Credit Analysis: Event Insurance Services Limited

1. Credit Opinion: APPROVE

Reasoning: Event Insurance Services Limited demonstrates strong creditworthiness underpinned by a nearly 30-year trading history, significant net asset growth (nearly doubling to £1.086m in FY2025), and robust profitability evidenced by retained earnings increasing from £555k to £974k. The company maintains adequate liquidity with £496k cash and a healthy current ratio of approximately 2.24x. Shareholder commitment is demonstrated through a £112k share premium injection in the period. Low bank borrowings (£14k) and elimination of long-term creditors further strengthen the position. The primary considerations are the significant debtor balances and the recent director resignations, which warrant monitoring but do not impede approval.

2. Financial Strength

Balance Sheet Position - Strong

The balance sheet has strengthened materially. Net assets nearly doubled year-on-year, driven by strong retained profit generation (£419k increase) and a capital injection via share premium (£112k). The company carries minimal financial leverage with bank loans reduced to just £14k.

Tangible Net Worth: £1.086m provides substantial cushion for creditors. The asset base is predominantly liquid or receivable in nature rather than tied up in illiquid fixed assets (net book value of fixed assets only £254k).

Capital Structure: Family-controlled (Scurlock-Jones family holds 75-100% collectively) with demonstrated willingness to inject capital when needed. The share premium introduction in FY2025 signals commitment to the business.

Provisions: Modest and declining at £54k (down from £62k), suggesting no significant contingent liabilities are being recognised.

3. Cash Flow Assessment

Liquidity Position - Adequate with Monitoring Required

Positive Factors: - Cash position stable at approximately £496k - Net current assets doubled to £887k - Current ratio improved from 1.62x to 2.24x - Long-term creditors eliminated (£133k paid down to nil) - Corporation tax liability of £234k indicates strong taxable profits

Areas Requiring Attention:

Debtors Analysis: | Debtor Category | FY2025 | FY2024 | Movement | |----------------|--------|--------|----------| | Trade Debtors | £172,681 | £210,911 | -18.1% | | Other Debtors (current) | £496,889 | £190,778 | +160.5% | | Directors' Current Accounts | £112,000 | £29,908 | +274.5% | | Other Debtors (>1 year) | £275,794 | £135,264 | +103.9% |

The significant increase in "other debtors" and directors' current accounts requires scrutiny. The £112k owed by directors and the £275k in long-term other debtors represent cash tied up that could impact working capital if not collected timely.

Obligations: - Corporation tax payable: £233,794 (up from £81,990) - significant upcoming cash outflow - Hire purchase commitments: £119,520 (increased from £34,325) - indicates equipment financing - Total current liabilities: £716,971

Working Capital Assessment: The business generates commission income from insurance intermediation, which typically requires lower working capital than trading businesses. The current ratio of 2.24x provides adequate headroom, though the composition of debtors warrants ongoing review.

4. Monitoring Points

High Priority

1. Directors' Current Accounts (£112k): Obtain confirmation of repayment terms and timeline. Significant increase from £30k suggests either loans to directors or unpaid remuneration. Ensure this does not represent improper extraction of value.

2. Other Debtors Composition: The 160% increase in current other debtors and 104% increase in long-term other debtors requires explanation. Understand the nature - if related to insurance intermediation balances, confirm collectibility with relevant insurers/clients.

3. Director Resignations: Two directors (Daniel Rose and Paul John Telling) resigned in December 2025. Understand the implications for business continuity and management depth. The company now appears to rely heavily on Peter David Scurlock-Jones as the sole remaining director.

Medium Priority

4. Corporation Tax Liability: £234k represents a significant cash outflow requirement. Monitor payment timing and ensure adequate cash reserves are maintained.

5. Hire Purchase Commitments: Increased from £34k to £120k, suggesting significant equipment acquisition (likely the £58k in computer equipment additions). Understand the repayment schedule and impact on future cash flows.

6. Insurance Market Conditions: As a non-life insurance intermediary, the business is exposed to market hardening/softening cycles and potential claims volatility through any binding authority or underwriting agency arrangements.

Ongoing

7. Profitability Trends: While retained earnings growth indicates strong profitability, obtain profit & loss details (not filed under small company regime) to understand margin sustainability.

8. Related Party Transactions: Given the family ownership structure, monitor for transactions that may prefer shareholders over creditors.

9. Employee Numbers: Headcount increased from 20 to 21 - monitor for cost pressures.