Company Number: 12492962

Analysis Date: 2025-07-19 12:43 UTC

Financial Health Assessment for SUKAMI GROUP LTD as of 31 March 2024

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1. Financial Health Score: D

Explanation:
The company currently exhibits signs of financial distress primarily due to negative net assets (£-9,386) and substantial non-current liabilities (finance lease obligations of £87,496). While it maintains positive net current assets (£11,747), the heavy long-term liabilities overshadow short-term liquidity. The recent steep increase in fixed assets accompanied by high finance lease debt signals possible aggressive investment financed through borrowing, which strains the balance sheet. This results in a below-average financial health grade, reflecting significant risk and the need for corrective measures.

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2. Key Vital Signs

Metric	Value (2024)	Interpretation
Net Assets (Equity)	£-9,386	Negative equity indicates liabilities exceed assets — a critical symptom of financial distress.
Total Fixed Assets	£66,363	Large increase from prior year (£6,991), showing significant investment in tangible assets.
Current Assets	£13,128	Includes £10,397 cash, which is a positive sign of liquidity.
Current Liabilities	£1,381 (net)	After adjusting for director loans and accruals, current liabilities are relatively low.
Net Current Assets	£11,747	Positive working capital, indicating the company can cover short-term debts comfortably.
Non-Current Liabilities	£87,496	Large finance lease obligations, representing long-term debt burden.
Share Capital	£1	Minimal share capital, indicating low equity buffer.
Profit & Loss Reserve	£-9,387	Accumulated losses reflected in negative retained earnings.
Turnover & Profitability	Not disclosed	No direct data on turnover or profits, limiting full assessment of operational performance.
Employees	3	Small workforce consistent with micro/small enterprise classification.

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3. Diagnosis: What the Numbers Reveal

• Liquidity and Working Capital:
  The company’s "healthy cash flow" is suggested by positive net current assets (£11,747) and cash balances (£10,397), which means it can meet immediate obligations without distress.

• Leverage and Solvency:
  However, the "symptoms of distress" emerge strongly in the long-term liabilities. The finance lease debt of £87,496 is a heavy burden relative to total assets, pushing net assets into negative territory. This means from a solvency standpoint, the company is overleveraged and at risk if asset values or income streams do not improve.

• Asset Growth and Investment:
  The jump in fixed assets from £6,991 to £66,363 within one year suggests recent capital expenditure, likely financed through lease agreements. While investment can be positive if it drives growth, the current funding structure increases risk and strains the balance sheet.

• Equity Position:
  Negative shareholders’ funds (£-9,386) indicate that accumulated losses have eroded the company’s equity base. This weakens the company's financial cushion to absorb shocks or losses going forward.

• Company Size and Industry:
  As a small private limited company engaged in artistic creation and photographic activities, the business likely operates in a niche market. The financial structure may be typical for creative start-ups investing heavily in equipment but needs careful management to avoid insolvency risks.

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4. Recommendations: Steps to Improve Financial Wellness

1. Restructure Long-Term Debt:
   Engage creditors or lessors to renegotiate finance lease terms, possibly converting some lease obligations into equity or longer repayment schedules to reduce immediate solvency pressure.

2. Assess Asset Utilisation:
   Review the investment in fixed assets to ensure these are generating sufficient revenue or operational benefit. Consider selling or leasing underutilised assets to improve liquidity.

3. Increase Equity Injection:
   Consider raising additional equity capital to restore positive net assets. This could come from the existing controlling shareholder or external investors if feasible.

4. Improve Profitability and Cash Flow:
   Focus on increasing turnover and operational efficiency. Since turnover data is not disclosed, management should ensure robust revenue streams to support asset servicing and build reserves.

5. Tighten Working Capital Management:
   Maintain strong control over debtors and creditors to preserve positive net current assets and avoid cash flow bottlenecks.

6. Regular Financial Monitoring:
   Establish monthly financial reviews focusing on liquidity ratios, debt levels, and profitability metrics to detect and address symptoms early.

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Medical Analogy Summary

The company’s financial "pulse" reveals a stable short-term circulation (liquidity) but a compromised "heart" — the equity base weakened by high "cholesterol" (debt). Without intervention, the risk of "cardiac arrest" (insolvency) grows. Prompt "treatment" through debt restructuring, capital infusion, and operational improvement is critical to restore financial health.

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