HOMEBUILDING COMPANY ENGLAND LIMITED

Executive Summary

HOMEBUILDING COMPANY ENGLAND LIMITED is currently experiencing financial distress characterized by negative working capital and shareholders' funds, reflecting liquidity challenges and capital erosion. Immediate actions focusing on cash flow management, cost control, and capital reinforcement are essential to stabilize the company's financial health and avoid insolvency risks.

HOMEBUILDING COMPANY ENGLAND LIMITED - Analysis Report

Company Number: 12759953

Analysis Date: 2025-07-29 18:58 UTC

Financial Health Assessment of HOMEBUILDING COMPANY ENGLAND LIMITED

---

1. Financial Health Score: D

Explanation:
The company is showing clear signs of financial distress in the most recent year (2023) with negative net current assets and negative equity, indicating a weakened financial position. This score reflects significant symptoms of financial strain that require urgent attention to avoid further deterioration.

---

2. Key Vital Signs

Metric	2023 (£)	2022 (£)	Interpretation
Current Assets	5,742	629,118	Drastic reduction; very low liquid resources
Cash	5,218	126,930	Sharp decline in cash availability
Debtors	20,352	414,412	Large drop, possibly reflecting lower sales or write-offs
Current Liabilities	19,130	582,032	Significant reduction but still higher than current assets
Net Current Assets (Working Capital)	-13,388	47,086	Negative working capital, indicating liquidity stress
Shareholders' Funds (Equity)	-13,388	47,086	Negative equity signals insolvency risk
Share Capital	100	100	Minimal capital base

• Liquidity (Working Capital): The company moved from a healthy positive net current asset position in 2022 (£47k) to a negative position in 2023 (-£13k). This is a critical "vital sign" showing that current liabilities now exceed current assets, posing a risk to meeting short-term obligations.

• Cash Flow "Pulse": Cash reserves have sharply fallen from £127k to just over £5k. This is akin to a "weak heartbeat" in financial terms, indicating cash flow challenges.

• Equity "Heart Function": The shift to negative shareholders' funds is a serious symptom of accumulated losses or asset impairments.

• Debtors and Investments: Debtors and investments have substantially reduced, possibly due to write-offs or impairments, further weakening the asset base.

---

3. Diagnosis

The company is exhibiting symptoms of financial distress, notably:

• Liquidity Crisis: Negative working capital and near-depleted cash reserves indicate difficulty in meeting short-term creditor demands.
• Capital Erosion: Negative equity suggests that the company’s liabilities exceed its assets, a critical warning sign of insolvency risk.
• Operational Contraction: The drastic reduction in debtors and current assets implies either a slowdown in business activity or aggressive collection/write-off of receivables.
• Uncertain Profitability: No profit and loss account was provided, but the financial position and equity deterioration suggest ongoing losses or asset impairments.

In medical terms, the company’s financial "vital signs" suggest it is in a fragile state, requiring immediate intervention to prevent "organ failure" (i.e., insolvency or liquidation).

---

4. Recommendations

To stabilize and improve financial health, the company should consider the following interventions:

• Urgent Cash Flow Management:

  • Tighten credit control to accelerate debtor collections.
  • Delay non-essential payments without damaging supplier relationships.
  • Explore short-term financing options (e.g., overdraft, invoice factoring) to boost cash reserves.

• Capital Injection:

  • Seek equity funding or shareholder loans to restore positive net assets and strengthen the balance sheet.

• Cost Reduction and Operational Review:

  • Conduct a thorough review of operating costs and overheads to identify savings.
  • Evaluate project pipelines and delay or cancel non-profitable developments.

• Financial Reporting and Monitoring:

  • Implement more frequent financial monitoring to detect early signs of distress.
  • Prepare a detailed profit and loss statement to diagnose operational profitability issues.

• Strategic Planning:

  • Assess the long-term viability of the current business model and consider restructuring if necessary.
  • Engage professional advisors for turnaround or restructuring support.

---

Executive Summary