Credit Analysis: ASQUIRE WEALTH MANAGEMENT LIMITED

1. Credit Opinion: CONDITIONAL

The company demonstrates a strongly improving financial trajectory with net assets growing from £26,513 (2016) to £783,751 (2025), and working capital shifting from negative (-£150,267 in 2024) to positive (£148,889 in 2025). However, several factors warrant a conditional rating:

• Accumulated losses remain significant at -£459,884 in the P&L reserve, despite improving
• No income statement visibility — the company files abridged accounts, obscuring profitability metrics
• Group structure complexity — 75%+ ownership by Awi Services Ltd and £500,000 in subsidiary investments introduce contagion risk
• Debtors have nearly doubled year-on-year (£302,859 to £510,812), requiring verification of quality and collectibility
• Heavy intangible asset base (£240,677 in goodwill and development costs) creates impairment risk

The conditional approval requires enhanced due diligence on related-party transactions, debtor quality, and group cash flow dependencies before full commitment.

2. Financial Strength

Balance Sheet Summary (FY2025):

Positive Indicators: - Consistent capital base: Share capital and premium (£1,243,635 combined) provide a substantial capital cushion, indicating historical shareholder support through capital injections - Improving net asset trajectory: Six consecutive years of net asset growth demonstrates sustained recovery - Deleveraging trend: Current liabilities reduced by £52,742 (10.1%) year-on-year

Concerning Indicators: - Accumulated losses still substantial: Despite improvement, the P&L reserve deficit of £459,884 means the company has not yet recouped historical losses - Intangible asset concentration: Goodwill (£191,244) and development costs (£49,433) represent 30.7% of total assets — these are subject to impairment risk and have limited realisable value in distress - Investment concentration: £500,000 in subsidiary investments (down from £750,000) represents 39.2% of total assets — liquidity of these assets is questionable

Leverage Assessment: - Total liabilities to net assets ratio: 0.60x — moderate leverage - Current liabilities to total assets: 36.7% — manageable but requires monitoring - The company has no long-term debt structure beyond £23,145 falling due after one year

3. Cash Flow Assessment

Liquidity Position:

Working Capital Analysis: The transition from negative to positive working capital is a materially significant improvement. However, the composition of current assets raises quality concerns:

• Debtors represent 82.8% of current assets (£510,812 of £616,429) — this is an unusually high concentration
• Debtors increased 68.7% year-on-year without proportional revenue visibility (no P&L disclosed)
• Cash represents only 17.1% of current assets — relatively thin liquid buffer

Cash Flow Indicators: - Cash improved by £38,461 (57.3%) — positive - The £250,000 reduction in investments (from £750,000 to £500,000) may represent a disposal that generated cash inflows - The £52,742 reduction in current liabilities could indicate cash settlement of trade creditors

Key Concern: Without a cash flow statement or income statement, it is impossible to determine whether operating cash flow is genuinely positive or whether liquidity improvements stem from asset disposals and capital restructuring. The significant debtor growth without revenue visibility is a red flag that requires investigation — this could represent related-party receivables or revenue recognition issues.

4. Monitoring Points

Critical Metrics to Watch:

1. Debtor Quality & Ageing - Request full debtor ageing analysis - Verify the proportion of related-party vs. third-party debtors - Monitor debtor days trend — the 68.7% increase requires justification with revenue growth

2. Profitability Verification - Request management accounts to verify trading profitability - The P&L reserve improved by £63,952, suggesting profitability, but this could include non-trading items - Seek confirmation of EBITDA and operating margins

3. Group Structure & Contagion Risk - Obtain group consolidated accounts for Awi Services Ltd - Assess cash flow dependencies between group entities - Review inter-company balances and guarantees

4. Investment Realisability - Understand the £250,000 reduction in subsidiary investments — was this a disposal or impairment? - Assess the remaining £500,000 investment for recoverability - Review the business model of invested subsidiaries

5. Intangible Asset Impairment - Goodwill of £191,244 requires annual impairment review - Development costs of £49,433 (amortised at 20% straight-line) need commercial viability assessment - Combined intangibles represent 30.7% of total assets — significant impairment could erode net assets materially

6. Covenant Compliance - If any borrowing facilities exist, verify covenant compliance - The £23,145 in creditors due after one year should be investigated — is this a related-party loan?

7. Filing Compliance - Accounts are current and not overdue — positive governance indicator - Confirmation statement is up to date

8. Employee Growth Sustainability - Headcount grew from 5 to 8 (60% increase) — verify revenue supports this cost base - Assess payroll obligations relative to cash generation

Suggested Facility Structure:

If proceeding, consider: - Shorter tenor facilities given the improving but still recovering position - Financial covenants requiring minimum net current assets, maximum leverage, and minimum EBITDA - Related-party transaction restrictions - Quarterly monitoring of management accounts and debtor ageing