HG1 SOLUTIONS LIMITED

Executive Summary

HG1 Solutions Limited is currently experiencing financial distress characterized by persistent negative working capital and shareholders' funds, signaling liquidity challenges and accumulated losses. Immediate actions focusing on cash flow management, capital injection, and cost control are essential to improve its financial health and ensure sustainable operations. Without intervention, the company’s fragile financial condition may worsen, threatening ongoing viability.

HG1 SOLUTIONS LIMITED - Analysis Report

Company Number: 12720051

Analysis Date: 2025-07-29 16:54 UTC

Financial Health Assessment for HG1 Solutions Limited (Year Ending 31 July 2024)

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1. Financial Health Score: D (Below Healthy)

Explanation:
HG1 Solutions Limited exhibits signs of financial distress primarily linked to persistent negative net current assets and shareholders’ funds. The company’s working capital position is weak, indicating liquidity issues that could impair its ability to meet short-term obligations without external support. While the company is still active and filing on time, the financial “vital signs” suggest it is struggling to maintain a healthy operational footing.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Fixed Assets	2,150	Low fixed assets typical for a micro company; little capital investment in long-term assets.
Current Assets	278	Very low liquid assets and receivables; insufficient to cover current liabilities effectively.
Current Liabilities	4,988	High short-term debts relative to current assets—sign of liquidity strain.
Net Current Assets	-4,710	Negative working capital indicates inability to cover short-term debts with short-term assets.
Total Assets Less Liabilities	-2,560	Negative net asset value signals the company’s liabilities exceed its assets, a symptom of financial strain.
Shareholders’ Funds	-2,560	Negative equity position indicates accumulated losses or capital erosion over time.
Share Capital	1.00	Nominal share capital; no significant equity buffer against losses.
Average Number of Employees	1	Very small operation, possibly sole director/owner; limited human resources.

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3. Diagnosis: What the Financial Data Reveals

HG1 Solutions Limited is showing clear symptoms of financial distress. The company has been operating with negative net current assets since at least 2021, and negative shareholders’ funds since inception, indicating sustained losses or capital withdrawals that have eroded equity. The shrinking current assets and liabilities suggest attempts might have been made to reduce debts, but working capital remains deeply negative.

The company’s micro-entity status and very low asset base suggest a lean operation, likely a sole director-engineer providing IT consultancy and electrical installation services. However, the persistent negative equity and liquidity pressure indicate that cash flow from operations is insufficient to cover debts and working capital needs, a sign of “unhealthy cash flow.”

The absence of an audit and minimal fixed assets are consistent with a small-scale business, but the financial structure is fragile. The director, who is the sole significant controller, may be funding the company informally, but this is not reflected in strong balance sheet indicators.

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4. Recommendations to Improve Financial Wellness

• Improve Cash Flow Management:
  Focus on accelerating receivables and managing payables to improve liquidity. Explore short-term financing options to cover immediate cash shortfalls.

• Increase Capital Injection:
  Consider injecting additional equity capital to restore positive shareholders’ funds, providing a buffer to absorb losses and support operations.

• Cost Control:
  Review operating expenses rigorously to reduce outflows and improve profitability. With only one employee, scrutinize overheads and discretionary spending.

• Revenue Growth:
  Develop sales and marketing plans to increase income streams, potentially diversifying service offerings or targeting higher-margin contracts.

• Debt Restructuring:
  Negotiate with creditors to restructure short-term liabilities into manageable payment plans, reducing pressure on working capital.

• Regular Financial Monitoring:
  Implement monthly cash flow forecasts and financial reviews to detect symptoms early and adjust strategies promptly.

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