Company Number: 13256370

Analysis Date: 2025-07-20 19:03 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   HEAC CO LTD demonstrates substantial investment property assets valued at approximately £3.34 million, securing a bank loan of £2.27 million. However, the company has a negative net asset position (£37k deficit) and significant net current liabilities (£1.1 million deficit) driven by high current liabilities mainly owed to group undertakings. The reliance on group funding and negative working capital suggests liquidity challenges. Approval is conditional on assurances regarding cash flow management, loan servicing capability, and potential support from the parent/group entity.

2. Financial Strength:
   The company’s balance sheet is asset-heavy with investment property as the principal asset. Fixed assets remain stable year-on-year. However, net liabilities persist, reflecting accumulated losses or reserves deficit. The equity base is weak with shareholders’ funds negative at £38k. The sizeable long-term bank loan is secured against the investment property, which mitigates some risk but the lack of equity cushion is a concern. The company is classified as a small private limited company with minimal employees, indicating limited operational scale.

3. Cash Flow Assessment:
   Cash balances improved slightly to £13,405, and debtors increased to £33,195, but current liabilities remain very high at £1.15 million, resulting in a severely negative net current asset position (-£1.1 million). This indicates short-term liquidity stress and potential difficulties in meeting immediate obligations without external funding. The company’s cash generation capacity is unclear due to absence of profit and loss data, but reliance on loans from group undertakings and director loans (interest-free, repayable on demand) highlights dependency on related parties for working capital.

4. Monitoring Points:

• Liquidity ratios and net current asset position to track improvement or deterioration in working capital management.
• Timely servicing of bank loan interest and principal repayments under secured facility.
• Any changes in investment property valuation and potential revaluation impairments.
• Updates on related party loans and any repayment or conversion to equity.
• Director and group support evidencing ability to cover short-term cash shortfalls.