Company Number: 12782016

Analysis Date: 2025-07-29 17:11 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   H & G Property Solutions Ltd shows positive growth in net assets and equity in the latest financial year, driven mainly by a substantial increase in investment property values. However, the company currently has a negative net current asset position (£-101k) due to high current liabilities relative to current assets, signaling potential short-term liquidity stress. The long-term borrowings have increased significantly to £528k, reflecting higher leverage. The company’s ability to service debt depends on stable rental income and property market conditions, which are inherently subject to market risk. Approval is recommended with conditions requiring close monitoring of liquidity and timely servicing of debt obligations.

2. Financial Strength:
   The balance sheet shows a marked improvement in net assets from £51k in 2023 to £116k in 2024, reflecting the revaluation uplift of investment properties to £762k from £420k. Total liabilities, particularly long-term bank loans, have increased to £528k from £447k, indicating higher gearing. The company’s equity base remains modest at £116k, supported solely by retained earnings and a nominal share capital of £200. The reliance on secured borrowings against investment properties is significant, implying the company’s financial strength is closely tied to property market valuations and rental income stability.

3. Cash Flow Assessment:
   Cash on hand has increased to £62.6k, improving liquidity compared to £20.4k last year. However, current liabilities stand at £165k, significantly exceeding current assets excluding stocks. The company’s negative net current assets suggest a working capital deficit, which may impair its ability to cover short-term obligations without refinancing or additional cash inflows. The presence of stock valued at £241k (work in progress/transfer to investment property) may convert to assets, but this is not immediately liquid. The company must ensure reliable rental income and effective management of creditor terms to maintain liquidity.

4. Monitoring Points:

• Monitor rental income streams and occupancy rates to ensure consistent cash flow for debt servicing.
• Watch current liabilities and working capital trends closely to avoid liquidity shortfalls.
• Track property market conditions and valuations due to their material impact on asset base and borrowing capacity.
• Assess the company’s ability to meet scheduled loan repayments and any refinancing needs, given increased leverage.
• Review any changes in the terms or charges related to bank loans secured against investment properties.