AXLE DEVELOPMENTS LIMITED

Executive Summary

Axle Developments Limited shows improving equity driven by investment property value but remains challenged by significant current liabilities and low cash balances, indicating liquidity risk. Conditional credit approval is recommended, contingent on improved cash flows and close monitoring of short-term debt servicing. The company’s creditworthiness hinges on converting its property assets into sustainable cash flow to meet obligations.

AXLE DEVELOPMENTS LIMITED - Analysis Report

Company Number: 13130184

Analysis Date: 2025-07-19 13:02 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Axle Developments Limited presents a mixed credit profile. The company is relatively new (incorporated in 2021) and operates in the development of building projects sector. While it reports positive shareholders’ funds in the latest year (£12,830) compared to negative equity in prior years, its liquidity position is weak with significant net current liabilities (£178,621). The company holds an investment property valued at £191,451, which is a key asset underpinning its balance sheet. However, current liabilities remain high relative to cash and working capital, raising concerns about short-term repayment capacity. Approval is conditional on monitoring cash flow improvements and debt servicing ability.

2. Financial Strength:
   The balance sheet shows total net assets of £12,830 as at 29 January 2024, recovering from a negative net asset position in 2023. The key asset is investment property valued at £191,451, held at fair value. The company’s equity is minimal (£100 share capital) but profit and loss reserves have improved to £12,730. Despite this, the company has persistent net current liabilities (£178,621), indicating working capital pressure. The current liabilities consist mainly of other creditors (£177,634) and some corporation tax payable (£3,056). The absence of fixed assets other than investment property suggests limited operational assets.

3. Cash Flow Assessment:
   Cash balances are low (£2,069), and net current liabilities are significantly negative, highlighting a liquidity strain. The company’s ability to meet short-term obligations depends on cash inflows from operations or refinancing. No audit was performed, and the profit and loss account was not included, which limits visibility on operating cash flows. The large creditor balances may relate to project-related payables or deferred payments. The company needs to demonstrate sustained cash flow generation or access to external funding to cover current liabilities to mitigate credit risk.

4. Monitoring Points:

• Liquidity trends: Track monthly cash balances and working capital improvements.
• Creditor aging: Monitor the composition and aging of current liabilities, especially trade and other creditors.
• Profitability and cash generation: Obtain management accounts to assess operating performance and cash flow.
• Asset valuations: Confirm the ongoing fair value of the investment property and potential for sale or refinancing.
• Tax liabilities: Monitor corporation tax payments and any deferred tax exposure.
• Director conduct and governance: No adverse records noted; maintain oversight on management actions.