KOVA CONSTRUCTION LTD

Executive Summary

Kova Construction Ltd, a micro-entity operating in roofing and joinery, faces high financial risk due to a marked deterioration in liquidity and net assets over the past year. While compliance and stable management are positives, the company’s negative working capital and shrinking equity raise concerns about its short-term solvency and operational sustainability.

KOVA CONSTRUCTION LTD - Analysis Report

Company Number: 13804641

Analysis Date: 2025-07-29 20:54 UTC

1. Risk Rating: HIGH
   The company exhibits significant liquidity and solvency concerns, evidenced by negative net current assets and a substantial decrease in net assets over the past year. This raises questions about its ability to meet short-term obligations and sustain operations.

2. Key Concerns:

• Liquidity Risk: As of 31 December 2023, current liabilities (£27,779) substantially exceed current assets (£18,073), resulting in net current liabilities of £8,565, which indicates potential cash flow difficulties.
• Declining Net Assets: Net assets dropped sharply from £10,176 at the end of 2022 to just £1,092 in 2023, indicating erosion of capital and potential solvency issues.
• Small Scale and Limited Financial Transparency: Classified as a micro-entity with no audit and limited financial detail, restricting the ability to fully assess operational performance and risks.

3. Positive Indicators:

• Compliance with Filings: The company is current with its statutory accounts and confirmation statement filings, showing no governance or regulatory compliance issues to date.
• Stable Management: The same two directors have been in place since incorporation, suggesting stable leadership.
• Niche Industry Focus: Engagement in roofing and joinery installation (SIC codes 43910 and 43320) could provide steady demand, assuming local market conditions are favorable.

4. Due Diligence Notes:

• Review cash flow statements (if available) to assess the company’s ability to manage short-term liabilities and working capital needs.
• Investigate reasons behind the significant increase in current liabilities in 2023 compared to prior years.
• Confirm whether there are any contingent liabilities or off-balance-sheet commitments that might exacerbate solvency risks.
• Assess contracts, client base, and order book to determine operational sustainability and future revenue streams.
• Examine directors’ plans or strategies to address the deteriorating financial position.