DEVINE DEVELOPERS LTD

Executive Summary

Devine Developers Ltd exhibits early-stage financial strain characterized by negative working capital and limited liquidity, posing risks to its short-term financial stability. While the company has a positive net asset value, its cash position and creditor obligations suggest the need for urgent cash flow management and cost control measures. Strengthening liquidity and improving operational cash conversion will be critical to restoring financial health and supporting sustainable growth.

DEVINE DEVELOPERS LTD - Analysis Report

Company Number: 14398395

Analysis Date: 2025-07-29 19:54 UTC

Financial Health Assessment for DEVINE DEVELOPERS LTD

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1. Financial Health Score: D

Explanation:
The company exhibits clear signs of financial distress primarily due to negative working capital and a modest net asset base relative to current liabilities. While it is an early-stage business (incorporated Oct 2022) and may be in its investment/growth phase, the current financial indicators suggest liquidity strain and potential solvency risks if not addressed promptly.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Current Assets	16,973	Includes cash and receivables; relatively low for operational needs.
Cash at Bank	5,178	Limited cash buffer; "healthy cash flow" requires more liquidity.
Current Liabilities	30,957	Over 30k due within a year; significant short-term obligations.
Net Current Assets (Working Capital)	-13,984	Negative working capital; indicates "symptoms of distress" in meeting short-term debts.
Net Assets (Equity)	8,435	Small equity base; reflects limited accumulated profit or capital investment.
Fixed Assets (Net Book Value)	27,678	Investment in plant and machinery; suggests capital expenditure but low liquidity conversion.
Provisions for Liabilities	5,259	Indicates some recognized future obligations; reduces net asset cushion.

Additional Context:

• The company is a Private Limited Company operating in information technology consultancy (SIC 62020).
• Controlled fully (75-100% shares and voting rights) by one director, Christopher Thomas Devine.
• Accounts are unaudited but filed timely with no overdue filings.
• Only one employee (the director) indicates a small operation, typical for a start-up or micro entity.

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3. Diagnosis

Underlying Financial Health:

• The most concerning "symptom" is the negative working capital (£-13,984). This means current liabilities exceed current assets, implying the company may struggle to pay its short-term debts as they fall due without raising further funds or converting fixed assets into cash.
• The cash balance (£5,178) is low relative to liabilities due within one year (£30,957), indicating a tight liquidity position and potential cash flow "breathlessness."
• The company's net assets (£8,435) are modest but positive, implying it is not insolvent on a balance sheet basis yet. However, provisions for liabilities (£5,259) reduce this cushion and may represent contingent or expected expenses.
• The tangible fixed assets net book value (£27,678) is significant compared to equity, but these assets are not liquid and may be difficult to convert quickly to cash without loss, especially in distress.
• The company is very young (just over one year old) and may still be investing heavily in its infrastructure and client acquisition, which can explain early losses or tight cash.

Risks Identified:

• Potential liquidity crisis if cash flow does not improve or liabilities are not managed.
• Risk of creditor pressure due to overdue payments or tax/social security liabilities (£12,852 tax and social security creditor).
• Dependence on a single controller/director can limit operational flexibility but may streamline decision-making.

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4. Recommendations

• Improve Liquidity:

  • Explore short-term financing options such as overdrafts or invoice factoring to ease cash flow pressures.
  • Accelerate debtor collections and tighten credit terms where possible to boost cash inflows.
  • Review and potentially renegotiate payment terms with creditors to reduce immediate outflows.

• Cost Control and Cash Flow Management:

  • Closely monitor and control expenses to avoid exacerbating the negative working capital situation.
  • Forecast cash flow weekly/monthly to anticipate and address liquidity gaps proactively.

• Asset Utilisation:

  • Evaluate fixed assets for underutilisation; consider sale and leaseback or disposal of non-essential equipment to raise cash.
  • Investigate potential grants or tax reliefs related to capital expenditure in technology consultancy.

• Strategic Planning:

  • Develop a business plan focused on generating profitable contracts quickly, given the consultancy nature of the business.
  • Consider seeking additional equity investment or shareholder loans to strengthen shareholders’ funds.

• Governance and Transparency:

  • Ensure regular financial review and reporting to detect early warning signs.
  • Maintain compliance with filing deadlines to avoid penalties and demonstrate operational discipline.

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