Company Number: 14760873

Analysis Date: 2025-07-29 12:43 UTC

Financial Health Assessment for PAYCOCKE ROAD LIMITED (as at 31 December 2023)

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1. Financial Health Score: D

Explanation:
The company shows significant financial distress symptoms, including negative net assets and substantial net current liabilities. While the company owns valuable fixed assets (investment property), its short-term liabilities heavily outweigh its current assets, indicating liquidity challenges. The financial position is fragile, but support from the parent company provides a lifeline. Hence, the score reflects serious concerns but not immediate insolvency.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Fixed Assets (Investment Property)	4,184,500	Strong asset base in property, a long-term resource that underpins company value.
Current Assets	243,160	Very low liquidity; mostly debtors, almost no cash on hand (£30).
Current Liabilities	4,465,995	Extremely high short-term obligations, causing liquidity stress.
Net Current Assets (Working Capital)	-4,222,835	A large negative figure signals inability to cover short-term debts with short-term assets.
Net Assets (Equity)	-38,335	Negative equity means liabilities exceed assets; a critical symptom of financial distress.
Share Capital	100	Very minimal capital base, typical of a newly incorporated company.
Related Party Debt	3,550,321 (owed to group undertakings)	Large intra-group debt forms a major portion of liabilities, indicating dependency on parent company support.
Cash	30	Practically no liquid cash available, raising concerns about day-to-day operational liquidity.

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3. Diagnosis

PAYCOCKE ROAD LIMITED presents as a company with a significant asset base in investment property, which is its core business activity per SIC code 68100. However, the company's liquidity and solvency "vital signs" are weak. The substantial net current liabilities of over £4.2 million compared with current assets of just £243k create a severe cash flow "blockage." This can be likened to a patient with a strong heart muscle (investment property) but critically low blood flow (cash and liquid assets), impairing the ability to meet immediate demands.

The negative net assets of £38,335 and negative shareholders' funds indicate the company is technically insolvent on a balance sheet basis. However, the going concern note states continued support from its parent company, Wilkins And Reed Holdings Limited, which mitigates immediate risk of collapse.

The large amounts owed to group undertakings (£3.55 million) and other creditors (£750,000) suggest reliance on intra-group financing and potentially unsecured funding. The lack of cash and the large creditor balances represent symptoms of operational cash flow distress.

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4. Recommendations

Short-Term Actions:

• Enhance Liquidity: Immediate focus on improving cash flow, possibly through accelerating debtor collections, negotiating extended payment terms with creditors, or drawing on parent company support.
• Review Debt Structure: Consider restructuring or refinancing current liabilities to reduce short-term pressure, possibly converting some debt to longer-term instruments.
• Monitor Related Party Transactions: Ensure that intra-group debts are managed transparently and on commercial terms to avoid regulatory or tax complications.

Medium to Long-Term Actions:

• Asset Management: Explore options to monetise or leverage the investment property assets to raise liquid funds if necessary.
• Capital Injection: Consider a capital increase or shareholder loan from the parent or external investors to strengthen equity base and absorb losses.
• Operational Efficiency: Review operational processes to control costs and improve revenue recognition, ensuring sustainable cash generation.

Governance and Reporting:

• Maintain timely and accurate financial reporting to monitor "vital signs" regularly.
• Engage with financial advisors or restructuring specialists early if cash flow symptoms worsen.

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Medical Analogy Summary

The company’s financial health shows a heart (asset base) that is strong but with a dangerously low blood flow (liquidity). The symptoms—negative working capital and equity—are red flags indicating the company is in financial distress. However, the parental support acts as an IV drip, sustaining the company’s survival while corrective measures are implemented.

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