NEWMAN KNIGHT PROPERTIES LIMITED

Executive Summary

Newman Knight Properties Limited displays signs of significant liquidity distress with negative working capital exceeding £1.45 million, despite a solid fixed asset base. The company's financial health is currently weak (grade D), requiring urgent cash flow management and possible debt restructuring to avoid operational disruption. Strategic asset monetization and improved financial controls will be critical to restoring stability and ensuring sustainable operations.

NEWMAN KNIGHT PROPERTIES LIMITED - Analysis Report

Company Number: 13554997

Analysis Date: 2025-07-19 12:55 UTC

Financial Health Assessment for Newman Knight Properties Limited

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1. Financial Health Score: D

Explanation:
The company shows critical symptoms of financial distress. Despite possessing long-term fixed assets valued at £1.53 million, the company's liquidity position is severely strained, with current liabilities exceeding current assets by over £1.45 million, resulting in a negative working capital. This negative net current assets figure signals a liquidity crisis — akin to a patient with dangerously low blood pressure. Shareholders' funds have increased but remain modest relative to liabilities, indicating limited equity buffer. Overall, the company's financial health is weak and at risk without intervention.

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2. Key Vital Signs

Metric	2024 Value	Interpretation
Fixed Assets	£1,530,489	Strong asset base, primarily in tangible fixed assets (land/buildings).
Current Assets	£87,789	Predominantly cash (£86,605), indicating some liquidity but insufficient against liabilities.
Current Liabilities	£1,542,115	Very high short-term obligations, possibly loans or creditor payables demanding urgent cash.
Net Current Assets	-£1,454,326	Negative working capital, showing inability to cover short-term debts with short-term assets.
Shareholders' Funds	£76,163	Modest equity, increased from prior year but still low compared to liabilities.
Cash Ratio	0.056 (Cash/Current Liabilities)	Very low cash coverage of current liabilities, indicating liquidity distress.

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3. Diagnosis: What the Numbers Reveal

• Liquidity Crisis ("Weak Pulse"): The most alarming symptom is the severe negative working capital. The company’s current assets are less than 6% of its current liabilities, signaling a critical shortage of liquid resources to meet immediate obligations. This is analogous to a patient who is severely dehydrated — urgent replenishment is needed to sustain operations.

• Asset Concentration ("Structural Strength but Inflexible"): The company’s fixed assets are significant (£1.53m), mainly tangible property. However, these are illiquid and cannot be quickly converted to cash to alleviate short-term pressures without potential loss or delay.

• Equity Cushion ("Thin Skin"): Shareholders' funds have increased from £33,924 (2023) to £76,163 (2024), showing some retained earnings growth or capital injection. However, this equity base is very small relative to liabilities, providing minimal shock absorption against downturns.

• Profit & Loss Information Missing: The absence of an income statement prevents insight into profitability or operational cash flow. However, the negative working capital and large liabilities may suggest ongoing funding challenges.

• Company Size and Risk Profile: As a private limited company engaged in property letting, the company may carry risks linked to property market fluctuations and financing structure.

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4. Recommendations: Steps to Improve Financial Wellness

1. Urgent Cash Flow Management:

   • Prioritize negotiating extended payment terms with creditors to reduce immediate cash outflows.
   • Explore short-term financing options or equity injections to stabilize liquidity ("administer IV fluids" to the company's cash flow).

2. Asset Monetization Strategy:

   • Evaluate possibility of selling or refinancing fixed assets to unlock cash without compromising business operations.
   • Consider leasing or joint ventures to generate income from property assets.

3. Financial Restructuring:

   • Engage with financial advisors to restructure debt, potentially converting some short-term liabilities into longer-term obligations.
   • Review cost structures and operational efficiencies to improve profitability and cash generation.

4. Regular Financial Monitoring:

   • Implement stringent financial controls and forecasting to detect early signs of distress akin to regular health check-ups.
   • Prepare and review management accounts monthly to monitor liquidity and solvency closely.

5. Governance and Transparency:

   • Maintain transparent reporting with stakeholders and lenders to build trust and facilitate negotiations.
   • Consider seeking external audit or independent financial review for credibility.

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