MARSAN PROPERTIES LIMITED

Executive Summary

MARSAN PROPERTIES LIMITED shows modest profitability and a solid property asset base but faces significant liquidity challenges due to high long-term debt and negative working capital. The company’s financial health is stable yet fragile, requiring careful cash flow management and a strategic focus on debt reduction and revenue growth to ensure sustainable financial wellness.

MARSAN PROPERTIES LIMITED - Analysis Report

Company Number: 12700856

Analysis Date: 2025-07-29 14:34 UTC

Financial Health Assessment for MARSAN PROPERTIES LIMITED

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1. Financial Health Score: C

Explanation:
The company exhibits a stable but fragile financial condition. It shows consistent, albeit very modest, profitability and positive net assets growth. However, the liquidity position is tight, with current liabilities exceeding current assets, indicating potential cash flow stress risks. The balance sheet is dominated by significant long-term debt relative to equity, suggesting financial leverage that requires close monitoring.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Turnover	12,375	Very low revenue, reflective of a small-scale property letting operation.
Gross Profit	10,941	Healthy gross margin (~88%), indicating good control over direct costs.
Operating Profit	6,690	Modest operating profit, improving from prior year.
Profit Before Tax	1,120	Small profit, indicating limited buffer for operational risks.
Cash on Hand	9,606	Limited cash reserves, marginally above current assets.
Current Assets	9,606	Entirely cash; no receivables or stock, simplifying working capital.
Current Liabilities	134,352	Significantly higher than current assets, indicating a liquidity mismatch.
Net Current Assets	(124,746)	Negative working capital, a critical symptom of financial strain.
Fixed Assets (Property)	127,602	Material asset base in property, core business asset.
Net Assets (Equity)	2,856	Positive but very low equity relative to liabilities, indicating high leverage.
Long-Term Debt	134,352	Substantial bank loans, principal cause of liquidity pressure.

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3. Diagnosis: Financial Condition Overview

MARSAN PROPERTIES LIMITED is a young, small-scale property letting company with a core asset in land and buildings valued at £127,602. Over the last 4 years, the company has maintained a low but steadily increasing turnover (~£12k) and has achieved modest profitability.

Symptoms of Concern:

• Liquidity Risk: The company’s current liabilities are heavily outweighed by current assets (which are purely cash), resulting in a negative working capital position. This suggests the company may struggle to meet short-term obligations without refinancing or asset liquidation.

• Financial Leverage: The substantial long-term debt (£134k) relative to equity (£2.8k) indicates high leverage. This magnifies financial risk in case of revenue downturns or increased interest rates.

• Thin Profit Margins & Cash Flow: Although operating profits exist, the profit before tax is slim, and interest costs are significant (£5,570), which reduces cash flow available for reinvestment or debt servicing.

Signs of Strength:

• The fixed asset base is stable and unchanged, representing a tangible asset that can support borrowing or be leveraged for liquidity.
• Profitability is positive and improving, indicating operational controls are effective.
• No overdue filings or compliance issues, which supports operational governance.

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4. Recommendations: Steps to Improve Financial Wellness

1. Enhance Liquidity Management:

   • Develop a cash flow forecast to monitor timing of inflows and outflows.
   • Negotiate with lenders to restructure short-term liabilities or extend repayment terms to ease immediate cash pressure.
   • Explore options to increase cash reserves through additional equity injection or asset sales if feasible.

2. Increase Revenue Streams:

   • Evaluate opportunities to increase occupancy or diversify property letting to improve turnover.
   • Consider value-added services or cost efficiencies to boost gross and operating margins.

3. Debt Reduction Strategy:

   • Use operating profits to gradually reduce high-interest bank loans.
   • Review interest rates and consider refinancing options to reduce interest expense and improve profitability.

4. Strengthen Equity Base:

   • Engage shareholders for potential capital infusion to improve net asset ratio and reduce leverage risk.
   • Retain profits where possible to build reserves.

5. Operational Controls & Monitoring:

   • Maintain tight control over administrative and distribution costs to sustain profitability.
   • Regularly review financial KPIs to detect early symptoms of distress and act proactively.

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Medical Analogy Summary

MARSAN PROPERTIES LIMITED is like a patient with a stable but fragile heart—its core asset base (property) is healthy and strong, but the blood flow (cash liquidity) is thin and irregular due to heavy debt burden. The company is managing to keep a steady pulse (modest profits), but the symptoms of liquidity strain and high leverage suggest the need for careful monitoring and intervention to avoid financial shock.

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