DRISTERNAN PROPERTY SOLUTIONS LTD

Executive Summary

Dristernan Property Solutions Ltd is a small real estate investment company with positive net assets supported by investment property. However, it operates with a significant working capital deficit funded by an interest-free, unsecured related party loan repayable on demand, which poses liquidity risk. Credit approval is recommended on a conditional basis with close monitoring of liquidity and related party funding stability.

DRISTERNAN PROPERTY SOLUTIONS LTD - Analysis Report

Company Number: SC734740

Analysis Date: 2025-07-20 15:49 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Dristernan Property Solutions Ltd operates in real estate letting. The company shows modest net assets (£42.9k) with stable fixed assets (investment property valued at £390.6k). However, it has significant current liabilities (£533.4k) exceeding current assets (£185.7k), resulting in a negative working capital position (-£347.7k). The large creditor balance primarily relates to an interest-free, unsecured loan of £500k from a related party, repayable on demand. While this related party funding provides liquidity support, it introduces risk as it is not a committed long-term financing facility. The company has no external debt and is not paying director remuneration, limiting cash outflows. Given these factors, credit approval is possible but subject to ongoing monitoring of liquidity and the relationship with the related party lender.

2. Financial Strength
   The balance sheet shows a single investment property asset held at a stable valuation (£390.6k). Net assets have doubled from £22.3k to £42.9k over the year, reflecting retained profits. However, the company has a material negative working capital position due to current liabilities significantly exceeding current assets. The main liability is a £500k related party loan, interest-free and repayable on demand, which cushions liquidity risk but lacks formal repayment terms. Share capital is minimal (£100), indicating limited equity buffer. Overall, the company has low financial strength with high dependency on related party funding and no diversification of assets or liabilities.

3. Cash Flow Assessment
   The company holds cash balances of £185.6k, up from £34.2k the prior year, indicating improved liquidity. However, current liabilities of £533.4k create a working capital deficit. The cash position is supported by the related party loan, which is interest-free and repayable on demand, providing flexible short-term liquidity. The absence of director remuneration and limited operating expenses reduce cash burn. No audit or detailed cash flow statement is provided, but cash generation appears sufficient for current operations. The negative net current assets position warrants caution on short-term liquidity if related party funding terms change.

4. Monitoring Points

• Stability and terms of the £500k related party loan: confirm ongoing availability and any changes to repayment demands.
• Cash flow trends: monitoring bank balances relative to current liabilities to ensure liquidity coverage.
• Profitability and reserve growth: track the company’s ability to generate retained earnings to strengthen equity.
• Debtor balances: minimal current debtors, but any changes could affect liquidity.
• Market conditions affecting investment property valuation and rental income stability.