AFH DEVELOPMENTS LTD

Executive Summary

AFH Developments Ltd is currently facing high financial risk primarily driven by negative net assets and a working capital deficit, indicating potential solvency and liquidity challenges. While it holds investment property as a key asset and maintains regulatory compliance, the significant debt burden and absence of detailed operational data warrant cautious scrutiny. Further investigation into debt terms, asset valuation, and cash flow sustainability is recommended before considering investment exposure.

AFH DEVELOPMENTS LTD - Analysis Report

Company Number: 13383689

Analysis Date: 2025-07-29 18:59 UTC

1. Risk Rating: HIGH
   AFH Developments Ltd exhibits significant solvency concerns due to persistent negative net assets and net current liabilities, indicating it is currently unable to meet its short-term obligations without external support.

2. Key Concerns:

• Negative Net Assets and Shareholders’ Funds: The company has reported net liabilities of approximately £2,697 as of 31 December 2023, a slight deterioration from previous years, signaling ongoing accumulated losses or insufficient equity.
• Negative Net Current Assets: A consistent working capital deficit around £32,000 reflects liquidity risk, with current liabilities exceeding current assets, mainly due to creditors and bank loans.
• High Long-term Debt Relative to Assets: The company carries bank loans of £82,458 due in more than one year, which is significant relative to total assets, increasing financial leverage and risk of default.

3. Positive Indicators:

• Stable Investment Property Asset: The company holds fixed assets in the form of investment property valued at £112,047 with no depreciation or impairment recorded, which provides a tangible asset base.
• Cash Reserves: Although modest, the company maintains cash balances around £40,000, which may provide short-term liquidity relief.
• No Overdue Filings: The company is in good regulatory standing with up-to-date accounts and confirmation statements, indicating compliance with filing requirements and governance norms.

4. Due Diligence Notes:

• Investigate the terms and covenants of the bank loans totaling £82,458, including repayment schedules and interest obligations.
• Review any off-balance-sheet liabilities or contingent liabilities not reflected in the filings.
• Examine the valuation method and market conditions for the investment property to assess the reliability and liquidity of this asset.
• Assess the company’s operational cash flows and revenue generation capability, which is not disclosed in the filed accounts due to exemption from full accounts submission.
• Clarify the nature of creditors within current liabilities as they are substantial relative to current assets.