Company Number: 12465142

Analysis Date: 2025-07-19 12:44 UTC

Financial Health Assessment of DEGANWY PROPERTIES LIMITED

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1. Financial Health Score: D

Explanation:
The company exhibits persistent negative net assets and working capital deficits over multiple years, indicating financial distress symptoms. While it remains active and compliant with filings, the balance sheet shows a weak financial position with liabilities exceeding assets significantly. The negative equity and consistent net current liabilities suggest liquidity challenges and a strained balance sheet, warranting a cautious outlook.

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2. Key Vital Signs

Metric	2024 (£)	Interpretation
Fixed Assets	3,734	Low fixed asset base, declining over recent years, suggests limited long-term investments.
Current Assets	5,688	Small current assets base with slight improvement from prior year, but still insufficient.
Current Liabilities	24,647	High short-term liabilities creating pressure on liquidity; obligations due within a year.
Net Current Assets	-18,959	Significant working capital deficit, indicating inability to cover short-term debts with assets.
Total Assets Less CL	-15,225	Negative after deducting current liabilities, showing liabilities outweigh total assets.
Creditors > 1 year	2,713	Some long-term liabilities, though relatively small in scale.
Net Assets / Equity	-18,513	Negative shareholder funds indicate accumulated losses or capital erosion.
Share Capital	100	Minimal share capital, typical for micro-entities but insufficient to cover losses.

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3. Diagnosis: What the Financial Data Reveals

• Symptoms of Distress:
  The company is exhibiting classic symptoms of financial strain: persistent negative net assets and a sizeable working capital deficit. Current liabilities vastly exceed current assets, which is a red flag for liquidity problems. This means the company may struggle to meet short-term obligations without additional funding or asset sales.

• Balance Sheet Weakness:
  The erosion from £-13,352 net assets in 2020 to £-18,513 in 2024 reflects ongoing losses or write-downs, weakening the company’s financial foundation. Reduced fixed assets from £19,922 in 2020 to £3,734 in 2024 suggests asset disposals or depreciation outpacing reinvestment.

• Cash Flow Concerns:
  Although cash specifics are only mentioned in early years (£4,824), the negative net current assets and rising liabilities imply constrained cash flow. The company may be reliant on external financing or delayed payments to manage day-to-day operations.

• Limited Equity Cushion:
  The minimal share capital combined with negative reserves means there is little buffer to absorb losses or economic shocks. This is typical in micro-entities but increases vulnerability.

• Operational Scale:
  With only one employee on average, the company operates on a very small scale, which can limit operational flexibility and resilience.

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4. Recommendations: Improving Financial Wellness

• Improve Liquidity Management:
  Prioritize reducing current liabilities through renegotiation of payment terms or refinancing long-term to ease short-term cash flow pressures. Improving collection of receivables or increasing cash reserves would create a healthier cash flow pulse.

• Capital Injection:
  Consider raising additional equity or shareholder loans to restore positive net assets, providing a stronger financial cushion and improving creditor confidence.

• Asset Review and Optimization:
  Evaluate the fixed asset base to ensure assets are generating returns. Dispose of non-performing assets and consider reinvestment in higher-yielding properties or activities within the real estate sector.

• Cost Control:
  Scrutinize operating expenses to improve profitability. Given the small scale, even modest cost savings can help improve the financial position.

• Strategic Business Planning:
  Develop a clear plan addressing revenue growth, diversification, or niche market opportunities within the real estate letting sector to turn around the negative equity trend.

• Professional Advice:
  Engage with financial advisors or accountants specializing in turnaround strategies for micro-entities to support restructuring and growth.

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Medical Analogy Summary:

The company’s financial health shows "symptoms of distress" with a "weak pulse" in liquidity and an "ailing balance sheet" marked by negative equity. Without intervention, the prognosis is guarded, but with targeted actions—like a "nutritional boost" via capital injection and "physical therapy" through cost control and asset optimization—the company may regain "vitality" and stability.

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