TOWN AND COAST HOMES LTD

Executive Summary

Town and Coast Homes Ltd shows early-stage growth in fixed assets and positive net equity after initial losses, supported by related party funding. However, significant short-term liabilities and minimal cash position create liquidity risks requiring close monitoring and possible restructuring of debt terms. Credit may be extended conditionally, contingent on improved cash flow management and financial stability measures.

TOWN AND COAST HOMES LTD - Analysis Report

Company Number: 13884937

Analysis Date: 2025-07-29 17:43 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Town and Coast Homes Ltd is a recently incorporated private limited company primarily engaged in letting and operating its own or leased real estate. The company shows positive net assets as of 29 February 2024, reflecting an improvement from prior years. However, it carries significant short-term liabilities (£495,883) far exceeding its current assets (only £100 cash), indicating acute liquidity stress and a working capital deficit of approximately £495,783. The bulk of its asset base is investment property valued at £531,271 with additions made during the year, showing growth in fixed assets. The director holds full control, which consolidates decision-making but also concentrates risk. The loans from related parties, non-interest bearing and without fixed repayment terms, suggest funding reliance on insiders rather than external finance. Given these factors, credit can be extended conditionally, subject to assurances on liquidity management and plans to reduce short-term creditors or convert liabilities into longer-term funding.

2. Financial Strength:
   The company’s balance sheet shows total assets less current liabilities of £35,488, representing positive net assets and shareholders’ funds after two years of negative equity. This turnaround is driven by the appreciation and addition of investment property assets. The absence of depreciation on investment properties follows FRS 102 treatment, which may inflate asset values compared to historical cost but is acceptable for fair value reporting. The company has minimal cash and no other current assets, leading to a large negative net current asset position. The reliance on related party loans to finance operations is a weakness, limiting external creditor comfort. Overall, the company is building equity but remains financially fragile given current liabilities and liquidity constraints.

3. Cash Flow Assessment:
   Cash availability is extremely limited at £100, which is insufficient to cover imminent liabilities of nearly half a million pounds. The company’s working capital deficit signals pressure on short-term cash flows and an inability to meet obligations from operating activities alone. The lack of formal repayment terms on related party loans adds uncertainty to cash flow forecasting. Without evidence of strong rental income or other operational inflows, the company’s liquidity position is precarious. Immediate focus is needed on improving cash reserves, operational cash generation, or restructuring liabilities to ensure ongoing solvency.

4. Monitoring Points:

• Liquidity and cash flow management: regular review of cash balances, incoming rental income, and creditor payment schedules.
• Related party loan agreements: formalisation of terms and potential conversion to longer-term debt or equity to alleviate short-term pressure.
• Investment property valuations: monitor market conditions impacting asset values and potential impairments.
• Profitability and operational cash generation: assess income statements when available to confirm ability to service debts.
• Director and ownership concentration risks: monitor governance and financial controls given single director and shareholder status.