SOUTHERN CONSTRUCTION PROJECTS LIMITED

Executive Summary

Southern Construction Projects Limited is a micro-sized building project developer with current liquidity but significant long-term debt exceeding net assets, resulting in a negative equity position. While operational filings are up to date and working capital appears positive, the company’s ability to service its considerable long-term liabilities is uncertain. Conditional credit approval is recommended pending further cash flow and debt servicing information.

SOUTHERN CONSTRUCTION PROJECTS LIMITED - Analysis Report

Company Number: 13292943

Analysis Date: 2025-07-20 13:49 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Southern Construction Projects Limited is a micro-entity operating in the development of building projects sector. The company shows modest net assets but carries significant long-term liabilities (£900,000) that exceed current assets and net assets. The equity position has deteriorated from £137,392 in 2023 to a negative £76,529 in 2024, indicating losses or liabilities not fully offset by assets. While the company is current with filings and maintains an active status, the large creditor balances and negative equity suggest a higher credit risk. Approval is conditional on obtaining further details on the nature and terms of the £900,000 liabilities, as well as the company’s cash flow forecasts and ability to service this debt.

2. Financial Strength:

• Fixed assets are negligible or zero in 2024, indicating no significant capital investment or property holdings.
• Current assets are reasonably high (£842,213 in 2024), but current liabilities are not explicitly stated for 2024; net current assets are positive at £842,213, which implies no immediate working capital issues.
• The key concern is the £900,000 creditors falling due after more than one year, which creates a material long-term liability burden exceeding net assets.
• Shareholders’ funds have turned negative (deficit of £76,529), reflecting erosion of capital or accumulated losses.
• The provision for liabilities has increased modestly, which may indicate recognition of potential future costs or contingencies.

3. Cash Flow Assessment:

• Positive net current assets suggest the company has sufficient short-term liquidity to meet immediate obligations.
• However, the significant long-term liabilities require sustained cash generation to meet repayment schedules.
• The company employs only 1 person, which may keep overheads low but also limits operational scale.
• Without detailed profit and loss or cash flow statements, it is difficult to confirm if cash flows from operations are sufficient to cover debt service.
• Monitoring of debtor collection, contract inflows, and working capital turnover is advisable.

4. Monitoring Points:

• Watch the company’s ability to improve or stabilize net asset position and avoid further equity erosion.
• Track payments and restructuring of the £900,000 long-term liabilities to ensure no default risk.
• Monitor cash flow statements and profitability trends once available to assess sustainability.
• Evaluate any changes in contract wins or project pipeline as indicators of future revenue growth.
• Review director conduct and compliance with filing deadlines to mitigate governance risks.