FIRETRACE LTD.
Company number 03239431 · Monitor this company
This analysis was written by an AI from the company's public filings. It may contain errors or omissions and is not financial or professional advice.
Credit Analysis: Firetrace Ltd.
1. Credit Opinion: APPROVE
Reasoning: Firetrace Ltd. presents an exceptionally strong credit profile. The company demonstrates consistent equity growth, substantial cash reserves, and negligible leverage. With net assets of £5.45M and cash of £3.37M against total liabilities of just £1.35M, the business has considerable capacity to service debt obligations. The company has been established for nearly 29 years and has built a robust balance sheet through retained profits, indicating sound financial stewardship and a profitable, sustainable business model.
2. Financial Strength
Balance Sheet Summary (FY2025):
| Metric | FY2025 | FY2024 | FY2023 | FY2022 | FY2021 | FY2020 |
|---|---|---|---|---|---|---|
| Total Assets | £6.55M | £5.30M | £7.03M | £4.69M | £3.35M | £2.95M |
| Total Liabilities | £1.35M | £0.92M | £1.11M | £1.08M | £0.76M | £0.60M |
| Net Assets | £5.45M | £4.63M | £6.18M | £3.88M | £2.82M | £2.58M |
| Cash | £3.37M | £2.51M | £4.06M | £2.00M | £1.21M | £1.21M |
Key Observations:
-
Equity Growth: Net assets have more than doubled over five years (from £2.58M to £5.45M), demonstrating strong profit retention and organic growth.
-
Gearing: Essentially nil. The balance sheet shows no long-term debt. Total liabilities of £1.35M are entirely current, and equity represents 83% of total assets.
-
Asset Quality: Tangible fixed assets are modest at £313K, suggesting the business is not capital-intensive. The asset base is dominated by current assets (cash, stock, and debtors).
-
Retained Profits: P&L reserves grew by £824K (from £4.63M to £5.45M), confirming profitable trading in FY2025.
-
2023 Anomaly: The dip in net assets from £6.18M (FY2023) to £4.63M (FY2024) appears to reflect a large dividend or extraction event rather than trading losses, given the subsequent recovery. This should be clarified with management.
Assessment: Very Strong. The balance sheet is conservatively structured with minimal leverage and substantial accumulated profits.
3. Cash Flow Assessment
Liquidity Position (FY2025):
| Metric | FY2025 | FY2024 |
|---|---|---|
| Current Assets | £6,238,013 | £4,373,312* |
| Current Liabilities | £1,345,283 | £922,629 |
| Net Current Assets | £4,892,730 | £3,450,683 |
| Current Ratio | 4.64:1 | 4.74:1 |
| Quick Ratio | 3.22:1 | 3.26:1 |
*Note: FY2024 current assets calculated as total assets less fixed assets (£5,295,941 - £324,918 = £4,971,023); net current assets per balance sheet £4,373,312.
Working Capital Composition (FY2025):
| Component | Amount | % of Current Assets |
|---|---|---|
| Cash at bank | £3,372,318 | 54.1% |
| Stocks | £1,909,879 | 30.6% |
| Trade debtors | £1,195,853 | 19.2% |
| Other debtors | £73,347 | 1.2% |
Creditor Position (FY2025 vs FY2024):
| Creditor Type | FY2025 | FY2024 | Change |
|---|---|---|---|
| Trade creditors | £613,751 | £165,251 | +271% |
| Corporation tax | £55,806 | £147,059 | -62% |
| Other taxation/social security | £225,420 | £448,847 | -50% |
| Other creditors | £353,079 | £26,904 | +1,212% |
| Accruals & deferred income | £97,227 | £134,568 | -28% |
Key Observations:
-
Cash Dominance: Cash represents over half of current assets, providing exceptional liquidity headroom.
-
Stock Levels: At £1.91M, stock is significant and represents 29% of total assets. For a manufacturer of fire suppression systems, this may reflect work-in-progress on installation contracts or strategic material purchases. Stock increased by 40% year-on-year (£1.36M to £1.91M), which warrants scrutiny regarding obsolescence risk and working capital efficiency.
-
Trade Debtors: Decreased from £1.39M to £1.20M, suggesting improved collection or timing differences.
-
Creditor Increases: The substantial jumps in trade creditors (+271%) and other creditors (+1,212%) are notable. This could indicate:
- Timing of year-end creditor cut-off
- Increased trading volumes straining supplier payment terms
- Potential stretch of creditor days
The increase in other creditors from £27K to £353K should be investigated—this may relate to deposits, retention, or specific contractual obligations.
Cash Flow Generation: Retained profits increased by £824K, and cash grew by £858K, indicating strong operating cash conversion. The business is clearly cash-generative.
Assessment: Strong. Liquidity is excellent with cash comfortably covering all current liabilities 2.5 times over. Working capital management requires monitoring, particularly regarding stock levels and creditor trends.
4. Monitoring Points
| Metric | Current Position | Threshold for Concern | Rationale |
|---|---|---|---|
| Current Ratio | 4.64:1 | Below 2.0:1 | Strong buffer; deterioration would signal working capital stress |
| Cash Balance | £3.37M | Below £1.5M | Critical liquidity measure; ensures debt service capability |
| Stock Turnover | Unknown (P&L not filed) | Stock exceeding £2.5M or growing faster than revenue | Risk of obsolescence or cash tie-up |
| Trade Creditors | £613K | Exceeding £1M | Sudden increases may indicate cash flow pressure or supplier term stretching |
| Other Creditors | £353K | Exceeding £500K without clear explanation | Unexplained growth warrants investigation |
| Net Assets Trend | £5.45M | Decline exceeding 15% | Would indicate trading losses or significant dividend extraction |
| Filing Compliance | Up to date | Overdue filings | Governance risk indicator |
Specific Items Requiring Clarification: 1. FY2023 to FY2024 equity reduction: Net assets fell from £6.18M to £4.63M—was this due to dividend extraction? If so, what is the dividend policy going forward? 2. Other creditors increase: From £27K to £353K—what is the nature of these obligations? 3. Employee reduction: Headcount decreased from 47 to 46—minor, but monitor for further reductions. 4. Operating lease commitments: Reduced from £76K to £25K—ensure no lease obligations have been reclassified.
Recommended Facility Structure Considerations: - The company's balance sheet could comfortably support unsecured lending - Any facility should include covenants around minimum net assets and cash thresholds - Consider quarterly monitoring of management accounts to track trading performance (given P&L is not filed)