SMILE ELECTRICAL LTD

Executive Summary

St Mary’s Island’s Local Electrician Ltd shows signs of financial strain primarily due to a significant reduction in liquidity and net assets over the last year, indicating moderate solvency risk. While regulatory compliance is current and the business operates in a stable sector, the company’s limited operational scale and cash flow concerns warrant close monitoring and further investigation before any investment decision. The company’s future stability will depend heavily on restoring healthy cash flows and addressing working capital deficits.

ST MARY'S ISLAND'S LOCAL ELECTRICIAN LTD - Analysis Report

Company Number: 13105391

Analysis Date: 2025-07-20 14:09 UTC

1. Risk Rating: MEDIUM
   The company demonstrates a deterioration in liquidity and net assets over the recent year, which raises moderate solvency concerns despite no overdue filings or regulatory issues. The very limited cash balance at year-end 2023 and reduction in net current assets from positive to negative indicate potential cash flow constraints.

2. Key Concerns:

• Liquidity decline: Cash reserves dropped drastically from £4,664 in 2022 to only £7 in 2023, coupled with current liabilities exceeding current assets by £1,113 in 2023. This signals potential difficulty in meeting short-term obligations.
• Shrinking net assets: Net assets declined from £14,093 in 2022 to £6,199 in 2023, reflecting diminished financial stability and possible losses or asset impairments.
• Single director and employee: The company has only one director and one employee (the same person), which may raise operational risks due to limited management capacity and succession planning.

3. Positive Indicators:

• No overdue filings: Accounts and confirmation statements are filed on time, demonstrating compliance with Companies House requirements.
• Limited liability structure: As a private limited company, shareholder exposure is limited to invested capital (£1 share capital), mitigating personal risk for the director.
• Niche industry: Operating in electrical installation (SIC 43210), a trade with steady demand, which may support business sustainability if cash flow issues are managed.

4. Due Diligence Notes:

• Investigate the causes for the sharp decline in cash and net current assets in 2023, including review of income statement, cash flow statement, and any unusual transactions or write-downs.
• Assess the company’s ability to generate positive cash flow going forward and any reliance on director funding or external credit.
• Confirm absence of director disqualifications or regulatory sanctions beyond publicly available data.
• Review client base and contract stability given sole director/operator status.
• Verify whether the company has adequate insurance, licenses, and compliance with industry regulations.