ACUATIVE LIMITED

Currency note: The latest filed accounts are prepared in USD, while the Companies House history feed labels amounts in GBP. I use the filed USD figures for FY2024/FY2023 and treat currency reconciliation as a condition/monitoring point.

1. Credit Opinion: CONDITIONAL

Reasoning: Acuative Limited is an active, asset-light IT consultancy with a strong balance sheet: FY2024 reported profit of $236.5k, net assets of $3.338m, no interest-bearing debt disclosed, and a current ratio of 8.7x. Solvency risk is low.

However, the credit is not clean because liquidity is concentrated in debtors: debtors rose by $1.197m to $3.344m, while cash fell by $1.115m to $426.9k despite reported profit. That implies weak cash conversion and a working-capital outflow. The company is also a UK subsidiary of a US parent, with intercompany recharges and parent reliance noted in the accounts. No income statement is filed, so turnover, EBITDA and debt-service capacity cannot be fully verified from statutory data.

View: Suitable for a modest, appropriately structured facility subject to satisfactory debtor ageing, management accounts/cash-flow forecasts, related-party disclosure, and parent support or guarantee if the exposure is material. A large unsecured facility should not be approved on the balance sheet alone. Management quality is adequate but transparency is limited: officers are current and filings are not shown as overdue, though the FY2024 accounts approval date appears late against the normal 9-month deadline.

2. Financial Strength

Balance sheet health is strong on a solvency basis:

• Net assets/equity: $3.338m; equity ratio c.88.5% of total assets.
• Liabilities: $433k, all falling due within one year; no long-term debt disclosed.
• Leverage: liabilities/equity c.13% — very low.
• Net current assets: $3.337m.
• Current ratio / quick ratio: c.8.7x; no stock, so quick ratio is similar.
• Cash ratio: c.0.99x — cash broadly covers current liabilities, but with little cushion.
• Fixed assets: negligible at $1.1k; the business is people/contract-driven, so recovery value on default depends mainly on receivables and parent support, not tangible assets.

The main balance-sheet weakness is asset quality, not solvency. Current assets are $3.770m, of which debtors are $3.344m (88.7%) and cash is $427k (11.3%). The company therefore depends heavily on collecting receivables. Profit retention supports capital: P&L reserves increased to $1.772m from $1.535m. Reconcile the reported share capital and currency data before facility documentation.

3. Cash Flow Assessment

Liquidity looks strong on the current ratio, but the cash flow signal is weaker:

• Reported profit: $236.5k
• Cash movement: -$1.115m
• Debtors increase: +$1.197m
• Creditors decrease: -$156k

This implies a material working-capital absorption and likely negative operating cash flow in FY2024. Cash of $426.9k covers current liabilities of $433.2k at about 1.0x, so there is limited headroom if collections slip. Debtor days cannot be calculated reliably from the FY2024 filing because turnover is not disclosed; using the only available turnover figure from 2021 as a dated proxy would suggest a very long DSO, so aged debtor analysis is essential.

Debt service: No existing debt is disclosed and reported profit is positive, but new debt service should be tested against verified operating cash flow or an eligible-receivables borrowing base, not against reported profit alone.

4. Monitoring Points

• Debtor ageing and concentration: Obtain monthly aged debtors, top-10 customer exposure, accrued income, credit notes, bad-debt history, and related-party/intercompany balances. Set DSO and concentration covenants after baseline review.
• Cash conversion: Monitor 13-week cash flow and monthly management accounts with turnover, gross margin, EBITDA and operating cash flow. Statutory accounts omit the income statement.
• Liquidity covenant: Set a minimum cash/liquidity headroom and restrict dividends/upstreaming if cash ratio or debtors performance deteriorates.
• Parent support: If the facility is material, require a parent guarantee or keep-well letter from Acuative Corporation, given the US parent relationship and intercompany recharges.
• Currency: Confirm USD functional currency versus GBP facility exposure; require FX hedging or currency-matched facilities if material.
• Compliance/governance: Monitor accounts and confirmation statement filing, officer/PSC changes, and reconcile the apparent late FY2024 approval and share-capital/currency inconsistencies.
• Facility controls: No new debt or security without consent; negative pledge; borrowing-base structure if lending against receivables.