LIGHTNING ELECTRICAL SOUTH LTD

Executive Summary

Lightning Electrical South Ltd demonstrates modest financial stability with positive working capital and net assets, but a notable decline in equity and low cash reserves raise concerns about liquidity and profitability. Conditional credit approval is advised, contingent on enhanced financial monitoring and assurance of receivables collection and ongoing profitability. Continued scrutiny of cash flow and management accounts is essential to ensure the company can meet its obligations.

LIGHTNING ELECTRICAL SOUTH LTD - Analysis Report

Company Number: 13101225

Analysis Date: 2025-07-20 13:13 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Lightning Electrical South Ltd shows a positive net current asset position and positive net assets, indicating basic financial stability. However, recent financials reveal a declining net assets trend from £16,880 in 2022 to £10,110 in 2023, signaling weakening equity and possibly profitability or cash flow pressures. The company is small with one employee and limited share capital (£1), which suggests limited operational scale and financial flexibility. Absence of audit and limited disclosed profit and loss details restrict full credit risk assessment. Conditional approval is recommended, subject to monitoring ongoing profitability and cash flow, and obtaining more detailed management accounts to confirm ability to service debt.

2. Financial Strength:
   The balance sheet shows current assets of £20,337 against current liabilities of £10,227 as of end 2023, yielding net current assets (working capital) of £10,110, which supports short-term obligations. Shareholders’ funds have decreased by approximately 40% over one year, which could reflect operating losses or withdrawals. Cash on hand is very low (£225), and debtors constitute the bulk of current assets (£20,112), indicating potential concentration risk or collection challenges. The company holds no significant fixed assets or long-term investments disclosed. Overall, the company’s financial strength is modest with a reliance on receivables and limited equity buffer.

3. Cash Flow Assessment:
   Cash balances are minimal and have declined from £371 in 2022 to £225 in 2023. The debtor balance remains high, representing a key component of liquidity. The company’s ability to convert receivables to cash promptly will be critical for meeting short-term liabilities, which stand around £10k mainly comprising taxation and social security costs. Lack of detailed profit and loss data limits precise cash flow analysis, but declining net assets and cash suggest potential liquidity strain. Working capital remains positive but has contracted materially year-on-year, warranting careful monitoring.

4. Monitoring Points:

• Track receivables ageing and cash collection efficiency to avoid liquidity bottlenecks.
• Monitor profitability trends and retained earnings to assess if the net asset decline stabilizes or reverses.
• Review management accounts or interim financials for updated cash flow and operational performance insights.
• Confirm no adverse director conduct or external financial pressures impacting company stability.
• Watch for any changes in tax or creditor obligations that may increase short-term cash demands.