Company Number: 13610224

Analysis Date: 2025-07-29 20:07 UTC

1. Credit Opinion: CONDITIONAL APPROVAL

Co-Living Capital Ltd shows a significant increase in fixed assets in 2023, reflecting property investment growth aligned with its SIC classification (real estate letting). However, the company exhibits a negative net current asset position (£-546k) and substantial long-term creditors (£13.85m), indicating high leverage and potential liquidity risk. The net assets have decreased to £389k from £485k last year, and the profit & loss reserve is in deficit (£-1.38m), suggesting accumulated losses. The company’s ability to service debt depends heavily on the cash flow generated from its property portfolio and the management of its working capital. Given the recent growth and asset base, the credit facility could be granted conditionally, subject to ongoing monitoring and possibly covenants on debt service coverage and liquidity metrics.

2. Financial Strength:

• Fixed assets grew sharply to £15.37m in 2023 from £5.6m in 2022, driven by additions and revaluation, demonstrating capital investment and business expansion.
• Current assets improved to £2.6m with a healthy cash balance (£1.62m), but current liabilities remain significant at £3.15m.
• Net current liabilities improved substantially from £4.67m (2022) to £0.55m (2023), indicating better short-term financial management but still negative working capital.
• Long-term liabilities of £13.85m comprise most of the company’s debt; these are secured by fixed and floating charges on assets.
• Shareholders’ funds are low (£389k), reflecting thin equity relative to total assets and high gearing, reducing financial buffer against downturns.

3. Cash Flow Assessment:

• Cash on hand increased markedly from £225k to £1.62m, improving liquidity.
• Debtors decreased slightly to £985k, with low trade debtor balances suggesting limited receivables risk.
• Current liabilities fell significantly, indicating some debt repayment or restructuring.
• The negative working capital position remains a concern but is improving.
• Reliance on long-term loans secured by property assets is evident; cash flow from rental income and asset management will be critical to meet ongoing obligations.
• No audit was performed, so cash flow statements are not available; monitoring actual cash generation is advised.

4. Monitoring Points:

• Debt service coverage ratio and interest coverage ratio, given the sizeable borrowings.
• Stability and growth of rental income cash flow to support debt repayment.
• Working capital trends to ensure the negative position does not worsen.
• Changes in asset valuations impacting collateral value for loans.
• Any related party transactions for potential exposure or liquidity drain.
• Timely filing of accounts and returns to ensure transparency and compliance.