectively.

6. Monitor Financial Reporting and Compliance:
   Continue timely filing of accounts and confirmation statements to maintain regulatory compliance and credibility with lenders and investors.

7. Business Model Evaluation:
   As a new entity in real estate trading, assess market conditions, pricing strategy, and operational efficiency to enhance profitability and reduce dependency on director loans.

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