POWERHOUSE PROPERTY GROUP LTD

Executive Summary

Powerhouse Property Group Ltd has made a significant property investment but currently exhibits weak financial strength with negative equity and working capital deficits. Liquidity is constrained with low cash balances and substantial borrowings. Conditional credit approval is recommended, contingent on evidence of sustainable cash flow generation from property operations and clear plans for managing debt obligations.

POWERHOUSE PROPERTY GROUP LTD - Analysis Report

Company Number: 13869215

Analysis Date: 2025-07-20 13:29 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Powerhouse Property Group Ltd is a recently incorporated property company with significant investment property assets acquired in the latest financial year. However, the company shows negative net assets and working capital deficits, reflecting reliance on director loans and bank mortgage financing. The interest-free director loan with no fixed repayment terms and a secured mortgage offer some comfort, but repayment capacity depends heavily on property income or disposal proceeds which are not evidenced here. The company’s ability to service debt is currently constrained, and credit approval should be conditional on receipt of updated cash flow forecasts and confirmation of rental income or exit strategy for the investment property.

2. Financial Strength: Weak but Improving
   As of 31 January 2024, the company holds investment property valued at £145,818, significantly increasing total assets from prior years. However, net liabilities stand at £8,002, worsening from a £3,237 deficit the previous year, driven by increased borrowings (mortgage £100,425) and current liabilities (£57,205). Shareholders’ funds remain negative, indicating funding through debt rather than equity. The balance sheet reflects a leveraged position typical for property investment startups but requires strengthening through profitable operations or additional equity to mitigate solvency risks.

3. Cash Flow Assessment: Limited Liquidity and Working Capital Deficit
   Cash balances have decreased sharply from £34,663 in 2023 to £2,800 in 2024, indicating cash outflows likely related to property acquisition and debt servicing. Net current assets are negative at £-53,395, primarily due to high current liabilities (£57,205), including a director loan of £55,700 with no repayment terms. While the director loan and mortgage are interest-free or presumably manageable, the company’s limited liquidity and negative working capital highlight potential short-term cash flow pressures needing close management.

4. Monitoring Points:

• Track rental income or other revenue streams from the investment property to assess operating cash flow and debt servicing ability.
• Monitor director loan and mortgage repayment terms and any changes or additional funding rounds.
• Watch for improvements in net assets and equity position through retained earnings or capital injection.
• Review upcoming filings for any changes in liabilities or related party transactions that may affect financial stability.
• Confirm timely payment of liabilities and maintenance of creditor relations to avoid default risk.