Credit Analysis: MICRO SCOOTERS LIMITED

1. Credit Opinion: APPROVE

Micro Scooters Limited presents a strong credit profile warranting approval. The company demonstrates exceptional liquidity with £3.2M cash against only £1.09M current liabilities, a current ratio exceeding 5:1, and consistent net asset growth from £2.36M (2021) to £4.55M (2025). The business has a 20-year trading history, professional audit by Blick Rothenberg, and no adverse filings. The only cautionary note is cash flow volatility evidenced by the 2022 low of £59K, though this has fully recovered. Standard terms appropriate for a well-capitalised SME.

2. Financial Strength

Balance Sheet Summary (FY2025): - Net Assets: £4,552,629 (up 12.4% from £4,050,771 in 2024) - Shareholders' Funds: £4,552,629 (virtually all retained earnings; share capital only £118) - Total Liabilities: £1,085,927 against Total Assets of £5,641,242 - Gearing: Negligible — no borrowings evident, liabilities are trade creditors and deferred items

Net Asset Trajectory: | Year | Net Assets | YoY Change | |------|-----------|------------| | 2025 | £4,552,629 | +12.4% | | 2024 | £4,050,771 | +7.6% | | 2023 | £3,765,773 | +16.5% | | 2022 | £3,233,189 | +36.8% | | 2021 | £2,363,177 | -26.0% | | 2020 | £3,194,213 | — |

The 2021 dip appears driven by elevated liabilities (£3.07M) during COVID, but the company has since de-levered significantly while growing the asset base. This demonstrates management's ability to strengthen the balance sheet through retained profits.

Key Concern: The business is asset-light with only £90K in fixed assets. Collateral value rests primarily on inventory (£1.74M) and receivables (£610K), plus the substantial cash balance.

3. Cash Flow Assessment

Liquidity Position (FY2025): - Current Assets: £5,550,629 - Current Liabilities: £1,085,927 - Net Current Assets: £4,464,702 - Current Ratio: 5.1x - Quick Ratio (ex-stock): 3.5x

Cash History: | Year | Cash | Net Current Assets | |------|------|-------------------| | 2025 | £3,199,172 | £4,464,702 | | 2024 | £2,280,225 | £4,004,446 | | 2023 | £1,309,403 | £3,768,459 | | 2022 | £59,009 | £3,235,875 | | 2021 | £3,208,967 | £2,365,863 | | 2020 | £2,831,459 | £3,196,899 |

Assessment: The current ratio of 5.1x is exceptionally strong for a retailer. Cash covers current liabilities almost 3x over. However, the 2022 cash trough (£59K) warrants examination — this likely reflects seasonal inventory build-ahead of peak trading (spring/summer for scooters) plus potential COVID supply chain stockpiling. The recovery to £3.2M by 2025 confirms the business generates substantial operating cash flow.

Retained Profits: FY2025 P&L reserve increased by approximately £502K (£4,552,511 - £4,050,653), indicating profitable operations despite the absence of a filed P&L account (permitted under small company regime).

Working Capital Quality: - Stock: £1.74M (31% of current assets) — appropriate for retail but monitor for obsolescence risk - Debtors: £610K (down from £844K) — improving collection or lower credit sales - Trade creditors likely comprise most of the £1.09M current liabilities

4. Monitoring Points

Specific Monitoring Recommendations:

1. Seasonal Cash Flow Patterns: Request quarterly management accounts to understand intra-year cash fluctuations. The 2022 trough suggests significant working capital swings. Consider whether facility limits should accommodate seasonal peaks.

2. Inventory Quality: At £1.74M, stock represents significant working capital. Understand ageing profile and margin erosion risk on slow-moving lines. Scooter retail has product lifecycle and fashion risk.

3. Foreign Currency Exposure: The company imports scooters (Swiss parent brand). FX movements on CHF/GBP and EUR/GBP will impact margins. The accounts reference foreign currency translation policies — confirm hedging arrangements.

4. Trust Ownership: Micro Scooters Trustees Limited holds >75% of shares. Understand the trust structure and any implications for commitment to the business.

5. Related Party Transactions: Small company accounts provide limited disclosure. Request details of any intercompany balances or transactions with the Swiss brand owner.

6. Margin Trends: Without filed P&L, profitability must be inferred from balance sheet movements. Request management accounts to assess trading margins and overhead control.