CP WORKWEAR LTD

Executive Summary

CP Workwear Ltd shows signs of early-stage operational improvement with a return to positive net assets and growing debtor balances, but ongoing liquidity constraints and minimal equity pose moderate financial risks. The company is compliant with filing obligations, yet close scrutiny of cash flow, creditor management, and profitability is advised to confirm sustainability. Investors should weigh these factors carefully given the company’s short trading history and modest financial buffers.

CP WORKWEAR LTD - Analysis Report

Company Number: 13118596

Analysis Date: 2025-07-20 12:12 UTC

1. Risk Rating: MEDIUM
   CP Workwear Ltd exhibits moderate solvency and liquidity risks with a small net asset base and negative working capital, albeit an improving trend from the prior year. The company’s short operating history and tight cash position warrant cautious monitoring.

2. Key Concerns:

• Negative Net Current Assets: The company had net current liabilities of £6,842 as of January 2024, although this is an improvement from a more severe £26,073 deficit the previous year, indicating ongoing liquidity pressure.
• Minimal Share Capital and Equity Cushion: The share capital is nominal (£1) and shareholders’ funds stand at £1,326, providing limited buffer against operational or financial shocks.
• Reliance on Trade Credit and Director Loans: Current liabilities include significant trade creditors (£21,382) and VAT liabilities (£11,953), with small director loans indicating some owner reliance for funding, which may not be sustainable.

3. Positive Indicators:

• Turnaround from Prior Year's Losses: Net assets improved substantially from a negative £16,998 to a positive £1,326, reflecting some operational progress.
• Increasing Debtor Balances: Debtors rose from £5,550 to £21,889, suggesting increased sales or receivables turnover, potentially indicating business growth.
• Stable Fixed Assets and Controlled Depreciation: Tangible assets are modest but stable at £10,084 with consistent depreciation policies, reflecting modest capital investment appropriate to company size.
• Compliance with Filing Deadlines: The company is up to date on accounts and confirmation statement filings with no overdue returns, reducing regulatory compliance risk.

4. Due Diligence Notes:

• Investigate Cash Flow Management: The company’s cash balance rose from £12 to £8,108 but remains low relative to current liabilities. Assess actual cash flow cycles and working capital management.
• Review Trade Credit Terms and Payment History: Clarify the aging and terms of trade creditors and VAT liabilities to understand pressure points.
• Confirm Revenue and Profitability Trends: Since the profit and loss account was not included in filings, obtain detailed income statements to evaluate operational sustainability and margin trends.
• Director and Related Party Transactions: Examine the nature and sustainability of director loans and any related party transactions that could affect liquidity.
• Assess Business Model and Market Position: Understand the competitive positioning in the manufacture of workwear sector and order book stability to evaluate future prospects.