VYELIGHT ELECTRICAL SERVICES LIMITED
Company number 05020189 · 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 Assessment: VYELIGHT ELECTRICAL SERVICES LIMITED
1. Credit Opinion: CONDITIONAL
Rationale: The company demonstrates strong liquidity and a 20-year trading history, but the significant decline in net assets of £221,831 (27%) in the latest year requires explanation before full credit confidence can be established. Without visibility of the profit and loss account (filleted accounts), it is unclear whether this erosion stems from trading losses or shareholder dividend extraction. The former would be concerning; the latter, while reducing the capital cushion, would be less problematic given the retained cash position.
The conditional status reflects the need for clarification on this material movement before confirming any substantial facility.
2. Financial Strength
Balance Sheet Summary (2024 vs 2023):
| Metric | 2024 | 2023 | Movement |
|---|---|---|---|
| Net Assets | £597,836 | £819,667 | -£221,831 (-27%) |
| Cash | £429,788 | £390,191 | +£39,597 (+10%) |
| Total Assets | £1,012,313 | £1,272,574 | -£260,261 (-20%) |
| Total Liabilities | £292,787 | £262,257 | +£30,530 (+12%) |
Key Observations:
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Net asset decline is material. The P&L reserve fell from £819,566 to £597,736, representing the entire reduction. This is either a substantial trading loss or a significant dividend payout. Given the cash position remained strong and even improved, dividend extraction appears more likely, but confirmation is essential.
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Asset quality concern. Goodwill of £100,000 (carrying value) represents 16.7% of net assets. The original cost was £200,000, being amortised over 40 years — an unusually long useful life that warrants scrutiny. If this were impaired, the capital base would be further eroded.
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Leverage is manageable. Total liabilities of £414,477 (current + long-term) against total assets of £1,012,313 gives a debt-to-asset ratio of 41%, which is acceptable for a trading business of this nature.
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Long-term debt is reducing. Creditors falling due after one year decreased from £190,650 to £121,690, indicating the company is deleveraging.
3. Cash Flow Assessment
Liquidity Position:
| Metric | 2024 | 2023 |
|---|---|---|
| Current Assets | £721,412 | £1,003,989 |
| Current Liabilities | £292,787 | £262,257 |
| Net Current Assets | £428,625 | £741,732 |
| Current Ratio | 2.46x | 3.83x |
| Quick Ratio | 2.35x | 3.68x |
Working Capital Analysis:
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Current ratio of 2.46x is healthy and indicates adequate short-term debt servicing capacity. While down from 3.83x, this remains well above the 1.0x threshold.
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Debtors decreased significantly from £573,298 to £257,244 — a reduction of £316,054. This could indicate improved collections, reduced revenue, or a combination. The appearance of £66,000 owed by group undertakings (nil in 2023) suggests some receivables may have been reclassified or new intercompany trading has emerged.
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Cash increased to £429,788 despite the net asset decline, suggesting the business generates positive operating cash flow. The cash position alone covers total liabilities (current and long-term) by 1.04x.
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Trade creditors increased modestly from £168,586 to £192,650, which is not alarming but should be monitored for any stretching of payment terms.
Cash Flow Concern:
- The intercompany balance of £66,000 with group undertakings requires investigation. If this is owed by a related entity with limited liquidity, it may not be readily realisable and could effectively represent capital trapped within the group structure.
4. Monitoring Points
| Priority | Metric | Current Status | Watch For |
|---|---|---|---|
| Critical | Net asset movement | -£221,831 (27% decline) | Obtain confirmation whether loss or dividend; if loss, assess underlying cause |
| High | Revenue trajectory | Not disclosed (filleted accounts) | Request management accounts to verify turnover stability |
| High | Intercompany balance | £66,000 (new in 2024) | Confirm nature and recoverability; assess if this is a recurring or one-off |
| Medium | Goodwill carrying value | £100,000 (40-year amortisation) | Monitor for impairment indicators, particularly if contracts are lost |
| Medium | Debtors quality | £257,244 (down from £573,298) | Understand if reduction reflects lower revenue or improved collections |
| Low | Trade creditor days | £192,650 (up 14%) | Monitor for payment stress indicators |
| Low | Long-term debt | £121,690 (down from £190,650) | Positive trend; continue to monitor reduction schedule |
Additional Considerations:
- The holding company structure (Vyelight Holdings Limited owning 75%+) means dividend policy is controlled by the parent. Any group reorganisation or upstream cash extraction could impact creditor position.
- The company files filleted accounts, which limits visibility. For any significant facility, request full management accounts including profit and loss.
- No director disqualifications are evident, and the family management team has maintained the business for over two decades, which is a positive governance indicator.