OLDHAM ENGINEERING LIMITED

Risk Rating: MEDIUM

Justification: The company demonstrates strong solvency with net assets of approximately £12.5m and cash reserves of approximately £5.7m at the latest year-end, and all statutory filings appear current. However, the rating reflects compressed profit margins, a substantial increase in cash whose source is not evident from the summary data, and a concentration of director resignations—including individuals who are also persons with significant control—during late 2024 and November 2025.

Key Concerns

1. Margin compression: The accounts state that gross profit margin fell from 43.7% to 35.5% and net profit margin from 16.7% to 6.4% during the year ended 30 September 2025, despite turnover growth. This trend requires explanation in relation to input costs, pricing, or operational efficiency.
2. Governance and ownership transition: Multiple directors resigned in late 2024 and on 25 November 2025, including two individuals recorded as persons with significant control. Several new directors were appointed over the same period. The cumulative effect is a materially refreshed board and warrants clarity on the reasons for the changes.
3. Cash movement and capital structure: Cash increased from approximately £1.0m to approximately £5.7m in one year, and no dividends were paid for 2025. The summary data does not reveal whether this build arose from trading, asset realisation, or external financing, and the associated balance sheet structure should be verified.

Positive Indicators

• Financial position: Net assets and shareholders’ funds have grown consistently, reaching approximately £12.5m at September 2025, indicating a solvent position with accumulated retained earnings.
• Liquidity buffer: Cash reserves of approximately £5.7m provide substantial coverage of short-term obligations relative to the company’s scale.
• Revenue growth: Turnover increased from approximately £8.2m in 2022 to approximately £24.8m in 2025, supported by expanded manufacturing capacity and a new site in Sheffield.
• Compliance: Accounts and confirmation statement filings are not overdue, and the latest accounts were audited and prepared under the medium-sized companies regime.

Due Diligence Notes

• Request the full balance sheet to assess current assets, current liabilities, debtor and creditor positions, and the maturity profile of borrowings, including hire purchase and lease obligations referenced in the accounts.
• Verify the source of the approximately £4.6m increase in cash during 2025 and determine whether any new debt or security was granted.
• Obtain details on the resignations of directors, including those who are persons with significant control, and the induction and strategic mandate of the newly appointed board members.
• Assess customer concentration and the visibility of future workload, given the accounts cite timing of customer demand as a principal risk.
• Confirm the capital expenditure committed to the Sheffield site and the integration of new laser processing and robotic handling equipment.
• Review the £225,313 of donations and charitable expenditure for materiality and any related-party dimensions.