Investment Risk Analysis: R.A.H.M.S. LIMITED

1. Risk Rating: MEDIUM

Justification: While the company demonstrates a long operating history, strong revenue growth, and a clean audit opinion, there are notable concerns around the significant decline in cash reserves alongside rising liabilities and declining net assets in the most recent year. The business appears to be undergoing a capital-intensive transition that warrants monitoring.

2. Key Concerns

Concern 1: Deteriorating Cash Position Despite Revenue Growth

Cash has declined dramatically from £2.39M (2020) to £766K (2024)—a 68% reduction—while turnover nearly doubled from £4.04M to £7.06M over the same period. This inverse relationship between revenue growth and cash depletion raises serious questions about cash conversion efficiency and whether the business is generating sustainable free cash flow.

Concern 2: Net Assets Decline and Apparent Loss in 2024

Net assets fell from £3.82M (2023) to £3.44M (2024)—a decline of approximately £374K. The auditor's report confirms the financial statements show a "loss for the year," which is notable given that turnover grew from £6.76M to £7.06M. This suggests margin compression or significant one-off costs that are eroding the equity base.

Concern 3: Rapid Liability Expansion

Total liabilities nearly doubled from £942K (2023) to £1.78M (2024), representing a year-on-year increase of approximately 89%. Without a detailed breakdown of current versus non-current liabilities, it is unclear whether this represents trading creditors, borrowings, or other obligations, but the pace of increase is material relative to the company's size.

3. Positive Indicators

• Established Business: Incorporated in 1985, the company has operated for nearly 40 years, suggesting resilience through multiple economic cycles.
• Revenue Growth Trajectory: Turnover has grown consistently from £4.04M (2020) to £7.06M (2024), representing approximately 75% growth over four years.
• Substantial Equity Base: Net assets of £3.44M and shareholders' funds matching this figure indicate the company is not technically insolvent and maintains a meaningful buffer.
• Clean Audit Opinion: The auditors (Lawes and Co) provided an unqualified opinion, confirming the financial statements give a "true and fair view" and that the going concern basis is appropriate with no material uncertainties identified.
• Compliance: No overdue filings for accounts or confirmation statements. The company appears current with all statutory obligations.
• Premium Location: Registered at 75 Grosvenor Street, Mayfair—a high-value London address consistent with the serviced offices business activity.

4. Due Diligence Notes

1. Cash Flow Reconciliation: Investigate the specific drivers behind the cash decline. The company holds significant fixed assets (likely long-leasehold property given the "serviced offices" activity), which may explain capital deployment, but the relationship between capital expenditure, working capital changes, and operating cash flows needs clarification.

2. Composition of Liabilities: The 2024 filed accounts (under the small companies regime) provide limited detail. Request a full breakdown of the £1.78M liabilities—specifically the split between current and non-current, and between trade creditors, financial instruments, and any related-party balances.

3. Controlling Shareholder: Perpetua Family Office Ltd holds more than 75% of shares (appears listed twice, possibly reflecting different share classes). Investigate the identity, financial standing, and strategic intentions of this entity, as minority shareholder protections may be limited.

4. Director Changes: D C Litton resigned as director on 23 December 2024, and Robert Graham Jones resigned as secretary on 17 June 2026 (per the officer records). Understand the circumstances of these departures and whether they signal any governance concerns.

5. Profitability Analysis: The 2024 loss occurred despite revenue growth. Request detailed profit and loss information to understand whether this reflects operational issues, investment costs, or non-recurring items.

6. Related Party Transactions: Given the controlling family office structure, examine whether there are related-party balances or transactions that may explain the liability increase or cash outflows.

7. Business Segmentation: The company operates in both management consultancy and serviced offices. Understand the revenue and margin contribution of each segment, as serviced offices are typically capital-intensive with long lease commitments.