CLAPHAM HOUSE LIMITED

Executive Summary

Clapham House Limited is an active property development company showing positive but declining net current assets and shareholders' funds. The company maintains liquidity through significant intra-group financing, which poses refinancing risk. Credit facilities may be extended on a conditional basis, subject to close monitoring of cash flow, working capital, and related party funding arrangements to mitigate financial and operational risks inherent in the sector.

CLAPHAM HOUSE LIMITED - Analysis Report

Company Number: 12796404

Analysis Date: 2025-07-20 12:31 UTC

1. Credit Opinion: CONDITIONAL APPROVAL

Clapham House Limited demonstrates ongoing trading activity with current assets exceeding current liabilities, showing positive net current assets at £464,914 as of 31 March 2024. However, there is a noticeable decline in net current assets and shareholders' funds compared to prior years (from £952k in 2023 to £465k in 2024), indicating some weakening in financial strength. The company operates in property development (SIC 41100), a sector sensitive to economic cycles and liquidity pressures. The concentration of debt owed to group undertakings (£2.25 million) and related party balances suggests reliance on intra-group funding rather than external finance. Directors are experienced and have maintained compliance with filing deadlines, with no adverse conduct records noted.

Given the declining equity and working capital and dependence on related party financing, credit terms should be conditional on monitoring cash flow closely and ensuring the company maintains sufficient liquidity to service debts. Any new lending should be supported by detailed cash flow forecasts and possibly guarantees or collateral due to the inherent risks in property development and the company's current financial trajectory.

2. Financial Strength:

• Shareholders' funds decreased from £952,024 in 2023 to £465,014 in 2024, reflecting a reduction by more than 50%.
• Net current assets also halved from £951,924 to £464,914, indicating tighter working capital.
• Current assets are mainly stocks (£1.525 million) and debtors (£1.586 million), with cash reserves at £409k.
• Current liabilities stand at £3.06 million, largely composed of amounts owed to group undertakings (£2.25 million) and other creditors.
• The company has minimal fixed assets (investment in group subsidiaries at £100).
• The balance sheet reflects a small company with modest capitalization (£100 share capital).
• The company’s accounting policies are conservative, valuing stock at the lower of cost or net realizable value, but impairment risks exist in property development stock.

3. Cash Flow Assessment:

• Cash on hand decreased from £577,568 to £409,076, indicating some cash usage or operational cash flow pressure.
• Debtors decreased slightly but still represent a significant portion of current assets.
• The company relies heavily on intra-group loans (£2.25 million current liability), which may be on flexible terms but also represent a refinancing risk if group funding is withdrawn.
• Net current assets remain positive but have declined, signaling tighter liquidity.
• No audit was performed, so cash flow transparency is limited; however, the company prepares accounts under the small companies regime.
• The absence of detailed profit and loss information restricts full cash flow insight, but the reduction in reserves suggests recent losses or distributions.

4. Monitoring Points:

• Watch liquidity trends, especially cash balances and net current asset position, to detect any further deterioration.
• Monitor the status of amounts owed to group undertakings and related party transactions to assess refinancing risk.
• Keep an eye on stock valuation and potential impairments in property development projects as market conditions fluctuate.
• Review updates to profit and loss data when available to assess operational profitability and cash generation.
• Confirm directors maintain compliance and timely filing to avoid regulatory penalties.
• Evaluate the impact of sector-specific risks such as construction delays, cost inflation, and property market cycles on future cash flow.