AFFAAN SATTAR LIMITED

Executive Summary

Affaan Sattar Limited operates in property letting with substantial investment property assets but is highly leveraged with negative working capital and falling net assets due to property revaluation losses. The company’s ability to service mortgage debt depends on rental income stability and asset values. Conditional approval is recommended with close monitoring of liquidity, property valuations, and director funding support to mitigate risks associated with leverage and cash flow constraints.

AFFAAN SATTAR LIMITED - Analysis Report

Company Number: 13191998

Analysis Date: 2025-07-20 12:03 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Affaan Sattar Limited shows a significant asset base in investment property (£4.57M) but is currently experiencing a large negative working capital position with net current liabilities of £491,973 as of 29 February 2024. The company’s mortgage debt is substantial (£3.75M), secured against these properties, which supports the debt but exposes the company to valuation risk in the real estate market. The decline in property valuation by £641,000 year-on-year and the sharp drop in net assets from £949k to £332k indicate some weakening in financial strength. However, the director’s ownership and control concentrated in a single individual with professional landlord experience provides some oversight continuity. Approval is recommended with conditions: tighten liquidity monitoring and require periodic updates on property valuations and debt servicing.

2. Financial Strength:
   Balance sheet strength is moderate but showing signs of strain. The company's net assets have fallen by about 65% to £331,649 mainly due to a £641,000 decrease in investment property valuation. Shareholders’ funds remain positive at £982,618 due to share premium, but retained earnings are deeply negative (£651,069), reflecting accumulated losses. The large long-term mortgage liabilities are roughly 82% of total assets less current liabilities, indicating high leverage typical in property investment businesses but increasing risk if property values decline further or income drops.

3. Cash Flow Assessment:
   Cash balances are low (£7,317) relative to current liabilities (£501,435), resulting in a negative net working capital position. Trade debtors are minimal (£2,145), implying limited receivables risk. The company relies heavily on long-term financing and rental income to service debt. The director’s loan of £464,137 interest-free and repayable on demand provides some liquidity buffer but also indicates dependence on director support. The recent sale of a property post year-end (carrying value £1.2M with related mortgage £991,812) would improve liquidity and reduce debt but requires confirmation of proceeds and application.

4. Monitoring Points:

• Property valuation changes and their impact on net asset value and loan-to-value ratios.
• Rental income stability and occupancy rates to ensure consistent cash flow for debt servicing.
• Liquidity position and working capital trends to avoid payment difficulties.
• Director loan balance and any changes in repayment terms or additional funding.
• Compliance with mortgage covenants and any refinancing risk.
• Timely filing of accounts and confirmation statements to detect operational or compliance issues.