Investment Risk Analysis: A.J. Sharp Limited

Company No. 03754576 | Incorporated 20 April 1999 | Status: Active Sector: Lead, zinc and tin production (SIC 24430)

1. Risk Rating

LOW (with watch items)

The balance sheet is fundamentally sound. The company holds £847,970 in net assets, £390,589 in cash, and has positive working capital of £709,030 — a current ratio of approximately 3.7x. There is no visible bank or third-party debt in the filings, and reserves have grown consistently over the nine-year period reviewed. The rating is held at LOW rather than "very low" because the accounts are unaudited, no profit and loss data is disclosed, and several year-on-year movements warrant monitoring (detailed below).

2. Key Concerns

a) Significant stock build-up Stocks rose 42% year-on-year, from £291,084 to £414,098, and now represent 42% of total assets. For a metals production business, this could reflect genuine growth or the accumulation of slow-moving/obsolete inventory. Without turnover data or an ageing breakdown, this cannot be resolved from the filings alone. Inventory is the single largest asset and the principal area of valuation uncertainty.

b) Sharp rise in tax liabilities Corporation tax payable increased almost threefold, from £29,521 to £86,519. Together with "other taxation and social security" of £84,251, total tax-related current liabilities stand at £170,770 — a material near-term cash obligation. While the increase implies stronger profitability, it also concentrates a cash outflow in the short term and should be reconciled against expected profits.

c) Director departure and complex ownership structure Xxxxxx Xxxxxxxxname shown to subscribers resigned as a director on 25 September 2026 — shortly after the accounts were approved (7 September 2026). He remains recorded as a person with significant control (25–50% shareholding), so his exit from the board does not necessarily mean a change in ownership. Separately, the PSC register lists overlapping corporate controllers (Kelham Holdings Limited and A.J. Sharp Holdings Limited, both shown as >75% owners, with the latter listed twice), which is inconsistent and requires clarification of the true ownership chain.

3. Positive Indicators

• Long trading history: 26 years since incorporation, indicating durability and established market position.
• Consistent reserve growth: Net assets have risen from £619 (2016) to £847,970 (2025) — a steady, multi-year improvement rather than a single-year spike.
• Strong liquidity: Cash of £390,589 covers current liabilities 1.5x on its own, before any reliance on stock or debtor collection.
• Low leverage: No bank loans, overdrafts, or long-term borrowings are disclosed; creditors are predominantly trade and tax related.
• Positive retained earnings: Profit and loss reserves of £847,870 confirm cumulative profitability.
• Stable workforce: 27 employees (2025) versus 28 (2024), suggesting no disruption.

4. Due Diligence Notes

1. Stock composition and provisioning — Obtain an ageing analysis and confirm the basis for the £414,098 carrying value; test for obsolescence, particularly given the metals price exposure inherent to SIC 24430.
2. Profitability verification — Request the full profit and loss account (excluded from the filed accounts) to confirm that the higher tax charge reflects genuine trading profit rather than a one-off.
3. Ownership and control — Clarify the relationship between Kelham Holdings Limited and A.J. Sharp Holdings Limited, and reconcile the duplicated PSC entry. Confirm the ultimate beneficial owner.
4. Director resignation circumstances — Establish why Xxxxxx Xxxxxxxxname shown to subscribers stepped down and whether it affects management continuity or shareholder alignment.
5. Related party balances — Amounts due to key management personnel (£176) are immaterial, but confirm no larger undocumented related-party exposures exist.
6. Security and charges — Check the register of charges for any fixed or floating charges not evident in the balance sheet.
7. Audit position — Accounts are unaudited under the small companies regime; if the investment case depends on financial assurance, consider commissioning independent verification.

Note on data quality: The analysis is based on filed accounts and Companies House records. The accounts are unaudited and omit a profit and loss statement, and some PSC entries appear internally inconsistent. Conclusions are therefore drawn primarily from balance sheet data and should be treated as indicative.

Names of the people mentioned are shown to subscribers. See subscription