CDB CASTLE MEWS LTD

Executive Summary

CDB CASTLE MEWS LTD is currently experiencing liquidity challenges and negative equity, primarily sustained through internal group financing. While not in immediate distress, the company requires focused cash flow management and equity strengthening to ensure long-term financial health. Proactive steps can help transition from reliance on parent support to a more robust, independent financial state.

CDB CASTLE MEWS LTD - Analysis Report

Company Number: 14518555

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

Financial Health Assessment for CDB CASTLE MEWS LTD

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1. Financial Health Score: D

Explanation:
The company shows persistent negative net current assets and shareholders' funds over the last two years, indicating a financial condition that is under stress. While it remains active and not in formal distress processes, the working capital deficit and reliance on intercompany loans pose liquidity risks. The score "D" reflects a borderline unhealthy financial state requiring careful management to avoid deterioration.

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2. Key Vital Signs

Metric	2024 (£)	2023 (£)	Interpretation
Current Assets	1,767,377	754,824	Healthy increase, mainly in work-in-progress.
Cash at Bank	121	776	Critically low cash—symptom of liquidity strain.
Debtors	54,447	27,847	Modest increase; manageable but needs monitoring.
Current Liabilities	1,772,977	756,317	More than doubled, mainly owed to group undertakings.
Net Current Assets (Working Capital)	-5,600	-1,493	Negative working capital indicates short-term liquidity pressure.
Shareholders’ Funds (Equity)	-5,700	-1,593	Negative equity signals accumulated losses and financial stress.
Stock (Work-in-Progress)	1,712,809	726,201	Large increase—may tie up funds in unfinished projects.

Additional Notes:

• Most current liabilities (£1.68M) are amounts owed to the parent/group company, which suggests internal financing rather than external creditor pressure.
• The company is exempt from audit and has small company status, limiting detailed public disclosures.

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3. Diagnosis: Financial Condition Overview

CDB CASTLE MEWS LTD is in a precarious financial state characterized by:

• Liquidity symptoms: Very low cash reserves combined with negative net current assets, indicating that the company may struggle to meet short-term obligations without continued support from its parent company.
• Balance sheet strain: Negative equity reflects accumulated losses or investments not yet profitable, akin to a patient with chronic symptoms but no acute crisis yet.
• Dependency on related party financing: The large amounts owed to the parent company (Coker Design And Build Ltd) suggest the business is relying heavily on internal loans to sustain operations.
• Asset composition: The majority of current assets are work-in-progress stock, which may not be readily convertible to cash and could delay cash inflows.
• Going concern: Directors state the company is supported by its shareholder and directors, which is critical given the negative equity and liquidity constraints.

This financial "patient" shows symptoms of distress but is currently stable due to supportive care from its parent company. Without this, the company’s ability to operate independently could be compromised.

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4. Recommendations: Steps to Improve Financial Wellness

1. Enhance Cash Flow Management:

   • Prioritise accelerating receivables collection and converting work-in-progress into completed, billable projects.
   • Maintain a minimum cash buffer to avoid liquidity crises.

2. Reduce Reliance on Group Loans:

   • Develop a plan to reduce intercompany debt gradually or formalise long-term financing arrangements to avoid short-term liquidity mismatches.

3. Strengthen Equity Base:

   • Consider a capital injection from shareholders to restore positive equity and shore up the balance sheet. This will improve creditor confidence and reduce financial risk.

4. Cost Control and Profitability Focus:

   • Review project margins and overheads to enhance profitability, reducing the drain on retained earnings.

5. Regular Financial Monitoring:

   • Implement monthly cash flow forecasts and working capital reviews to detect early signs of financial strain.

6. Explore External Financing Options:

   • If internal funding is insufficient, seek external finance with manageable terms to support growth and liquidity.

7. Governance and Transparency:

   • Ensure timely and accurate filing of accounts and returns to maintain regulatory compliance and investor confidence.

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Medical Analogy Summary:

CDB CASTLE MEWS LTD's financial condition is like a patient showing chronic symptoms of liquidity weakness and balance sheet strain. The company is not in critical condition thanks to its "family support" (parent company funding), but without intervention to improve cash flow and strengthen equity, it risks entering a more severe health crisis.

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