REMNANT PROPERTIES LIMITED

Executive Summary

Remnant Properties Limited shows positive equity growth but suffers from significant liquidity challenges reflected in negative working capital. Immediate focus on improving cash flow and managing current liabilities is crucial to avoid financial distress. Strengthening short-term financial resilience will position the company for sustainable growth in the competitive real estate sector.

REMNANT PROPERTIES LIMITED - Analysis Report

Company Number: 13639929

Analysis Date: 2025-07-29 20:03 UTC

Financial Health Assessment for Remnant Properties Limited

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1. Financial Health Score: C

Explanation:
Remnant Properties Limited demonstrates a mixed financial condition. While it shows positive net assets that have improved over recent years, the company exhibits significant liquidity challenges with large net current liabilities. The balance sheet indicates a build-up of fixed assets and shareholder equity, but current liabilities far exceed current assets, signaling potential cash flow stress. The score "C" reflects a moderate concern level: the company is solvent but faces symptoms of financial strain that need addressing to avoid future distress.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Fixed Assets	137,941	Growing investment in long-term assets, likely property holdings typical for the real estate sector.
Current Assets	2,186	Very low liquid or short-term assets, indicating limited immediate cash or receivables.
Current Liabilities	122,185	High short-term obligations that must be paid within a year, substantially exceeding current assets.
Net Current Assets (Working Capital)	-118,254	Negative working capital suggests liquidity stress; unable to cover short-term debts with assets on hand.
Net Assets (Equity)	18,487	Positive but low equity base, though it nearly quadrupled from last year, showing capital growth.
Shareholders Funds	18,487	Mirrors net assets; indicates owners' stake is positive but modest in size given liabilities.
Employee Headcount	3	Small team consistent with micro-entity status; suggests low operational complexity.

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3. Diagnosis: What the Numbers Reveal

• Liquidity & Cash Flow:
  The company exhibits "symptoms of distress" with significantly negative net current assets (-£118k). Current liabilities (debts due within one year) are about 56 times the current assets, showing a strained short-term liquidity position. This could impact the ability to meet immediate obligations without refinancing or asset liquidation.

• Solvency & Capital Structure:
  Despite liquidity concerns, the company remains solvent with positive net assets (£18.5k), indicating total assets exceed total liabilities. The rise in net assets from £5.2k in 2023 to £18.5k in 2024 suggests gradual strengthening of equity, possibly through retained earnings or capital injections.

• Asset Composition:
  Fixed assets have increased, likely reflecting property acquisitions or capital improvements aligned with the company's real estate letting activities. This long-term asset base supports business operations but is illiquid and cannot quickly cover short-term debts.

• Operational Scale & Control:
  The company is a micro-entity with a small team of 3 employees and three directors who hold significant control, including ownership and voting rights. This structure allows for agile decision-making but also concentrates financial risk among a few individuals.

• Filing & Compliance:
  Accounts and confirmation statements are filed on time, showing good compliance and governance discipline.

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4. Recommendations: Steps to Improve Financial Wellness

1. Improve Liquidity Management:

   • Develop a cash flow forecasting model to predict short-term liquidity needs.
   • Explore options to convert some fixed assets into cash or secure short-term financing to cover current liabilities.
   • Negotiate longer payment terms with creditors where possible to ease immediate cash outflows.

2. Strengthen Working Capital:

   • Increase current assets by accelerating debtor collections or increasing cash reserves.
   • Review operational expenses to reduce unnecessary outflows and preserve cash.

3. Capital Restructuring:

   • Consider equity injections from shareholders to bolster net assets and provide a buffer against liabilities.
   • Evaluate the potential to refinance current liabilities into longer-term debt to improve liquidity ratios.

4. Regular Financial Monitoring:

   • Establish monthly financial health checks focusing on liquidity ratios and working capital.
   • Monitor debtor aging and creditor payment schedules closely to prevent overdue situations.

5. Strategic Asset Management:

   • Assess the performance and return on fixed assets to ensure investments are generating expected income streams.
   • If some property assets underperform, consider divestment or alternative uses to improve cash flow.

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Medical Analogy Summary

Remnant Properties Limited is akin to a patient with a strong heart (positive net assets) but low blood volume (cash and liquid assets), struggling to meet immediate demands (current liabilities). The company’s "circulatory system" (working capital) shows signs of stress, requiring careful management to avoid a liquidity crisis. With timely interventions—improving cash reserves and restructuring debt—the company can regain robust health and sustain growth.

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