HSM COMMUNICATIONS LTD

Executive Summary

HSM Communications Ltd is a newly incorporated, micro-entity with weak financials characterized by negative equity and poor liquidity, indicating an inability to service debt or meet short-term obligations. Given its limited asset base and significant working capital deficit, credit facilities cannot be recommended at this stage without improvement or external support. Close monitoring of liquidity and financial performance is essential before reconsidering credit risk.

HSM COMMUNICATIONS LTD - Analysis Report

Company Number: 14654162

Analysis Date: 2025-07-29 16:26 UTC

1. Credit Opinion: DECLINE
   HSM Communications Ltd exhibits weak financial health, with significant net liabilities (£20,662) and negative net current assets (-£22,436) as of the latest accounts date (31 March 2024). The company’s inability to cover short-term liabilities with current assets raises concerns over liquidity and payment capability. Being a new entity incorporated in 2023, with only one employee and minimal fixed assets (£3,574), it lacks operational scale and financial resilience. The negative equity position and working capital deficit suggest limited capacity to service debt or meet commercial obligations without additional capital injection. Given these factors, the risk of default is high; therefore, credit extension is not advisable unless substantial financial improvement or external guarantees are provided.

2. Financial Strength:
   The balance sheet reflects a fragile financial structure. Total assets are low (£7,358 total: fixed + current assets), while current liabilities are disproportionately high (£26,220), resulting in negative net current assets and net liabilities. Shareholders’ funds are negative, indicating accumulated losses or significant start-up costs not covered by equity. No retained earnings or profit reserves are reported, and the company is in its initial growth phase with limited tangible assets. This weak capitalization limits the company’s capacity to absorb unexpected losses or economic shocks.

3. Cash Flow Assessment:
   Current assets of £3,784 are insufficient to cover short-term liabilities of £26,220, giving a current ratio of approximately 0.14, well below the acceptable threshold of 1.0 for liquidity. This poor liquidity position signals potential difficulties in meeting immediate payment obligations such as trade creditors, taxes, or short-term borrowings. The negative working capital suggests reliance on external funding or owner support to sustain operations. No detailed profit and loss or cash flow statement is available, but the balance sheet snapshot strongly indicates cash flow constraints.

4. Monitoring Points:

• Improvement in net current assets and overall liquidity position in subsequent filings.
• Evidence of positive operating cash flow or capital injections to cover short-term liabilities.
• Timely filing of accounts and confirmation statements to ensure regulatory compliance.
• Business growth indicators such as increased turnover, asset base expansion, or addition of employees.
• Stability and conduct of the sole director, Mrs. Helen Stewart-Miller, who holds full control, to assess management reliability.