STACEY LIMITED

Executive Summary

Stacey Limited’s financial position is weak, marked by significant and persistent working capital deficits and heavy reliance on repayable-on-demand related party loans. The company’s liquidity is inadequate relative to short-term liabilities, posing a high risk to creditors. Without evidence of improved cash flow or debt restructuring, the credit risk is too elevated to approve new lending.

STACEY LIMITED - Analysis Report

Company Number: 13181440

Analysis Date: 2025-07-29 16:59 UTC

1. Credit Opinion: DECLINE
   Stacey Limited exhibits a concerning credit profile. Despite being active and filing accounts on time, the company shows persistent and significant net current liabilities, indicating severe working capital deficits (£-1.78M in 2024). Current liabilities exceed current assets by a large margin, raising doubts about short-term liquidity and ability to meet debt obligations as they fall due. The company’s balance sheet is heavily leveraged, with current liabilities around £2.1M against current assets of only £0.3M, mainly driven by substantial loans from related parties (£1.99M). This reliance on non-interest bearing, repayable-on-demand inter-company loans undermines external creditor protection. Without clear evidence of profitable operations or cash flow generation (no income statement disclosed), the risk of default is high. The fixed asset base is mostly investment property valued at £2.2M, but this is illiquid and cannot cover immediate liabilities. Overall, the financial structure is fragile and the current liability burden excessive for the size and cash resources of the company.

2. Financial Strength:
   The company’s total net assets increased from £269k in 2023 to £427k in 2024, largely due to stable investment property values and a modest increase in retained earnings. However, the fixed asset base (£2.2M) is concentrated in investment property with no depreciation, which may not be readily realizable without loss in a distressed sale. The equity base is minimal (£54 share capital) and the company is highly leveraged with current liabilities exceeding current assets by a factor of nearly 7:1. The company is classified as small and employs only 3 staff, indicating a small operational scale. The balance sheet shows no signs of improving liquidity or debt reduction over the last three years. The company’s financial strength is weak due to poor liquidity and high short-term debt reliance.

3. Cash Flow Assessment:
   Cash at bank is low relative to liabilities (£113k cash vs £2.1M short-term creditors). Debtor balances have increased but remain small compared to liabilities. The working capital deficit persists and worsened slightly from 2023 to 2024. The company depends heavily on short-term loans from related parties which are repayable on demand and interest-free, creating a risk of sudden withdrawal. No income statement was provided to assess operating cash flows, but the continuing heavy reliance on external financing indicates cash generation from operations is insufficient to cover obligations. Liquidity is inadequate to meet current liabilities without refinancing or asset sales.

4. Monitoring Points:

• Working capital and net current asset position: Watch for signs of improvement or further deterioration.
• Related party debt levels and repayment terms: Monitor any changes that could trigger liquidity crises.
• Cash balances and debtor collection efficiency.
• Any disclosures on operating profitability or cash flow generation in future accounts.
• Timeliness and completeness of filings as indicators of management’s financial discipline.
• Market value and liquidity of investment property asset in case of need for forced sale.