XELGH LIMITED

Executive Summary

XELGH Limited presents a strong credit profile supported by substantial net assets, high cash reserves, and effective management of operational risks in a volatile semiconductor distribution market. Despite a recent revenue decline, improved margins and strategic inventory positioning underpin financial resilience. Continued monitoring of inventory and working capital metrics is recommended to maintain liquidity and creditworthiness.

XELGH LIMITED - Analysis Report

Company Number: 13196824

Analysis Date: 2025-07-29 16:17 UTC

1. Credit Opinion: APPROVE
   XELGH Limited demonstrates strong financial backing with significant net assets and cash reserves, indicating solid capability to meet debt obligations. The company operates in a specialized sector with experienced management and has navigated geopolitical and market risks effectively, reflecting sound stewardship. Despite a 12% revenue decline in the latest year, the improved gross margin and strategic inventory management support sustainable profitability. No overdue filings or adverse auditor comments enhance credit reliability.

2. Financial Strength:
   The company shows substantial net assets of approximately £20 million as of August 2024, up from £16.2 million the prior year, reflecting growth in equity. Cash holdings remain robust at £9.4 million, although reduced from £14.1 million the previous year, still providing a strong liquidity buffer. Current liabilities stand at £3.6 million, creating a negative net current asset position; however, this is mitigated by the large overall net assets and total assets less current liabilities of £5.5 million. The balance sheet indicates a well-capitalized group with adequate shareholder funds and no indications of financial distress.

3. Cash Flow Assessment:
   The company maintains a strong cash position providing good short-term liquidity. The negative net current asset position suggests working capital is tight, primarily due to high current liabilities relative to current assets excluding cash, but the substantial cash balance offsets this concern. The firm's credit risk management and close monitoring of debtors minimize bad debt exposure. The group’s liquidity risk is actively managed by the board, and there is confidence in funding sufficiency. Overall, cash flow appears sound with adequate working capital to support ongoing operations and debt servicing.

4. Monitoring Points:

• Monitor inventory valuation and turnover closely, as the business carries significant inventory that is subject to price volatility in the semiconductor market.
• Track gross profit margins and sales revenue trends to ensure profitability remains stable despite market fluctuations.
• Keep watch on current liabilities and working capital ratios to avoid liquidity stress.
• Review geopolitical developments affecting supply chains that could impact operations or financial performance.
• Continue to assess credit risk exposure to customers to prevent bad debts.