CHESTER RD (SUTTON) DEVELOPMENTS LTD

Executive Summary

CHESTER RD (SUTTON) DEVELOPMENTS LTD exhibits a stable short-term financial position but faces risks from high long-term debt and weak equity. Overdue filings and reliance on director loans highlight administrative and liquidity challenges. Prompt compliance and financial restructuring are recommended to enhance resilience and long-term viability.

CHESTER RD (SUTTON) DEVELOPMENTS LTD - Analysis Report

Company Number: 13522671

Analysis Date: 2025-07-29 14:47 UTC

Financial Health Assessment of CHESTER RD (SUTTON) DEVELOPMENTS LTD

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1. Financial Health Score: C

Explanation:
The company shows a modest net asset base and positive net current assets, indicating some financial stability. However, the presence of significant long-term debt, a small equity base, and overdue statutory filings introduce cautionary flags. The overall health is fair but with symptoms suggesting stress that requires attention.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Net Assets (Equity)	4,029	Very low equity capital; company is just above break-even net worth.
Current Assets (Stocks)	632,670	Significant inventory holding, which is a key asset but also a liquidity risk if slow-moving.
Current Liabilities	250,641	Short-term debts, including £249,900 owed to a director interest-free on demand—liquidity risk.
Net Current Assets (Working Capital)	382,029	Positive working capital suggests ability to cover short-term obligations comfortably.
Non-Current Liabilities (Bank Loan)	378,000	Substantial medium-term debt; a heavy leverage burden relative to equity.
Share Capital	100	Minimal subscribed capital, indicating reliance on loans and reserves for funding.
Profit & Loss Reserve	3,929	Retained earnings are positive but very modest.
Filing Status	Accounts overdue	Overdue statutory filings may lead to penalties and indicate administrative weaknesses.

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3. Diagnosis

The financial "vitals" of CHESTER RD (SUTTON) DEVELOPMENTS LTD reveal a company in a delicate state—akin to a patient with stable but borderline vital signs. Its positive net current assets indicate a "healthy cash flow environment" in the short term; the company currently holds sufficient liquid resources (stocks and short-term assets) to cover immediate debts.

However, the substantial long-term bank loan (£378,000) compared to negligible equity (just £4,029) is a "symptom of financial strain" and high leverage. This raises concerns about solvency risk if cash flows weaken or if stock cannot be converted to cash efficiently. The interest-free director loan (£249,900) is both a support and a risk, as it may be recalled at short notice, stressing liquidity.

The company's overdue accounts and confirmation statements filings are a "symptom of administrative distress," potentially limiting access to credit and undermining stakeholder confidence. The small equity base and the fact that the company is relatively young (incorporated in 2021) suggest that it is still in a development phase but needs to manage its resources carefully.

In summary, the diagnosis is a company with a stable but fragile financial condition, capable of meeting short-term obligations but vulnerable to shocks due to high gearing and administrative lapses.

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4. Recommendations

• Improve Administrative Compliance: Immediate attention to overdue accounts and confirmation statements is critical to avoid penalties and maintain corporate credibility.
• Reduce Leverage: Explore options to refinance or gradually repay the £378,000 bank loan to reduce financial risk and interest burden.
• Enhance Equity Base: Consider raising additional share capital or converting some director loans into equity to strengthen the balance sheet.
• Inventory Management: Review stock levels to ensure inventory turnover is efficient; excess stock ties up cash and increases risk if market conditions change.
• Cash Flow Monitoring: Maintain strict cash flow forecasting to anticipate liquidity needs, especially given the director loan's repayable-on-demand nature.
• Stakeholder Communication: Keep open lines with creditors and investors to build trust and possibly negotiate better terms or support.
• Strategic Growth Planning: As a construction company, focus on securing profitable contracts and timely payments to improve financial "vital signs."

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