One bad year could wipe out the NOK 88.8m that owners of CTS Nordics hold

Plenty of cash, very little that belongs to the owners

CTS Nordics AS closed 2025 holding NOK 1.5bn in cash. A year earlier it held NOK 78.8m. Over the same year its total assets grew from NOK 1.2bn to NOK 2.9bn. On a quick read, that is a company getting richer.

The equity line says otherwise. At the end of 2025 the owners' stake in the business, its equity, was NOK 88.8m. That is 3.0% of total assets. Almost everything on the balance sheet is owed to someone else: suppliers, customers, lenders or other companies in a group.

CTS Nordics is an aksjeselskap (AS), the Norwegian equivalent of a private limited company, registered in Oslo. It reports in Norwegian kroner (NOK), and its financial year follows the calendar year.

The year also brought a change at the top. CTS Nordics has a new daglig leder (the Norwegian title for the managing director or CEO), a new chair of the board and a new board member. I would not tie the appointments to any particular figure.

The cash arrived with other people's money

The obvious question is where all that cash came from. The equity line answers part of it. Cash rose by NOK 1.4bn during 2025. Equity rose by NOK 73.3m, which matches the year's net profit of NOK 73.3m. The profit stayed in the company, and none of it went out as dividends. But retained profit explains only a small slice of the new cash. The rest of the increase was funded by liabilities, because the owners' side of the balance sheet moved by no more than the profit.

That is the usual mechanism behind a thin layer of equity, and it tends to have one of a few origins. Owners take out most of each year's profit. Losses in earlier years eat the capital. Or the business grows on money provided by others: suppliers paid late, customers paying in advance, a bank line, or a parent company's cash pool.

The accounts give one hint about the first explanation. At the end of 2024, equity stood at NOK 15.5m, smaller than the NOK 108m of net profit the company earned that year. So the 2024 profit did not stay in equity, either because it was paid out or because older losses absorbed it. The accounts do not separate the two.

The pattern of 2025 points towards the last explanation. A company whose cash swells while its own capital barely moves is often holding money that is not really its own: prepayments from customers, funds it collects and passes on, or balances parked by related companies. Businesses that work this way can run safely on very little equity, because the cash sits right next to the obligation it matches. The breakdown of liabilities by type, and the note on related parties, would settle which kind of money this is.

A shrinking business with a steadier margin

The income statement adds a second layer. Revenue fell 30.6% in 2025, to NOK 4.2bn from NOK 6.1bn. It was already lower in 2024 than the NOK 7.2bn recorded for 2023. Across those years revenue shrank by 23.4% a year on average. That is no longer a dip. It is a trend.

Profit fell less steeply. Operating profit, what is left after running the business but before financing and tax, dropped 15.9% to NOK 104m. The operating margin widened by 0.4 pp, to 2.5%. Net profit fell 32.0%, and the net margin stayed level at 1.7%.

These are thin margins on a large turnover, and that matters for the equity question. A company keeping so little of each krone of revenue has a small stream of profit to rebuild capital from, and a shrinking revenue line makes that stream smaller still. It also means a bad year does not need to be spectacular to hurt. At the end of 2025, equity of NOK 88.8m was smaller than one year's operating profit of NOK 104m. A loss the size of an ordinary year's profit would wipe out the owners' stake.

In fairness to the company, the direction improved. The equity ratio rose by 1.7 pp, from 1.3% to 3.0%, because the profit stayed in. Still, a ratio this low only looks safe when the liabilities behind it are stable and matched by cash.

What to check on your own balance sheet

The useful lesson here is not about Norway. It is about the difference between cash you hold and cash you own. Many businesses confuse the two, especially those that collect customer prepayments, deposits or money on behalf of others.

Open your latest balance sheet and work through the following.

First, calculate your equity ratio: equity divided by total assets. Then set your equity against a normal year's operating profit. If a loss of that size would push equity below zero, you have very little cushion, however full the bank account looks.

Second, split your cash into two piles. One is money that is genuinely free: what would remain if every customer prepayment, deposit and amount held for others had to be returned tomorrow. The other is money you are only holding. Ask your finance team for that split in writing. If they cannot produce it within a day, that is a finding in itself.

Third, read your loan agreements and any group cash pool terms for a minimum equity requirement. Banks often set one, sometimes as an equity ratio, sometimes as a ban on negative equity. Know how close you are before the bank tells you. Norwegian company law, like that of many countries, also expects the board to act when equity is no longer adequate for the company's risk, so a thin layer is a legal matter as well as a financial one.

CTS Nordics holds far more cash than a year ago, and almost none of its balance sheet belongs to its owners. That is a sound way to run a business that holds other people's money and a fragile one for a business that does not. The accounts do not say which of the two this is, and the new chief executive and chair will have to answer that before anything else.