SOLAR ELECTRONICS LIMITED
Company number 03594331 · Monitor this company
This analysis was written by an AI from the company's public filings. It may contain errors or omissions and is not financial or professional advice.
Credit Analysis: SOLAR ELECTRONICS LIMITED
1. Credit Opinion: DECLINE
This application must be declined. The company is currently in Liquidation status at Companies House, which is an absolute bar to any new credit facility. Beyond this fundamental disqualifier, the financial trajectory is catastrophic — net assets have eroded by 91% over five years, from £871,640 (2020) to £74,761 (2025), with a staggering 75% decline in the most recent year alone. The business is insolvent or near-insolvent and is being formally wound up.
2. Financial Strength
The balance sheet reveals severe and accelerating deterioration:
| Metric | 2020 | 2022 | 2024 | 2025 |
|---|---|---|---|---|
| Net Assets | £871,640 | £746,479 | £293,552 | £74,761 |
| Total Liabilities | £570,767 | £406,915 | £400,357 | £519,024 |
| Cash | £524,443 | £158,767 | £38,853 | £57,614 |
Critical concerns:
- Equity destruction: The P&L reserve has fallen from £283,542 to £64,751 — a loss of £218,791 in a single year. This indicates significant trading losses being retained in the business.
- Liability surge: Current liabilities jumped 30% from £400,357 to £519,024, while total assets contracted. The company is taking on obligations it cannot service.
- Related party exposure: £411,964 (69% of current assets) is described as "Amounts owed by participating interests" — this is money owed by connected parties, likely the director's other ventures. This balance is highly unlikely to be recoverable in liquidation and represents a serious red flag for potential preferential treatment or value extraction.
- Thin capitalisation: Net assets of £74,761 against total liabilities of £546,966 (including long-term) gives a debt-to-equity ratio of approximately 7.3:1 — critically overleveraged.
3. Cash Flow Assessment
Liquidity position is untenable:
- Current ratio: £600,796 / £519,024 = 1.16:1 — superficially adequate but critically undermined by the composition of current assets.
- Stripping out the questionable related-party debtor: (£600,796 - £411,964) / £519,024 = 0.36:1 — the company is deeply illiquid on an arms-length basis.
- Cash of £57,614 against trade creditors of £317,089 and tax liabilities of £160,218 means the company has no capacity to meet its obligations as they fall due.
- Stock of £93,364 (down from £142,023) — in a liquidation scenario, printer cartridge inventory will realise a fraction of book value.
Working capital is illusory. The £81,772 net current asset position depends entirely on recovering £411,964 from related parties — a recovery that is highly uncertain in liquidation.
4. Monitoring Points
If any exposure exists, the following require immediate attention:
| Metric | Risk Level | Detail |
|---|---|---|
| Liquidation status | 🔴 Critical | Company is being wound up — monitor for liquidator appointment and creditor claims |
| Related party debtor | 🔴 Critical | £411,964 owed by participating interests — investigate whether preferential transactions occurred |
| Trade creditor arrears | 🔴 Critical | £317,089 owed to trade creditors — likely includes unpaid suppliers |
| Tax liability | 🔴 Critical | £160,218 owed to HMRC — Crown debt takes priority in insolvency |
| Director conduct | 🟡 Elevated | Single controlling shareholder (>75%); potential for wrongful trading investigation given trajectory |
| Asset realisation | 🔴 Critical | Fixed assets of only £20,931; stock likely impaired; related party debtor doubtful |