WESTFIELDS PROPERTY MANAGEMENT LIMITED

Executive Summary

Westfields Property Management Limited demonstrates a modest but improving equity position supported by property assets. However, its current negative working capital and heavy reliance on director loans for liquidity present short-term credit risk. Credit approval is recommended on a conditional basis with close monitoring of liquidity, operational cash flows, and debt servicing capability to ensure financial stability and repayment capacity.

WESTFIELDS PROPERTY MANAGEMENT LIMITED - Analysis Report

Company Number: 13574859

Analysis Date: 2025-07-20 15:28 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Westfields Property Management Limited shows growth in net assets and shareholders' funds over the last three years, indicating gradual strengthening of its financial base. However, the company currently has a significant working capital deficit (negative net current assets), primarily due to current liabilities exceeding current assets including cash. The presence of substantial director loans (over £646k) classified as current liabilities suggests reliance on related party funding to meet short-term obligations. The company operates in real estate letting, a sector sensitive to economic cycles and interest rates, which presents moderate risk. Given these factors, credit approval can be recommended on condition of continued monitoring of liquidity and confirmation of the company’s ability to service debt from operational cash flows rather than further director loans.

2. Financial Strength:
   The balance sheet shows fixed assets dominated by investment properties valued at £666,734, stable over recent years, with tangible assets and cash increasing slightly. Net assets improved from £8,618 in 2023 to £20,050 in 2024, reflecting retained earnings growth. Long-term liabilities consist solely of secured bank loans of £425,484, which is significant relative to net assets, but secured against property assets. The company’s equity base remains modest but growing. The financial structure shows moderate leverage, supported by property collateral, but the thin equity buffer means any adverse valuation or cash flow event could strain solvency.

3. Cash Flow Assessment:
   The company holds cash balances of £435,208 at the year-end; however, current liabilities total £657,664, producing a negative net working capital position of £222,456. This indicates potential short-term liquidity pressure. The large component of directors’ loans within current liabilities (£646,507) suggests that liquidity depends on related party funding rather than external sources or operational cash generation. Cash flow risk is notable until the company can reduce current liabilities or convert director loans into longer-term financing. Monitoring operational cash inflows from rental income relative to interest and principal repayments is critical.

4. Monitoring Points:

• Liquidity metrics, especially current ratio and net working capital, to ensure improvement or stabilization.
• Timely servicing of bank loan interest and principal repayments.
• Movement in director loans and whether these are extended, repaid, or converted to equity or long-term debt.
• Rental income consistency and occupancy rates to assess operational cash flow stability.
• Market valuation trends of investment properties affecting collateral value and solvency.
• Any changes in financial leverage or new borrowing that could impact financial risk.