CHADWICK CONSTRUCTION LIMITED

Executive Summary

CHADWICK CONSTRUCTION LIMITED shows stable but modest financial health with positive working capital and equity. The company is currently reliant on director loans and has a low capital base, which poses risks for financial resilience. Improving capitalisation, profitability monitoring, and cash flow management will be critical to strengthen its financial wellness and support sustainable growth.

CHADWICK CONSTRUCTION LIMITED - Analysis Report

Company Number: 13167593

Analysis Date: 2025-07-29 16:04 UTC

Financial Health Assessment for CHADWICK CONSTRUCTION LIMITED

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1. Financial Health Score: C

Explanation:
The company demonstrates a stable but modest financial position with positive net current assets and shareholders' funds. However, the fluctuations in net assets and a very low share capital alongside reliance on director loans indicate some vulnerability. The absence of significant debt is positive, but the company appears small and somewhat constrained in resources, with limited cash and reliance on fixed assets. Overall, the financial health is fair but with warning signs requiring attention to improve resilience.

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2. Key Vital Signs

Metric	2025 (£)	Interpretation
Current Assets	10,000	Healthy level of stock maintained; however, no trade debtors indicating limited receivables.
Current Liabilities	5,385	Manageable short-term obligations; current ratio approx 1.86 (10,000/5,385) indicates liquidity is adequate but not strong.
Net Current Assets	4,615	Positive working capital suggests the company can cover short-term debts with current assets.
Total Assets Less Current Liabilities	11,356	Stable net asset base, though decreased from prior year, indicating some asset erosion or profit retention decline.
Shareholders Funds	11,356	Equity buffer is positive but relatively small, reflecting limited capitalisation.
Share Capital	£1	Minimal initial capital; company reliant on reserves and director loan.
Tangible Fixed Assets	6,741	Significant investment in equipment, possibly essential for construction activities.
Director Loan	Unsecured, interest-free and repayable on demand	Indicates reliance on director financing which may pose risk if withdrawn.

Interpretation of Vital Signs:

• The company has maintained positive net current assets for several years, indicating no immediate liquidity crisis.
• The current ratio (~1.86) is above 1, which is generally considered healthy, meaning the company can meet short-term liabilities from current assets.
• The drop in net assets and shareholders’ funds from £15,009 in 2024 to £11,356 in 2025 signals some reduction in retained profits or asset value.
• Minimal share capital but reasonable reserves suggest the company is primarily financed through earnings and director loans rather than external capital.
• No trade debtors in the latest year may indicate either prompt collection or low sales on credit, which can affect cash flow patterns.
• The presence of director loans is a symptom of dependency on internal financing which could be a vulnerability if the director withdraws support.

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3. Diagnosis: What the Financial Data Reveals About Business Health

• Liquidity & Cash Flow: The company shows a "healthy cash flow" symptom in that current assets comfortably exceed current liabilities, allowing it to meet short-term obligations. However, the lack of trade debtors suggests minimal credit sales or very efficient collections, which can be positive but might also indicate low sales volume or conservative credit terms limiting growth.
• Capital Structure: The company's "low capital injection" (only £1 share capital) paired with director loans points to a business in early growth or constrained funding phase. This is akin to a patient with a fragile immune system relying heavily on a single helper (director financing).
• Profitability & Retained Earnings: Declining shareholders’ funds and net assets suggest that either profits are low or losses have been incurred, or assets have depreciated or been impaired. The company has not disclosed a profit and loss account, so the detailed profitability picture is unclear, but the reduction in equity is a cautionary "symptom" of financial stress or reinvestment needs.
• Asset Management: Fixed assets are significant relative to total assets, indicating investment in operational capacity, which is positive. However, depreciation and impairment policies should be closely monitored to avoid asset overvaluation.
• Compliance & Governance: The company is up to date with filings and is not under audit, consistent with its small company status. No signs of governance or compliance distress.

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4. Recommendations: Specific Actions to Improve Financial Wellness

1. Strengthen Capital Base: Consider increasing share capital or seeking external equity investment to reduce reliance on director loans and improve financial stability. This would reduce financial risk if director financing were withdrawn.
2. Improve Profitability Transparency: Prepare and monitor detailed profit and loss accounts to identify profit drivers and cost pressures. This will help detect early "symptoms of distress" and allow timely corrective actions.
3. Enhance Cash Flow Management: Maintain and build cash reserves to safeguard against unforeseen expenses or downturns. Explore opportunities to increase trade receivables to support growth while managing credit risk.
4. Asset Utilisation Review: Regularly assess the productive use of tangible fixed assets to ensure they contribute effectively to revenue generation and are not causing excessive depreciation or impairment losses.
5. Plan for Growth: With a stable but small financial base, the company should consider strategic growth plans (e.g., new contracts, diversification) to increase turnover and build reserves, improving long-term financial health.
6. Risk Mitigation: Develop contingency plans to manage reliance on director loans, including options for bank financing or alternative lending, to avoid liquidity shocks.

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