Investment Risk Analysis: United Hygiene Solutions Limited

1. Risk Rating: MEDIUM

Justification: While the company demonstrates positive net assets (£188,008) and profitability (retained earnings grew from £93,982 to £134,817), there are significant concerns around liquidity quality and balance sheet volatility. The cash position has deteriorated to critically low levels, and the dramatic increase in debtors raises questions about asset quality and cash conversion. The historical financial trajectory shows material instability that warrants caution.

2. Key Concerns

Concern 1: Critical Cash Position Relative to Obligations

Cash at bank stands at only £7,070 against current liabilities of £145,531—a cash-to-current-liabilities ratio of approximately 0.05:1. This represents a significant deterioration from the £350,202 cash position reported in February 2017 and even from the more recent £28,752 in April 2024. The company is heavily dependent on timely debtor collection to meet its near-term obligations, leaving limited margin for operational disruptions or delayed payments.

Concern 2: Dramatic Debtors Increase—Asset Quality Question

Debtors surged from £97,159 (April 2025) to £223,381 (April 2026), a 130% increase year-on-year. This disproportionate growth relative to the overall asset base raises several concerns: - Collection risk: Are these debts recoverable within normal credit terms? - Revenue recognition: Has revenue been recognised prematurely or on extended credit terms? - Related party exposure: Without a detailed breakdown, it is unclear whether these debts are with arms-length customers or connected parties - Concentration risk: The accounts do not disclose whether this amount is concentrated among few or many debtors

Debtors now represent approximately 76% of current assets, creating significant dependency on a single asset class.

Concern 3: Unexplained Historical Volatility and Structural Changes

The financial history reveals dramatic fluctuations that lack transparent explanation: - Total assets collapsed from £545,111 (December 2017) to £53,191 (December 2018)—a 90% reduction - Net assets fell from £310,332 to £53,191 in the same period - The 2018 accounts show no liabilities, suggesting a potential dormancy or restructuring event

Additionally, the company has undergone three name changes (2011, 2019, 2022), which may indicate shifts in business model, ownership, or market positioning that are not explained in the filed documents. The change in accounting reference date from December to April (effective from the 2020 accounts) further suggests structural changes.

3. Positive Indicators

Established Operating History

Incorporated in 1993, the company has over 30 years of operating continuity in the facilities support sector, suggesting institutional knowledge and market resilience.

Profitability Trend

Retained earnings have grown consistently in recent years: £93,982 → £134,817, indicating the company is generating profits rather than eroding its capital base. This is a fundamental strength that supports going-concern viability.

Improving Net Asset Position

Net assets increased from £147,173 to £188,008 (27.8% growth), and total assets grew from £215,871 to £293,274. The elimination of both long-term creditors (£1,667 to £0) and provisions (£12,990 to £0) reduces future claims on resources.

Regulatory Compliance

Accounts and confirmation statements are filed on time with no overdue status. The company uses a reputable firm of chartered accountants (Bessler Hendrie LLP) and prepares accounts under FRS 102 Section 1A, which provides a reasonable framework for small entity reporting.

Working Capital Coverage

Despite liquidity quality concerns, the current ratio stands at approximately 2.02:1 (current assets £293,274 / current liabilities £145,531), which provides a theoretical buffer, assuming debtors are recoverable at face value.

4. Due Diligence Notes

Priority Investigation Items:

A. Debtor Composition and Age Analysis Request a detailed aged debtor schedule to understand: - Age profile of the £223,381 debtor balance - Whether any single customer represents more than 10% of the total - Bad debt provision adequacy - Whether any debts are with related parties or entities sharing common ownership with PSCs

B. Ownership Structure Clarification The PSC register contains contradictory information—three entities/individuals are listed with overlapping ownership percentages that exceed 100% in aggregate: - Bio Clean Systems Limited: >75% shares, >75% voting rights (as trustee), right to appoint/remove directors - Mr Peter Charles Evans: 50-75% shares, 50-75% voting rights - Lindstrom Limited: >75% shares, >75% voting rights, right to appoint/remove directors

This structure is inconsistent and requires clarification. Investigate: - Whether Bio Clean Systems Limited and Lindstrom Limited are related entities - The nature of the trust arrangement referenced for Bio Clean Systems - Ultimate beneficial ownership and control

C. 2017-2018 Financial Collapse Explanation Obtain details on the events causing the 90% asset reduction between December 2017 and December 2018. This may involve: - Sale of business assets or divisions - Transfer of operations to related entities - Dormancy or cessation of trading activities - Review of the full accounts for that period

D. Cash Flow Sustainability Given the thin cash position, request: - Cash flow forecasts for the next 12 months - Details of any overdraft facilities or credit lines - Payment terms with major suppliers and customers - Seasonal trading patterns that might explain the low cash at year-end

E. Related Party Transactions The accounts note is truncated, but related party disclosures are typically found in the notes. Request the complete notes to determine: - Whether any of the increased debtors relate to connected entities - Terms of any intercompany balances or guarantees - Whether the company provides financial support to or receives support from group entities

F. Business Model Evolution Given the multiple name changes and the nature of the business (SIC 81100 - Combined facilities support activities), understand: - Current revenue mix (product sales vs. rental income as noted in accounting policies) - Contract terms and renewal rates - Competitive position and market outlook - Customer concentration risk