CompaniesInTheUK

THE STERLINGHAM CO. LTD

Company number 07249302 ·

Active

This analysis was written by an AI from the company's public filings. It may contain errors or omissions and is not financial or professional advice.

Investment Risk Analysis: THE STERLINGHAM CO. LTD

1. Risk Rating: MEDIUM

Justification: The company demonstrates consistent profitability and growing net assets over a 10-year track record, but exhibits concerning working capital dynamics—current liabilities have grown 57% year-on-year whilst liquid assets remain thin relative to short-term obligations. The combination of high inventory concentration, significant trade creditor increases, and group intercompany balances warrants careful monitoring despite the positive equity position.

2. Key Concerns

i) Working Capital Deterioration and Liquidity Squeeze Current liabilities surged from £796k to £1.25M (57% increase) whilst net current assets declined from £719k to £679k. The quick ratio (excluding stock) is approximately 0.82—below the 1.0 threshold—meaning the company cannot cover short-term debts without liquidating inventory. Trade creditors nearly doubled from £295k to £563k (91% increase), which may indicate the company is stretching supplier payments to manage cash flow. With only £94k cash against £1.25M current liabilities, there is minimal buffer.

ii) Inventory Concentration and Conversion Risk Stock represents 47% of total current assets (£906k of £1.93M) and has grown 26% year-on-year. For a metal fabrication business, this level of inventory holding requires confident conversion to cash within operating cycles. If demand softens or projects are delayed, stock obsolescence could erode asset values significantly. The accounts note stock is valued at "lower of cost and net realisable value," but no provision figures are disclosed.

iii) Group Intercompany Dependency and Related Party Exposure Amounts owed by group undertakings remain static at £262k—unchanged from the prior year. This raises questions about whether this is a genuine trading balance or semi-permanent funding arrangement. The company is majority-owned by The Sterlingham (Holdings) Co. Ltd, meaning strategic decisions and cash flow management may be influenced by group priorities rather than standalone operational needs. The lack of disclosure on related party terms is notable.

3. Positive Indicators

  • Consistent Equity Growth: Net assets have grown from £339k (2017) to £851k (2025), demonstrating sustained value creation over the long term. Retained earnings increased by £16.4k in the latest year, confirming profitability.

  • Asset Base Expansion: Total assets grew 27% to £1.93M, with tangible fixed assets of £320k supporting operations. Capital expenditure of £104k in the latest year signals ongoing investment in productive capacity.

  • Regulatory Compliance: Accounts and confirmation statements are filed on time with no overdue items. The company has maintained active status throughout its 15-year history with no indication of disqualification proceedings against the director.

  • Workforce Growth: Employee numbers increased from 51 to 57, suggesting operational expansion rather than contraction.

4. Due Diligence Notes

Item Investigation Required
Trade Creditor Increase Determine whether the 91% increase in trade creditors reflects genuine trading growth, delayed payments, or renegotiated terms. Cross-reference with revenue data (not disclosed in filleted accounts).
Intercompany Balance Obtain details on the £262k owed by group undertakings—aging, terms, and whether this is collectible on demand. Assess whether group cash management could restrict this company's liquidity.
Debt Structure Bank loans/overdrafts increased to £315k and HP/finance leases total £162k (current + non-current). Clarify maturity profiles, covenant conditions, and whether facilities are secure.
Single Director Governance Only one director (A G Healey) is listed for a company with 57 employees. Assess whether there is sufficient management depth and whether key-person risk is addressed.
Stock Composition Request breakdown of inventory between raw materials, work-in-progress, and finished goods. Assess provision adequacy and ageing of slow-moving items.
Group Structure The Sterlingham (Holdings) Co. Ltd and Mr Kelvin John Stanley Pearce both hold >75%—investigate whether there are overlapping control rights and how group-level decisions affect subsidiary operations.
Profitability Metrics Income statement has not been delivered (permitted under small companies regime). Request turnover, gross margin, and operating profit figures to assess whether liability growth is revenue-proportionate.
Contingent Liabilities Provisions of £60k are noted but not detailed. Obtain full notes to understand nature and expected timing.

Perspective: Investment Risk Assessor · Model: glm-5.1 · Generated 5 September 2026