JACKSON MACHINERY SERVICES LIMITED

Risk Rating: LOW The company exhibits a strong balance sheet with substantial cash reserves, minimal leverage, and a long, stable operating history. While the recent marginal decline in net assets warrants monitoring, the overall financial position presents very low solvency and liquidity risk.

Key Concerns

1. Recent Decline in Retained Earnings: Net assets and the Profit and Loss reserve both decreased by approximately £2,120 in the latest reporting period (2025). Without a filed Profit & Loss account, it is impossible to determine from the balance sheet alone whether this reduction is the result of a trading loss or a dividend distribution to the shareholders.
2. Key Person Dependency: The company lists only one employee, who is also the sole director and the person with significant control (owning >75% of shares). This creates a high key-person risk; the sudden incapacity of the director could severely disrupt operations and the realization of asset value.
3. Limited Financial Transparency: The directors have elected to file under Section 444(5A) of the Companies Act 2006, opting to withhold the Profit & Loss account from public record. This limits an investor's ability to assess revenue trends, gross margins, and operational profitability.

Positive Indicators

1. Excellent Liquidity Position: The company holds £50,608 in cash against total current liabilities of only £12,142. This results in a current ratio of approximately 5.5x, indicating more than sufficient short-term liquidity to meet all obligations without needing to liquidate stocks or debtors.
2. Low Leverage and Solvency Risk: Total liabilities (£12,142) are minimal relative to total assets (£82,353). There is no long-term debt visible on the balance sheet, and the company is funded predominantly by accumulated retained earnings (£67,201).
3. Longevity and Regulatory Compliance: Incorporated in 2000, the company has over two decades of operational history. It is fully compliant with Companies House filing requirements, with the latest accounts filed early and no overdue filings.

Due Diligence Notes

1. Nature of the P&L Reserve Decline: Investigate whether the £2,120 reduction in the P&L reserve represents a trading loss or a dividend extraction. Given the director's >75% control, dividend extraction is highly plausible, but a loss would require an assessment of whether it represents a temporary blip or a deterioration of the business model (SIC 82990 - Other business support service activities).
2. Related Party Balances: The balance sheet lists £1,520 as "Amounts owed to related parties" under current liabilities. Clarify the terms of this related-party debt—specifically, whether it is repayable on demand and if there are any offsetting amounts owed from the director to the company not currently classified as current assets.
3. Asset Realizability: The company's fixed assets are heavily depreciated (Net Book Value of £15,830 vs. Cost of £115,281). While this indicates the assets are older, the company's working capital and cash position mean it is not reliant on the resale value of these assets to remain solvent. However, operational capacity may require future capital expenditure to replace aging plant and machinery.
4. Deferred Tax Provision: Note the presence of a £3,008 deferred tax liability. Understand what underlying timing difference is generating this liability (typically arising from capital allowances on the plant and machinery exceeding accounting depreciation) to assess future cash tax burdens.