RWP (NW) LTD

Executive Summary

RWP (NW) Ltd is facing significant liquidity challenges and negative equity, indicating financial distress. Immediate focus on improving cash flow, restructuring liabilities, and securing ongoing parental support is vital to stabilise the business. Without intervention, the company risks solvency issues, but with proper management and backing, recovery is possible.

RWP (NW) LTD - Analysis Report

Company Number: 14194354

Analysis Date: 2025-07-29 15:49 UTC

Financial Health Assessment for RWP (NW) LTD as of 30 June 2024

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1. Financial Health Score: D

Explanation:
The company exhibits serious signs of financial distress, primarily due to significant net current liabilities and negative shareholders' funds. The score "D" reflects a weak financial position with risks to solvency, but not yet at the brink of immediate failure or insolvency. There is a reliance on external support to maintain operations.

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2. Key Vital Signs:

Metric	30-Jun-24	Interpretation
Current Assets	£15,630	Very low liquid resources available
Cash at Bank	£15,630	Entire current asset base is cash
Current Liabilities	£724,159	Very high short-term debts
Net Current Assets	-£708,529	Severe working capital deficit ("cash flow distress")
Total Assets less CL	-£1,921	Negative after subtracting current liabilities
Shareholders' Funds	-£2,021	Negative equity, indicating accumulated losses
Investment Property	£706,608	Long-term asset base increased significantly
Debtors	£0	No receivables to generate incoming cash

Trend Analysis:

• Compared to the prior year (2023), cash reserves have dropped sharply from £196,639 to £15,630, a critical red flag for liquidity.
• Current liabilities remain consistently high (~£724k), leading to a worsening net current asset position (from -£526k to -£708k).
• Investment property increased by ~£199k, which is a positive sign of asset growth but remains illiquid.
• Shareholders' funds improved slightly (less negative), but still firmly in negative territory.

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3. Diagnosis:

Symptoms of Financial Distress:

• The company shows "symptoms of distress" with a dangerously low cash position and a heavy burden of short-term liabilities far exceeding current assets.
• Negative working capital implies that it cannot meet its immediate obligations with its liquid assets.
• Negative equity suggests accumulated losses or funding shortfalls in prior periods.
• No debtors (trade receivables) means no incoming short-term cash flow from clients, increasing pressure on cash reserves.
• The company relies heavily on investment property as a long-term asset, which is illiquid and cannot be quickly converted into cash to meet short-term liabilities.
• The directors have acknowledged reliance on continued financial support from the parent company, Rishton Waste Paper Ltd, to sustain operations—this is akin to a patient relying on medication or external support to stay stable.
• The company is relatively young (incorporated June 2022) and still developing its financial foundation; however, the financial health is currently fragile.

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4. Prognosis:

• Without a significant increase in liquidity or reduction in short-term liabilities, the company risks running into solvency issues.
• The investment in property, while positive for long-term value, does not alleviate immediate cash flow problems.
• Continued support from the parent company appears critical to the company’s going concern status and financial stability.
• If operational performance improves as anticipated by the directors, and external support continues, there is potential for recovery.
• However, failure to improve cash flow or restructure liabilities may lead to insolvency proceedings in the medium term.

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5. Recommendations:

Immediate Actions:

• Improve Cash Flow: Explore ways to increase liquid assets quickly—such as accelerating receivables collection (if possible), reducing discretionary spending, or converting some investment property into cash or secured loans.
• Restructure Liabilities: Engage with creditors to negotiate extended payment terms or restructure short-term debts to ease immediate cash flow pressures.
• Parent Company Support: Formalise continued financial support arrangements with the parent company to ensure stable funding.
• Financial Monitoring: Implement rigorous cash flow forecasting and financial controls to monitor liquidity daily.
• Operational Review: Assess business operations to identify cost-saving measures and revenue enhancement opportunities to improve profitability and reduce reliance on external funding.

Longer-Term Actions:

• Capital Injection: Consider equity investment to strengthen the balance sheet and provide working capital.
• Asset Utilisation: Evaluate the feasibility of leveraging the investment property (e.g., sale and leaseback) to convert illiquid assets into cash.
• Business Strategy: Develop a clear growth and profitability plan to move from reliance on external support to self-sufficiency.

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Medical Analogy Summary:

RWP (NW) Ltd is currently exhibiting "symptoms of financial distress" with "low blood pressure" in liquidity and "high fever" in liabilities. The company's "vital signs" are weak, with dangerously low cash reserves against high short-term debts, akin to a patient struggling with dehydration and infection simultaneously. The prognosis depends heavily on timely intervention and continued "medical support" from the parent company to stabilise and recover.

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