LYKE DEVELOPMENTS LIMITED

Executive Summary

LYKE DEVELOPMENTS LIMITED exhibits significant financial distress with negative net assets, a working capital deficit, and reliance on director loans. The company is in the process of winding up, indicating a critical financial state. Prompt restructuring and financial management actions are essential to improve the outlook or manage an orderly closure.

LYKE DEVELOPMENTS LIMITED - Analysis Report

Company Number: 14251006

Analysis Date: 2025-07-29 20:04 UTC

Financial Health Assessment for LYKE DEVELOPMENTS LIMITED

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1. Financial Health Score: D

Explanation:
The company exhibits signs of financial distress, including net liabilities and negative shareholder equity. While the company is still operational and filing on time, its current financial position is weak, with a net liability of £4,621 and ongoing reliance on director loans. This leads to a below-average financial health rating of D, indicating significant concerns that require prompt management attention.

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2. Key Vital Signs

Metric	Value	Interpretation
Account Category	Micro	Smallest filing requirements; limited scale.
Current Assets	£0	No liquid assets recorded at period end; poor liquidity.
Current Liabilities	£4,621	Short-term obligations present.
Net Current Assets	-£4,621	Negative working capital; potential liquidity strain.
Net Liabilities	-£4,621	Total liabilities exceed total assets; balance sheet weakness.
Shareholders’ Funds	-£4,621	Negative equity; indicates accumulated losses or capital deficits.
Employee Count	3	Small workforce consistent with micro category.
Directors’ Loans	£0 (net)	Directors have advanced and repaid loans, showing some financial support.
Filing Status	Up to date	No overdue filings; compliance maintained.
Company Status	Active	Still operational but noted as being wound up.

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3. Diagnosis: Financial Condition and Symptoms

Symptoms of Distress:

• Negative Net Current Assets: The company has a working capital deficit, meaning current liabilities exceed current assets. This symptom often points to cash flow challenges and difficulty meeting short-term obligations without additional funding.
• Net Liabilities and Negative Equity: The balance sheet shows total liabilities surpass assets, indicating the company is technically insolvent on a balance sheet basis. This is a critical symptom of financial distress.
• Director Loan Reliance: The notes indicate that the directors have provided financial support, and there is a balance owed to them which they plan to write off. This suggests the company is dependent on internal funding to continue operations, a common symptom of liquidity strain.
• Company Winding Up: The financial notes mention the company is being wound up and that assets have been used to cover liabilities, with a residual balance due to directors. This is a significant red flag indicating the company is in its terminal phase financially.

Underlying Causes:

• Likely operating losses or insufficient revenue generation leading to erosion of equity.
• Possibly high operating costs or capital expenditures that have not been matched by incoming cash flows.
• The micro-company scale limits access to extensive capital or credit markets, increasing vulnerability to financial shocks.

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4. Prognosis: Future Financial Outlook

Given the current financial position and the note that the company is in the process of being wound up, the prognosis is poor. Without a significant turnaround strategy, new capital injection, or restructuring, the company is unlikely to recover financially. The director’s intention to write off the balance owed suggests they may be preparing to close the company formally.

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5. Recommendations: Steps to Improve Financial Wellness

1. Immediate Financial Restructuring:

   • Engage with professional insolvency or turnaround advisors to explore options such as restructuring debts, negotiating with creditors, or formal insolvency procedures if appropriate.

2. Cash Flow Management:

   • If continuing operations, prioritize cash flow forecasting and management to ensure critical payments can be met.
   • Reduce discretionary expenses and delay non-essential capital investments.

3. Capital Injection:

   • Seek additional funding sources, either from shareholders, new investors, or external lenders, to improve liquidity and restore net asset value.

4. Operational Review:

   • Conduct a thorough review of business operations to identify cost savings and improve profitability.
   • Explore new revenue streams or business model adjustments to enhance income.

5. Governance and Reporting:

   • Maintain timely filing and compliance to avoid penalties or legal complications.
   • Enhance financial reporting transparency to build trust with stakeholders.

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