Company Number: SC745711

Analysis Date: 2025-07-20 13:20 UTC

1. Risk Rating: MEDIUM
   Cheviot Construction (Borders) Ltd exhibits moderate financial stability with positive net assets and working capital; however, rising liabilities and reliance on hire purchase financing introduce some solvency and liquidity risks typical for a young company in capital-intensive construction activities.

2. Key Concerns:

• Increased Current and Long-Term Liabilities: Current liabilities rose from £45,355 in 2023 to £64,766 in 2024, with hire purchase contracts now forming a significant secured debt (£16,360). This leverage could pressure cash flows.
• Declining Net Assets and Working Capital: Net assets decreased from £83,251 to £74,090, and net current assets dropped from £51,668 to £30,566, signaling reduced financial buffer.
• Concentration of Control and Small Size: The company is newly incorporated (2022), with only two employees and four directors, and ownership concentrated between two individuals. Limited scale and governance diversity may impact operational resilience.

3. Positive Indicators:

• Positive Working Capital and Net Assets: Despite declines, the company maintains positive net current assets and shareholders’ funds, indicating ability to meet short-term obligations.
• Healthy Cash Position: Cash balances increased substantially from £37,145 to £80,849, which supports liquidity.
• No Filing or Compliance Issues: Accounts and confirmation statements are up-to-date with no overdue filings, reflecting good regulatory compliance.
• Going Concern Asserted: Directors confirm going concern status, suggesting confidence in ongoing operations.

4. Due Diligence Notes:

• Review Hire Purchase Terms: Examine hire purchase contract terms and repayment schedules to assess impact on future cash flows and asset security.
• Analyze Revenue and Profitability: As turnover and profit data are not disclosed, investigate income streams and margins, especially given the volatility in debtors and creditors.
• Understand Provisions: Provisions increased from £10,528 to £18,060; clarify nature and timing of these liabilities to assess potential future cash outflows.
• Evaluate Operational Scale: With only two employees, assess capacity to meet contractual obligations and manage growth sustainably.
• Investigate Dividend Declaration: The interim dividend declared shortly after reporting date should be reviewed for impact on liquidity and retained earnings.