CADON BUILDING SERVICES LTD

Executive Summary

Cadon Building Services Ltd, a recently formed private company, demonstrates initial solvency and regulatory compliance with positive net assets and working capital. However, reliance on director loans and low cash reserves relative to current liabilities introduce moderate liquidity and operational risks. Further monitoring of cash flow, debtor quality, and director loan arrangements is advisable to assess ongoing financial stability.

CADON BUILDING SERVICES LTD - Analysis Report

Company Number: 14626848

Analysis Date: 2025-07-29 16:51 UTC

1. Risk Rating: MEDIUM
   Justification: As a newly incorporated company (2023) with a single year of financial data, Cadon Building Services Ltd shows positive net assets and working capital, indicating initial solvency and liquidity. However, the company's reliance on director loans, minimal equity, and relatively high current liabilities pose moderate risk until further operational and financial history is established.

2. Key Concerns:

• Director Loans: Significant unsecured, interest-free loans from directors (£41,336 combined) are recorded as creditors, indicating dependency on related party funding which may affect financial stability if not repaid or replaced with external financing.
• Cash Position: Cash at bank is low (£8,144) relative to current liabilities (£261,322), which may signal potential liquidity strain despite positive net current assets supported by stock and debtors.
• Work in Progress and Debtor Concentration: Stock/work in progress (£196,466) and trade debtors (£128,673) form the bulk of current assets; this raises concerns about the speed of conversion to cash and potential exposure to customer payment delays or project completion risks.

3. Positive Indicators:

• Positive Net Current Assets and Net Assets: The company has net current assets of £71,961 and net assets of £85,174, suggesting a solvent position at the balance sheet date.
• Compliance and Timeliness: All filings, including accounts and confirmation statements, are up to date with no overdue returns, demonstrating regulatory compliance.
• Clear Accounting Policies and Small Company Exemptions: The accounts are prepared under FRS 102 section 1A with appropriate accounting policies, and the directors have complied with audit exemption rules, reflecting proper governance for a small entity.

4. Due Diligence Notes:

• Review the nature and terms of director loans, their repayment plans, and any impact on cash flow or creditor priority.
• Assess turnover and profitability trends beyond the initial year once available to evaluate operational sustainability and cash conversion cycles.
• Investigate the composition and collectability of trade debtors and work in progress, including customer credit risk and contract terms.
• Confirm there are no director disqualifications or governance issues beyond those disclosed, especially given the recent director changes within the first year.
• Monitor ongoing compliance with filing deadlines and any changes in company status or capital structure.