DCG PROPERTY DEVELOPMENTS LTD

Executive Summary

DCG Property Developments Ltd possesses valuable fixed assets but struggles with poor liquidity and significant liabilities, leading to negative net assets. Although recent small profits indicate some operational progress, the company faces financial strain due to high debts and low cash reserves. Immediate focus on improving cash flow, restructuring debt, and enhancing profitability is critical to stabilise and strengthen its financial health.

DCG PROPERTY DEVELOPMENTS LTD - Analysis Report

Company Number: 12836515

Analysis Date: 2025-07-20 16:40 UTC

Financial Health Assessment for DCG PROPERTY DEVELOPMENTS LTD

---

1. Financial Health Score: D

Explanation:
The company exhibits signs of financial distress primarily due to persistent net liabilities and significantly negative working capital. While it owns substantial fixed assets, the overwhelming current liabilities and overall net liabilities suggest unhealthy liquidity and solvency positions. The modest profits recorded in recent years provide some relief but are insufficient to offset the accumulated losses and liabilities. Consequently, the financial health is below average, warranting caution and proactive management.

---

2. Key Vital Signs

Metric	Value (2024)	Interpretation
Fixed Assets	£284,250	The company holds significant tangible assets (property), a vital strength and long-term resource.
Current Assets	£3,411	Extremely low; primarily cash, indicating limited short-term liquidity ("poor pulse").
Current Liabilities	£158,679	Very high short-term obligations; "symptoms of distress" in meeting immediate debts.
Net Current Assets (Working Capital)	-£155,268	Negative working capital indicates inability to cover immediate liabilities with current assets; "weak circulation".
Total Assets Less Current Liabilities	£128,982	Positive, reflecting fixed assets outweigh current liabilities, but not enough to offset all debts.
Long-Term Liabilities	£138,215	Large borrowings secured against assets, increasing financial risk.
Net Assets (Shareholders' Funds)	-£9,233	Negative equity indicates cumulative losses exceeding invested capital; a "chronic condition".
Profit for Year	£728	Small profit, indicating some operational improvement but insufficient to reverse losses.
Share Capital	£100	Minimal capital base; limited financial buffer.

---

3. Diagnosis

DCG Property Developments Ltd is like a patient with a strong skeletal frame (fixed assets) but critically low blood pressure (cash and current assets). The company’s persistent negative net assets and working capital deficits reveal chronic financial strain. The balance sheet shows a "symptom" of high debt relative to equity, particularly with significant current liabilities and long-term borrowings exceeding £296,000 combined, while cash reserves remain minimal.

The small but positive annual profits are a hopeful sign, yet the company is still burdened by accumulated losses and shareholder deficits. The related party balances of over £114,000 owed to a commonly controlled entity indicate reliance on internal financing, which could pose further risks if not managed carefully.

Overall, the company’s liquidity position is weak, and its solvency is precarious. Without improved cash flow management and reductions in liabilities, DCG Property Developments Ltd faces a risk of financial "collapse" or distress if external financing conditions tighten or asset values decline.

---

4. Recommendations

1. Improve Liquidity ("Boost the Pulse")

   • Increase cash reserves through improved collection of receivables or asset disposals.
   • Negotiate extended payment terms with creditors to reduce immediate liabilities.
   • Explore short-term financing options with favourable terms.

2. Restructure Debt ("Relieve the Burden")

   • Engage with lenders to refinance or restructure long-term debts to reduce pressure on cash flows.
   • Consider converting some debt to equity if possible to improve net asset position.

3. Enhance Profitability ("Strengthen the Heart")

   • Focus on increasing turnover and margin through operational efficiencies or new projects.
   • Review costs carefully to improve net profit margins.

4. Address Related Party Balances ("Clear Internal Dependencies")

   • Formalise and monitor intercompany balances to ensure transparency and reduce risk.
   • If feasible, reduce reliance on related party funding by securing independent financing.

5. Regular Financial Monitoring ("Ongoing Health Checks")

   • Implement monthly cash flow forecasting and management reporting to detect early signs of distress.
   • Maintain compliance with filing deadlines to avoid penalties and maintain stakeholder confidence.

---