E.L.M LEISURE ENTERPRISES LTD

Executive Summary

E.L.M Leisure Enterprises Ltd demonstrates a strong liquidity position and positive net assets shortly after incorporation, supported by significant cash holdings. The company’s concentrated ownership and existing borrowings warrant cautious credit approval, subject to ongoing monitoring of revenue, cash flow, and debt servicing. Conditional credit approval is recommended to support business growth while managing financial risk prudently.

E.L.M LEISURE ENTERPRISES LTD - Analysis Report

Company Number: 14685246

Analysis Date: 2025-07-29 15:14 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   E.L.M Leisure Enterprises Ltd is a newly incorporated (Feb 2023) private limited company operating in the gambling and betting sector. The company shows positive net assets of £293,566 and strong net current assets of £319,675 as at 31 July 2024. The founder director owns 100% of shares and voting rights, which provides clear control but presents some concentration risk. The company has outstanding loans totaling £82,682 (current £18,000 and non-current £64,682), which need to be monitored carefully. The substantial cash balance (£464,879) supports liquidity; however, the company has declared dividends amounting to £26,200, which reduces retained earnings. Given its short trading history and sector risks, credit approval should be conditional on evidence of continued revenue generation, prudent management of borrowings, and maintenance of liquidity.

2. Financial Strength:
   The balance sheet reflects a healthy financial position for a young company. Fixed tangible assets of £45,626 mainly consist of plant and machinery and short leasehold land/buildings. Current assets are robust at £476,016, largely supported by cash reserves. Current liabilities of £156,341 are well covered by current assets, yielding a strong working capital position. The company’s net assets of £293,566 indicate positive equity with no accumulated losses reported. However, borrowings represent a material liability, so ongoing debt servicing capacity is vital. The dividend payment relative to equity suggests cash distribution policy should be cautiously managed.

3. Cash Flow Assessment:
   Cash and cash equivalents are strong at £464,879, providing ample liquidity to meet short-term obligations of £156,341. The net current asset surplus of £319,675 indicates effective working capital management at this stage. Debtors are minimal (£6,601), reducing credit risk from receivables. There is also a moderate stock holding (£4,536), which appears controlled. However, the company has loans payable in both short and long term, so cash flow forecasting should ensure debt repayments do not impair liquidity. The declared interim dividend (£26,200) is a cash outflow to watch in future periods to avoid liquidity strain.

4. Monitoring Points:

• Revenue and profit trends to verify sustainable cash generation given the young trading period.
• Debt servicing ability, particularly monitoring timely payment of loans and interest.
• Liquidity ratios, especially current ratio and quick ratio, to ensure working capital remains positive.
• Dividend policy prudence relative to retained earnings and cash flow.
• Any changes in ownership or director conduct that might affect governance or credit risk.
• Sector-specific risks in gambling/betting regulatory environment and economic cycles.