KWP AUTOMATION & TRAINING LTD

Executive Summary

KWP Automation & Training Ltd is a newly established engineering consultancy with a currently negative net worth but positive working capital and improving cash balances. The business relies heavily on director loans to support operations, which introduces risk. Credit approval is recommended on a conditional basis pending evidence of strengthening equity and sustainable cash flow generation. Close monitoring of director funding and operational cash conversion is advised.

KWP AUTOMATION & TRAINING LTD - Analysis Report

Company Number: 14265673

Analysis Date: 2025-07-29 12:08 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   KWP Automation & Training Ltd is a very recently incorporated SME operating in engineering-related scientific and technical consulting. The company is currently reporting negative net assets and shareholders’ funds, indicating an equity deficit. However, it has positive net current assets and increasing cash balances, supported by a directors’ loan account which finances the business. This suggests reliance on director funding to maintain liquidity. While the company is not currently overdue on filings and shows some working capital strength, the negative net worth and dependency on director loans warrant monitoring. Approval should be conditional on continued director support and improvement in equity position.

2. Financial Strength:
   The balance sheet reflects minimal fixed assets (£375) and modest current assets (£40,168) with cash at £33,642 as of July 2024. Current liabilities are low (£5,530), resulting in a healthy net current asset position of £34,638, which is a positive indicator of short-term financial health. However, the company carries a significant director loan liability (£38,867) classified as a long-term creditor, which contributes to net liabilities of £3,854 and negative shareholders’ funds. The equity deficit signals past or ongoing losses and a weak capital base, which constrains the company’s buffer against financial stress.

3. Cash Flow Assessment:
   Cash improved from £21,727 in 2023 to £33,642 in 2024, indicating enhanced liquidity and potentially better cash conversion from operations or additional director funding. Debtors decreased significantly (£14,644 to £6,526), which may reflect improved collection or reduced sales volume. The level of current liabilities is manageable relative to current assets. Overall, working capital management appears adequate for current operations but the reliance on director loans is a key liquidity support. The company’s ability to generate positive operating cash flow without continued financing support should be closely monitored.

4. Monitoring Points:

• Equity position and trend of net assets: Look for reduction of negative net worth through profitability or capital injection.
• Director loan account: Monitor for continued funding and any repayment plans, as this drives solvency.
• Cash flow from operations: Ensure operating cash generation improves to reduce reliance on external/related party financing.
• Debtor and creditor turnover: Track collection efficiency and supplier payment terms to maintain working capital balance.
• Filing compliance: Maintain timely submission of accounts and confirmation statements as per regulatory deadlines.