H&H SMART GROUP LTD
Executive Summary
H&H SMART GROUP LTD is showing significant financial distress with worsening negative net assets and severely negative working capital, indicating liquidity and solvency challenges. Immediate financial restructuring and capital support are essential to restore financial health and secure the company's future viability.
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This analysis is opinion only and should not be interpreted as financial advice.
H&H SMART GROUP LTD - Analysis Report
Financial Health Assessment Report for H&H SMART GROUP LTD
As of Financial Year Ending 31 October 2024
1. Financial Health Score: D
Explanation:
The company exhibits clear signs of financial distress, with significant negative net assets and worsening working capital over the past years. While still active, the financial "vital signs" suggest unhealthy liquidity and solvency positions that require urgent attention to avoid potential insolvency.
2. Key Vital Signs
Metric | 2024 Value (£) | Interpretation |
---|---|---|
Current Assets | 1,292 | Very low short-term assets; insufficient to cover debts. |
Current Liabilities | 26,623 | High short-term obligations compared to assets. |
Net Current Assets (Working Capital) | -25,331 | Negative, indicating inability to meet short-term debts. |
Net Assets (Shareholders' Funds) | -25,331 | Negative equity, company owes more than it owns. |
Trend in Net Assets (2021-2024) | From -8,133 to -25,331 | Deteriorating financial position over 3 years. |
Employee Count | 1 | Very small operation, limited human resources. |
Interpretation of Vital Signs:
- The working capital is deeply negative, a "symptom of distress" akin to a patient showing poor circulation; the company lacks the liquidity "blood flow" necessary to fund day-to-day operations safely.
- The net assets have declined markedly, indicating accumulated losses or liabilities exceeding assets, comparable to a "body" losing its vital reserves.
- The size and scale (micro-entity, 1 employee) mean the company may lack diversification and resilience.
3. Diagnosis
Based on the financial data, H&H SMART GROUP LTD is currently in poor financial health:
- Liquidity Crisis: The company cannot cover its current liabilities with current assets, which may lead to payment delays, supplier pressure, or legal claims.
- Solvency Risk: Negative net assets highlight that liabilities outweigh assets, a red flag for creditors and investors regarding long-term viability.
- Deteriorating Trend: The financial condition has worsened significantly year-on-year, indicating ongoing losses or increasing debts without sufficient recovery.
- Small Scale Limitation: Operating as a micro-entity with only one employee limits operational capacity and flexibility to absorb shocks or invest in growth.
These factors collectively diagnose the company as financially unhealthy, with symptoms typical of a business under financial strain and at risk of insolvency if conditions do not improve. However, it is still active and not currently in liquidation or administration, providing a window for intervention.
4. Recommendations
To improve financial wellness and avoid further deterioration, the company should consider the following actions—think of these as "treatment protocols" to restore health:
Improve Liquidity:
- Seek short-term financing or overdraft facilities to ease immediate cash flow pressures.
- Accelerate debtor collections and negotiate extended payment terms with creditors to improve working capital.
Cost Control & Efficiency:
- Review all expenses rigorously and cut non-essential costs to reduce cash burn.
- Streamline operations to maximize output from limited resources.
Capital Injection:
- Consider raising new equity from the major shareholder or external investors to shore up net assets and strengthen the balance sheet.
- Alternatively, negotiate debt restructuring or write-offs with creditors.
Business Strategy Review:
- Reassess the business model focusing on profitable activities within the two SIC code areas (agents specializing in sales and used car sales).
- Explore diversification or partnerships to broaden revenue streams.
Financial Monitoring:
- Implement tighter financial controls and regular cash flow forecasting to anticipate and manage liquidity issues proactively.
Seek Professional Advice:
- Engage with insolvency practitioners or financial advisors early to explore turnaround options and avoid forced insolvency.
Medical Analogy Summary
H&H SMART GROUP LTD currently exhibits symptoms analogous to a patient with poor circulation and depleted reserves — urgent lifestyle changes and treatment (financial restructuring and capital infusion) are necessary to restore "health" and prevent collapse.
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