EQUATIV LTD

Executive Summary

EQUATIV LTD is a growing small private company with a strong liquidity position and profitability evident from its latest financials. The business shows good capital growth and operational success but remains reliant on its parent company for ongoing support. Key focus areas include improving receivables management and reducing dependency risks to sustain its positive financial trajectory.

EQUATIV LTD - Analysis Report

Company Number: 13954688

Analysis Date: 2025-07-29 19:36 UTC

Financial Health Assessment for EQUATIV LTD (formerly STRX UK LTD)
As of Financial Year Ending 31 December 2023

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1. Financial Health Score: B+

Explanation:
EQUATIV LTD demonstrates solid financial footing with growing net assets and a healthy working capital base. The company shows strong equity growth and increasing retained earnings, indicative of profitability and financial stability. However, reliance on parent company support and the relatively early stage of the business temper the score from an A to a B+.

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2. Key Vital Signs:

Metric	Value (£) / Notes	Interpretation
Current Assets	£567,918	Good liquidity pool to cover short-term debts.
Cash at Bank	£132,274	Adequate cash on hand improves daily operational flexibility.
Debtors (Receivables)	£435,644	Significant amount tied in receivables; collection efficiency should be monitored.
Current Liabilities	£284,386	Manageable current obligations relative to assets.
Net Current Assets (Working Capital)	£283,532	Positive, signaling ability to cover short-term liabilities comfortably.
Net Assets (Equity)	£292,600	Equity base more than doubled from previous year, indicating growth and retained profits.
Profit and Loss Reserves	£163,263	Accumulated profit showing consistent earnings generation.
Share Based Payments Reserve	£129,336	Significant non-cash expense, reflecting investment in employee incentives or equity awards.
Profit for the Year	£95,517	Profitable period, reinforcing operational success.
Company Size	Small (turnover ≤ £10.2M, etc.)	Subject to less onerous filing but still growing.
Going Concern Statement	Supported by parent company	Reliance on parent company support noted.

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3. Diagnosis: What the Financial Data Reveals About Business Health

• Liquidity & Cash Flow: EQUATIV LTD's current assets, especially cash and receivables, comfortably exceed current liabilities, indicating a "healthy cash flow" scenario. The company can meet short-term obligations without stress, which is a crucial sign of financial wellness.

• Profitability & Retained Earnings: The increase in profit and loss reserves from £67,746 to £163,263 suggests the business is not only generating profit but retaining it effectively to strengthen its capital base. This is a positive symptom of sustainable operations.

• Capital Structure & Equity: The net assets have more than doubled in a year, reflecting a robust equity injection and/or retained earnings accumulation. The modest share capital (£1) paired with a large share-based payment reserve (£129,336) indicates extensive use of equity incentives which could dilute ownership but also motivate key personnel.

• Dependence on Parent Company: The notes state that the company provides services to its parent and relies on its support for going concern. This introduces a dependency risk—while currently stable, any withdrawal of support could pose financial distress.

• Asset Composition: Tangible fixed assets are minimal (£9,068), which aligns with a service-oriented IT and publishing business model. The bulk of assets are current assets, especially debtors, which means operational cash conversion cycles should be closely monitored.

• Growth Trajectory: The significant increase in current assets and equity over the prior period signals a growing company, likely expanding its operations and market footprint.

• Governance & Management Changes: Recent director appointments and resignations may indicate a transition phase. Stability in leadership is critical for steady financial health.

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4. Recommendations: Specific Actions to Improve Financial Wellness

a. Enhance Receivables Management:
With £435,644 tied up in debtors, focus on tightening credit control, accelerating cash collection, and reducing days sales outstanding (DSO) to avoid liquidity strain.

b. Monitor Reliance on Parent Company:
Develop contingency plans to reduce financial dependence on the parent, such as diversifying client base or securing independent financing to mitigate "symptoms of distress" if support wanes.

c. Manage Share-Based Payments Impact:
Evaluate the cost-benefit of share-based payments to ensure they effectively incentivize staff without excessive dilution or erosion of shareholder value.

d. Strengthen Cash Reserves:
Continue to build cash balances to provide a buffer against market fluctuations or unforeseen expenses, enhancing the "cardiac resilience" of the business.

e. Leadership Stability:
Ensure smooth transitions with new directors and maintain clear strategic direction to avoid operational disruptions.

f. Regular Financial Monitoring:
Implement periodic financial health checks focusing on liquidity ratios, profitability trends, and working capital dynamics to detect early signs of financial stress.

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