BEARING & ENGINEERING SERVICES LIMITED

1. Risk Rating: LOW Justification: The company demonstrates a strong trajectory of improving financial health over the last five years. Following a period of historically tight liquidity (2016-2020), the business has significantly strengthened its balance sheet, with cash reserves growing from £2.5k in 2017 to £96k in 2025, and shareholders' funds nearly tripling from £103k to £305k in the same period. Current liabilities are well-covered by current assets (current ratio of approximately 1.9:1), indicating low immediate solvency and liquidity risk.

2. Key Concerns: * Key Person Risk & Control Concentration: Xxxxxx Xxxxxxxxname shown to subscribers holds over 75% of the shares, over 75% of the voting rights, and the right to appoint/remove directors. This level of individual control poses a significant key-person risk, particularly regarding succession planning and business continuity. * Debtor Reliance: Trade debtors stand at £306,378, representing approximately 48% of total assets. A default by a major debtor or significant delays in payment could quickly erode the company's liquidity and working capital position. * Limited Financial Visibility: The company files filleted accounts (as permitted for small entities), meaning the Profit & Loss account is not publicly available. While the balance sheet is strong, the absence of revenue, gross margin, and net profit data limits the ability to assess operational profitability and margin sustainability.

3. Positive Indicators: * Strong Liquidity Improvement: The cash position has grown consistently and significantly over the last five years, from £10,135 (2021) to £96,007 (2025). This indicates robust cash generation and/or effective working capital management. * Deleveraging: Total liabilities have decreased from a peak of £509,137 (2017) to £332,762 (2025), while total assets have grown. The business is actively strengthening its financial position and reducing external obligations. * Longevity and Stability: Incorporated in 1982, the company has over 40 years of operational history. It has successfully navigated previous tight financial periods (evident in 2016-2020) to reach a much stronger current position. Employee numbers have also remained stable at 11 for the last two years.

4. Due Diligence Notes: * Debtor Quality: Investigate the aging schedule and concentration of the £306k trade debtors. Determine if this figure represents a few large invoices or many smaller ones, and assess the bad debt risk. * Profitability vs. Cash Flow: The retained earnings only increased by £9,446 in the latest year (from £280,318 to £289,764), which suggests net profit may be relatively modest compared to the cash flow generated. Clarify whether the strong cash position is being driven by high profitability or by the liquidation of debtors (which decreased by £68k year-on-year). * Succession Planning: Given the high level of control exercised by Xxxxxx Xxxxxxxxname shown to subscribers, it is vital to understand the long-term strategic plan for the business, particularly if it is intended to be a going concern beyond her involvement. * Related Party Transactions: Note that the registered office is the same as the accountants' address (Bennett Brooks & Co Ltd). Clarify if there are any related party loans or financial dependencies not visible in the abbreviated balance sheet.

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