GRIFO DEVELOPMENT SEA ROAD LIMITED

Executive Summary

GRIFO DEVELOPMENT SEA ROAD LIMITED is currently experiencing financial strain characterized by negative net assets and tight working capital, largely influenced by intra-group transactions. While the company remains operational, it faces liquidity challenges and requires immediate focus on improving cash flow and capital structure. Prompt action to strengthen financial fundamentals will be critical to ensure sustainable business health going forward.

GRIFO DEVELOPMENT SEA ROAD LIMITED - Analysis Report

Company Number: 13759445

Analysis Date: 2025-07-29 19:03 UTC

Financial Health Assessment for GRIFO DEVELOPMENT SEA ROAD LIMITED

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1. Financial Health Score: D

Explanation:
The company is showing signs of financial distress with net liabilities on the balance sheet and negative shareholder funds. While it remains active and filing on time, its working capital position is weak, indicating a strained ability to meet short-term obligations. The financial "vital signs" suggest the company is in a fragile state requiring attention to restore health.

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2. Key Vital Signs

Metric	2023 Value (£)	Interpretation
Current Assets	75,600	Includes £7,564 cash and £68,036 debtors (group)
Current Liabilities	75,732	Amount owed primarily to group undertakings
Net Current Assets (Working Capital)	-132	Slightly negative, indicating liquidity stress
Net Assets (Total Equity)	-132	Negative net assets imply the company owes more than it owns
Shareholders’ Funds	-232	Indicates accumulated losses or capital erosion
Cash on Hand	7,564	Low cash reserves relative to liabilities
Debtors	68,036	Amount owed by group companies, possibly intra-group financing

Interpretation of Vital Signs:

• The company has a healthy inflow of receivables from its group, but this is balanced by almost equal amounts owed to the group, creating a tight net working capital position.
• Negative net assets reveal a symptom of financial stress, suggesting the company is operating with liabilities exceeding assets.
• Low cash reserves ("healthy cash flow" is lacking) hint at limited immediate liquidity to cover operational needs.
• The reliance on group transactions (both as debtor and creditor) may mask the real standalone liquidity and solvency position.

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3. Diagnosis

The financial "symptoms" indicate GRIFO DEVELOPMENT SEA ROAD LIMITED is in a precarious financial condition:

• The negative working capital is a key symptom of liquidity strain, meaning the company may struggle to fund day-to-day operations without additional support.
• Negative net assets and shareholders’ funds reflect accumulated losses or capital depletion, which could undermine stakeholder confidence and restrict future financing options.
• The company's business is in the property development sector, which is capital-intensive and may require robust financing and cash reserves to weather project cycles.
• Substantial intra-group balances suggest the company is dependent on its parent or related group companies for financing and operational support. This dependence can be both a strength (access to funds) and a vulnerability (risk if group support is withdrawn).

Overall, the diagnosis is that the company is functioning but financially fragile, showing early signs of distress that require prompt management attention to prevent worsening conditions.

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4. Recommendations

1. Improve Liquidity Management:

   • Increase cash reserves by accelerating collection of receivables or injecting fresh capital.
   • Negotiate longer payment terms with creditors to ease short-term cash flow pressures.

2. Review Group Transactions:

   • Clarify the nature and terms of intra-group debts to ensure they are sustainable and properly documented.
   • Consider restructuring intercompany balances to improve the standalone financial position.

3. Capital Strengthening:

   • Explore options for equity injection or shareholder loans to restore positive net assets and improve financial stability.
   • Avoid further erosion of shareholders’ funds by controlling costs and improving profitability.

4. Operational Efficiency:

   • Assess project pipeline and development costs carefully to ensure they align with available financial resources.
   • Implement tighter budget controls and cash flow forecasting.

5. Regular Monitoring and Reporting:

   • Establish monthly cash flow monitoring to catch liquidity issues early.
   • Engage financial advisors if necessary to improve financial structuring.

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