PLUMB FACTORY HORWICH LTD

Executive Summary

Plumb Factory Horwich Ltd exhibits significant financial distress with negative net assets and working capital shortages as of April 2024, undermining its ability to service debt or meet obligations. The company’s liquidity position is weak, with very limited cash and high current liabilities, suggesting an elevated credit risk. Without strong parent company support or a clear recovery plan, credit facilities should be declined at this stage.

PLUMB FACTORY HORWICH LTD - Analysis Report

Company Number: 13136212

Analysis Date: 2025-07-29 20:54 UTC

1. Credit Opinion: DECLINE
   Plumb Factory Horwich Ltd shows a significant deterioration in financial health during the latest accounting year ending April 2024. The company has moved from positive net current assets and shareholders' funds in prior years to substantial net current liabilities of £22,676 and negative equity of £22,776. This indicates an erosion of capital and significant liquidity stress. The creditors due within one year have increased sharply to £23,796, while current assets have plummeted to only £1,120, including cash of £1,020. Such a mismatch raises serious concerns over the company’s ability to meet short-term obligations and service debt. Given this financial distress and lack of profitability disclosures, credit approval is not recommended without substantial mitigation or guarantees.

2. Financial Strength:
   The balance sheet reveals a weakening financial position. Shareholders’ funds have turned sharply negative, reflecting accumulated losses or increased liabilities. The company’s net current assets have swung from a positive £4,730 to a negative £22,676, primarily driven by a large increase in current liabilities, including tax and other creditors. The company holds minimal fixed or tangible assets (none disclosed), exposing it to risk if cash flows deteriorate further. The parent company, Plumb Factory Ltd, holds 100% ownership, which may provide some indirect support, but the subsidiary’s standalone financial position is weak.

3. Cash Flow Assessment:
   Liquidity is critically constrained. Cash on hand is minimal at £1,020 with trade debtors nearly written off to £100 from over £11,000 the prior year, suggesting collection issues or write-downs. Current liabilities are almost 21 times current cash, indicating a high risk of default on short-term payables. The company’s working capital deficit is a clear indicator of cash flow problems, likely requiring external funding or restructuring to remain solvent.

4. Monitoring Points:

• Track monthly cash flow closely, particularly cash conversion from debtors and management of creditor payments.
• Monitor any support or financial injections from the parent company, Plumb Factory Ltd.
• Review any upcoming filings or management commentary for turnaround plans or refinancing.
• Watch for further deterioration in net current assets and shareholder equity.
• Assess profitability or loss trends once profit and loss accounts are available to understand operational sustainability.