REES ASTLEY INSURANCE BROKERS LIMITED
Company number 06452632 · 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: Rees Astley Insurance Brokers Limited
1. Credit Opinion: CONDITIONAL
The company demonstrates a fundamentally sound financial position with substantial cash reserves and no external borrowings, supporting an approval in principle. However, the conditional rating reflects a significant extraction of value in the latest financial year (£399k reduction in shareholders' funds) and growing intercompany receivables that require monitoring. The group structure (controlled by Rees Astley Holdings Limited) introduces contagion risk that should be ring-fenced through appropriate covenants.
2. Financial Strength
Balance Sheet Summary (2024): - Net Assets: £750,175 (down from £1,149,156 – a 34.7% decline) - Share Capital & Reserves: £750,175 - Tangible Fixed Assets: £42,452 (minimal asset base) - Investments: £3,342 (unlisted, at cost)
Key Observations:
The most striking feature is the £398,981 decline in net assets year-on-year. Given the P&L reserve fell by exactly this amount (£1,148,989 to £750,008) with no corresponding increase in other reserves, this almost certainly represents a dividend distribution to the parent company rather than a trading loss. This is consistent with the group structure and typical for subsidiary companies in this sector.
The balance sheet is predominantly liquid – cash represents 89.7% of total assets (£1,358,660 of £1,514,649). However, £505,381 of this cash represents client monies held in trust, which are not available to satisfy the company's own debts. Stripping out client monies:
| Metric | Reported | Adjusted (excl. client monies) |
|---|---|---|
| Cash | £1,358,660 | £853,279 |
| Trade Creditors | £547,256 | £41,875 |
| Net Current Assets | £712,195 | £712,195 |
The adjusted position confirms the company's own trading liquidity remains robust.
Intercompany Position: Amounts owed by group undertakings increased from £5,432 to £53,927 – a tenfold increase. While not material in absolute terms, this trajectory warrants monitoring as it suggests growing cash advances to related entities.
Gearing: Effectively nil – no bank borrowings, no loan creditors. The company operates debt-free.
3. Cash Flow Assessment
Liquidity Position:
| Metric | 2024 | 2023 | Movement |
|---|---|---|---|
| Cash | £1,358,660 | £1,708,593 | -£349,933 |
| Current Assets | £1,468,855 | £1,762,654 | -£293,799 |
| Current Liabilities | £756,660 | £651,913 | +£104,747 |
| Net Current Assets | £712,195 | £1,110,741 | -£398,546 |
| Current Ratio | 1.94x | 2.71x | Deteriorated |
Adjusted Current Ratio (excluding client monies): 3.83x – remains very strong.
Working Capital Analysis:
The reduction in net current assets is primarily driven by: 1. Dividend distribution to parent (inferred): ~£399k 2. Increase in trade creditors: £148k (including client insurance liabilities up from £360k to £505k) 3. Increase in trade debtors: £15k 4. Increase in intercompany receivables: £49k
The company's own operating creditors (excluding client liabilities) are modest at approximately £41k, indicating limited operational commitments.
Cash Generation Concern: While the cash balance has decreased, this appears to reflect deliberate dividend extraction rather than operational cash burn. The underlying business continues to generate client premiums flowing through the balance sheet, typical of insurance broking operations.
4. Monitoring Points
| Risk Area | Metric | Current Position | Threshold for Concern |
|---|---|---|---|
| Dividend extraction | P&L reserve movement | -£399k in 2024 | Further significant reductions without corresponding group support |
| Intercompany balances | Amounts owed by group | £53,927 (up from £5,432) | Continued rapid growth; recovery terms |
| Client monies compliance | Client cash vs client liabilities | £505,381 vs £505,381 (balanced) | Any shortfall in client monies segregation |
| Cash position | Unrestricted cash | ~£853k | Falling below £500k |
| Creditor days | Trade creditors (excl. client) | ~£42k | Significant increase suggesting payment stress |
| Related party transactions | Group intercompany activity | Growing | Material changes in group structure or lending |
Specific Conditions for Credit Approval: 1. Any facility should include a negative pledge preventing the company from granting security to third parties without bank consent 2. Covenant requiring maintenance of minimum net current assets of £500k 3. Notification requirement for dividend distributions exceeding £100k in any financial year 4. Parent company guarantee from Rees Astley (Holdings) Limited to mitigate group contagion risk 5. Periodic confirmation that client monies remain properly segregated and reconciled
Sector Consideration: Insurance brokers operate under FCA regulation with client money rules. The company's compliance with CASS 7 (Client Assets Sourcebook) is critical – any breach could result in regulatory action impacting the business fundamentally.