ADH CUSTOMS LIMITED

Executive Summary

ADH CUSTOMS LIMITED shows early-stage growth and profitability but faces financial constraints with negative net assets and weak liquidity. Credit approval is possible with conditions such as low exposure and security due to limited equity and ongoing working capital deficits. Close monitoring of cash flow and creditor management is essential to mitigate credit risk.

ADH CUSTOMS LIMITED - Analysis Report

Company Number: 14112064

Analysis Date: 2025-07-29 18:01 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   ADH CUSTOMS LIMITED is a micro-sized, active private limited company in vehicle maintenance and repair, with a single director who holds full control. The company has demonstrated some growth in turnover from £79,794 (2023) to £102,947 (2024) and delivered a modest profit of £24,701 in the latest period. However, its balance sheet shows persistent negative net assets (approx. -£10,000), driven mainly by long-term creditors (£30,000) exceeding total assets. The working capital position is negative (£-10,000), implying potential liquidity strain. Given these factors, credit facilities could be considered but with careful limits and possibly requiring personal guarantees or additional security due to the weak equity and current liabilities exceeding current assets.

2. Financial Strength:
   The company’s fixed assets increased significantly from £15,000 to £30,000, reflecting investment but tied up in long-term assets with limited liquidity. Current assets remain low (£10,000) and insufficient to cover current liabilities (£20,000). Long-term liabilities (£30,000) further burden the balance sheet. Shareholders’ funds are negative at approximately £-10,000 for two consecutive years, signaling that accumulated losses or liabilities exceed asset value. This weak equity base limits the company’s financial resilience and ability to absorb shocks or expand through debt.

3. Cash Flow Assessment:
   Negative net current assets and relatively low cash suggest limited liquidity headroom. The company’s turnover growth and profit indicate operational improvement, but the cost of materials remains high (£52,240), impacting cash generation. The accounts show only one employee (the director), so operating expenses may be low, but creditor levels suggest payment terms or cash flow management challenges. Monitoring cash conversion cycles and creditor turnover will be critical to ensure ongoing solvency.

4. Monitoring Points:

• Net current asset position, ensuring improvement or at least stability in working capital
• Timely servicing of creditor obligations to avoid overdue payables
• Profit margins and cost control, particularly materials cost trends
• Any changes in long-term liabilities and their servicing
• Director’s financial support or additional capital injections if required
• Trading performance relative to industry conditions, given micro size and single-person management