SK17 PROPERTIES LIMITED

Executive Summary

SK17 PROPERTIES LIMITED has made progress in stabilizing its financial position, moving from negative equity and working capital deficits to marginally positive net assets and working capital. However, the company remains highly leveraged with reduced cash reserves, indicating vulnerability. Focused efforts on cash flow management, debt restructuring, and equity strengthening are recommended to ensure sustainable recovery and improve financial resilience.

SK17 PROPERTIES LIMITED - Analysis Report

Company Number: 13050861

Analysis Date: 2025-07-20 12:23 UTC

Financial Health Assessment for SK17 PROPERTIES LIMITED

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1. Financial Health Score: C

Explanation:
The company shows signs of recovery from previous financial distress but remains in a fragile state. The recent financial year demonstrates an improved balance sheet with positive net current assets and net equity, yet the scale of long-term liabilities and relatively low cash reserves indicate vulnerability. The company is neither in critical distress nor yet fully stable, meriting a middle-tier grade.

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2. Key Vital Signs

Metric	2024 (£)	2023 (£)	Interpretation
Current Assets	3,394	12,858	Sharp decrease; potential liquidity tightening.
Cash	2,864	12,373	Significant reduction; less "healthy cash flow".
Debtors	530	485	Slight increase, manageable level of receivables.
Current Liabilities	1,204	20,110	Dramatic reduction; positive sign for short-term health.
Net Current Assets	2,190	(7,252)	Turned positive; improved working capital status.
Total Assets Less CL	503,578	271,243	Nearly doubled; reflects significant asset growth.
Creditors (non-current)	503,128	280,308	Large long-term debt burden; risk factor.
Net Assets (Equity)	450	(9,065)	Returned to positive territory; tentative recovery.
Share Capital	3	3	Minimal; equity base is very low.
Investment Property Value	501,388	278,495	Large increase; driver of asset growth but illiquid.

Interpretation of Vital Signs:

• The company’s liquidity (cash and current assets) has decreased sharply, which could be a symptom of cash flow strain.
• However, the drastic reduction in current liabilities and positive net current assets indicate that short-term financial obligations are now more manageable.
• The large increase in investment property reflects a strategic growth in fixed assets, likely financed through increased long-term liabilities.
• Net assets have moved from a negative to a marginally positive position, signaling a recovery from past accumulated losses but still very fragile.
• The very low equity base relative to liabilities suggests that the company’s financial structure is heavily leveraged, which may limit resilience to future shocks.

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3. Diagnosis

The company has shown symptoms of financial distress in previous years, as evidenced by negative net assets and working capital deficits. The financial "patient" has undergone a significant intervention in the latest year, with a substantial acquisition or revaluation of investment property that has boosted total assets. This has been largely funded through increased long-term borrowings, indicating reliance on external financing to support growth.

The improvement in net current assets and elimination of current liabilities’ pressure is a positive sign of stabilizing liquidity. However, the reduced cash balance is a symptom of tight operating cash flow or capital expenditure outflows. The balance sheet signs a cautious recovery but remains vulnerable due to high leverage and low equity buffer.

Overall, SK17 PROPERTIES LIMITED is in a "convalescent" phase—recovering but not yet robust. The financial health is moderately stable, but close monitoring of cash flows and debt servicing capability is essential to avoid relapse into distress.

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4. Recommendations

1. Improve Cash Flow Management:

   • Implement strict cash flow forecasting and control to prevent liquidity shortages.
   • Explore options to increase cash reserves, such as improving rent collection or managing payment terms.

2. Debt Restructuring/Reduction:

   • Engage lenders to potentially restructure long-term debt to more manageable terms to reduce financial strain.
   • Consider partial debt repayment if excess cash flow permits to improve gearing ratios.

3. Enhance Equity Base:

   • Evaluate the possibility of raising additional equity capital to strengthen the financial foundation and reduce reliance on debt.

4. Asset Utilization Review:

   • Assess the investment properties for yield and market value to ensure they are generating adequate returns and are not overvalued.
   • Consider selling underperforming assets to boost liquidity if necessary.

5. Regular Financial Health Monitoring:

   • Establish key performance indicators (KPIs) for liquidity, debt ratios, and profitability to detect early signs of distress.

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