GRAHAM'S GAS SERVICES LTD

Executive Summary

Graham’s Gas Services Ltd is a small private limited company operating in plumbing and heating installation with a track record of profitability and sufficient liquidity to meet current obligations. However, the company’s modest equity base and ongoing bank borrowings present moderate solvency and liquidity risks, particularly in light of significant dividend distributions. Continued monitoring of financial leverage, dividend policy, and cash flow management is recommended to ensure operational stability.

GRAHAM'S GAS SERVICES LTD - Analysis Report

Company Number: 13112217

Analysis Date: 2025-07-20 15:10 UTC

1. Risk Rating: MEDIUM
   The company shows a positive net asset position and increasing profitability, but there are moderate concerns due to relatively low equity base, modest net current assets, and reliance on external borrowings. The financial data and compliance history do not indicate immediate distress but warrant careful monitoring.

2. Key Concerns:

• Modest Shareholders’ Funds: Shareholders’ funds increased from £61 in 2023 to £3,993 in 2024, which is still very modest for operational resilience, indicating limited financial buffer against shocks or unforeseen expenses.
• External Borrowings: The company carries non-current liabilities (bank loans) of £6,459 in 2024, slightly reduced from £7,773 the prior year, which represents a material obligation relative to its net assets and cash balances. This leverage could impact solvency if cash flows weaken.
• Dividend Payments vs Retained Earnings: Significant dividend distributions (£13,600 in 2024 and £9,300 in 2023) have been made despite relatively low equity and net current assets, potentially constraining liquidity and reinvestment capacity.

3. Positive Indicators:

• Consistent Profitability: Profits of £17,532 in 2024 and £7,447 in 2023 indicate the business is generating positive earnings and improving its financial position.
• Adequate Liquidity: Cash balances increased to £18,736 in 2024, covering current liabilities (£14,408), supporting short-term liquidity. Net current assets also improved to £6,266.
• Timely Compliance: The company is active and up to date with its filing obligations, with no overdue accounts or confirmation statements, indicating sound regulatory compliance and governance practices.

4. Due Diligence Notes:

• Review the terms, covenants, and repayment schedule of the bank loans to assess refinancing risk and impact on cash flow.
• Investigate the basis and justification for dividend payments given the low equity and recent profitability levels, ensuring compliance with the Companies Act and no adverse impact on financial stability.
• Examine the company’s cash flow projections and working capital management, especially with regard to trade creditors and tax liabilities which are significant components of current liabilities.
• Confirm the accuracy and completeness of debtor balances and evaluate credit risk concentration given the modest amounts reported.