WATER PRESSURE LTD

Executive Summary

Water Pressure Ltd exhibits critical liquidity and solvency weaknesses, driven by excessive short-term liabilities and minimal cash reserves. The company’s positive net assets are tied up in illiquid investments, raising concerns about its ability to meet debt obligations. Given these factors and limited operational data, credit extension is not recommended without substantial improvement in financial position and cash flow.

WATER PRESSURE LTD - Analysis Report

Company Number: 14183358

Analysis Date: 2025-07-29 18:24 UTC

1. Credit Opinion: DECLINE
   Water Pressure Ltd displays significant liquidity and solvency concerns that impede its ability to service debt. The company’s current liabilities have surged dramatically to over £1 million (2024), with minimal cash balances (£650) and severely negative net current assets (-£1,025,564). Although net assets are slightly positive (£3,436), this is largely due to a sizeable investment in a subsidiary (£1.881 million), which may not be readily liquidatable. The heavy reliance on creditor financing, including £683,800 owed to group undertakings and £852,000 due after one year, indicates a fragile capital structure. Without evidence of stable cash inflows or operational profits, the risk of default is high. Therefore, credit facilities are not advisable at this stage.

2. Financial Strength:
   The balance sheet reveals a heavily leveraged position with a very low equity base. The company’s fixed assets consist solely of investments in a group company, indicating no tangible assets for collateral or operational support. The rapid growth in current liabilities from £9,165 in 2023 to £1,026,214 in 2024, combined with net current liabilities over £1 million, highlights deteriorating short-term financial health. The marginal positive net assets are insufficient to absorb financial shocks. Overall, the financial strength is weak, with poor liquidity and over-dependence on related-party funding.

3. Cash Flow Assessment:
   Cash on hand remains negligible (£650 in 2024), indicating poor liquidity. The substantial current liabilities imply significant near-term cash outflows, which the company is unlikely to meet given its minimal liquid resources. Negative working capital of over £1 million suggests ongoing operational cash deficits or financing issues. The lack of income statement data constrains full cash flow analysis, but the balance sheet position signals potential cash flow stress and limited ability to cover short-term obligations without additional capital injections.

4. Monitoring Points:

• Liquidity trends: Monitor cash balances and net current assets in subsequent filings to detect improvement or further deterioration.
• Related-party debt: Track movements in amounts owed to group undertakings, especially repayment terms and any restructuring.
• Investment asset valuation: Assess the recoverability of the £1.881 million investment in the subsidiary to understand realisable value under stress.
• Profitability indicators: Obtain profit and loss data to evaluate operational performance and cash generation capability.
• Director actions: Watch for changes in management or capital structure that might indicate efforts to address financial instability.