Commercial Credit Assessment: IVENDI LIMITED

Company: IVENDI LIMITED (Company No. 07003191) Industry: IT Consultancy (SIC 62020) — Automotive retail technology Latest Accounts Reviewed: Year ended 31 December 2021

1. Credit Opinion: CONDITIONAL APPROVAL

IVENDI Limited presents a reasonably creditworthy profile with consistent net asset growth, institutional backing, and a 12+ year trading history. The company demonstrates improving profitability (accumulated losses reduced by £437K in FY2021) and positive working capital. However, the high concentration of intangible assets, rising debtor balances, declining cash position, and increasing provisions warrant a conditional approach. Any credit facility should be sized conservatively against tangible asset coverage and cash flow, not intangible book values. Personal guarantees from the majority shareholder-director (Xxxxxx Xxxxxxxxname shown to subscribers) would strengthen the proposition.

2. Financial Strength

Balance Sheet Trajectory (FY2014–FY2021):

Positive indicators: - Net assets have grown approximately 3.2x over the review period, from £655K to £2.07M, reflecting genuine value creation. - Shareholders' funds stabilised at £3.88M from FY2017 onward, indicating an equity injection (share premium account) of approximately £1.79M around FY2016–2017. This was likely the Technology and Innovation Fund LP investment. - The P&L reserve improved from (£2.26M) to (£1.82M) in a single year, indicating the company returned to profitability and is working down accumulated losses.

Concerns: - Intangible asset dependency: Intangibles represent £2.93M of £3.08M total fixed assets (95%) and 55% of total assets. These are likely capitalised development costs. From a credit perspective, intangibles offer minimal realisation value in a distress scenario. Net assets of £2.07M would shrink materially if intangibles were written down. - Provisions increased from £464K to £748K (+61%), which warrants explanation — these could relate to deferred consideration, warranty obligations, or tax provisions. - Accumulated losses of £1.82M remain in the P&L reserve, meaning the company has not yet fully recovered historical losses despite recent improvement.

Asset Quality Assessment: Tangible net worth (net assets less intangibles) is approximately £140K — significantly lower than the headline £2.07M net assets figure. Any lending should be assessed against this tangible base, not the reported net assets.

3. Cash Flow Assessment

Liquidity Position (FY2021):

Working capital analysis: - Net current assets are positive at £472K, an improvement from £350K in FY2020. This is encouraging. - However, the composition is deteriorating: cash fell by £424K while debtors rose by £508K. This suggests the working capital improvement is driven by increased receivables rather than cash generation. The company is effectively funding growth through stretched creditor cycles or debtor build-up. - With 91 employees and a likely turnover in the £5–8M range (inferred from headcount and asset base), debtors of £1.80M could represent approximately 80–130 days of sales outstanding. This is elevated for an IT consultancy business and warrants investigation into debtor aging and credit quality.

Cash flow signals: - The £1.79M addition to intangible assets in FY2021 indicates significant ongoing investment in product development. While positive for future growth, this is a cash drain. - The reduction in accumulated losses (£437K improvement) suggests operating profitability, but the cash position declined — indicating that profits are being reinvested into intangibles and absorbed by working capital. - Long-term creditors of £730K represent a stable obligation; combined with the £748K provision, the company carries £1.48M in longer-dated liabilities that will eventually pressure cash flow.

Debt service capacity: Without a profit and loss account (filed as abridged, P&L not disclosed), precise interest cover and EBITDA cannot be calculated. The improving P&L reserve suggests the business is generating profits, but the declining cash balance raises questions about the quality of those earnings. Any facility should require evidence of cash generation, not just accounting profit.

4. Monitoring Points

1. Debtor quality and aging: Debtors grew 39% year-on-year to £1.80M. Request a debtor aging schedule and top-10 customer concentration analysis. Monitor for bad debt risk and collection cycle deterioration.

2. Intangible asset capitalisation policy: With £1.79M added to intangibles in FY2021, understand the capitalisation criteria. Over-capitalisation inflates both assets and profits. Request details on what is being capitalised vs. expensed.

3. Provisions movement: The £283K increase in provisions (from £464K to £748K) requires explanation. Assess whether these are contingent liabilities that could crystallise into cash outflows.

4. Cash conversion: Track the gap between reported profitability (inferred from P&L reserve movement) and actual cash generation. If debtors continue growing faster than cash, this signals deteriorating earnings quality.

5. Latest accounts: The most recent financial data available is FY2021. The accounts information indicates accounts made up to 31 December 2025 are expected. Request the latest filed accounts (FY2022–FY2025) before any credit decision, as the post-2021 period includes significant macroeconomic events (inflation, interest rate rises, automotive sector disruption) that may have materially impacted performance.

6. Customer concentration: As an automotive retail technology provider, assess dependency on key dealership groups or OEM relationships. Automotive sector stress could directly impact this company's order book.

7. Director changes: Xxxxxx Xxxxxxxxname shown to subscribers resigned on 31 December 2025. Understand the reason for departure and any associated governance implications.

8. Institutional investor engagement: The Technology and Innovation Fund LP holds director appointment rights. Monitor whether the institutional investor remains supportive, particularly regarding follow-on funding or exit timelines that could influence management behaviour.

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