SRP HIRE SOLUTIONS LTD
Company number 06687866 · 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.
Investment Risk Analysis: SRP Hire Solutions Ltd
1. Risk Rating: MEDIUM
Justification: The company demonstrates adequate solvency with positive net assets (£1.198M) and working capital (£324K), but exhibits a concerning trajectory of declining net assets over the past two years, significant reliance on financed assets, and a high debtor balance that warrants scrutiny. The business remains operational and compliant, but the erosion of approximately £436K in net assets since the 2022 peak requires explanation.
2. Key Concerns
a) Sustained Erosion of Net Assets Net assets have declined from a peak of £1,634,181 (2022) to £1,198,210 (2024), representing a 26.7% reduction over two years. Retained earnings fell from £1,474,999 to £1,197,746, confirming cumulative losses of approximately £277K in the latest year alone. This trend, if continued, would materially impair the company's financial resilience.
b) High Debtor Concentration Debtors stand at £1,198,360 — representing approximately 87% of current assets. This level of receivables concentration poses both liquidity risk (if collections slow) and credit risk (if bad debts materialise). Without visibility into debtor ageing or concentration, this figure is a significant unknown.
c) Heavy Reliance on Financed Assets The tangible asset base of £1,536,592 includes £1,528,017 in assets held under hire purchase contracts and loans — up from £1,108,793 in the prior year. This means virtually all fixed assets are encumbered, and the company has significantly increased its financing commitments. The security and terms of these arrangements are not disclosed.
3. Positive Indicators
a) Strong Cash Recovery Cash at bank improved materially from £26,198 (2023) to £184,754 (2024), suggesting improved cash management or working capital collection. This addresses the near-term liquidity concern evident in the prior year.
b) Filing Compliance and Corporate Standing Accounts are filed and up to date (year ending 30 September 2024, filed September 2025). The confirmation statement is current. No overdue filings exist. The company has been actively trading since 2008, demonstrating longevity.
c) Positive Working Capital Net current assets of £324,015 and a current ratio of approximately 1.31x indicate the company can meet its near-term obligations. Shareholders' funds remain positive at £1,198,210, and the company is not in liquidation or administration.
4. Due Diligence Notes
| Item | Action Required |
|---|---|
| Profit & Loss Detail | The filed accounts are filleted (no P&L delivered). Obtain management accounts to understand the drivers behind the £277K retained earnings decline — operating losses, asset impairments, or one-off items. |
| Debtor Quality | Request an aged debtor schedule and assess concentration risk. At £1.2M against a hire business of this scale, understanding collectability is critical. |
| Finance Lease Terms | Clarify the terms, maturity profile, and security arrangements for the £1.528M in financed assets. Determine whether balloon payments or restrictive covenants exist. |
| Provisions | Investigate the nature of the £215,615 in provisions (down from £253,513). These could relate to lease obligations, warranties, or other commitments. |
| Workforce Reduction | Employee numbers fell from 30 to 25 (a 17% reduction). Determine whether this reflects operational efficiency, cost-cutting under financial pressure, or business contraction. |
| PSC Structure | N M & J Limited holds 25-50% of shares alongside Mr Nigel Ford. Clarify the relationship and any inter-company transactions or guarantees. |
| Creditor Profile | Current liabilities increased from £933K to £1,059K. Understand the composition — trade creditors, HP repayments, and any related party balances. |