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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