J & A FARMING AND CONTRACTING WORK LTD

Executive Summary

J & A Farming and Contracting Work Ltd demonstrates significant financial distress, with negative net assets and severely diminished liquidity, raising high solvency risk concerns. Despite compliance with filing requirements and recent fixed asset investment, the lack of profitability disclosure and cash flow issues warrant careful further analysis before considering investment. The company's operational sustainability appears fragile based on current data.

J & A FARMING AND CONTRACTING WORK LTD - Analysis Report

Company Number: 14016953

Analysis Date: 2025-07-29 15:56 UTC

1. Risk Rating: HIGH
   The company exhibits a declining solvency position with net current liabilities worsening from £(1,265) in 2023 to £(4,916) in 2024 and shareholders’ funds turning negative to £(1,914). This indicates an inability to meet short-term obligations from current assets and an overall negative net asset position, which is a significant risk factor for investors.

2. Key Concerns:

• Negative Net Current Assets and Shareholders’ Funds: The company’s liquidity position has deteriorated, showing negative working capital and equity, reflecting potential solvency issues.
• Low Cash Reserves: Cash on hand dropped sharply from £8,417 to £28, raising concerns about immediate liquidity and cash flow management.
• Lack of Profit and Financial Performance Disclosure: No income statement was filed, and the company is exempt from audit, limiting transparency on operational profitability and cash flow generation.

3. Positive Indicators:

• Active Status and Compliance: The company is active and has filed accounts and confirmation statements on time, showing compliance with statutory requirements.
• Tangible Fixed Assets Growth: Investment in plant and machinery increased, with net book value rising from £1,415 to £3,102, indicating some capital expenditure that could support operations.
• Experienced Directors with Control: Both directors have significant control and appear to be local, which could imply committed management.

4. Due Diligence Notes:

• Verify the nature and collectability of the debtor balance (£226) and the composition of current liabilities (£5,170), especially the large portion classified as "other creditors" (£4,105).
• Investigate cash flow trends and sources of financing given the sharp drop in cash reserves and the lack of reported profitability.
• Assess reasons for the absence of an income statement and audit, and request management accounts or internal financial reports if available.
• Examine the business model sustainability within the crop production support sector (SIC 1610) and the competitive environment given the company's financial stress.
• Confirm any contingent liabilities or off-balance sheet obligations not disclosed in the filleted accounts.