CORE TECH PROPERTIES LTD

Executive Summary

Core Tech Properties Ltd holds strong tangible assets in real estate but faces significant liquidity challenges due to high short-term liabilities exceeding current assets. The company’s net asset growth is promising but overshadowed by negative working capital, indicating potential cash flow distress. Immediate focus on debt restructuring and liquidity management is essential to restore financial health and ensure sustainability.

CORE TECH PROPERTIES LTD - Analysis Report

Company Number: 13628950

Analysis Date: 2025-07-29 18:26 UTC

Financial Health Assessment for CORE TECH PROPERTIES LTD (as of 31 March 2024)

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1. Financial Health Score: C

Explanation:
The company exhibits a mixed financial condition. While it holds substantial fixed assets (land and buildings), it faces significant short-term liquidity pressures, as evidenced by a large deficit in net current assets. The growth in net assets is positive but largely driven by asset acquisitions rather than operational cash flow, indicating underlying financial strain that requires careful management.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Fixed Assets (Tangible)	476,100	Strong asset base in land and buildings, providing collateral and long-term stability.
Current Assets	9,175	Very low current assets, mostly cash; minimal liquid resources for day-to-day operations.
Current Liabilities	288,841	High short-term liabilities, mainly bank loans and overdrafts, indicating immediate repayment pressure.
Net Current Assets	-279,666	Large negative working capital ("symptom of distress"), signaling liquidity risk and cash flow issues.
Net Assets (Equity)	87,643	Positive net worth, showing the company is solvent but reliant on asset backing and external financing.
Shareholders’ Funds	87,643	Equity matches net assets, reflecting retained earnings and capital contributions.
Cash on Hand	8,393	Adequate cash but insufficient relative to short-term liabilities.

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3. Diagnosis

• Liquidity Concerns: The company’s current liabilities exceed current assets by a large margin (£279,666), indicating a "cash flow blockage". This means the business may struggle to meet its short-term obligations without refinancing or asset liquidation. The primary short-term debt is bank loans and overdrafts, which could require urgent attention to avoid default.

• Asset-Heavy but Cash-Light: The substantial fixed asset base (£476,100) in land and buildings is a positive sign and a key strength. However, these are non-liquid assets and cannot quickly be converted to cash if needed. The company’s increasing fixed assets were financed through additional borrowings, especially longer-term debts owed to group undertakings (£108,791).

• Solvency Stable but Fragile: Net assets increased from £32,415 to £87,643, suggesting that the company has built equity, likely through retained earnings or capital injections. Yet, this improvement is overshadowed by the heavy current liabilities and negative working capital, which pose risks to ongoing operational stability.

• No Operational Staff: The company reports zero employees, indicating it may be an investment or holding entity rather than an operational business. This aligns with its SIC classification (letting and operating own real estate), focusing on property rather than trading activities.

• Exemption from Audit: The company qualifies for audit exemption due to size, so financials are unaudited. While normal for small entities, this means external scrutiny is limited.

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4. Prognosis

• Short-Term: The company faces immediate liquidity challenges that could jeopardize its ability to pay creditors on time. Without addressing high short-term debts, it risks default or forced asset sales.

• Medium to Long-Term: If the property assets retain or increase value and the company can restructure or refinance its borrowings, it can stabilize and grow equity further. However, reliance on group loans and bank overdrafts suggests a dependency on related parties and external funding.

• Potential Risks: Market fluctuations in real estate value, rising interest rates on loans, or inability to raise additional capital could exacerbate financial stress.

• Opportunities: Strengthening cash reserves, managing liabilities, and optimizing property income could improve financial health.

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5. Recommendations

1. Liquidity Management:

   • Develop a cash flow forecast to monitor incoming rents and outgoing expenses carefully.
   • Negotiate with lenders to restructure short-term bank loans or extend repayment terms.

2. Debt Restructuring:

   • Explore refinancing options to convert short-term overdrafts into longer-term debt, reducing immediate pressure.
   • Engage with group undertakings to clarify and possibly restructure intra-group loans.

3. Asset Utilization:

   • Assess the rental income potential of the properties to ensure they generate consistent cash flow ("healthy cash flow") to cover debts.
   • Consider selling non-core assets if liquidity issues persist.

4. Financial Controls and Reporting:

   • Even though audit exemption applies, implement regular internal financial reviews to detect and address any early "symptoms of distress."
   • Ensure timely filing of accounts and returns to maintain compliance and credibility.

5. Strategic Planning:

   • Evaluate business model sustainability given zero employees and passive asset management.
   • Consider diversifying income streams or partnerships to reduce financial risks.

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Executive Summary