CANAPII LIMITED

Executive Summary

Canapii Limited shows early-stage growth with improved profitability and asset base but currently operates with a marginally negative working capital position and limited equity. The company depends on shareholder support to maintain liquidity and meet obligations. Conditional credit approval is advised, subject to continued monitoring of liquidity, profitability, and shareholder funding assurances.

CANAPII LIMITED - Analysis Report

Company Number: 13234100

Analysis Date: 2025-07-29 15:07 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Canapii Limited demonstrates modest profitability and growth with a profit of £8,626 for the year ended March 2024, compared to £99 the previous year. The company operates in a niche, technology-driven sector—business and domestic software development—which can offer scalability but also exposes it to market volatility. Despite this positive trajectory, the company currently holds a slightly negative working capital position (net current liabilities of £855) and a small absolute net asset base (£8,825). Management relies on ongoing financial support from its parent and shareholders to maintain operations and meet obligations, which is a key credit consideration. Approval is recommended with conditions: continued monitoring of liquidity and confirmation of ongoing shareholder support.

2. Financial Strength:
   The balance sheet is small but shows improvement over prior years. Fixed assets increased significantly to £12,641 from £938, indicating investment in tangible assets possibly supporting business growth. Current assets rose to £88,414 mainly due to increased debtors (£47,728) and cash (£40,686), yet current liabilities have also grown substantially to £89,269. This results in a marginally negative net current asset position, signaling tight short-term liquidity. Net assets improved markedly to £8,825 from £199, reflecting retained earnings growth. Deferred tax provisions of £2,961 are noted, which may impact future cash flows. Overall, the company’s financial strength is modest, with limited equity buffer.

3. Cash Flow Assessment:
   Cash on hand increased by approximately £14,487 year-over-year, which supports operational liquidity. However, the negative working capital position implies current liabilities slightly exceed current assets, raising concerns about the ability to meet short-term obligations purely from operational cash flows. The increase in trade debtors could indicate extended credit terms or slower collections, which may pressure cash flow. The directors’ statement affirms reliance on shareholder funding to cover cash flow gaps, emphasizing the importance of external support. No significant borrowings are reported, so debt service burden is low.

4. Monitoring Points:

• Liquidity ratios and working capital position: monitor improvements or deterioration, particularly debtor collection efficiency and creditor payment terms.
• Profitability trends: ensure sustained or improved profit margins to build internal equity.
• Dependence on shareholder funding: confirm ongoing financial backing remains robust to cover operational shortfalls.
• Asset investments: assess if fixed asset growth aligns with revenue generation and cash conversion.
• Deferred tax impact: track timing and cash implications of deferred tax liabilities.