THE ALTERNATIVE ENERGY CENTRE LTD

Executive Summary

The Alternative Energy Centre Ltd shows strong financial health with excellent profitability and liquidity for a recently incorporated company. Its financial "vital signs" indicate efficient operations and a solid equity base, positioning it well for sustained growth. Continued prudent cash management and strategic reinvestment will be key to maintaining this positive outlook.

THE ALTERNATIVE ENERGY CENTRE LTD - Analysis Report

Company Number: 14708158

Analysis Date: 2025-07-29 16:56 UTC

Financial Health Assessment Report: THE ALTERNATIVE ENERGY CENTRE LTD

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1. Financial Health Score: A-

Explanation:
The company demonstrates a strong financial position with healthy profitability and solid liquidity. It is a newly incorporated business (since March 2023) and has shown impressive operating performance with a high operating profit margin and strong cash reserves. While the business is young, its financial "vital signs" suggest robustness and stability, though ongoing monitoring is necessary as the company scales.

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2. Key Vital Signs (Core Financial Metrics & Interpretation)

Metric	Value (£)	Interpretation
Turnover (Revenue)	1,461,871	Strong initial revenue generation for a startup in electrical installation. Indicates good market traction.
Gross Profit	1,369,510	Very high gross margin (~94%), showing efficient cost of sales management.
Operating Profit	1,117,647	Operating margin ~76%, exceptional operational efficiency and control over expenses.
Profit Before Tax	1,117,126	Confirms strong profitability before taxation.
Profit After Tax	840,913	Solid bottom-line profit indicating good tax management and net earnings.
Current Assets	1,514,211	Healthy liquidity resources to cover short-term needs.
Cash at Bank	1,448,692	Very strong cash position; "healthy cash flow" symptom, enabling flexibility and resilience.
Current Liabilities	703,296	Manageable short-term debts, less than current assets indicating positive working capital.
Net Assets	810,915	Positive net asset base, showing good equity cushion and solvency.
Share Capital	2	Nominal, typical for a private limited company start-up.
Retained Earnings	810,913	Profits retained in the business, contributing to net assets.
Average Staff Number	2	Small team, consistent with a micro/small enterprise.

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3. Diagnosis: Financial Condition and Business Health

• Liquidity: The company exhibits excellent liquidity with current assets more than double current liabilities. Cash reserves are strong, a "healthy pulse" indicating the business can meet short-term obligations comfortably.
• Profitability: Exceptional gross and operating margins are "symptoms of vitality," reflecting efficient cost control, strong pricing power, or a premium service offering. Profit before and after tax is highly positive, indicating a well-managed operation.
• Working Capital: Positive net current assets (£810k) demonstrate effective working capital management—no immediate risk of cash flow strain.
• Capital Structure: The company is minimally leveraged, with no long-term debt disclosed, relying on equity and internal funds. This strengthens its solvency but may limit growth capital.
• Growth Stage: As a company incorporated recently (March 2023), the impressive turnover and profitability suggest rapid establishment in the market, a positive "growth heartbeat."
• Risks: The small number of employees and relatively recent incorporation mean that the business may be vulnerable to execution risk if key personnel changes. Also, the dividend payment of £30,000 relative to the small share capital is notable and should be monitored for sustainability.
• Compliance: No overdue filings or penalties; regulatory "vital signs" are normal.

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4. Recommendations: Actions to Sustain and Enhance Financial Wellness

• Maintain Cash Reserves: Continue to monitor cash flow carefully to preserve liquidity, especially as growth accelerates and capital needs increase.
• Invest in Growth: Consider reinvesting some retained earnings into expanding staff, marketing, or equipment to support scaling operations and sustaining high margins.
• Diversify Client Base: To mitigate concentration risk, broaden customer portfolio to avoid dependency on a few contracts.
• Monitor Dividend Policy: Evaluate the sustainability of dividend payments in line with profitability and cash flow to avoid unnecessary strain.
• Strengthen Governance: As the business grows, consider appointing additional directors or advisors to bolster strategic oversight.
• Plan for External Funding: Should growth ambitions require, prepare for potential external financing (e.g., loans or equity) to fuel expansion without compromising liquidity.
• Regular Financial Review: Implement quarterly financial health checks to catch any early "symptoms of distress" before they impact operations.

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Medical Analogy Summary:
The Alternative Energy Centre Ltd displays the "vital signs" of a financially healthy young company: robust cash flow, strong profitability, and solid capital structure. Its "heart rate" in terms of turnover and profit is rapid and vigorous, suggesting good market reception. The company currently enjoys a stable "immune system" with no signs of distress but should maintain vigilance as it grows to ensure continued financial wellness.

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