Credit Analysis Report: TRACIE GILES LIMITED

1. Credit Opinion: APPROVE

Rationale: This business presents an exceptionally strong credit profile. Net assets have grown from £80k (2013) to £1.49m (2022), demonstrating sustained profitability over a decade. The cash position of £1.77m exceeds total liabilities by nearly 4x, providing substantial debt service capacity. The company carries no visible bank debt and has consistently built reserves. The primary considerations are the complex group structure and related party transactions, which warrant documentation but do not undermine the fundamental credit strength.

Risk Rating: Low Risk Recommended Exposure Limit: Up to £500k unsecured would be supportable based on current financial position

2. Financial Strength Analysis

Balance Sheet Summary (April 2022)

Key Observations:

• Asset Quality: Cash comprises 93% of total assets. This is an exceptionally liquid balance sheet with minimal reliance on debtors or stock realisation.

• Leverage: Total liabilities to net assets ratio stands at 0.30x. The company is effectively debt-free from traditional lending sources. Creditors of £449k comprise trade creditors (£22k), taxation/social security (£229k), and other creditors (£192k) — the latter likely including the £5.9k owed to group undertakings.

• Retained Earnings Growth: Retained earnings increased from £913,630 to £1,485,398 — growth of £571,768. After accounting for dividends of £106,000, this implies retained profit of approximately £677,768 for the year. This is strong profitability for a business with 9 employees.

• Fixed Assets: Minimal at £49k — the business is not capital-intensive, which is typical for beauty/aesthetics clinics. Leasehold improvements and equipment are being depreciated appropriately.

Ten-Year Trajectory

The business has demonstrated consistent value creation: - Net assets have grown from £80k (2013) to £1.49m (2022) — approximately 18x growth - Cash has grown from £264k to £1.77m over the same period - The only year of slight decline was 2016 (net assets dropped from £244k to £100k), but recovery was swift

This trajectory indicates a well-managed, profitable enterprise with compounding returns.

3. Cash Flow Assessment

Liquidity Position

Working Capital Analysis: Net current assets of £1.45m provide an enormous buffer. The business could meet all current liabilities from cash reserves without needing to realise debtors or stock.

Cash Flow Quality: The significant cash build (from £1.04m to £1.77m in one year) alongside dividend payments of £106k and capital expenditure of £1.6k indicates strong operating cash generation well in excess of requirements.

Dividend Policy: Dividends of £106k (2022) and £66k (2021) are conservative relative to profitability. This suggests management retains sufficient earnings for reinvestment and buffer maintenance.

Creditor Positioning

• Trade creditors of £22k are modest relative to the business scale
• Taxation and social security of £229k likely includes Corporation Tax on the year's profits — a positive indicator of profitability
• Other creditors of £192k require clarification but are manageable given the cash position

4. Monitoring Points

Priority Watch Items

1. Related Party Transactions: The business has significant inter-company balances: - £80,090 annual rent paid to Cosmedic Plus Limited (connected entity) - £41,121 owed by Polly Pow Pow Limited (connected entity, director Charlotte Giles) - £5,906 owed to Cosmedic Plus Limited - £780 owed from Face Project Limited

Action: Obtain full group structure and understand the financial health of connected entities. The £41k owed by Polly Pow Pow Limited has been outstanding since at least 2021 (£40,373) — assess whether this is recoverable and whether it represents a drain on resources.

2. Group Structure Complexity: The company is classified as "Audit Exemption Subsidiary" and has TPC Group Limited as a PSC owning >75% of shares. Multiple PSCs with overlapping ownership percentages suggest a complex structure. Action: Map the full group structure and assess any contingent liabilities or cross-guarantees.

3. Director Changes: Two directors resigned in 2026 (Wael Ballouk and Stefano Malagoli) — both non-UK nationals. Action: Understand the reasons for departure and whether this affects operational continuity or control.

4. Cash Utilisation: The £1.77m cash balance is substantial. Action: Clarify whether any portion is earmarked for specific purposes (expansion, property acquisition, tax reserves) or represents free liquidity available for debt service.

5. Industry Vulnerability: The beauty/aesthetics sector is discretionary spend. Action: Monitor for economic downturn impacts. The business weathered COVID successfully (net assets grew from £665k in 2019 to £914k in 2021), which provides some comfort regarding resilience.

Ongoing Monitoring

• Filing Compliance: Accounts and confirmation statements are up to date — continue to monitor
• Cash Position: Any reduction below £1m would warrant review
• Related Party Balances: Increases in inter-company receivables beyond £50k should be investigated
• Dividend Extraction: Dividends exceeding £150k annually would merit scrutiny given the need to maintain reserves

Additional Context

Business Profile: Operating from 98 Harley Street — a premium London address — the company trades as a permanent makeup and aesthetics clinic. The brand positioning and location suggest a high-value, margin-rich business model serving affluent clients.

Employee Base: 9 employees (up from 8) — the business is small but appears to generate significant revenue per employee, consistent with a premium services model.

Ownership: Ms Tracy Giles appears to be the founder and majority controller (50-75% shares and voting rights), with Charlotte Giles holding 25-50%. TPC Group Limited holds >75% of shares — this structure requires clarification as it may indicate a holding company arrangement.