CL DEVELOPMENT SOLUTIONS LTD

Executive Summary

CL DEVELOPMENT SOLUTIONS LTD faces ongoing financial challenges, including negative working capital, low cash reserves, and negative equity, signaling liquidity stress and accumulated losses. While some improvement occurred in 2024, the company remains financially vulnerable and must focus on improving cash flow, reducing debt pressures, optimizing stock, and potentially raising capital to stabilize its financial health.

CL DEVELOPMENT SOLUTIONS LTD - Analysis Report

Company Number: 12801514

Analysis Date: 2025-07-20 14:49 UTC

Financial Health Assessment for CL DEVELOPMENT SOLUTIONS LTD

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1. Financial Health Score: D

Explanation:
The company exhibits persistent negative net current assets and shareholders' funds over multiple years, indicating financial strain. Despite some improvement in 2024, the balance sheet shows working capital deficiency and negative equity, suggesting the company is under financial distress. The low cash reserves relative to liabilities heighten liquidity risk. Overall, the financial "vital signs" are weak, warranting a below-average grade.

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2. Key Vital Signs

Metric	2024 Value	Interpretation
Current Assets	£577,400	Moderate level of liquid and near-liquid assets
Cash at Bank	£12,634	Low cash reserves, a symptom of potential liquidity issues
Current Liabilities	£591,642	High short-term obligations, exceeding current assets
Net Current Assets	-£14,242	Negative working capital, indicating potential cash flow strain
Shareholders’ Funds	-£14,262	Negative equity, a sign of accumulated losses or insufficient capital
Stock Value	£546,164	Large stock holding relative to cash, risk of overvaluation or slow turnover
Bank Loans (current)	£326,300	Significant short-term debt increasing financial pressure
Debtors	£18,602	Moderate amount tied up in receivables, potential cash flow delay

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3. Diagnosis: What the Financial Data Reveals

• Liquidity Stress: The company’s working capital is negative, meaning its short-term liabilities slightly exceed its current assets. This "symptom" suggests that the company may struggle to meet immediate obligations without additional financing or asset liquidation.

• Low Cash Reserves: Despite reasonable current assets, cash on hand is very limited (£12,634), highlighting a "healthy cash flow" problem. The bulk of current assets are in stock, which may not be quickly convertible to cash.

• Negative Equity: Shareholders’ funds remain negative at -£14,262, indicating accumulated losses or insufficient capital injections. This "chronic condition" weakens the company’s financial foundation and ability to absorb shocks.

• Debt Servicing Burden: Current liabilities include substantial bank loans (£326,300) due within a year, which may impose significant interest and principal repayment pressures. This contributes to the financial "strain" seen in working capital and equity.

• Stock Management Concerns: Stock levels remain high and have only slightly decreased from prior year. If stock turnover is slow or stock values are overstated, this could tie up capital and worsen liquidity.

• Consistent Negative Trend: Although the net current liabilities improved from -£84,511 in 2023 to -£14,242 in 2024, the company has been consistently in negative territory for several years, indicating ongoing financial challenges.

• No Audit Requirement: As a small company, the financial statements are unaudited, which may limit assurance of financial accuracy but is typical for this size.

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4. Recommendations: Specific Actions to Improve Financial Wellness

• Improve Cash Flow Management: Focus on accelerating debtor collections and converting stock to cash faster to build a healthier cash reserve. This could include offering early payment discounts or tightening credit terms.

• Stock Optimization: Conduct a thorough review of inventory levels and valuation to identify slow-moving or obsolete stock. Consider discounting or writing down excess stock to improve liquidity.

• Reduce Short-Term Debt: Explore refinancing options to extend loan maturities beyond one year or negotiate with lenders to ease repayment terms, reducing immediate cash outflows.

• Capital Injection or Equity Support: Consider raising additional equity capital or injecting funds to restore positive shareholders’ funds and strengthen the financial “immune system.”

• Cost Control and Profitability: Although profit and loss details are not included, management should review operating expenses and pricing strategies to improve profitability and reduce losses.

• Regular Financial Monitoring: Establish tighter internal financial controls and regular cash flow forecasting to detect early symptoms of distress and take timely corrective action.

• Seek Professional Advice: Engage financial advisors or turnaround specialists to assist in restructuring debt and improving operational efficiency.

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Medical Analogy Summary

CL DEVELOPMENT SOLUTIONS LTD shows "symptoms of financial distress" with a "weak pulse" in liquidity and "chronic negative equity," akin to a patient with a compromised cardiovascular system struggling to pump sufficient blood (cash) to meet bodily needs (liabilities). While recent data shows some improvement, the "underlying condition" remains serious and requires urgent intervention to avoid worsening prognosis.

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