SANDBOX INVESTMENTS LTD

Executive Summary

Sandbox Investments Ltd possesses a strong fixed asset base in investment property but suffers from significant liquidity and solvency challenges, reflected in negative working capital and shareholders’ funds. Immediate actions to improve cash flow, restructure debt, and strengthen equity are essential to stabilize its financial health and ensure long-term viability.

SANDBOX INVESTMENTS LTD - Analysis Report

Company Number: 12939653

Analysis Date: 2025-07-20 14:28 UTC

Financial Health Assessment Report for SANDBOX INVESTMENTS LTD
Assessment Date: Financial Year End 31 May 2024

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1. Financial Health Score: D

Explanation:
The company is currently operating with a negative net asset position and significant current liabilities exceeding current assets, resulting in negative working capital. Despite holding substantial fixed assets (investment property), the liabilities and liquidity position show symptoms of financial distress. The financial structure suggests vulnerability with an unfavorable balance sheet and cash flow constraints.

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2. Key Vital Signs

Metric	Value (2024)	Interpretation
Fixed Assets	£782,500	Strong asset base primarily in investment property.
Current Assets	£8,560	Very low liquidity; cash and debtors insufficient for short-term needs.
Current Liabilities	£502,584	Very high short-term obligations relative to current assets.
Net Current Assets	£-314,110	Negative working capital; indicates cash flow pressure.
Total Assets less Current Liabilities	£468,390	Positive after deducting current liabilities, primarily due to fixed assets.
Creditors due after one year	£502,584	Large long-term debt, secured by investment property.
Net Assets / Shareholders Funds	£-34,194	Negative equity; company liabilities exceed assets.
Share Capital	£1.00	Minimal equity base, indicating limited shareholder investment.
Cash at Bank	£5,059	Low cash reserves, potentially insufficient for operational needs.

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3. Diagnosis

The company shows symptoms of financial distress, primarily from its liquidity and solvency positions. The negative net current assets (working capital) indicate SANDBOX INVESTMENTS LTD may struggle to meet short-term obligations without additional financing or cash inflows. This "cash flow weakness" is a critical vital sign that could lead to operational difficulties if not addressed.

The balance sheet is "overdrawn" with net liabilities (negative equity), pointing to a solvency concern. However, the company's fixed assets, mainly investment property valued at £772,500, provide a tangible asset base that supports the company's borrowing (£502,584 bank loan secured by property). The company is reliant on this asset and external financing to maintain operations.

The director's report mentions ongoing support from the director and lenders, suggesting goodwill and backing to maintain the business as a going concern. However, the financials do not show any significant turnaround yet, as net liabilities have only marginally improved compared to the prior year.

There is also a notable reduction in director's advances to zero during the year, which could suggest repayment of director loans, possibly improving the company's liability structure slightly.

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4. Recommendations: Prescription for Financial Wellness

Immediate Actions to Address Symptoms:

• Improve Liquidity:
  Seek to bolster cash reserves either through additional equity injection, refinancing existing debt to reduce near-term repayments, or selling non-core assets if possible. Healthy cash flow is essential to meet immediate liabilities and avoid solvency crisis.

• Debt Management:
  Negotiate with lenders for better terms on the £502k bank loan, potentially restructuring repayments or extending maturities to ease short-term pressure. This can improve the "current liabilities" burden and relieve working capital stress.

• Equity Strengthening:
  Consider shareholder capital injections or attracting new investors to improve the negative shareholders’ funds position, thereby strengthening the balance sheet and investor confidence.

• Operational Review:
  Although the company is asset-heavy and likely investment property-focused, review operational expenses and revenue generation to ensure sustainable income streams and prevent further losses.

• Regular Financial Monitoring:
  Implement tighter financial controls and forecasting to detect early signs of distress and manage cash flow proactively. This will provide early warning signals and enable timely corrective action.

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Medical Analogy Summary

SANDBOX INVESTMENTS LTD currently shows "symptoms of distress" such as negative working capital and negative equity, akin to a patient presenting with low blood pressure and poor circulation. The "healthy asset" (investment property) is like a vital organ functioning well, but the "circulatory system" (cash flow) is weak. Without prompt intervention—improving liquidity, managing debt, and strengthening equity—the company's prognosis could worsen, risking insolvency.

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