FECKENHAM DEVELOPMENTS LIMITED

Executive Summary

Feckenham Developments Limited shows strong short-term liquidity with positive working capital, but suffers from negative net assets due to increasing long-term debt, indicating financial strain. Immediate focus on improving cash reserves, managing stock, and restructuring long-term liabilities is essential to restore financial health and ensure sustainable growth.

FECKENHAM DEVELOPMENTS LIMITED - Analysis Report

Company Number: 13802503

Analysis Date: 2025-07-29 20:19 UTC

Financial Health Assessment Report for Feckenham Developments Limited
(as at 31 March 2024)

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1. Financial Health Score: C

Explanation:
Feckenham Developments Limited demonstrates solid operational liquidity with strong net current assets, indicating a healthy short-term ability to meet obligations. However, the company shows persistent net liabilities and negative shareholders’ funds, pointing to an underlying capital structure weakness and ongoing financial strain. The score "C" reflects a mixed picture: good short-term vitality but notable long-term solvency concerns requiring management attention.

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2. Key Vital Signs

Vital Sign	Value (2024)	Interpretation
Current Assets	£1,354,980	Healthy volume of short-term assets, mainly stock, indicating ongoing project activity.
Cash at Bank	£5,361	Very low cash reserve, signalling limited immediate liquidity despite overall assets.
Debtors	£4,052	Small receivables, low exposure to delayed payments from customers.
Current Liabilities	£166,273	Manageable short-term debts relative to current assets.
Net Current Assets (Working Capital)	£1,188,707	Strong positive working capital, a sign of good short-term financial health.
Creditors (Due After 1 Year)	£1,193,353	Significant long-term debt burden, nearly matching current asset base.
Net Assets (Equity)	£-4,646	Negative net asset value, indicating liabilities exceed assets marginally.
Shareholders’ Funds	£-4,726	Negative equity position, showing accumulated losses or capital deficits.

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3. Diagnosis

Feckenham Developments Limited exhibits symptoms of financial distress in its capital structure despite a "healthy cash flow" proxy in the form of strong net current assets. The company holds substantial stock assets reflective of its construction/development activities, which supports ongoing operations. However, the very low cash balance is a warning sign that liquid cash reserves are minimal, potentially exposing the company to liquidity risk in an emergency.

The long-term creditors' figure has nearly doubled in one year, indicating increased reliance on creditor financing or related-party loans. This growing debt load is the primary cause of the negative net assets and shareholders’ funds, which marks a chronic capital deficiency. While the company is not insolvent at present, the persistent negative equity suggests it is operating with a weakened financial backbone, akin to a patient with good immediate vital signs but an underlying chronic illness.

The directors have maintained compliance with filing deadlines and the accounts are prepared under the small company regime, which suggests sound governance practices. However, the company must address its capital structure to avoid future distress.

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4. Recommendations

• Improve Cash Reserves:
  Enhance liquidity by better cash flow management, accelerating receivables, or negotiating longer payment terms with creditors. Consider short-term financing if necessary to build a cash buffer.

• Address Long-Term Debt:
  Engage with creditors, particularly related-party lenders, to restructure or convert debt to equity where possible. Reducing long-term liabilities will help restore positive net assets.

• Inventory Management:
  Review stock levels and turnover rates closely. Excessive stock ties up funds and may increase risk if property market conditions change. Seek to convert stock into cash more rapidly.

• Capital Injection:
  Consider equity infusion from existing shareholders or new investors to strengthen shareholders’ funds and improve solvency.

• Ongoing Monitoring:
  Regularly track key financial ratios (working capital ratio, debt-to-equity, liquidity ratios) to detect early signs of distress and take proactive measures.

• Strategic Planning:
  Evaluate project pipeline and profitability margins to ensure sustainable long-term growth and avoid overextension.

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Medical Analogy Summary

Feckenham Developments Limited presents with good immediate "vital signs" (working capital and asset base) — a company with a "healthy pulse" in current operations. However, the "symptoms of distress" lie in its capital structure, akin to a patient with a chronic underlying condition (negative equity and heavy long-term debt). Without targeted treatment (debt restructuring and capital strengthening), the prognosis could worsen despite current operational strength.

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