Company Number: 12497356

Analysis Date: 2025-07-29 13:54 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Apple Tree Homely Ltd is an active private limited company operating in the real estate sector (investment and trading in own properties). The company shows growth in fixed assets (investment properties increased by ~£450k in the last year), indicating expansion or acquisition activity. However, the business exhibits significant liquidity stress with current liabilities far exceeding current assets (net current liabilities of approximately £1.6 million as of the latest accounts). The firm is highly leveraged in the short term, which raises concerns about its ability to meet near-term obligations without refinancing or additional capital injection. The director has not identified going concern risks, but the large short-term creditor balance warrants caution. Approval is recommended only with conditions such as monitoring liquidity closely and ensuring access to working capital lines or shareholder support.

2. Financial Strength:
   The balance sheet shows substantial investment property assets (£1.68 million) with no depreciation charged, consistent with fair value accounting for investment properties. Net asset value improved from £35,877 in 2022 to £68,007 in 2023, reflecting appreciation or additions to property assets and retained earnings growth. Share capital is minimal (£100), and shareholder funds remain low, indicating a small equity base relative to liabilities. The company’s negative net current assets position (-£1.6 million) is primarily due to high current liabilities (£1.63 million) versus low current assets (£25k cash, no debtors). This imbalance suggests dependence on long-term financing or owner support to cover short-term debts.

3. Cash Flow Assessment:
   Cash at bank improved slightly from £7,185 to £25,290, but remains insufficient to cover the current liabilities. The absence of trade debtors in the latest year signals that revenue generation or receivable turnover is limited or non-existent, typical for investment property holding companies but increasing liquidity risk. Current liabilities have increased markedly (from £1.2 million to £1.63 million), including amounts owed to group undertakings (£253k), highlighting potential reliance on related parties for funding. The company’s working capital deficit signals potential cash flow difficulties in meeting immediate obligations without external support or refinancing.

4. Monitoring Points:

• Liquidity ratios (current ratio and quick ratio) to detect any worsening of short-term liquidity pressures.
• Changes in investment property valuations and market conditions impacting asset values.
• The level and terms of current liabilities, particularly amounts owed to group undertakings and other creditors.
• Cash generation from operations or alternative financing arrangements to cover working capital shortfalls.
• Any director or related party loans and their repayment schedule.