Company Number: 13550683

Analysis Date: 2025-07-20 16:38 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   LHSM Ltd demonstrates moderate financial strength with positive net assets and a stable working capital position. However, the company is relatively young (incorporated in 2021) with limited scale (micro/small category) and a single employee director. Its reliance on director loans (noted as directors’ current accounts of £89,983 within current liabilities) indicates some dependency on internal funding which may affect liquidity in adverse conditions. Approve credit facilities with conditions requiring regular financial monitoring and limits on exposure until a longer operating history confirms sustainability.

2. Financial Strength
   The company’s net assets have grown from £31,119 in 2023 to £62,300 in 2024, reflecting retained earnings accumulation and improved equity. Fixed assets are modest (£72,503), mainly tangible assets such as motor vehicles and fixtures. Current assets (£194,603) exceed current liabilities (£155,685) by £38,918, indicating positive working capital. However, hire purchase contracts amounting to £49,998 (current and long-term combined) represent financial commitments secured against assets, limiting liquidity flexibility. Overall, balance sheet is sound but exposure to hire purchase debt and director loans requires attention.

3. Cash Flow Assessment
   Cash on hand is low (£11,391) relative to current liabilities, suggesting tight liquidity. Debtors (£170,575) constitute the bulk of current assets, which may pose collection risk. The high balance in directors' current accounts (£89,983) within liabilities suggests that the company depends on director financing, which could be withdrawn or altered. Working capital remains positive but marginally improved. Monitoring debtor collection efficiency and cash conversion cycles is critical to assess ongoing liquidity.

4. Monitoring Points

• Debtor Days and collection efficiency to ensure cash inflows meet operational needs
• Director loan account fluctuations to assess reliance on internal funding
• Timely repayment and management of hire purchase obligations
• Profitability trends once income statements are available (currently not filed)
• Any expansion in employee headcount or operational scale that might impact working capital needs
• Maintenance of filed accounts and confirmation statements on schedule to avoid compliance risk