HOME GARDEN ST LTD

Executive Summary

HOME GARDEN ST LTD is currently financially distressed with negative net assets and worsening working capital deficits, primarily due to increased borrowings and work in progress stock. The company’s liquidity position is weak, with minimal cash and debtors relative to large current liabilities, raising significant repayment risk. Without clear evidence of capital support or operational turnaround, credit exposure is not recommended at this time.

HOME GARDEN ST LTD - Analysis Report

Company Number: 13420126

Analysis Date: 2025-07-29 18:46 UTC

1. Credit Opinion: DECLINE. HOME GARDEN ST LTD shows significant financial distress with persistent negative net assets and shareholders' funds, worsening from -£2,329 in 2022 to -£6,218 in 2023. The company’s current liabilities have surged sharply to £3.3 million against current assets of £3.3 million, resulting in a negative working capital position. The bulk of current assets are work in progress stock (£3.27 million), which may not be readily liquid. The company is reliant on substantial borrowings (£2.44 million) and trade creditors (£0.86 million), indicating tight liquidity and potential repayment risk. Given these factors, the company appears unable to comfortably service new or existing debt obligations without additional capital or substantial operational improvements.

2. Financial Strength: The balance sheet reveals a deteriorating financial position. Net current liabilities and negative net assets reflect capital erosion. Share capital remains minimal (£100), and accumulated losses are increasing. The large increase in work in progress stock (from £347k to £3.27 million) suggests expansion or project scaling but also ties up significant funds in inventory that may have uncertain realisable value. High bank borrowings and trade payables relative to the asset base indicate over-leverage and weak solvency. Lack of shareholders’ equity cushions the company from downside risks.

3. Cash Flow Assessment: The company’s cash on hand is very low (£17k), negligible relative to current liabilities of over £3.3 million. Debtors are minimal (£6.5k), implying limited receivables conversion. The negative net working capital (current assets minus current liabilities) of -£6,218 highlights liquidity strain. Heavy reliance on bank borrowings and trade creditors to fund operations is a concern. Without improved cash inflows or external funding, liquidity pressures may impair operational continuity and debt servicing capability.

4. Monitoring Points:

• Track changes in work in progress valuation and realisation timeline to assess liquidity conversion.
• Monitor bank borrowings and repayment schedules to identify refinancing or covenant risks.
• Watch operating cash flows and debtor collection efficiency closely.
• Observe any changes in shareholders’ funds or capital injections indicating improved financial support.
• Review management’s ability to control costs and improve profitability to stem losses.