Credit Analysis: Chiltern Consultancy Limited

1. Credit Opinion: APPROVE

Chiltern Consultancy Limited presents a fundamentally sound credit profile. The company holds a substantial cash position of £659,270 against current liabilities of £330,689 — cash coverage of nearly 2:1 on obligations falling due within one year. Net assets have grown consistently from £59,210 in 2013 to £468,213 in 2024, with only a temporary dip in 2020 (consistent with broader market disruption). No external bank debt is visible on the balance sheet; liabilities consist of trade creditors, tax/social security, and other creditors (likely intercompany given the group structure). The company has been trading for over 22 years and files are up to date.

The approval is given with the caveat that no profit and loss account is filed (small company exemption exercised), so turnover, gross margin, and net profitability cannot be directly assessed. The implied retained profit for FY2024 is approximately £61,900 (movement in P&L reserves from £405,725 to £467,663), which indicates the business is profitable, but without revenue figures, leverage ratios such as debt service coverage and interest cover cannot be calculated. Any facility should be sized conservatively against available balance sheet equity and verified trading performance.

2. Financial Strength

Balance sheet health is robust.

• Equity base has grown every year since 2020, demonstrating accumulated retained earnings and sound financial stewardship.
• Tangible asset base is minimal (£41,327), which is typical for a financial advisory/consultancy business but means the company's strength lies in its working capital and cash rather than physical collateral.
• No long-term creditors in FY2024 (down from £3,716 in 2023), and provisions are negligible at £5,561.
• Share capital is nominal at £250 (200 Ordinary A shares + 50 Ordinary B shares), meaning the entire equity cushion is built from retained profits — a positive indicator of self-funded growth.
• The company is a subsidiary of PFM Group Limited (owns 75%+ of shares, voting rights, and director appointment rights). This group affiliation provides potential support but also means strategic decisions are driven by the parent. Any credit assessment should consider the wider group's financial position.

3. Cash Flow Assessment

Liquidity is excellent.

• Cash at bank: £659,270 — this is the single largest balance sheet item and represents 86% of total assets. The company is highly liquid.
• Current ratio: Current assets (£763,136) / Current liabilities (£330,689) = 2.31x — well above the 1.5x threshold typically considered healthy.
• Quick ratio (excluding stock, which is nil): effectively the same at 2.31x.
• Debtors declined from £292,699 to £103,866, driven mainly by a reduction in "other debtors" from £268,085 to £69,869. This suggests collection of intercompany balances or loan receivables, converting non-cash assets into cash — a positive liquidity signal.
• Trade debtors remain modest at £33,997, indicating either prompt payment by clients or minimal credit extension — favourable for a financial services business.
• Creditors increased from £250,001 to £330,689, with trade creditors rising from £115,214 to £158,051. This is a 32% increase, which could indicate normal trading growth or deliberate working capital management (stretching supplier terms). The increase is comfortably covered by the cash position.
• Operating lease commitments of £112,871 (£41,044 within one year) represent the primary fixed obligation. These are modest relative to the cash balance.

Without a filed P&L, operating cash flow generation cannot be directly measured, but the consistent growth in reserves and strong cash position strongly suggest positive cash generation from operations.

4. Monitoring Points

1. P&L visibility: Request management accounts or internal financial statements showing turnover, gross margin, and operating profit to verify ongoing profitability and size any facility appropriately.
2. Group structure reliance: Obtain financial information on PFM Group Limited (the parent) to assess group-level solvency and any cross-guarantees or intercompany lending that could affect Chiltern's standalone position.
3. Director turnover: Five directors have resigned between December 2025 and September 2026, with three remaining. While this may reflect group restructuring, monitor for any signs of governance disruption or strategic direction changes.
4. Creditor trend: Trade creditors grew 37% year-on-year. If this trend continues without proportional revenue growth, it could signal working capital stress.
5. SIC code classification: The company's registered activity is "financial intermediation not elsewhere classified" (SIC 64999). Clarify the exact nature of services provided to assess any sector-specific regulatory or market risks.
6. Cash deployment strategy: With £659k sitting in cash (86% of total assets), understand whether this is operational working capital, reserved for acquisitions/distributions, or held against contingent obligations. Large cash balances in a subsidiary can be extracted via dividends to the parent.