EASEMENT SOLUTIONS LIMITED

1. Risk Rating: LOW

The company demonstrates a strong financial position characterized by robust liquidity, consistent net asset growth over a decade, and no signs of solvency stress. Total assets of £1.02 million comfortably exceed total liabilities of £254.8k. While the near-total distribution of profits as dividends and the significant year-on-year increases in trade debtors and creditors warrant monitoring, the overall risk profile remains low due to the substantial cash reserves and long-standing operational history.

2. Key Concerns

• High Dividend Payout Ratio: The reserves note indicates a profit for the year of £121,479 against dividends of £122,656. While typical for owner-managed businesses, distributing nearly 100% of generated profits limits the internal capital available for future growth, debt reduction, or buffering against unexpected operational shocks.
• Significant Increase in Trade Debtors: Trade debtors increased by approximately 57% year-on-year (from £184,549 to £290,240). In the absence of a filed Profit & Loss account (due to small company exemptions), it is unclear if this correlates with a similar increase in turnover or if it represents deteriorating collection practices.
• Sharp Rise in Trade Creditors: Trade creditors surged from £12,429 to £86,310. Although the company holds ample cash to settle these obligations, this sudden increase could indicate a deliberate shift in payment terms, cash management strategy, or potential friction with suppliers.

3. Positive Indicators

• Strong Liquidity and Cash Position: The company holds £532,955 in cash, which alone comfortably covers all current liabilities (£254,840). The current ratio is healthy, indicating minimal short-term liquidity risk.
• Consistent Long-Term Growth: The financial history demonstrates a steady upward trajectory in net assets, growing from £231,895 in 2016 to £781,129 in 2025. This indicates a sustainable, profitable business model over the long term.
• Regulatory Compliance: Filings are up to date, with the latest accounts made up to 31 December 2025 and the confirmation statement up to August 2026. The accounts are prepared in accordance with FRS 102 Section 1A and are signed off by a reputable firm of chartered accountants.

4. Due Diligence Notes

• Working Capital Dynamics: Investigate the underlying cause for the simultaneous spike in trade debtors and trade creditors. Request an aged debtor report to verify the collectability of the £290k outstanding and confirm that trade creditor terms are not being stretched.
• Share Structure: Note the existence of two share classes (200 A Ordinary shares and 4 B Ordinary shares). Due diligence should clarify the rights attached to the B Ordinary shares, particularly regarding voting and dividend rights, as this can affect control and future distributions.
• Revenue Visibility: As the company files under the small companies regime, the Income Statement is not delivered. To assess margin and operational efficiency, it would be necessary to request management accounts to reconcile the £121k profit with the working capital movements on the balance sheet.
• Related Party Transactions: Given the concentration of ownership among three PSCs (Sheralyn Mole, Charles Medwyn Dearden, and Derek Mole) and the high dividend payout, further inquiry should be made into any related party transactions or director loans that are not explicitly detailed in the filleted accounts.