STEPHEN AND ADRIANA PROPERTIES LTD

Executive Summary

Stephen and Adriana Properties Ltd shows a fragile but improving financial position, with very thin equity and persistent liquidity challenges due to high current liabilities and low current assets. The company must prioritize improving working capital and restructuring debt to avoid financial distress. With careful management and possible capital support, the outlook can stabilize and strengthen.

STEPHEN AND ADRIANA PROPERTIES LTD - Analysis Report

Company Number: SC721759

Analysis Date: 2025-07-20 16:47 UTC

Financial Health Assessment of STEPHEN AND ADRIANA PROPERTIES LTD

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1. Financial Health Score: C

Explanation:
The company demonstrates some resilience with positive net assets in the latest year, recovering from prior deficits. However, significant liquidity concerns exist due to persistent negative net current assets (working capital deficit) and high current liabilities relative to current assets. The financial position is fragile but not critical, warranting cautious optimism with careful management.

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2. Key Vital Signs

Metric	2024 (£)	Interpretation
Fixed Assets	135,194	Stable investment in long-term property assets.
Current Assets	5,993	Very low liquid assets (cash, receivables).
Current Liabilities	97,680	High short-term obligations—potential liquidity strain.
Net Current Assets (Working Capital)	(35,307)	Negative: symptoms of cash flow pressure.
Total Assets Less Current Liabilities	99,887	Reflects asset backing after short-term debts.
Creditors (Long-term)	97,680	Significant long-term debt burden.
Net Assets (Equity)	1,326	Slightly positive equity—balance sheet just emerging from previous losses.
Shareholders’ Funds	1,326	Equity funded by shareholders but very thin margin.

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3. Diagnosis: Financial Condition Analysis

• Liquidity Symptoms: The company’s "pulse" reveals a persistent working capital deficit, indicating the business struggles to cover its immediate liabilities with short-term assets. This is akin to a patient showing signs of dehydration or low blood pressure—critical functions are under stress and need attention.

• Solvency Status: Despite liquidity concerns, the company shows a slight improvement from prior years, moving from a negative net asset position (£-2,219) to a marginally positive one (£1,326). This suggests some recovery or additional capital injection improving the "immune system" of the balance sheet.

• Asset Composition: The bulk of the company's value lies in fixed assets (property), which are illiquid and cannot quickly be converted to cash to meet short-term obligations. This may exacerbate cash flow difficulties if operational cash inflows are insufficient.

• Debt Burden: High levels of both current and long-term liabilities indicate ongoing financial stress. The company is reliant on external funding (creditors) to sustain operations, which is a vulnerability if creditors call in debts or if refinancing is not available.

• Operational Health: The company has no employees, indicating either a small, possibly owner-managed operation or an asset management entity. Lack of trading profits disclosed (no income statement filed) limits insight into operational cash generation, but the negative working capital signals challenges in daily operational funding.

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4. Recommendations: Steps to Improve Financial Wellness

1. Improve Liquidity Management:

   • Increase current assets by accelerating receivables collection or increasing cash reserves.
   • Negotiate extended payment terms with creditors to reduce immediate cash outflows.
   • Consider short-term financing solutions to ease working capital strain.

2. Strengthen Capital Base:

   • Explore capital injections or shareholder loans to bolster equity and reduce reliance on creditor funding.
   • Reassess fixed asset utilization—consider asset sales or leasing to improve cash flow if feasible.

3. Cost Control and Cash Flow Monitoring:

   • Implement rigorous cash flow forecasting to anticipate liquidity crunches.
   • Minimise discretionary expenditure and delay non-critical investments.

4. Strategic Review of Debt Structure:

   • Engage with lenders to restructure or refinance high-interest or short-term debt into longer maturities to relieve pressure on current liabilities.
   • Monitor covenant compliance to avoid triggering default events.

5. Enhance Financial Reporting:

   • Prepare and review a full profit and loss statement regularly to diagnose operational profitability and cash generation capability.
   • Seek professional advice on tax planning and financial optimization.

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Medical Analogy Summary

The company shows signs of financial distress similar to a patient with low circulating volume (cash) and a fragile cardiovascular system (equity). Although the "organ" (asset base) is intact, the blood flow (liquidity) is insufficient to meet immediate demands, risking operational collapse if not addressed. Timely interventions focusing on replenishing circulating assets and reducing short-term liabilities are critical to restore financial "vitality."

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