P AND R DIVINE PROPERTIES LTD

Executive Summary

P AND R DIVINE PROPERTIES LTD holds valuable investment properties but is challenged by liquidity shortages and negative net equity, indicating financial strain. Immediate focus on improving cash flow, managing debt, and enhancing profitability is essential to stabilize and strengthen the company’s financial health.

P AND R DIVINE PROPERTIES LTD - Analysis Report

Company Number: 13501963

Analysis Date: 2025-07-29 19:37 UTC

Financial Health Assessment for P AND R DIVINE PROPERTIES LTD (as of 31 August 2024)

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1. Financial Health Score: D

Explanation:
The company shows signs of financial stress with negative net assets and persistent working capital deficits, despite holding valuable fixed assets. The financials reveal symptoms of liquidity strain and accumulated losses that have not yet been fully resolved. While not in immediate crisis, the company’s financial health is fragile and requires careful management to avoid deterioration.

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2. Key Vital Signs

Metric	2024 Value	Interpretation
Fixed Assets (Investment Properties)	£480,000	Healthy asset base providing potential collateral value. Stable but slightly decreased from prior year.
Current Assets	£13,749	Very low short-term resources available.
Cash at Bank	£9,349	Limited liquidity, indicating tight cash flow.
Current Liabilities	£160,189	High short-term obligations, over 11 times current assets.
Net Current Assets (Working Capital)	-£146,440	Significant working capital deficit — a key symptom of liquidity distress.
Total Assets Less Current Liabilities	£333,560	Positive, reflecting asset value above short-term debts.
Long-Term Liabilities (Bank Loans)	£336,650	Substantial long-term debt almost equal to asset net value.
Net Assets (Equity)	-£3,090	Negative net worth indicating accumulated losses exceeding equity.
Shareholders’ Funds	-£3,190	Negative shareholders’ equity, signaling financial strain.

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3. Diagnosis: What the Financial Data Reveals

• Asset Strength vs. Liquidity Weakness:
  The company owns investment properties valued at approximately £480,000, which is a solid asset base — akin to a patient with a strong heart muscle. However, the liquidity position is weak, with current assets of just £13,749 against current liabilities of £160,189, resulting in a working capital deficit of £146,440. This indicates “symptoms of distress” in cash flow and short-term financial obligations.

• Negative Net Worth:
  The net liabilities of £3,090 reflect that the company’s accumulated losses have eroded the shareholders’ equity. This is comparable to a patient whose vital reserves are depleted. While the deficit is not severe relative to asset size, it signals that the company is operating at a loss or has been over-leveraged.

• Debt Burden:
  With bank loans at £336,650, the company carries substantial long-term debt almost equal to the net asset base (assets minus current liabilities). This leverage increases financial risk, especially if rental income or property values decline.

• Cash Flow Strain:
  The relatively low cash balance (£9,349) combined with high current liabilities suggests the company may face challenges meeting immediate financial obligations without additional funding or operational improvements.

• Directors and Control:
  The company is controlled primarily by Mr. Robert Frank Divine (75-100% ownership), indicating centralized decision-making. This can facilitate swift strategic action but also concentrates risk.

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4. Recommendations: Actions to Improve Financial Wellness

• Improve Liquidity Management:
  Prioritize boosting current assets, especially cash reserves, to address the working capital deficit. This may include negotiating extended payment terms with creditors or accelerating debtor collections.

• Review and Restructure Debt:
  Engage with lenders to explore refinancing or restructuring options for the £336,650 bank loans to improve cash flow and reduce short-term pressure.

• Asset Optimization:
  Consider revaluing or selectively monetizing parts of the investment property portfolio to generate cash if necessary, without compromising the core business.

• Enhance Revenue Streams:
  Since the company operates in real estate letting, focus on maximizing rental income, reducing vacancy rates, and controlling operating expenses to improve profitability.

• Build Equity Buffer:
  Explore capital injection options, either through shareholder loans or new equity, to restore positive net asset position and provide a financial cushion.

• Regular Monitoring:
  Establish monthly financial reviews to detect early warning signs and adjust operational plans accordingly.

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Medical Analogy Summary

P AND R DIVINE PROPERTIES LTD currently exhibits “symptoms of financial distress” such as liquidity shortages and negative net worth, despite a robust underlying asset base (the “heart” of the business). Without intervention to improve “circulation” (cash flow) and reduce “debt burden” (financial strain), the company risks deteriorating health. Prompt and focused financial management can restore it to a healthier state.

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