CANES DEVELOPMENTS LIMITED

Executive Summary

Canes Developments Limited shows a concerning liquidity mismatch with current liabilities far exceeding current assets, raising significant short-term solvency risks. The sizeable director loan balance and lack of operational turnover further compound financial stability concerns. However, the company holds substantial investment property assets and remains compliant with statutory filings, suggesting underlying asset value and governance adherence despite early-stage operational challenges.

CANES DEVELOPMENTS LIMITED - Analysis Report

Company Number: 13885468

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

1. Risk Rating: HIGH

Justification: The company exhibits significant liquidity risk as current liabilities vastly exceed current assets, resulting in a large negative net working capital. There is also a material director loan balance that appears to have increased substantially, indicating potential related party financing reliance. Although net assets are positive due to investment properties, the ability to meet short-term obligations is questionable.

2. Key Concerns:

• Severe liquidity shortfall: Current liabilities of approximately £5.2 million compared to current assets of only £41k (cash £19k) at 28/02/2025, producing negative net current assets of about £5.16 million.
• Large unsecured, interest-free director loan balance of over £5.1 million, with no clear repayment plan, indicating dependence on internal funding and potential governance risk.
• Absence of turnover and no employees reported, suggesting an early-stage or inactive operational profile which may impact cash generation and sustainability.

3. Positive Indicators:

• Ownership of investment properties valued at £5.46 million at fair value, which supports asset backing and net positive equity (£48,963).
• No overdue filings for accounts or confirmation statements, indicating compliance with statutory requirements.
• Company is active and relatively newly incorporated (Feb 2022), potentially in early stages of development with growth prospects.

4. Due Diligence Notes:

• Investigate nature and terms of director loans, including rationale for advances, repayment expectations, and impact on financial stability.
• Review cash flow forecasts and working capital management plans to assess how the company intends to address the significant short-term liability gap.
• Assess valuation methodology of investment properties and confirm realizable value under current market conditions.
• Clarify operational status, sources of revenue, and business model to understand sustainability and future profitability.
• Confirm no undisclosed contingent liabilities or related party transactions that might affect solvency.