DAVIES DRAINAGE SOLUTIONS LTD

Executive Summary

DAVIES DRAINAGE SOLUTIONS LTD shows solid financial health with growing assets and positive working capital, indicating a stable foundation for its drainage business. While the company benefits from strong equity and compliance discipline, it should focus on liquidity management, diversification, and controlled growth to strengthen resilience and capitalize on future opportunities.

DAVIES DRAINAGE SOLUTIONS LTD - Analysis Report

Company Number: 14415509

Analysis Date: 2025-07-29 16:19 UTC

Financial Health Assessment Report for DAVIES DRAINAGE SOLUTIONS LTD

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1. Financial Health Score: B

Explanation:
The company demonstrates good financial stability with positive net assets and improving working capital. The increase in fixed assets and net current assets over the last year indicates growth and prudent asset management. However, as a micro-entity with only one employee and relatively modest asset size, it still faces risks typical of small startups, such as limited liquidity buffers and dependency on a single director-owner. The score “B” reflects sound financial footing with some room for improvement in liquidity and diversification.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Fixed Assets	11,809	Increased from £6,156 in 2023, showing investment in long-term assets — a healthy sign of growth and capacity building.
Current Assets	17,042	Significant increase from £8,246, indicating improved cash, receivables, or stock levels — suggests better short-term resource availability.
Current Liabilities	15,118	Increased from £9,232 but still manageable relative to current assets. Must monitor to avoid liquidity strain.
Net Current Assets	1,924	Positive and improved from £986, indicating healthy working capital — the company's short-term financial "pulse" is stable.
Total Net Assets	13,733	More than doubled from £5,170, reflecting increased shareholder equity — a “strong heart” of financial health.
Shareholders’ Funds	13,733	Entirely equity financed, no indication of external debt — good for financial resilience but limits leverage.
Average Employees	1	Indicates a very small operation, possibly founder-led and highly dependent on key personnel.

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3. Diagnosis

The financial "symptoms" of DAVIES DRAINAGE SOLUTIONS LTD show a company in its early growth stage with improving asset base and working capital. The increase in fixed assets suggests investment in equipment or property necessary for its drainage business, aligning with its SIC classification in sewerage services. The positive net current assets reflect a healthy liquidity position, alleviating immediate risks of cash flow distress.

The company’s balance sheet shows no alarming signs such as negative equity or excessive short-term debt. The absence of overdraft or loans indicates a low-risk financial structure, though this also implies limited external financing to fuel faster expansion. The reliance on a single director who owns 75-100% of shares and voting rights suggests centralized control — a double-edged sword offering streamlined decision making but also concentration risk if key personnel issues arise.

The company is not overdue in its filing obligations and operates actively, which supports ongoing compliance and operational continuity.

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4. Recommendations

To further improve the company's financial wellness and reduce vulnerabilities, consider the following:

• Enhance Liquidity Reserves: Maintain or grow net current assets to buffer against any unforeseen short-term cash demands or delays in receivables.
• Diversify Revenue Streams: Explore expanding service offerings or client base to reduce dependency on limited contracts or markets, which is critical for a micro-sized business.
• Consider Controlled Financing: Evaluate small-scale external funding options to support growth initiatives, such as new equipment or marketing, while maintaining prudent debt levels.
• Formalize Succession Planning: Document operational and financial procedures to mitigate risks associated with sole director control.
• Regular Financial Monitoring: Implement monthly cash flow forecasting and periodic financial reviews to detect early warning signs of distress.
• Employee Development: As the company grows, consider strategic hiring or training to broaden operational capacity and reduce reliance on one individual.

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