AEQUITAS PROPERTY MANAGEMENT LTD

Executive Summary

Aequitas Property Management Ltd exhibits a positive growth trajectory in asset base and equity, supported by investment property revaluations and improved cash reserves. Nonetheless, the company’s high leverage through secured loans necessitates cautious credit management and conditional approval with stringent monitoring of cash flow and rental income stability. Financial strength is adequate for current operations but sensitive to property market and income fluctuations.

AEQUITAS PROPERTY MANAGEMENT LTD - Analysis Report

Company Number: 12836108

Analysis Date: 2025-07-20 11:54 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Aequitas Property Management Ltd demonstrates a growing asset base supported by investment properties and an improving equity position. However, the company carries significant secured debt nearly 7 times its equity, indicating a high leverage level that could pressure cash flow under adverse market conditions. Lending is recommended with conditions, including close monitoring of debt service capability and rental income stability, as well as requiring updated management accounts to verify operating cash flows before facility approval.

2. Financial Strength:
   The balance sheet shows total fixed assets (investment properties) increased from £1.9M to £2.19M in the latest year, supported by fair value revaluations (£235K). Current assets have also improved notably, primarily cash rising to £105K from £4K, enhancing liquidity. Total liabilities rose largely due to higher secured bank loans (£938K from £652K) and other creditors (£1.02M), resulting in net assets of £280K (up from £199K). While net assets are positive and increasing, the gearing ratio is high (debt to equity approx. 6.8x), reflecting heavy reliance on debt finance. Deferred tax provision of £86K relates to unrealised gains on property revaluations.

3. Cash Flow Assessment:
   The company holds a healthy cash position (£105K) relative to short-term creditors (£5.9K), resulting in strong net current assets of £132K. This supports short-term liquidity and working capital adequacy. Debtors have increased but remain manageable (£33K). However, the large long-term debt secured on assets implies significant interest and principal repayments, necessitating steady rental income and cash inflows to service debt. The absence of employees suggests limited operating expenses but also no diversification of income streams. Monitoring operating cash flow alongside debt repayments is critical.

4. Monitoring Points:

• Rental Income Consistency: Confirm ongoing rental receipts meet projections to cover debt servicing.
• Debt Service Coverage Ratio: Monitor interest and principal coverage from operating cash flow.
• Property Valuations: Track fluctuations in fair value reserves impacting equity and deferred tax.
• Creditors and Liquidity: Watch for increases in short-term liabilities that could strain liquidity.
• Management Reporting: Require regular management accounts and cash flow forecasts.
• Economic Factors: Monitor property market conditions affecting asset values and rental demand.