A&D CONSTRUCTION SYSTEMS LTD

Executive Summary

A&D Construction Systems Ltd is a micro-sized construction business with a positive but declining net asset base and working capital. While able to meet short-term obligations currently, the significant drop in liquidity warrants caution. Conditional credit approval is recommended with ongoing monitoring of financial performance and liquidity indicators.

A&D CONSTRUCTION SYSTEMS LTD - Analysis Report

Company Number: 13594939

Analysis Date: 2025-07-20 14:57 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   A&D Construction Systems Ltd is a very small construction company (micro-entity) with minimal tangible financial resources but a positive net asset position. The company has no sign of insolvency but shows a notable decline in net current assets and net assets from £11,708 in 2023 to £3,815 in 2024, signaling some weakening of financial strength. Given the company is only three years old with limited operating history, credit should be extended cautiously and possibly with conditions such as regular monitoring and shorter credit terms until further financial stability is demonstrated.

2. Financial Strength:
   The balance sheet reflects a small but positive net asset base (£3.8k) and working capital (£3.8k) as of August 2024, down significantly from prior year levels (£11.7k). Current assets are composed mainly of cash or receivables given the micro scale and no fixed assets are reported. Current liabilities are low (£858). The shareholders’ funds mirror net assets, indicating no long-term debt. The decline in net assets over recent years suggests the company may be consuming capital or experiencing margin pressure. Overall, financial strength is weak but not critical at this stage.

3. Cash Flow Assessment:
   Working capital remains positive but has dropped sharply, indicating reduced liquidity cushion. The company employs 2 staff and operates in specialized construction activities, which may have irregular cash flow patterns. No detailed cash flow statement is available, but the reduction in current assets suggests tighter liquidity management is needed. The low level of creditors implies the company is not heavily reliant on trade credit. Cash generation potential appears limited at this stage but manageable if business volume stabilizes or grows.

4. Monitoring Points:

• Monitor next annual accounts for stabilization or improvement in net assets and working capital.
• Watch for any overdue filings or director changes that might indicate distress.
• Review payment patterns on credit facilities to detect early signs of cash flow stress.
• Observe business volume trends and client concentration in the specialized construction sector.
• Keep track of any new borrowings or liabilities that could strain liquidity.