Company Number: 12737174

Analysis Date: 2025-07-29 16:38 UTC

1. Risk Rating: MEDIUM
   Hector Andrews Limited demonstrates recovery and strengthening of its financial position in the latest financial year. However, historical negative net current assets and limited cash balances pose some liquidity concerns. The company’s small size, minimal share capital, and reliance on receivables warrant cautious monitoring.

2. Key Concerns:

• Liquidity Risk: Cash at bank remains very low (£594 in 2024), despite large current assets driven almost entirely by debtors (£595,632). This indicates potential cash flow timing issues and dependency on collection of receivables to meet short-term liabilities (£174,810).
• Volatility in Working Capital: The company moved from negative net current assets in prior years (-£112,932 in 2023) to a positive £421,416 in 2024, largely due to recognition of debtors. Such fluctuations suggest operational or billing challenges affecting stability.
• Minimal Share Capital and Equity Base: Share capital is only £20 with shareholders’ funds of £524,798, mostly from retained earnings or revaluation of financial assets. This may limit the company’s ability to absorb shocks or secure additional financing without dilution.

3. Positive Indicators:

• Strong Improvement in Net Assets: The company’s net assets rose substantially from £10,514 in 2023 to £524,798 in 2024, indicating improved profitability or asset revaluation.
• No Overdue Filings or Compliance Issues: Accounts and confirmation statements are filed on time with no overdue notices, reflecting good governance and regulatory compliance.
• Stable Directorship: The two directors have been in place since incorporation with no disqualifications or adverse records, suggesting stable management.
• Investment Holding: The company holds financial assets valued at £103,382 at fair value, contributing to overall net asset strength.

4. Due Diligence Notes:

• Verify the nature and collectability of the large debtor balance (£595,632) to assess liquidity risk and revenue quality.
• Review turnover and profit trends not disclosed here to confirm sustainability of earnings and working capital improvements.
• Investigate the composition and valuation methods of other financial assets to ensure conservatism and market realism.
• Clarify the business model and client base given SIC code 96090 (“Other service activities not elsewhere classified”) is broad and may mask operational risks.
• Confirm that cash flows are sufficient to meet ongoing liabilities given minimal cash reserves despite strong net current assets.
• Assess any contingent liabilities or off-balance-sheet risks not evident in abridged accounts.