Company Number: 14519262

Analysis Date: 2025-07-20 17:07 UTC

Financial Health Assessment Report: CDP CONTRACTING LTD

---

1. Financial Health Score: D

Explanation:
The company exhibits several symptoms of financial distress, notably negative net assets and working capital deficits. While it remains operational (active status) and current with filings, the financial position shows challenges in meeting short-term obligations without creditor support. This results in a below-average financial health grade, reflecting vulnerability but not immediate insolvency.

---

2. Key Vital Signs

Metric	Value (£)	Interpretation
Fixed Assets	18,730	Moderate investment in tangible assets (motor vehicles and computer equipment).
Current Assets	11,481	Includes cash (£3,997) and debtors (£7,484).
Current Liabilities	15,802	Amounts due within one year; exceeds current assets, indicating liquidity pressure.
Net Current Assets (Working Capital)	-4,321	Negative working capital ("symptom of distress") suggests difficulty in covering short-term debts.
Creditors (>1 year)	16,964	Long-term liabilities mainly from hire purchase agreements.
Net Assets (Equity)	-2,722	Negative net assets indicate financial strain and potential solvency concerns.
Shareholders' Funds	-2,722	Reflects accumulated losses exceeding capital invested.
Number of Employees	0	No staff, possibly reflecting a sole trader or contractor operation.
Going Concern Statement	Positive	Director believes company will continue with creditor support, but margin is tight.

---

3. Diagnosis: Financial Condition Overview

Liquidity and Working Capital:
The company suffers from a short-term liquidity imbalance. Current liabilities (£15,802) exceed current assets (£11,481), resulting in a negative net current asset position of -£4,321. This "unhealthy cash flow" situation means the company may struggle to pay bills on time without reliance on creditor tolerance or additional financing.

Solvency:
Negative net assets of -£2,722 reflect that total liabilities exceed total assets, a significant "symptom of financial distress." The company’s equity base is eroded by accumulated losses (-£2,822 in the profit and loss reserve), which is a warning sign of solvency issues if the trend continues.

Asset Base:
Fixed assets of £18,730 provide some tangible backing, mainly motor vehicles and computer equipment. However, these are depreciating assets and might not be easily liquidated to cover debts.

Debt Structure:
Long-term hire purchase liabilities (£16,964) add to financial burden, with repayments requiring steady cash flow. High director current account balances (£8,858) suggest reliance on director financing, which may be a temporary lifeline but poses risk if withdrawn.

Operational Status:
No employees and a single director/controller indicate a small-scale operation, possibly a sole consultancy contractor. This limits operational complexity but also revenue diversification and resilience.

Going Concern and Future Outlook:
The director’s going concern statement acknowledges ongoing support from creditors but highlights a narrow margin. This precarious balance means the company’s future depends heavily on maintaining creditor confidence and improving cash flow.

---

4. Recommendations: Path to Financial Wellness

1. Improve Working Capital:

   • Accelerate collections of trade debtors (£7,484) to boost cash.
   • Negotiate extended payment terms with suppliers or restructure short-term debts to ease liquidity pressures.

2. Reduce Debt Burden:

   • Explore refinancing or consolidating hire purchase liabilities to reduce interest and improve cash flow.
   • Consider repaying director current account balances gradually to reduce reliance on internal financing.

3. Enhance Cash Flow Management:

   • Implement rigorous cash flow forecasting and monitoring to anticipate and manage shortfalls.
   • Control discretionary expenses and delay non-essential capital expenditures.

4. Build Equity Base:

   • Inject fresh capital if possible or retain profits to rebuild shareholder funds and improve solvency metrics.

5. Strategic Business Development:

   • Expand client base and diversify revenue streams to stabilize income.
   • Consider formal credit control policies and tighter budget management.

6. Regular Financial Review:

   • Maintain up-to-date accounts and conduct periodic financial health checks to catch early symptoms of distress.

---

Medical Analogy Summary

CDP CONTRACTING LTD currently shows "symptoms" akin to a patient with weak circulation—working capital deficit and negative equity indicate poor financial "circulation" and resilience. The "heart" (cash flow) is weak and dependent on creditor "supportive care." Without intervention to strengthen liquidity and reduce debt load, the company risks deterioration. However, with careful management and financial "therapy," recovery and sustainable health are achievable.

---