FLEX POWER TOOLS LIMITED

Executive Summary

Flex Power Tools Limited shows weakened financial strength with net liabilities and negative working capital. The company's survival is contingent on ongoing financial support from its parent group. Credit approval is conditional, requiring careful monitoring of intercompany funding and liquidity metrics to mitigate risk.

FLEX POWER TOOLS LIMITED - Analysis Report

Company Number: 13003798

Analysis Date: 2025-07-20 13:10 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Flex Power Tools Limited operates as a subsidiary and agent within a group structure, with its financial viability heavily reliant on ongoing support from its ultimate parent company, Chervon Holdings Ltd, and immediate parent, Flex Elektrowerkzeuge GmbH. The company reported net liabilities of £201,434 at the end of 2022, a significant deterioration from net assets of £49,750 in 2021. The going concern assumption is explicitly dependent on parent company support letters, indicating inherent risk if that support were withdrawn. Therefore, credit approval is conditional on continued parent company backing and close monitoring of intercompany balances and liquidity.

2. Financial Strength:
   The balance sheet shows a marked weakening in financial position from 2021 to 2022. Current assets increased significantly to £1.81M due to debtors, primarily amounts owed by group undertakings (£715k) and trade debtors (£855k), while cash reserves fell to zero. Current liabilities also increased sharply to £2.01M, mostly amounts owed to group undertakings (£1.91M). The company’s net liabilities of £201k reflect accumulated losses (£251k loss reserve), eroding the initial share capital of £50k. No fixed assets are reported, and the company’s equity base is negative, highlighting weak financial resilience.

3. Cash Flow Assessment:
   The company has no cash on hand and large amounts tied up in receivables from group companies, which may not be readily convertible to cash. The mismatch between current liabilities and current assets results in negative net working capital of £201k. The company has no employees besides directors, limiting operating expenses, but reliance on intercompany funding is critical. The absence of independent cash flow generation and reliance on letters of support from the parent raises liquidity risk. Continuous monitoring of intercompany balances and parent company funding commitments is essential.

4. Monitoring Points:

• Parent company support status and any changes to funding commitments.
• Timeliness and collectability of trade and intercompany receivables.
• Changes in net current liabilities and overall net asset position in future accounts.
• Any increase in operating expenses or changes to the business model that could impact cash flow.
• Director and management changes affecting governance and financial oversight.