CREDIT ANALYSIS: CHILTERN CONSULTANCY LIMITED

1. Credit Opinion: APPROVE

Reasoning: Chiltern Consultancy Limited presents a strong credit profile characterised by consistent net asset growth, an exceptionally liquid balance sheet with no visible bank debt, and robust cash reserves exceeding £650k. The company has demonstrated sound financial stewardship over multiple years, growing net assets from £59k in 2013 to £468k in 2024. The current ratio of 2.31x and cash comprising 86% of current assets indicates ample capacity to service debt obligations. The primary limitation is the absence of a filed profit & loss account due to small company exemptions, meaning profitability metrics must be inferred from balance sheet movements.

2. Financial Strength

Balance Sheet Summary (2024): - Net Assets: £468,213 (up 15.2% from £406,275 in 2023) - Shareholders' Funds: £468,213 - Share Capital: £250 (minimal) - Retained Earnings: £467,663 (accumulated profits retained in business)

Asset Composition: | Category | 2024 | 2023 | Movement | |----------|------|------|----------| | Fixed Assets | £41,327 | £49,278 | -£7,951 | | Current Assets | £763,136 | £616,166 | +£146,970 | | Total Assets | £763,136 | £616,166 | +£146,970 |

Key Observations: - The business is asset-light, consistent with a financial advisory services model - Fixed assets are modest (£41k) and primarily leasehold improvements/plant & equipment - Net assets have grown every year on record (bar a dip from 2019 to 2020), demonstrating resilience through COVID-19 and economic cycles - The capital base is almost entirely retained earnings, indicating reinvestment of profits rather than dividend extraction - No bank borrowings are apparent on the balance sheet

Leverage: Effectively nil. The company operates without bank debt, with liabilities comprising trade creditors, tax/social security, and other creditors. This is a conservative capital structure.

3. Cash Flow Assessment

Liquidity Position: | Metric | 2024 | 2023 | |--------|------|------| | Current Assets | £763,136 | £616,166 | | Current Liabilities | £330,689 | £250,001 | | Net Current Assets | £432,447 | £366,165 | | Current Ratio | 2.31x | 2.46x | | Cash | £659,270 | £323,467 |

Working Capital Analysis: - Cash represents 86.4% of current assets — an exceptionally strong liquidity position - Net current assets of £432k provide substantial buffer for operational requirements - The current ratio has dipped slightly from 2.46x to 2.31x due to creditor increases, but remains well above prudential thresholds - Trade creditors increased by £42,837 (37.2%) to £158,051, which may reflect timing of year-end payments or expanded trading activity

Estimated Profitability (derived from P&L reserve movement): - P&L reserve increased by £61,938 (from £405,725 to £467,663) - This represents the minimum profit after tax and any dividends for the year - On net assets of ~£400k, this implies a return on equity of approximately 15.3% — healthy for a service business

Cash Generation: - Cash increased by £335,803 year-on-year (£323,467 to £659,270) - This significantly exceeds the retained profit of £61,938, suggesting: - Reduction in other debtors (down from £268,085 to £69,869 — a £198,216 inflow) - Possible settlement of the long-term creditor (£3,716 cleared) - The other debtors reduction warrants clarification — if these were intercompany or related-party balances, it may indicate group restructuring

Creditor Profile: | Creditor Type | 2024 | 2023 | Change | |---------------|------|------|--------| | Trade Creditors | £158,051 | £115,214 | +37.2% | | Tax & Social Security | £72,156 | £63,040 | +14.5% | | Other Creditors | £100,482 | £71,747 | +40.0% |

• The increase across all creditor categories alongside growing cash suggests the business is trading at a higher volume
• No creditors falling due after more than one year in 2024 (previously £3,716)

Operating Lease Commitments: - Within one year: £41,044 - Between two and five years: £71,827 - Total: £112,871 - These are manageable obligations against the cash position

4. Monitoring Points

1. Other Debtors Volatility: The significant drop in other debtors from £268k to £70k between 2023 and 2024 requires explanation. If this was a one-off intercompany settlement, it is positive. If it represents unreliable receivables, it could indicate credit risk in future periods.

2. Trade Creditor Growth: Trade creditors increased by 37% — monitor whether this reflects genuine trading growth or stretched payment terms. Days payable outstanding should be tracked.

3. Group Structure: Pfm Group Limited holds >75% of shares with voting control and director appointment rights. The company operates as a subsidiary within a group. Any credit exposure should consider the group's consolidated position and potential for upstream cash extraction via dividends or management charges.

4. Revenue Visibility: As a financial advisory services firm (SIC 64999), revenue is likely discretionary and correlated with market conditions. Monitor for revenue concentration and client dependency risks.

5. Employee Costs: Headcount remained stable at 20, but with 7 directors, the remuneration burden should be assessed. Director compensation may represent a significant proportion of operating costs.

6. Filing Compliance: Accounts and confirmation statements are up to date with no overdue filings. The company filed within the small companies regime, which limits financial disclosure. Consider requesting management accounts for full P&L visibility.

7. Cash Utilisation: With £659k in cash and no visible investment activity, question the strategic purpose of such high cash reserves. Is this earmarked for acquisition, distribution, or simply conservative management?

8. Provisions: £5,561 in provisions (stable year-on-year) — confirm nature and adequacy.