Company Number: 13168970

Analysis Date: 2025-07-20 16:07 UTC

1. Credit Opinion: DECLINE
   Sostre Group Limited exhibits significant financial distress with persistent and growing net liabilities over the last four years. The company’s current liabilities, primarily in the form of directors' loan accounts, vastly exceed its current assets, resulting in negative working capital and negative shareholders’ funds. There is no evidence of profitability or positive cash flow generation. The negative net asset position and reliance on director loans indicate vulnerability and insufficient financial resilience to service additional debt or credit facilities.

2. Financial Strength:
   The balance sheet reveals a weak financial position: net liabilities increased from approximately £18.9k (2021) to £32.9k (2024). Fixed assets are minimal (£654 in 2024) and have been depreciated over time. The current liabilities of £34,186 are largely due to directors’ loan accounts (£33,166), suggesting the company is dependent on director financing to maintain operations. Share capital is negligible (£2), and there are accumulated losses reflected in the profit and loss reserve (£-32,907). This indicates insufficient equity buffer and ongoing losses.

3. Cash Flow Assessment:
   Cash balances have declined from £1,982 (2023) to £627 (2024), further restricting liquidity. The company's net current liabilities of £33,559 (2024) signal that short-term liabilities significantly exceed short-term assets, resulting in poor liquidity and limited ability to cover imminent obligations. The reliance on director loans as current liabilities suggests cash flow is supported by internal financing rather than operational cash generation.

4. Monitoring Points:

• Track changes in directors’ loan balances for any repayment or further advances.
• Monitor cash balances and net current assets for improvements in liquidity.
• Watch for turnover and profit trends once available to assess operational performance.
• Review any changes in debt structure or external financing arrangements.
• Observe management actions to reduce losses and improve equity position.