LOTHIAN ELECTRICAL SERVICES LTD

Executive Summary

LOTHIAN ELECTRICAL SERVICES LTD exhibits a strong initial financial foundation with excellent liquidity and positive net assets for a newly incorporated micro-entity. The company is free from financial distress symptoms but should focus on scaling operations prudently and maintaining robust financial and governance practices to ensure sustainable growth. Continued close monitoring of cash flow and strategic planning will be critical as the business evolves.

LOTHIAN ELECTRICAL SERVICES LTD - Analysis Report

Company Number: SC792325

Analysis Date: 2025-07-20 14:50 UTC

Financial Health Assessment: LOTHIAN ELECTRICAL SERVICES LTD (As at 31 December 2024)

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1. Financial Health Score: B

Explanation:
The company demonstrates solid foundational health with a strong net asset base relative to its size, positive working capital, and no overdue filings. The score 'B' reflects that while the financials are healthy, the company is newly incorporated and still nascent, with limited financial history and modest fixed assets. There is room for improvement in cash flow management and growth capital deployment.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Fixed Assets	10,932	Modest investment in long-term equipment, typical for a micro electrical business.
Current Assets	118,950	Healthy short-term assets, likely cash and receivables, indicating liquidity.
Current Liabilities	7,780	Low short-term obligations, manageable and far outweighed by current assets.
Net Current Assets (Working Capital)	118,950	Very positive working capital, showing strong liquidity and operational cushion.
Total Net Assets	122,103	Positive equity base, indicating that assets exceed liabilities comfortably.
Shareholders Funds	122,103	Entirely funded by equity, no indication of long-term debt.
Employee Count	3	Small workforce consistent with micro-entity status.

Interpretation:

• Liquidity ("Healthy cash flow"): The company holds a strong buffer in current assets over current liabilities, which is a good sign of the ability to meet short-term obligations without distress.
• Capital Structure: Funded entirely by shareholder equity with no reported long-term debt, indicating low financial risk but also potentially limited leverage for expansion.
• Asset Base ("Physical robustness"): Fixed assets are minimal but sufficient for a start-up in electrical services, possibly tools and equipment.
• Operational Scale: Small number of employees aligns with micro company thresholds, indicating a lean operation.

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3. Diagnosis

LOTHIAN ELECTRICAL SERVICES LTD is in the early stages of operation (incorporated December 2023) and shows no symptoms of financial distress. The company’s balance sheet is "healthy" with strong net current assets, indicating good liquidity. The positive net assets and equity position suggest a stable financial foundation without reliance on debt. The absence of overdue filings reduces compliance risk.

However, as a new business, the company has limited financial history, which constrains comprehensive trend analysis. The small fixed asset base indicates a relatively low capital intensity business model, typical for a service provider in electrical installation.

The presence of a single controlling director who is also the sole significant shareholder implies centralized control, which can be agile but may also present succession or governance risks if not managed carefully.

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4. Recommendations

• Maintain Strong Cash Flow Management: Continue monitoring working capital closely to ensure cash remains sufficient for operational needs and potential growth opportunities.
• Plan for Growth Capital: As the business grows, consider cautious leveraging options or equity injection to expand fixed assets or workforce without overstretching liquidity.
• Strengthen Financial Record-Keeping: Although exempt from audit, ensure robust accounting practices to prepare for future financial scrutiny or potential financing requirements.
• Governance Enhancements: Consider appointing additional directors or advisors to diversify management input and reduce key person risk.
• Market Development: Invest in marketing and client acquisition to build revenue, crucial for moving from start-up phase to stable operations.
• Prepare for Next Filings: Keep filings timely to avoid penalties and maintain good standing with Companies House.

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