ROCKWEST PROPERTIES LTD

Executive Summary

Rockwest Properties Ltd, a recently incorporated real estate company, shows significant financial strain characterized by a large negative net working capital and heavy reliance on bank loans. While regulatory compliance is current and the company holds substantial fixed asset investments, its minimal equity base and liquidity imbalance pose considerable solvency risks. Further due diligence is required on asset valuations, debt terms, and operational cash flows to fully assess financial stability.

ROCKWEST PROPERTIES LTD - Analysis Report

Company Number: 13939594

Analysis Date: 2025-07-29 17:51 UTC

1. Risk Rating: HIGH
   The company exhibits a high solvency risk due to a significant imbalance between current liabilities and current assets, resulting in a substantial negative net working capital. The presence of large outstanding liabilities relative to minimal cash and equity further exacerbates liquidity concerns.

2. Key Concerns:

• Severe Liquidity Mismatch: Current liabilities amounting to £937,239 vastly exceed current assets of £2,127, yielding a negative net current asset position of £-935,112. This indicates potential difficulty meeting short-term obligations.
• High Leverage: Total liabilities due after one year include bank loans of £764,775 against minimal net assets of £1,613, signaling heavy reliance on external financing and possible solvency issues.
• Minimal Equity Base: Shareholders' funds stand at only £1,613 despite substantial investments (£1,701,500) recorded, suggesting that the company’s financial structure is fragile and heavily debt-financed.

3. Positive Indicators:

• Active Status and Compliance: The company is active, with no overdue filings for accounts or confirmation statements, demonstrating regulatory compliance and operational continuation since incorporation in 2022.
• Investment in Fixed Assets: The company has made significant investments (£1,701,500) classified as fixed assets, which may represent valuable property holdings consistent with its real estate letting industry classification (SIC 68209).
• Sole Controlling Director: Clear ownership and control by a single director/PSC may facilitate streamlined decision-making.

4. Due Diligence Notes:

• Nature and Valuation of Investments: Investigate the composition, valuation basis, and liquidity of the fixed asset investments (£1.7 million), including any encumbrances or impairments not evident from the accounts.
• Debt Terms and Covenants: Review loan agreements and repayment schedules for the bank loans (£764,775) and other creditors to assess refinancing risks and potential covenant breaches.
• Cash Flow Projections: Obtain management-prepared cash flow forecasts to evaluate the company’s ability to service debts and manage short-term liabilities given the negative working capital position.
• Director's Background and Related Party Transactions: Although no disqualifications are noted, further review of the director’s conduct history and any related party transactions may be prudent given the company’s financial structure.
• Revenue and Profitability Information: Since the statement of comprehensive income has not been filed (exemption applies), request internally prepared profit and loss data to assess operational performance and sustainability.