ONTAM LTD

Executive Summary

Ontam Ltd shows improving equity and net current assets, indicating financial strengthening since incorporation. However, low cash reserves combined with increased trade creditors and director loans introduce liquidity risk. Approval is recommended with prudent limits and ongoing monitoring of cash flow, debtor management, and creditor exposure to safeguard repayment capacity.

ONTAM LTD - Analysis Report

Company Number: 13192222

Analysis Date: 2025-07-20 12:03 UTC

1. Credit Opinion: APPROVE with caution
   Ontam Ltd demonstrates improving financial strength with a positive trend in net assets and net current assets over recent years. The company operates in the retail sale via internet/mail order sector, which is generally scalable but competitive. Current liabilities have increased substantially, notably trade creditors and director loans, which should be monitored. The absence of employees suggests a lean operating model but also reliance on the director or outsourcing. Overall, the company appears capable of meeting its short-term obligations, but credit exposure should be limited and reviewed regularly due to modest cash balances and rising liabilities.

2. Financial Strength:
   The company’s net assets increased from £3,845 in 2023 to £7,852 in 2024, indicating retained earnings growth and strengthening equity. Tangible fixed assets remain low (£802), consistent with a service/retail business model. The balance sheet shows a healthy increase in current assets (from £9,196 to £22,663), primarily driven by a substantial rise in debtors (£4,734 to £15,116) and inventories (£136 to £7,446). The jump in inventories may indicate stock build-up, which could impact liquidity if not converted to sales timely. The company is classified as a small entity with share capital of £100.

3. Cash Flow Assessment:
   Cash on hand is very low (£101 in 2024 down from £4,326 in 2023), which raises liquidity concerns despite positive net current assets (£7,050). The significant increase in trade creditors (£1,444 to £11,589) and director loans (£1,936 to £2,468) suggests reliance on supplier credit and director funding to support operations. Debtor levels are high relative to cash, implying potential collection risk. Working capital is positive but the low cash balance and growing short-term payables warrant cautious monitoring.

4. Monitoring Points:

• Debtor collection efficiency and aging to ensure cash inflows meet operational needs.
• Inventory turnover to avoid overstocking and potential write-downs.
• Trade creditor levels and payment terms to manage supplier relationships and liquidity.
• Director loans and any changes in related party transactions.
• Cash flow forecasting to assess ability to handle short-term obligations without additional external funding.
• Business growth sustainability in a competitive e-commerce environment.