Risk Analysis: CAL SAMEDAY LIMITED

1. Risk Rating: HIGH

Justification: The company exhibits a concerning combination of a director loan that exceeds net assets, rapidly deteriorating liquidity despite apparent revenue growth, and thin capitalisation that leaves minimal buffer against adverse events. While the business has demonstrated trading longevity, the current financial structure presents material solvency and liquidity vulnerabilities.

2. Key Concerns

Concern 1: Director Advance Exceeding Net Assets

M Johnson's outstanding director loan balance stands at £124,400 as at 30 April 2025, having increased by £55,300 during the year with no repayments made. This amount exceeds the company's total net assets of £121,455, meaning the director effectively owes more to the company than the company is worth on a net basis. This represents a significant extraction of value and raises serious governance concerns regarding the director's commitment to maintaining the company's financial resilience. The lack of any repayment activity whatsoever is particularly troubling.

Concern 2: Severe Liquidity Deterioration

Cash has declined dramatically from £77,711 (2023) to £22,616 (2024) to £14,228 (2025) — an 82% decline over two years. Simultaneously, current liabilities have more than doubled from £764,755 to £1,627,278. The current ratio stands at approximately 1.05:1 (£1,711,160 current assets against £1,627,278 current liabilities), providing virtually no working capital buffer. The net current assets of £83,882 are essentially unchanged from the prior year (£83,926) despite the business nearly doubling in size, indicating that growth is being funded entirely through increased creditor leverage rather than cash generation.

Concern 3: Factoring Facility with Full Recourse

The accounts disclose a factoring arrangement where advances are made on 85% of assigned debt, with full recourse to the company. This means if debtors fail to pay, the company remains liable. Given that debtors have more than doubled from £826,065 to £1,696,932 and represent the dominant current asset, any material default could cascade into a significant cash shortfall. The factoring facility effectively masks the true liquidity position by converting debtors into cash at a discount while retaining all credit risk.

3. Positive Indicators

• Trading Longevity: The company has been operational since 2011 and has weathered previous financial stress, including a period of negative net assets in 2021 (£-13,361). This suggests some operational resilience and management adaptability.

• Equity Recovery: Net assets have been rebuilt from negative territory in 2021 to £121,455 in 2025, demonstrating capacity to generate and retain earnings over time. Retained earnings have grown consistently from £111,789 to £121,355 in the latest year.

• Regulatory Compliance: Accounts and confirmation statements are filed on time with no overdue status. The company maintains proper filing discipline and appears to meet its statutory obligations.

• Long-term Debt Elimination: Creditors falling due after more than one year have been reduced from £16,794 to nil, improving the long-term liability position.

4. Due Diligence Notes

1. Director Loan Terms: Investigate the formal terms of M Johnson's advance — is it secured, interest-bearing, and does it have a defined repayment schedule? Request any loan agreements or board minutes authorising this facility. The absence of repayments warrants direct inquiry.

2. Factoring Agreement Specifics: Obtain and review the full factoring agreement — understand the advance rate, fees, recourse provisions, termination clauses, and what proportion of the £1.7m debtor book is factored versus unfactored.

3. Debtor Quality and Concentration: Assess the age profile and collectibility of the debtor book. Determine whether there is customer concentration risk (e.g., does a single customer represent a disproportionate share of outstanding debtors?). Identify any related-party debtors.

4. Director Resignation Impact: Mark Anthony Johnson resigned as director on 4 September 2026 (per the officer records). Clarify whether he remains a PSC (the PSC register still lists him with 25-50% ownership) and understand the implications for control and decision-making. Also determine whether his director loan will be repaid upon departure.

5. Share Structure Complexity: The company has four classes of ordinary shares (A, B, C, D) totalling only 100 shares at £1 each. Understand the rights attached to each class — voting rights, dividend rights, and whether this structure could create governance or control complications.

6. Cash Flow Sustainability: Request cash flow statements or management accounts to understand whether the declining cash position reflects genuine operating losses, aggressive debtor growth, or deliberate financing decisions. The disconnect between apparent revenue growth (inferred from debtor and asset increases) and cash depletion requires explanation.

7. Lease Commitment Reduction: Operating lease commitments have decreased significantly from £81,844 to £12,136. Investigate whether this reflects lease terminations, business restructuring, or other changes that might impact operational capacity.