LUMLEY SERVICES LIMITED

Executive Summary

Lumley Services Limited is showing significant financial distress with negative net assets and insufficient working capital, indicating poor liquidity and solvency. Immediate cash flow management, capital restructuring, and operational improvements are essential to stabilize the company's financial health and support future growth.

LUMLEY SERVICES LIMITED - Analysis Report

Company Number: 14491959

Analysis Date: 2025-07-29 16:58 UTC

Financial Health Assessment: Lumley Services Limited (As of 31 December 2024)

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1. Financial Health Score: D

Explanation:
The company shows significant signs of financial distress, with negative net assets and worsening working capital. This grade reflects the urgent need to address liquidity and solvency issues to avoid further deterioration.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Net Current Assets	-9,107	Indicates a working capital deficit; the company cannot cover short-term liabilities with current assets, a symptom of cash flow problems.
Net Assets (Shareholders' Funds)	-13,446	Negative net equity signals accumulated losses and insolvency risk, akin to a patient with a weakened immune system.
Fixed Assets	0	No long-term asset base, limiting collateral for borrowing or business stability.
Current Assets	6,827	Low liquidity position; cash and receivables are insufficient relative to liabilities.
Current Liabilities	15,934	High short-term obligations that the company struggles to meet timely.
Director’s Loan Account	15,913 (credit)	The company owes a significant amount to the director, indicating reliance on insider funding to sustain operations.

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3. Diagnosis: What the Financial Data Reveals

Lumley Services Limited is exhibiting classic symptoms of financial distress:

• Liquidity Crisis: The negative net current assets (-£9,107) suggest the company is unable to meet its short-term debts as they fall due. This is a critical "vital sign" indicating unhealthy cash flow and potential operational strain.

• Solvency Concerns: Negative shareholders’ funds (-£13,446) reflect accumulated losses and a net liability position. This is comparable to a chronic condition weakening the company's financial "immune system," decreasing resilience to shocks or downturns.

• Reliance on Director Funding: The director's loan account shows the company depends heavily on director advances (£15,913 credit balance), a temporary and risky source of funds that may not be sustainable long-term.

• Asset Base: The absence of fixed assets removes a layer of financial security and diminishes borrowing capacity, akin to lacking physical health "support structures."

• Business Activity: The company operates in human health activities, management consultancy, and retail sectors, but with only two employees and minimal asset base, it appears to be in an early or struggling growth phase.

Overall, the company is in a fragile financial state, with liquidity and solvency symptoms indicating stress that must be managed promptly.

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4. Recommendations: Specific Actions to Improve Financial Wellness

• Immediate Cash Flow Management:
  Implement tight cash flow controls to prioritize payments and accelerate receivables. Consider negotiating extended terms with suppliers to ease short-term pressure.

• Capital Injection or Debt Restructuring:
  Explore additional equity funding or formal restructuring of director loans to reduce immediate liabilities and improve net asset position. Seek external investment if possible.

• Cost Control and Revenue Enhancement:
  Re-examine operational expenses and reduce non-essential costs. Focus on boosting sales or consulting contracts within core SIC activities to increase income.

• Asset Acquisition Strategy:
  Consider investing in essential fixed assets to build business stability and enhance borrowing potential, once liquidity improves.

• Professional Financial Advice:
  Engage a financial advisor or turnaround specialist to develop a recovery plan, including scenario analysis and contingency planning.

• Monitoring and Reporting:
  Establish regular financial "health checks" (monthly cash flow forecasts, management accounts) to detect early symptoms of distress and respond proactively.

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Executive Summary

Lumley Services Limited is currently experiencing financial distress marked by a lack of liquidity and negative net assets, signaling urgent cash flow and solvency challenges. Without prompt strategic actions such as improved cash management, capital restructuring, and cost control, the company risks further deterioration. Early intervention and professional advice are critical to restoring financial health and ensuring sustainable operations.