PRIORY ELECTRICAL SERVICES LIMITED

Executive Summary

Priory Electrical Services Limited, a young but profitable electrical installation firm, shows improving financial strength and solid working capital. Its current liquidity and low leverage support its ability to meet debt obligations, though cash flow depends heavily on debtor management. Overall, the company merits credit approval with routine monitoring of receivables and profitability trends.

PRIORY ELECTRICAL SERVICES LIMITED - Analysis Report

Company Number: 13271061

Analysis Date: 2025-07-20 12:49 UTC

1. Credit Opinion: APPROVE
   Priory Electrical Services Limited demonstrates a solid financial position for a relatively young company incorporated in 2021. The company shows consistent growth in net assets from £95,998 in 2023 to £148,226 in 2024, indicating positive retained earnings and profitability. Current assets comfortably cover current liabilities with a net working capital of £140,367, signaling good short-term liquidity to meet obligations. The absence of overdue filings and no indication of financial distress enhance confidence. Directors have modest related party balances, reducing concerns about aggressive related-party financing. Overall, the company appears capable of servicing debt and maintaining commercial credit arrangements.

2. Financial Strength:
   The balance sheet reveals a healthy increase in net assets driven by retained earnings, growing from approximately £96k to £148k in one year, reflecting profitable trading. Fixed assets are modest (£10.5k), appropriate to an electrical installation business, and the company holds no significant long-term liabilities. Deferred tax provisions are low (£2.6k) and manageable. The company's share capital is minimal (£100), with financial strength relying on operational profitability and earnings retention. This growing equity base supports reasonable resilience against business cycles.

3. Cash Flow Assessment:
   Current assets stand at £836k, predominantly debtors and accrued income (£836k), with only £100 cash in hand, indicating receivables are the primary liquid resource. Current liabilities are £696k, including trade creditors, tax, social security, and bank loans (£45.6k). The net current assets of £140k suggest positive working capital. However, the high level of accrued income and debtors implies cash flow depends on timely collections. Bank borrowings are low relative to current liabilities, suggesting low financial leverage. Monitoring debtor collection efficiency will be important to ensure liquidity.

4. Monitoring Points:

• Debtor Days & Cash Collection: The large debtor and accrued income balances require close monitoring to avoid liquidity strain.
• Profitability Trends: Continued profit growth and dividend policy should be watched to ensure retained earnings maintain financial buffers.
• Related Party Transactions: Although currently modest, ongoing scrutiny of amounts owed to/from associates and directors is advised.
• Working Capital Management: Ensure current liabilities do not outpace current assets, especially if business scales rapidly.