SOLSTICE CONSULTANCY LIMITED

Executive Summary

Solstice Consultancy Limited has experienced a stark deterioration in financial health over the past year, with liquidity and net asset erosion raising serious concerns about its ability to service new credit facilities. The balance sheet and cash flow position indicate fragile financial strength and potential short-term cash flow stress. Credit approval is not recommended without significant mitigating factors or security.

SOLSTICE CONSULTANCY LIMITED - Analysis Report

Company Number: SC677343

Analysis Date: 2025-07-29 20:26 UTC

1. Credit Opinion: DECLINE
   Solstice Consultancy Limited's latest financials indicate a sharp deterioration in liquidity and net asset position. The company moved from a strong net current asset position of £14,237 in 2023 to a net current liability position of £3,944 in 2024. Net assets have plummeted from £19,708 to a mere £178. This drastic decline suggests potential cash flow stress and weakened ability to meet short-term obligations. The significant corporation tax creditor of £35,738 further strains liquidity. Given these factors, the company currently lacks the financial resilience to reliably service new credit facilities without additional security or guarantees.

2. Financial Strength:
   The balance sheet shows very low fixed assets (£4,122) and a nearly eroded equity base (£178). The company's capital structure is minimal, with only £1 share capital and negligible retained earnings. The large current liabilities relative to current assets indicate a weakened financial position. The company's high corporation tax liability, increasing year on year, raises concerns about ongoing profitability or effective tax planning. The director's loan account as a debtor (£28,547) partially offsets current liabilities but is not guaranteed as immediate cash. Overall, the balance sheet reflects a fragile financial foundation with limited buffer against operational or market shocks.

3. Cash Flow Assessment:
   Cash on hand fell drastically from £42,395 in 2023 to just £4,417 in 2024, indicating significant cash outflows or poor working capital management. Debtors are mainly director's loan accounts rather than trade receivables, suggesting limited operational cash inflows from customers. The negative net current assets position signals potential liquidity challenges. The company's ability to generate positive operating cash flow appears constrained, raising concerns about meeting short-term liabilities without external financial support.

4. Monitoring Points:

• Liquidity metrics: monitor cash balances and net current assets closely.
• Corporate tax liabilities: track if the tax creditor is being managed or paid down.
• Director's loan accounts: assess recoverability and terms to understand cash availability.
• Profitability and turnover trends: review interim management accounts for signs of revenue recovery or further decline.
• Working capital cycle: monitor debtor and creditor days to detect worsening cash flow pressures.