SIRIUS MANUFACTURING GROUP LIMITED

Executive Summary

Sirius Manufacturing Group Limited is demonstrating healthy growth with positive equity and working capital. However, the rapid increase in trade receivables and payables, especially within group transactions, signals potential liquidity strain. Careful management of cash flow and working capital will be critical to maintain financial stability and support ongoing expansion.

SIRIUS MANUFACTURING GROUP LIMITED - Analysis Report

Company Number: 13490755

Analysis Date: 2025-07-19 13:03 UTC

Financial Health Assessment for SIRIUS MANUFACTURING GROUP LIMITED

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1. Financial Health Score: B

Explanation:
The company demonstrates generally sound financial health with a stable net asset position and positive working capital. However, the large increase in debtors and current liabilities relative to previous years, along with significant intra-group balances, suggests some liquidity strain and dependency on related party transactions. This indicates a condition that is stable but requires careful monitoring and management of cash flow.

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2. Key Vital Signs

Metric	2023 Value (£)	Interpretation
Current Assets	7,430,345	Healthy increase mainly due to debtors and stock; good short-term resources for operations.
Cash and Cash Equivalents	213,122	Modest cash holding relative to liabilities; suggests limited immediate liquidity buffer.
Debtors	6,650,980	Substantial rise indicating revenue growth but also potential collection risk (cash flow stress).
Current Liabilities	6,873,378	Sharp increase mostly due to amounts owed to group undertakings and trade creditors.
Net Current Assets (Working Capital)	556,967	Positive, indicating the company can cover short-term debts, but margin is thin.
Net Assets (Equity)	562,075	Positive equity base reflecting retained earnings and shareholder funds; consistent growth.
Stock (Inventory)	566,243	Significant increase suggesting expansion or stock buildup, which could tie up cash.
Profit & Loss Reserves	561,975	Indicates accumulated retained profits, showing historical profitability.
Invoice Discounting Liability	398,430	Presence of invoice discounting reveals use of financing against receivables; a liquidity tool.

Additional observations:

• The company’s turnover is not explicitly stated, but the sizable debtors and creditors imply increased trade activity.
• Related party transactions are significant, with large amounts owed to and from group companies, indicating reliance on internal group financing and trade.
• The company increased employee numbers from 2 to 5, which is a positive sign of operational growth.
• Tangible fixed assets are minimal, suggesting the business is not capital intensive.

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3. Diagnosis

The company shows the symptoms of a growing business—notably the sharp rise in debtors and creditors, and expansion in stock levels. The healthy net asset and retained earnings positions indicate profitability over time. However, the large jump in current liabilities, particularly amounts owed to group undertakings, acts as a warning sign of potential liquidity tightness. The company appears to be using invoice discounting to manage cash flow, a common practice but one that indicates working capital pressure.

The cash flow is somewhat strained given the modest cash reserves compared to current liabilities, so the business might be operating with a narrow liquidity margin. This could be a "symptom of distress" if customers delay payment or if creditors demand quicker settlement. However, the company has not breached any filing deadlines and has a clean audit report, which are positive signs.

The reliance on intra-group balances suggests the company is part of a group structure where financial support mechanisms are in place, reducing immediate risk but potentially masking standalone liquidity issues.

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4. Recommendations

To improve financial wellness and "strengthen the heartbeat" of the business, the following actions are suggested:

1. Improve Cash Conversion Cycle:

   • Accelerate debtor collections through stricter credit terms and monitoring.
   • Review stock management to avoid excess inventory tying up cash.

2. Manage Current Liabilities:

   • Negotiate better payment terms with suppliers and group entities to ease short-term outflows.
   • Consider alternative financing options to reduce reliance on invoice discounting.

3. Enhance Liquidity Reserves:

   • Build cash reserves to provide a buffer for unexpected delays or liabilities.
   • Monitor cash flow forecasts closely to anticipate and address liquidity gaps.

4. Strengthen Financial Reporting:

   • Include profit and loss account in future filings to provide clearer visibility on profitability trends.
   • Regular financial health check-ups to detect early symptoms of financial stress.

5. Operational Efficiency:

   • Monitor employee productivity and operational expenses as the team grows.
   • Evaluate fixed asset investments to ensure they support growth without overextension.

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