DATOM ENGINEERING LTD

Executive Summary

Datom Engineering Ltd is a micro-entity with improving net assets and positive working capital but shows signs of liquidity reliance on director loans. Conditional approval is recommended with close monitoring of director advances and cash flow management. The company’s small scale and limited financial history require cautious credit exposure with regular financial review.

DATOM ENGINEERING LTD - Analysis Report

Company Number: 13555257

Analysis Date: 2025-07-29 20:04 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Datom Engineering Ltd is a micro-entity with limited financial history, showing a modest but improving net asset position (£4,420 in 2024 vs £113 in 2023). The company demonstrates some financial improvement and has no overdue filings, which supports compliance reliability. However, the presence of a director loan overdraft (£28,686 at year end, repaid after year end) signals potential liquidity management issues. Given the small scale and limited employee base (1 including director), the credit risk is moderate. Approval should be conditional on monitoring director loans and ensuring liquidity is maintained.

2. Financial Strength:
   The balance sheet remains very small with fixed assets of only £290 and current assets of £37,655 against current liabilities of £33,525, yielding net current assets of £4,130. The net asset base improved significantly from £113 to £4,420 in the last year, indicating some strengthening. The company is micro-sized, so balance sheet capacity to absorb shocks is limited. Director advances represent a significant liability off-balance sheet during the year but were repaid shortly after year-end, improving net asset reliability.

3. Cash Flow Assessment:
   Current assets are primarily short-term assets (£37,655), with current liabilities close behind (£33,525), resulting in a positive working capital of £4,130. This suggests the company can meet short-term obligations currently. However, the director overdraft (loan) implies internal cash flow strain or reliance on director financing. The repayment of this overdraft after year-end is positive but warrants close monitoring to ensure ongoing liquidity.

4. Monitoring Points:

• Director loan balances and timing of repayments to avoid liquidity strain.
• Net current assets trend to ensure working capital remains positive.
• Timeliness of future filings and financial updates to maintain transparency.
• Business development, given the company’s very small scale and reliance on two directors.
• Profitability and cash generation in future accounts to reduce reliance on director financing.