SENSIBLE PROPERTIES LTD

Executive Summary

Sensible Properties Ltd is a recently established property management and trading company with significant fixed asset investments but limited equity and cash resources. While the company’s asset base supports its borrowing, its high leverage and minimal liquidity present moderate credit risk. Conditional approval is recommended, subject to close monitoring of cash flows, rental income, and debt servicing ability.

SENSIBLE PROPERTIES LTD - Analysis Report

Company Number: 14811680

Analysis Date: 2025-07-29 13:56 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Sensible Properties Ltd is a newly incorporated private limited company (April 2023) operating in real estate management and trading. The company holds substantial fixed assets (£11.75M) in land and buildings, indicating significant investment in property. However, the balance sheet shows minimal net assets (£913) and shareholders’ funds, with current liabilities far exceeding current assets, and a large long-term creditor balance (£11.8M). This suggests the company is highly leveraged, likely financed through debt secured on these properties. As the company has only one year of trading and is in the early stage, its ability to meet debt obligations depends on rental income cash flows and asset values. Approval can be considered if additional covenants or guarantees are in place and rental income is stable, but the company’s nascent status and thin equity base imply moderate risk.

2. Financial Strength:

• Fixed assets (land and buildings) of £11,749,264 dominate the balance sheet, with no depreciation charged yet, consistent with investment property accounting at cost or valuation.
• Current assets total £90,658, mainly debtors (£88,251) and minimal cash (£2,407), which is low relative to current liabilities of £26,316.
• Net current assets are positive at £64,342, a modest working capital buffer.
• Long-term liabilities (creditors due after more than one year) total £11,812,693, nearly equal to fixed assets, indicating significant reliance on external financing.
• Net assets and shareholders’ funds stand at £913, reflecting a minimal equity base and indicating the company is operating with high financial leverage.
  Overall, the financial structure is asset-heavy and debt-laden with limited equity cushion, typical for a start-up property company but requiring close monitoring of asset values and debt servicing capability.

3. Cash Flow Assessment:

• Cash at bank is minimal (£2,407), suggesting tight liquidity.
• Debtors (£88,251) are significant but depend on timely collection, likely rental receivables.
• Current liabilities are low (£26,316) but payable within one year, so manageable if cash inflows are steady.
• The company’s ability to generate operating cash flow is unproven given the short trading history and no income statement disclosed.
• Absence of depreciation and profit/loss data limits visibility on operational profitability and cash generation.
  Liquidity appears constrained, highlighting reliance on effective debtor management and potential refinancing or capital injections to cover obligations.

4. Monitoring Points:

• Rental income stability and collection performance from debtors to ensure cash flow adequacy.
• Servicing of long-term debt (£11.8M), including interest and principal repayments, and covenant compliance if applicable.
• Changes in fair value of investment properties, which may impact asset base and borrowing capacity.
• Equity and reserves growth from retained earnings over subsequent periods to improve leverage ratios.
• Timely filing of future accounts and confirmation statements to maintain transparency.
• Director conduct and governance as the sole director holds full control and significant influence.