PROPERTY BY KM LIMITED

Executive Summary

Property By KM Limited has demonstrated asset growth through investment properties but remains financially vulnerable due to negative equity and working capital deficits. The company’s liquidity position and heavy reliance on external financing warrant conditional credit approval with close monitoring of cash flow and debt servicing. Continued growth in property valuations is a positive indicator but must translate into improved profitability and equity to support sustainable credit risk.

PROPERTY BY KM LIMITED - Analysis Report

Company Number: 13887783

Analysis Date: 2025-07-20 17:15 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Property By KM Limited shows some positive signs such as growth in fixed assets (investment properties) and increasing fair value reserves, indicating asset appreciation. However, the company is currently reporting net liabilities and negative shareholders’ funds, with substantial current liabilities exceeding current assets, resulting in negative working capital. The company is relatively new (incorporated in 2022) and has not yet demonstrated consistent profitability or equity growth. Credit approval should be conditional on close monitoring of cash flow, repayment capacity, and debt servicing, especially given reliance on director loans and bank loans increasing significantly over the last year.

2. Financial Strength:
   The balance sheet reveals that fixed assets (investment properties) increased from £131k to £261k, reflecting property acquisitions and revaluation gains, which supports underlying asset strength. However, the company’s net current liabilities worsened slightly from -£100k to -£84k, showing ongoing working capital stress. Total liabilities have increased markedly, particularly long-term bank loans rising from £63.7k to £190.9k. Consequently, net liabilities reduced slightly but remain negative at -£21.7k. Shareholders’ funds remain negative (-£54.7k), indicating the company’s equity base is weak and reliant on external financing rather than retained earnings.

3. Cash Flow Assessment:
   Cash at bank improved significantly from £1k to £17k, which is a positive liquidity sign but still low relative to current liabilities of £101k. Debtors are minimal and stable, suggesting limited receivables risk. The company relies heavily on director loan accounts (£99k) and bank loans, which are significant components of current and long-term liabilities. Negative net current assets suggest the company may face short-term liquidity challenges and needs to ensure sufficient cash inflows or refinancing to meet obligations. The cash flow from operations is not disclosed but should be reviewed to confirm if operating income can cover interest and principal repayments.

4. Monitoring Points:

• Working capital trends and ability to improve net current assets
• Timely servicing of bank loans and director loans
• Cash flow generation from property lettings and sales activities
• Movements in investment property valuations and fair value reserves
• Any changes in directors' loan balances or additional equity injections
• Filing deadlines and compliance status (currently up to date)
• Potential impact of market conditions on property values and rental income