BURROWS 2 INVESTMENTS LIMITED

Executive Summary

BURROWS 2 INVESTMENTS LIMITED is financially robust with a strong asset base in property and positive equity. The company maintains healthy liquidity and manageable current liabilities, though it carries a significant secured bank loan requiring careful management. Continued focus on cash flow, debtor management, and prudent leverage will be key to sustaining financial wellness.

BURROWS 2 INVESTMENTS LIMITED - Analysis Report

Company Number: 14187742

Analysis Date: 2025-07-20 17:18 UTC

Financial Health Assessment of BURROWS 2 INVESTMENTS LIMITED as of 31 March 2024

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1. Financial Health Score: B+

Explanation:
BURROWS 2 INVESTMENTS LIMITED demonstrates a strong asset base dominated by investment properties with a solid equity position. The company maintains positive net current assets and manageable liabilities. However, reliance on a significant bank loan secured against properties and relatively modest liquidity suggests a need for cautious monitoring. Overall, the company appears financially sound but with some areas to watch to maintain vitality.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Fixed Assets	16,254,623	Large asset base primarily investment properties; stable value
Current Assets	292,137	Limited liquidity but sufficient to cover short-term needs
Cash Balance	195,297	Healthy cash reserve for operational flexibility
Debtors (Receivables)	96,840	Moderate receivables level; manageable but should be monitored
Current Liabilities	101,587	Very low short-term payable obligations, indicating low immediate pressure
Long-Term Debt	5,700,000	Significant bank loan secured by property; manageable but sizeable leverage
Net Current Assets	190,550	Positive working capital; signals ability to meet short-term obligations
Net Assets (Equity)	10,741,517	Strong equity base supports financial stability
Share Capital	200	Nominal share capital; typical for private limited company
Profit and Loss Reserves	173,988	Positive retained earnings; indicates cumulative profitability

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3. Diagnosis: Financial Health Overview

• Asset Strength:
  The company’s financial "skeleton" is robust, with investment properties valued at over £16 million providing a strong foundation. These assets are held at fair value, indicating no impairment concerns currently, which is a positive sign of healthy "bones."

• Liquidity and Cash Flow:
  The company maintains a "healthy cash flow" with nearly £200k in cash and positive net current assets of approximately £190k. This liquidity cushion is vital for daily operations and short-term obligations. Debtors have decreased compared to the prior year, which improves cash conversion but should be monitored for timely collections.

• Leverage and Debt Burden:
  The company carries a substantial bank loan of £5.7 million secured against its properties. This is a typical financing structure in real estate development but represents a "heart condition" requiring ongoing management of interest payments and refinancing risks. The low current liabilities suggest no immediate distress, but the heavy reliance on debt means the company must maintain stable income from rentals or sales to avoid financial strain.

• Profitability and Reserves:
  Though the profit and loss account is not included, the positive retained earnings reserve indicates the company has accumulated profits, a "healthy metabolism." The prior year adjustment related to share premium does not impact underlying profitability but reflects prudent accounting adjustments.

• Operational Health:
  No employees are reported, suggesting the company operates primarily as a property holding or investment entity, reducing operational overhead risks but possibly limiting growth capacity.

• Compliance and Reporting:
  The company is current with filings and not overdue, which is a positive "check-up" sign showing good governance and compliance.

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4. Recommendations

1. Monitor Debt Servicing Ability:
   Maintain vigilant oversight of rental income or project cash flows to ensure timely debt servicing. Consider stress testing cash flows against interest rate rises or tenant vacancies.

2. Improve Liquidity Buffer:
   Although liquidity is currently adequate, building a larger cash reserve or credit facility would provide a stronger safety net against unforeseen expenses or market downturns.

3. Debtor Management:
   Continue active monitoring and management of receivables to avoid cash flow bottlenecks. Implement clear credit control policies if applicable.

4. Consider Asset Diversification:
   Explore opportunities to diversify assets or income streams beyond property holdings to reduce concentration risk and enhance financial resilience.

5. Profit & Loss Transparency:
   Although exempt from audit, consider voluntarily preparing a profit and loss summary for internal use to better track operational performance and inform strategic decisions.

6. Long-Term Financial Planning:
   Develop a medium to long-term financial strategy focused on debt reduction, reinvestment, and potential growth avenues to maintain financial vitality.

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