BARKWELL DEVELOPMENTS LIMITED

Executive Summary

Barkwell Developments Limited is currently in a fragile financial position, with tight liquidity and declining net assets, primarily reliant on intercompany transactions for cash flow. While solvent, the company shows signs of financial strain that require urgent focus on cash management and working capital improvement. Strengthening cash reserves and equity will be critical to sustaining operations and supporting future growth.

BARKWELL DEVELOPMENTS LIMITED - Analysis Report

Company Number: 12731730

Analysis Date: 2025-07-29 13:05 UTC

Financial Health Assessment for Barkwell Developments Limited (as at 30 June 2024)

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1. Financial Health Score: C

Explanation:
The company shows signs of survival but with notable vulnerabilities. It maintains a positive net asset position and modest shareholders' equity, but liquidity is tight with current liabilities nearly matching current assets. The drop in cash reserves and increase in reliance on intercompany debtors and creditors indicate cash flow constraints and potential working capital stress. The score reflects a borderline healthy state, needing careful management of liquidity and operational efficiency.

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2. Key Vital Signs

Metric	2024 Figure (£)	Interpretation
Current Assets	380,595	Short-term assets available to cover liabilities. Declining from prior years.
Cash at Bank	5,595	Very low cash reserves—symptom of tight liquidity and potential cash flow issues.
Debtors (Amounts owed by Group)	375,000	High intercompany receivables; dependent on parent or group for cash inflows.
Current Liabilities	374,742	Nearly equal to current assets—tight working capital situation.
Net Assets	5,853	Positive but very slim equity buffer; fragile financial foundation.
Share Capital	100	Minimal capital invested; reliance on retained earnings and intercompany support.
Profit and Loss Reserve	5,753	Retained earnings are positive but small, indicating limited accumulated profits.

Trend Observations:

• Net assets have declined from £15,807 in 2023 to £5,853 in 2024 — a worrying sign of diminishing equity.
• Cash dropped drastically from £166,526 in 2023 to just £5,595 in 2024, indicating a "symptom of distress" in liquidity management.
• Debtors decreased somewhat but remain high, tied up primarily within group entities.
• Current liabilities have reduced but remain close to current assets, limiting financial flexibility.

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3. Diagnosis

Underlying Business Health:
Barkwell Developments Limited operates in the property development sector, a capital-intensive field with cyclical cash flows. The company’s financial statements reveal a "heart struggling to pump cash"—very low cash reserves paired with a high level of intercompany debtors and creditors. This indicates a dependence on the parent company (Barkwell Properties Limited) for working capital, which masks internal liquidity challenges.

The company maintains a positive net asset position, reflecting that it is solvent on a balance sheet basis. However, the sharp contraction in cash and net assets over the last year shows "symptoms of financial strain," possibly due to delays in project completions, sales, or collections.

The financials do not reveal any long-term borrowings; however, the reliance on group transactions creates counterparty risk that must be managed carefully. The minimal cash indicates a "weak pulse" in operational liquidity, which could impact day-to-day business stability if not addressed.

The small profit and loss reserve, combined with minimal share capital, means the company has limited internal resources to absorb shocks or fund growth independently.

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4. Recommendations

To improve financial wellness and strengthen the company’s financial health, Barkwell Developments Limited should consider the following steps:

• Enhance Cash Flow Management:
  Implement stricter cash controls and accelerate collection of intercompany receivables. Consider negotiating payment terms with the parent company or other creditors to ease immediate liquidity pressures.

• Increase Cash Reserves:
  Explore options for cash injection either through parent company support, shareholder loans, or external financing to restore a healthy liquidity buffer. A "healthy cash flow" is essential to avoid operational disruptions.

• Strengthen Working Capital:
  Aim to reduce current liabilities relative to current assets by managing payables and deferring non-essential expenditures. Monitoring and managing working capital cycles closely will improve financial "vital signs."

• Build Equity Base:
  Consider augmenting share capital or retaining more profits to bolster shareholder funds, providing a stronger "immune system" against financial shocks.

• Review Business Operations:
  Analyze project timelines, sales conversion rates, and cost controls in property development activities to improve profitability and cash generation.

• Maintain Transparent Reporting and Governance:
  Continue timely filing of accounts and returns. The recent resignation of a director should be managed carefully to maintain leadership stability and adherence to governance best practices.

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