Company Number: 12499518

Analysis Date: 2025-07-29 18:13 UTC

Financial Health Assessment of THE AURIGA GROUP LTD as of 31 March 2024

---

1. Financial Health Score: B

Explanation:
THE AURIGA GROUP LTD shows a stable and positive financial condition overall, with strong net current assets and shareholders’ funds. However, a notable decline in cash reserves and a small loss in the latest year, alongside significant dividend payments, indicate some caution. The company’s financial "pulse" remains steady, but there are early "symptoms" that warrant monitoring to prevent potential distress.

---

2. Key Vital Signs (Critical Metrics and Interpretation)

Metric	2024 Value	Interpretation
Net Current Assets (Working Capital)	£204,505	Healthy positive working capital indicating sufficient short-term liquidity to cover current liabilities.
Cash at Bank	£57,385	Sharp decline from £680,064 in 2023; signals reduced liquidity cushion — "cash flow pulse" weakened.
Debtors	£287,590	Increased from prior year, could indicate slower collections—possible "symptom" of operational cash flow strain.
Current Liabilities	£140,470	Reduced from last year; manageable short-term obligations.
Net Assets (Shareholders’ Funds)	£205,099	Positive equity, though significantly down from £692,870 in 2023, reflecting retained earnings erosion.
Profit/Loss for Year	-£7,471	Small loss this year after a large profit in previous year; may indicate emerging operational pressure.
Dividends Paid	£480,300	High dividend payout relative to profit; could be draining reserves and cash.
Share Capital	£100	Minimal capital base, typical for small private companies.
Staff Costs	£5,000	Very low payroll costs, indicating a lean operation or limited staff.
Related Party Loans	Significant amounts owed by related companies; no interest or repayment terms.	Potential risk if these loans are not repaid timely; "hidden symptoms" in related party exposure.

---

3. Diagnosis: Financial Condition Overview

• Liquidity: The company maintains a healthy net current asset position, which is the "heartbeat" of operational liquidity. However, the dramatic fall in cash reserves from over £680k to £57k in one year is a concerning "arrhythmia" that may point to cash flow management issues or large cash outflows such as dividend payments.

• Profitability: After a very strong profit of over £800k in 2023, the company recorded a small loss in 2024, indicating "symptoms of operational stress." This swing can be due to timing issues, investment in growth, or increased costs.

• Capital Structure: The company's equity remains positive but has shrunk considerably, primarily due to dividend distributions exceeding profits. This suggests the company is returning significant value to shareholders but at the cost of depleting reserves.

• Related Party Exposure: The presence of significant loans to related entities without formal repayment terms or interest creates financial risk — akin to an "undiagnosed condition" that may affect cash flow and asset quality if not managed carefully.

• Overall: The company is currently in a stable but vulnerable financial state. The "vital signs" are generally good, but the cash flow decline and reliance on related party loans represent early warning signs.

---

4. Recommendations: Specific Actions to Improve Financial Wellness

• Strengthen Cash Flow Management:
  Investigate causes of the sharp cash decline. Consider tighter debtor collection policies, closer monitoring of cash outflows, and possibly revising dividend policy to conserve liquidity.

• Review Dividend Strategy:
  The high dividend payout relative to profit is unsustainable. Align dividend payments with cash generation to avoid draining reserves.

• Formalize Related Party Loans:
  Ensure loan agreements with related parties include clear repayment terms and interest to reduce financial uncertainty and risk of bad debts.

• Monitor Profitability Closely:
  Analyze causes of the recent loss and implement cost control measures or revenue enhancement strategies to restore profitability.

• Maintain Adequate Reserves:
  Build up retained earnings to create a financial buffer against fluctuations and unexpected expenses.

• Regular Financial Health Checks:
  Establish periodic financial reviews to detect any emerging "symptoms" early and adjust strategies proactively.

---