SPELLBROOK PROJECT LTD

Executive Summary

Spellbrook Project Ltd demonstrates rapid asset growth and maintains strong net working capital; however, its minimal net equity and heavy reliance on intra-group loans present credit risks. Conditional approval is advised with appropriate safeguards and continuous monitoring of related party funding and liquidity metrics. The company’s ongoing viability depends on managing its working capital efficiently and securing stable financing arrangements.

SPELLBROOK PROJECT LTD - Analysis Report

Company Number: 13666973

Analysis Date: 2025-07-20 11:55 UTC

1. Credit Opinion: CONDITIONAL APPROVAL. Spellbrook Project Ltd is an active private limited company engaged in building project development. The company shows significant growth in current assets and current liabilities year on year, indicating expanding operations. However, its net assets and shareholder funds remain nominal (£100), and it carries a sizable long-term creditor balance owed to group undertakings (£1.19M). The company is dependent on related party financing, raising concerns about financial independence and creditor risk. Loan approval is recommended only if supported by strong director guarantees or additional security, and with ongoing monitoring of related party balances and cash flow.

2. Financial Strength: The balance sheet reveals current assets of £1.4M as of October 2023, a substantial increase from £202k in the previous year, largely due to increased stock/work in progress (£1.36M). Current liabilities rose to £210k from £22k, maintaining a healthy net working capital position of £1.19M. The critical issue is the large creditor amount falling due after more than one year (£1.19M) owed to group undertakings, which inflates total liabilities and reduces net assets to a minimal £100. This indicates the company is heavily leveraged on intra-group funding rather than external debt or equity, which may affect its standalone creditworthiness.

3. Cash Flow Assessment: Cash balances are low (£4,948) despite large current assets, suggesting funds are tied up in stock and debtors. Debtors increased to £35,776, which is a small proportion relative to stock but requires confirmation of collectability. The company has no employees and limited operational cash flow, relying likely on related party funding to finance operations and working capital. Liquidity risk exists if related party funding terms change or if stock is not converted to cash promptly. The director confirms the business is a going concern with adequate working capital for the next 12 months.

4. Monitoring Points:

• Closely monitor related party creditor balances and terms to assess refinancing risk.
• Track turnover and cash conversion cycles to ensure stock and debtors translate into cash.
• Watch for any deterioration in net current assets or sudden increases in liabilities.
• Review future financial statements for evidence of profitability and equity build-up.
• Confirm director commitment and any personal guarantees supporting credit facilities.