LJR PROPERTY INVESTMENTS LIMITED

Executive Summary

LJR Property Investments Limited is currently under financial strain due to high short-term liabilities and negative equity, typical of a start-up in property development. However, the company holds significant property assets under construction and benefits from committed directors providing ongoing financing. Immediate attention to liquidity management, project completion, and possible equity infusion is essential to transition from financial distress to a stable footing.

LJR PROPERTY INVESTMENTS LIMITED - Analysis Report

Company Number: 15255481

Analysis Date: 2025-07-29 20:04 UTC

Financial Health Assessment of LJR Property Investments Limited

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1. Financial Health Score: D

Explanation:
The company is in its infancy, having been incorporated in late 2023, and shows significant financial distress indicators at this early stage. The negative net current assets and shareholders’ funds, combined with a very high current liabilities position relative to current assets, suggest liquidity challenges. However, as a start-up property investment company with ongoing development works, this is not unusual. The financial health score "D" reflects a company at risk but with potential if adequately managed and financed.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Current Assets	9,897	Very low short-term asset base, mostly cash and small debtors
Current Liabilities	1,169,301	Extremely high short-term obligations, likely loans/creditors
Net Current Assets (Working Capital)	-1,159,404	Negative working capital—a symptom of liquidity distress
Fixed Assets (Investment Property)	1,154,884	Significant long-term asset, under construction development
Shareholders’ Funds (Equity)	-4,522	Negative equity indicating net liabilities (liabilities exceed assets)
Cash	8,140	Limited cash reserve to meet immediate liabilities
Deferred Tax Asset	(968)	Deferred tax losses available for future offset

Interpretation of Vital Signs:

• Liquidity ("Healthy Cash Flow"): The company exhibits "symptoms of distress" with a negative net current assets position of over £1.15 million. This means short-term liabilities far exceed short-term assets, indicating potential difficulty meeting immediate obligations without additional financing or creditor leniency.
• Solvency: The negative shareholders’ funds reflect that total liabilities slightly exceed total assets, an early warning sign of undercapitalization.
• Asset Base: The company holds a substantial investment property asset valued at approximately £1.15 million, which is the core business asset but currently under construction. This is a positive indicator if development completes successfully and the property can be monetized or rented out.
• Going Concern Assumption: Directors confirm the company is in a start-up phase with net liabilities but believe continued financing from shareholders and creditor patience will allow reversal of this position. This is crucial for survival.

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3. Diagnosis: Financial Condition

LJR Property Investments Limited is currently in a precarious financial state, characterized by:

• Liquidity Strain: The company faces severe short-term liquidity pressure with liabilities exceeding current assets by a factor of about 118 times (£1.17 million liabilities vs £9.9k assets). This is a critical symptom of financial distress typical in early-stage property developments funded by loans or creditor financing.
• Negative Equity: Shareholders’ funds are slightly negative, indicating the company’s total liabilities exceed its total assets. This is concerning but not uncommon in start-ups investing heavily in fixed assets before generating income.
• Development Phase Risk: The fixed asset (investment property) is still under construction, so the valuation is based on cost and directors’ judgment rather than completed market valuation. This introduces valuation uncertainty and risk.
• Reliance on Financing: The directors’ note of ongoing financial support and creditor forbearance is vital. Without this, the company could face insolvency risks.
• No Audit Requirement: Being a small company, accounts are unaudited, which limits external assurance on financial accuracy.

Overall, the company shows "symptoms of liquidity and solvency distress" but has a tangible asset base and director commitment, suggesting a fragile but potentially recoverable financial health, contingent on successful project completion and funding.

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4. Recommendations: Steps to Improve Financial Wellness

1. Strengthen Liquidity

   • Secure additional short-term financing or extend creditor payment terms to alleviate immediate cash flow pressure.
   • Monitor cash flow closely to avoid "cash starvation."

2. Accelerate Development Completion

   • Expedite construction to move from cost-based asset to income-generating property or sellable asset, improving asset liquidity and valuation certainty.

3. Equity Injection

   • Consider further capital contributions from shareholders to restore positive equity and strengthen the balance sheet.

4. Financial Planning & Reporting

   • Implement robust cash flow forecasting and financial controls to anticipate funding gaps early.
   • Prepare management accounts regularly to track progress and financial health.

5. Risk Mitigation

   • Explore options for refinancing high-interest or short-term liabilities to more sustainable long-term debt.
   • Engage with professional advisors to manage tax implications and deferred tax asset utilization.

6. Transparency & Governance

   • Maintain up-to-date statutory filings and disclosures to preserve stakeholder confidence.
   • Directors should continually assess going concern status in light of funding and project progress.

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