Company Number: 13014743

Analysis Date: 2025-07-20 14:38 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Risk Smart Limited shows significant growth in asset base and equity in 2023 compared to prior years, supported by substantial capital injections. However, the company incurred a heavy loss of £461k in 2023 and continues to have a large negative retained earnings reserve (-£585k). The business is currently reliant on equity funding rather than operational profitability. Given the early stage and losses, credit approval should be conditional on continued capital support or demonstrable improvement in profitability and cash flow sustainability.

2. Financial Strength:

• Fixed assets increased markedly to £425k in 2023 from £72k in 2022, reflecting investment in intangible assets (software) and tangible assets.
• Net current assets improved to £307k, showing working capital strength.
• Total net assets rose to £498k, driven by share premium increases (now £1.07M) despite the mounting loss reserves.
• The company’s balance sheet is solid with no borrowings reported and a strong equity base relative to liabilities.
• Deferred income of £234k suggests prepayments from customers, supporting future revenue recognition.

3. Cash Flow Assessment:

• Cash at bank increased slightly to £333k, indicating good liquidity to cover short-term liabilities of £131k.
• Trade debtors rose to £65k, which is reasonable but should be monitored for collection efficiency.
• The company’s net current assets and cash position reflect reasonable short-term liquidity.
• The absence of bank borrowings reduces financial risk but also indicates dependency on shareholder funding.
• Interest-free director loans of £1k are immaterial but indicate some shareholder involvement in funding.

4. Monitoring Points:

• Track quarterly management accounts to assess whether operating losses reduce and positive EBITDA emerges.
• Monitor debtor days and cash conversion cycle to ensure working capital efficiency.
• Watch deferred income trends as indicator of future revenue stability.
• Review capital raising activities and shareholder support to ensure ongoing solvency.
• Assess impact of any new directors appointed in December 2024 on corporate governance and financial discipline.