FIRE SYSTEMS MANAGEMENT LTD

Executive Summary

Fire Systems Management Ltd demonstrates improving financial strength with growing net assets and substantial cash reserves. However, the significant increase in current liabilities, particularly tax-related, and large dividend payouts pose potential liquidity risks. The company maintains good regulatory compliance, but operational scale is limited, warranting further examination of cash flow and business sustainability.

FIRE SYSTEMS MANAGEMENT LTD - Analysis Report

Company Number: 13538963

Analysis Date: 2025-07-20 16:38 UTC

1. Risk Rating: MEDIUM
   Justification: The company shows growth in net assets and net current assets over the last two years, indicating improving financial strength. Cash balances have increased significantly to £267K in 2024, suggesting liquidity is currently sufficient to meet short-term obligations. However, current liabilities have nearly tripled from £74K in 2023 to £209K in 2024, which is a notable increase and warrants monitoring. The company is small, with only 3 employees, which limits operational scale and resilience.

2. Key Concerns:

• Sharp increase in current liabilities (£209K in 2024 vs. £74K in 2023), driven mainly by taxation and social security creditors (£138K), which may indicate cash flow timing issues or upcoming tax payments.
• Interim dividends of £220,000 declared in 2024, substantially higher than previous year (£110,000), which could strain cash resources despite reported cash balances.
• Limited scale of operations with only 3 employees and a narrow share capital structure (only 2 shares issued), potentially constraining growth and operational flexibility.

3. Positive Indicators:

• Strong growth in cash reserves from £57K in 2022 to £267K in 2024, supporting good liquidity coverage.
• Increasing net assets (from £35K in 2021 to nearly £137K in 2024), indicating retained earnings and overall equity are strengthening.
• No overdue filings or compliance issues noted; accounts and confirmation statements are up to date, indicating good regulatory compliance and governance.

4. Due Diligence Notes:

• Review the nature and timing of the taxation and social security creditor balances to assess if these are accrued expenses or delayed payments impacting liquidity.
• Examine cash flow statements (not provided) to confirm cash generation and ability to sustain dividend payments without impairing operational cash needs.
• Investigate the business model and contracts to understand revenue stability given the small employee base and limited fixed assets.
• Confirm directors' plans regarding future dividend policy and working capital management to avoid potential liquidity stress.