Investment Risk Analysis: Simon Hall Limited (04585031)

1. Risk Rating: LOW-MEDIUM

The company demonstrates a long-established trading history (22 years), substantial asset backing, and a healthy cash position. However, the most recent financial year shows a notable decline in shareholders' funds and cash, alongside rising creditor balances, which warrants monitoring. The overall financial trajectory over the past decade remains positive, but the reversal in 2025 requires attention.

2. Key Concerns

i. Implied Loss in FY2025

Retained earnings fell from £1,018,342 (2024) to £891,210 (2025), a decline of approximately £127,000. As the company files filleted accounts under the small companies regime, the income statement has not been delivered to Companies House, meaning the specific drivers of this loss cannot be identified from available data. This follows several years of strong growth in net assets, so it may represent a one-year correction, but the opacity is a concern.

ii. Rising Creditor Balances and New Hire Purchase Obligations

Creditors due within one year increased from £340,623 to £401,867 (up 18%), driven by: - Trade creditors rising from £127,422 to £147,050 - Other creditors rising from £85,950 to £124,764 - New hire purchase contracts of £58,170 appearing (nil in 2024)

This combination of increased short-term obligations alongside a cash decline may indicate tightening working capital conditions.

iii. Significant Related Party Rent Payments

The company paid £114,686.50 in rent to director Simon Hall and his wife for units 1-6 of Willersey Industrial Estate. This represents a material recurring obligation to related parties and raises questions about whether the rental terms are at arm's length. Over a decade, this equates to more than £1.1 million in rent paid to the directors' personal interests.

3. Positive Indicators

• Strong Long-Term Growth: Net assets have grown from £298,089 (2016) to £891,610 (2025), a nearly threefold increase over nine years, demonstrating the business's ability to generate and retain value.
• Substantial Fixed Asset Base: Tangible fixed assets of £633,669 (primarily land and buildings at £531,844 net book value) provide significant asset backing. The company invested £192,822 in additions during 2025, indicating continued capital investment.
• Healthy Cash Reserves: Cash at bank of £437,634, while down from the 2024 peak of £565,760, remains at a level that comfortably exceeds current trade creditors (£147,050) and provides a liquidity buffer.
• Operational Consistency: Average employee count has remained stable at 17 for two consecutive years, suggesting a steady operational scale without disruptive headcount changes.
• Compliance Status: All filings are up to date with no overdue accounts or confirmation statements. No director disqualification records are present.
• Experienced Ownership: The company has been under the continuous control of the Hall family since incorporation in 2002, providing deep industry knowledge in a specialist niche (art, antiques, and collectibles logistics).

4. Due Diligence Notes

1. Profit and Loss Dynamics: The filleted accounts mean the income statement is unavailable. An investor should request the full accounts directly from the company to understand what drove the ~£127k decline in retained earnings — whether it was an operating loss, a one-off write-down, or increased depreciation following the £192,822 asset additions.

2. Related Party Rent Assessment: The £114,686.50 annual rent to the directors should be benchmarked against commercial rates for similar industrial units in the Willersey/Broadway area. Confirm whether the property is owned personally by the Halls or through another entity, and whether the company has any option to purchase the freehold.

3. Debtor Quality: Other debtors increased from £99,171 to £124,043 (up 25%). Given the specialist nature of the business (art and antiques shipping), investigate whether these represent prepayments, intercompany balances, or potentially unrecoverable amounts. Trade debtors actually decreased, which is mildly positive.

4. Hire Purchase Terms: The new £58,170 HP obligation should be examined — what asset was acquired, over what term, and what are the monthly commitments? This may relate to the £192,822 in additions to land and buildings.

5. Taxation Position: Taxation and social security liabilities fell from £127,251 to £71,883, which could indicate lower profitability or timing differences. This should be reconciled against the implied loss.

6. Succession Planning: Simon Hall (the majority shareholder with >75% voting rights) is a key person. The presence of Xxxxxx Xxxxxxxxname shown to subscribers and Xxxxxx Xxxxxxxxname shown to subscribers as co-directors and shareholders suggests some succession planning, but the company's reliance on the founding director's personal property (industrial estate) creates a structural dependency.

7. Sector Exposure: The business operates in a niche within freight transport and warehousing (art, antiques, collectibles). This market is sensitive to discretionary spending, art market conditions, and international trade flows. The 2025 decline may reflect broader softness in the art market.

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