HM PROPERTY GROUP (NW) LIMITED

Executive Summary

HM PROPERTY GROUP (NW) LIMITED currently exhibits financial distress with negative working capital, low cash reserves, and net liabilities exceeding assets. The company’s liquidity is strained, and its leveraged position poses risks to ongoing operations. Immediate focus on cash flow improvement and debt management is critical to avoid insolvency and ensure financial stability.

HM PROPERTY GROUP (NW) LIMITED - Analysis Report

Company Number: 13181075

Analysis Date: 2025-07-29 17:26 UTC

Financial Health Assessment for HM PROPERTY GROUP (NW) LIMITED

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1. Financial Health Score: D

Explanation:
The company shows signs of financial distress with persistent net liabilities and negative working capital over the last three years. The net asset position is negative at approximately £20,000, indicating that total liabilities exceed total assets. Cash reserves are minimal (£371 in 2024), and current liabilities significantly outweigh current assets, resulting in a strained liquidity position. The company’s financial "vital signs" suggest it is struggling to maintain healthy cash flow and balance sheet strength.

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2. Key Vital Signs

Metric	2024 Value	Interpretation
Cash at Bank	£371	Extremely low cash reserves, insufficient for covering immediate obligations.
Current Liabilities	£98,206	High short-term debts, creating liquidity pressure.
Net Current Assets (Working Capital)	-£13,921	Negative working capital, indicating the company cannot cover short-term debts with current assets.
Total Assets Less Current Liabilities	£78,179	Reflects tangible fixed assets (property), but does not cover all liabilities.
Creditors Due After One Year (Bank Loans)	£98,206	Long-term debt is substantial and equal to current liabilities, indicating leveraged position.
Net Assets / Shareholders’ Funds	-£20,027	Negative equity signals insolvency risk or ongoing losses.
Share Capital	£2	Nominal equity capital, indicating minimal initial investment.

Additional Notes:

• Fixed assets reported at £92,100 (land and buildings) remain stable but are not depreciated.
• The company employs 2 people, indicating a small operational scale.
• No audit required, accounts are filed under small company exemptions.

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3. Diagnosis: Financial Symptoms and Condition

The company exhibits classic "symptoms of distress" primarily characterized by:

• Negative Working Capital: Current liabilities exceed current assets by nearly £14,000, indicating potential difficulties meeting short-term obligations without raising additional funds or liquidating assets.
• Negative Net Assets: The company's liabilities exceed its assets by over £20,000, a warning sign of balance sheet weakness.
• Low Cash Reserves: With less than £400 in cash, the company likely faces cash flow constraints, limiting operational flexibility.
• High Debt Load: Bank loans and creditors amount to nearly £100,000 each for short and long term, suggesting significant leverage relative to the company's size and capital base.
• Stagnant Asset Base: Fixed assets remain constant, indicating no new investment or asset disposals to improve liquidity.

This financial "diagnosis" suggests the company is operating under financial strain, with a fragile liquidity position and a leveraged balance sheet that may challenge ongoing viability without corrective action.

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4. Prognosis: Future Financial Outlook

If current financial patterns persist, the company faces an increased risk of insolvency or the need for restructuring:

• Continued negative working capital may lead to inability to meet creditor demands or operational disruptions.
• The lack of retained earnings or positive equity reduces financial buffers against downturns.
• Without cash flow improvement or debt restructuring, the company may struggle to finance day-to-day operations.
• However, owning tangible fixed assets like property provides some collateral value that could be leveraged or sold to improve liquidity.

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5. Recommendations: Improving Financial Wellness

Short-Term Actions:

• Enhance Cash Flow Management: Prioritize collection of receivables and reduce discretionary spending to improve cash reserves.
• Negotiate with Creditors: Seek extended payment terms or restructuring of short-term liabilities to ease liquidity pressure.
• Explore Additional Funding: Consider equity injection from shareholders or new financing to strengthen working capital.

Medium to Long-Term Actions:

• Asset Utilization Review: Evaluate the potential to monetize or leverage property assets to reduce debt.
• Cost Control: Tighten operational expenses and optimize resource allocation to improve profitability.
• Financial Planning: Implement regular cash flow forecasting and budgeting to anticipate and mitigate liquidity issues.
• Strategic Review: Assess business model sustainability and explore growth or diversification opportunities to improve revenue generation.

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Executive Summary