LUMUS AUTOMOTIVE LTD

Executive Summary

Lumus Automotive Ltd exhibits symptoms of financial distress with negative net assets despite recent improvements in liquidity and reduction of short-term liabilities. The company’s financial health is fragile, requiring urgent focus on capital strengthening, debt management, and operational efficiency to ensure long-term viability. With careful management and strategic actions, the outlook can improve from its current precarious position.

LUMUS AUTOMOTIVE LTD - Analysis Report

Company Number: 14572260

Analysis Date: 2025-07-29 19:04 UTC

Financial Health Assessment of Lumus Automotive Ltd

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1. Financial Health Score: D

Explanation:
Lumus Automotive Ltd is currently experiencing financial distress as evidenced by its negative net assets and shareholders’ funds over the last three financial years. While there has been some improvement in net liabilities, the company remains in a deficit position, indicating ongoing financial challenges. This grade reflects a company with symptoms of financial strain that require urgent attention to restore healthy balance sheet fundamentals.

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2. Key Vital Signs

Metric	2023-01-31	2024-01-31	2025-01-31	Interpretation
Current Assets (£)	5,170	5,170	11,551	Increasing cash and receivables, positive sign
Current Liabilities (£)	11,900	11,900	350	Significant reduction, improving liquidity
Net Current Assets (£)	4,820	-6,730	11,201	Fluctuating but improved to positive
Creditors after 1 year (£)	-11,900	-11,900	-15,800	Long-term liabilities growing, concern for solvency
Net Assets / Shareholders Funds	-7,080	-7,080	-4,599	Negative, indicates accumulated losses
Number of Employees	1	1	1	Very small, consistent staffing

Interpretation of Vital Signs:

• The company’s current assets have more than doubled from 2024 to 2025, indicating improved liquidity or cash inflows—this is akin to a patient’s pulse quickening in response to treatment.
• Current liabilities fell sharply in 2025, reflecting a reduction in short-term debt or payables, which improves the company’s ability to meet immediate obligations (healthy cash flow symptom).
• However, net assets remain negative, despite a slight improvement, meaning the company’s total liabilities still outweigh its assets—a clear symptom of financial distress or insolvency risk.
• Long-term creditors increased, suggesting the company may have taken on more debt with longer repayment terms, which could be a strategy to manage short-term liquidity but increases future financial burden.
• The company operates on a micro scale with only one employee, meaning operational risks are concentrated and resources are limited.

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3. Diagnosis

Current Financial Condition:
Lumus Automotive Ltd is in a fragile financial state, characterized by persistent negative equity and reliance on external creditors. The recent improvement in current assets and reduction in current liabilities suggest some positive operational cash flows or capital injections, which are encouraging signs. However, the continued negative net assets reveal that accumulated losses or liabilities have not yet been fully addressed—akin to a patient whose vital signs improve but underlying illness remains.

The increase in long-term liabilities indicates the company may be refinancing or restructuring debt, which can provide a temporary relief but also presents a risk of future cash flow strain if operating profits do not increase.

Underlying Issues:

• Negative retained earnings or losses carried forward are eroding shareholder value.
• Dependence on external financing (creditors) highlights vulnerability to creditor demands or funding constraints.
• Small scale of operations limits diversification of income and resilience to market shocks.
• Micro-entity accounting and exemption from audit limit external scrutiny and may mask operational inefficiencies or risks.

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4. Recommendations

To improve financial wellness and move towards a healthier financial state, Lumus Automotive Ltd should consider the following:

1. Capital Injection / Equity Support:

   • Infuse additional equity capital to restore positive net assets and strengthen the balance sheet. This is like providing a transfusion to improve the patient’s blood volume.

2. Debt Restructuring:

   • Negotiate terms with creditors to manage or reduce long-term liabilities, preventing future cash flow stress.

3. Enhance Cash Flow Management:

   • Tighten control over receivables and payables to maintain a healthy working capital cycle. Monitor cash flow closely to avoid liquidity crises.

4. Operational Efficiency:

   • Explore ways to increase revenues from retail sales via internet/mail order (primary SIC code 47910) by expanding customer base or product range.

5. Financial Monitoring and Reporting:

   • Despite micro-entity status, consider voluntary audits or detailed financial reviews to better understand operational risks and improve transparency.

6. Strategic Planning:

   • Develop a clear business plan focusing on sustainable growth and profitability to overcome the current deficit and build shareholder value.

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