ENDOLE LTD
Company number 09346879 · 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.
Financial Health Assessment: ENDOLE LTD (09346879)
Business profile: Data processing & business information services | Incorporated December 2014 | 11 employees | Small company regime, audit exempt
1. Financial Health Score: B — Good underlying health, one significant condition requiring treatment
The core business is in genuinely strong shape: ten consecutive years of net asset growth, zero external debt, and consistent profitability. However, the score is held back from an A by one dominant finding — a £700,000 interest-free loan to a related company, representing 77% of the company's net assets. Combined with a halving of cash reserves and stalled equity growth in 2025, this warrants active treatment rather than emergency intervention.
2. Key Vital Signs
| Vital Sign | Reading (FY2025) | Clinical Interpretation |
|---|---|---|
| Net assets | £909,713 | Strong and grown every year since 2016 (£6k → £910k) |
| Cash at bank | £152,223 | Down 51% YoY (from £310,382) — a weakening pulse |
| Current ratio | 17.2x | Appears exceptional, but heavily distorted (see below) |
| External borrowings | £0 | Excellent — no debt burden whatsoever |
| Retained profit growth | +£27,198 | Sharp slowdown from +£167,189 in 2024 |
| Related-party loan | £700,000 | 72% of total assets; 95% of all debtors |
| Corporation tax creditor | £46,760 | Halved from £95,739 — corroborates a profit dip |
| Filings & compliance | All current | Clean bill of administrative health |
Adjusted liquidity check: Strip out the £700k related-party loan and the "true" trading position is ~£190,526 of current assets (cash £152k + genuine debtors ~£38k) against £51,632 of creditors — a still-healthy 3.7x coverage. So the patient is not liquidity-stressed, but the headline 17.2x figure flatterers reality.
3. Diagnosis
The constitution is strong. A decade of uninterrupted retained-earnings growth, fully self-funded from a £100 share capital base, with no bank debt and a growing headcount, indicates a profitable, well-run operating business with a healthy metabolism.
The dominant symptom is circulatory. The company is channelling its lifeblood — cash — to a sister company under common ownership via a £700,000 interest-free loan with no disclosed repayment terms. This loan has grown during 2025 (up from ~£614k of "other debtors" in 2024) and is the principal reason cash reserves halved despite the business remaining profitable. In medical terms: a strong heart, but a significant vascular shunt diverting supply to another body.
Secondary observations: - Growth pulse slowed sharply in 2025 — net assets rose just 3.1% versus 23.4% the prior year. The halved tax creditor suggests genuinely lower taxable profit rather than timing alone (though undisclosed dividends could also be a factor — filleted accounts conceal the P&L). - Capital expenditure of £74k (including £38,890 on motor vehicles, bringing the vehicle fleet to £137k cost for an 11-person data firm) absorbed further cash. - Governance concentration: a single director and two family-member PSCs (25–50% each), no audit, and minimal public disclosure. The interest-free, unsecured nature of the related-party loan is exactly the kind of arrangement that benefits from independent scrutiny.
4. Prognosis
Stable to positive, but conditional. The operating business should continue generating healthy profits. However, the prognosis is unusually dependent on an entity we cannot examine: if the borrowing sister company is sound, this is a B/A-grade business; if it falters, up to 77% of book equity is exposed to a single related-party credit risk. That concentration — not trading performance — is the swing factor in this company's future health.
5. Recommendations (Prescription)
- Formalise the £700k loan immediately — written agreement, defined repayment schedule, and a commercial interest rate (or convert to equity in the borrower). An undocumented, interest-free, open-ended loan is the single biggest threat to asset quality.
- Assess recoverability — obtain and review the sister company's accounts; if it cannot service repayment, consider provisioning against the loan.
- Take tax advice on the arrangement — interest-free related-party financing can attract transfer-pricing and other tax consequences.
- Rebuild cash reserves — the 51% cash decline should be arrested; set a minimum liquidity floor (e.g., 6–12 months of overheads).
- Investigate the profit slowdown — confirm whether 2025's flat equity growth reflects lower margins, dividends, or one-off costs, and whether it is a blip or a trend.
- Strengthen governance — consider a voluntary audit or fuller account disclosures, and independent oversight of related-party dealings, given the concentrated family ownership.