SPEARHEAD PROPERTIES LIMITED

Executive Summary

Spearhead Properties Limited holds a significant investment property asset but reports negative net assets and relies heavily on related party loans that are unsecured and interest-free. The company’s liquidity is modest with rising current liabilities and limited equity buffer. Credit approval is conditional, requiring ongoing monitoring of cash flow, related party financing, and asset values to mitigate risk.

SPEARHEAD PROPERTIES LIMITED - Analysis Report

Company Number: SC699823

Analysis Date: 2025-07-29 18:58 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Spearhead Properties Limited demonstrates ownership of investment property valued at approximately £1.26 million, which supports asset backing. However, the company reports net liabilities (£24,684 negative net assets) and a material level of long-term creditors (£1.3 million), largely comprising related party loans with no repayment expected within 12 months. The working capital position is positive but modest (£16,964). The director is a sole significant controller with relevant professional expertise (Chartered Surveyor), which is positive for management quality. Given the small scale, limited equity, and reliance on related party financing, credit approval should be conditional on monitoring liquidity and ensuring no further deterioration in gearing or liquidity risk. The absence of an audit and limited disclosure on profitability warrants caution.

2. Financial Strength:

• Fixed assets (investment property) stand at £1,258,985, unchanged from prior year, providing stable collateral value.
• Current assets decreased from £148,682 to £120,370, mainly due to lower debtors and a slight increase in cash balances (£54 to £9,980).
• Current liabilities increased to £103,406 from £52,994, reducing net current assets from £95,688 to £16,964, indicating tightening short-term liquidity.
• Long-term liabilities remain high at £1,300,633, primarily related party loans that are interest free and unsecured, with no repayment planned within 12 months.
• Net liabilities and negative shareholders’ funds indicate the company is technically insolvent on an accounting basis, though asset backing mitigates risk somewhat.
• The company operates with minimal share capital (£1), reflecting limited external equity buffer.

3. Cash Flow Assessment:

• Year-end cash of £9,980 is low but improved from prior year (54), suggesting some cash flow management.
• Debtors reduced significantly (£148,628 to £110,390), potentially improving cash conversion.
• Current liabilities doubled, pressuring short-term liquidity.
• Related party loans totaling £579,019 (current and non-current combined) represent significant funding but are interest-free and not due within 12 months, presenting rollover risk but also flexibility.
• No employees and minimal operating expenses reduce cash burn, but lack of profit and negative reserves indicate reliance on external financing.
• Absence of profit and loss information limits full cash flow assessment; however, the director’s statements imply limited trading activity.

4. Monitoring Points:

• Track net current assets and cash position to ensure liquidity remains sufficient to meet short-term obligations.
• Monitor related party loan balances and repayment terms, including any changes to interest or repayment profiles.
• Watch for improvements or further deterioration in net asset position, especially equity reserves.
• Review any updates on property valuations or disposals that affect asset backing.
• Assess any changes in debtor balances and collection efficiency.
• Keep under review director conduct and any changes in management or ownership structure.
• Confirm filing of annual accounts and confirmation statements on time to avoid regulatory penalties.