PPS PROPERTY MANAGEMENT LTD

Executive Summary

PPS Property Management Ltd exhibits signs of financial strain with worsening working capital and declining net assets, despite a stable fixed asset base and improved cash reserves. The company is solvent but faces liquidity challenges that require urgent working capital management and debt restructuring. With strengthened governance and focused operational improvements, the company can restore financial health and sustain its property management business.

PPS PROPERTY MANAGEMENT LTD - Analysis Report

Company Number: 13253806

Analysis Date: 2025-07-20 13:01 UTC

Financial Health Assessment for PPS Property Management Ltd as of 31 March 2024

---

1. Financial Health Score: C

Explanation:
PPS Property Management Ltd shows mixed financial signals. While the company maintains positive net assets and has a reasonable fixed asset base, there are concerning liquidity issues with persistent negative net current assets and a decline in net assets over the last year. These symptoms indicate financial strain despite overall solvency. The company is somewhat stable but requires attention to working capital management and debt levels to improve financial wellness.

---

2. Key Vital Signs

Metric	2024 (£)	2023 (£)	Interpretation
Fixed Assets	90,000	95,000	Stable asset base, slight reduction possibly due to depreciation or disposal.
Current Assets	19,672	26,721	Decline in liquid and short-term assets; cash increased moderately but debtors halved.
Current Liabilities	29,656	33,629	Decrease in short-term liabilities, but still sizeable relative to current assets.
Net Current Assets (Working Capital)	-9,984	-6,908	Negative working capital worsened, indicating liquidity pressure. “Symptoms of distress” in managing short-term obligations.
Non-current Liabilities	57,600	57,600	Stable long-term debt, a significant burden compared to equity.
Net Assets (Equity)	19,574	26,501	Decreased by ~26%, indicating retained earnings drawdown or losses.
Share Capital	60	60	Minimal share capital, typical of small private companies.
Cash and Cash Equivalents	7,687	3,566	Healthy cash flow improvement, doubling cash reserves, a positive sign.
Debtors	11,985	23,155	Significant decrease, could indicate improved collections or reduced sales.

Additional Notes:

• The company operates in the real estate management sector, owning investment property (£90k).
• The company is small and entitled to audit exemption.
• Directors have changed recently, with one resignation in May 2024, which may impact governance dynamics.

---

3. Diagnosis: Financial Condition Overview

Liquidity and Working Capital:
The company suffers from a chronic shortage of working capital, as evidenced by negative net current assets which have worsened from £-6,908 to £-9,984. This is akin to a patient with a weak pulse—insufficient short-term resources to meet immediate liabilities, a “symptom of financial distress.” Although cash reserves have improved, the overall current asset base has contracted, primarily due to a sharp fall in debtors. This could reflect improved credit control or a reduction in sales activity, which requires monitoring.

Solvency and Capital Structure:
Net assets remain positive at £19,574 but have declined by over 25% year on year. The company carries significant long-term liabilities (£57,600), which is almost three times its equity, indicating a leveraged position. This leverage is a risk factor, similar to a patient with high blood pressure—it increases stress on the business and limits flexibility.

Profitability and Retained Earnings:
Retained earnings have fallen from £26,441 to £19,514, suggesting the company may have experienced losses or paid out dividends exceeding profits. The absence of profit and loss details limits a full assessment, but the reduced equity indicates less internal buffer to absorb shocks.

Asset Quality:
Fixed assets are primarily investment property valued at £90,000, slightly lower than last year. This stable asset base is a positive sign, representing a tangible foundation for the business. However, the decline may indicate depreciation or a revaluation reflecting market conditions.

Governance and Management:
Recent director changes could affect strategic direction and operational continuity. Stability in leadership is crucial for “financial health,” much like consistent care is essential for a patient’s recovery.

---

4. Recommendations: Path to Financial Wellness

1. Improve Working Capital Management:

   • Accelerate debtor collections and review credit terms to boost cash inflows.
   • Negotiate longer payment terms with suppliers to ease short-term cash demands.
   • Consider short-term financing options only as a bridge, not a cure.

2. Strengthen Profitability:

   • Analyze the profit and loss drivers closely once available, focusing on cost control and pricing strategies.
   • Explore opportunities to increase revenues from property management and related services.

3. Debt Restructuring:

   • Engage with lenders to renegotiate terms on the long-term liability of £57,600 to reduce interest burden or extend repayment periods.
   • Avoid taking on additional debt without clear repayment plans.

4. Governance and Strategic Planning:

   • Ensure active and stable board oversight with clear roles among directors.
   • Develop a robust business plan addressing cash flow forecasting and investment needs.

5. Monitor Asset Values:

   • Regularly review investment property valuations to ensure balance sheet accuracy.
   • Consider potential asset sales if liquidity needs become critical.

6. Financial Reporting and Transparency:

   • Prepare and file full profit and loss accounts to provide stakeholders with complete financial visibility.
   • Use management accounts monthly to detect early “symptoms” of financial issues.

---