Company Number: SC682220

Analysis Date: 2025-07-29 20:23 UTC

1. Credit Opinion: DECLINE
   Activon Electrical Limited exhibits significant and persistent net liabilities and negative working capital, indicating poor financial health and an inability to comfortably meet short-term obligations. The company’s creditors include substantial amounts owed to a related party (Activon Limited), with no formal repayment schedule, increasing credit risk. The directors’ reliance on continued financial support to maintain going concern status further undermines confidence in autonomous debt servicing capacity. Given these factors, extending credit facilities at this stage is not advisable without substantial improvement or credible restructuring plans.

2. Financial Strength:
   The company’s balance sheet shows net liabilities of £23,977 as at 31 December 2023, worsening from £15,408 the prior year. Current liabilities of £29,373 significantly exceed current assets of £5,396, resulting in a negative net working capital of £23,977. Shareholders’ funds are deeply negative (£-24,077), reflecting accumulated losses and erosion of equity. The company holds minimal cash (£594) and modest inventories (£1,216), limiting liquidity buffers. Dependence on related-party loans (£26,250) without formal terms suggests underlying cash flow and capital structure fragility.

3. Cash Flow Assessment:
   Cash balances remain minimal, though slightly improved from zero cash the previous year. Debtors have increased substantially to £3,586, indicating sales on credit but also potential collection risk. The company’s negative net current assets reflect a working capital deficit, implying potential difficulties in funding day-to-day operations without reliance on external support. The absence of bank borrowings or overdrafts suggests limited external financing, and director loans remain static, implying limited additional cash injection capability. Overall, liquidity is constrained and insufficient for independent operational resilience.

4. Monitoring Points:

• Monitor quarterly cash flow statements for improvements in liquidity and collection of debtors.
• Track progress on formalizing repayment terms for related-party balances to assess risk mitigation.
• Review any capital injection or restructuring plans proposed by management to strengthen equity.
• Monitor trade creditor aging and supplier payment terms to avoid supply chain disruptions.
• Watch for any director changes or disqualifications that could impact governance and financial stewardship.