ETP UK 1 LTD

Executive Summary

ETP UK 1 LTD is experiencing financial distress characterized by negative net assets and increasing long-term liabilities, despite maintaining modest positive liquidity. Immediate focus on capital restructuring, liquidity improvement, and cost management is essential to stabilize the company’s financial position and avoid further deterioration. With timely action, the company can improve its financial health and secure a more stable future.

ETP UK 1 LTD - Analysis Report

Company Number: 14548137

Analysis Date: 2025-07-29 16:44 UTC

Financial Health Assessment of ETP UK 1 LTD

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1. Financial Health Score: D

Explanation:
ETP UK 1 LTD shows clear signs of financial distress. The company has persistently negative net assets (shareholders' funds), indicating an equity deficit. While it maintains some current assets exceeding current liabilities (positive net current assets), the overall solvency is compromised by significant long-term liabilities. This financial imbalance places the company in a vulnerable position, though it is still operational.

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2. Key Vital Signs

Metric	2024 (£)	2023 (£)	Interpretation
Net Assets (Equity)	-20,181	-9,825	Negative and worsening, indicating liabilities exceed assets—symptom of financial distress.
Net Current Assets	6,000	41,389	Positive but sharply reduced, suggests short-term liquidity is weakening.
Current Liabilities	8,040	6,000	Slight increase, manageable but needs monitoring.
Long-term Liabilities	85,542	86,915	High level of non-current debt, a key factor in negative equity and solvency risk.
Debtors	14,040	47,389	Decreasing significantly, may indicate collection issues or reduced sales in 2024.
Fixed Assets	59,361	35,701	Increasing, showing investment in tangible assets; could strain cash flow if not well managed.

Interpretation of Vital Signs:

• The negative net assets are the critical red flag — the company’s liabilities exceed its assets, which is like a patient with a dangerously low blood count.
• The decline in net current assets warns of deteriorating liquidity, a "weak pulse" in short-term financial health.
• The high level of long-term creditors is analogous to a chronic condition requiring careful management — this heavy debt load puts pressure on the company's financial resilience.
• The reduction in debtors may either be a positive sign of improved collections or a symptom of reduced business activity.

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3. Diagnosis

ETP UK 1 LTD is currently in a state of financial distress. The company’s balance sheet shows a persistent and widening deficit in net assets, driven primarily by substantial long-term liabilities. The company's liquidity, although positive, has weakened considerably over the past year, reducing its ability to comfortably meet short-term obligations.

The business appears to be investing in fixed assets, which could be a strategic growth move but also risks straining cash flow if not matched by increased earnings or funding.

There are no signs of insolvency proceedings, but the financial "symptoms" suggest the company is vulnerable to external shocks or downturns in business. Without corrective action, the company's financial health may deteriorate further, risking future solvency.

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4. Recommendations

Immediate Actions:

• Address Negative Equity: Consider a capital injection or debt restructuring to restore positive shareholders’ funds. This is akin to stabilizing a patient’s vital signs with an infusion.
• Improve Liquidity Management: Tighten credit control to reduce debtor days and enhance cash inflows. Avoid large additional fixed asset purchases until the liquidity improves.
• Review Long-term Debt: Engage creditors to potentially refinance or extend repayment terms to ease pressure on cash flow. This can be viewed as managing a chronic illness with longer-term treatment plans.
• Cost Control: Evaluate operational expenses to reduce overhead and preserve working capital.

Medium-Term Strategy:

• Profitability Focus: Strengthen revenue streams and margins to generate retained earnings which can replenish equity.
• Regular Financial Monitoring: Implement monthly cash flow forecasting and financial reporting to detect and address issues early.
• Stakeholder Communication: Maintain transparent dialogue with shareholders and creditors about the company’s financial strategy and progress.

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Executive Summary