CONTRACT DESIGN SOLUTIONS LIMITED

Executive Summary

CONTRACT DESIGN SOLUTIONS LIMITED is facing financial distress, evidenced by negative net current assets and shareholders' funds. Immediate focus on improving liquidity and capital structure is essential to prevent insolvency. With targeted financial management and possible capital infusion, the company can stabilize and improve its financial health.

CONTRACT DESIGN SOLUTIONS LIMITED - Analysis Report

Company Number: 14042089

Analysis Date: 2025-07-29 14:44 UTC

Financial Health Assessment for CONTRACT DESIGN SOLUTIONS LIMITED

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1. Financial Health Score: D

Explanation:
The company is showing clear symptoms of financial distress, primarily due to recurring net current liabilities and negative net assets. Despite some growth in current assets, the liabilities consistently exceed assets, indicating an unhealthy balance sheet position. This score reflects a need for urgent financial management intervention to restore solvency and operational stability.

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2. Key Vital Signs

Metric	Latest (£, 2024)	Previous Year (£, 2023)	Interpretation
Current Assets	7,818	3,019	Some improvement in liquidity, but still limited cash and short-term assets to cover liabilities.
Current Liabilities	11,687	5,311	Current liabilities have more than doubled, increasing short-term financial pressure.
Net Current Assets	-3,869	-2,292	Persistent negative working capital ("symptom of cash flow strain"), raising risk of insolvency.
Net Assets / Shareholders' Funds	-3,869	-2,292	Negative equity indicates the company owes more than it owns, a sign of financial distress.
Employees	1 (including director)	1	Very small headcount, suggesting a micro-entity with limited operational scale.

Additional Observations:

• The company is a micro private limited company, incorporated recently in April 2022.
• The sole director and 100% owner is Mr Abdul Kalam, indicating centralized control.
• No audit exemption is claimed due to size, but accounts remain unaudited, limiting detailed financial scrutiny.
• Industry classification: Non-specialised wholesale trade — a sector where working capital management is crucial due to inventory and receivables.

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3. Diagnosis

The company’s financial vital signs show a recurring pattern of "liquidity deficiency" and "capital erosion." Negative net current assets reveal that short-term obligations outweigh readily available resources, akin to a patient showing dehydration and electrolyte imbalance—warning signs of systemic distress.

The negative shareholders' funds (net assets) demonstrate that the company is on the "balance sheet insolvency" spectrum, meaning liabilities exceed assets. This condition places the company at risk of insolvency unless corrective steps are taken promptly.

However, the increase in current assets compared to last year (from £3,019 to £7,818) indicates some attempts to improve liquidity, potentially through increased cash holdings or receivables. Unfortunately, the liabilities have grown even faster, negating this positive movement.

The company’s small size and single-director structure suggest limited resources and possibly tight cash flow management. The unaudited nature of accounts is typical for micro-entities but also means less assurance about the accuracy of the financial data.

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4. Recommendations

Immediate Actions:

• Improve Cash Flow Management: Focus on accelerating receivables, negotiating better payment terms with creditors, and tightly controlling expenses to restore positive working capital. Consider short-term financing if necessary but cautiously to avoid exacerbating liabilities.
• Capital Injection: The negative equity position suggests the company needs fresh capital, either through a shareholder loan or equity injection from the owner or external investors, to stabilize the balance sheet.
• Cost Review: Given the micro size, scrutinize all overheads and identify any non-essential costs to reduce financial strain.
• Financial Forecasting: Develop a detailed cash flow forecast to anticipate short-term liquidity needs and avoid surprises.
• Seek Professional Advice: Engage with a financial adviser or insolvency practitioner to assess restructuring options if liquidity issues persist.

Longer-Term Steps:

• Build Reserves: Once immediate liquidity improves, focus on building a cash reserve to provide a buffer against future shocks.
• Diversify Revenue Streams: Explore ways to increase turnover and reduce reliance on a small customer base.
• Governance and Controls: Implement basic financial controls and regular monitoring to catch symptoms early and avoid recurrence of distress.

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Summary

CONTRACT DESIGN SOLUTIONS LIMITED is currently experiencing financial stress, characterized by persistent negative working capital and deteriorating net asset position. The company’s financial "vital signs" indicate an urgent need to address liquidity and capital structure to avoid insolvency risks. With prompt and focused financial management—improving cash flow, reducing costs, and potentially recapitalising—the prognosis can improve, steering the company back to healthier financial standing.