SRC GROUP LIMITED
Company number 05251463 · 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: SRC Group Limited
As at 28 September 2024
1. Financial Health Score: D (Weak)
The company shows a very thin buffer of net assets (£21,553) and almost no liquid cash (£69). While it has moved from negative net assets in 2022 to a small positive position, the reliance on intercompany balances and director loans makes the recovery fragile. The financial structure resembles a patient with low blood pressure and anemic circulation—functional but at constant risk of collapse under stress.
2. Key Vital Signs
| Metric | 2024 | 2023 | 2022 | Interpretation |
|---|---|---|---|---|
| Net Assets (Equity) | £21,553 | £6,983 | -£14,103 | Returned to positive but is only ~11% of total assets. A very narrow equity cushion. |
| Cash & Bank | £69 | £68 | £1,526 | Critically low. Insufficient to cover even a single day’s trading. A “pulse” barely detectable. |
| Net Current Assets (Working Capital) | £21,552 | -£5,592 | N/A | Turned positive by reducing creditors, but this came mostly from writing off tangible assets and shifting debtors. |
| Total Debtors / Total Assets | 100% | 93% | — | Almost all assets are owed by group companies. Collectibility is uncertain. |
| Directors’ Loan Account (Liability) | £100,122 | £111,122 | A large injection of director funding, but also a callable debt if the directors need repayment. | |
| Total Liabilities / Total Assets | 89% | 95% | 103% | High leverage. The business is financed largely by debt, not retained earnings. |
Other indicators:
- Tangible fixed assets: £0 (all disposed of in the year). The company now owns virtually no physical assets.
- Intercompany balances: Owed from group undertaking £193k; owed to other participating interests £76k. The business is essentially a clearing house for related parties.
3. Diagnosis: Chronic Working Capital Deficiency and High Dependency
Primary Condition: Severe cash starvation and asset lightness.
- Symptoms:
- Cash at bank is negligible, meaning the company cannot pay even small unexpected bills without immediate director support or intercompany transfers.
- The only material asset (debtors) is entirely composed of related party receivables. If those group companies face cash flow problems, SRC Group will have no liquidity.
- The director loan of £100k is effectively funding the business—if that were recalled, the company would be insolvent.
- The disposal of all tangible assets suggests the company has no operational fixed base; it may be acting purely as a management or service vehicle for the group.
Underlying Cause: The business appears to be a holding/servicing entity with no independent revenue stream or cash generation. Its financial health is entirely dependent on the health of related companies and the continued support of directors.
4. Recommendations (Treatment Plan)
-
Immediate cash preservation and monitoring
- Prepare a 13‑week cash flow forecast. With only £69 cash, any delay in intercompany receipts could cause a default.
- Set up a formal cash management process to track inflows from group debtors weekly. -
Reduce dependency on director loans
- Agree a formal repayment schedule or convert part of the directors’ loan into equity to reduce the callable liability.
- This would strengthen the balance sheet and reduce the risk of a sudden withdrawal. -
Assess collectibility of intercompany debtors
- Obtain up‑to‑date management accounts from the group companies that owe £193k. Are they profitable? Do they have cash? If not, the asset is at risk of impairment.
- Consider if any of that debt should be provided for. -
Consider restructuring or distribution
- If the company is no longer trading (no turnover appears in the filed accounts), evaluate whether it is the most efficient structure. A strike‑off or liquidation may be cleaner than maintaining a shell with large intra‑group balances. -
Board oversight
- The directors should document their assessment that the company is a going concern, given the thin liquidity. Without this, the accounts could be misleading.