CONTRAX BUILDING SERVICES LTD

1. Credit Opinion: DECLINE
The company's balance sheet is extremely thin, with net assets of just £5 as of September 2025. It emerged from two consecutive years of negative net worth (£-933 in 2024, £-1,669 in 2023) only recently, and the recovery is fragile. Total assets have contracted sharply from £36,510 (2020) to £5,032 (2025), indicating a significant reduction in business scale. No revenue or profit data is available (profit and loss account not filed), making cash flow generation impossible to assess. The sole director holds over 75% control, creating key‑person risk. Given the negligible equity cushion, lack of tangible fixed assets, and declining trajectory, the company cannot support meaningful unsecured debt. Any material credit facility would carry unacceptable default risk.

2. Financial Strength
- Net Assets: £5 (2025) vs. negative £933 (2024) – technically solvent but virtually zero capital base.
- Shareholders’ Funds: £5, comprising £1 share capital and £4 retained earnings.
- Total Liabilities: £5,027 (£3,131 current + £1,896 non‑current bank loan). Gearing (debt/equity) is extreme (approx. 1,005%).
- Historical Losses: The company was balance‑sheet insolvent in both 2023 and 2024.
- Declining Asset Base: Total assets have fallen 86% from 2020 to 2025, suggesting business contraction or distribution of assets to shareholders (note proposed dividends of £1,115 in current liabilities).
- No Fixed Assets: The balance sheet consists entirely of cash and small debtors – no property, plant, or equipment to offer as security.

3. Cash Flow Assessment
- Liquidity: Cash at bank £5,025 against current liabilities of £3,131 gives a current ratio of 1.6x and a quick ratio of 1.6x. On the surface, the company can meet short‑term debts. However, cash has fallen sharply from £24,358 (2020) to £5,025 (2025).
- Debt Service: A bank loan of £1,896 falls due after one year. With no visible revenue or profit information, the ability to repay this loan – let alone additional debt – is unverifiable.
- Working Capital: Net current assets of £1,901 provide a modest buffer, but the proposed dividend of £1,115 suggests the director is extracting cash, which weakens liquidity.
- Receipts Uncertainty: Debtors are just £7; the business appears to operate with minimal trade credit, but also minimal revenue visibility.

4. Monitoring Points
- Future Turnover & Profitability: The lack of filed profit and loss accounts is a critical information gap. Request management accounts or VAT returns to confirm revenue stability.
- Net Asset Trend: Even a small loss could quickly return the company to negative net worth. Monitor next year’s accounts closely.
- Cash Burn: Cash is the only material asset. A withdrawal of even £2,000 would severely impair liquidity.
- Bank Loan Repayment: The £1,896 non‑current loan is due within 12 months of the next balance sheet date. Confirm repayment source.
- Director Conduct & Dependency: The sole director controls all aspects. Any personal financial difficulty could cripple the company.
- Dividend Policy: Proposed dividends during a period of low equity suggest aggressive cash extraction; this pattern needs scrutiny.