SOUTHAMPTON CONTAINER SERVICES LTD

Executive Summary

Southampton Container Services Ltd demonstrates a viable but financially pressured position with reduced net assets and declining cash balances. While current liquidity is positive, increased trade creditors and hire purchase debt heighten risk. Conditional credit approval is recommended with close monitoring of cash flow, debtor management, and profitability to ensure sustainable repayment capacity.

SOUTHAMPTON CONTAINER SERVICES LTD - Analysis Report

Company Number: 13057830

Analysis Date: 2025-07-20 11:02 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Southampton Container Services Ltd is an active private limited company operating in freight transport by road. The company shows positive net current assets and net assets, indicating a basic level of financial stability. However, there is a significant decline in net assets from £139,279 (2023) to £71,925 (2024), and cash reserves have decreased considerably from £306,925 to £193,613. Trade creditors have also increased markedly, indicating potentially stretched supplier payment terms or increased operational scale. The presence of hire purchase debts secured on assets adds financial leverage. Given these factors, credit approval should be conditional on monitoring cash flow management and creditor days, with limits on exposure until financial performance stabilizes.

2. Financial Strength:

• Net Assets: £71,925 as of 30 Nov 2024, down from £139,279 in the prior year, evidencing a material reduction in equity possibly due to operating losses or asset writedowns.
• Tangible Fixed Assets: £20,151, predominantly motor vehicles under hire purchase, reflecting some investment in operational capacity but financed by secured debt.
• Current Assets: £753,627 mainly composed of debtors (£560,014) and cash (£193,613).
• Current Liabilities: £685,259, primarily trade creditors (£635,290), indicating tight working capital.
• The gearing is moderate, with secured hire purchase liabilities totaling £16,033.
  Overall, the balance sheet shows thin equity buffers and increased liabilities, requiring careful assessment of ongoing profitability.

3. Cash Flow Assessment:

• Cash on hand has declined substantially year-on-year, which may signal liquidity pressures or increased operational outflows.
• Debtors have increased, potentially reflecting longer collection periods or higher sales on credit.
• Trade creditors have also increased significantly, which may be a strategy to manage cash outflows but could strain supplier relationships.
• Net current assets are positive (£68,368) but down from prior years, indicating reduced working capital cushions.
• The company holds hire purchase obligations payable beyond one year, which could impact future cash demands.
  Liquidity appears adequate for now but warrants close monitoring, particularly debtor collection and creditor payment terms.

4. Monitoring Points:

• Debtor Days and Cash Conversion Cycle: Rising trade debtors require scrutiny to avoid cash flow bottlenecks.
• Creditor Days: Increased trade creditors could affect supplier confidence; ensure terms remain sustainable.
• Profitability Trends: Investigate causes of net asset decline and ensure turnaround or stabilization.
• Hire Purchase Obligations: Monitor asset values and payment schedules to prevent covenant breaches or repossession risks.
• Director and Shareholder Transactions: Confirm no related party exposures or unusual financial arrangements given significant control by Vergo Holdings Limited and Mr. Gover.