DAVIDSON OF DARRAS HALL LTD

Executive Summary

Davidson Of Darras Hall Ltd maintains a positive liquidity position and regulatory compliance, with sufficient current assets to cover liabilities. However, the substantial increase in current liabilities and director’s loan account, coupled with a decline in net assets, raise medium-level concerns regarding liquidity management and governance. Further due diligence on related-party financing and cash flows is recommended to fully assess financial stability.

DAVIDSON OF DARRAS HALL LTD - Analysis Report

Company Number: 12485157

Analysis Date: 2025-07-20 12:12 UTC

1. Risk Rating: MEDIUM
   Davidson Of Darras Hall Ltd demonstrates adequate net current assets and positive net assets, indicating basic solvency. However, the notable increase in current liabilities in 2024, particularly trade creditors and director’s loan account, alongside declining fixed assets, suggests emerging liquidity pressure and financial structure shifts that warrant caution.

2. Key Concerns:

• Significant rise in current liabilities from £27,284 in 2023 to £74,840 in 2024, driven by increased trade creditors (£20,456) and a substantial director’s loan account (£22,884), which may signal cash flow stress or reliance on director financing.
• Decline in net assets from £102,886 in 2023 to £93,716 in 2024, reflecting a reduction in retained earnings/profit and potential erosion of equity.
• Concentration of control with a director who is also a major creditor (director’s loan), which could pose governance risks or conflicts of interest if financial difficulties arise.

3. Positive Indicators:

• Strong cash position (£127,347) relative to current liabilities, supporting short-term liquidity and operational continuity.
• Consistent positive net current assets (~£90k), indicating the company can cover its short-term liabilities with current assets.
• Timely filing of accounts and confirmation statements, with no overdue filings, suggesting compliance with regulatory requirements.
• Stable employee base (33 employees), implying operational continuity and established business scale since incorporation in 2020.

4. Due Diligence Notes:

• Investigate the nature and terms of the director’s loan account, including repayment schedules and conditions, to assess potential risks of related-party financing.
• Review cash flow statements (not provided) to confirm actual cash generation and liquidity beyond the snapshot balance sheet data.
• Assess reasons behind the reduction in fixed assets and net assets to determine if asset disposals or impairments indicate operational challenges.
• Confirm whether the company has any contingent liabilities or off-balance sheet obligations that could affect solvency.
• Examine customer and supplier concentration risks given the industry and trade debtor/creditor balances.
• Evaluate management effectiveness and governance structures given the dual role of key directors and control concentration.