HPC CHIGWELL LIMITED

Executive Summary

HPC CHIGWELL LIMITED shows clear financial stress with negative net assets and significant long-term liabilities, though it maintains positive working capital. The company’s financial health is fragile but improving slightly, requiring urgent action to strengthen equity and improve profitability. Immediate focus on debt management and capital injection is essential to stabilize and enhance future financial resilience.

HPC CHIGWELL LIMITED - Analysis Report

Company Number: 12842867

Analysis Date: 2025-07-29 12:49 UTC

Financial Health Assessment for HPC CHIGWELL LIMITED

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1. Financial Health Score: D

Explanation:
The company exhibits several signs of financial stress, primarily with negative net assets (shareholders’ funds) persisting over multiple years and a significant level of creditors exceeding current assets. While the company remains active and solvent in the short term, the ongoing erosion of equity and reliance on longer-term liabilities signals a fragile financial condition. The score “D” reflects a company that is still operational but showing clear symptoms of financial distress requiring urgent attention.

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2. Key Vital Signs

Metric	Value (2024)	Interpretation
Net Assets (Shareholders’ Funds)	£-23,465	Negative net assets indicate liabilities exceed assets, a key symptom of financial distress.
Fixed Assets	£13,247	Modest tangible assets suggest limited long-term investment or capital base.
Current Assets	£29,694	Relatively low current assets (cash, receivables, stock) limit liquidity buffers.
Current Liabilities	£14,257	Current liabilities are somewhat covered by current assets, showing a positive working capital.
Creditors (Long-term)	£52,149	Substantial long-term liabilities compared to assets, increasing financial risk.
Net Current Assets	£15,437	Positive net working capital indicates the company can meet short-term obligations.
Trend in Net Assets	Improving (from -£47,078 in 2023 to -£23,465 in 2024)	The upward trend is a positive sign but net liabilities remain a concern.
Employees	1	Small workforce consistent with micro-entity status, possibly limiting operational scale.

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3. Diagnosis

HPC CHIGWELL LIMITED is a micro private limited company operating in sports activities, licensed restaurants, and retail trade of sports goods. Despite being active and compliant with filing deadlines, the company is displaying classic symptoms of financial distress:

• Negative Net Assets: The company’s liabilities exceed its assets by £23,465 as of the latest accounts, indicating an insolvency "red flag" on a balance sheet basis. This condition has persisted for several years, although the deficit has reduced recently.

• Liabilities Structure: Current liabilities are covered by current assets, suggesting a "healthy cash flow" at the working capital level, which is a positive sign. However, the company carries significant long-term creditors (over £52k), which may be exerting pressure on financial stability.

• Asset Base: The fixed asset base is small and declining, indicating limited capital investment or possible asset disposals. This can constrain capacity for growth or operational scaling.

• Profitability & Reserves: While the P&L reserve is not explicitly stated, the negative equity points to accumulated losses or insufficient profits to build retained earnings.

• Operational Scale: With only one employee and a share capital of £1, the company appears to be a small, closely held entity with limited operational breadth.

In medical analogy, HPC CHIGWELL LIMITED’s financial health could be likened to a patient with chronic but stable illness: there is ongoing internal damage (negative equity) but compensatory mechanisms (positive working capital) keep it stable for now. Without intervention, the underlying condition could worsen.

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4. Recommendations

To improve HPC CHIGWELL LIMITED’s financial wellness and avoid further deterioration, consider the following actions:

1. Strengthen Equity Base:

   • Inject additional capital from shareholders or new investors to restore positive net asset value and improve solvency.
   • Alternatively, negotiate debt restructuring or conversions to equity with creditors.

2. Improve Profitability:

   • Review cost structures and revenue streams in the sports, restaurant, and retail segments.
   • Focus on boosting margins or increasing sales to generate retained profits.

3. Manage Liabilities:

   • Engage with creditors holding long-term debt to restructure payment terms or reduce liabilities.
   • Prioritize reducing long-term debt burden to improve financial stability.

4. Asset Utilization:

   • Evaluate fixed assets for potential efficiency improvements or asset sales to raise cash.
   • Invest selectively in assets that can enhance operational capacity and profitability.

5. Cash Flow Monitoring:

   • Maintain strong liquidity management to ensure current obligations are met promptly.
   • Establish cash flow forecasts to anticipate and prevent future liquidity “symptoms of distress.”

6. Governance and Controls:

   • With a single director and secretary, ensure robust financial controls and timely management reporting.
   • Consider external advisory support for strategic financial planning.

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