HYBRID DEVELOPMENTS (SOUTH EAST) LTD

Executive Summary

HYBRID DEVELOPMENTS (SOUTH EAST) LTD maintains strong short-term liquidity but faces early warning signs of financial distress due to negative net assets driven by high long-term debt. Immediate focus on cash management, debt restructuring, and converting inventory to cash is essential to restore financial health and ensure sustainable growth.

HYBRID DEVELOPMENTS (SOUTH EAST) LTD - Analysis Report

Company Number: 13840093

Analysis Date: 2025-07-29 20:32 UTC

Financial Health Assessment for HYBRID DEVELOPMENTS (SOUTH EAST) LTD

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1. Financial Health Score: C (Fair condition with early signs of financial strain)

Explanation:
The company shows solid operational assets but is currently in a net liability position due to significant long-term creditors exceeding its net assets. This suggests early symptoms of financial distress that require focused management attention to restore balance sheet health.

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2. Key Vital Signs

Metric	Value (2024)	Interpretation
Current Assets	£1,229,389	Healthy level of short-term assets, largely comprised of stocks, indicating active inventory.
Cash at Bank & In Hand	£6,612	Very low cash reserves, a symptom of potentially tight liquidity or cash flow constraints.
Debtors	£17,272	Moderate receivables, manageable but should be monitored for timely collection.
Current Liabilities	£535,321	High short-term obligations, but current assets exceed these, indicating positive working capital.
Net Current Assets (Working Capital)	£694,068	Strong working capital, a positive sign of short-term financial health and liquidity.
Creditors > 1 Year (Long-term Liabilities)	£700,000	Substantial long-term debt weighs heavily on the balance sheet, a concerning factor.
Net Assets (Equity)	-£5,932	Negative net assets indicate liabilities slightly exceed total assets, a red flag for solvency.
Shareholders' Funds	-£6,032	Negative equity reflects accumulated losses or high debt levels impacting owners' stake.

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3. Diagnosis: Financial Symptoms and Underlying Health

• Healthy Cash Flow Position in Short Term: The company maintains a healthy working capital buffer (£694k), meaning it can cover its immediate liabilities with current assets. This suggests day-to-day operations are supported by sufficient liquid and near-liquid assets.

• Symptoms of Financial Distress: Despite good working capital, the company is showing a negative net asset position (equity deficit of approximately £6k). This is mainly due to substantial long-term creditors (£700k) exceeding the net current assets, indicating the company is reliant on external financing and has a leverage risk.

• Inventory Concentration: A large proportion of current assets is tied up in stocks (£1.2 million). While this is typical for a real estate development business, it presents a risk if these assets cannot be realised promptly or at expected values.

• Low Available Cash: The very low cash balance (£6.6k) is a warning sign. It means the company may face difficulties meeting unexpected expenses or short-term cash demands despite overall working capital strength.

• No Employees: The company reports no employees, consistent with a business possibly in early development or project-based stages, which may affect scalability and operational capacity.

• Positive Industry Outlook: The company operates in real estate letting and development, sectors that can be asset-intensive but potentially lucrative if projects complete successfully.

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4. Prognosis: Future Financial Outlook

• Short-Term Outlook: The company can likely meet its immediate obligations given positive working capital but must closely manage cash flow to avoid liquidity shocks.

• Medium to Long-Term Outlook: The net liability position and heavy reliance on long-term creditors pose solvency risks. Without improved profitability or debt restructuring, the company may experience financial strain.

• Potential for Recovery: If the company can convert stock to cash via successful property development or leasing and reduce debt levels, it can restore positive equity and strengthen its financial health.

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5. Recommendations for Financial Wellness Improvement

1. Enhance Cash Management:
   Increase cash reserves to build a healthy cash buffer. This might involve negotiating better payment terms with creditors or accelerating debtor collections.

2. Debt Restructuring:
   Engage with creditors to potentially restructure long-term debts, reducing immediate financial pressure and improving net asset position.

3. Inventory (Stock) Review:
   Conduct a thorough review of stock valuations and turnover rates. Focus on converting inventory into cash or income-generating assets to reduce asset concentration risk.

4. Profitability Focus:
   Develop and implement strategies to improve profitability, such as optimizing project costs, enhancing leasing strategies, or exploring new revenue streams.

5. Regular Financial Monitoring:
   Establish monthly financial reviews focusing on liquidity ratios, debt levels, and cash flow projections to catch early signs of distress.

6. Consider External Advice:
   Given the current net liability position, seek financial advisory support to assist with restructuring and growth strategies to sustain and enhance financial health.

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Medical Analogy Summary:

The company currently exhibits "healthy vital signs" in short-term liquidity (working capital), akin to a patient with stable blood pressure and heart rate. However, the "symptoms of distress"—negative net assets and high long-term liabilities—are like underlying chronic conditions that, if untreated, could threaten the company’s survival. Immediate intervention to improve cash flow and manage debt is critical to prevent deterioration and support recovery.

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