LIFETIME ENERGY LTD

Executive Summary

Lifetime Energy Ltd displays fragile financial health characterized by tight liquidity and increased debt levels, despite growing business activity. Immediate attention to working capital management and debt restructuring is crucial to stabilize the company’s financial condition and support sustainable growth.

LIFETIME ENERGY LTD - Analysis Report

Company Number: SC686246

Analysis Date: 2025-07-29 20:03 UTC

Financial Health Assessment: Lifetime Energy Ltd (As of 31 January 2024)

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1. Financial Health Score: C

Explanation:
Lifetime Energy Ltd currently exhibits a fragile financial condition. While the company remains active and solvent, key liquidity pressures and a significant increase in liabilities relative to assets reveal symptoms of financial strain. The balance sheet shows a very slim net asset base and elevated debt levels, suggesting the company is at a crossroads and requires careful management to avoid deterioration.

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2. Key Vital Signs

Metric	Value (Jan 2024)	Interpretation
Current Assets	£139,115	Healthy growth, primarily from cash and debtors.
Cash at Bank	£88,079	Strong cash holding, a positive sign for liquidity.
Current Liabilities	£125,206	Substantial short-term obligations; high and rising.
Net Current Assets	£13,909	Positive but very thin working capital buffer.
Long-Term Liabilities	£15,392	Introduction of long-term debt this year; financial gearing increases.
Net Assets	£100	Extremely low equity base, near break-even net worth.
Share Capital	£100	Minimal paid-up capital, typical for a small private company.
Employee Count	3	Small team, likely manageable overheads.
Loan from Director	£3,000 (interest-free)	Reliance on related party funding may indicate cash flow tightness.

Additional Notes:

• Fixed assets are minimal (£1,615 net), indicating a light asset base mainly focused on current operations.
• Debtors have increased significantly, which may signal growth but also risks in receivables collection.
• Taxation and social security creditors jumped markedly (£76,558), indicating potential cash flow timing issues or deferred payments.
• The company has only recently taken on bank loans, adding financial risk.

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3. Diagnosis: Financial Condition Analysis

Lifetime Energy Ltd is exhibiting symptoms of financial distress primarily related to its liquidity and leverage:

• Liquidity Stress: Despite a healthy cash balance, current liabilities are very high relative to current assets, leaving a narrow margin to cover short-term debts. This tight working capital position is akin to a patient with borderline blood pressure—stable but at risk of sudden spikes causing complications.

• Increased Leverage: The recent introduction of a long-term bank loan of £15,392 increases financial gearing. This adds pressure to cash flows due to future debt servicing obligations, echoing a chronic condition that requires ongoing medication (debt management).

• Eroded Equity Base: Net assets have declined drastically from £3,250 in 2021 to a mere £100 in 2024. This thinning equity cushion reduces the company’s resilience to shocks and may diminish stakeholder confidence—a sign of a weakened immune system.

• Growth and Operational Activity: The surge in debtors and cash indicates increased business activity, which is a positive sign. However, the company must ensure that this growth is sustainable and that debtor collections remain timely to avoid cash flow blockages.

• Director Support: The presence of an interest-free director loan provides temporary relief but is not a substitute for solid operating cash flow.

Overall, Lifetime Energy Ltd resembles a patient who has moved from a stable state into a vulnerable phase: not critically ill, but requiring immediate intervention to restore robustness and prevent further deterioration.

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4. Recommendations: Steps to Improve Financial Wellness

1. Strengthen Working Capital Management

   • Accelerate debtor collections through tighter credit controls and invoicing practices.
   • Negotiate extended payment terms with suppliers and creditors to ease short-term cash outflows.

2. Debt Management and Financing Structure

   • Develop a clear debt repayment plan to service current and long-term loans without straining cash flows.
   • Consider refinancing options or restructuring debt to improve liquidity.

3. Equity Injection or Capital Reserves

   • Explore possibilities of raising additional equity or capital injections to rebuild the net asset base and improve the financial buffer—akin to a transfusion providing fresh strength.

4. Cost Control and Efficiency

   • Monitor operating expenses closely to avoid unnecessary cash burn, especially given the small employee base.
   • Evaluate opportunities for operational efficiencies or incremental revenue improvement.

5. Regular Financial Monitoring

   • Implement frequent cash flow forecasting and financial reviews to detect early symptoms of distress.
   • Engage financial advisors or accountants for ongoing diagnostic assessments.

6. Maintain Compliance and Reporting

   • Continue timely filing of accounts and confirmation statements to avoid regulatory pressures which could compound financial stress.

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Executive Summary

Lifetime Energy Ltd is currently solvent but shows signs of financial strain due to rising liabilities and an eroded equity base. While cash reserves are healthy, tight working capital and increased borrowings highlight liquidity risks requiring active management. Prompt steps in cash flow optimization, debt management, and capital strengthening are essential to restore the company’s financial health and ensure sustainable growth.