Commercial Credit Assessment: MONTGOMERY COATES LIMITED

1. Credit Opinion: DECLINE

Reasoning: This company presents an unacceptable credit risk for new facilities. The business is balance sheet insolvent with net liabilities of £207,106 and has experienced a catastrophic deterioration in financial position over recent years. Cash reserves have collapsed to a nominal £120, and the company is entirely dependent on director and group company support to continue trading. There is no visible capacity to service additional debt obligations from operating cash flows, and the financial trajectory is steeply negative.

The going concern basis is maintained solely through external support — a fragile arrangement that provides no security to a new lender. The current ratio stands at approximately 0.62:1, meaning the company cannot meet its existing short-term obligations from current assets, let alone service new debt.

2. Financial Strength

Balance sheet position is critically impaired:

The deterioration is stark and accelerating. Net assets have moved from a surplus of £497,957 in 2021 to a deficit of £207,106 in 2025 — a swing of over £705,000 in four years. The company has been technically insolvent since 2023.

Key concerns: - Shareholders' deficit of £207,106 means total equity is eroded - Tangible fixed assets of only £10,009 provide negligible asset cover - Debtors of £356,085 represent virtually all current assets — collectibility and concentration risk is significant - Share capital remains at a nominal £1,000 with accumulated losses of £208,106 charged against the P&L reserve

The reclassification note regarding £48,069 of outstanding cheques previously misclassified as accruals raises questions about accounting quality and historical accuracy of reported positions.

3. Cash Flow Assessment

Severe liquidity crisis:

• Cash position: £120 (effectively nil)
• Current liabilities: £573,320
• Net current liabilities: £217,115
• Current ratio: 0.62:1 (critically below the 1.0 threshold)

The company has minimal liquid resources and cannot meet its existing trade and other creditor obligations from its own current assets. Working capital is negative by over £217,000.

Going concern dependency: The directors explicitly state that the company "meets its day to day working capital requirements through support from the directors and fellow group companies which will continue for the foreseeable future." This is a material uncertainty — the business has no self-sustaining cash generation capacity.

PSC structure: Control sits with Scmc Holdings Limited and R W & J Skinner Ltd, both holding over 75% of shares and voting rights. Any credit assessment would need to evaluate the financial standing of these group entities, as they are effectively keeping the company afloat.

4. Monitoring Points

If any existing exposure exists or group guarantees are being considered, the following require ongoing surveillance:

1. Cash position: Monitor monthly — the £120 balance leaves zero headroom for any unexpected costs
2. Creditor ageing: Track whether trade creditors are being paid within terms; current liabilities grew by £80,852 year-on-year, suggesting potential creditor stretch
3. Debtor collectibility: £356,085 in debtors is the only meaningful asset — assess quality, ageing, and whether related to group companies
4. Group support sustainability: Obtain and review financial statements for Scmc Holdings Limited and R W & J Skinner Ltd to assess whether they can continue funding
5. Filing compliance: Currently up to date, but any deterioration in filing timeliness would be a significant red flag
6. Net liability trajectory: The deficit has grown by approximately £78,000 in the latest year — monitor whether losses are continuing to accumulate
7. Director changes: Six officers currently listed; any resignations, particularly of the Tucker family members or key operational directors, would be concerning