EAV DEVELOPMENTS LIMITED

Executive Summary

EAV DEVELOPMENTS LIMITED has shown significant asset growth but is heavily leveraged with a negative net asset position, indicating financial fragility. While short-term liquidity appears stable, the company's reliance on debt poses risks requiring active financial management. Immediate focus on debt restructuring and equity strengthening is recommended to restore financial health and ensure sustainable growth.

EAV DEVELOPMENTS LIMITED - Analysis Report

Company Number: 13753538

Analysis Date: 2025-07-29 20:53 UTC

Financial Health Assessment for EAV DEVELOPMENTS LIMITED

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1. Financial Health Score: C

Explanation:
EAV DEVELOPMENTS LIMITED shows some strengths in asset growth but displays symptoms of financial strain, particularly a negative net asset position and high long-term liabilities relative to assets. The company’s financial health is currently moderate but has clear warning signs that need addressing to avoid deterioration. This earns a middle-grade score of C, indicating "watchful care" is necessary to restore robust health.

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2. Key Vital Signs

Metric	2023 Value (£)	Interpretation
Fixed Assets	833,356	Indicates substantial investment in long-term assets, reflecting business expansion or property holdings. Healthy if these assets generate income.
Current Assets	233,938	Cash and short-term resources have increased, suggesting improved liquidity compared to prior years.
Current Liabilities	1,074,064	Very high short- and long-term obligations, more than current assets, creating liquidity pressure.
Net Current Assets	233,938	Positive working capital, meaning short-term obligations are covered by current assets, a healthy sign.
Total Assets Less Current Liabilities	1,067,294	Shows significant net assets excluding long-term creditors; good underlying asset base.
Creditors > 1 Year	1,074,064	Large long-term debt burden, which is a key symptom of financial stress or aggressive leverage.
Net Assets (Shareholders Funds)	-6,770	Negative equity indicates liabilities exceed total assets; a critical symptom of financial distress.

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3. Diagnosis

• Asset Growth but Over-leverage: The company has nearly doubled fixed assets in the last year (£426k to £833k), indicating investment or acquisition activity, likely property given the SIC code (real estate letting). However, this is almost entirely financed by debt (£1,074k creditors falling due after one year), creating a heavy leverage load.

• Negative Net Equity: The shareholders' funds are slightly negative (£-6,770), meaning the company’s liabilities exceed its assets. While not large in absolute terms, it signals the company is technically insolvent on a net asset basis. This is a warning sign of balance sheet weakness.

• Liquidity Position: Positive net current assets (£233,938) show the company can cover short-term debts with current assets, which is a "healthy cash flow" sign. This suggests short-term operations are not under immediate distress.

• No Employees: No staff are recorded, implying either a very lean operation or reliance on contractors/outsourcing. This reduces fixed operational costs but may limit growth capacity.

• Compliance and Governance: Up to date filing and no overdue returns show good compliance "vital signs," which is positive for governance.

Overall, the company is in a fragile condition, with strong asset backing but significant debt and negative equity. This is akin to a patient with good heart muscle (assets) but high blood pressure (debt level) threatening overall health.

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4. Recommendations

• Debt Restructuring: Engage with lenders to renegotiate terms of long-term debt to reduce pressure on cash flows and improve solvency ratios. Extending maturities or reducing interest rates can ease the "strain on the arteries."

• Equity Injection: Consider capital raising or shareholder loans to restore positive net worth and strengthen the balance sheet "immune system."

• Asset Utilization: Ensure fixed assets are generating sufficient rental income or returns to service debt. If any assets are non-performing, consider disposal to improve liquidity.

• Cost Control: Maintain lean operations. With no employees currently, keep overheads minimal and review all outgoings regularly.

• Financial Monitoring: Implement regular financial reviews and cash flow forecasting to detect early symptoms of distress and address them promptly.

• Strategic Planning: Develop a clear business plan to grow income from real estate holdings, focusing on tenant retention and market opportunities.

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