Company Number: 12492351

Analysis Date: 2025-07-19 12:21 UTC

Financial Health Assessment Report for SALT ELECTRICAL SERVICES LIMITED

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1. Financial Health Score: C

Explanation:
The company shows a moderate financial position with positive net assets and net current assets, indicating a generally stable financial condition. However, the declining trend in net assets and net current assets over recent years signals emerging concerns that require attention. The business exhibits symptoms of financial "fatigue" with shrinking asset bases and increasing long-term liabilities, suggesting a cautious outlook.

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2. Key Vital Signs (Core Financial Metrics and Interpretation):

Metric	2024 Value (£)	Interpretation
Fixed Assets	13,989	Tangible assets have decreased, indicating possible asset disposals or depreciation.
Current Assets	22,707	Liquid resources (cash, receivables, stock) have also declined, reducing short-term liquidity.
Current Liabilities	13,468	Short-term debts have slightly decreased but remain a significant outflow pressure.
Net Current Assets	9,239	Positive working capital; however, lower than previous year, indicating tightening liquidity.
Creditors Due After One Year	5,334	Long-term liabilities are substantial and have reduced, which is positive but still impactful.
Net Assets (Equity)	17,894	Positive equity but trending downward, reflecting accumulated losses or asset erosion.
Share Capital	100	Minimal share capital, typical for micro-entities, not a significant buffer.

Additional Observations:

• The company operates as a micro-entity, meaning simplified accounts with limited disclosure, which restricts full diagnostic depth.
• Only one director (also the managing director) is involved, indicating a small operational structure.
• No reported employees beyond the director, indicating a very lean business model.
• The sector (repair of electrical equipment) is generally stable but competitive.

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3. Diagnosis (What the Financial Data Reveals About Business Health):

• Liquidity & Working Capital: The company maintains a positive working capital, indicating it can meet short-term obligations. However, the decline from £16,714 (2023) to £9,239 (2024) signals a "weakened pulse" in operational liquidity. This could be due to slower cash inflows or increased short-term payables, risking a cash flow crunch if not monitored closely.

• Asset Base & Capital Structure: Fixed assets have declined over the past 3 years from £21,857 (2021) to £13,989 (2024), suggesting either asset disposals or wear and tear without replacement. This may impact operational capacity or future revenue generation. Net assets have similarly dropped from £23,533 to £17,894 in two years, indicating some erosion in the company's net worth—akin to a patient losing weight unexpectedly.

• Long-term Obligations: Creditors due after one year have reduced from £10,667 (2023) to £5,334 (2024), which is a positive sign of debt repayment or restructuring, alleviating some long-term financial burden.

• Profitability & Reserves: Due to micro-entity filing exemptions, profit and loss details are not disclosed, limiting direct profitability analysis. The reduction in net assets could imply operating losses or distributions exceeding profits.

• Operational Scale: With only one director and no other employees, the company is very small and likely highly dependent on the director’s involvement. This "single heartbeat" business model can be vulnerable to key person risk.

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4. Recommendations (Specific Actions to Improve Financial Wellness):

1. Enhance Cash Flow Monitoring:
   Implement tighter cash flow forecasting and control to prevent liquidity tightness. Prioritize collection of receivables and negotiate payment terms with creditors.

2. Asset Management Strategy:
   Review the fixed asset base to ensure key operational assets are maintained or replaced as needed to support revenue-generating activities. Avoid excessive asset disposals that could impair business capacity.

3. Debt Management:
   Continue efforts to reduce long-term liabilities while balancing the need for operational capital. Consider refinancing options if needed to spread out repayment and reduce pressure.

4. Profitability Focus:
   Since profit and loss accounts are not publicly available, internally assess margins and cost controls. Identify opportunities to increase gross and net profitability to rebuild reserves.

5. Business Continuity Planning:
   Given the reliance on a single director, develop contingency plans for key person risk. Consider succession planning or involving additional skilled personnel.

6. Prepare for Compliance and Growth:
   Maintain punctual filing of accounts and confirmation statements, and consider upgrading accounting transparency as the business grows to attract potential investors or creditors.

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Medical Analogy Summary:

SALT ELECTRICAL SERVICES LIMITED currently shows signs of a "stable but weakening pulse" in its financial health. The company has a healthy baseline with positive net assets and working capital, but the recent decline in these vital signs suggests early symptoms of financial fatigue. Without intervention, the risk of liquidity stress or operational capacity reduction may worsen. Proactive financial "treatment" through cash flow management, asset care, and debt reduction is recommended to restore vitality and support sustainable growth.

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