LAMBERT ENERGY SOLUTIONS LTD

Executive Summary

Lambert Energy Solutions Ltd shows signs of financial strain despite maintaining positive working capital. The company’s declining net assets and increased reliance on director loans highlight vulnerabilities in liquidity and capital structure. With focused management on cash flow and funding diversification, the company can strengthen its financial footing and improve long-term sustainability.

LAMBERT ENERGY SOLUTIONS LTD - Analysis Report

Company Number: 14417190

Analysis Date: 2025-07-29 19:25 UTC

Financial Health Assessment for Lambert Energy Solutions Ltd (As of 31 October 2024)

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Financial Health Score: C

Explanation:
The company exhibits signs of financial stability but also indications of strain in key areas. The score reflects a cautious outlook due to declining net assets, modest working capital, and reliance on director loans which may pose liquidity risk. While not in immediate distress, the financial "vital signs" suggest the need for careful monitoring and targeted improvements.

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Key Vital Signs:

Metric	Value (2024)	Interpretation
Fixed Assets	£500	Very low investment in long-term assets, typical for a micro company in early stage.
Current Assets	£13,472	Healthy increase from prior year, primarily cash or receivables. Good short-term resource pool.
Current Liabilities	£12,836	Significant increase compared to prior year, close to current assets level, indicating tight liquidity.
Net Current Assets (Working Capital)	£636	Positive but very slim margin; potential early "symptom" of cash flow strain.
Net Assets (Equity)	£236	Declined from £440 prior year; low equity base signals vulnerability to financial shocks.
Share Capital	£1.00	Minimal share capital, typical for micro entities but implies limited capital buffer.
Director Loans	£6,457 (net owed by director)	Reliance on unsecured, interest-free director loans for working capital support, a liquidity "patch".
Number of Employees	2	Small team, indicative of micro enterprise scale.

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Symptoms Analysis:

• Declining Net Assets: The drop from £440 to £236 over the year is a "symptom of distress" in equity, suggesting either losses or increasing liabilities relative to assets.
• Working Capital Pressure: Although net current assets remain positive, the narrow margin (£636) indicates the company has limited buffer to manage short-term obligations without stress.
• Increased Current Liabilities: Nearly quadrupled from £2,630 to £12,836, this sharp rise in short-term debts could indicate increasing payables or accruals that may pressure cash flow.
• Dependence on Director Loans: The director loan balance, though reduced, remains significant relative to net assets, highlighting dependency on insider funding to bridge liquidity gaps.
• Asset Base Shrinking: Fixed assets have decreased slightly, possibly reflecting depreciation or asset disposals, limiting long-term productive capacity.
• No Audit & Micro Entity Reporting: While legally compliant, this limits external verification and may mask deeper financial issues not visible in summary accounts.

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Diagnosis:

Lambert Energy Solutions Ltd is currently in a fragile financial state typical of a young, micro-sized company in growth or setup phase. The company is maintaining operations with narrowly positive working capital but shows signs of financial strain through reduced equity and increased short-term liabilities. Its reliance on director loans as a source of liquidity is a "red flag" symptom that external financing avenues might be limited or costly. The business is not in immediate danger of insolvency but is vulnerable to any adverse changes in cash flow or trading conditions.

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Prognosis:

If current trends continue without intervention, the company risks further erosion of equity and tightening liquidity, which could lead to cash flow crises or inability to meet short-term debts. However, with prudent financial management, improved cash flow controls, and potentially fresh capital injection, the company can stabilize and gradually build a healthier balance sheet.

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Recommendations:

1. Improve Working Capital Management:
   Tighten controls on receivables and payables to reduce current liabilities and improve the cash conversion cycle. Aim to increase net current assets beyond the minimal buffer.

2. Reduce Reliance on Director Loans:
   Seek alternative financing options such as small business loans, grants, or equity investment to reduce liquidity risk and formalize funding structure.

3. Build Equity Base:
   Consider increasing share capital or retaining earnings to strengthen shareholders’ funds, improving financial resilience.

4. Monitor Financial Metrics Regularly:
   Track liquidity ratios, net assets, and cash flow trends monthly to detect early signs of distress and respond promptly.

5. Plan for Asset Investment:
   Evaluate the need to invest in fixed assets strategically to support business growth without overextending finances.

6. Engage Professional Advice:
   Seek guidance on tax planning, grants, and financial structuring to optimize resources and improve profitability.

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