BKNH PROPERTIES LTD

Executive Summary

BKNH Properties Ltd is currently facing liquidity and solvency challenges, marked by negative working capital and shareholders’ funds despite solid property assets. Immediate attention to cash flow improvement and debt restructuring is crucial to stabilize its financial health and secure future viability.

BKNH PROPERTIES LTD - Analysis Report

Company Number: 13661047

Analysis Date: 2025-07-29 14:27 UTC

Financial Health Assessment for BKNH PROPERTIES LTD as at 31 March 2024

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1. Financial Health Score: D

Explanation:
The company exhibits 'symptoms of financial distress' evidenced by persistent negative shareholders' funds and net current liabilities, indicating a fragile financial condition. Despite maintaining substantial fixed assets, the heavy current liabilities and negative working capital suggest liquidity strain and potential solvency concerns. The score D reflects a need for urgent attention to financial restructuring to restore health.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Fixed Assets	541,412	Strong investment in long-term assets (likely property), a healthy asset base.
Current Assets	4,479	Very low liquid assets, indicating poor short-term liquidity or 'thin' cash reserves.
Current Liabilities	388,085	High short-term debts to be settled within a year, a significant burden.
Net Current Assets	(183,228)	Negative working capital signaling 'cash flow distress' and difficulty in meeting short-term obligations.
Total Assets less CL	358,184	Positive value after deducting current liabilities, showing asset backing but affected by long-term debts.
Creditors > 1 year	388,085	Large long-term liabilities, potentially loans or mortgages against property.
Shareholders’ Funds	(31,401)	Negative equity indicating accumulated losses or over-leverage; 'symptom of insolvency risk'.

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3. Diagnosis

• Liquidity & Cash Flow: The company is suffering from a 'cash flow cold' — with only £4,479 in current assets but £388,085 in current liabilities, it lacks adequate liquid resources to cover short-term debts. This mismatch creates pressure on day-to-day operations and creditor relations.

• Solvency: Negative shareholders’ funds (-£31,401) reflect that the company’s total liabilities exceed its assets, a 'red flag' for solvency. Although fixed assets (property) are substantial, much of the value is likely tied up and not easily convertible to cash in the short term.

• Leverage: The company carries significant long-term liabilities (£388,085) alongside high short-term debts, indicating a leveraged capital structure. This amplifies financial risk, especially if rental income or property valuations decline.

• Trend: Compared with prior years, the company’s financial position has shown little improvement. Negative net current assets persist, and shareholders' funds remain negative, suggesting ongoing 'symptoms of financial strain' without effective corrective measures.

• Business Activity: Operating in real estate letting (SIC 68209) implies revenues depend on rental income. The low current assets may indicate delays or difficulties in collecting rents or insufficient reserves to cover liabilities.

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4. Recommendations

• Improve Liquidity: Prioritize increasing cash or current assets to cover short-term liabilities. This could include accelerating rent collections, negotiating extended payment terms with creditors, or injecting working capital.

• Restructure Debt: Engage lenders to renegotiate terms on current and long-term liabilities, possibly converting some short-term debts into longer maturities to ease liquidity pressures.

• Asset Utilization: Review fixed assets for potential sale or refinancing opportunities to generate cash without undermining core business operations.

• Financial Controls: Implement tighter cash flow management and forecasting to detect and prevent future liquidity shortfalls.

• Equity Injection: Consider capital infusion from existing shareholders or new investors to restore positive net worth and improve solvency.

• Operational Efficiency: Evaluate property management and letting strategies to maximize rental income and reduce operational costs.

• Ongoing Monitoring: Regularly track key financial indicators to monitor recovery progress and adjust strategies accordingly.

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Medical Analogy Summary:
BKNH Properties Ltd shows 'symptoms of distress' primarily in liquidity and solvency, akin to a patient with a strong heart (fixed assets) but weak circulation (cash flow). Without immediate intervention to improve working capital and reduce liabilities, the company risks 'financial collapse.' Timely 'treatment' via liquidity improvement and debt restructuring is essential to restore health.

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