SHAFI PROPERTY INVESTMENT LTD

Executive Summary

Shafi Property Investment Ltd is a newly incorporated property holding company with significant current liabilities exceeding its liquid assets, resulting in negative working capital and equity. Its solvency is currently supported by an interest-free shareholder loan repayable on demand, which poses refinancing risk. While the company holds an investment property with external valuation support and complies with filing requirements, close scrutiny of cash flow viability and shareholder support is essential to assess ongoing financial stability.

SHAFI PROPERTY INVESTMENT LTD - Analysis Report

Company Number: 15400436

Analysis Date: 2025-07-19 12:44 UTC

1. Risk Rating: HIGH
   The company exhibits a high risk profile primarily due to a significant negative net current asset position, substantial current liabilities relative to cash and asset base, and reliance on shareholder loans that are repayable on demand.

2. Key Concerns:

• Negative Working Capital: Net current liabilities stand at £216,753 against cash of only £8,712, indicating potential liquidity stress and difficulty meeting short-term obligations without additional funding.
• Reliance on Shareholder Loans: The £225,465 creditor balance represents an interest-free loan from shareholders, repayable on demand, which introduces refinancing risk and dependency on continued shareholder support.
• Negative Equity Position: Shareholders' funds are negative (£1,753) despite holding investment property valued at £215,000, showing that liabilities exceed assets and raising concerns about solvency if support is withdrawn.

3. Positive Indicators:

• Investment Property Asset: The company holds a recently acquired investment property valued at £215,000, supported by a professional external valuation, which can provide income and potential capital appreciation.
• No Overdue Filings: The company is compliant with statutory filing deadlines (accounts and confirmation statement), indicating good regulatory compliance and governance discipline.
• Directors and PSCs Transparency: Current directors and persons with significant control are clearly identified and active, with no noted disqualifications or governance issues.

4. Due Diligence Notes:

• Examine Shareholder Loan Terms: Confirm the nature, flexibility, and enforceability of the interest-free loan and assess the shareholders' willingness and capacity to continue funding on demand.
• Cash Flow Projections: Review detailed cash flow forecasts to evaluate the company’s ability to service liabilities and fund ongoing operations without additional external financing.
• Investment Property Income: Verify rental income streams, occupancy, and market conditions affecting the investment property to assess operational sustainability and revenue generation.
• Future Profitability Plans: Review management’s business plan and assumptions underpinning the expectation of future profits that would reverse the current negative equity and liquidity position.
• Related Party Transactions: Assess the impact and transparency of related party balances, including the shareholder loan, to ensure no undue risk or conflicts.