CLEVELEYS ESTATES LTD

Executive Summary

Cleveleys Estates Ltd operates with a significant secured debt burden and limited liquidity, resulting in a high solvency risk despite stable asset valuation and recent profitability. The company maintains regulatory compliance, but its weak working capital position and thin equity base warrant further scrutiny of debt terms and cash flow projections to assess financial resilience. Investors should conduct detailed due diligence on loan arrangements and property valuation to fully understand risk exposure.

CLEVELEYS ESTATES LTD - Analysis Report

Company Number: 12997785

Analysis Date: 2025-07-20 18:34 UTC

1. Risk Rating: HIGH
   Justification: The company carries a significant level of long-term debt (£678k) secured against its sole investment property valued at £824k, but it has persistently negative net current assets (~£133k in 2023) indicating liquidity stress. Its net assets are minimal (£13k), and cash reserves are low relative to current liabilities, suggesting a vulnerability to short-term cash flow issues and potential solvency risk if obligations cannot be met as they fall due.

2. Key Concerns:

• Negative Net Current Assets: The company has a large current liabilities balance (£155k) far exceeding its current assets (£23k), indicating working capital deficiency and potential liquidity problems.
• High Secured Debt Concentration: The entire long-term debt is a bank loan (£678k) secured solely on the investment property, which may limit refinancing options and presents refinancing risk if the property value fluctuates.
• Minimal Equity Buffer: Shareholders’ funds are very low (£13k), reflecting a thin equity base and limited capacity to absorb losses or financial shocks.

3. Positive Indicators:

• Stable Investment Property Valuation: The property value has remained stable at £824k year-over-year, supporting the asset side of the balance sheet.
• Profit Generation: The company reported a profit of £9,643 in the latest year, improving retained earnings and net asset position from prior years.
• Compliance with Filings: No overdue accounts or confirmation statements, indicating good regulatory compliance and governance on reporting.

4. Due Diligence Notes:

• Investigate the terms of the bank loan, including interest rates, repayment schedule, and covenant requirements to assess refinancing risk and debt serviceability.
• Review cash flow statements or management accounts (not filed) to better understand operating cash generation and the ability to meet short-term liabilities.
• Confirm the valuation method and marketability of the investment property to verify collateral adequacy and potential liquidation value.
• Assess any contingent liabilities or off-balance-sheet commitments that may further impact solvency.
• Explore business plans or contracts underpinning the property letting activities to evaluate operational sustainability and income stability.