Company Number: 13011359

Analysis Date: 2025-07-20 18:34 UTC

1. Credit Opinion: DECLINE

DBF Group Ltd shows significant liquidity and working capital issues with net current liabilities of approximately £942k and current liabilities far exceeding current assets. Despite holding substantial fixed assets (investment property valued at £2.827m), the company has a large bank loan of £1.883m due after one year and current creditors of approximately £1m. The drastic reduction in net assets from £952k in 2022 to just £2.7k in 2023 indicates a sharp decline in financial position. The company's ability to service debt from operational cash flow appears highly constrained, with minimal cash reserves (£9.5k) and significant short-term obligations. Without clear evidence of sufficient recurring income or equity injection, the risk of default is elevated.

2. Financial Strength:

The balance sheet is heavily leveraged with long-term bank loans nearly equal to the value of fixed assets. Net assets have almost been fully eroded over the last year. Current liabilities have increased slightly but remain very high relative to current assets. Shareholders’ funds are negligible at £2.7k, suggesting little cushion for creditors. The company carries investment property as its main asset but this is illiquid and may not be readily available for debt repayment if needed. Overall, the financial strength is weak, with net current liabilities and minimal equity.

3. Cash Flow Assessment:

Cash balances are very low at £9.5k, and trade debtors represent the majority of current assets. The company’s working capital deficit of nearly £942k indicates insufficient liquidity to meet short-term obligations. The large bank loan repayment obligations and other creditors totaling nearly £1m due within one year exacerbate liquidity risk. There is no indication of positive operating cash flow or profits retained to support cash generation. The company’s ability to generate cash to service debt and cover operational costs appears limited.

4. Monitoring Points:

• Track changes in cash and liquid assets regularly.
• Monitor debtor aging and collectability to improve liquidity.
• Watch bank loan repayment schedule and covenant compliance.
• Review turnover and profitability trends to assess operational cash flow.
• Watch for any equity injections or restructuring that might improve net assets.
• Keep an eye on the market value and liquidity of the investment property asset.