AZAH PROPERTIES LTD

Executive Summary

AZAH PROPERTIES LTD shows early signs of financial strain with negative net assets and working capital, indicating liquidity and solvency challenges. The company's strong investment property asset provides a base for recovery, but urgent actions to improve cash flow, restructure debt, and strengthen equity are essential to restore financial health. Without intervention, the company risks worsening distress, but with focused management, recovery prospects remain viable.

AZAH PROPERTIES LTD - Analysis Report

Company Number: 14836397

Analysis Date: 2025-07-20 16:08 UTC

Financial Health Assessment for AZAH PROPERTIES LTD (as of 31 May 2024)

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1. Financial Health Score: D

Explanation:
The company shows significant financial strain marked by negative net assets and net current liabilities, indicating symptoms of financial distress. While it holds valuable fixed assets (investment property), high levels of liabilities, particularly long-term debts, outweigh its equity base. The financial outlook is fragile but not yet critical, warranting urgent attention.

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2. Key Vital Signs

Metric	Value	Interpretation
Cash at Bank	£10,914	Low cash reserves suggest limited liquidity for day-to-day operations or emergency needs.
Current Liabilities	£50,199	Obligations due within one year; sizable relative to cash and current assets.
Net Current Assets (Working Capital)	-£39,285	Negative working capital signals liquidity stress; company owes more short-term than it owns.
Fixed Assets (Investment Property)	£343,744	Strong asset base in property, a positive sign of long-term value, but may lack liquidity.
Total Liabilities (Current + Long-term)	£362,230	High total liabilities, with bank loans £242,031 and group debts £70,000, reflecting leverage.
Net Assets / Shareholders Funds	-£7,572	Negative equity indicates company’s liabilities exceed its assets, a red flag for solvency risk.

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3. Diagnosis: What the Financial Data Reveals

AZAH PROPERTIES LTD is in an early but precarious financial condition. The company has invested in an investment property valued at £343,744, which forms the backbone of its asset base — akin to a vital organ supporting its overall health. However, the presence of negative net current assets (working capital) and negative net assets reveals symptoms of distress, particularly liquidity and solvency challenges.

The company’s liabilities, notably a bank loan (£242,031) and amounts owed to group undertakings (£70,000), are greater than both its fixed and current assets combined. This imbalance mirrors an unhealthy cardiovascular system where the ‘debt pressure’ exceeds the ‘asset supply’, risking financial failure if not addressed.

The low cash balance (£10,914) relative to current liabilities (£50,199) suggests limited buffer for short-term obligations, indicating potential difficulties in meeting immediate payment demands without refinancing or asset liquidation.

The business is newly incorporated (May 2023), so some of these imbalances may reflect start-up phase financing and capital structure development. However, the negative equity position requires corrective measures to restore financial viability.

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4. Recommendations: Specific Actions to Improve Financial Wellness

a. Improve Liquidity (Healthy Cash Flow):

• Increase cash reserves by accelerating receivables collection or injecting additional capital.
• Manage payables to extend payment terms with creditors, easing short-term cash pressure.

b. Debt Restructuring (Reduce Financial Burden):

• Negotiate with lenders to restructure bank loans to more manageable terms or seek refinancing at lower interest rates.
• Explore options to convert intercompany debts into equity to strengthen shareholders’ funds.

c. Asset Utilization and Valuation:

• Review the investment property’s market value and consider partial sale or leveraging the property via refinancing to generate liquidity.
• Ensure ongoing valuation aligns with market conditions to reflect true asset health.

d. Strengthen Capital Base:

• Injection of fresh equity capital from existing or new shareholders to offset negative net assets and improve solvency ratios.
• Consider business plan revision to outline clear profitability path and reassure stakeholders.

e. Monitoring and Reporting:

• Implement monthly financial reviews focusing on cash flow forecasts and working capital management.
• Maintain timely and transparent financial reporting to build creditor and investor confidence.

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Medical Analogy Summary

AZAH PROPERTIES LTD currently exhibits symptoms consistent with financial stress: negative working capital and shareholder equity indicate its ‘financial heart’ is under strain, risking a potential ‘collapse’ if liquidity issues are not managed. However, the presence of valuable fixed assets is analogous to having vital organs still functioning, offering a path to recovery if appropriate ‘treatment’ via capital restructuring and cash flow management is undertaken promptly.

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