MGP SAGITTARIUS LTD

Executive Summary

MGP SAGITTARIUS LTD displays improving equity and asset backing in investment properties but suffers from a significant working capital deficit and tight liquidity. The company depends on director loans and mortgage financing, which requires careful cash flow management. Conditional credit approval is recommended with close monitoring of liquidity metrics and asset valuations.

MGP SAGITTARIUS LTD - Analysis Report

Company Number: 13786157

Analysis Date: 2025-07-20 17:06 UTC

Credit Opinion:
CONDITIONAL APPROVAL. MGP SAGITTARIUS LTD shows modest financial stability with positive shareholders' funds and a slight improvement in net assets in 2024. However, the company carries a significant working capital deficit driven by high current liabilities relative to cash and other current assets, which raises liquidity concerns. The business operates in real estate management, a sector with stable income potential, but the current financial structure suggests reliance on director funding and mortgage liabilities. Credit extensions should be cautiously structured with covenant protections and periodic financial monitoring.

Financial Strength:
The company’s balance sheet reveals total assets less current liabilities of £2,182 in 2024, improving from a negative £1,476 in 2023. Tangible fixed assets amounting to £486 and investment properties valued at £78,280 indicate a solid asset base primarily in real estate. Shareholders’ funds have turned positive (£2,182) after years of negative equity, indicating an improving equity position. The company’s capital structure includes a mortgage of £57,002 and director’s current account liabilities of £27,470, suggesting some external and related-party financing. Overall, the company is small with limited equity cushion but owns significant real estate assets.

Cash Flow Assessment:
Cash holdings increased from £4,230 in 2023 to £8,700 in 2024, indicating a positive movement in liquidity. However, current liabilities remain high at £85,284, producing a net current liability (working capital deficit) of £76,584. This signals that short-term obligations substantially exceed liquid assets, which could pressure cash flow if not managed carefully. The presence of a mortgage and director loans as current liabilities implies scheduled repayments and potential calls on cash resources. The company’s ability to meet short-term liabilities depends heavily on continued operational cash inflows or refinancing.

Monitoring Points:

1. Working Capital Trend: Watch for improvement or deterioration in net current assets to assess liquidity risk.
2. Cash Flow Adequacy: Monitor cash generation from operations and ability to service mortgage and director loans.
3. Asset Valuation Stability: Investment property values should be reviewed for impairment risk or market fluctuations.
4. Director Funding Dependency: Track changes in director’s current account balance indicating reliance on related-party financing.
5. Profitability and Reserves: As profit and loss reserves move positive, confirm sustained profitability and reinvestment ability.
6. Filing and Compliance: Maintain timely accounts and confirmation statement filings to avoid regulatory risk.