HHC SOLUTIONS LTD

Executive Summary

HHC Solutions Ltd is facing financial strain with negative working capital and net assets indicating liquidity and solvency challenges. Immediate focus on improving cash flow, securing capital, and controlling costs is vital to restore financial health. With timely and targeted action, the company can stabilize and improve its outlook.

HHC SOLUTIONS LTD - Analysis Report

Company Number: 13828490

Analysis Date: 2025-07-29 15:55 UTC

Financial Health Assessment for HHC SOLUTIONS LTD

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1. Financial Health Score: D

Explanation:
The company currently exhibits signs of financial distress, with negative net assets and net current liabilities as at the latest year-end. While it remains active and compliant with filing requirements, the deterioration in working capital and equity signals vulnerability. This places the financial health in a below-average category, indicating urgent attention is needed to restore financial stability.

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2. Key Vital Signs

Metric	2024 (Latest)	Interpretation
Current Assets	£5,318	Slight increase, showing some liquidity, but insufficient to cover short-term debts.
Current Liabilities	£7,230	Increased compared to prior year; short-term debts exceed current assets—symptom of liquidity stress.
Net Current Assets (Working Capital)	-£1,912	Negative value indicates inability to meet short-term obligations from available liquid assets.
Net Assets (Shareholders’ Funds)	-£2,670	Negative equity suggests accumulated losses or liabilities exceeding assets—critical warning sign.
Average Number of Employees	1	Very small operation, typical for micro entity; limited human resources to manage financial recovery.

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3. Diagnosis: What the Financial Data Reveals

• Liquidity Symptoms: The company’s working capital has shifted from a small positive buffer (£78) in the previous year to a significant shortfall (£-1,912). This "unhealthy cash flow" scenario means the business currently lacks sufficient liquid assets to cover immediate debts, posing risk to ongoing operations.

• Capital Structure Concerns: Negative net assets (-£2,670) indicate that the company’s liabilities exceed its total assets, reflecting "symptoms of financial distress." This could stem from accumulated operating losses or increased creditor obligations not offset by asset growth.

• Operational Scale: With an average of only one employee, the company is a micro-entity, limiting operational flexibility and resilience. The industry classification (manufacture of other plastic products) may require capital investment or inventory holding, which could strain cash flow if sales are not robust.

• Compliance & Governance: The company remains active, with no overdue filings, and has a single director who is also the sole significant controller (owns 75-100% shares). This centralised control can facilitate quick decision-making but also concentrates risks.

• Audit Exemption: Reliance on micro-entity provisions and audit exemption means less external scrutiny, potentially delaying visibility of financial issues until they become acute.

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4. Recommendations: Actions to Improve Financial Wellness

1. Improve Liquidity Management:

   • Conduct a detailed cash flow forecast to anticipate short-term cash needs.
   • Negotiate extended payment terms with suppliers or seek short-term credit facilities to bridge current liabilities.
   • Accelerate debtor collections, if applicable.

2. Capital Infusion:

   • Consider injecting additional equity or shareholder loans to restore positive net assets and provide a buffer for operations.
   • Explore government grants or funding schemes targeted at manufacturing SMEs, especially in plastics.

3. Cost Control and Operational Efficiency:

   • Review operational expenses to identify savings opportunities.
   • Assess inventory levels and production schedules to avoid overstocking and cash tie-up.

4. Financial Monitoring and Reporting:

   • Implement regular internal financial reviews to detect early warning signs.
   • Engage an accountant or financial advisor to assist with budgeting and compliance.

5. Strategic Review:

   • Evaluate market positioning and pricing strategy in the plastic products sector.
   • Consider diversification or partnership opportunities to increase revenue streams.

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Medical Analogy Summary:
HHC Solutions Ltd currently exhibits "symptoms of distress" akin to a patient with low blood pressure and weakened heart function—its liquidity (blood flow) is insufficient to meet immediate demands, and its capital reserves (body strength) are depleted. Without prompt intervention—such as emergency funding (IV fluids) and lifestyle changes (cost controls)—the risk of worsening condition (insolvency) increases.

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