OCP PROPERTY LTD

Executive Summary

OCP Property Ltd has made positive strides in recovering its net asset position, driven by its strong investment property portfolio. However, the company faces liquidity challenges manifested in a significant negative working capital position, which could strain its ability to meet short-term obligations. Strategic focus on working capital optimisation and cash flow management is essential to strengthen financial wellness and sustain growth.

OCP PROPERTY LTD - Analysis Report

Company Number: 14457408

Analysis Date: 2025-07-29 12:24 UTC

Financial Health Assessment for OCP PROPERTY LTD (as at 31 August 2024)

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1. Financial Health Score: C

Explanation:
OCP Property Ltd shows signs of recovery and growth in net assets, moving from a deficit to a positive equity position within two years. However, the company is experiencing significant working capital strain, reflected by a substantial negative net current assets balance, indicating short-term liquidity challenges. The tangible asset base is strong, but current liabilities far exceed current assets, which suggests symptoms of cash flow stress that need monitoring. The overall financial health is moderate but requires focused interventions to improve liquidity.

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2. Key Vital Signs

Metric	2024 Value	Interpretation
Net Assets (Shareholders' Funds)	£114,078	Positive equity after prior losses, showing capital base recovery. Healthy long-term solvency indicator.
Net Current Assets (Working Capital)	-£290,013	Large negative figure implies liquidity "symptoms of distress" — current liabilities exceed current assets by a wide margin.
Cash at Bank	£8,870	Low cash reserves relative to short-term debts, indicating tight cash flow.
Current Liabilities	£336,145	High short-term obligations that could pressure operations if not managed.
Fixed Assets (Land & Buildings)	£630,000	Strong, stable asset base, primarily investment property, supporting long-term value.
Debt due after one year	£199,833	Long-term bank loans at manageable levels compared to fixed assets.
Debtors	£37,262	Receivables present but not sufficient to offset short-term liabilities.

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3. Diagnosis

• Liquidity Condition:
  The company's "vital signs" reveal a strained liquidity position, with current liabilities greatly exceeding current assets and cash reserves. This indicates “symptoms of distress” in meeting short-term obligations, which could lead to operational disruptions if cash inflows are delayed or reduced.

• Capital Structure and Solvency:
  The positive net assets and shareholders' funds position reflect a recovery from the previous years’ deficits. This suggests that the company has successfully increased its asset base and/or improved profitability to bolster its equity. The tangible assets—primarily investment property—provide a solid foundation and potential collateral for financing.

• Profitability and Growth:
  While detailed profit and loss data is not provided due to exemption, the improvement in retained earnings (from negative to positive profit and loss account) indicates profitability or revaluation gains (notably a £137,240 increase in investment property value) contributing to overall financial health.

• Risk Factors:
  The significant negative working capital signals that the company may face challenges in covering immediate liabilities without additional financing or improved cash flow management. Continued reliance on short-term creditors could be risky if market conditions tighten or if asset liquidity is constrained.

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4. Recommendations

• Improve Working Capital Management:
  Focus on accelerating debtor collections and negotiating extended payment terms with creditors to ease short-term cash flow pressures. Consider implementing tighter credit control policies.

• Enhance Cash Reserves:
  Building a "healthy cash flow" cushion is crucial. Explore options for short-term financing facilities or overdraft arrangements to cover gaps in liquidity.

• Asset Utilisation:
  Assess the potential to leverage or refinance the investment property assets to generate liquidity or reduce costly short-term borrowings.

• Financial Planning and Forecasting:
  Develop robust cash flow forecasts to anticipate liquidity needs and avoid "symptoms of distress." Scenario planning will help in preparing for adverse conditions.

• Monitor Debt Levels:
  Maintain a balanced approach to debt, ensuring that long-term liabilities remain manageable relative to asset values and that short-term debts do not overwhelm operating capacity.

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