AJM PROP SERVICES LIMITED

Executive Summary

AJM Prop Services Limited shows modest balance sheet improvement but faces significant short-term liquidity challenges, evidenced by increasing working capital deficits and reduced cash reserves. While the directors maintain strong control and have invested in fixed assets, the company's ability to meet current obligations without additional support is constrained. Credit should be extended cautiously with conditions to mitigate liquidity risk and ongoing monitoring of cash flow and working capital metrics.

AJM PROP SERVICES LIMITED - Analysis Report

Company Number: 12592311

Analysis Date: 2025-07-20 12:42 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   AJM Prop Services Limited is an active private limited company operating in management consultancy and real estate letting. The company’s net assets improved modestly from £1,001 in 2023 to £2,747 in 2024, indicating incremental balance sheet strengthening. However, the company exhibits persistent net current liabilities (working capital deficits), increasing from -£3,877 in 2023 to -£11,022 in 2024. This raises concerns about short-term liquidity and the ability to meet current obligations without relying on external support or director funding. The directors appear committed, with shareholding and control concentrated within a family group, which can be positive for governance continuity. Given the working capital pressure, credit facilities should be structured conservatively and potentially require additional security or covenants.

2. Financial Strength:
   The company’s fixed assets increased significantly in 2024, mainly due to additions in plant, machinery, and fixtures (£10,684 additions), raising net fixed assets to £13,769. This indicates some investment in operational capacity or asset base expansion. Shareholders’ funds remain low but have nearly tripled from £1,001 to £2,747, demonstrating a positive retained earnings movement. However, the balance sheet remains small and stretched, with current liabilities (£19,839) exceeding current assets (£8,817). The absence of long-term liabilities simplifies the capital structure but highlights reliance on short-term creditors and possibly director loans. The company’s limited capitalization (£100 share capital) also limits loss absorption capacity.

3. Cash Flow Assessment:
   Cash at bank dropped materially from £18,632 in 2023 to £2,230 in 2024, a significant liquidity decline. Debtors increased sharply to £6,587 from £668, which may reflect slower collections or more credit sales, further stressing cash flow. Current liabilities remain high, notably corporation tax (£7,003) and taxes/social security (£2,676), suggesting significant near-term cash outflows. Persistent negative working capital and declining cash reserves pose a risk to ongoing liquidity. The company should be monitored closely for its ability to generate operating cash flows or secure timely financing to cover short-term obligations.

4. Monitoring Points:

• Liquidity ratios and cash conversion cycle to track improvement or deterioration in working capital management.
• Creditors aging and debtor collection performance to assess cash flow predictability.
• Profitability and retained earnings trends to confirm improving net asset base.
• Any director loan movements or injections to support liquidity.
• Compliance with filing deadlines and any changes in company status or control.