AA BUILDING CONSTRUCTIONS LIMITED

Executive Summary

AA Building Constructions Limited presents a mixed financial profile. While the company has maintained positive short-term liquidity and complies with regulatory requirements, the substantial increase in provisions for liabilities and corresponding drop in net assets highlight emerging solvency risks. Further inquiry into the nature of these provisions and operational cash flows is recommended before concluding on financial stability.

AA BUILDING CONSTRUCTIONS LIMITED - Analysis Report

Company Number: SC679621

Analysis Date: 2025-07-29 20:31 UTC

1. Risk Rating: MEDIUM
   The company shows positive net current assets and no current liabilities at the latest year-end, which suggests an ability to meet short-term obligations. However, the significant drop in net assets from £1,402 in 2023 to £265 in 2024, driven by a large increase in provisions for liabilities (£2,746 in 2024 versus £368 in 2023), indicates emerging solvency concerns that require closer scrutiny.

2. Key Concerns:

• Sharp Decline in Net Assets: The reduction from £1,402 to £265 within one year is material and mainly due to increased provisions, which may indicate potential liabilities or contingent risks not yet clarified.
• Increased Provisions for Liabilities: The jump in provisions suggests the company may be facing legal, contractual, or other financial obligations that could impact future cash flows.
• Minimal Share Capital and Small Scale: With only £1 issued share capital and micro-entity status, the company’s capital base is very limited, potentially constraining its ability to absorb losses or fund growth.

3. Positive Indicators:

• Positive Net Current Assets: The company reported net current assets of £3,011 in 2024 and no current liabilities at year end, indicating short-term liquidity appears adequate.
• Compliance with Filing Deadlines: Both accounts and confirmation statements are up to date and not overdue, reflecting good governance and compliance discipline.
• Stable Employment: The company maintains a consistent average of 2 employees, suggesting operational continuity.

4. Due Diligence Notes:

• Investigate Nature and Cause of Provisions: Clarify what liabilities the provisions relate to and assess their likelihood and timing to determine actual solvency risk.
• Review Profit and Loss Account: Analyze recent profitability trends and cash flow statements (not provided here) to evaluate operational sustainability and liquidity beyond balance sheet snapshots.
• Assess Director and Management Background: Verify any director conduct records or adverse regulatory issues, although none are apparent in the data provided.
• Consider Business Model and Market Conditions: Given the SIC code 43390 (Other building completion and finishing), understand the industry environment and potential exposure to project risks or payment delays.