CGL CONTRACTS LIMITED

Executive Summary

CGL Contracts Limited shows signs of moderate financial stability with positive net assets and compliance with filing requirements. However, liquidity pressures due to reduced cash balances and reliance on related party funding merit close monitoring. Further examination of cash flow and debtor quality is recommended to fully assess the company’s operational sustainability and solvency risk.

CGL CONTRACTS LIMITED - Analysis Report

Company Number: 12823977

Analysis Date: 2025-07-20 15:40 UTC

1. Risk Rating: MEDIUM
   Justification: CGL Contracts Limited demonstrates positive net current assets and growing net assets over recent years, indicating some financial stability. However, the company operates with relatively high current liabilities close to current assets, and cash reserves have decreased significantly from the prior year. The presence of interest-free, repayable-on-demand loans from related parties and modest shareholder capital also suggest moderate financial risk.

2. Key Concerns:

• Liquidity Pressure: Cash on hand decreased from £217k in 2023 to £105k in 2024, while current liabilities remain high (£332k), indicating potential short-term liquidity constraints.
• Reliance on Related Party Funding: The company has £48k owed to a related company (interest free, repayable on demand), which may pose refinancing or repayment risk if the related party’s position changes.
• Modest Capital Base: Share capital is minimal (£100), and although accumulated reserves have grown, this limits the company’s buffer against operating or financial shocks.

3. Positive Indicators:

• Positive Net Current Assets: Despite high current liabilities, net current assets improved from £30k to £44.9k, reflecting improved working capital management.
• Increasing Net Assets and Reserves: Shareholders’ funds increased from £33k in 2023 to £55k in 2024, showing retained profitability or capital injections.
• Timely Compliance: No overdue filings or accounts, indicating good regulatory compliance and governance practices.
• Stable Management: Directors have been in place since incorporation with no disqualifications noted, suggesting consistent leadership.

4. Due Diligence Notes:

• Investigate the nature and terms of the related party loan to assess the risk of sudden recall or non-repayment.
• Review cash flow statements and forecasts to confirm liquidity adequacy and ability to meet short-term obligations without reliance on related parties.
• Examine debtor aging and collectability given the substantial trade debtors balance (£180k).
• Assess the adequacy of provisions (£3.3k) and any contingent liabilities that might affect solvency.
• Confirm the sustainability of revenue streams and client concentration given the company’s industry (construction installation).
• Verify any off-balance-sheet liabilities or commitments not disclosed in the accounts.