Company Number: 13106834

Analysis Date: 2025-07-20 11:45 UTC

1. Credit Opinion: APPROVE with conditions

5Y Technology Limited demonstrates a solid improvement in financial strength and working capital over the last three years. The company’s substantial growth in net assets from a negative position in 2021 to £892k in 2024, combined with increasing current assets and net current assets, reflects enhanced operational scale and financial management. However, the company carries a non-current borrowing of £250k, which requires monitoring for timely servicing. Approval is recommended provided updated cash flow projections and debt servicing arrangements are reviewed periodically.

2. Financial Strength:

• The balance sheet has strengthened significantly: net assets rose from a deficit of £120k in 2021 to a positive £892k in 2024.
• Fixed assets have increased from £74k to £401k, primarily due to intangible assets (intellectual property) growing to £359k, indicating investment in proprietary technology.
• Current assets more than doubled to nearly £2 million, with trade debtors tripling to £1.43 million, reflecting strong sales growth but also a need to manage debtor collections efficiently.
• Current liabilities have increased but are well covered by current assets, resulting in net current assets of £751k (2024) versus £257k (2023), showing improved liquidity.
• The £250k long-term borrowing is a moderate leverage level relative to shareholders’ funds (£892k).

3. Cash Flow Assessment:

• Cash at bank decreased to £98k from £134k in the prior year, but the company maintains healthy working capital.
• Debtor levels are high, so cash flow depends on efficient receivables management; delays could pressure liquidity.
• Current liabilities have risen but remain manageable given the net working capital surplus.
• Absence of audit and limited disclosure on profit and loss restricts full cash flow visibility; however, the increasing retained earnings (£891k) are positive.
• The company has lease commitments of £15k per annum, a modest fixed cost.

4. Monitoring Points:

• Receivables aging profile and credit control effectiveness to avoid cash flow bottlenecks.
• Servicing of the £250k long-term debt, including interest and principal repayment schedules.
• Continued investment returns on intangible assets to ensure they generate expected future benefits.
• Profitability trends once full P&L data becomes available to confirm sustainable earnings.
• Any changes in the operating environment of the IT consultancy sector that could affect revenues or margins.