Company Number: 13218075

Analysis Date: 2025-07-20 13:48 UTC

1. Credit Opinion: DECLINE
   DMI Draincare & Groundworks Ltd shows persistent negative net assets and net current assets over three consecutive years, indicating ongoing financial distress and insufficient working capital to meet short-term liabilities. The company’s liabilities exceed assets by £10,145 as of February 2024, despite acquiring motor vehicle fixed assets valued at £8,579. The current liabilities of £22,600 significantly outweigh available cash (£3,876), with a negative working capital position (-£18,724). The company relies on director loans (£12,620) and finance lease obligations (£9,980), which adds financial risk. The absence of employees and limited turnover data suggests minimal operational scale or growth, compounded by recent management changes and a name change indicating possible restructuring or pivot. Given these factors, the company is not currently able to reliably service new credit facilities or loans without substantial improvement in financial position and cash flow.

2. Financial Strength:
   The balance sheet reflects weak financial health. Negative shareholders’ funds and net liabilities indicate accumulated losses eroding equity. The tangible fixed asset addition (motor vehicle) is the only positive asset addition, but no depreciation charged yet, suggesting recent purchase. Persistent negative working capital and reliance on director loans and hire purchase finance highlight vulnerability to liquidity shocks. No retained earnings or reserves are available to buffer downturns. Overall, the equity base is insufficient to support significant borrowing or credit exposure.

3. Cash Flow Assessment:
   Cash at bank is low (£3,876) compared to current liabilities (£22,600), signaling liquidity strain. Negative net current assets point to an inability to cover short-term debts from current assets. The company has no employees and appears to operate with minimal cash inflows; no profit and loss data is provided but losses are implied by negative equity. Dependency on director loans and finance leases indicates cash flow challenges and potential reliance on related party funding. This weak liquidity profile limits the company’s ability to withstand operational or market disruptions.

4. Monitoring Points:

• Improvement in net current assets and positive working capital
• Profitability trends and accumulation of retained earnings
• Reduction in director loans and hire purchase obligations
• Cash flow from operations and ability to generate positive free cash flow
• Stability in management and business model post name change and director transition
• Timely filing and compliance with Companies House requirements