HYSPEC ENGINEERING LIMITED
Company number SC371408 · 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: HYSPEC ENGINEERING LIMITED (SC371408)
1. Credit Opinion: DECLINE
This company presents unacceptable credit risk for any unsecured or lightly-secured facility. Hyspec Engineering Limited has been balance sheet insolvent for four consecutive years (2022–2025), with net liabilities of £208,511 at the most recent year-end. Cash reserves are critically depleted at £10,031, and the company is carrying negative working capital of £208,511. The auditor has explicitly flagged a material uncertainty regarding going concern, with continued operations dependent on financial support from the ultimate parent company, Mohammed name shown to subscribers LLC.
Any credit extension would require a parent company guarantee from Mohammed name shown to subscribers LLC and/or substantial tangible security well in excess of the exposure. Without such support structures, this facility should not be advanced.
2. Financial Strength
The balance sheet has undergone severe deterioration over the review period:
| Year | Net Assets | Total Assets | Total Liabilities | Cash |
|---|---|---|---|---|
| 2018 | £1,895,860 | £5,270,761 | £3,200,941 | £35,693 |
| 2019 | £1,428,656 | £4,414,177 | £2,767,702 | £105,224 |
| 2020 | £1,078,203 | £3,116,355 | £1,728,311 | £66,588 |
| 2021 | £251,623 | £2,894,287 | £1,904,515 | £70,741 |
| 2022 | -£925,043 | £4,392,275 | £4,667,578 | £25,243 |
| 2023 | -£481,955 | £3,074,926 | £3,539,381 | £40,729 |
| 2024 | -£151,277 | £2,198,293 | £2,342,070 | £72,187 |
| 2025 | -£208,511 | £2,109,788 | £2,318,299 | £10,031 |
The company moved from positive equity of £251k in 2021 to negative £925k in 2022 — a catastrophic £1.17M swing. While there was a partial recovery through 2024 (aided by a £330k profit), the 2025 loss of £57k has reversed that momentum. Total assets have contracted by 60% from their 2018 peak (£5.27M to £2.11M), suggesting potential asset disposals or write-downs.
Share capital is negligible at £2, meaning the entire equity buffer has been eroded through accumulated losses. The P&L reserve is deeply negative. The company is technically insolvent on a balance sheet basis and has been sustained by creditor forbearance and parent company support.
The shareholding is £2 — this is a company with essentially no shareholder capital at risk.
3. Cash Flow Assessment
The liquidity position is critical and deteriorating:
- Cash on hand: £10,031 (2025), down from £72,187 in 2024 — an 86% reduction in a single year
- Net current liabilities: £208,511 — the company cannot meet short-term obligations from current assets
- Working capital deficit has persisted for at least four consecutive years
The company is reliant on the wider group (Hyspec Engineering Holdings Limited) and ultimately Mohammed name shown to subscribers LLC for financial support. The auditor's report confirms that the parent has committed to provide support for at least 12 months from the accounts' approval date (September 2026), but this is a conditional commitment, not a guarantee of long-term solvency.
The strategic report mentions a return to a five-day workweek (from four days), which suggests increased operational capacity — but also higher fixed costs. Headcount optimisation and energy-saving initiatives are planned but unproven. The company's own narrative acknowledges that more than half of revenue remains tied to Oil & Gas, a sector subject to cyclical downturns.
Post year-end, the directors report profitability for the 7 months to July 2026, which is encouraging but insufficient to offset the structural balance sheet deficiency. Without detailed cash flow statements (not available in the provided data), we cannot assess the quality or sustainability of this reported profitability.
4. Monitoring Points
If any facility were considered (with parent guarantee and/or security), the following would require ongoing monitoring:
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Parent company support: Any withdrawal or reduction of financial support from Mohammed name shown to subscribers LLC would trigger immediate default risk. Monitor the parent's financial position and any changes in group structure.
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Going concern status: The auditor's material uncertainty flag must be removed in the next filing. If it persists or worsens, the facility should be reviewed immediately.
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Cash position: The decline from £72k to £10k in one year is alarming. Monthly cash flow monitoring would be essential. Any further deterioration below £5k should trigger a formal review.
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Working capital: Track net current assets/liabilities monthly. The company needs to achieve positive working capital to demonstrate self-sustainability.
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Sector diversification: Monitor progress on the stated strategy to expand into Defence, Aerospace, and Automotive. Continued Oil & Gas concentration above 50% of revenue represents significant sector risk.
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Customer relationships: The strategic report references "repairing relationships with key customers" including Technip FMC and Baker Hughes. Loss of a major customer would be terminal given the current balance sheet position.
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Profitability consistency: The swing from £330k profit (2024) to £57k loss (2025) demonstrates earnings volatility. Sustained profitability over multiple consecutive periods is needed before any confidence in the trajectory can be established.
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Filing compliance: Currently up to date, but monitor for any late filings which could indicate administrative distress.