FABPLUS LIMITED
Revenue (Latest)
Net Income: £2.0m
ROE %
ROA: 14.6%
Debt to Equity
NWC Peg: -£1.5m
Est. EBITDA
Debt Cap: £6.4m
1.0 Executive Summary & Origination Catalyst
This is a high-confidence succession-driven opportunity. The two controlling shareholders and long-serving directors, Mr and Mrs McGavigan, are both aged 66, a prime catalyst for an exit. The recent and simultaneous appointment of three younger directors in January 2024 signals a formal management transition is underway. This board restructuring, combined with an explosive, valuation-enhancing financial performance in the latest year (£20.8M revenue), creates a perfect window for the founders to achieve liquidity and for us to partner with the next generation of leadership.
Revenue Growth vs EBITDA Generation
2.0 Risk Architecture & Due Diligence
Mandatory Board-Level Interrogation
Identified Risk Vectors
liquidity
Strategic Observation
Cash levels remain modest (£253k) relative to a £13.5M asset base and a significant increase in operational scale.
Data Context
"The explosive growth in FY2024 appears to have consumed significant working capital, evidenced by large increases in receivables and inventory."What are the company's undrawn credit facilities and what are the primary banking covenants we would need to consider?
profitability
Strategic Observation
Net income surged from £278k to £1.98M in a single year, representing an outlier performance against a five-year trend.
Data Context
"This step-change in profitability may not be sustainable and could be linked to a one-off, high-margin project. The valuation will be highly sensitive to the normalisation of these earnings."Provide a detailed breakdown of gross profit by project or customer for FY2023 and FY2024 to validate the sustainability of the current margin structure.
leverage
Strategic Observation
Total liabilities increased from £5.0M to £6.3M in the last financial year, although the company reports zero financial debt.
Data Context
"The balance sheet appears unleveraged from a financial debt perspective, but the growth in trade creditors and other liabilities to fund expansion must be understood. This represents significant operational leverage."Provide a full schedule of liabilities, detailing the nature of the non-debt obligations and confirming the absence of any off-balance sheet financing or quasi-debt instruments.
operational
Strategic Observation
The board structure has been significantly altered with three new directors appointed in January 2024, while the two controlling shareholders are of retirement age.
Data Context
"This signals a critical succession event. The operational stability of the business is now dependent on a newly formed leadership team whose capabilities are untested at this new scale."What are the specific operational roles and responsibilities of the new directors, and what is the transition plan for key client and supplier relationships currently managed by the founders?
3.0 Forensic Performance Review
income statement
FY2024 revenue increased to £20.75M (from £8.70M in FY2023, +138.5%) and net income increased to £1.98M (from £0.28M, +612.3%). However, gross margin is shown as 100% in FY2021–FY2024 with cost of revenue recorded as £0, which is not credible for a trading/manufacturing profile and indicates classification/mapping issues or cost capitalisation/above-the-line suppression.
"QoE risk: if direct costs are being reclassified into overheads, inventory, or fixed assets, statutory profit can be materially overstated and not repeatable. The step-change in FY2024 profitability may be accounting presentation-driven rather than operational, and it impairs any reliance on margin trend for sustainable earnings."
Provide the FY2024 trial balance and nominal ledger mapping showing where all direct materials, subcontract labour, carriage, and production overheads are recorded; explain why cost of sales is £0 and reconcile gross profit to management accounts gross margin by product line/customer.
profitability ratios
Net margin rose to 9.55% in FY2024 (FY2023: 3.20%; FY2022: 3.93%; FY2021: 6.48%). ROE increased to 27.21% (FY2023: 5.25%) while total assets increased to £13.54M (FY2023: £10.26M) and equity to £7.28M (FY2023: £5.30M).
"The profitability uplift coincides with significant balance sheet expansion and heavy capex, raising the risk that earnings are being flattered by capitalisation (fixed assets and/or inventory) and timing effects rather than improved cash yield. ROE expansion can be optical if working capital and capex are absorbing cash and liabilities are stretching."
Reconcile FY2024 net income (£1.98M) to taxable profit and to cash taxes paid; provide a bridge from statutory net income to EBITDA and to operating cash flow, explicitly identifying capitalised labour/overheads, stock movements, and any one-offs (grants, insurance proceeds, litigation, asset disposals).
cost structure
FY2024 capex is £3.09M (FY2023: £0.45M; FY2022: £0.40M; FY2021: £0.98M) with capex intensity 14.88% of revenue. Inventory remains elevated at £3.67M (FY2023: £3.53M) despite the revenue step-change, and cash is low at £0.25M (FY2023: £0.15M).
"High capex alongside persistently high inventory and low cash suggests either (i) aggressive capitalisation of costs that would normally hit P&L, (ii) build-and-hold stock risk (obsolescence/NRV write-down exposure), or (iii) operational strain where growth is being funded by suppliers/other creditors rather than internally generated cash."
Break down FY2024 additions of £3.09M by asset class, supplier, and project; confirm whether any wages/overheads were capitalised (and the capitalisation policy), and provide inventory ageing/NRV analysis plus post year-end write-offs/credit notes to evidence stock realisability.
Profitability & Margin Expansion
Capital Efficiency & Return Profile
4.0 Capital Structure & Benchmarks
Capital Structure
FABPLUS LIMITED appears ungeared on a net debt basis (calculated net debt reported as £0 across 2020–2024; cash £253k in 2024). Balance sheet is liability-funded but not bank-levered in the statutory extracts provided (total liabilities £6.3m vs equity £7.3m in 2024).
Enterprise Value Proxy
Earnings-based valuation is applicable (this is a trading SME with £20.8m revenue in 2024). Using a normalised EBITDA proxy derived from operating profit, an EV proxy range is £8.5m–£12.8m (4.0x–6.0x).
4.2 Peer & Industry Benchmarking
| Metric | FABPLUS LIMITED | Industry Avg | Performance |
|---|---|---|---|
| ROE (Return on Equity) | 27.2% | 12.0% | LEADER |
| Current Ratio | N/Mx | 1.50x | TIGHT |
4.3 Origination Model Outputs
Estimated EBITDA
£2.1m
Implied EV Range
£8.5m - £12.7m
Max Debt Capacity
£6.4m
Valuation Driver
Primary driver is normalised operating earnings (EBITDA proxy) given the company is trading and profitable in 2024. Secondary drivers are balance sheet intensity and cash conversion: inventory and receivables are significant, capex is elevated in 2024, and the NWC position swings materially year-to-year, which can move equity value via completion adjustments even if EV is set on an EBITDA multiple.
LBO Feasibility
LBO feasibility is supported by (i) improved 2024 profitability and (ii) apparent absence of existing net debt, but constrained by (a) working capital volatility and the 2024 estimated £1.5m NWC deficit versus target, (b) inventory-heavy balance sheet (valuation/provisioning risk), and (c) limited statutory cash flow visibility. A lender will likely haircut leverage or require tighter covenants until cash conversion is evidenced.
5.0 Governance & Succession
Board of Directors
Ownership Structure (PSC)
Control Status
Consolidated Founder Control
- Thomas McGavigan 25-50%
- Mary McGavigan 25-50%
Voting rights and ownership are shared between founding principals. No institutional equity participation identified.
6.0 Appendix & Disclosures
Data Provenance
This intelligence dossier is compiled using a proprietary synthesis of public record data from Companies House, Yahoo Finance market data, and AI-assisted OCR extraction from statutory PDF filings. All financial figures are sourced directly from the target company's public disclosures and are subject to statutory reporting delays.
Legal Disclaimer
This report is for informational and deal-origination purposes only. It does not constitute financial, investment, legal, or tax advice. The valuation proxies and debt capacity estimates are algorithmic derivations and should not be used as the basis for a transaction without independent forensic due diligence.