MCCARTHY EXTERNAL SYSTEMS LTD

Executive Summary

McCarthy External Systems Ltd exhibits a solvent financial position with positive net current assets and no regulatory filing issues. However, significant related-party loans and limited operational history present medium risk factors requiring further scrutiny of liquidity and business sustainability before investment. The company benefits from parent company backing and good compliance discipline, which partially mitigate these concerns.

MCCARTHY EXTERNAL SYSTEMS LTD - Analysis Report

Company Number: 13689122

Analysis Date: 2025-07-20 15:49 UTC

1. Risk Rating: MEDIUM
   The company demonstrates a positive net current asset position and shareholders' funds, indicating solvency at the balance sheet date. However, the substantial amount of debtors due from an associate and the concentration of control within a single shareholder raise concerns about liquidity and related-party exposure.

2. Key Concerns:

• Related Party Exposure: The company has loaned £300,000 to McCarthy Homes SW Ltd, an associate, which represents a significant portion (nearly 59%) of current assets. This concentration risk could affect liquidity if the associate delays repayment.
• Liquidity Profile: Although cash balances improved to £100,477, the company’s liquidity depends heavily on receivables, including those from related parties, which may not be readily convertible to cash.
• Limited Operational History and Activity: Incorporated in late 2021, the company has no employees reported and minimal operational disclosures, suggesting it may be in an early or developmental stage, which could affect sustainability and cash flow predictability.

3. Positive Indicators:

• Solvency: The company holds net current assets of £261,076 and shareholders’ funds of the same amount as of 29 February 2024, showing a solid equity base relative to liabilities.
• Compliance: All statutory filings (accounts and confirmation statements) are up to date with no overdue documents, indicating good regulatory compliance and governance practices.
• Control and Stability: The company is wholly owned by McCarthy Holdings SW Ltd, which suggests potential backing from a parent company that could support operations or financing needs.

4. Due Diligence Notes:

• Examine the nature, terms, and recoverability of the £300,000 loan to McCarthy Homes SW Ltd, including whether it is repayable on demand or has specific repayment schedules.
• Review cash flow statements or management accounts if available to assess actual liquidity and operational cash generation.
• Investigate the business model and operational plans, given the absence of employees and limited turnover data, to understand revenue streams and sustainability.
• Assess the financial health and creditworthiness of the parent company and related entities to gauge group support and intercompany risk.