Company Number: 12952776

Analysis Date: 2025-07-20 15:30 UTC

Financial Health Assessment Report for ELECTRIC STAR GROUP LTD
Assessment Date: Financial Year Ending 31 October 2024

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1. Financial Health Score: B

Explanation:
ELECTRIC STAR GROUP LTD demonstrates a solid financial position with strong net assets growth and healthy working capital. The company has shown significant improvement in liquidity and equity over recent years. While the low cash balance and high debtor levels require monitoring, overall, the financial indicators suggest a stable and growing business. The grade B reflects good financial health with some areas to watch closely to maintain and enhance liquidity and cash flow.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Fixed Assets	143,896	Stable investment in long-term assets, mainly in subsidiaries and property. Maintains operational base.
Current Assets	630,855	Strong current asset base, primarily driven by debtors (accounts receivable).
Cash	1,266	Very low cash on hand, potential symptom of cash flow strain despite strong current assets.
Debtors	629,589	Large debtor balance indicates sales made on credit; risk of delayed collections.
Current Liabilities	184,377	Manageable short-term obligations; increased but supported by strong working capital.
Net Current Assets	446,478	Healthy working capital, indicating the company can cover short-term liabilities comfortably.
Net Assets (Equity)	590,374	Strong equity base, showing cumulative profits and retained earnings growth.
Share Capital	1.00	Minimal share capital; equity is mainly accumulated reserves.
Employees	14 (average)	Growing workforce suggests expanding operations.

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3. Diagnosis

• Healthy Growth and Capitalisation:
  The company has grown its net assets from £225k in 2023 to nearly £590k in 2024, indicating profitable operations or capital injections. This is a strong sign of financial "vitality."

• Working Capital and Liquidity:
  Net current assets of £446k show a good buffer to meet short-term debts, akin to a patient with stable blood pressure. However, the very low cash balance (£1,266) is a "symptom" requiring attention. It suggests that cash is tied up in debtors rather than available for immediate use. This can strain daily operations if collections slow.

• Debtor Concentration:
  Debtors represent over 99% of current assets and have surged from £187k to £630k in one year, largely due to intra-group balances (£527k owed by subsidiaries). This creates dependency on timely payments from related companies, introducing some risk to liquidity if these subsidiaries face delays.

• Creditors and Obligations:
  Current liabilities increased but remain well covered by current assets. Director’s current account credit of £65k indicates some funding from directors, providing flexibility but also potential personal exposure.

• Asset Composition:
  Fixed assets remain stable and primarily consist of investments in subsidiaries, reflecting the company’s role as a holding or management group for multiple trading entities. Tangible assets are minimal.

• Operational Context:
  The company operates in the "Public houses and bars" sector, which can be capital intensive and sensitive to market conditions. The increase in employees (from 11 to 14) suggests operational scaling or preparation for growth.

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4. Recommendations

• Improve Cash Flow Management:
  Focus on converting debtors into cash faster. Implement tighter credit control, timely invoicing, and active collection procedures to reduce days sales outstanding. This will help alleviate the "symptom" of low cash despite strong overall assets.

• Monitor Intra-Group Balances:
  Since a major portion of receivables come from subsidiaries, ensure these entities maintain good financial health and timely repayment schedules. Consider formalizing intercompany loan agreements with clear repayment terms.

• Maintain Working Capital Cushion:
  Continue to manage current liabilities prudently. Avoid sudden increases in short-term debt without corresponding asset liquidity.

• Review Director Funding:
  The director’s current account balance should be monitored. While it provides flexibility, it should not become a long-term financing source without formal arrangements.

• Strategic Growth Planning:
  Given the expansion in workforce and asset base, plan operational budgets carefully to maintain profitability and avoid overextension.

• Regular Financial Review:
  Perform quarterly financial health checks, focusing on liquidity ratios and cash flow forecasts to catch early signs of distress.

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Medical Analogy Summary

ELECTRIC STAR GROUP LTD’s financial "vital signs" indicate a company in robust health with strong "equity immunity" and "working capital circulation." However, the "low cash pulse" signals the need for improved liquidity management—akin to ensuring that oxygenated blood (cash) reaches every organ (business function) efficiently. Addressing debtor management will sustain this healthy state and prevent future financial "symptoms" or distress.

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