Investment Risk Analysis: TOTAL BODY KARMA LIMITED

1. Risk Rating: MEDIUM-HIGH

The company presents a concerning liquidity profile despite showing positive net assets of £1.75M. The solvency position is almost entirely dependent on a revalued property asset, while the accumulated trading losses exceed £1.1M and cash reserves have deteriorated to critically low levels. With no visible revenue stream and nearly £2.9M in bank borrowings, the company's ability to service its obligations without external support or asset disposal is questionable.

2. Key Concerns

Concern 1: Severe Liquidity Constraints

Cash has declined from £104,750 (2022) to just £9,858 (2025), representing a 91% reduction over three years. The company has negative working capital of £37,306, with current liabilities of £47,164 exceeding current assets (cash only). There are no debtors, no stock, and no other liquid assets. This leaves virtually no buffer for operational costs, loan interest, or unexpected expenditures.

Concern 2: Solvency Dependent on Property Revaluation

The positive net asset position of £1,751,090 is entirely attributable to a revaluation reserve of £2,878,180. Without this revaluation, the company would have negative shareholders' equity of approximately £(1,127,000) — consistent with the accumulated P&L losses of £(1,127,091). The property is carried at £5,400,000 with no depreciation (freehold land), and this valuation has remained unchanged since at least 2024. Any downward correction in the Kensington property market would rapidly erode the stated solvency position.

Concern 3: No Visible Income Source

The company reports zero employees, no turnover line item, no debtors, and provides "No description of principal activity" in the accounts. With SIC codes 68100 and 68209 (buying/selling and letting of own real estate), the company appears to be a passive property holding vehicle. However, there is no evidence of rental income, and the persistently growing accumulated losses suggest the property is not generating sufficient (or any) income to cover financing costs and other expenses.

3. Positive Indicators

• Substantial Property Asset: The £5.4M freehold property in Kensington (W8) provides significant collateral value. Even in a stressed sale scenario, the property likely covers the bank loan of £2.89M with a comfortable margin, assuming the valuation is achievable.

• Long-Established Entity: Incorporated in 2004, the company has operated for over 20 years, suggesting a degree of stability and the bank's ongoing willingness to support the arrangement.

• Filing Compliance: Accounts and confirmation statements are current and not overdue. The company appears to meet its statutory obligations.

• Improving Net Asset Trend: Net assets have improved from £(318,122) in 2022 to £1,751,090 in 2025, though this is entirely revaluation-driven rather than through operational performance.

• Deleveraging: The bank loan has reduced slightly from £2,902,363 (2024) to £2,892,059 (2025), indicating marginal principal repayment.

4. Due Diligence Notes

Priority Investigations:

1. Provisions of £719,545: This is a material figure (approximately 14% of the property value) with no explanatory note in the filleted accounts. Investigation needed into whether this relates to deferred tax on the property revaluation, warranty obligations, or other contingent liabilities. If this is a deferred tax provision on the revaluation gain, the real net asset position may be significantly weaker than presented.

2. Bank Loan Terms: The £2,892,059 long-term bank loan requires urgent clarification on: - Interest rate and annual interest cost - Maturity date and repayment schedule - Covenant conditions (LTV ratios, interest coverage) - Whether the loan is on a repayment or interest-only basis - Any personal guarantees from the director

3. Property Valuation Basis: The £5,400,000 carrying value has remained static since at least 2024. Determine: - Date and basis of last independent valuation - Whether this reflects current market conditions in W8 - Whether the valuation assumes vacant possession or tenanted income

4. Income/Revenue Position: The P&L account has not been delivered to the Registrar (permitted for small companies), meaning profitability cannot be assessed. Request: - Latest profit and loss account - Rental income schedule (if any) - Corporation tax returns to verify income

5. Director's Financial Position: Ms Siaymala Devi Gopal Pasupathy (Singaporean national) is the sole director and PSC with 75%+ ownership. Investigate: - Her residency status and UK tax position - Whether she provides financial support to the company - Any connected party transactions or loans

6. Cash Flow Sustainability: With only £9,858 in cash and annual costs likely exceeding this (loan interest alone on £2.9M could be £100,000+ annually), clarify: - How ongoing costs are being met - Whether the director is funding operations personally - Whether there is an overdraft facility or other credit line not shown

7. Historical Negative Equity Periods: The company had negative net assets in 2016 (£-499,039) and 2022 (£-318,122). Understand what drove these periods and how they were resolved, as they may indicate cyclicality or structural issues.