AHT DEVELOPMENT LTD

Executive Summary

AHT Development Ltd demonstrates growth through fixed asset acquisition, but its current liquidity position is weak with significant working capital deficits. The company requires closer scrutiny on cash flow management and funding arrangements to support ongoing operations. Conditional credit approval is prudent, pending satisfactory evidence of financial support or operational improvements.

AHT DEVELOPMENT LTD - Analysis Report

Company Number: 13308592

Analysis Date: 2025-07-29 13:56 UTC

1. Credit Opinion: CONDITIONAL APPROVAL

AHT Development Ltd shows a mixed credit profile. The company is active and has recently acquired significant fixed assets (£612k in land and property), indicating potential growth and investment in its core business of building project development (SIC 41100). However, the company’s liquidity position is weak with net current liabilities of £445k, primarily due to high current liabilities (£490k) versus low current assets (£45k). The company’s cash balance is minimal (£321), and working capital is negative, suggesting short-term cash flow stress. The directors have not drawn salaries or employed staff, which may limit operational risk but also signals a small scale of operations. Credit approval should be conditional on obtaining further evidence of cash flow support or refinancing plans to cover current liabilities and sustain operations.

2. Financial Strength:

The balance sheet reflects a significant increase in fixed assets (from £0 to £612k) in the latest year, likely representing a property purchase. Total net assets have improved to £154k from just £3k the previous year. The company is classified as a small company and benefits from full exemption accounts, with minimal share capital (£3). However, the large current liabilities relative to current assets and working capital deficit highlight a balance sheet liquidity risk. Provisions for liabilities (£12.6k) further reduce net assets. The presence of amounts owed to associates and other participating interests (£118k combined) may indicate related party financing or intercompany liabilities that require scrutiny.

3. Cash Flow Assessment:

Cash at bank is negligible (£321), and debtors are minimal (£3), indicating limited incoming cash flow from operations or receivables. The company holds stocks and work in progress valued at £44k, substantially lower than the prior period (£520k), which may reflect project completion or inventory write-downs. Current liabilities, including bank loans and overdrafts (£296k), trade creditors, and other creditors, dominate the short-term obligations. Negative net current assets signify potential difficulties in meeting short-term liabilities without external funding or asset disposals. Without detailed cash flow statements, the risk is that the company may require refinancing or capital injection to meet immediate obligations.

4. Monitoring Points:

• Liquidity trends: Monitor cash balances, current assets, and current liabilities to ensure working capital improves or remains stable.
• Debt servicing: Review bank loan covenants, repayment schedules, and overdraft limits to assess ability to service debt.
• Project progress and inventory turnover: Track work in progress and stock levels to confirm project completion and conversion to revenue.
• Related party transactions: Scrutinize amounts owed to associates and participating interests for sustainability and risk of calls on capital.
• Management actions: Any plans for capital injection, refinancing, or operational changes to improve cash flow should be documented.