PM CONTROLS LTD

Executive Summary

PM Controls Ltd demonstrates strong asset growth and improved net assets since incorporation, but carries significant finance lease liabilities that present a risk to liquidity. Cash levels have declined, increasing dependence on debtor collections and cash flow management. Conditional credit approval is recommended with ongoing monitoring of cash flow, lease servicing, and profitability metrics.

PM CONTROLS LTD - Analysis Report

Company Number: 14132529

Analysis Date: 2025-07-29 12:27 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   PM Controls Ltd is a relatively new company, incorporated in 2022, operating in the security systems service sector. Its financials show significant growth over two years, with net assets increasing from £3,552 in 2023 to £22,587 in 2024. However, the company has considerable finance lease obligations (£30,160 total) which represent a material future liability. The current liabilities exceed cash and debtors combined, indicating some pressure on liquidity. Given the growth trajectory and positive net assets, credit approval can be considered on condition of continued monitoring of cash flow and debt servicing capabilities, particularly the ability to meet lease payments.

2. Financial Strength:
   The balance sheet shows a healthy increase in fixed assets (£40,194 in 2024 from £940 in 2023), reflecting recent investments largely funded by finance leases. Current assets (£16,944) exceed current liabilities (£9,221), producing positive net current assets of £7,723, which is an improvement from the prior year’s £2,612. However, the company carries long-term finance lease liabilities of £25,330, which are sizable relative to equity (£22,587). Shareholders’ funds have grown substantially, indicating retained earnings or capital injection, but the gearing from lease obligations warrants caution.

3. Cash Flow Assessment:
   Cash at bank has dropped sharply from £12,555 in 2023 to £1,174 in 2024, although trade debtors increased to £15,770. This decline in cash suggests working capital tied up in receivables and significant finance lease repayments. The company’s ability to convert debtors to cash promptly and manage lease payments will be critical. The presence of a director’s loan account of £8 is negligible. Overall, liquidity is tight and dependent on effective debtor collection and maintaining operating cash flows to service lease and bank loan obligations.

4. Monitoring Points:

• Monitor cash flow closely, especially the timing of debtor collections versus lease payment schedules.
• Watch the servicing of finance lease obligations and any changes in lease terms or additional borrowing.
• Track profitability through future accounts filings to ensure the company can grow retained earnings to strengthen equity.
• Keep an eye on corporation tax payments, which decreased significantly from £9,542 to £2,879, to verify the sustainability of tax liabilities.
• Assess any changes in the company's credit terms with suppliers and customers which could impact working capital.