PROMERITUM SOUTH LIMITED

Executive Summary

PROMERITUM SOUTH LIMITED maintains a solid balance sheet with improving shareholder funds and a positive working capital position, supporting its ability to meet short-term obligations. Despite a reduction in current assets, liquidity remains adequate, but debtor management should be closely monitored. Given the company’s compliance and stable ownership, credit approval is recommended with ongoing oversight of liquidity and operational cash flow metrics.

PROMERITUM SOUTH LIMITED - Analysis Report

Company Number: 13133096

Analysis Date: 2025-07-20 11:22 UTC

1. Credit Opinion: APPROVE with monitoring conditions.
   PROMERITUM SOUTH LIMITED demonstrates a strong net asset base and improving shareholder equity, indicating adequate capitalisation for a micro-entity. The company maintains positive working capital and a reasonable liquidity position despite a decline in current assets over the last year. The directors have maintained compliance with filing deadlines, and there are no indications of financial distress or governance concerns. Given the company’s size, nature of business (security dealing on own account), and stable ownership structure with a controlling shareholder, the risk profile is moderate. Approval is recommended with ongoing monitoring of liquidity and debtor management.

2. Financial Strength:
   The company’s balance sheet shows growth in shareholder funds from £990,990 in 2023 to £1,135,478 in 2024, reflecting retained earnings or capital injections supporting net assets. Fixed assets are negligible (£240), consistent with a service/trading business model that is not capital intensive. Current liabilities decreased from £2.39M in 2023 to £1.65M in 2024, improving the net current asset position. The company’s equity represents approximately 43% of total assets, which is a healthy equity ratio for a micro-entity, indicating sound financial backing. The overall balance sheet is conservative with no long-term debt disclosed, reducing leverage risk.

3. Cash Flow Assessment:
   While specific cash flow statements are not provided, the reported cash balance and current assets indicate reasonable liquidity. Current assets at £2.78M against liabilities of £1.65M provide a current ratio of approximately 1.69x, which is acceptable for short-term debt coverage. However, current assets have declined from prior years, and cash held is inferred to be modest relative to total current assets, suggesting a material portion is tied up in debtors (£3.36M in 2023, though this figure is not explicitly stated for 2024). The company should be monitored for debtor collection efficiency and working capital turnover to ensure ongoing liquidity adequacy.

4. Monitoring Points:

• Debtor aging and collection periods: High debtor balances require close scrutiny to avoid liquidity strain.
• Current ratio and working capital trends: Watch for any deterioration that might signal cash flow pressures.
• Profitability trajectory and retained earnings growth: To assess capacity for debt service and internal capital generation.
• Director and shareholder stability: The majority shareholder has significant control; any changes here could affect governance risk.
• Compliance with future filing deadlines and any emerging contingent liabilities.