Credit Analysis: NUMERABLE SOFTWARE LTD

1. Credit Opinion: DECLINE

Reasoning: This company is deeply insolvent with net liabilities of £242,009 and no visible revenue stream sufficient to service additional debt obligations. The business is entirely dependent on interest-free director loans (£244,930) with no fixed repayment date to continue as a going concern. The financial trajectory shows persistent deterioration, with accumulated losses growing year-on-year. There are no tangible assets to provide security, and the working capital position is wafer-thin and declining. Extending credit in these circumstances would expose the lender to unacceptable risk.

2. Financial Strength: Critically Weak

The balance sheet presents a severely compromised position:

Key concerns:

• Technical insolvency: Liabilities exceed assets by a substantial margin. The company cannot meet its obligations if the director demands repayment of the loan.
• No tangible asset base: Fixed assets are fully depreciated (£0 net book value). In a liquidation scenario, realisable value would be negligible.
• Accumulated losses accelerating: The P&L reserve shows losses of £243,709, growing from £235,748 — an £8,000 deterioration, consistent with ongoing trading losses.
• Director dependency: The going concern basis is explicitly contingent on continued director loan support. The director has confirmed this for 12 months, but this is a statement of intent, not a contractual obligation. If support is withdrawn, immediate insolvency follows.

The company has been insolvent since at least 2016 and has accumulated losses far exceeding its modest share capital of £1,700.

3. Cash Flow Assessment: Precarious

Liquidity Position:

While technically positive, net current assets have nearly halved in 12 months. The current ratio has deteriorated from 1.70 to 1.25, approaching the danger zone.

Working capital concerns:

• Trade debtors of only £562 suggest minimal revenue generation or immediate cash collection — either interpretation is problematic for a software business that would typically carry larger receivable balances.
• Accruals and deferred income grew from £6,390 to £7,689, indicating mounting obligations not yet paid.
• Other taxation and social security nearly doubled from £1,868 to £3,588, suggesting potential arrears with HMRC.
• The director loan increase of £5,000 indicates the company continues to require external funding to fund operations — it is not self-sustaining.

Cash generation capacity: With only 2 employees (including the director), minimal trade debtors, and no disclosed turnover, there is no evidence this business generates sufficient cash flow to service any meaningful debt facility.

4. Monitoring Points

If any commercial relationship is maintained (e.g., as a trade creditor), the following should be closely monitored:

1. Director loan withdrawal risk: Any notice of the director seeking repayment or converting the loan to equity would be material. Monitor Companies House filings for charges or changes in loan terms.

2. HMRC arrears: The significant increase in taxation/social security creditors suggests potential cash flow difficulties meeting statutory obligations. A winding-up petition from HMRC would be catastrophic.

3. Accruals growth: Continued growth in accruals and deferred income without corresponding revenue growth signals operational cash burn.

4. Filing compliance: Accounts are currently up to date (next due September 2027 for YE Dec 2025). Late filing would be an early warning indicator.

5. Confirmation statement: Next due September 2027. Monitor for changes in directorships or PSC structure — any change in Martin Coulthard's involvement would be critical given the company's total dependency on his financial support.

6. Revenue verification: If any credit consideration is revisited, insist on full management accounts showing turnover, gross margin, and monthly cash flow projections. The filleted accounts deliberately obscure profitability.

7. Net current assets trend: Any further deterioration below £2,000 would push the company into negative working capital territory, at which point even day-to-day trading becomes questionable without additional director support.