PHOENIX PROPERTY LETTINGS LIMITED

Executive Summary

Phoenix Property Lettings Limited shows improved net assets thanks to property revaluation but continues to face liquidity challenges due to negative working capital and high debt levels. While the company’s asset quality provides a solid foundation, focused efforts on cash flow management and debt restructuring are essential to strengthen financial health.

PHOENIX PROPERTY LETTINGS LIMITED - Analysis Report

Company Number: SC680516

Analysis Date: 2025-07-29 20:33 UTC

Financial Health Assessment of PHOENIX PROPERTY LETTINGS LIMITED

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1. Financial Health Score: C

Explanation:
The company shows a mixed financial picture. While it has positive net assets and equity in the latest year, there are clear symptoms of financial strain such as negative working capital (net current assets) and significant current and long-term liabilities. The recent positive fair value adjustment on investment property improves the balance sheet but underlying liquidity concerns remain. This earns a middle grade "C" reflecting cautious optimism but notable risks.

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2. Key Vital Signs

Metric	2023 Value	Interpretation
Net Assets	£92,013	Positive equity, improved from a negative position previously, indicating some recovery or asset revaluation.
Net Current Assets	-£99,322	Negative working capital, a symptom of liquidity stress; current liabilities exceed current assets by a significant margin.
Cash at Bank	£1,116	Very low cash reserves, indicating limited immediate liquidity to meet obligations.
Total Assets Less Current Liabilities	£400,291	Shows overall assets after covering short-term debts; improved from the previous year.
Share Capital	£100	Nominal share capital, typical for small private companies.
Long-Term Creditors	£308,278	High long-term debt, mainly secured as per notes, increasing financial leverage and fixed obligations.
Investment Property Value	£499,613	Principal asset, recently revalued upward by £80,000, indicating potential for capital strength.

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3. Diagnosis

• Liquidity Strain (Symptoms of Distress): The company’s working capital is in negative territory by approximately £99k, meaning short-term liabilities significantly exceed short-term assets. This points to a liquidity crunch where the company may struggle to cover immediate obligations without additional financing or asset sales.

• Leverage and Debt Load: With over £308k in creditors due after one year and a fixed/floating charge held by TSB Bank PLC over assets, the company is highly leveraged. This increases financial risk, especially if rental income or property valuations decline.

• Asset Quality: The primary asset is investment property valued at nearly £500k. The recent £80k revaluation surplus is a positive sign and suggests underlying asset quality is good, potentially providing a buffer against financial distress. However, the £88k disposal of property in the year indicates ongoing portfolio adjustments.

• Profitability and Retained Earnings: Retained earnings have moved from negative to positive (£11,913), signaling improved profitability or reduced losses. However, the company has no reported employees and limited cash flow, so the quality of earnings should be monitored closely.

• Financial Position Trajectory: The company has improved net assets from negative to positive, largely due to property revaluation and disposal strategies. Yet, persistent negative working capital and high debt levels remain concerns for operational health.

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4. Recommendations

Improve Liquidity:

• Enhance cash reserves by accelerating rent collections, renegotiating payment terms with creditors, or arranging short-term financing.
• Explore sale or refinancing options for less productive properties to reduce current liabilities.

Debt Management:

• Engage with lenders (TSB Bank PLC) to potentially restructure debt terms to ease near-term cash flow pressures.
• Monitor interest rates closely given the related party loan interest is tied to Bank of England base rate + 2.5%.

Operational Efficiency:

• Since the company has no employees, ensure property management and maintenance costs are tightly controlled.
• Consider strategic partnerships or outsourcing to maintain cost discipline.

Financial Monitoring:

• Regularly monitor working capital and liquidity ratios monthly rather than just annual reporting.
• Update asset valuations prudently and transparently to reflect true market conditions.

Strategic Planning:

• Develop a medium-term plan to reduce leverage and build positive working capital.
• Assess market conditions for letting properties to maximize rental income and occupancy rates.

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Medical Analogy Summary:

PHOENIX PROPERTY LETTINGS LIMITED exhibits some "symptoms of financial distress," notably "poor liquidity" (negative working capital) akin to a patient with low blood pressure risking organ function. However, the "healthy asset base" (investment properties with recent revaluation gains) acts like a strong immune system providing resilience. The "financial pulse" (net assets) has improved, but careful "lifestyle adjustments" (debt management and cash flow improvements) are needed to avoid deterioration into a "critical condition."

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