Credit Assessment: INTER-TEC SERVICES LIMITED (SC133953)

1. Credit Opinion: CONDITIONAL

Rationale: The company demonstrates a strong balance sheet with excellent liquidity ratios and consistent growth in net assets. However, the micro-entity filing status significantly limits financial transparency—no profit & loss data, no turnover figures, and no cash flow statement are available. The related party transactions with the director's other business and key-person dependency warrant additional due diligence before full approval. A personal guarantee from Mr Gorrie (already in place with RBS) would mitigate risk on any facility.

Conditions for approval: - Provision of management accounts showing turnover and profitability - Disclosure of nature and terms of related party transactions with Inter-Tec Aero Design and Certification Limited - Personal guarantee from Mr Gorrie (standard given >75% ownership) - Confirmation that the existing RBS personal guarantee does not conflict with proposed facility

2. Financial Strength

Balance Sheet Summary (FY2025):

Key Observations:

• Strong equity position: Net assets grew 35% year-on-year (£215k to £290k) and 50% over two years, indicating retained profits are being reinvested rather than distributed
• Minimal leverage: Long-term liabilities reduced from £40,480 to £14,275 (65% reduction), suggesting active debt repayment
• Low gearing: Total liabilities represent only ~20% of total assets, well within acceptable parameters
• Share capital of only £100 means the entire net asset position comprises accumulated retained earnings—a positive indicator of long-term profitability
• Fixed assets declining from £12,977 to £8,912 suggests depreciation exceeding capital expenditure, typical for a consultancy where the primary asset is human capital

Concern: Without P&L data, we cannot verify the source of net asset growth—whether from trading profits, asset revaluations, or capital injections.

3. Cash Flow Assessment

Liquidity Position:

Assessment:

• Exceptional liquidity: Current assets of £372,523 against current liabilities of £76,617 provides substantial headroom
• Current assets are likely predominantly debtors and cash given the service nature of the business (specialised design activities with 12 employees)
• Working capital surplus of £295,906 provides significant buffer for debt service
• Long-term debt repayment trajectory is positive—reducing from £40,480 to £14,275 suggests the company is generating sufficient cash to pay down obligations

Debt Service Capacity: Based on the balance sheet evidence, the company appears well-positioned to service additional debt. The existing RBS facility (with personal guarantee) and the declining long-term liabilities suggest the company has demonstrated repayment capability.

Limitation: Without cash flow statements, we cannot confirm operating cash generation or identify any working capital strain masked by the year-end position.

4. Monitoring Points

Key Monitoring Priorities:

1. Related party transactions: The company provides services to Inter-Tec Aero Design and Certification Limited (director-owned). Need to understand pricing terms, outstanding balances, and whether this represents concentration risk or inter-company funding concerns

2. Key person dependency: Single director with >75% ownership creates succession and continuity risk. Any facility should require key-person insurance or succession planning disclosure

3. Management accounts: Request quarterly management information to compensate for limited statutory filing data—particularly turnover, gross margin, and operating cash flow

4. Sector exposure: Aerospace design and certification is cyclical and dependent on defence/aviation capital expenditure cycles. Monitor for contract pipeline deterioration

5. Personal guarantee scope: Clarify whether the existing RBS guarantee limits additional borrowing or creates inter-creditor issues