A & J ACCESS LTD

Investment Risk Analysis: A & J ACCESS LTD

1. Risk Rating: MEDIUM

The company maintains positive net assets (£202,218) and has improved its cash position materially year-on-year, but the explicit going concern qualification noting reliance on director financial support, combined with a very large director loan balance within current liabilities, elevates risk above the low category. The business is small, director-dependent, and carries significant inventory relative to its overall size.

2. Key Concerns

a) Going Concern Qualification The accounts state plainly: "The company is reliant upon the financial support of its directors in order to meet its liabilities as they fall due." This is a formal going concern caveat. While the directors have indicated continued support, this signals that the company cannot standalone meet its obligations from operating cash flows. Any change in director circumstances or willingness to fund the business would create immediate solvency pressure.

b) Director Loan Exposure Concentration Other creditors include £187,897 due to the directors (2024: £193,730), representing approximately 93% of current liabilities. While this debt is soft in nature (owed to owner-managers), it is classified as due within one year. If either director sought repayment or restructured their position, the company's cash (£53,726) and trade receivables (£7,644) would be insufficient to meet the obligation. The intercompany loan of £50,000 present in 2024 has been cleared, which is positive, but the director balance remains dominant.

c) Inventory Concentration and Valuation Risk Stocks stand at £312,142, representing 82% of current assets and 82% of total assets. This is an exceptionally high concentration for an agency business (SIC 46180). The stock is carried at the lower of cost and estimated selling price less costs to complete and sell. If any portion of this inventory is obsolete, slow-moving, or subject to market price decline, the realisable value could be materially below carrying value, which would directly erode net assets.

3. Positive Indicators

• Cash Position Improvement: Cash at bank increased from £8,137 (2024) to £53,726 (2025), a sixfold improvement, suggesting better cash generation or working capital management in the year.
• Liability Reduction: Total liabilities decreased from £270,219 to £201,559, a reduction of approximately 25%, indicating deleveraging.
• Intercompany Loan Cleared: The £50,000 owed to a connected company in 2024 was fully repaid by 2025, reducing related-party exposure.
• Consistent Net Asset Growth: Over nine years, net assets have grown from £12,235 (2017) to £202,218 (2025), demonstrating cumulative value creation despite fluctuations.
• Regulatory Compliance: All filings are current. Accounts and confirmation statements are not overdue. No director disqualification records are evident. The company prepares accounts under FRS 102 with appropriate small company exemptions.
• Stable Ownership: Two directors (Xxxxxx Xxxxxxxxname shown to subscribers and Xxxxxx Xxxxxxxxname shown to subscribers) each hold 25–50% of shares and voting rights, providing aligned interests and continuity since incorporation in 2016.

4. Due Diligence Notes

1. Profit & Loss Account: The directors have elected not to include the profit and loss account in the filed financial statements (permitted under the small companies regime). This means revenue, gross margin, operating costs, and net profit/loss for the year are not publicly available. The decline in net assets from £214,934 to £202,218 implies a loss of approximately £12,716 for the year, but the composition of this result cannot be verified. Request full P&L if pursuing investment or credit decisions.

2. Inventory Composition and Turnover: Given stocks represent 82% of total assets, understanding the nature, age, and turnover of this inventory is critical. Investigate whether stock is held on consignment, subject to supplier return rights, or genuinely owned and at risk. Request an inventory ageing schedule and evidence of recent sales realisations.

3. Director Loan Terms: The £187,897 owed to directors is classified within current liabilities (due within one year). Clarify whether there are formal loan agreements, interest charges, repayment schedules, or subordination arrangements. The going concern note suggests informal support — formalising this would reduce risk perception.

4. Business Activity Clarification: The SIC code (46180 — agents specialised in the sale of other particular products) combined with very high stock levels is somewhat inconsistent. An agency model typically carries minimal inventory. Investigate whether the business has shifted toward a trading/stockholding model and what products are being held.

5. Connected Party Transactions: The 2024 accounts referenced a £50,000 loan from a connected company (now repaid). Identify the connected company, its relationship to the directors, and whether any other intercompany arrangements exist that are not reflected in the 2025 balance sheet.

6. Corporation Tax Position: A corporation tax receivable of £5,088 appears in 2025 (nil in 2024), while £20,387 of corporation tax was payable in 2024 (nil in 2025). This volatility warrants investigation into the company's tax position and whether losses are being utilised.

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