SUMMERHILL 10 LTD

Executive Summary

SUMMERHILL 10 LTD is a newly formed real estate company with substantial fixed assets but currently facing liquidity and negative equity challenges. While these symptoms are common in early stages, active financial management is crucial to stabilize cash flow and strengthen capital structure. With timely interventions, the company can improve its financial health and build a sustainable operating model.

SUMMERHILL 10 LTD - Analysis Report

Company Number: 15113872

Analysis Date: 2025-07-29 20:26 UTC

Financial Health Assessment: SUMMERHILL 10 LTD (as at 31 March 2024)

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1. Financial Health Score: D

Explanation:
The company shows early-stage financial distress indicators, with negative net assets and net current liabilities. Given its recent incorporation and limited operating history, the financial position reflects startup challenges, particularly in managing liabilities relative to assets. While not yet critical, the financials suggest caution and the need for active management to avoid worsening conditions.

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2. Key Vital Signs:

Metric	Value (£)	Interpretation
Cash at bank	370	Critically low cash reserves, indicating tight liquidity.
Current Liabilities	42,992	Significant short-term obligations to meet soon.
Net Current Assets	-42,622	Negative working capital; symptoms of liquidity strain.
Fixed Assets (Tangible)	117,242	Investment in property/plant; substantial asset base.
Long-term Liabilities	83,250	Bank loans due beyond one year; financial leverage present.
Net Assets (Shareholders’ Funds)	-8,630	Negative equity; company owes more than it owns overall.
Share Capital	1	Minimal initial equity injection.

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3. Diagnosis:

The company's financial "vital signs" reveal symptoms typical of a newly formed entity investing heavily in fixed assets (likely property given SIC code 68209: real estate letting/operating) but with minimal cash buffer and significant short and long-term liabilities. The negative net current assets (-£42,622) signal a "cash flow congestion," meaning current obligations exceed liquid assets, which can impair day-to-day operations if not managed carefully.

Negative net assets (equity) of -£8,630 indicate the company has more total liabilities than assets, resembling a financial "deficiency" or early-stage insolvency risk if conditions persist or worsen. However, this is not uncommon in start-ups or property investment companies that take on debt to acquire assets before generating operating income.

The sole director and majority owner, Mr. Nevin Thomas Hutchinson, holds full control, and the company is compliant with filing deadlines, suggesting governance and regulatory adherence are sound — a positive sign akin to stable "patient monitoring."

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4. Recommendations:

Short-Term (Liquidity & Operational Stability):

• Boost cash reserves: Consider capital injection or short-term financing to improve cash flow and cover imminent current liabilities, preventing liquidity "crisis symptoms."
• Negotiate payment terms: Engage creditors to extend or restructure short-term debts, easing working capital pressure.

Medium-Term (Financial Resilience & Growth):

• Leverage fixed assets: Explore rental income or asset refinancing options to generate steady cash flow.
• Implement budgeting and cash flow forecasting: Rigorous monitoring will detect distress early and help manage expenditures aligned with income.

Long-Term (Capital Structure & Profitability):

• Strengthen equity position: Inject additional share capital or retain earnings to restore positive net assets, improving financial "immune system."
• Business development: Enhance revenue streams from the real estate portfolio to transition from asset-heavy to cash-generative status.

Governance & Risk Management:

• Maintain transparent financial reporting and director oversight to avoid compliance risks.
• Consider professional financial advisory support to manage debt and growth strategy effectively.

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Medical Analogy Summary:

This company is like a patient recently admitted with significant structural injuries (high fixed assets) but showing symptoms of circulatory strain (negative working capital and low cash). Prompt fluid replacement (cash infusion) and careful monitoring (cash flow management) are essential to stabilise the condition and support recovery towards financial wellness.

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