HUSSAIN ENGINEERING SERVICES LIMITED

Executive Summary

HUSSAIN ENGINEERING SERVICES LIMITED is currently facing financial strain characterized by low cash reserves, negative working capital, and negative equity, indicating liquidity and solvency challenges. Immediate focus on improving cash flow, reducing liabilities, and enhancing profitability is essential to avoid further decline. Director support is crucial, but sustainable operational improvements are needed for long-term recovery.

HUSSAIN ENGINEERING SERVICES LIMITED - Analysis Report

Company Number: 13874006

Analysis Date: 2025-07-20 13:31 UTC

Financial Health Assessment for HUSSAIN ENGINEERING SERVICES LIMITED

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1. Financial Health Score: D

Explanation:
The company’s financial position shows significant signs of distress in the latest year, with net current liabilities and negative net assets. This indicates a fragile financial state, warranting a below-average grade. The company was financially healthier in the previous year but has recently deteriorated.

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2. Key Vital Signs

Metric	2024 Figures (£)	Interpretation
Current Assets	2,537	Very low liquid and receivable assets, indicating limited short-term resources.
Cash	539	Critically low cash balance, suggesting tight liquidity.
Debtors	1,998	Some receivables, but not sufficient to cover liabilities.
Current Liabilities	9,387	High short-term obligations, nearly 4x the cash.
Net Current Assets (Working Capital)	-6,850	Negative working capital, a symptom of liquidity strain.
Net Assets / Shareholders' Funds	-6,850	Negative equity indicates insolvency on a balance sheet basis.
Share Capital	2	Minimal share capital, typical for a micro/small entity.

Additional observations:

• Director loan of £7,827 is recorded as a creditor, indicating reliance on director financing without interest.
• Previous year (2023) had positive net current assets and net assets (£1,657), so the financial condition has worsened materially within one year.

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3. Diagnosis

The company is exhibiting classic symptoms of financial distress:

• Liquidity Crunch: The sharp drop in cash from £12,444 to £539 is a red flag, indicating very tight cash flow or cash burn.
• Negative Working Capital: Current liabilities far exceed current assets, meaning the company may struggle to meet short-term obligations without external support.
• Negative Net Assets: Shareholders’ funds have moved from positive to negative, signaling accumulated losses or an erosion of equity capital.
• Dependence on Director Financing: A large portion of liabilities is owed to a director, indicating internal financing is supporting operations, which may not be sustainable.
• Going Concern: The director has pledged continued financial support, but this is a subjective assurance without external validation. Without improved operational cash flows, the company risks insolvency.
• Revenue & Profitability: No explicit revenue or profit/loss figures are provided, but the worsening balance sheet suggests operational losses or inadequate profitability.

Overall, the company’s financial health is fragile, akin to a patient with compromised vital signs requiring immediate intervention.

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4. Recommendations

To restore financial wellness and avoid further deterioration, the company should consider the following actions:

1. Improve Cash Flow Management:

   • Accelerate debtor collections and reduce overdue receivables.
   • Tighten credit terms with clients to boost cash inflows.
   • Manage payment terms with suppliers and creditors to conserve cash.

2. Reduce Liabilities:

   • Negotiate with creditors for extended payment terms or partial settlements.
   • Convert director loans into equity if feasible to strengthen the balance sheet.

3. Enhance Profitability:

   • Review pricing, cost control, and operational efficiency to improve margins.
   • Explore new revenue streams or contracts to increase turnover.

4. Capital Injection:

   • Consider seeking external investment or shareholder funding to recapitalize the business.

5. Regular Financial Monitoring:

   • Implement monthly cash flow forecasts and financial reviews to detect symptoms early.
   • Engage professional advice for restructuring if necessary.

6. Governance and Transparency:

   • Maintain clear communication with stakeholders, including directors and PSCs, about financial status and plans.

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