CHATER PROPERTIES LIMITED

Executive Summary

CHATER PROPERTIES LIMITED is currently facing liquidity and solvency challenges, with negative working capital and net liabilities indicating financial distress. The company must focus on improving cash flow, managing stock levels, and possibly injecting new capital to restore financial health. Without strategic intervention, the outlook remains cautious despite the company’s active status and compliance with statutory filings.

CHATER PROPERTIES LIMITED - Analysis Report

Company Number: 13551986

Analysis Date: 2025-07-20 17:45 UTC

Financial Health Assessment for CHATER PROPERTIES LIMITED

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1. Financial Health Score: D

Explanation:
The company currently exhibits signs of financial distress, reflected in persistent net liabilities and negative working capital. While it remains active and compliant with filing requirements, the financial "vital signs" indicate a struggling balance sheet with more short-term liabilities than assets, implying liquidity challenges. The score "D" reflects a need for careful management intervention to return the company to stable financial health.

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2. Key Vital Signs

Metric	2024 Figure (£)	Interpretation
Current Assets	359,756	Includes stock (major portion), debtors, and cash. The high stock level ties up capital, potentially illiquid.
Cash	7,725	Very low cash reserves suggest fragile liquidity "pulse" and risk of cash flow "arrhythmia".
Debtors	6,785	Relatively small amount owed to company, indicating limited receivables.
Current Liabilities	388,580	High short-term debts including bank loans and other creditors, creating pressure on liquidity.
Net Current Assets	-28,824	Negative working capital ("symptom of distress"), showing inability to cover short-term liabilities with assets.
Net Assets (Equity)	-28,824	Negative net assets ("balance sheet anemia") indicating liabilities exceed assets.
Shareholders' Funds	-28,824	Negative equity reflecting accumulated losses and undercapitalization.
Stock Increase (YoY)	345,246	Stock increased by ~27% since 2023, tying up more funds in inventory.
Bank Loans & Overdrafts	187,298	Significant reliance on external financing, increasing financial risk.
Other Creditors	199,722	Large other payables due within one year, adding to liquidity strain.

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3. Diagnosis: Financial Condition Analysis

Liquidity and Working Capital:
The company exhibits a negative net working capital of approximately £28.8k, a "warning symptom" that short-term obligations exceed current assets. This implies potential cash flow problems, making it difficult to meet creditor demands promptly without raising additional funds or converting stock to cash.

Solvency and Capital Structure:
The balance sheet shows net liabilities (negative equity of £28.8k), indicating that the company has an "anemic capital base" and has accumulated losses since inception. This is often a red flag that the business is undercapitalized or has been incurring losses over time.

Operational Health:
The company’s primary business is in real estate letting and trading, a sector often capital intensive with significant stock (property or projects in progress). The large stock holding suggests capital is tied in inventory, which may not be quickly liquidated. Debtors and cash are very low, raising concerns about the company's liquidity "heartbeat."

Trend Analysis:
Comparing prior years, the company’s net liabilities have increased from about £11.4k in 2023 to £28.8k in 2024, and stock has risen substantially. This suggests increasing financial strain and capital being tied up, without corresponding increases in liquid assets or equity.

Directors and Control:
Two directors hold significant control (each with 25-50% shares and voting rights), which may provide stable leadership but also concentrates risk.

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4. Recommendations: Improving Financial Wellness

1. Enhance Liquidity:

   • Focus on converting stock (properties or inventory) into cash through sales or rentals to alleviate negative working capital.
   • Negotiate extended payment terms with creditors or refinance short-term debts to reduce immediate liquidity pressure.

2. Capital Injection:

   • Consider additional equity funding from shareholders or external investors to improve the capital base and address negative net assets.
   • Alternatively, restructure or reduce debt obligations to strengthen solvency.

3. Cost and Overhead Management:

   • Review operational expenses and overheads to improve profitability and reduce losses, targeting a healthier profit and loss reserve.

4. Cash Flow Forecasting:

   • Implement rigorous cash flow management and forecasting to anticipate liquidity shortfalls and plan for contingencies.

5. Stock Management:

   • Assess stock valuation critically, ensuring it reflects realistic net realizable value and not overstated, which can hide liquidity issues.

6. Explore Revenue Growth:

   • Enhance marketing or service offerings to increase turnover and cash inflows, particularly in real estate sales or lettings.

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