CARNIVAL ESTATE LTD

Executive Summary

Carnival Estate Ltd has a leveraged balance sheet supported by investment property assets and related party funding. While net assets and cash improved modestly, the company’s negative working capital and significant unsecured related party loans pose liquidity risks. Conditional credit approval is advised with ongoing monitoring of liquidity, related party exposures, and debt servicing.

CARNIVAL ESTATE LTD - Analysis Report

Company Number: 12658655

Analysis Date: 2025-07-29 19:00 UTC

1. Credit Opinion: CONDITIONAL APPROVAL

Carnival Estate Ltd demonstrates a positive net asset position and a modest increase in shareholder funds, indicating some financial growth. However, the company carries substantial creditor balances, especially long-term liabilities (£1.42m) close to the value of its investment property (£1.96m), and holds significant related-party debts with no fixed repayment terms. The cash position is reasonable but working capital is negative, reflecting short-term liquidity pressure. Approval is recommended with conditions focusing on monitoring liquidity closely and ensuring transparency around related-party transactions and debt servicing capacity.

2. Financial Strength:

• Total assets of £2.08m (primarily investment property at £1.96m) declined from prior year (£2.59m), largely due to a disposal of property (£544k).
• Net assets improved slightly to £55.9k from £25.9k, reflecting retained profits.
• The balance sheet shows a high gearing profile: long-term creditors (£1.42m) represent over 25x the shareholder equity, indicating leverage risk.
• Related party balances are material: £537k owed to a parent company and £64k owed by an associate company, both unsecured and interest free without fixed terms.
• Deferred tax liability is minimal (£771).

3. Cash Flow Assessment:

• Cash on hand increased to £57k from £25k, improving liquidity.
• Current assets (£121k) are insufficient to cover current liabilities (£599k), resulting in net current liabilities of £478k.
• The company relies on related party funding to manage short-term obligations, which is unsecured and interest free, indicating external liquidity support but also risk if this support ceases.
• The company’s operating cash flow details are not disclosed but given the negative working capital, cash flow management should be closely monitored.

4. Monitoring Points:

• Liquidity and working capital trends: watch the company's ability to convert debtors and cash into sufficient funds to meet short-term creditors.
• Related party balances: monitor changes in unsecured loans and debtors from related companies, as these affect financial flexibility.
• Property portfolio value fluctuations and disposals: significant changes in investment property value or sales could impact net asset base.
• Debt repayment capacity: review servicing of long-term creditors and any refinancing risks.
• Profitability and cash flow generation in subsequent filings to ascertain operational resilience.