Company Number: 13937057

Analysis Date: 2025-07-29 19:24 UTC

1. Credit Opinion: DECLINE
   Searchstone Ltd shows a significantly negative net asset position that has worsened markedly over the last two years (from -£33k to -£90k). Current liabilities more than double current assets, resulting in a large working capital deficit (-£92k), indicating acute liquidity stress. The company is loss-making and heavily reliant on intra-group funding (£96k owed to group undertakings), which suggests a fragile financial structure and dependence on related parties for survival. The short operating history (incorporated 2022) and negative equity raise concerns over sustainability and repayment capacity of any additional credit. Without evidence of profitability or positive cash flow improvements, extending credit would be high risk.

2. Financial Strength:
   The balance sheet is weak, with negative shareholders’ funds of approximately £90k as of 31 March 2024. Fixed assets are negligible (£1.8k) and provide minimal collateral value. Current liabilities (£140k) far exceed current assets (£48k), primarily due to a large intra-group loan (£96k). The company’s net liabilities have nearly tripled in one year, signaling deterioration in financial health. The company’s financial position is indicative of ongoing losses and insufficient capitalisation.

3. Cash Flow Assessment:
   Cash at bank has decreased from £11.8k to £4.8k year-on-year, further restricting liquidity. Debtor balances have increased (£26.9k to £43.2k), which may indicate extended credit terms or collection challenges, exacerbating cash flow pressure. The large working capital deficit highlights risk of payment delays or inability to meet short-term obligations without additional funding. Reliance on group funds suggests limited independent cash generation.

4. Monitoring Points:

• Improvement in net assets and reduction of working capital deficit
• Turnaround towards profitability or sustained positive EBITDA
• Cash conversion cycle and debtor collection efficiency
• Reduction in intra-group debt dependency
• Filing of future accounts and confirmation statements on time
• Any director changes or adverse conduct records