VERDE DEVELOPMENTS LIMITED

Executive Summary

VERDE DEVELOPMENTS LIMITED shows early-stage financial distress marked by negative working capital and slight negative equity, despite a strong investment property asset. The company’s liquidity position is fragile, reliant on director loans and effective asset management to sustain operations. Prompt financial restructuring and operational improvements are essential to secure a stable financial future.

VERDE DEVELOPMENTS LIMITED - Analysis Report

Company Number: 14723560

Analysis Date: 2025-07-20 12:06 UTC

Comprehensive Financial Health Assessment for VERDE DEVELOPMENTS LIMITED
Financial Year Ending 31 March 2024

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1. Financial Health Score: D (Poor Financial Health with Warning Signs)

Explanation: VERDE DEVELOPMENTS LIMITED shows critical symptoms of financial distress. Negative net current assets and net liabilities indicate liquidity challenges and a fragile equity base. While the company is newly incorporated and holds a significant investment property asset, the current financial structure lacks robustness, warranting urgent attention.

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2. Key Vital Signs (Core Financial Metrics & Interpretation)

Metric	Value (£)	Interpretation
Fixed Assets	277,712	Strong asset base primarily due to investment property valued at £276,587.
Current Assets	4,971	Very low short-term assets (cash £3,047 and debtors £1,924), insufficient for current liabilities.
Current Liabilities	126,894	High short-term debt obligations, exceeding current assets (negative working capital).
Net Current Assets (Working Capital)	-121,923	Negative working capital indicates liquidity strain; company may struggle to meet short-term debts.
Creditors due after 1 year	155,806	Significant long-term debt, likely bank loans, adding to financial burden.
Net Assets (Equity)	-17	Slightly negative net assets indicate equity erosion; shareholders’ funds are in deficit.
Share Capital	2	Minimal equity capital, typical for a new company.
Loans from Directors	£123,571 owed to directors (related party loan)	High reliance on related party funding to support operations.

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3. Symptoms Analysis (What the Numbers Reveal About Business Health)

• Liquidity Symptoms ("Healthy Cash Flow" Concern): The company’s current assets (£4,971) are vastly overshadowed by current liabilities (£126,894), producing an acute working capital deficit (-£121,923). This is a classic symptom of cash flow distress, where immediate obligations cannot be covered by liquid resources. Such a condition is a red flag for potential payment difficulties and operational disruptions if not managed carefully.

• Leverage and Solvency ("Heart Strain"): Total liabilities including long-term borrowings (£155,806) exceed total assets less current liabilities, resulting in negative net assets (-£17). This signals that the company’s equity "heart" is under strain, with liabilities outweighing the company’s net worth, placing the company at risk should asset values decline or additional debts arise.

• Asset Quality ("Strong Skeletal Structure"): The company’s primary asset is investment property valued at £276,587. This is a strong asset base, akin to a robust skeletal structure, providing collateral value. However, this asset is relatively illiquid and may not generate immediate cash to relieve the liquidity crunch.

• Funding Profile ("Reliance on Internal Lifeline"): The company owes a substantial sum (£123,571) to its directors, indicating reliance on internal lifelines rather than external financing. While common in startups, this dependency can become a liability if recovery or profitability is delayed.

• Profitability Indicators: No profit & loss details were provided, but the negative retained earnings (P&L reserve: -£19) and net liabilities indicate either initial losses or the absence of accumulated profits, typical of a startup phase.

• Company Life Stage ("Infant Patient"): Incorporated March 2023, the company is in its infancy and still establishing operational and financial footing. Early-stage companies often show such financial profiles before stabilizing.

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4. Diagnosis: Overall Financial Condition Assessment

VERDE DEVELOPMENTS LIMITED is currently exhibiting financial distress signs primarily due to liquidity issues and negative equity despite having a solid investment property asset. The negative working capital is the most pressing symptom—a “warning arrhythmia” in financial health—suggesting the company may struggle to pay short-term debts when they fall due.

The negative net assets reflect a fragile financial constitution that, if not addressed, could impair the company’s ability to raise funds or invest in growth. However, the company’s asset base (property) and director support (loans) provide some stability and breathing room.

This “patient” is at a delicate stage where prompt financial management and strategic action are critical to avoid deterioration.

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5. Prognosis: Future Financial Outlook

The outlook depends on several factors:

• Cash Flow Improvement: If the company can convert its property asset into income (e.g., rental revenue or sale) or secure additional liquid funds, the health will improve markedly.

• Debt Management: Restructuring or extending the repayment terms of current liabilities, especially director loans and bank debts, will ease liquidity pressure.

• Operational Performance: Achieving profitable operations will help build reserves and restore positive equity.

• External Financing: Access to external capital or investment will support growth and working capital needs.

If these steps are taken, the company may stabilize within 12-24 months. Without intervention, the risk of insolvency or forced asset sales increases.

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6. Recommendations: Specific Actions to Improve Financial Wellness

• Enhance Liquidity: Negotiate with creditors to extend payment terms; prioritize cash collection from debtors; consider short-term financing options to cover immediate obligations.

• Leverage Asset Base: Explore monetizing the investment property through rental income or partial sale to generate cash inflows.

• Director Loan Formalization: Formalize and possibly restructure director loans with clear repayment plans to improve transparency and reduce pressure.

• Budgeting and Cash Flow Forecasting: Implement rigorous cash flow management to monitor timing of receipts and payments, preventing liquidity shocks.

• Seek Financial Advice: Engage with financial professionals to develop a turnaround plan and explore refinancing or equity injection opportunities.

• Operational Focus: Accelerate project development and sales in line with the company’s SIC code (building projects) to generate sustainable revenue.

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Medical Analogy Summary:
VERDE DEVELOPMENTS LIMITED is like a patient with a strong skeletal frame (investment property) but with a weak circulatory system (cash flow) and compromised heart function (negative equity). Immediate interventions to improve liquidity and manage debts are necessary to stabilize and restore health.

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