INTANGIBLE RANGE LTD

Credit Analysis: Intangible Range Ltd

1. Credit Opinion: APPROVE

Reasoning: The company demonstrates a strong and improving financial position with robust liquidity, growing net assets, and a clean filing record. The balance sheet has shifted from negative equity in 2017–2018 to a healthy net asset position of £291k as at December 2025. Cash holdings have nearly tripled year-on-year to £159k, and current liabilities are well covered by current assets (current ratio >7x). The business appears to operate as a holding or IP licensing entity with minimal operating costs (no employees) and stable profitability. The main credit risk lies in the high trade debtor balance (£460k) and the large long-term creditor (£293k), likely related party. However, the overall financial strength and positive trajectory support approval. Covenant-lite monitoring recommended given the group structure.

2. Financial Strength

• Net Assets: Improved from £245k (2024) to £291k (2025), a 19% increase. Retained earnings grew from £139k to £185k, confirming consistent profitability.
• Leverage: Total liabilities of £293k (all long-term) against net assets of £291k gives a debt-to-equity ratio of approximately 1.0x. Manageable, but the long-term creditor (£293k) warrants clarification on terms – if it is a shareholder loan, effective gearing is low.
• Asset Base: Total assets £677k, dominated by current assets (£672k). Fixed assets are negligible (£5k). The company is asset-light, typical of a service/holding entity.
• Shareholders’ Funds: £291k, with a large share premium account (£106k) indicating prior capital injections. No negative reserves.

3. Cash Flow Assessment

• Cash Position: £159k at year-end 2025, up from £57k in 2024 and £46k in 2023. Strong organic cash generation implied.
• Working Capital: Net current assets of £579k provide a substantial buffer. Current ratio = 671,618 / 92,181 = 7.3x. Quick ratio (excluding stock, which is negligible) similarly strong.
• Debtor Management: Trade debtors of £460k are high relative to total assets. No revenue disclosed, but if this represents a few large trade receivables, concentration risk exists. Ageing analysis not available – monitoring required.
• Creditor Structure: Trade creditors dropped sharply from £194k to £74k, suggesting improved payment terms or settlement of bulk payables. Long-term creditors rose from £64k to £293k – likely a new group loan or deferred consideration. Must confirm repayment schedule.
• Liquidity Headroom: Cash plus short-term debtors (£460k) comfortably cover all current liabilities (£92k). No overdraft or short-term borrowings evident.

4. Monitoring Points

• Trade Debtor Concentration: Request debtor ageing and concentration detail. High receivables could indicate slow payment or client dependency.
• Long-Term Creditor Nature: Clarify the £293k due after one year – is it a shareholder loan, deferred tax, or other? Terms, interest rate, and maturity matter for debt servicing.
• Related Party Transactions: Significant exposures to group entities (PSC is Lithuanian corporate). Ensure arm’s length pricing and no hidden recourse risk.
• Profitability Trend: No income statement filed. Request management accounts or profit margins to confirm sustainability of retained earnings growth.
• Employee Status: Zero employees – confirm operational substance, especially if the company holds significant intangible assets or contracts.
• Filing Compliance: All filings up to date (accounts due Sept 2027, confirmation statement due Feb 2027). Continue to monitor.