CREDIT ASSESSMENT: GREEN INC (EU) LIMITED

1. Credit Opinion: CONDITIONAL

Recommendation with reservations. The company demonstrates a marked recovery trajectory from its deeply distressed position in FY2023, with net assets swinging from (£482,624) to a positive £134,418 by FY2025. However, several material concerns warrant conditional treatment:

• Accumulated losses remain significant at (£481,090), indicating the company has not yet traded through its historical difficulties
• Dependency on parent support – the £491,801 capital contribution reserve arose from Neath Port Talbot College waiving a loan balance, effectively a capital rescue
• No visibility on trading profitability – as a small company filing filleted accounts, the P&L is not disclosed, making it impossible to assess underlying operating performance
• Historical volatility – the precipitous decline from net assets of £133,958 (FY2017) to (£482,624) (FY2023) raises questions about business model resilience, with a 5-year data gap obscuring the deterioration path

Any facility should be subject to parental guarantee from Neath Port Talbot College and regular financial covenant monitoring.

2. Financial Strength

Balance sheet has stabilised but remains fragile:

The return to positive net assets is entirely attributable to the capital contribution reserve (parent loan waiver). Without this, the balance sheet would remain deeply insolvent. The £69,145 improvement in retained earnings during FY2025 is encouraging, though the accumulated deficit still stands at nearly half a million pounds.

Asset quality: The company is asset-light with £139,398 in cash (77% of total assets). Tangible assets of £27,774 provide minimal collateral value. Debtors have fallen sharply from £128,945 to £41,033 – this could indicate improved collections or declining revenue; without P&L data, this is ambiguous.

Leverage: Total liabilities of £73,787 against net assets of £134,418 gives a debt-to-equity ratio of 0.55x – superficially reasonable but misleading given the capital contribution reserve inflating equity. Bank debt is modest at £11,373 total.

3. Cash Flow Assessment

Liquidity position is currently sound:

The dramatic reduction in current liabilities from £202,163 to £72,762 (64% decrease) is the primary driver of improved liquidity. Trade creditors fell from £42,573 to £470, and other creditors from £92,313 to £46,227. This may reflect settlement of overdue obligations, potentially funded by the parent's capital contribution.

Working capital headroom is adequate for current operations with £107,669 in net current assets. However, the 25-employee headcount with £139k cash suggests this is a service business with limited capital requirements – cash generation capacity depends entirely on contract continuity.

Cash flow from operations cannot be assessed without P&L and cash flow statements. The increase in cash of £31,827 could arise from trading, parent support, or debtor collection.

4. Monitoring Points

Additional conditions recommended: - Parental guarantee from Neath Port Talbot College for any facility above £25k - Quarterly management accounts to be provided - Notification clause for any director changes or PSC restructuring - Minimum cash covenant of £50k