Company Number: NI684701

Analysis Date: 2025-07-29 16:05 UTC

Financial Health Assessment of Carney Hill Developments Ltd as at 31 January 2024

---

1. Financial Health Score:

Grade: D – The company shows signs of financial distress with a negative equity position and net current liabilities, indicating an unhealthy financial state requiring urgent attention.

---

2. Key Vital Signs (Core Financial Metrics and Interpretation):

• Net Current Assets (Working Capital):

  • £-81,790 (negative) as of 31 January 2024, worsening from £-29,226 the previous year.
  • Interpretation: The company’s short-term obligations exceed its short-term assets, signaling liquidity strain; akin to a patient with insufficient blood flow to vital organs.

• Shareholders’ Funds (Net Assets/Equity):

  • £-81,791 (negative), deteriorated from £-29,227 in prior year.
  • Interpretation: The company’s liabilities surpass assets, indicating an “underweight” balance sheet and potential insolvency risk if not corrected.

• Current Assets:

  • £2,478,828, mostly comprised of inventories (work-in-progress) at £2,341,838.
  • Interpretation: High inventory levels suggest capital is tied up in incomplete projects, reducing cash availability.

• Current Liabilities:

  • £2,560,618, including loans (£1,210,853) and trade payables (£1,301,889).
  • Interpretation: Large short-term debts create pressure on cash flow management.

• Debtors:

  • £133,407, largely from connected parties (£120,857).
  • Interpretation: Reliance on related-party receivables could be risky if these parties face their own financial difficulties.

• Cash and Cash Equivalents:

  • Minimal at £3,583, marginally improved but still critically low.
  • Interpretation: Very limited “healthy cash flow” or liquidity buffer.

• Going Concern Statement:

  • Company acknowledges asset deficiency and reliance on director and creditors.
  • Interpretation: The “patient” is dependent on external support to survive.

---

3. Diagnosis:

Carney Hill Developments Ltd is currently exhibiting symptoms typical of a company under financial stress:

• Liquidity Weakness: Negative working capital indicates inability to cover immediate debts from current assets, risking payment defaults.
• Balance Sheet Deficiency: Negative equity signals accumulated losses or insufficient capital infusion, threatening solvency.
• Inventory Concentration: Large work-in-progress inventory suggests capital is immobilised, potentially delaying cash inflows.
• Inter-Group Exposure: Significant receivables from related parties increase risk due to potential contagion from associated entities’ financial issues.
• Minimal Cash Reserves: Very low cash undermines operational flexibility and emergency response.

Overall, the company’s financial condition could be described as “ailing” and requires intervention to prevent deterioration into insolvency.

---

4. Recommendations:

• Improve Liquidity:

  • Accelerate completion and sale of inventory projects to convert work-in-progress into cash.
  • Tighten credit control especially on related-party balances to improve debtor collection.
  • Explore short-term financing options or renegotiate terms with creditors to ease immediate liabilities.

• Capital Restructuring:

  • Consider equity injection by the director or external investors to restore positive net assets and strengthen solvency.
  • Review and possibly write down obsolete or slow-moving inventory to reflect realistic recoverable amounts.

• Cost and Debt Management:

  • Control operational costs rigorously to reduce further losses.
  • Engage lenders to restructure loans or extend repayment periods to reduce short-term pressure.

• Governance and Monitoring:

  • Establish regular financial health monitoring akin to medical check-ups to detect worsening symptoms early.
  • Maintain transparency with stakeholders and creditors regarding financial position and recovery plans.

• Strategic Review:

  • Evaluate business model and project pipeline to ensure sustainable cash flow generation.
  • Consider diversification or partnerships to reduce risk concentration.

---