NEWTURN DEVELOPMENTS LIMITED

Executive Summary

Newturn Developments Limited has demonstrated a positive turnaround in financial position with improved liquidity and net assets in its latest year. However, significant related party borrowing and high gearing present risks that require close monitoring. Conditional approval is recommended, contingent upon regular review of cash flows and debt servicing capacity.

NEWTURN DEVELOPMENTS LIMITED - Analysis Report

Company Number: 12956609

Analysis Date: 2025-07-20 17:37 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Newturn Developments Limited shows clear improvement in net assets and working capital in its latest financial year, moving from a negative net asset position in 2022 to a modest positive position of £45,266 in 2023. The company maintains strong current assets relative to current liabilities, indicating good short-term liquidity. However, the company carries significant long-term related party borrowings (£1.9M in 2023) and overall gearing remains high, which introduces risk. Approval is recommended subject to conditions including monitoring loan covenants and related party exposure, and obtaining updated cash flow forecasts to confirm debt servicing capacity.

2. Financial Strength:
   The company has increased fixed assets modestly (£51k in 2023 vs £24k in 2022) and more than doubled current assets to £2.44M, driven largely by increased stock/work in progress (£1.89M) and debtors (£459k). Current liabilities have decreased substantially to £243k from £711k, improving net current assets to £2.19M, a strong liquidity position. Nonetheless, total liabilities after one year nearly quadrupled to £2.2M, primarily due to related party loans. The equity base is thin but positive after prior losses. Overall, balance sheet health shows recovery but remains leveraged.

3. Cash Flow Assessment:
   Cash on hand increased slightly to £84.7k, indicating some liquidity buffer. Working capital is strong with net current assets vastly positive, suggesting the company can meet short-term obligations comfortably. However, the large long-term loans and finance leases require ongoing cash outflows. The company’s ability to generate cash from operations is not disclosed but must be sufficient to cover interest and principal repayments. Monitoring of cash conversion cycles and debtor collection efficiency is critical.

4. Monitoring Points:

• Related party loan balances and terms, including repayment schedules and interest obligations.
• Cash flow generation and operating profitability to ensure sustainable debt servicing.
• Stock/work in progress valuation and turnover to avoid overstatement of current assets.
• Debtor aging analysis to detect potential collection issues.
• Maintenance of positive net assets and working capital in future periods.
• Directors’ conduct and any changes in management or ownership structure.