Risk Analysis: EASY LOAD LIMITED (02571712)

1. Risk Rating: MEDIUM

Justification: While the company maintains a substantial asset base and positive net assets of £3.28M, the most recent financial year (ending March 2025) reveals a significant deterioration in key financial metrics that warrants careful monitoring. The P&L reserve declined by approximately £662K, cash reserves nearly halved, and long-term financial obligations quadrupled—all suggesting either a major capital investment programme financed through debt, a substantial trading loss, or a combination of both.

2. Key Concerns

a) Significant Decline in Retained Profits The Profit and Loss reserve fell from £3,722,157 (2024) to £3,060,313 (2025)—a reduction of £661,844. This represents a material erosion of shareholders' funds and suggests either a significant operating loss, asset write-downs, or substantial dividend extraction. Without access to the P&L account (filed under small company exemptions), the root cause cannot be confirmed from available data.

b) Cash Position Deterioration Alongside Rising Debt Obligations Cash at bank declined 47% from £1,190,091 to £627,384. Simultaneously, total finance lease and hire purchase obligations nearly doubled from £367,699 to £727,721, with long-term creditors increasing from £105,048 to £417,640. This combination indicates the company is leveraging debt to fund operations or capital expenditure at a time when cash generation appears constrained.

c) Asset Investment Risk The company added £938,000 in tangible assets (plant & machinery: £668,500; motor vehicles: £269,500) during the year, predominantly financed through lease arrangements rather than cash flow. If these assets do not generate the expected revenue uplift, the fixed cost burden from lease payments could strain future cash flows.

3. Positive Indicators

• Long-established business: Incorporated in 1991, giving over 33 years of trading history in the waste collection sector—a resilient, non-discretionary service industry.

• Strong asset backing: Total assets of £4.65M against total liabilities of £975,740 (current + long-term), yielding net assets of £3.28M. The company holds significant tangible assets including freehold property (£889,608 NBV) and investment property (£253,272).

• Adequate current liquidity: Current assets of £1,247,172 against current liabilities of £558,100 yields a current ratio of approximately 2.23:1, which provides reasonable short-term coverage.

• Regulatory compliance: All filings are up to date with no overdue accounts or confirmation statements. The company remains active with no insolvency proceedings.

• Consistent shareholder base: PSCs appear to be family members (Thomas Lee, Russell Thomas Lee, Thomas James Lee) with long-term involvement, suggesting committed ownership.

4. Due Diligence Notes

1. Profit & Loss Account: The company has filed filleted accounts under Section 444(1) of the Companies Act 2006, meaning the P&L account is not publicly available. Request full management accounts to determine whether the £662K decline stems from trading losses, asset impairments, or dividend distributions.

2. Finance Lease Terms: Total lease obligations stand at £727,721 with £417,640 due beyond one year. Investigate the interest rates, maturity profiles, and whether these relate to the newly acquired plant and vehicles. Assess whether lease terms are competitive and whether balloon payments exist.

3. Trade Debtor Quality: Debtors stand at £619,788 (approximately 50% of current assets). Request an aged debtor analysis to assess collectibility and concentration risk.

4. Related Party Transactions: Given the family ownership structure (three PSCs with overlapping control rights), examine whether there are any director loans, related-party balances, or transactions that could affect the company's financial position.

5. Revenue Trajectory: The company grew from 40 to 41 employees, suggesting maintained operational scale. However, without turnover data, it is impossible to assess revenue performance. Request turnover figures for the past 3-5 years to evaluate whether the capital investment is translating into growth.

6. Deferred Tax Position: The deferred tax provision of £396,992 has remained static year-on-year. Clarify the underlying timing differences and whether this reflects underprovided tax liabilities.

7. Creditor Concentration: Current creditors include £112,274 in trade creditors and £123,453 in taxation/social security. Verify that tax obligations are current and no disputes exist with HMRC.