SEQUOIA HOMES & PROPERTIES LIMITED

Executive Summary

Sequoia Homes & Properties Limited exhibits significant liquidity and solvency risks due to persistent negative working capital and high leverage from substantial bank loans against low equity. While ownership of a valuable property asset and regulatory compliance are positive aspects, the company’s financial structure suggests vulnerability in meeting short-term obligations without further capital or refinancing. Detailed analysis of loan terms and cash flow generation is recommended to fully assess operational sustainability and risk exposure.

SEQUOIA HOMES & PROPERTIES LIMITED - Analysis Report

Company Number: 13048727

Analysis Date: 2025-07-20 13:01 UTC

1. Risk Rating: HIGH
   The company demonstrates a high solvency risk primarily due to significant current liabilities far exceeding current assets, resulting in negative net current assets across multiple years. The large long-term loan relative to its modest net assets and minimal equity further exacerbates financial vulnerability.

2. Key Concerns:

• Persistent negative working capital: Current liabilities (~£689k) vastly exceed current assets (<£3k), indicating liquidity stress and potential difficulties in meeting short-term obligations.
• Heavy reliance on bank loans: Long-term liabilities of £689k dominate the balance sheet relative to net assets (~£8k), signaling high leverage and financial risk.
• Minimal shareholder equity: Share capital is nominal (£100), and accumulated reserves are very low, limiting the company’s ability to absorb losses or raise additional capital easily.

3. Positive Indicators:

• Tangible fixed assets: Ownership of property valued at approximately £988k provides a substantial asset base that could support refinancing or asset sales if needed.
• Timely filings: No overdue accounts or confirmation statements, suggesting compliance with regulatory requirements and up-to-date statutory reporting.
• Experienced controlling directors: Both significant controllers hold equal voting rights and have been consistent since incorporation, indicating stable governance.

4. Due Diligence Notes:

• Investigate the nature and terms of the £689k bank loan, including interest rates, covenants, and repayment schedule to assess refinancing risk and cash flow impact.
• Review cash flow statements and revenue streams to understand operational cash generation and ability to service debt.
• Clarify whether the fixed asset (property) is encumbered as security for loans, and assess marketability and potential for liquidation if needed.
• Confirm the absence of contingent liabilities or off-balance-sheet obligations that might further impair liquidity.
• Examine directors’ plans for improving working capital and managing liabilities given the persistent negative net current assets.