NN DEVELOPMENTS LTD

Executive Summary

NN DEVELOPMENTS LTD has experienced a significant deterioration in financial health during the year ending March 2024, highlighted by a sharp decline in liquidity and net assets. The company faces symptoms of financial distress, including tight cash flow and reduced working capital, which require urgent management action to restore stability. Immediate focus on improving cash collections, managing liabilities, and reassessing operational efficiency is critical to improve the company's financial prognosis.

NN DEVELOPMENTS LTD - Analysis Report

Company Number: 12459306

Analysis Date: 2025-07-20 17:06 UTC

Financial Health Assessment of NN DEVELOPMENTS LTD (Year ended 31 March 2024)

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1. Financial Health Score: D

Explanation:
NN DEVELOPMENTS LTD shows significant signs of financial distress in the latest reported year. Key liquidity and solvency indicators have deteriorated sharply compared to prior years, indicating underlying cash flow and asset management challenges. While not yet insolvent, the company’s financial "vital signs" suggest it is in a fragile state requiring immediate attention to avoid worsening conditions.

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2. Key Vital Signs

Metric	2024 (£)	2023 (£)	Interpretation
Current Assets	185,986	795,141	Current assets sharply decreased, mainly debtors and cash dropped significantly.
Cash at Bank	8,299	31,888	Very low cash reserves — symptom of tight liquidity.
Debtors	177,687	212,830	Debtors declined but remain high relative to cash, indicating possible collection issues or delayed payments.
Current Liabilities	131,859	62,761	Current liabilities more than doubled, putting pressure on short-term obligations.
Net Current Assets (Working Capital)	54,127	732,381	Drastic drop in working capital signals liquidity crunch; company’s buffer to meet short-term debts is very thin.
Long-term Liabilities	46,855	677,761	Large reduction in long-term liabilities, possibly through repayments or restructuring, reducing financial leverage but also possibly reflecting asset disposals or refinancing.
Net Assets / Shareholders’ Funds	7,303	54,666	Substantial erosion of equity capital; very low net assets suggest financial fragility.
Stock (Inventory)	0	550,424	Stock eliminated from balance sheet, possibly sold off or written down, impacting asset base and future revenue potential.

Additional observations:

• Tangible fixed assets are negligible (£31), indicating minimal investment in property/equipment or possible asset sales.
• Bank loans decreased sharply, signaling debt repayments or refinancing.
• Corporation tax creditor increased significantly, possibly reflecting accrued tax liabilities and cash flow pressures.

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3. Diagnosis

NN DEVELOPMENTS LTD exhibits symptoms of financial distress akin to a patient whose vital signs have worsened significantly over a short period:

• The sharp reduction in current assets, especially cash and stock, alongside a doubling of current liabilities, indicates the company is struggling to maintain healthy liquidity. This "drying up" of cash and working capital is a worrying sign of cash flow problems, akin to a patient running low on oxygen supply.
• The elimination of stock from the assets side suggests a major operational change — likely selling off inventory or write-downs — which can be a sign of distress liquidation or a shift in business model.
• The drastic fall in net assets (down from £54,666 to £7,303) highlights accumulated losses or asset impairments, eroding the company's financial "immune system" and reducing its ability to absorb shocks.
• The increase in corporation tax payable with low cash levels compounds the stress, potentially indicating cash flow timing issues or tax planning challenges.
• The company is still "alive" and has no overdue filings, but the balance sheet shows symptoms of weakening financial health that require urgent intervention to avoid insolvency risk.

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4. Recommendations

To improve financial wellness and stabilize the company’s financial health, consider the following actions:

A. Improve Liquidity and Cash Flow Management

• Accelerate debtor collections — review credit control processes to reduce days sales outstanding (DSO).
• Negotiate extended payment terms with creditors to ease short-term cash flow pressure.
• Explore short-term financing options or overdraft facilities to maintain working capital buffer.

B. Asset and Inventory Management

• Investigate the reasons behind stock elimination — if due to sales, ensure replenishment plans support ongoing operations; if write-downs, reassess inventory valuation and purchasing policies.
• Monitor fixed assets and capital expenditures carefully to avoid overextension of resources.

C. Financial Restructuring and Tax Planning

• Assess long-term debt structure to ensure sustainable repayments without draining cash reserves.
• Engage with tax advisors to manage corporation tax liabilities proactively, possibly arranging payment plans if needed.

D. Strategic Business Review

• Directors should conduct a thorough review of operations and profitability, identifying loss-making projects or cost centers.
• Consider strategic partnerships or equity injections to strengthen the balance sheet.
• Maintain transparent communication with stakeholders about financial position and recovery plans.

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Executive Summary