G7 AUTOMATION AND SECURITY LTD

Executive Summary

G7 Automation and Security Ltd shows strong improvements in liquidity and equity, indicating a healthy financial position for a micro-entity. The company benefits from solid working capital and growing net assets, though limited share capital and scale present some constraints. Careful cash flow management and strategic reinvestment are recommended to sustain this positive trend and support future growth.

G7 AUTOMATION AND SECURITY LTD - Analysis Report

Company Number: 12936021

Analysis Date: 2025-07-20 16:29 UTC

Financial Health Assessment Report: G7 AUTOMATION AND SECURITY LTD

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1. Financial Health Score: B

Explanation:
G7 Automation and Security Ltd demonstrates solid improvement in its financial position over recent years, with consistent growth in net assets and notable strengthening of working capital. However, being a micro-entity with a single director and limited shareholder capital, there remain moderate risks due to limited asset base and dependence on short-term liabilities. The overall financial "vital signs" suggest a generally healthy but still developing financial condition.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Fixed Assets	5,176	Slight reduction from previous years; reflects modest investment in long-term assets.
Current Assets	52,033	Nearly doubled from prior year, indicating improved liquidity and resource availability.
Current Liabilities	40,716	Increased but proportionate to current assets; manageable short-term obligations.
Net Current Assets	11,775	Healthy positive working capital, showing ability to cover short-term debts comfortably.
Net Assets (Equity)	13,899	Grew threefold since 2023; a strong indicator of accumulated retained earnings and financial strength.
Share Capital	1.00	Minimal paid-in capital; most equity growth from retained profits or reserves.
Average Employees	1	Very lean operation, likely owner-managed, which can limit operational scalability and risks.

Interpretation of Vital Signs:
The company’s working capital is "healthy," meaning it has sufficient short-term assets to meet its short-term liabilities, reducing liquidity risk. The steady increase in net assets reflects "symptoms of financial improvement," indicating profitable operations or efficient management of resources. The low fixed asset base suggests the company relies on current assets and possibly outsourced or service-based operations, typical for a micro-entity in security systems services.

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3. Diagnosis

• Liquidity: The company shows a strong liquidity position with net current assets of £11,775, improving significantly from £3,866 the previous year. This suggests the business is not suffering from cash flow distress and can comfortably meet immediate financial obligations.

• Solvency: Net assets at £13,899 indicate positive equity, showing the company is solvent and financially stable. The increase from £4,496 in 2023 implies retained earnings are accumulating, a good sign of ongoing profitability or capital retention.

• Capital Structure: Share capital is nominal (£1), highlighting that most funding comes from operational earnings rather than external equity infusion. This is common in small, owner-managed companies but may limit the ability to raise finance quickly.

• Operational Efficiency: Maintaining a single employee (likely the director) points to a lean structure with low overheads, which can support profitability but may also limit growth potential.

• Asset Management: The reduction in fixed assets could mean some disposal of equipment or minimal reinvestment, indicating the company is cautious with capital expenditure.

Overall Diagnosis:
The company exhibits "healthy financial vital signs" with no immediate symptoms of distress such as negative working capital or declining equity. The growth trajectory in net assets and current assets signals improving financial wellness. However, the limited scale and minimal share capital suggest caution in expansion plans without further capital injection.

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4. Recommendations

1. Maintain Healthy Cash Flow: Continue prudent management of working capital to sustain liquidity. Monitor receivables closely to avoid cash flow bottlenecks.

2. Consider Capital Injection: To support future growth or cushion operational risks, consider increasing share capital or seeking external funding sources (loans or investor equity).

3. Asset Reinvestment: Evaluate opportunities for reinvesting in fixed assets or technology upgrades to enhance service delivery and operational efficiency.

4. Scalability Planning: With only one employee, assess potential for controlled hiring or subcontracting to expand capacity without excessive overhead.

5. Financial Monitoring: Implement regular financial reviews focusing on key ratios like current ratio, quick ratio, and net profit margins to detect early signs of distress or opportunities.

6. Compliance and Governance: Maintain timely filing of accounts and confirmation statements to avoid penalties and demonstrate good governance.

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