Company Number: 13140164

Analysis Date: 2025-07-20 18:54 UTC

1. Risk Rating: MEDIUM
   Lancaster Electrical Services Limited shows some signs of financial distress with negative net current assets reported for the last two years, indicating potential liquidity issues despite a modest positive net asset position overall. The company is small and relatively new, with limited capital and operational scale, which adds to risk but is not critical at this stage.

2. Key Concerns:

• Liquidity Pressure: Current liabilities exceed current assets by £3,689 for the latest year, worsening from a smaller negative balance previously. This suggests potential cash flow constraints that could impact short-term solvency.
• Small Share Capital and Limited Equity Buffer: Share capital is only £2, and net assets have declined from £15,902 to £8,785, showing limited equity to absorb losses or support growth.
• Operational Scale and Reliance on Few Employees: With only 2 employees and no reported turnover figures available, business sustainability and growth potential appear constrained, which may affect ongoing viability and resilience to market fluctuations.

3. Positive Indicators:

• Improved Net Asset Position from Initial Loss: The company moved from a negative net asset position (-£11,933) in its first year to a positive figure, indicating some recovery and improved financial management.
• Current Compliance with Filing Requirements: No overdue accounts or confirmation statements, which suggests sound regulatory compliance and governance practices.
• Stable Director Structure with Relevant Industry Experience: Directors include an electrician and a shop assistant, suggesting operational knowledge and some business diversity in management.

4. Due Diligence Notes:

• Investigate the company’s cash flow and working capital management to understand how it manages negative net current assets and meets short-term obligations.
• Review turnover, profitability, and trading performance details that are not available in the micro-entity accounts to assess operational sustainability.
• Clarify the nature of liabilities causing current liabilities to exceed current assets, including any related-party debts or short-term borrowings.
• Assess the company’s business model and client base to gauge growth potential and resilience in the electrical installation sector.
• Confirm any contingent liabilities or off-balance sheet commitments that might affect solvency.