DMO PROPERTIES LTD

Executive Summary

DMO Properties Ltd is a property management company with a highly leveraged balance sheet but tangible real estate assets. Liquidity and net working capital improved in the latest year, yet the company remains dependent on director capital injections to sustain operations. Conditional credit approval is recommended with close monitoring of cash flow, debt servicing, and ongoing financial support to mitigate risk.

DMO PROPERTIES LTD - Analysis Report

Company Number: 12887525

Analysis Date: 2025-07-20 18:35 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   DMO Properties Ltd shows a very leveraged balance sheet with significant long-term bank loans (£472,500) and other creditors (£260,000) totaling £732,500 due after one year, alongside current liabilities of £3,030. The company holds tangible fixed assets of £665,960 in real estate but maintains very minimal net assets (£4,363) and shareholders' funds (£17,000). The cash position improved to £38,933 in 2024 from £663 in 2023, indicating better liquidity but still modest relative to liabilities. The company is dependent on continued capital injections from the director to maintain going concern status. Credit approval is conditional on monitoring the company’s ability to generate operational cash flow to service debt and on confirmation of ongoing capital support.

2. Financial Strength
   The company's fixed assets consist entirely of freehold land and buildings valued at £665,960, showing no depreciation, which supports asset backing. However, the net asset base is very low (£4,363) due to significant liabilities, particularly bank loans and other creditors totaling over £732,000. The revaluation reserve of £17,000 helps equity but the retained loss of £12,737 indicates accumulated operational deficits. The minimal equity buffer heightens credit risk, as the company’s balance sheet is highly leveraged with limited shareholder funds to absorb potential losses.

3. Cash Flow Assessment
   The cash balance increased significantly to £38,933, a positive sign of improved liquidity, but remains small compared to liabilities. Current assets at £73,933 and current liabilities at £3,030 yield a positive net working capital (£70,903) in 2024, reversing prior years’ negative working capital. However, the company’s accounts note that going concern depends on director capital injections, indicating internal cash generation is insufficient to cover debt servicing. The presence of a bank loan with 1.15% monthly interest further pressures cash flow. Working capital improvements are encouraging but require close monitoring.

4. Monitoring Points

• Cash flow from operations: To ensure sufficient liquidity to meet interest and principal repayments without reliance on shareholder funds.
• Debt servicing capability: Particularly focus on the bank loan with high monthly interest charges.
• Changes in net assets and equity: Watch for erosion or improvement in shareholder funds and revaluation reserves.
• Capital injections: Confirm continued director support and timing of any equity or loan advances.
• Debtor collection: Assess recoverability of £35,000 debtors to prevent liquidity strain.
• Market conditions for real estate: As the company’s assets and operations are property-focused, downturns could impact asset values and rental income.