HOWE BUILDING GROUP LTD

Executive Summary

Howe Building Group Ltd demonstrates a strong financial position with healthy liquidity and growing net assets, reflecting sound operational and financial management for a young construction business. While the company shows promising signs of financial wellness, focusing on debtor management and strategic growth will be key to sustaining and improving its financial health. Overall, the company is in good shape but should continue monitoring vital financial indicators closely.

HOWE BUILDING GROUP LTD - Analysis Report

Company Number: 13574232

Analysis Date: 2025-07-20 15:27 UTC

Financial Health Assessment for Howe Building Group Ltd
Assessment Date: Financial Year End 31 August 2024

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1. Financial Health Score: B

Explanation:
The company demonstrates solid improvement in its financial "vital signs" over the last year, particularly in liquidity and net assets, indicating a generally healthy financial condition for a young business in the construction sector. However, the scale of the business is still small with modest current assets and working capital, suggesting room for further strengthening to achieve an 'A' grade.

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2. Key Vital Signs

Metric	2024 Value	Interpretation
Current Assets	£35,089	Healthy level of liquid and short-term assets; doubled since 2023.
Cash at Bank	£18,456	Strong "cash pulse" indicating good liquidity.
Debtors	£16,633	Moderate receivables; manageable but needs monitoring to avoid collection delays.
Current Liabilities	£14,104	Short-term obligations appear well covered by current assets.
Net Current Assets (Working Capital)	£20,985	Positive and increased significantly, indicating good short-term financial health.
Net Assets (Equity)	£20,985	Net worth has increased almost fivefold in one year – very positive sign.
Shareholders' Funds	£20,985	Reflects retained earnings and owner investment; strong growth.
Employee Count	2	Small, indicating a micro to small enterprise size.
Account Status	On time filing, no overdue accounts or returns	Compliance is current, reducing risk of regulatory penalties.

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3. Diagnosis: Financial Condition and Symptoms Analysis

Liquidity and Cash Flow:
The company exhibits a healthy cash flow, as evidenced by a significant increase in cash reserves from £3,207 in 2023 to £18,456 in 2024. This strong liquidity "heartbeat" ensures the business can comfortably meet imminent obligations and invest in growth opportunities.

Working Capital:
The positive and growing net current assets (working capital) from £4,527 to £20,985 suggest the business maintains a sound operational "circulation" system, effectively balancing short-term assets and liabilities. This mitigates symptoms of distress such as cash shortages or urgent debt repayments.

Profitability and Retained Earnings:
The substantial increase in shareholders' funds and retained earnings indicates the company is generating profit and reinvesting it efficiently, a sign of "nutritional" health in business terms.

Receivables Management:
Debtors have increased but remain within a reasonable range relative to cash and liabilities. Effective management of accounts receivable is critical to prevent "blockages" in cash flow.

Size and Scale:
With only two employees and relatively small asset base, the company is still in its early growth phase. This presents opportunities for scaling but also risks if market or operational shocks occur.

Compliance and Governance:
The company is current with filings and not in liquidation or any distress status, indicating good regulatory health and governance.

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4. Recommendations: Prescriptions for Financial Wellness

1. Maintain and Monitor Cash Flow:
   Continue to nurture the strong cash position to provide a buffer against market fluctuations, especially in the cyclical construction sector.

2. Tighten Debtor Control:
   Implement or enhance credit control procedures to ensure timely collection of debts, preventing potential "infection" of cash flow problems.

3. Plan for Growth:
   Consider strategic investments or incremental hiring to expand capacity while maintaining financial discipline. Growth should be paced to avoid overextension.

4. Regular Financial Reviews:
   Conduct quarterly financial health checks to detect early signs of distress, such as rising liabilities or slowing cash inflows.

5. Risk Management:
   Given the company's small size, diversify client base and contracts to avoid reliance on a few large customers, reducing risk exposure.

6. Leverage Tax and Accounting Advice:
   As profits increase, seek advice on tax planning and possible incentives for small construction firms to optimize net returns.

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