Company Number: 13889947

Analysis Date: 2025-07-20 18:46 UTC

1. Risk Rating: HIGH

Justification: The company’s balance sheet shows negative net current assets and net liabilities, indicating significant solvency and liquidity risks. This financial deterioration over the past two years raises concerns about the company’s ability to meet short-term and long-term obligations.

2. Key Concerns:

• Negative Net Current Assets: The current liabilities (£53,421) exceed current assets (£11,375) by a large margin, resulting in negative working capital of -£42,046 for the year ending March 2024. This suggests liquidity stress and potential difficulty in settling immediate debts.
• Declining Financial Position: The net assets have moved from a positive but minimal £2,104 in 2023 to a negative £30,013 in 2024, showing deteriorating financial health and possible accumulated losses.
• Limited Size and Scale: As a micro-entity with only 3 employees and relatively small asset base, the company may lack operational resilience and financial buffer to withstand adverse business conditions.

3. Positive Indicators:

• Timely Filings: The company is up to date with both accounts and confirmation statement filings, indicating compliance with statutory requirements.
• Single Director and PSC Alignment: The controlling individual (Syed Ali Farhan Raza) is both director and 100% owner, simplifying governance and decision-making processes.
• Micro-entity Status: The company benefits from simplified reporting standards, reducing administrative burden.

4. Due Diligence Notes:

• Investigate Causes of Negative Net Assets: Analyze profit and loss trends, cash flow statements, and creditor aging to understand the drivers behind the worsening financial position.
• Confirm Ongoing Viability: Assess whether the company has access to external financing or director loans supporting liquidity.
• Review Director’s Plans: Determine if there are restructuring plans or operational changes underway to restore solvency and liquidity.
• Verify No Undisclosed Liabilities: Ensure there are no contingent or off-balance sheet liabilities that could exacerbate financial risk.
• Evaluate Contractual Commitments: Given the construction industry SIC code, check for ongoing project exposures or potential contract disputes.

executiveSummary: LSQ CONSTRUCTION LTD shows significant financial distress with negative net assets and substantial current liabilities exceeding current assets as of March 2024. Despite compliance with filing requirements, the company’s liquidity and solvency risks are elevated and warrant close scrutiny. Further investigation into cash flows, operational viability, and management plans is recommended before considering investment.