HEART HOUSING LIMITED

Executive Summary

Heart Housing Limited demonstrates a strengthening financial position with increasing net current assets and shareholders’ funds, alongside compliance with filing requirements. However, significant related party creditor balances and a sudden rise in cash holdings highlight liquidity and exposure risks that require further investigation. Operational sustainability without employees also warrants closer review to ensure ongoing business stability.

HEART HOUSING LIMITED - Analysis Report

Company Number: 12755757

Analysis Date: 2025-07-29 20:09 UTC

1. Risk Rating: MEDIUM
   The company shows improving net current assets and shareholders’ funds, indicating growing financial strength. However, significant amounts owed to related parties and a large increase in cash balances juxtaposed with high current liabilities warrant caution regarding liquidity management and related party exposure.

2. Key Concerns:

• Related Party Creditors: Substantial and increasing amounts (£481k in 2024 vs. £300k in 2023) owed to a company with a participating interest may indicate reliance on affiliated funding, posing potential risks if terms are not on arm’s length or if these creditors demand repayment unexpectedly.
• Liquidity Concentration: The company holds a large cash balance (£1.46M) as of 2024 year-end, which is positive, but the sudden jump from £18k in the prior year raises questions about the source and future use of these funds. It will be important to verify if this cash is unrestricted and truly available for operational needs.
• No Employees: The absence of employees suggests the company may rely on directors or outsourced services. This could impact operational sustainability and scalability, particularly if the business expands or faces complex property transactions.

3. Positive Indicators:

• Growing Net Current Assets and Shareholders’ Funds: Improvement from £273k to £461k net current assets and shareholders’ funds over the last year indicates strengthening equity position and working capital management.
• Timely Filings and Compliance: The company is current with accounts and confirmation statement filings, demonstrating regulatory compliance and governance discipline.
• Clear Business Focus: The principal activity is buying and selling own real estate, a straightforward business model with transparent accounting treatment of stock and turnover.

4. Due Diligence Notes:

• Examine the terms and conditions related to the amounts owed to the participating interest company, including repayment schedules, interest rates, and potential contingent liabilities.
• Verify the nature and liquidity of the large cash balance reported at 2024 year-end; confirm it is unrestricted and not subject to encumbrances.
• Investigate the company’s operational model given no employees are reported, including reliance on directors and third parties, to assess business continuity and risk exposure.
• Review the company’s property portfolio turnover and stock management to evaluate sustainability of profitability and cash flow generation.
• Confirm there are no director disqualifications or governance issues given the two current directors both reside at the registered office address.