SCI-NET LIMITED
Company number 03624389 · Monitor this company
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.
Financial Health Assessment: SCI-NET LIMITED
Financial Health Score: B+
The company demonstrates strong overall financial health with consistent growth, positive net assets, and a solid working capital position. Minor areas of concern include relatively low cash reserves compared to debtors and significant intangible assets, which require careful monitoring.
Key Vital Signs
| Metric | 2024 Value | Interpretation |
|---|---|---|
| Net Assets | £4,325,921 | Healthy and growing (up 43% from 2023). |
| Working Capital (Net Current Assets) | £1,945,534 | Positive and strong – current assets exceed short-term liabilities by a comfortable margin. |
| Current Ratio | 2.1 | Good – current assets (£3.72m) more than cover current liabilities (£1.77m). |
| Quick Ratio | ~2.1 | No inventory held, so liquidity position is similar to current ratio. |
| Cash Ratio | 0.22 | Low – cash (£389,801) covers only 22% of current liabilities. Relies on debtor collection for liquidity. |
| Debt-to-Equity Ratio | 0.55 | Moderate – total liabilities (£2.37m) are about half of equity (£4.33m), indicating manageable leverage. |
| Implied Profitability | Strong | Retained earnings increased by £1.31m (from £3.02m to £4.33m) in 2024, reflecting healthy after-tax profits. |
| Asset Growth (YoY) | +26% | Total assets grew from £5.33m to £6.70m, driven by intangible assets (capitalised development costs). |
Diagnosis
Overall Condition: Good, with minor symptoms of strain.
The company is financially robust – like a patient with strong vital signs and a healthy heart (positive equity, growing net assets). However, two areas deserve attention:
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High Debtor Dependency – Debtors (£3.33m) make up 89% of current assets. This creates a vulnerability: if customers delay payments, cash flow could tighten. The cash ratio (0.22) is low, meaning the company relies heavily on timely debtor collection to meet short-term obligations.
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Significant Intangible Assets – Intangible assets (£2.06m) represent 31% of total assets. These are capitalised development costs (software). While common in IT service companies, they are less liquid and may be subject to impairment if projected revenues don't materialise. The company must ensure these assets continue to generate economic returns.
No signs of distress: no overdue filings, no liquidation or administration, and directors have no disqualification records.
Recommendations
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Improve Cash Conversion Cycle – Focus on reducing debtor days (e.g., through stricter credit terms or proactive collections) to strengthen cash reserves. Aim for a cash ratio above 0.5 to provide a stronger liquidity buffer.
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Monitor Intangible Asset Performance – Regularly test capitalised development costs for impairment. Ensure that the software products or services generating these assets are achieving expected revenue and profit margins.
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Maintain Working Capital Discipline – With strong growth, the company should avoid over-leveraging. The current debt-to-equity ratio is acceptable, but any further increase in long-term debt should be matched by clear plans for repayment from operating cash flows.
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Consider Dividend Policy – Given the healthy retained earnings, the company may want to review its dividend/distribution policy to balance shareholder returns with reinvestment for growth.