RHEAD PROPERTIES LTD

Executive Summary

Rhead Properties Ltd is currently in a financially strained condition marked by negative net assets and high long-term liabilities. While there is some improvement in working capital, the company must prioritize capital strengthening and debt management to stabilize its financial health. Immediate action on liquidity and profitability is essential to prevent further deterioration and support sustainable growth.

RHEAD PROPERTIES LTD - Analysis Report

Company Number: 14127878

Analysis Date: 2025-07-29 19:23 UTC

Financial Health Assessment: RHEAD PROPERTIES LTD

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1. Financial Health Score: D

Explanation:
Rhead Properties Ltd exhibits signs of financial distress with negative net assets and shareholders' funds over the last two years. Although the company maintains some tangible fixed assets, its working capital position is fragile but showing slight improvement. Overall, the company's financial health is below average and requires cautious management to avoid further deterioration.

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2. Key Vital Signs

Metric	31 May 2024	Interpretation
Net Assets	£(3,806) (negative)	Negative net assets indicate liabilities exceed assets, a symptom of financial strain.
Shareholders' Funds	£(3,906) (negative)	Reflects accumulated losses and lack of equity buffer, increasing financial vulnerability.
Net Current Assets (Working Capital)	£768 (positive)	Slightly positive working capital suggests improved liquidity but still very tight.
Cash Balance	£1,364	Low cash reserves imply limited immediate liquidity — akin to a patient with low blood volume.
Fixed Assets (Property)	£74,184	Significant long-term asset base, providing some stability and collateral value.
Current Liabilities	£596	Minimal short-term debts, manageable in the short term.
Non-current Liabilities	£78,758	High long-term liabilities relative to assets, indicating significant leverage or debt burden.
Retained Earnings	£(3,906) deficit	Accumulated losses indicate ongoing operational challenges or capital erosion.

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3. Diagnosis: Financial Condition Overview

• Symptoms of Distress:
  The company shows a classic symptom of financial stress—negative net assets, which means that if the company were to liquidate today, it could struggle to cover all its debts. The deficit has deepened from £(2,105) to £(3,806) over the last year, indicating worsening equity.

• Liquidity Status:
  The working capital has improved from a negative £31,765 to a barely positive £768, suggesting some recovery in short-term liquidity, but cash reserves remain very low (£1,364), which is a fragile "pulse" for day-to-day survival.

• Leverage and Solvency:
  The company carries significant long-term liabilities (£78,758), exceeding the value of its tangible assets (£74,184). This over-leverage is a critical concern akin to a patient with a chronic condition that requires ongoing medical intervention.

• Profitability and Retained Losses:
  The company has reported a loss for the year (£701) and has paid dividends (£1,000) despite the deficit, which could be unsustainable and detrimental to financial health.

• Asset Base:
  The tangible fixed assets (real estate property) provide a stable foundation, but the company's financial "heart" (equity) is weakened due to accumulated losses and liabilities.

• Filing and Compliance:
  The company is current with its accounts and confirmation statement filings, indicating good administrative health.

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4. Recommendations: Steps to Improve Financial Wellness

1. Capital Injection:
   Consider raising equity capital or securing additional funding to restore positive net assets, improving the company’s financial "immune system" to withstand shocks.

2. Debt Restructuring:
   Engage with creditors to restructure long-term liabilities to more manageable terms, easing the "respiratory burden" on cash flows.

3. Cash Flow Management:
   Improve liquidity by managing working capital tightly, delaying non-essential expenditures, and possibly increasing cash reserves to avoid cash flow "fainting spells."

4. Profitability Focus:
   Review operational efficiency and revenue streams to reverse the loss trend, building retained earnings to enhance financial resilience.

5. Dividend Policy Review:
   Suspend dividends until profitability and net asset position recover, preserving cash and equity.

6. Asset Utilisation:
   Explore opportunities to unlock value from tangible assets, such as refinancing property or leveraging for development, to strengthen the balance sheet.

7. Ongoing Monitoring:
   Implement regular financial health check-ups to detect early symptoms of distress and adjust strategy accordingly.

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