Risk Assessment: HARNFIELD PROPERTIES LIMITED

1. Risk Rating: MEDIUM

Justification: The company demonstrates consistent growth in net assets and maintains a long operational history since 1999. However, the financial position is fundamentally underpinned by extensive related party balances, creating significant dependency risks. The thin cash position relative to operational scale and the dramatic increase in stock levels warrant careful scrutiny. While not immediately distressed, the opacity of inter-company relationships presents material uncertainty for an external investor.

2. Key Concerns

Concern 1: Extreme Related Party Dependency

The most significant red flag is the scale of related party transactions. "Other creditors" of £3,857,475 and "Other debtors" of £3,732,805 overwhelmingly represent inter-company balances with entities under common control (Quickstone Midlands Limited, Goldholme Stone Limited, and BCH UK Limited). The net creditor position to Goldholme Stone alone is £3,779,089. This means the company's solvency is entirely dependent on the willingness of related parties not to call in debts. If these related party relationships were to sour or if the controlling shareholders restructured the group, this company could face immediate insolvency.

Concern 2: Thin Cash Position

Cash at bank stands at only £58,178 for a company with 33 employees and £4.7M in total assets. This represents just 1.2% of total assets. While the current ratio appears healthy at approximately 1.16:1, this is misleading—stripping out inter-company debtors (which are not independently recoverable) would leave current assets of approximately £767,878 against current liabilities of £3,992,744, creating a severely negative working capital position. The company is reliant on related party forbearance for day-to-day liquidity.

Concern 3: Dramatic Stock Increase

Stocks have surged from £132,700 (2023) to £694,700 (2024)—a 424% increase. Without visibility over revenue or profit (the company has opted not to file its income statement), it is impossible to determine whether this represents genuine trading growth or potential stock accumulation from over-production, reduced demand, or related party transfers. Given the company's SIC code relates to quarrying, this could represent extracted stone awaiting sale, but the magnitude of the increase requires explanation.

3. Positive Indicators

• Consistent Net Asset Growth: Net assets have grown from £151,929 (2014) to £708,739 (2024), demonstrating a clear upward trajectory over the decade. This suggests cumulative profitability and value creation.

• Regulatory Compliance: All filings are current with no overdue items. The company has maintained consistent filing history since 1999, and accounts for December 2024 were prepared and signed by September 2025—well within deadlines.

• Operational Continuity: 33 employees maintained across years, a defined contribution pension scheme in operation, and 25+ years of continuous operation indicate a stable operational business rather than a shell or dormant entity.

• No External Bank Debt: The creditor profile shows no visible bank loans or secured borrowings, suggesting the group self-finances rather than relying on external lenders who could trigger covenant breaches.

4. Due Diligence Notes

Items Requiring Further Investigation:

1. Group Structure Mapping: The PSC register shows three Kerry family members with significant control, and the accounts reference "businesses under common control." A full group structure chart should be obtained to understand the flow of funds, which entities hold assets vs. liabilities, and whether there are any circular funding arrangements.

2. Nature of "Other Debtors" and "Other Creditors": These balances comprise approximately 96% of debtors and 97% of creditors respectively. The terms of these inter-company balances—whether they are repayable on demand, interest-bearing, or effectively long-term—must be established. If Goldholme Stone demanded repayment of £3.8M, the company would be insolvent.

3. Profitability Verification: The company has elected not to file its profit and loss account. Given that net assets increased by £130,434 during 2024, this implies profitability, but the quantum of profit relative to turnover, margins, and the nature of the related party trading margins (stated to be "at market rate") cannot be independently verified.

4. Stock Composition and Realisability: The 424% increase in stocks warrants investigation into whether this represents finished goods available for sale, work-in-progress, or potential impairment. The accounting policy states stocks are held at lower of cost and net realisable value, but no impairment analysis is disclosed.

5. Director Identity Discrepancy: The officer listed is Edward Nathan DALRYMPLE, but the accounts are signed by P A Kerry as Director. The PSC register lists Matthew Jonathan Kerry, Jonathan Andrew Kerry (appearing twice with different control thresholds), and Philip Andrew Kerry. The relationship between the Dalrymple director and the Kerry family control should be clarified.

6. Quickstone Midlands Limited Transactions: Sales of £2,098,098 and purchases of £416,632 with this single related party represent substantial trading volume. The debtor balance of £3,629,019 due from Quickstone should be assessed for recoverability and whether this represents genuine trade terms or capital financing.