LPICL LTD

Executive Summary

LPICL LTD shows declining financial strength with shrinking assets and negative working capital, raising concerns over its ability to service debt. The company's fragile micro-scale operations and limited capital base increase credit risk. Without clear signs of operational or financial improvement, extending credit is not recommended at this stage.

LPICL LTD - Analysis Report

Company Number: 13019500

Analysis Date: 2025-07-20 14:47 UTC

1. Credit Opinion: DECLINE
   LPICL LTD presents significant financial deterioration over the past three years, with net assets declining sharply from £1,519 in 2022 to £578 in 2023 and net current liabilities turning negative in the latest period. The negative working capital and drop in fixed assets suggest weakening operational capacity and potential liquidity stress. The company operates in a niche artistic creation sector with minimal scale (micro entity status, one employee), which typically carries higher business risk. The limited capital base (£100 share capital) and modest asset base provide little cushion to absorb economic shocks. The directors' background does not indicate strong financial or commercial expertise to mitigate these risks. Given these factors, approval for new credit facilities is not advisable without material improvement in financial metrics or additional security.

2. Financial Strength:
   The balance sheet shows weakening financial health. Fixed assets have halved from £1,265 to £632, and current liabilities have doubled from £289 to £586, resulting in a negative net current asset position of £-54 in 2023 versus positive £254 in 2022. Total net assets have declined by over 60%, indicating erosion of shareholder equity. The company’s micro status and small asset base limit its borrowing capacity. Shareholders' funds stand at £578, reflecting limited retained earnings and capital infusion. This fragile balance sheet constrains the company’s ability to raise finance or absorb unforeseen losses.

3. Cash Flow Assessment:
   Current assets reduced slightly from £543 to £532, but current liabilities increased substantially, indicating potential liquidity strain. Negative net working capital suggests the company may struggle to meet short-term obligations without external support or improved cash conversion cycles. With only one employee and minimal operating scale, cash generation is likely limited. No off-balance sheet liabilities or contingent exposures are disclosed. Without signs of improved cash flow or working capital management, liquidity risk remains elevated.

4. Monitoring Points:

• Track net current asset position to see if negative working capital persists or improves.
• Monitor fixed asset levels and capital expenditure to understand asset base sustainability.
• Watch cash balances and short-term debt levels closely for liquidity pressures.
• Review directors’ strategic plans for revenue growth or cost control that might stabilize financials.
• Keep watch on any changes in ownership or director appointments that may affect governance quality.