ROMPA LIMITED
Company number 04011415 · Monitor this company
This analysis was written by an AI from the company's public filings. It may contain errors or omissions and is not financial or professional advice.
CREDIT ANALYSIS: ROMPA LIMITED
1. Credit Opinion: CONDITIONAL
Rationale: Rompa Limited presents a mixed credit profile. While the balance sheet retains reasonable asset backing with net assets of £1.74M and a current ratio above 2x, the business has recorded a significant loss in FY2025 (P&L reserve declined by approximately £470,160), cash has deteriorated by 42% year-on-year, and the company carries material intercompany exposure. The US-based parent group ownership provides some comfort regarding potential support, but the recent trading deterioration warrants caution. Facilities should be considered on a conditional basis with appropriate covenants and monitoring.
2. Financial Strength
Balance Sheet Composition (FY2025):
| Category | £ | % of Total Assets |
|---|---|---|
| Fixed Assets (Intangible) | 180,610 | 6.2% |
| Fixed Assets (Tangible) | 217,305 | 7.4% |
| Stocks | 766,356 | 26.3% |
| Debtors | 1,346,051 | 46.2% |
| Cash | 404,254 | 13.9% |
| Total Assets | 2,914,576 | 100% |
Key Concerns:
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Intangible Assets: £180,610 of development expenditure remains capitalised and unamortised. The notes state this project is "not yet complete" – this represents speculative value that may never generate returns. Additions of £82,565 in-year suggest continued investment with uncertain payback.
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Intercompany Debtors: £790,551 owed by group undertakings represents 58.7% of total debtors and 27.1% of total assets. While reduced from £1.25M in FY2024, this concentration creates significant dependency on the parent group's financial health and willingness/ability to settle.
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Stock Levels: At £766,356 (26.3% of total assets), inventory represents a meaningful liquidity risk if slow-moving or obsolete. The nature of the business (multi-sensory products) may involve specialised stock with limited secondary market value.
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Tangible Asset Base: Net tangible assets of only £217,305 provide limited collateral coverage for any secured lending. The majority of fixed asset value is in fixtures and fittings (£9,609 NBV) and plant/machinery (£207,696 NBV).
Net Asset Trajectory:
| Year | Net Assets | Movement |
|---|---|---|
| FY2021 | £1,489,832 | - |
| FY2022 | £1,755,417 | +£265,585 |
| FY2023 | £2,062,240 | +£306,823 |
| FY2024 | £2,213,052 | +£150,812 |
| FY2025 | £1,742,892 | -£470,160 |
The reversal in FY2025 is stark and eliminates approximately 75% of the profit accumulated over the preceding three years.
3. Cash Flow Assessment
Liquidity Position:
| Metric | FY2025 | FY2024 | Movement |
|---|---|---|---|
| Current Assets | £2,516,661 | £3,287,954 | -£771,293 |
| Current Liabilities | £1,131,684 | £1,147,174 | -£15,490 |
| Net Current Assets | £1,384,977 | £2,140,780 | -£755,803 |
| Current Ratio | 2.22x | 2.87x | Deteriorating |
| Cash | £404,254 | £697,801 | -£293,547 |
Working Capital Analysis:
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Cash Decline: Cash has fallen 42% from £697,801 to £404,254. While still a reasonable absolute figure, the trajectory is concerning – particularly as FY2023 held £901,537.
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Debtor Collection: Trade debtors reduced modestly from £220,908 to £206,119, suggesting stable payment terms. However, the intercompany balance reduction of £461,231 may indicate either repayment from the parent or reclassification/set-off arrangements.
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Creditor Position: Trade creditors at £638,336 (down from £708,399) and accruals/deferred income at £412,956 (up from £285,288) suggest the company is managing supplier payment terms but increasing accruals – potentially deferring costs.
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Quick Ratio: Excluding stock (which may be illiquid), the quick ratio is approximately 1.54x (£1,750,305 / £1,131,684), which remains adequate but is declining.
Cash Flow Quality Concern: The significant loss, combined with the reduction in intercompany debtors and increased accruals, raises questions about whether the business is generating sustainable cash from operations or relying on group funding mechanisms.
4. Monitoring Points
| Metric | Target/Threshold | Rationale |
|---|---|---|
| Profitability | Return to net profit position within 12 months | Current loss trajectory is unsustainable; P&L reserve erosion must be arrested |
| Cash Position | Minimum £300,000 | Current level provides ~4 months of operating costs; further decline would create liquidity pressure |
| Intercompany Balance | Monitor for continued reduction or unexpected increase | High dependency on group settlements; any increase would signal cash flow stress |
| Current Ratio | Maintain above 1.5x | Below this level would indicate working capital strain |
| Stock Turnover | Assess quarterly for obsolescence risk | £766k in inventory is material; impairment risk should be monitored |
| Employee Count | Watch for further reductions | Decline from 59 to 55 may indicate cost-cutting; further reductions could signal deeper issues |
| Group Support | Confirm parent company financial health | School Speciality LLC's position directly impacts intercompany debtor recoverability and potential support |
| Development Expenditure | Assess commercial viability of capitalised project | £180k capitalised with no amortisation; risk of write-off if project fails |
| Warranty Provision | Monitor adequacy of £40k provision | Potential contingent liability if warranty claims exceed provision |
Additional Considerations:
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Group Structure: As a wholly-owned subsidiary of Flaghouse Inc (ultimately School Speciality LLC, Delaware), there may be scope for parent company guarantees. However, the US-domiciled parent limits direct recourse and visibility over group financial health.
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Sector Context: Multi-sensory products serve educational, healthcare, and special needs markets. These can be subject to public sector budget pressures, though demand is relatively resilient.
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Audit Opinion: Unqualified audit report provides some comfort on accounts reliability.
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Filing Compliance: Accounts filed on time with no overdue filings – positive indicator of management discipline.