PE ESTATES LTD

Executive Summary

PE ESTATES LTD is exhibiting clear financial distress symptoms with very weak liquidity and a nearly depleted equity base. While still operational, the company is vulnerable to cash flow difficulties and creditor pressure. Immediate actions to improve cash management, reduce debt burden, and strengthen equity are essential to restore financial health and avoid insolvency risks.

PE ESTATES LTD - Analysis Report

Company Number: 13258637

Analysis Date: 2025-07-29 15:49 UTC

Financial Health Score: D

Explanation: PE ESTATES LTD shows signs of financial strain and vulnerability despite being operational. The company’s net assets have diminished significantly, and its working capital position is weak. These indicators suggest financial stress symptoms that need addressing to avoid deeper distress.

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Key Vital Signs

1. Fixed Assets (£261,591):
   This reflects substantial investment in long-term assets, likely property or real estate, consistent with its SIC classification (real estate letting). Fixed assets remain stable over years, indicating no recent disposals or acquisitions.

2. Current Assets (£5,408) vs. Current Liabilities (£263,202):
   A critical symptom of distress: current liabilities vastly exceed current assets, producing a negative working capital (current assets minus current liabilities ≈ -£257,794). This indicates the company may struggle to meet short-term obligations—a sign of acute liquidity risk.

3. Net Assets (£192):
   Net assets are practically negligible, indicating equity is almost wiped out by liabilities. The company's balance sheet is barely solvent, implying significant financial fragility.

4. Share Capital (£250):
   Minimal share capital typical of a micro-entity; does not provide a strong equity cushion.

5. Creditors Due After One Year (£263,202):
   The company carries significant long-term debt nearly equal to the fixed assets value, implying high leverage and potential solvency risk if cash flows are insufficient.

6. Employee Count (2 employees):
   Small headcount suggests a micro-business; overheads likely low but fixed costs still present.

7. Recent Financial Trend:
   Shareholders’ funds have deteriorated from negative (-£569 in 2021) to a small positive (£192 in 2024), but remain dangerously low. Current liabilities increased sharply from £170,795 in 2021 to £263,202 in 2024, worsening liquidity.

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Symptoms Analysis

• Liquidity Crisis: The company’s current liabilities dwarf current assets, indicating a failure to generate or maintain healthy cash flow. This "heart failure" of liquidity could impair day-to-day operations and creditor confidence.

• High Leverage: The balance sheet is heavily weighted with debt versus equity, a "breathing difficulty" for the business. Reliance on creditor funding and minimal equity buffer raises risk of insolvency.

• Stagnant Asset Base: Fixed assets remain constant without growth or disposal, possibly indicating limited reinvestment or asset impairment risk.

• Minimal Reserves: The micro-entity exemption and absence of a profit and loss statement limit visibility on profitability, but negligible net assets imply minimal retained earnings.

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Diagnosis

PE ESTATES LTD is currently in a financially fragile state characterized by poor liquidity and high leverage. The company’s "vital signs" show distress symptoms—especially in working capital and net asset position—that suggest the business is operating on a knife-edge. Without intervention, risk of insolvency or creditor enforcement actions is elevated.

The limited equity and heavy creditor reliance imply that while the company is not yet in liquidation, it is vulnerable to cash flow shocks or unexpected expenses. The lack of auditing and limited reporting reduces transparency, which can affect stakeholder confidence.

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Recommendations

1. Improve Liquidity:

   • Negotiate longer payment terms with creditors or restructure debt to ease short-term cash pressure.
   • Increase cash reserves by accelerating debtor collections or disposing of non-core assets if possible.

2. Equity Injection:

   • Consider new capital injections from existing shareholders or new investors to strengthen the equity base and reduce gearing risk.

3. Cost Control:

   • Review operating expenses rigorously to reduce overheads and improve net cash flow.

4. Financial Monitoring:

   • Implement more detailed internal financial reporting beyond micro-entity accounts to track cash flow and profitability actively.

5. Profitability Focus:

   • Explore opportunities to increase rental income or diversify income streams to boost profitability and build reserves.

6. Professional Advice:

   • Engage insolvency or restructuring advisors proactively to plan for financial recovery or to avoid formal insolvency processes.

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