INSULATED TOOLS LIMITED

1. Risk Rating: MEDIUM

The company appears solvent on a balance-sheet basis, with positive net assets, positive working capital and no filing defaults. However, the very low cash position relative to current liabilities, the concentrated ownership structure and the limited unaudited disclosure warrant a MEDIUM risk rating.

2. Key Concerns

1. Low Cash Balance Relative to Current Liabilities
   Cash at bank is reported at £15,765 against current liabilities of £892,501. While the company has positive net current assets of £1,724,762, the cash buffer is thin. If the current asset position is weighted towards slow-moving stock or uncollected debtors, the company could face short-term liquidity pressure despite appearing solvent on paper.

2. Concentrated Ownership and Related-Party Risk
   Both Insulated Tools Holdings Limited and Mr Mark Reginald Wardle are identified as persons with significant control, each owning more than 75% of the company’s shares. This level of concentration means the business is closely controlled, and there is increased scope for related-party transactions, intercompany funding arrangements and governance decisions that may not be in the interest of minority stakeholders or external creditors.

3. Limited Financial Disclosure and No Audit
   The company files under the small companies regime and is exempt from audit. The accounts are unaudited and do not include a profit and loss account in the filed document. This limits the ability to assess profitability, cash conversion, margins and the quality of earnings from the available data.

3. Positive Indicators

• Solvent Balance Sheet
  Total assets less current liabilities stand at £3,134,251, and equity is £2,860,038, up from £2,635,344 in the prior year. This indicates a reasonable level of retained value and no obvious balance-sheet insolvency.

• Positive Working Capital
  Net current assets improved from £1,528,077 to £1,724,762. Current assets comfortably exceed current liabilities, suggesting that day-to-day obligations are covered by short-term assets.

• Compliant Filing History
  The company is active, accounts are not overdue, and the confirmation statement is also shown as up to date. There is no indication of late filing or regulatory non-compliance in the available data.

• Established UK Manufacturing Operation
  The company appears to be a long-standing manufacturer of insulated hand tools, which may benefit from a specialist market position and a tangible fixed asset base.

4. Due Diligence Notes

• Obtain management accounts and cash flow forecasts covering at least 12 months to assess whether the low cash balance reflects normal trading patterns or a structural working capital issue.
• Request aged debtor and aged stock reports to confirm the quality and realisability of current assets.
• Clarify the composition and terms of the £892,501 current liabilities, including amounts due to trade creditors, HMRC, group companies and any short-term borrowing.
• Review the nature and security of the £159,104 creditors due after more than one year, including repayment schedules and any associated charges over company assets.
• Investigate the relationship and transactions with Insulated Tools Holdings Limited and Mr Wardle, including intercompany balances, management charges, dividends and any guarantees.
• Check the Companies House charges register for debentures, fixed or floating charges, and any other security granted by the company.
• Review the company’s tax position, including any outstanding liabilities or time-to-pay arrangements with HMRC.
• Consider obtaining a credit reference report and trade payment history to supplement the statutory accounts.