STEALTH DEVELOPMENTS LIMITED

1. Risk Rating: MEDIUM

Based on the available data, the company is solvent on a balance-sheet basis with positive net assets of £3.82m and a strong headline current ratio. However, the quality of current assets is weakened by a large intercompany debtor balance, the investment property valuation rests on a director’s assessment rather than an external valuation, and long-term borrowings increased materially during the year. The company is filing on time and is not in any formal insolvency process, but the absence of an audit and limited published profit information constrain assurance.

2. Key Concerns

1. Concentration in intercompany receivables
   Debtors due within one year total £2.80m, of which £2.63m is owed by group undertakings. That is roughly 84% of current assets. The strong current ratio of approximately 7.0 therefore relies heavily on the financial health and repayment capacity of other group entities, which cannot be assessed from this filing alone.

2. Valuation and leverage sensitivity
   Investment property is carried at £5.38m. The accounts note that the 2025 valuation was made by the director, despite the accounting policy referring to external valuations. With long-term creditors of £3.76m and deferred tax of £744k, there is limited headroom if the property valuation were to be revised downward. A fall in property values could erode a substantial portion of net assets.

3. Unexplained movements in group-related balances and investments
   During the year, the company made a £275k addition to subsidiary investments and then wrote off £274.9k, leaving a nominal £100 carrying value. At the same time, long-term creditors increased by roughly £1.76m and amounts owed by group undertakings rose by approximately £859k. These movements suggest active intra-group financing and restructuring, but the filing does not provide enough detail to understand the commercial rationale or the recoverability of the balances.

3. Positive Indicators

• Established company with a long operating history
  Incorporated in 1995 and still active, with no overdue accounts or confirmation statement on the available record.

• Positive net assets and long-term growth
  Net assets have grown from approximately £450k in 2012 to £3.82m at April 2025, though there may have been a weaker period around 2014.

• Improved cash position
  Cash at bank and in hand increased from £57k to £327k, and current liabilities fell from £1.07m to £447k.

• Asset-backed balance sheet
  The £5.38m investment property provides a substantial asset base, and the company is not currently subject to any insolvency procedure.

4. Due Diligence Notes

• Obtain the full, unabridged accounts and notes to identify the composition, maturity, security and interest terms of the £3.76m long-term creditors. Confirm whether any borrowing is secured against the investment property and whether financial covenants are being met.
• Review the financial statements of the group undertakings that owe the company £2.63m. Assess whether these balances are recoverable in a reasonable timescale and whether they are interest-bearing.
• Investigate the prior-year adjustment shown by the “as restated” 2024 comparatives. Any restatement should be understood before relying on the reported trend.
• Commission an independent external valuation of the investment property and stress-test the balance sheet against possible valuation declines, particularly in light of the £744k deferred tax provision.
• Request an explanation of the subsidiary investment addition and subsequent £274.9k write-off. Identify the subsidiary concerned and assess whether any further commitments or contingent liabilities exist.
• Review related-party transactions, director loans, and the practical implications of the concentration of control in the director/PSC, who holds more than 75% of shares and voting rights.
• Because the accounts are unaudited, seek supporting management accounts, cash flow forecasts and tax computations before placing full reliance on the reported figures.

The company appears solvent and compliant with filing obligations, with positive net assets and a substantial property portfolio. However, the balance sheet relies heavily on intercompany receivables, the investment property valuation lacks external verification, and borrowings increased significantly in the year. Further due diligence is recommended on group cash flows, property valuation, and the related-party transactions before any investment decision.