GEM PROPERTIES DRAYCOT LIMITED

Executive Summary

GEM PROPERTIES DRAYCOT LIMITED operates with very low equity and relies heavily on long-term liabilities against a stable asset base. Although solvent, its financial position is fragile, indicating symptoms of distress that require urgent measures such as capital injection and debt management to improve resilience. Without corrective action, the company risks exacerbated liquidity issues and potential solvency challenges.

GEM PROPERTIES DRAYCOT LIMITED - Analysis Report

Company Number: 13001358

Analysis Date: 2025-07-20 16:59 UTC

Financial Health Assessment Report: GEM PROPERTIES DRAYCOT LIMITED

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1. Financial Health Score: D

Explanation:
The company shows signs of financial distress primarily due to extremely low net assets (£110) relative to sizeable liabilities, and a razor-thin equity base (£100 share capital). While the company is solvent on paper, the minimal net asset buffer and persistent creditor obligations suggest vulnerability to cash flow shocks or unexpected expenses. This places the company at a borderline risk level, meriting a D grade reflecting caution.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Fixed Assets	159,650	Stable long-term asset base; likely property-related.
Current Assets	4,093	Very low short-term liquid assets; limited cash or receivables.
Current Liabilities	439	Small short-term debts; manageable but close to current assets.
Net Current Assets	3,654	Slightly positive working capital; a "healthy pulse" for short-term liquidity but minimal.
Creditors (Long-term)	163,194	Substantial long-term liabilities; major concern for solvency.
Net Assets (Equity)	110	Critical symptom of distress; equity almost wiped out.
Shareholders’ Funds	110	Almost negligible shareholder investment remaining.

Interpretation of Vital Signs:

• The company holds significant fixed assets (likely property), which is typical for a property management entity.
• Current assets are minimal and barely cover short-term liabilities, indicating tight liquidity.
• The overwhelming bulk of liabilities are long-term creditors, nearly matching the fixed asset value, suggesting heavy financing or mortgage-type arrangements.
• The net asset value and shareholders' funds are critically low, implying that accumulated losses or debt servicing has eroded equity significantly.

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3. Diagnosis

GEM PROPERTIES DRAYCOT LIMITED is showing "symptoms of financial strain" despite remaining technically solvent. The large long-term liabilities almost fully absorb the fixed assets, leaving an alarmingly low equity cushion for absorbing shocks or supporting growth. The company's liquidity is fragile, with current assets barely exceeding current liabilities, indicating a possible risk of cash flow crunches.

The micro-entity accounting regime and exemption from audit limit the financial transparency somewhat but do not mask the fundamental issue: the company’s financial "vital signs" suggest it is operating with very thin margins and minimal financial resilience.

The stable fixed asset figure and consistent liabilities over the years imply no significant asset impairment but also no growth in asset base or equity. The shareholder (Mrs Gail Mends) maintains strong control with 75-100% ownership, which may allow flexibility in financial decisions but also concentrates risk.

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4. Recommendations

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

• Increase Equity Injection:
  The company needs fresh capital infusion to strengthen the equity base, improve solvency ratios, and provide a buffer against financial shocks.

• Enhance Liquidity Management:
  Explore ways to boost current assets, such as improving receivables collection or holding more cash reserves to enhance short-term liquidity and reduce risk of payment delays.

• Debt Restructuring:
  Engage with creditors to potentially renegotiate long-term liabilities, lower interest costs, or extend repayment terms to reduce financial pressure.

• Profitability Focus:
  Review operating costs and revenue streams to improve net income, which can rebuild retained earnings and equity over time.

• Regular Financial Monitoring:
  Implement a monthly or quarterly financial review process to catch early signs of distress ("symptoms") and respond proactively.

• Seek Professional Advice:
  Given the precarious financial position, consultation with financial advisors or restructuring specialists could provide tailored strategies for turnaround.

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