GEORGE SMITH ENGINEERING LTD

Executive Summary

George Smith Engineering Ltd is a small, recently incorporated private company engaged in motor vehicle maintenance with modest turnover and net asset growth. While regulatory compliance is satisfactory, liquidity concerns arise from negative net current assets and low cash reserves relative to short-term liabilities. Further due diligence on cash flows and liability structure is recommended to clarify operational and solvency stability risks.

GEORGE SMITH ENGINEERING LTD - Analysis Report

Company Number: SC733119

Analysis Date: 2025-07-29 17:17 UTC

1. Risk Rating: MEDIUM
   The company shows modest net assets growth from £1,043 in 2023 to £19,309 in 2024, indicating some capital formation. However, the negative net current assets position (-£14,636 in 2024) and relatively low cash balances (£486) compared to current liabilities (£25,869) raise liquidity concerns. The company is newly incorporated (2022) with limited trading history and modest turnover (£26,465 in 2023), which poses operational stability risks.

2. Key Concerns:

• Liquidity Risk: Current liabilities significantly exceed current assets, and cash on hand is minimal, suggesting potential difficulties in meeting short-term obligations.
• Limited Trading History: Incorporated in 2022, with only two full financial years filed, limiting the ability to assess consistent operational performance or profitability.
• Small Scale and Concentrated Control: Single director and sole shareholder with 75-100% control could limit governance oversight and increase single-person dependency risk.

3. Positive Indicators:

• Increasing Net Assets: Shareholders’ funds increased nearly 19-fold in the latest year, indicating capital injection or retained profits supporting solvency.
• Fixed Assets Investment: Tangible fixed assets increased to £33,945, reflecting reinvestment in operational capacity which may support future revenue growth.
• Compliance Status: No overdue filings or accounts, timely submission of confirmation statements and accounts demonstrates regulatory compliance.

4. Due Diligence Notes:

• Verify the composition of current liabilities to assess if any short-term debt or trade payables are overdue or subject to repayment pressure.
• Investigate the source of the increase in net assets—whether from shareholder loans, capital injection, or profit retention.
• Assess cash flow statements (not provided) to understand operational cash generation and working capital management.
• Review director’s background and potential conflicts of interest given sole control and operational role as a mechanic.
• Confirm customer base stability and contract terms underpinning debtor balances (£10,747) to evaluate collectability and revenue sustainability.