Risk Assessment: IN2TEC LIMITED

1. Risk Rating: LOW

Justification: The company demonstrates a robust balance sheet with consistent net asset growth from £1.07M (2015) to £3.96M (2024), low leverage (liabilities represent only ~19.8% of total assets), and a healthy current ratio of approximately 4.56x. Filing obligations are current with no overdue documents. The primary moderating factor is the significant concentration in debtors, which warrants monitoring but does not, on present evidence, elevate the risk to medium.

2. Key Concerns

a) Debtors Concentration Risk Debtors stand at £3,691,258, representing approximately 82.7% of current assets and 74.8% of total assets. This is an exceptionally high concentration. Year-on-year, debtors increased by 16.8% (£3,158,879 to £3,691,258). Without access to an ageing analysis or bad debt provision figures, this represents a material liquidity risk if collection issues arise. A 27% default rate on debtors would eliminate net current assets excluding the debtors balance.

b) Limited Financial Disclosure The company files under the small companies' regime (Section 1A FRS 102) and is audit-exempt. The profit and loss statement has not been delivered, meaning revenue, operating costs, and profit margins are not publicly visible. This limits the ability to assess operational sustainability, margin trends, and the quality of earnings supporting the growing net asset position.

c) Cash Trajectory Cash at bank decreased from £699,795 (2023) to £607,184 (2024), a decline of 13.2%. While absolute cash levels remain adequate relative to current liabilities, this trend—coupled with growing debtors—may indicate slower cash collection or increased working capital requirements. Cash has fluctuated significantly over the historical period (£175K in 2017 to £797K in 2015), suggesting potential cyclicality.

3. Positive Indicators

Strong and Growing Equity Base: Shareholders' funds have grown every year in the dataset, from £1,054,724 (2016) to £3,961,440 (2024). The P&L reserve grew by £408,320 in the latest year, indicating retained profitability.

Low Leverage: Total liabilities of £978,327 against total assets of £4,939,767 yields a liabilities-to-assets ratio of approximately 19.8%. The company appears to operate with minimal external debt reliance.

Filing Compliance: Both accounts (next due 30 September 2026) and confirmation statement (next due 6 November 2026) are current with no overdue filings. This suggests competent administrative governance.

Long Operational History: Incorporated in October 2000, the company has operated for over 24 years, demonstrating resilience through multiple economic cycles.

Stable Capital Structure: Share capital has remained constant at £45,455, with growth driven by retained earnings rather than dilutive equity raises, suggesting organic and sustainable growth.

4. Due Diligence Notes

Debtors Quality: Request a full ageing analysis of the £3.69M debtors balance. Identify the top 10 counterparties and their concentration. Assess whether any single customer represents more than 10% of the balance. Determine the bad debt provision policy and historical write-off rates.

Revenue and Profitability: The absence of a P&L statement is a significant gap. Request management accounts to understand turnover trends, gross margins, and operating profit. The growing P&L reserve confirms profitability, but the quantum and consistency of that profit cannot be verified from public filings alone.

Related Party Transactions: The accounts reference Director1 and Director7 loan balances (within non-current financial instruments). Clarify the nature, terms, and security of these balances. Determine whether these are loans to or from directors, and whether they are on commercial terms.

Development Costs: Intangible assets of £7,005 (down from £8,441) relate to capitalised development expenditure amortised at 25% straight line. Understand what projects this relates to, whether the amortisation rate is appropriate, and whether any impairment indicators exist.

Year-End Change: The company changed its year-end from 30 June to 31 December (visible between 2020 and 2021 figures). Clarify the reason for this change and ensure comparability of financial data across the transition period.

Sector Context: With SIC codes covering electrical equipment manufacturing and business support services, assess whether the debtors growth is consistent with sector norms and whether the business model involves extended payment terms typical of manufacturing supply chains.

Contingent Liabilities: Small company filings do not require detailed disclosure of contingent liabilities or commitments. Request confirmation of any legal claims, guarantees, or off-balance-sheet obligations.