DDW COLOURS UK LTD.
Company number 02345988 · 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.
Commercial Credit Assessment: DDW COLOURS UK LTD.
1. Credit Opinion: APPROVE
Reasoning: The company presents a strong credit profile underpinned by substantial net assets exceeding £10.5M, a robust working capital position, and no bank debt as at the 2018 year-end. The backing of Givaudan S.A. — a major Swiss-listed multinational in the flavours and fragrances sector — provides significant institutional support. The company's 35-year trading history and current active status further support creditworthiness. The only caveat is the limited visibility on trading performance due to filleted accounts filing, which warrants standard monitoring.
2. Financial Strength
Balance Sheet Summary (2018 vs 2017):
| Metric | 2018 | 2017 | Movement |
|---|---|---|---|
| Total Assets | £10.84M | £11.15M | -£0.31M |
| Net Assets | £10.58M | £9.70M | +£0.88M |
| Shareholders' Funds | £10.58M | £9.70M | +£0.88M |
| Retained Earnings | £10.58M | £9.70M | +£0.88M |
Key Observations: - Net assets grew by £881K despite total assets declining slightly — driven by a £1.07M reduction in current liabilities - Gearing is minimal — bank borrowings were fully cleared in 2018 (down from £1.02M in 2017) - Tangible fixed assets of £1.85M provide asset backing, though primarily leasehold improvements and plant - Intercompany debtor balances of £2.25M indicate group treasury arrangements — typical for subsidiary operations but creates dependency on parent for cash realisation - Share capital remains minimal at £900, with the entirety of equity represented by retained earnings — demonstrates long-term value accumulation
Concern: Stock levels of £6.29M represent 58% of current assets. Significant inventory concentration in a food processing business carries obsolescence and valuation risk, particularly for natural colour products with shelf-life constraints.
3. Cash Flow Assessment
Liquidity Position:
| Metric | 2018 | 2017 |
|---|---|---|
| Current Assets | £10.84M | £11.15M |
| Current Liabilities | £2.01M | £3.08M |
| Net Current Assets | £8.82M | £8.07M |
| Current Ratio | 5.4x | 3.6x |
| Cash | £1.19M | £0 |
Working Capital Assessment: - Current ratio of 5.4x is exceptionally strong — the company has more than sufficient liquid resources to meet short-term obligations - Cash recovery from zero to £1.19M is positive, though the zero-cash position in 2017 is noteworthy and suggests potential for cash volatility - Trade debtors reduced significantly from £2.38M to £649K — this could indicate improved collections, reduced sales, or intercompany reorganisation following the Givaudan acquisition - Trade creditors increased modestly to £1.55M, suggesting the company is using supplier credit appropriately
Cash Flow Concerns: - The absence of a P&L statement (filied accounts) limits visibility on operating cash generation - Operating lease commitments of £2.06M remain, with £964K falling due beyond five years - Intercompany creditor balances are minimal (£2.6K), suggesting group funding is through equity rather than debt — positive for creditor position
4. Monitoring Points
| Metric | Rationale | Threshold |
|---|---|---|
| Stock valuation | High inventory concentration; risk of write-downs | Monitor stock-to-current-assets ratio; flag if exceeds 65% |
| Cash position | Demonstrated volatility (zero in 2017) | Flag if cash falls below £500K |
| Intercompany balances | £2.25M owed by group undertakings; recovery dependent on group | Monitor for significant increases or ageing |
| Trade debtor trends | Significant reduction may indicate sales decline | Obtain turnover figures if possible; monitor for further contraction |
| Group ownership stability | Recent name change and ownership transition (DowDuPont → Givaudan/Nixon) | Monitor for further restructuring |
| Filing compliance | Next accounts due 30 Sep 2027; confirmation statement due Jun 2027 | Flag any overdue filings promptly |
| Employee numbers | Stable at 40 | Significant reduction may indicate business contraction |
Additional Context
- Corporate Structure: The company underwent a name change from Phytone Limited to DDW Colours UK in October 2019, coinciding with ownership transition. The 2018 accounts reference ultimate parent as DowDuPont Inc.; current PSC records show Givaudan S.A. and N&H Holding UK Limited — indicating a subsequent acquisition
- Director Changes: Current board includes Nixon family members and Givaudan-appointed directors (including Michael David King as a known Givaudan executive), suggesting active post-acquisition governance
- Audit Status: Accounts are audited by Haines Watts with an unqualified opinion — provides additional assurance on balance sheet integrity