LAWFORD POWER LIMITED

Executive Summary

Lawford Power Limited demonstrates ongoing asset growth but faces significant liquidity pressures due to large, repayable-on-demand intra-group debts and limited cash reserves. Conditional credit approval is advised, contingent on close monitoring of working capital management and debtor collections. Strengthening cash flow and clarifying group funding arrangements are essential for improved creditworthiness.

LAWFORD POWER LIMITED - Analysis Report

Company Number: 13226457

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

1. Credit Opinion: CONDITIONAL APPROVAL
   Lawford Power Limited is a relatively new private limited company incorporated in 2021, engaged in manufacturing electric motors, generators, and transformers. The company shows growth in fixed assets and current assets year-on-year, indicating investment and expansion. However, the company carries significant current liabilities, primarily amounts owed to group undertakings with interest at 10% per annum, which are repayable on demand. This creates a liquidity risk given the net current liabilities position. Approval is recommended on a conditional basis, requiring close monitoring of liquidity and debtor collections. Additional security or guarantees may be requested to mitigate the risk posed by the large intra-group debt.

2. Financial Strength:

• Fixed assets increased from £114,191 in 2023 to £170,176 in 2024, showing capital investment.
• Current assets rose moderately from £50,000 to £62,996, mainly debtors, with very limited cash (£895).
• Current liabilities doubled from £118,166 to £204,112, driven by amounts owed to group undertakings.
• Net current liabilities worsened from -£68,166 to -£141,116, indicating working capital shortfall.
• Net assets declined from £46,025 to £29,060 but remain positive, supported by share premium of £50,988.
• The company has no external bank borrowings reported but relies on intra-group debt, which is repayable on demand and carries interest.

3. Cash Flow Assessment:

• Cash on hand is minimal, less than £1,000, raising concerns over immediate liquidity.
• The company depends heavily on debtor collections (£62,101) to fund operations and service liabilities.
• The large and growing amounts owed to group undertakings (£202,068) are repayable on demand, exposing the company to refinancing risk if group support is withdrawn.
• Interest expense at 10% per annum on intra-group debt will increase financial burden unless serviced by operational cash flow or further capital injections.
• Absence of employee remuneration and limited operational disclosures suggest a lean cost structure but also limited internal cash generation.

4. Monitoring Points:

• Closely watch net current assets and liquidity ratios to ensure the company can meet short-term obligations without needing additional group funding.
• Track debtor aging and collection efficiency to assess cash flow reliability.
• Monitor intra-group debt levels and terms, especially any changes in repayment or interest conditions.
• Review profitability and operational cash flow in future accounts to evaluate sustainability.
• Keep an eye on management stability given recent director changes in 2024, ensuring strong financial governance.