Company Number: 13346854

Analysis Date: 2025-07-20 17:26 UTC

1. Credit Opinion: APPROVE with conditions.
   Virgo Tech Ltd demonstrates improving financial strength and liquidity, with a significant increase in net assets and net current assets over the last two years. The company operates in retail sale of mobile phones, a competitive but stable sector. The director is the sole controller, simplifying governance but concentrating risk. The company has no overdue filings and maintains positive working capital. However, hire purchase debt secured on tangible assets and deferred tax liabilities warrant monitoring. Approval is recommended with ongoing review of asset-backed financing and cash flow consistency.

2. Financial Strength:
   The balance sheet shows growth from net assets of £24,900 in 2021 to £227,072 in 2024, reflecting retained earnings and asset expansion. Fixed tangible assets increased substantially (£103.5k to £156k), financed partly through hire purchase obligations. Current assets more than doubled to £508.5k with cash balances rising to £416.7k, indicating strong liquidity. Current liabilities increased but remain covered by current assets, yielding net current assets of £196k. Deferred tax liabilities rose by £12.9k due to accelerated capital allowances. Overall, the company has solid equity backing and asset growth but has increased secured liabilities.

3. Cash Flow Assessment:
   Cash balances have grown significantly, improving liquidity and ability to meet short-term obligations. Net current assets are positive and improving, indicating adequate working capital management. However, hire purchase liabilities secured on assets total approximately £103.6k (combining current and non-current), which may restrict asset liquidity. The company’s cash position appears sufficient to service these obligations, but further analysis of operational cash flow would be prudent to confirm sustainability.

4. Monitoring Points:

• Maintain close watch on hire purchase debt levels and repayment schedules to ensure asset coverage remains adequate.
• Monitor cash flow from operations to sustain strong cash balances and support ongoing capital expenditure.
• Track deferred tax liabilities and any tax planning impacts, especially related to capital allowances.
• Review debtor collection cycles, as debtor balances increased substantially in the latest year.
• Observe market conditions in mobile phone retail sector for demand fluctuations and competitive pressures.