HERITAGE ELECTRICAL AUTOMATION LTD

Executive Summary

Heritage Electrical Automation Ltd is an active micro-entity operating in electrical installation but shows concerning financial indicators, including negative working capital and a significant increase in long-term creditors. While regulatory compliance is up to date and the director’s expertise aligns with the business, the company’s declining net assets and liquidity issues suggest high solvency risk. Further detailed due diligence on debt structure and cash flow is recommended to fully evaluate financial stability.

HERITAGE ELECTRICAL AUTOMATION LTD - Analysis Report

Company Number: 13842205

Analysis Date: 2025-07-19 12:22 UTC

1. Risk Rating: HIGH
   Heritage Electrical Automation Ltd exhibits significant solvency and liquidity concerns despite its micro-entity status and recent incorporation. The company’s net current liabilities remain substantially negative (£-10,430 as of 31 January 2024), and it has a large creditor balance falling due after more than one year (£34,200). The net assets have dramatically declined from £15,330 in 2023 to a marginal £1,272 in 2024, indicating deteriorating financial health.

2. Key Concerns:

• Negative Working Capital: Persistent net current liabilities suggest the company struggles to cover short-term obligations, raising liquidity risk.
• High Long-Term Creditors: The emergence of £34,200 creditors due after one year (absent in the prior year) signals increased debt burden and potential solvency pressure.
• Declining Net Assets: A sharp drop in net assets within one year indicates erosion of equity and potential risk to shareholder funds, possibly reflecting losses or increased liabilities.

3. Positive Indicators:

• No Overdue Filings: The company is current on both accounts and confirmation statement filings, indicating regulatory compliance and proper governance at a basic level.
• Director’s Professional Background: The sole director is a qualified electrical engineer, which aligns with the company’s electrical installation SIC code and may support operational stability.
• Micro-Entity Filing Status: Reduced reporting complexity and compliance burden may be advantageous for a small, early-stage company.

4. Due Diligence Notes:

• Investigate the composition and terms of the £34,200 long-term creditors to understand repayment obligations and covenant risks.
• Review cash flow statements (if available) or inquire about cash management practices to assess liquidity beyond balance sheet snapshots.
• Clarify the nature of director advances and the impact of director loans on company finances.
• Assess business model viability and contract pipeline, given the very small scale (2 employees) and low current assets.
• Confirm absence of any undisclosed contingent liabilities or legal issues.