HUG DEVELOPMENTS LIMITED

Executive Summary

Hug Developments Limited is a young, small-scale real estate development company with a modest asset base and slight working capital deficit, indicating some liquidity risk. The company maintains good compliance with regulatory filings and benefits from concentrated ownership and control. Further investigation into related party transactions and operational cash flows is recommended to fully assess financial stability and growth prospects.

HUG DEVELOPMENTS LIMITED - Analysis Report

Company Number: 13324825

Analysis Date: 2025-07-20 16:37 UTC

1. Risk Rating: MEDIUM
   The company shows modest net assets but a slight working capital deficit, with liabilities marginally exceeding current assets. It is a relatively new entity (incorporated 2021) operating in real estate development, which can be capital intensive and cyclical. No evidence of overdue filings or liquidation exists, but the thin capital base and current liabilities slightly exceeding current assets indicate some risk in meeting short-term obligations.

2. Key Concerns:

• Negative Net Current Assets: The company’s current liabilities (£14,518) slightly exceed its current assets (£14,453), resulting in a net current liability of £65, which could signal tight liquidity.
• Limited Capitalization: Share capital is minimal (£100) with shareholders’ funds at £1,435, indicating a very small equity base to absorb shocks or fund growth.
• Related Party Borrowing: The company owes £2,500 to a related party (another company directed by Mrs. Harrison), which may indicate reliance on director-related funding and potential liquidity pressure.

3. Positive Indicators:

• No Overdue Filings: Both accounts and confirmation statement filings are up-to-date, indicating good compliance and governance practices.
• Growing Asset Base: Fixed assets of £1,500 and increase in cash from £100 to £11,953 year-on-year shows some asset accumulation and cash improvement.
• Experienced Control: The company is controlled by two directors with significant shareholding and voting rights, which may facilitate decisive management and oversight.

4. Due Diligence Notes:

• Investigate the nature and terms of the related party loan to Picture This Place Limited to assess repayment risk and impact on liquidity.
• Review cash flow forecasts and working capital management to understand how the company plans to cover current liabilities and sustain operations.
• Examine the business model and pipeline of development projects to evaluate revenue generation potential and operational sustainability given the small capital base.
• Confirm whether any contingent liabilities or commitments exist that could affect solvency.
• Assess the experience and track record of the directors in real estate development ventures.