HAMPSTEAD PROPERTY INVESTMENTS LTD

Executive Summary

Hampstead Property Investments Ltd has demonstrated asset growth and improved net equity but carries significant secured debt and negative working capital, posing liquidity risk. Conditional credit approval is recommended, contingent on stable cash flows and close monitoring of debt servicing capacity and working capital metrics. Directors’ loan reliance and mortgage commitments require ongoing scrutiny to mitigate potential financial stress.

HAMPSTEAD PROPERTY INVESTMENTS LTD - Analysis Report

Company Number: 12725842

Analysis Date: 2025-07-29 17:24 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Hampstead Property Investments Ltd demonstrates a positive trajectory in asset growth and net asset value, moving from negative equity in 2021 to a positive net asset position of £67,450 in 2024. The company’s core business, operating investment properties (SIC 68209), is capital intensive but shows fair value appreciation. However, the company faces significant current and long-term liabilities, including a substantial mortgage secured by the properties. The working capital position is negative, reflecting liquidity constraints that require monitoring. Credit approval is conditional on close monitoring of cash flow and debt servicing ability, and confirmation that rental income or alternative cash inflows remain stable to cover interest and principal repayments.

2. Financial Strength:

• Fixed Assets (investment properties) have increased from £448,725 in 2021 to £700,000 in 2024, indicating active asset acquisition and revaluation gains.
• Net Assets improved from a deficit of £3,943 in 2021 to £67,450 in 2024, reflecting retained earnings and enhanced equity.
• Share capital is minimal (£2), indicating limited equity injection, with most financing derived from borrowings.
• Long-term liabilities (mortgage) increased from £329,869 in 2023 to £442,439 in 2024, evidencing leveraged growth but increasing financial risk.
• Deferred tax provisions have increased moderately, consistent with asset revaluations.

3. Cash Flow Assessment:

• Current liabilities (£442,439) substantially exceed current assets (£13,444), resulting in a negative net working capital of £172,396 as of 2024, which poses liquidity risk.
• Cash balances declined significantly from £52,082 in 2023 to £13,023 in 2024, reducing buffer for short-term obligations.
• Debtors are minimal (£421), indicating limited receivables but also a lack of substantial liquid assets beyond cash.
• Directors’ loan accounts form a material part of current liabilities (£183,642), suggesting reliance on director financing in the short term.
• The company must maintain strong rental income or other cash inflows to meet immediate debt servicing demands.

4. Monitoring Points:

• Track cash flow monthly, focusing on rental income stability and timing of mortgage repayments.
• Review working capital improvements or deterioration, particularly changes in debtor collections and creditor payments.
• Monitor any further asset acquisitions or disposals impacting leverage ratios.
• Watch for changes in directors’ loan accounts, as reliance on director financing can affect financial stability.
• Assess deferred tax liabilities and their impact on future cash flows.
• Ensure timely filing of accounts and confirmation statements to avoid regulatory penalties.