Credit Analysis: Impact Learning & Data Solutions Limited

1. Credit Opinion: CONDITIONAL

Reasoning: The company demonstrates a strong balance sheet with net assets of £1.17M and consistent equity growth over multiple years. However, the significant concentration of assets in trade debtors (77% of total assets) and a 34% decline in cash reserves year-on-year present concentration and liquidity risks that require mitigation. Approval is recommended subject to conditions around debtor verification and cash flow monitoring.

2. Financial Strength

Balance Sheet Summary (FY2025 vs FY2024):

Key Observations:

• Strong equity base: Net assets have grown consistently from £790,761 (2019) to £1,170,024 (2025), representing 48% growth over six years. The retained earnings reserve stands at £1,170,020 against nominal share capital of just £4, indicating substantial profit retention.

• Leverage improvement: The debt-to-equity ratio has improved from 0.93x (2024) to 0.55x (2025), driven by a £241,335 reduction in current liabilities. This is a positive trend for creditworthiness.

• New long-term liability: A creditor due after more than one year of £49,435 has appeared in FY2025, which was nil in FY2024. This should be clarified—likely a finance lease or loan facility.

• Dilapidation provision: £22,130 provision for building restoration indicates a lease obligation that will eventually require cash outflow.

• Fixed asset growth: Tangible assets nearly doubled from £62,680 to £121,207, suggesting capital investment in plant and machinery (including leased assets).

3. Cash Flow Assessment

Liquidity Position:

Critical Concerns:

1. Debtor Concentration Risk: Trade and other debtors total £1,368,053, representing 77.4% of total assets. This is disproportionately high and creates vulnerability to: - Customer default or insolvency - Extended payment terms affecting cash conversion - Potential bad debt write-offs

2. Cash Decline: Cash fell from £450,580 to £296,824 (a reduction of £153,756 or 34.1%) despite: - Net current assets increasing by £209,758 - Current liabilities decreasing by £241,335

This suggests cash is tied up in working capital—specifically debtors and stock, which grew 24% and 24% respectively.

3. Working Capital Quality: While net current assets of £1.12M appear healthy, the composition is concerning: - Debtors: £1,368,053 (80% of current assets) - Stock: £102,149 (6%) - Cash: £296,824 (17%)

4. Profitability Indicator: The increase in retained earnings from £949,956 to £1,170,020 suggests approximately £220,064 in net profit for FY2025. However, without a P&L statement (exempt under small companies regime), we cannot verify margins or revenue trends.

4. Monitoring Points

Immediate Actions Required:

1. Aged Debtor Analysis: Request a detailed aged debtor schedule. With £1.37M outstanding, understanding the profile (concentration by customer, aging buckets, provision for doubtful debts) is essential. Any single debtor exceeding 10% of total debtors should be identified.

2. Cash Flow Forecasting: The declining cash position despite profitability warrants investigation. Request 12-month cash flow projections to assess whether the debtor book is converting to cash satisfactorily.

3. Long-term Creditor Clarification: The new £49,435 creditor due after one year should be identified—terms, purpose, and repayment schedule need documentation.

4. Stock Composition: With stock at £102,149 (likely work-in-progress given the education sector), assess realizability and obsolescence risk.

Ongoing Monitoring:

Sector Considerations: The company operates in technical and vocational secondary education (SIC 85320), which may involve government-funded training contracts. These can provide stable revenue but may also create payment delays due to public sector procurement cycles. Verify the debtor profile against funding body payment terms.

Related Party Considerations: The PSC is Allison Park Holdings Limited (owning 75%+), with Mr Richard Thomas William Allison holding 25-50% individually plus significant influence. This family-controlled structure (three Allison family directors) is typical for SMEs but concentrates decision-making. No director disqualifications are noted, which is positive.