KANDASAMY PROPERTIES LIMITED

Executive Summary

Kandasamy Properties Ltd is showing signs of recovery with a modest profit and positive equity in 2024, moving away from earlier losses. However, significant liquidity challenges and high debt levels pose ongoing risks that require careful cash flow management and debt restructuring. With focused financial discipline, the company can strengthen its resilience and improve its long-term stability.

KANDASAMY PROPERTIES LIMITED - Analysis Report

Company Number: 13453650

Analysis Date: 2025-07-20 17:28 UTC

Financial Health Assessment for KANDASAMY PROPERTIES LIMITED as at 30 June 2024

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1. Financial Health Score: C

Explanation:
The company shows signs of partial recovery from earlier distress but still carries notable liquidity and leverage risks. The positive net assets and profits in 2024 indicate improvement, yet substantial current liabilities exceeding current assets ("symptoms of cash flow strain") and heavy reliance on debt highlight moderate financial vulnerability.

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2. Key Vital Signs

Vital Sign	Metric (2024)	Interpretation
Turnover	£20,361	Modest revenue consistent with a small property letting business
Operating Profit	£10,091	Positive operating profit suggests operational efficiency
Profit for the Year	£4,800	Net profit after tax, indicating underlying business profitability
Current Assets	£17,650	Includes £16,282 cash — a very low buffer relative to liabilities
Current Liabilities	£253,212	Significantly exceeds current assets; indicates tight liquidity and potential cash flow stress
Net Current Assets	-£235,562	Negative working capital ("symptom of liquidity distress")
Total Assets	£488,394 (investment property)	Significant fixed asset base, mainly in residential rental properties
Net Assets (Equity)	£2,552	Positive shareholder equity after years of losses; mild improvement
Long-term Debt	£250,280	High leverage with mortgage-backed loans secured on property
Cash Flow Indicator	£16,282 cash	Low cash reserves compared to liabilities; signals tight cash flow management
Profit & Loss Reserve	£2,452	Positive retained earnings indicating accumulated profits

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3. Diagnosis

Kandasamy Properties Ltd is a small-scale property letting company showing signs of cautious recovery after previous financial strain. The company’s balance sheet tells a story akin to a patient who has been unwell but is now stabilizing:

• Vital Signs Reveal: The company turned a modest profit in 2024, moving from a loss-making position in prior years, which is a positive sign of operational health and improved management of expenses.
• Liquidity Symptoms: However, the current liabilities dwarf current assets by a wide margin, revealing "symptoms of liquidity distress." This means the company might struggle to meet short-term obligations without refinancing or asset sales.
• Leverage Concerns: The company has high leverage with £250k of bank loans secured by mortgage against its investment properties, indicating significant financial risk if rental income or property values decline.
• Asset Base: The investment properties valued at nearly half a million pounds provide a solid asset foundation; however, the ability to convert these into cash quickly (liquidity) in distress scenarios may be limited.
• Profitability: Operating profit and net profit show the company can generate earnings, but the relatively low turnover and profit margins suggest limited buffer against unexpected expenses or market downturns.
• Shareholder Equity: A positive but very slim equity base means the company has only just returned to a net asset positive state, implying earlier periods of losses were significant.

Overall, the company's financial "pulse" is improving but remains fragile, especially on liquidity and debt servicing fronts. Without improvements in cash flow management or reduction of liabilities, the financial health risks remain elevated.

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4. Recommendations

To strengthen the financial wellness and improve the prognosis, the company should consider the following:

• Improve Liquidity ("Boost the bloodstream"):

  • Negotiate longer payment terms or refinancing with lenders to reduce immediate cash flow pressures.
  • Accelerate debtor collections and optimize rent collection processes.
  • Maintain or increase cash reserves to cover imminent liabilities.

• Debt Management ("Reduce the financial strain"):

  • Explore opportunities to refinance or consolidate existing debt to reduce interest payments and extend maturity.
  • Consider partial sale of non-core assets or properties with lower yield to pay down debt.

• Operational Efficiency:

  • Continue controlling administrative expenses to maintain profitability margins.
  • Explore ways to increase rental income or diversify property portfolio to improve turnover.

• Financial Monitoring:

  • Implement regular cash flow forecasting to anticipate liquidity gaps early.
  • Track key ratios monthly, especially current ratio and debt-to-equity, to gauge ongoing financial health.

• Strategic Planning:

  • Evaluate market trends in residential letting to foresee risks and opportunities.
  • Consider seeking professional financial advice to optimise capital structure and tax planning.

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