SUFFOLK LEAF HOMES LTD

Executive Summary

Suffolk Leaf Homes Ltd is currently in a financially distressed position marked by negative net assets and declining cash reserves, indicating liquidity and solvency challenges. Immediate actions focusing on cash flow improvement, capital infusion, and operational efficiency are critical to stabilize the business and avoid further financial deterioration. With prompt and strategic interventions, the company can work toward restoring a healthier financial position.

SUFFOLK LEAF HOMES LTD - Analysis Report

Company Number: 12868544

Analysis Date: 2025-07-29 13:33 UTC

Financial Health Assessment for Suffolk Leaf Homes Ltd

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1. Financial Health Score: D

Explanation:
Suffolk Leaf Homes Ltd shows clear signs of financial distress, primarily demonstrated by persistent net current liabilities and negative net assets over the last five years. The company’s working capital is consistently negative, indicating cash flow constraints and potential difficulties meeting short-term obligations. This grade reflects a "symptomatic" condition that requires urgent attention to avoid further deterioration.

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2. Key Vital Signs

Metric	2024 (£)	2023 (£)	Interpretation
Current Assets	589,324	797,950	Decreased; signals reduced liquidity
Cash	8,390	216,089	Critically low cash reserves
Debtors	18,413	23,324	Slight decrease; potential collection issues
Current Liabilities	696,557	873,427	Decreased but still high
Net Current Assets	-107,233	-75,477	Negative; working capital deficit signals cash flow problems
Net Assets (Shareholders’ Funds)	-107,233	-75,477	Negative equity; indicates insolvency risk
Called up Share Capital	100	100	Minimal capital base

Interpretation:

• Healthy cash flow is lacking as evidenced by the sharp reduction in cash from £216k to just £8k, a red flag for liquidity.
• Persistent working capital deficit ("symptoms of distress") signifies that current liabilities exceed current assets, hinting at potential difficulties in paying short-term debts.
• Negative net assets/shareholders’ funds indicate the company’s liabilities exceed its assets, a serious structural issue that weakens the financial foundation.
• Stock levels remain relatively stable, but the inability to convert these assets into cash quickly adds strain.

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3. Diagnosis

Suffolk Leaf Homes Ltd is in a fragile financial state. The company has been operating with negative net current assets and net liabilities for at least five years, which reveals chronic financial imbalance. The drastic drop in cash reserves in the latest year is particularly concerning and may indicate that the company is relying on credit or has delayed payments to suppliers and other creditors.

The negative shareholders’ funds imply the company is technically insolvent on a balance sheet basis. While the company remains active and filing on time, its financial "vital signs" point to liquidity stress and potential solvency issues if corrective action is not taken.

The absence of employees other than the director may imply a lean operational model, but also suggests limited capacity to generate operational cash or diversify income streams. The director’s continued control (owning 25-50% shares and voting rights) indicates stable ownership but also concentration of financial risk.

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4. Recommendations

To improve financial wellness and reverse the symptoms of distress, Suffolk Leaf Homes Ltd should consider the following:

1. Cash Flow Management:

   • Prioritize improving cash inflows through accelerated debtor collections and possibly renegotiating payment terms with customers.
   • Consider negotiating extended payment terms with suppliers to ease immediate cash pressure.

2. Capital Injection:

   • Inject fresh equity or arrange for shareholder loans to shore up net assets and improve working capital.
   • Explore external financing options such as bridging loans or government-backed schemes if available.

3. Cost Control and Operational Efficiency:

   • Review all operating expenses and overheads to identify cost-saving opportunities.
   • Evaluate the pricing strategy and contract terms to enhance profitability on future projects.

4. Asset Utilization:

   • Assess the stock and work-in-progress for potential liquidation or faster turnover to generate cash.
   • Explore selling non-essential assets if any to improve liquidity.

5. Strategic Planning:

   • Develop a short-to-medium term financial forecast to anticipate cash needs and avoid surprises.
   • Engage with professional advisors for restructuring advice if insolvency risk persists.

6. Governance and Monitoring:

   • Implement regular financial performance reviews focusing on liquidity and solvency metrics.
   • Increase transparency with lenders and stakeholders about financial health and recovery plans.

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