CAPITAL DEVELOPMENT HOMES 2 LTD

Executive Summary

CAPITAL DEVELOPMENT HOMES 2 LTD’s financial health shows concerning signs with negative equity and severe liquidity issues, despite asset growth. Immediate focus on improving cash flow and restructuring debt is critical to avoid worsening financial distress. With prompt corrective actions, the company can stabilize and build a healthier financial footing.

CAPITAL DEVELOPMENT HOMES 2 LTD - Analysis Report

Company Number: 14175150

Analysis Date: 2025-07-29 18:46 UTC

Financial Health Assessment of CAPITAL DEVELOPMENT HOMES 2 LTD

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1. Financial Health Score: D

Explanation:
The company shows a concerning financial profile with negative net assets and a significant amount of long-term liabilities relative to its asset base. While the business has tangible fixed assets, the liabilities exceed equity, indicating financial distress symptoms. The "D" rating suggests urgent attention is needed to improve the company’s financial stability.

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2. Key Vital Signs

Metric	2024 (£)	2023 (£)	Interpretation
Fixed Assets	1,968,210	1,340,386	Growing asset base; positive for long-term
Current Assets	100	7,500	Extremely low liquidity; unhealthy cash flow
Current Liabilities	1,801,789	1,181,265	High short-term obligations; liquidity risk
Net Current Assets	-1,801,689 + 100 = -1,801,589? (The report shows negative 182,317, possible typo)	-167,309	Working capital deficit indicates cash flow strain
Total Net Assets (Equity)	-15,896	-8,188	Negative equity signals insolvency risk
Shareholders' Funds	-15,896	-8,188	Losses eroding shareholder value

Interpretation of Vital Signs:

• Fixed Assets Growth: The company has invested substantially in fixed assets, presumably real estate, which is consistent with its industry classification. This is a positive sign indicating asset accumulation.
• Current Assets vs Liabilities: Current assets are critically low (£100 in 2024), while current liabilities are very high (£1.8m+), indicating a serious liquidity problem. The company may struggle to meet short-term obligations, a key symptom of financial distress.
• Negative Net Assets: The company’s net assets are negative, meaning total liabilities exceed total assets by nearly £16k, a worrying sign of insolvency or financial weakness. This is a red flag indicating the company’s balance sheet is unhealthy.
• Working Capital Deficit: A negative working capital means the company does not have enough short-term resources to cover immediate debts, akin to a patient with low blood pressure—vital signs are weak.

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3. Diagnosis

CAPITAL DEVELOPMENT HOMES 2 LTD is showing symptoms of financial distress. The company has significant fixed assets tied up in real estate (likely properties for management or leasing), but liquidity is dangerously low. The working capital deficit means it may face challenges paying creditors on time, which can lead to operational disruptions or creditor actions if unresolved.

Negative shareholder funds suggest the company has accumulated losses or liabilities beyond its assets, putting it in a precarious financial position. The increase in fixed assets alongside ballooning long-term liabilities indicates that these assets are largely financed through debt, increasing financial risk.

The company is still active and filing accounts on time, which is positive. However, the lack of liquidity and negative equity are "early warning symptoms" of potential financial failure if corrective actions are not taken.

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4. Recommendations

• Improve Liquidity: Focus on increasing current assets, particularly cash or receivables, to cover short-term liabilities. This could involve accelerating debtor collections or renegotiating payment terms with suppliers.
• Debt Restructuring: Seek to renegotiate or restructure existing long-term liabilities to reduce immediate financial pressure and improve net asset position.
• Asset Utilization Review: Assess the fixed asset portfolio for underperforming properties. Consider selling non-core or underutilized assets to generate cash.
• Profitability Focus: Although profit & loss details are limited, ensure operations generate positive cash flows to rebuild shareholder funds and improve net assets.
• Financial Monitoring: Establish regular financial health checks to monitor liquidity and solvency metrics closely to avoid "critical health events" like insolvency.
• Professional Advice: Engage financial advisors or restructuring experts early to create a sustainable financial recovery plan.

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Summary

CAPITAL DEVELOPMENT HOMES 2 LTD is currently in a fragile financial state, characterized by negative net assets and extremely low liquidity despite significant investment in fixed assets. The company exhibits clear symptoms of financial distress that require immediate action to improve cash flow, restructure debt, and restore equity health. Without intervention, the prognosis points towards increasing financial strain.