BELMONT HOUSE DEVELOPMENT LIMITED

Executive Summary

Belmont House Development Limited is currently experiencing significant financial distress, marked by negative equity, poor liquidity, and a heavy debt burden. Immediate action to improve cash flow, reduce liabilities, and strengthen capital is essential to stabilize the company’s financial position and ensure sustainable operations.

BELMONT HOUSE DEVELOPMENT LIMITED - Analysis Report

Company Number: 12565189

Analysis Date: 2025-07-20 12:23 UTC

Financial Health Assessment of Belmont House Development Limited

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1. Financial Health Score: D

Explanation:
Belmont House Development Limited exhibits clear symptoms of financial distress. The company is operating with significant net current liabilities and negative shareholders' funds, indicating an unhealthy financial position. While the company remains active, the worsening net asset position and liquidity challenges require urgent attention.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Current Assets	5,697,037	Appears strong due to high stock value, but cash is minimal (£1,195), indicating liquidity issues.
Cash at Bank	1,195	Very low cash balance is a warning sign of poor immediate liquidity ("weak pulse").
Debtors	44,810	Low relative to stock, could mean limited receivables or slow sales.
Current Liabilities	6,930,730	Very high current liabilities ("high blood pressure"), causing working capital deficit.
Net Current Assets (Working Capital)	-1,233,693	Negative working capital signals inability to cover short-term debts with short-term assets.
Net Assets (Equity)	-1,233,693	Negative equity indicates the company owes more than it owns, a critical symptom of distress.
Shareholders' Funds	-1,233,993	Mirrors net assets, confirming shareholders' capital erosion.
Stock (Inventory)	5,651,032	High stock holding is a risk if inventory cannot be converted into cash promptly.
Bank Loans and Overdrafts	4,511,335	Large bank borrowing increasing significantly compared to prior year, adding financial strain.

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3. Diagnosis

Belmont House Development Limited is currently in a financially unhealthy state, characterized by:

• Liquidity Crisis: The company's cash reserves are critically low despite large stock holdings. The liquidity "heartbeat" is weak, with cash unable to meet current obligations.

• Working Capital Deficiency: Negative net current assets indicate the company owes more in the short term than it can cover with its liquid assets. This is a classic "symptom of distress" that can lead to payment delays or defaults.

• Negative Equity and Capital Erosion: The company’s net liabilities have grown from approximately -£277k in 2023 to over -£1.2 million in 2024, signifying deteriorating financial health and shareholders’ funds being wiped out by losses.

• Debt Burden: A significant increase in bank loans and overdrafts suggests reliance on external funding to cover operations and inventory. The company is under "high financial stress" due to heavy debt servicing obligations.

• Inventory Risk: Stock represents the majority of current assets, but if unsold or slow-moving, this "illiquid asset" cannot relieve cash flow pressures.

The company’s business activities in real estate management and trading involve substantial capital tied up in property, which can be illiquid and volatile. The worsening financial position raises concerns about sustainability without corrective action.

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4. Recommendations

To restore financial wellness, Belmont House Development Limited should consider the following steps:

1. Improve Liquidity Management:

   • Accelerate stock turnover and convert inventory into cash faster to ease cash flow pressure.
   • Negotiate better payment terms with suppliers and creditors to reduce current liabilities in the short term.

2. Capital Injection:

   • Seek additional equity funding or shareholder loans to strengthen the balance sheet and reduce reliance on bank overdrafts.

3. Debt Restructuring:

   • Engage with lenders to renegotiate terms and possibly extend loan maturities to reduce immediate repayment burdens.

4. Cost Control and Operational Efficiency:

   • Review operational expenses and streamline processes to improve profitability and reduce losses eroding shareholders’ funds.

5. Financial Monitoring:

   • Implement rigorous cash flow forecasting and working capital management to detect and address emerging distress early.

6. Strategic Review:

   • Assess the viability of current real estate projects and consider divesting non-core or slow-moving assets to improve liquidity.

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Executive Summary