MICHAELA CONSULTANCY LTD

Executive Summary

Michaela Consultancy Ltd has improved its financial position, moving from negative to positive net assets mainly due to property revaluation. However, it faces significant short-term liquidity challenges with a large working capital deficit and high gearing from bank loans. Conditional credit approval is recommended, contingent on close monitoring of cash flow from property operations and debt servicing capability.

MICHAELA CONSULTANCY LTD - Analysis Report

Company Number: 12581372

Analysis Date: 2025-07-29 15:03 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Michaela Consultancy Ltd presents a mixed credit profile. The company is operational and shows improved net asset position as of the latest accounts (Feb 2024), moving from negative net assets in prior years to positive net assets of £61,155. However, the company has a significant level of long-term debt (£229k bank loans) and current liabilities (£162k) far exceeding current assets, resulting in a working capital deficit of £158k. The company’s ability to service debt depends largely on the cash flow generated from its real estate investment property valued at £470k, which has appreciated in value. Given the absence of employees and limited operational activity, cash inflows may be irregular, increasing risk. Approval is conditional on monitoring the company’s cash flow and debt servicing capacity closely.

2. Financial Strength:
   The company’s balance sheet shows an improving trend. Net assets have increased from a deficit of £6,456 in 2022 to a positive £61,155 in 2024, primarily driven by a revaluation gain on investment property (£470k). Shareholders’ funds improved significantly from negative to positive, indicating recapitalization or retained profits. The company carries substantial long-term bank loans (£229k), which represent a high gearing level given the net assets. Current liabilities exceed current assets resulting in negative working capital, which is a concern for short-term liquidity. The company holds minimal cash (£4.7k), insufficient to cover short-term obligations.

3. Cash Flow Assessment:
   Cash on hand is low (£4.7k), and net current liabilities remain high at £158k, indicating tight liquidity. The company’s lack of employees suggests limited operating cash flows, and reliance is likely on rental income or property sales for liquidity. The long-term loans are repayable over several years, but short-term loan portions (£26.9k) plus other creditors (£135.7k) create immediate cash demands. Absence of detailed income or cash flow statements limits precise assessment, but the current asset structure and liabilities point to potential cash flow strain. The director’s related party balances (£134k owed to director) may provide some internal financial support but also indicate reliance on director funding.

4. Monitoring Points:

• Track rental income or other cash inflows from investment property to ensure debt service coverage.
• Monitor repayment schedule adherence on bank loans and any refinancing risks.
• Watch working capital trends and liquidity ratios closely; any widening of current liabilities or drop in cash reserves should prompt review.
• Assess director’s financial support continuity and any related party transactions for sustainability.
• Review subsequent filings for income statement and cash flow details to better understand operational performance.