MTEK CIVIL ENGINEERING LTD

Executive Summary

MTEK Civil Engineering Ltd shows a modest but positive liquidity position supported by increased cash and net current assets. However, the thin equity base and rising long-term liabilities, particularly related party debts, present some credit risk. Conditional approval is recommended with emphasis on monitoring debtor collections, funding sources, and profitability to ensure ongoing financial stability.

MTEK CIVIL ENGINEERING LTD - Analysis Report

Company Number: 12461850

Analysis Date: 2025-07-20 17:16 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   MTEK Civil Engineering Ltd demonstrates reasonable current asset coverage over current liabilities, indicating an ability to meet short-term obligations. However, the company has a modest net asset base and increased long-term creditors, including related party borrowings, which introduces some dependency risk. The business is small with limited shareholders' funds and a narrow equity base, so continued financial monitoring and maintenance of liquidity are advised. Approval is warranted with conditions on ongoing review of debt levels and debtor collections.

2. Financial Strength:
   The company’s net assets decreased from £161k in 2022 to £124k in 2023, reflecting erosion of equity likely due to retained losses or increased liabilities. Fixed assets are minimal (£10.5k), showing limited capital investment. Current assets of £1.27M exceed current liabilities of £931k, providing a net working capital surplus of £342k, which is positive for liquidity. However, non-current liabilities increased significantly to £226k from £35k, primarily due to increased borrowings including intercompany loans. The equity base remains thin at £124k, which constrains financial resilience.

3. Cash Flow Assessment:
   Cash balances improved substantially from £90k to £360k, strengthening liquidity. Debtors are high at £913k but represent a large portion of current assets, so timely collection is critical for cash flow. Trade creditors stand at £495k, with other creditors at £410k, including significant amounts owed to related parties (£311k total). The reliance on related party funding could pressure cash flows if repayment terms change. Overall, the company shows adequate liquidity currently but should focus on debtor management and reducing creditor concentrations to maintain healthy cash flows.

4. Monitoring Points:

• Debtor aging and collection efficiency to ensure cash inflows remain steady.
• Levels and terms of related party loans and other creditors to evaluate risk of funding withdrawal or restructuring.
• Profitability trends since profit & loss details are not filed, to confirm the company can generate sustainable earnings.
• Net asset erosion and equity position to assess capital adequacy over time.
• Compliance with filing deadlines and any changes in director conduct or company status.