Company Number: 12947040

Analysis Date: 2025-07-20 13:39 UTC

Credit Opinion:
CONDITIONAL APPROVAL. Venari Security Limited shows significant intangible asset investment and shareholder equity, indicating strong backing and business potential in IT consultancy/security. However, the company’s liquidity position has deteriorated markedly in 2023, with net current liabilities of £619.8k and a significant increase in current liabilities, raising concerns over short-term payment capability. Approval is recommended with close monitoring and possibly covenants requiring maintenance of liquidity or working capital buffers.

Financial Strength:
The balance sheet reveals substantial intangible assets (£2.4m) related to proprietary software development, supporting the company’s business model and future revenue prospects. Shareholders’ funds remain positive at £1.47m but have decreased from £2.69m in 2022, primarily due to a worsening profit and loss reserve (-£5.71m). Long-term creditors are modest (£325k) and stable. However, the steep rise in current liabilities from £263k to £1.11m is a red flag, impacting net current assets adversely and indicating increased short-term obligations or payables.

Cash Flow Assessment:
Cash on hand is critically low at £17.4k compared to £530k the prior year, and trade debtors have increased but are concentrated (£330k). The negative working capital position (-£619.8k) suggests liquidity strain, with current liabilities more than double current assets. This raises concerns about the company’s ability to meet immediate obligations without additional financing or cash inflows. The company’s cash conversion cycle and debtor collection efficiency should be reviewed in detail. The high level of "other creditors" (£792k) within current liabilities needs clarification for timing and nature.

Monitoring Points:

• Liquidity ratios (current ratio, quick ratio) to track improvement or further deterioration.
• Debtor aging and collection performance to ensure timely cash inflows.
• Changes in current liabilities composition, especially "other creditors."
• Profit and loss account movements to assess return to profitability and reserve strengthening.
• Director and shareholder support for potential short-term funding needs.
• Impact of amortisation on intangible assets and potential impairment risks.
• Any changes in management team or operational strategy that affect financial performance.