LODHI EVENTS SECURITY LIMITED

Executive Summary

LODHI EVENTS SECURITY LIMITED is currently experiencing liquidity challenges, evidenced by a sharp increase in current liabilities and negative net assets. Immediate focus on cash flow management, cost control, and potentially restructuring capital is essential to avoid worsening financial distress. Proactive measures and close monitoring will be critical to restoring financial health and sustaining operations.

LODHI EVENTS SECURITY LIMITED - Analysis Report

Company Number: 13756290

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

Financial Health Assessment for LODHI EVENTS SECURITY LIMITED

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1. Financial Health Score: D (Concerning)

Explanation:
The company shows significant signs of financial distress in the most recent year, as reflected by a large negative net current assets and net assets position. While the previous years showed positive net assets, the sharp deterioration in 2023 indicates cash flow or liability management issues that need urgent attention. This score reflects a concerning financial condition that could compromise ongoing operations without corrective measures.

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2. Key Vital Signs

Metric	2023 (£)	2022 (£)	Interpretation
Fixed Assets	6,063	7,394	Modest investment in long-term assets, stable
Current Assets	91,003	102,944	Declining but still reasonable short-term assets
Current Liabilities	162,189	109,266	Significant increase, major concern
Net Current Assets	(71,186)	(6,322)	Negative working capital, liquidity risk
Total Assets Less Current Liabilities	(65,123)	1,072	Shift from positive to negative net asset base
Net Assets (Shareholders’ Funds)	(65,123)	1,072	Eroded equity; signals insolvency symptoms
Average Employees	5	3	Growth in workforce, possibly increasing costs

Interpretation of Vital Signs:

• The most alarming symptom is the sharp increase in current liabilities, outpacing current assets, leading to a large negative net current asset figure. This suggests the company may struggle to meet its short-term obligations—a classic symptom of liquidity distress.
• The fixed assets have slightly decreased, which may indicate asset disposals or depreciation but is not a primary concern.
• The equity has swung from a modest positive value to a negative figure, signaling that liabilities exceed assets. This condition often indicates financial distress or potential insolvency risk.
• The increase in average employees indicates business growth or expansion, which might be exerting pressure on cash flow if not matched by revenue growth.

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3. Diagnosis

LODHI EVENTS SECURITY LIMITED is exhibiting symptoms of financial distress primarily due to liquidity crunch and rising short-term liabilities. The negative net current assets indicate the company may not have enough liquid resources to cover immediate debts, which is a critical warning sign. The erosion of shareholders' funds into negative territory further exacerbates concerns about solvency and financial stability.

Despite being a micro-entity with modest fixed assets, the company’s operating cycle may be under strain—possibly due to delayed receivables, increased payables, or higher operating expenses. The increase in employee numbers suggests growing operational demands, which without corresponding revenue growth, could worsen cash flow problems.

The recent change in director and consolidation of control under Mrs Fatima Khalid Lodhi could signal a strategic shift or restructuring attempt to address these issues.

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4. Recommendations

To restore financial health and prevent deterioration, LODHI EVENTS SECURITY LIMITED should consider the following actions:

1. Improve Cash Flow Management:

   • Conduct a detailed cash flow forecast to identify timing gaps.
   • Accelerate receivables collection and negotiate extended payment terms with suppliers to reduce pressure on liquidity.

2. Address Current Liabilities:

   • Prioritize payments on critical debts to avoid penalties or legal actions.
   • Explore refinancing options to convert short-term liabilities into longer-term debt where possible.

3. Cost Control Measures:

   • Review staffing and operational costs to ensure they align with revenue generation.
   • Consider temporary cost reductions or efficiency improvements to conserve cash.

4. Equity Injection or Capital Restructuring:

   • If feasible, inject new equity capital to strengthen the balance sheet.
   • Engage with shareholders or investors to increase financial resilience.

5. Regular Financial Monitoring:

   • Implement monthly financial reviews focusing on liquidity metrics.
   • Early detection of worsening symptoms will enable timely interventions.

6. Seek Professional Advice:

   • Consider consulting insolvency or restructuring specialists if liquidity issues persist.
   • Early expert intervention can help avoid forced liquidation or administration.

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