BYWAVES LIMITED

1. Risk Rating: MEDIUM

Justification: While the company exhibits a seemingly strong net asset position of £473,246 as of December 31, 2024, this is almost entirely predicated on a recent £480,000 revaluation of freehold property. Operationally, the company maintains a persistent net current liability position, meaning short-term obligations exceed liquid assets. Furthermore, the company is highly intertwined with related entities through significant intercompany loans, and its cash position, while improved, remains modest relative to its current liabilities.

2. Key Concerns

• Net Current Liabilities and Liquidity Squeeze: The company has net current liabilities of £38,323 (Current Assets: £213,475 vs. Current Liabilities: £251,798). This indicates that if all short-term creditors were called upon simultaneously, the company would lack the liquid assets to meet these obligations without selling fixed assets or securing additional funding.
• Revaluation-Dependent Solvency: The net asset position swung from £83,739 in 2023 to £473,246 in 2024. This £389,507 improvement is overwhelmingly driven by a £480,000 revaluation of land and buildings, rather than organic trading profits. Without this revaluation, the underlying tangible net worth would be heavily diminished, and the company carries a corresponding £120,073 deferred tax liability directly linked to this revaluation.
• Related Party Dependence: The balance sheet is deeply entangled with related entities. The company owes £116,058 to Spilsted & Sons Limited, and is owed £87,650 by Bracklesham Bay Developments Limited and £28,859 by Summersdale Garage (Chichester) Limited. Such heavy reliance on group financing often obscures the true standalone financial health of the entity and introduces contagion risk if the wider group faces distress.

3. Positive Indicators

• Tangible Asset Backing: The underlying business is a development of 11 luxury lodges with direct beach access. The revaluation reflects real physical assets on the balance sheet, providing potential security for lenders and a basis for long-term value generation.
• Improving Cash Position: Cash at bank has grown steadily from a critically low £3,025 in 2022 to £28,510 in 2023, and further to £47,225 in 2024. This suggests an improvement in cash generation or capital introduction.
• Longevity and Compliance: Incorporated in 1983, the company has a long operating history. Filing obligations are currently met, with accounts authorized for issue on September 26, 2025, and no overdue filings noted.

4. Due Diligence Notes

• Terms of Related Party Creditors: It is critical to establish the repayment terms of the £116,058 owed to Spilsted & Sons Limited. If this is repayable on demand, it poses a severe liquidity threat. If it is subordinated or long-term, the liquidity risk is substantially mitigated.
• Revaluation Basis: The £480,000 property uplift must be investigated. An independent, professional valuation should be confirmed to ensure the figure is realistic and not inflating the balance sheet to mask operational losses.
• Intercompany Receivables Recoverability: The £116,509 owed by related companies (Bracklesham Bay Developments and Summersdale Garage) requires scrutiny. If these entities are experiencing financial difficulty, Bywaves Limited may face impairment losses on these balances.
• Director Resignations: Two directors (Timothy Andrew Spilsted and James Matthew Spilsted) resigned on December 31, 2024, leaving Helen Spilsted as the sole director. The strategic implications of this board contraction—whether for succession, restructuring, or personal reasons—should be clarified.