PROQUANT ESTIMATING LTD
Company number 08246442 · 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 Assessment: Proquant Estimating Ltd
1. Credit Opinion: APPROVE
Reasoning: Proquant Estimating Ltd presents a strong credit profile underpinned by a consistently growing net asset base, an exceptionally liquid balance sheet, and no long-term debt obligations. The company has demonstrated nine consecutive years of retained earnings growth, with net assets expanding from £49,792 (2015) to £467,338 (2024) – nearly a tenfold increase. The cash position of £536,433 alone covers total liabilities (£248,121) more than twice over, providing substantial debt service capacity. The quantity surveying profession generates recurring fee income with low capital intensity, which supports stable cash generation. Minor caution is warranted regarding the most recent year's modest retained earnings increase (£2,021) and declining cash balances, though this likely reflects owner distributions rather than trading deterioration given the substantial tax liability of £167,849, which signals ongoing profitability.
2. Financial Strength
Balance Sheet Summary (October 2024):
| Item | £ | Commentary |
|---|---|---|
| Fixed Assets | 6,250 | Minimal – typical for professional services |
| Debtors | 174,339 | Up 24% YoY; warrants monitoring |
| Cash | 536,433 | 75% of current assets – exceptionally liquid |
| Current Liabilities | 248,121 | Predominantly tax & social security (£167,849) |
| Net Current Assets | 462,651 | Strong working capital position |
| Net Assets | 467,338 | Consistent year-on-year growth |
Key Ratios:
- Current Ratio: 2.87x – well above the 1.5x benchmark for SMEs
- Cash to Current Liabilities: 2.16x – excellent immediate coverage
- Gearing (Total Liabilities/Net Assets): 0.53x – conservative leverage
- Net Assets per Employee: ~£19,471 – reasonable for a service business
Trajectory: Net assets have grown at a compound rate of approximately 28% annually over the decade, though growth has moderated to approximately 0.4% in the latest year. The 2022-2024 period suggests the business is maturing into a stable earnings profile rather than aggressive expansion.
Share Capital: Only £100 allotted across multiple share classes (A, B, C, E Ordinary shares), with a share premium of £2,252. The three equal PSCs (each 25-50%) indicate a partnership-style ownership structure, which is typical for professional practices but introduces potential governance complexity.
3. Cash Flow Assessment
Liquidity Position: Outstanding. The company holds £536,433 in cash against £248,121 in current liabilities, with no long-term debt. This provides a substantial buffer for debt service and working capital needs.
Working Capital Analysis:
| Component | 2024 | 2023 | Movement |
|---|---|---|---|
| Trade Debtors | £132,965 | £109,866 | +£23,099 (+21%) |
| Other Debtors | £41,374 | £30,754 | +£10,620 (+35%) |
| Cash | £536,433 | £586,310 | -£49,877 (-8.5%) |
The debtor days appear to be extending, with trade debtors growing 21% year-on-year. Without turnover data (filed under small company exemptions), precise debtor day calculations aren't possible, but the trend warrants attention. The cash reduction of approximately £50,000, combined with minimal retained earnings growth of £2,021, strongly suggests significant dividend distributions to the three PSCs during the year – entirely normal for a mature private company but relevant when assessing free cash flow available for debt service.
Tax Liability as Profit Indicator: The £167,849 taxation and social security liability provides a useful proxy for trading profitability. Even assuming this includes both corporation tax and PAYE/NI for 24 employees, it suggests the underlying business generates substantial taxable profits well in excess of what the modest retained earnings increase implies.
Cash Generation Capacity: The business model – quantity surveying services with 24 fee-earners – is inherently cash-generative with low capital requirements. The £5,437 addition to plant and machinery in the year is minimal, confirming the light-capex nature of operations.
4. Monitoring Points
| Metric | Current Position | Threshold/Watch | Rationale |
|---|---|---|---|
| Cash Balance | £536,433 | Below £300,000 | Early warning of over-distribution or trading decline |
| Trade Debtors | £132,965 | Growth exceeding revenue growth | Collection risk; potential bad debts |
| Retained Earnings | £464,986 | Any significant decline | Indicator of trading losses or excessive distributions |
| Employee Count | 24 | Significant decrease | Key-person risk in professional services; revenue closely tied to headcount |
| Current Ratio | 2.87x | Below 1.5x | Deterioration would signal working capital stress |
| Tax Liability | £167,849 | Significant YoY decrease | Proxy for profitability decline |
| Filing Compliance | Current | Any overdue filings | Governance indicator |
Sector Considerations: Quantity surveying is correlated with construction sector activity. A meaningful downturn in UK construction output would likely impact fee income. Monitor construction PMI and infrastructure spending commitments.
Key-Person Risk: The three PSCs (Campbell, Wilcox, Lithgow) are likely the principal fee-earners. Any departure would materially affect revenue generation capacity. Consider requiring key-person insurance as a condition for larger facilities.
Governance Note: Five directors with three equal PSCs creates potential for deadlock in major decisions. For larger credit facilities, consider requesting shareholder agreements that address decision-making and share transfer provisions.