Risk Assessment: LUCY A RAYMOND & SONS LIMITED

1. Risk Rating: HIGH

Justification: The company is technically insolvent with negative shareholders' funds of £(140,502) and net current liabilities of £(100,911). Going concern status is explicitly dependent on continued support from the ultimate controlling party. The freely available cash position is negligible once client money is excluded. These are material solvency and liquidity concerns that warrant a HIGH risk rating.

2. Key Concerns

Concern 1: Technical Insolvency and Going Concern Dependency

Shareholders' funds have deteriorated from £988,449 (March 2019) to negative £(140,502) (July 2024). The accounts explicitly state the going concern basis relies on "the continued support of its ultimate controlling party" (Larandsons Holdings Limited). This is a significant qualification – withdrawal of parent company support would likely render the company unable to continue as a going concern.

Concern 2: Misleading Liquidity Position Due to Client Money

The reported cash of £255,017 includes £253,253 of insurance client money held in client bank accounts. This money is not available to meet the company's own obligations. The actual unrestricted cash available to the company is approximately £1,764. With current liabilities of £1,327,602 and net current liabilities of £(100,911), the true liquidity position is precarious.

Concern 3: Related Party Exposure and Intercompany Dependency

Three significant related party positions raise concentration and recovery risk: - £684,621 owed by the parent company Larandsons Holdings Limited (79% of total debtors, up from £nil in March 2024) - £306,429 owed to WTS (related party under common control) - £169,558 owed to a director (reversed from £597,030 owed by the director just four months earlier)

The speed of these balance sheet movements and the intercompany dependency suggest the company may be functioning as a conduit within a wider group structure, with limited standalone viability.

3. Positive Indicators

• Regulatory Compliance: Accounts and confirmation statements are filed on time with no overdue filings. The company appears to maintain its statutory obligations.

• Long-Established Business: Incorporated in 2000, the company has operated for 24 years in the insurance broking sector, which typically generates recurring commission income.

• Parent Company Support: The going concern statement indicates the ultimate controlling party is currently providing support, and the reversal of the director loan position (from £597K owed by the director to £170K owed to the director) suggests active financial management by those with control.

• Active Trading Status: The company remains operational with 13 employees, and the most recent period shows some improvement in the cash position (from £133K to £255K) and a reduction in net liabilities from March to July 2024.

4. Due Diligence Notes

1. Parent Company Financial Health: The entire going concern assumption rests on Larandsons Holdings Limited. Their accounts should be obtained and reviewed to assess whether they have the resources and willingness to continue supporting this subsidiary.

2. Recoverability of Intercompany Debtor: The £684,621 owed by the parent company (up from £nil in the prior period) represents a material concentration. The terms, security, and recoverability of this balance should be investigated. If impaired, the company's net liabilities would worsen significantly.

3. FCA Regulatory Status: As an insurance broker (SIC 66220), the company should hold FCA authorisation. The status and any regulatory actions should be verified on the FCA register. Client money handling procedures are critical given the size of client balances relative to company funds.

4. Nature of the Shortened Period: The company shortened its reporting period from 31 March to 31 July 2024. The stated reason is to "simplify administrative arrangements," but this should be corroborated. Period shortening can sometimes be used to obscure trends or align with group restructuring.

5. WTS Relationship: The £306,429 owed to Worldwide Technical Solutions Limited (a related party under common control) and the £68,000 in management charges/expenses require investigation into the nature of this arrangement and whether it represents a sustainable operating model.

6. Historical Decline Trajectory: The decline from £10.6M total assets and £988K equity (2019) to £1.2M assets and negative equity (2024) warrants a detailed understanding. Whether this reflects genuine trading losses, group restructurings, or asset transfers should be established.

7. PSC Inconsistency: Both Larandsons Holdings Limited and Mrs Lucy Amanda Williams are recorded as owning more than 75% of shares. This apparent inconsistency should be clarified – it may reflect different share classes or a filing error.