Company Number: 12758322

Analysis Date: 2025-07-20 19:07 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Freestone Properties Limited shows significant investment in property assets, with fixed assets increasing substantially to £788k in 2024 from a nominal base previously. However, the company remains in a net liability position with negative shareholders’ funds of £123k, reflecting accumulated losses. The large increase in bank loans (£503k) and related-party loans (£389k+) raise concerns around leverage and dependency on insider funding without fixed repayment terms or interest. The company’s liquidity is weak, with net current liabilities of £5.8k and minimal cash (£823). Credit approval could be considered only with conditions such as obtaining more robust cash flow forecasts, securing repayment plans for loans, or guarantees to mitigate risk.

2. Financial Strength:
   The balance sheet is asset heavy, primarily due to investment properties valued at £788k (fair value). However, this is offset by significant long-term liabilities of £891k, mainly bank loans and director/related-party loans. The company is insolvent on a net asset basis, with shareholders’ funds negative and deteriorating from prior years. The absence of equity buffer and reliance on related parties for funding weakens capital structure and financial resilience. The company’s recent acquisition and revaluation of property assets suggest growth ambitions but also increased financial risk.

3. Cash Flow Assessment:
   Cash balances have dramatically decreased from £61k in 2023 to under £1k in 2024, indicating tight liquidity. Current assets aside from cash are negligible (£691 in debtors and investments). Current liabilities are low but the net current liabilities position indicates working capital pressure. The company has no formal repayment terms on related-party loans, which could be a source of informal liquidity support but also a credit risk factor. Overall, the company’s ability to service debt from operational cash flow appears limited at present.

4. Monitoring Points:

• Cash flow generation and liquidity trends, especially ability to maintain positive working capital.
• Progress on reducing dependency on director and related-party loans or formalizing repayment terms.
• Valuation and marketability of investment properties to ensure asset realizations can support debt.
• Profitability trends and ability to generate retained earnings to rebuild equity.
• Any changes in banking facilities or covenants that affect refinancing risk.
• Directors’ actions regarding financial restructuring or capital injection.