Company Number: SC735949

Analysis Date: 2025-07-29 14:13 UTC

1. Credit Opinion: CONDITIONAL APPROVAL

LCM Properties Aberdeen Limited is an active private limited company operating in the real estate sector, specifically in letting and operating its own or leased commercial properties. The company has been trading since mid-2022 and shows significant growth in investment property assets within a short period. However, the company currently reports net liabilities of approximately £300k and net current liabilities of about £1.8M as of 31 March 2024, reflecting a working capital deficit. The directors' loans are substantial (£2.05M), interest-free, and without fixed repayment terms, indicating a reliance on director support for liquidity. Conditional approval is recommended, subject to continued director support and monitoring of cash flow and debt servicing capability.

2. Financial Strength

The company’s fixed assets, dominated by investment property, increased markedly from £423k to £1.5M, reflecting active property acquisitions. Tangible fixed assets are minimal (£1.76k). However, the balance sheet shows net liabilities of £299,978 driven by significant current liabilities (£2.18M) exceeding current assets (£380k). The equity position is negative, with a retained loss of £300k. The large balance of other creditors and directors' loan accounts indicates external and intra-group financing rather than operational trade payables. The financial structure is heavily leveraged but supported by director loans, which are unsecured and interest-free.

3. Cash Flow Assessment

Cash at bank increased from £60.6k to £147k, suggesting some improvement in liquidity, but remains modest relative to short-term liabilities. Trade debtors are low (£4.8k), and other debtors increased to £228k, possibly related to intercompany balances or receivables. The working capital deficit of £1.8M is significant, driven by high short-term creditors including director loans. The interest-free director loan with no repayment schedule is a critical liquidity support but also a risk if director funding withdraws or terms change. The company’s ability to meet short-term obligations depends heavily on ongoing director financial support and timely rental income collection.

4. Monitoring Points

• Liquidity trends: Monitor cash balances and working capital monthly to ensure sufficient short-term liquidity.
• Director loans: Track the level and terms of director loans for any changes that may impact funding availability.
• Rental income performance: Confirm stability and growth in rental income to support debt servicing.
• Creditors aging: Watch trade and other creditor payment terms to avoid supplier strain.
• Profitability trajectory: Given current losses, assess progress towards profitability and positive retained earnings.
• Financial covenants: If any lending is secured, monitor compliance with covenants related to gearing and liquidity.