Company Number: 13238608

Analysis Date: 2025-07-29 14:54 UTC

Financial Health Assessment for CLOUD 365 SERVICES LTD

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1. Financial Health Score: Grade D

Explanation:
The company exhibits several warning signs akin to symptoms of financial distress. Negative net liabilities, significant current liabilities exceeding current assets, and negative shareholder funds indicate the financial condition is weak. However, the company is still active and has no overdue filings, which suggests some operational continuity. The financial "pulse" is weak but not yet critical.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Fixed Assets (Investments)	1,100	Small asset base, mainly in investments.
Current Assets	1,461	Very low current assets, dominated by cash.
Cash	1,459	Healthy cash presence relative to total assets.
Debtors	2	Negligible receivables, low operational exposure.
Current Liabilities	6,145	High short-term liabilities; a stress symptom.
Net Current Assets	-4,684	Negative working capital; liquidity is impaired.
Accruals and Deferred Income	2,881	Significant deferred income, may mask cash flow.
Net Assets / Shareholder Funds	-703	Negative equity; balance sheet shows net liability.
Share Capital	2	Nominal capital; minimal shareholder investment.
Related Party Transactions	134,116 (income); balances owed (3,217)	Heavy reliance on related party transactions.

Interpretation:

• Liquidity Stress: The negative net current assets (-£4,684) indicate the company owes more short-term than it owns in liquid assets, a classic symptom of liquidity strain, which can be akin to a low blood pressure episode in financial health.
• Negative Net Assets: The company’s net liabilities (-£703) reflect that total liabilities exceed total assets, suggesting the company is “underweight” financially and potentially insolvent on a balance sheet basis.
• Deferred Income: The accruals and deferred income of £2,881 may indicate advance payments or unearned revenue, which could provide some short-term cash cushion but also represents future obligations.
• Related Party Dependence: Significant income and balances with related parties (Atech Support Limited) may indicate dependency on parent or related companies, which is a risk factor if these relationships weaken.
• Minimal Equity Base: A nominal share capital of £2 indicates very limited capital buffer.

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3. Diagnosis: Overall Financial Condition

CLOUD 365 SERVICES LTD shows symptoms consistent with financial distress:

• Liquidity Weakness: The company’s working capital is severely negative, signaling difficulties in meeting short-term obligations without external support.
• Balance Sheet Weakness: Negative net assets imply the company is technically insolvent on a book value basis, which can erode stakeholder confidence and restrict credit availability.
• Operational Reliance on Related Parties: Heavy transactions with related companies suggest the company may be relying on group support or intercompany transactions to maintain operations, raising questions over operational independence.
• Early Stage Business: Incorporated in 2021 and still in early growth phase, the company might yet be investing or building its operational base, explaining losses and balance sheet weakness. However, this also means it is vulnerable to cash flow shocks.

In medical terms, the company’s financial “vital signs” are weak but stable, requiring close monitoring and intervention to prevent deterioration into insolvency.

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4. Recommendations: Steps to Improve Financial Wellness

1. Strengthen Liquidity:

   • Improve cash flow management to ensure current liabilities can be met on time.
   • Negotiate extended payment terms with creditors or seek short-term financing to improve working capital.
   • Collect outstanding receivables promptly, even though current debtors are minimal.

2. Capital Injection:

   • Consider increasing equity capital either from existing shareholders or new investors to eliminate negative net assets and improve solvency.
   • Explore parent or related company support for capital or loans on favorable terms.

3. Reduce Reliance on Related Parties:

   • Diversify customer base to reduce dependency on related party transactions, enhancing operational independence and reducing counterparty risk.

4. Cost Control and Profitability:

   • Review operational expenses and overheads to limit cash burn.
   • Focus on increasing turnover and profitability to build retained earnings and improve shareholder funds.

5. Regular Financial Monitoring:

   • Implement monthly financial reviews to monitor cash flow and working capital health.
   • Early detection of distress signals (e.g., late payments, overdrafts) will allow timely remedial action.

6. Strategic Business Review:

   • Evaluate the business model and market strategy to ensure sustainable growth and financial viability.

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