Company Number: 12711605

Analysis Date: 2025-07-20 19:07 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Fusion Electrical Installations Ltd demonstrates ongoing business activity with active trading in electrical installation services since 2020. The company has maintained compliance with filing deadlines, indicating good governance. However, the financials show weak equity and reliance on finance leases, which constrain flexibility. Debt levels, especially finance lease obligations, are significant relative to net assets, which could impair debt servicing in adverse conditions. Approval is recommended with conditions including close monitoring of cash flow and timely repayment of director loans to improve financial robustness.

2. Financial Strength:

• Net assets have improved from £438 (2022) to £2,106 (2023) but remain minimal relative to total liabilities.
• Shareholders’ funds are low (£2,106), reflecting limited retained earnings and a nominal share capital of only £100.
• Fixed assets have declined over time from £41,961 (2020) to £21,076 (2023), partly due to depreciation; assets are largely financed through hire purchase/finance leases (£31,220 outstanding).
• Current assets exceed current liabilities slightly with net current assets of £5,322, a marginal improvement from £315 last year, indicating a thin working capital buffer.
• Director loans totaling £21,161 reduce the company’s ability to access external credit, but they are unsecured and interest-free, providing some flexibility.
  Overall, the balance sheet shows modest recovery but remains fragile with leveraged asset financing and limited equity cushion.

3. Cash Flow Assessment:

• Cash at bank increased to £14,618 from £2,395, suggesting improved liquidity.
• Debtors are substantial (£54,612), which may indicate some credit risk or longer collection periods; effective debtor management is critical.
• Current liabilities (£66,666) are close to current assets (£71,988), so working capital is tight.
• Finance lease obligations are relatively large and will require consistent cash outflows over the next few years (£6,928 within one year, £24,292 after one year).
• The company’s operating cash flow is not explicitly stated but given the increase in cash and net current assets, liquidity appears cautiously positive.
  The company should maintain strict cash collection and control capex or new financing to avoid liquidity strain.

4. Monitoring Points:

• Track debtor days and collection efficiency to ensure cash flow stability.
• Monitor timely repayments of director loans and any new financing arrangements.
• Keep close watch on finance lease obligations and asset replacement needs to avoid sudden liquidity demands.
• Review profitability trends once full profit and loss accounts become available to assess sustainable earnings for debt servicing.
• Ensure continued compliance with filing deadlines and governance to avoid regulatory risks.