DGR PROPERTIES LIMITED

Executive Summary

DGR PROPERTIES LIMITED shows early signs of financial strain, primarily due to a significant negative working capital position and a thin equity base. While the core asset—the investment property—provides some stability, the company must urgently improve liquidity and strengthen its capital structure to ensure ongoing financial health. Proactive management of cash flow and equity infusion are recommended to stabilize and support growth.

DGR PROPERTIES LIMITED - Analysis Report

Company Number: 13438529

Analysis Date: 2025-07-29 19:47 UTC

Financial Health Assessment of DGR PROPERTIES LIMITED (As at 30 June 2024)

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1. Financial Health Score: D

Explanation:
The company exhibits signs of financial strain primarily due to a persistent negative working capital position and minimal net asset value relative to its liabilities. While not in immediate distress, the financial "vital signs" suggest underlying liquidity issues and a fragile equity base, warranting caution and remedial action.

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2. Key Vital Signs

Metric	Value (2024)	Interpretation
Net Current Assets (Working Capital)	£-256,803	Negative working capital ("symptom of distress") indicates liabilities significantly exceed short-term assets, risking cash flow difficulties.
Net Assets (Equity)	£9,197	Very low positive net assets, showing a thin equity cushion to absorb losses or shocks.
Cash on Hand	£30,990	Cash level is small relative to short-term liabilities; liquidity is tight.
Current Liabilities	£287,863	High level of obligations due within one year, suggesting potential pressure on cash resources.
Fixed Assets (Investment Property)	£266,000	Stable asset base with a minor impairment (£5,029), indicating some devaluation in property value but still material asset backing.
Share Capital	£70	Minimal share capital, indicating limited initial equity investment.
Retained Earnings	£9,127	Small positive retained earnings, indicating limited accumulated profits.
Company Age	3 years	Relatively new company, may still be in the investment and growth phase.
Number of Employees	3	Small workforce, consistent with a micro/small company.

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3. Diagnosis: What the Financial Data Reveals

• Liquidity Concerns: The company’s "cash flow vital signs" show a negative net current asset position exceeding £250k. This means short-term obligations outweigh readily available assets, a classic symptom of liquidity stress. Though cash increased from £18.9k to £31k over the year, it remains insufficient to cover immediate liabilities.

• Fragile Capital Structure: The net assets stand at just £9,197, a thin buffer that leaves the company vulnerable to financial shocks or operational setbacks. This low equity base suggests limited financial resilience and increases risk in creditor relationships.

• Asset Composition: The main asset is the investment property valued at £266,000, down slightly from the prior year, reflecting a minor impairment. This property forms the backbone of the company’s balance sheet but is not liquid, which compounds cash flow challenges.

• Operating Scale: With only 3 employees and minimal share capital, the company is a micro/small entity in early stages, likely focused on property letting. This can explain tight margins and the capital structure but also implies limited operational diversification.

• Going Concern: Directors have prepared accounts on a going concern basis, indicating no immediate threat of insolvency. However, the ongoing negative working capital and limited cash require close monitoring.

• Significant Control: Ownership is concentrated among three main individuals, with one person controlling 50-75% shares, implying decision-making is streamlined but also dependent on a few stakeholders.

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4. Recommendations to Improve Financial Wellness

1. Improve Working Capital Management:

   • Negotiate longer payment terms with creditors or restructure short-term liabilities to reduce immediate cash demands.
   • Accelerate debtor collections (though debtors are minimal) and optimize cash inflows.
   • Consider short-term financing options to bridge liquidity gaps temporarily.

2. Strengthen Equity Base:

   • Inject additional equity capital or retain profits to build shareholder funds and provide a buffer against shocks.
   • Explore bringing in new investors if feasible to increase capital.

3. Asset Utilization and Valuation:

   • Review investment property performance to ensure it generates sufficient rental income or capital appreciation.
   • Consider asset sales or refinancing options if liquidity remains constrained.

4. Cost Control and Operational Efficiency:

   • Monitor and control overheads carefully given the small scale of operations.
   • Maintain lean staffing and administration expenses.

5. Financial Planning and Monitoring:

   • Implement regular cash flow forecasting to anticipate and manage liquidity needs.
   • Engage with professional advisors to optimize tax and financing structure.

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Medical Analogy Summary

The company’s financial "pulse" is weak, with a "healthy cash flow" currently compromised by a "symptom of liquidity distress" — negative working capital. The "equity immune system" is fragile, making the company susceptible to financial "infections" like market downturns or unexpected expenses. Early intervention to "strengthen the financial heart" (cash flow and equity) is essential to prevent progression to critical "financial illness."

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