FOREST CANOPY FOUNDATION

Executive Summary

Forest Canopy Foundation has improved its working capital position in the latest year but continues to operate with modest cash balances and a history of negative equity, indicating moderate solvency and liquidity risks. Compliance with filing requirements is current, and the company benefits from specialist directors aligned with its forestry activities. Further due diligence on debtor quality, cash flow, and operational sustainability is recommended to fully assess financial stability.

FOREST CANOPY FOUNDATION - Analysis Report

Company Number: 12930809

Analysis Date: 2025-07-20 14:00 UTC

1. Risk Rating: MEDIUM
   The Forest Canopy Foundation shows improvement in net current assets in the latest financial year but has a recent history of negative working capital and negative equity. The company is small, limited by guarantee, and exempt from audit, which limits transparency. While current assets slightly exceed current liabilities in 2024, cash reserves are low, indicating some liquidity constraints.

2. Key Concerns:

• Historical Negative Net Current Assets and Equity: The company reported net current liabilities and negative shareholders' funds for multiple years up to 2023, reflecting prior solvency pressures.
• Low Cash Balances: Cash on hand is only £2,308 as of July 2024, which is modest relative to current liabilities of £26,481, suggesting potential liquidity risk if debtors are not collected timely.
• No Employees and Limited Operational Data: The company has no employees reported, which raises questions about operational capacity and sustainability. Also, absence of an income statement (due to small company exemption) limits assessment of profitability and cash flow generation.

3. Positive Indicators:

• Improved Working Capital Position: The net current assets have swung positive to £4,685 in 2024 from a deficit in prior years, indicating some operational or financial improvement.
• No Overdue Filing or Compliance Issues: The company’s statutory accounts and confirmation statements are up to date with no overdue filings, suggesting sound governance practices.
• Experienced Forestry Directors: The board includes directors with forestry expertise, which aligns with the company’s core activity and could support operational stability.

4. Due Diligence Notes:

• Verify the nature and collectability of debtors (£28,858) as they represent the majority of current assets and are critical for liquidity.
• Obtain management accounts or cash flow forecasts to understand ongoing liquidity and operational cash generation.
• Clarify the company’s revenue model and funding sources, given no employees and limited financial disclosures.
• Review any contingent liabilities or off-balance sheet commitments not disclosed in the balance sheet.
• Investigate the absence of audit and impact on financial statement reliability.