HERVANR LTD

Executive Summary

HERVANR LTD is currently in a state of financial distress marked by negative net assets and poor liquidity, indicating an urgent need for corrective financial management. Without prompt intervention to improve cash flow and capital structure, the company risks insolvency despite its micro-entity scale. Immediate focus on cost control, capital injection, and creditor negotiations is recommended to stabilize its financial health.

HERVANR LTD - Analysis Report

Company Number: 12781193

Analysis Date: 2025-07-29 16:28 UTC

Financial Health Assessment for HERVANR LTD (As of 31 July 2024)

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1. Financial Health Score: D

Explanation:
The company exhibits significant financial distress with a negative net asset position worsening over recent years. The overwhelming current liabilities compared to current assets indicate liquidity problems—akin to a patient struggling to maintain vital functions. This score reflects a company in poor financial health requiring urgent intervention.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Fixed Assets	933	Minimal long-term investment; stable but small.
Current Assets	30,196	Short-term resources (cash, receivables) available.
Current Liabilities	66,482	Short-term debts due; more than double current assets.
Net Current Assets	-36,286	Negative working capital; liquidity strain.
Total Assets Less Current Liabilities	-35,353	Overall shortfall after covering short-term debts.
Net Assets (Shareholders Funds)	-35,353	Negative equity; company owes more than owns.
Share Capital	100	Nominal share capital; no cushion against losses.
Employee Count	1	Very small operational scale.

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3. Diagnosis: Financial Health Analysis

• Liquidity Crisis: The company's current liabilities (debts due within a year) are more than twice its current assets. This is a symptom of severe cash flow problems—similar to a patient whose vital signs indicate inadequate circulation. The negative net current assets mean the company may struggle to meet short-term obligations without external support.

• Eroded Capital Base: Negative net assets of £35,353 show accumulated losses exceeding the capital invested, indicating the company is "underwater." This resembles a patient with chronic illness where reserves are depleted.

• Deteriorating Trend: Comparing the last three years, liabilities have increased sharply from £40,600 in 2023 to £66,482 in 2024, while assets remain stagnant. This worsening imbalance signals ongoing financial stress.

• Small Scale Operations: With only one employee and micro-entity status, the company has limited operational and financial capacity to absorb shocks or invest in growth.

• Ownership and Control: The sole director and 100% shareholder is Ms Temitope Adeyefa, which simplifies decision-making but also concentrates risk and responsibility.

• Industry Risks: Operating in IT consultancy and internet retail, sectors prone to rapid change and competition, the company must maintain healthy cash flow and capital to adapt—currently a challenge.

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4. Recommendations: Steps to Improve Financial Wellness

• Immediate Cash Flow Management:
  Prioritize negotiating payment terms with creditors to ease short-term cash demands. Explore options for working capital financing or bridging loans to stabilize liquidity.

• Cost Control and Revenue Enhancement:
  Review operational expenses and reduce non-essential costs. Investigate opportunities to increase sales or diversify income streams within IT consultancy and internet retail.

• Capital Injection:
  Consider additional equity investment or shareholder loans to restore positive net assets and build a financial buffer. This is akin to replenishing a patient’s vital reserves.

• Financial Monitoring and Forecasting:
  Implement rigorous cash flow forecasting and budgeting practices to detect early signs of distress and plan accordingly.

• Professional Advice:
  Engage financial advisors or turnaround specialists to assist in restructuring debt and optimizing financial management.

• Contingency Planning:
  Prepare for worst-case scenarios including potential insolvency procedures to protect stakeholder interests.

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