DOMINUS TECH LTD.

Executive Summary

Dominus Tech Ltd. has made a notable financial recovery in the year ending March 2024, moving from negative net assets and poor liquidity to a cautiously healthy position with positive working capital and net assets. However, accumulated losses and reliance on directors' loans highlight ongoing challenges. Focused efforts on profitability, cash flow management, and equity strengthening are recommended to support sustained financial wellness.

DOMINUS TECH LTD. - Analysis Report

Company Number: 12576673

Analysis Date: 2025-07-19 12:23 UTC

Financial Health Assessment for DOMINUS TECH LTD. as of 31 March 2024

---

1. Financial Health Score: C

Explanation:
The company has shown a dramatic turnaround from a distressed state to a cautiously stable position within one year. While the latest accounts reveal a positive net asset position and healthy working capital, the historical losses and reliance on directors' loans indicate underlying vulnerabilities. This score reflects a company that has made a significant recovery but still faces challenges typical of a young, small enterprise in a competitive sector.

---

2. Key Vital Signs

Metric	2024 Value	Interpretation
Net Assets	£20,480	Positive net assets indicate the company’s resources exceed its liabilities—sign of solvency.
Net Current Assets (Working Capital)	£19,957	Healthy positive working capital suggests short-term liquidity is good—cash flow appears sound.
Cash at Bank	£15,392	Strong cash balance relative to liabilities—company has a cash buffer for operations.
Debtors	£15,469	High receivables may indicate reliance on credit sales; efficient collection needed.
Current Liabilities	£10,904	Mainly directors’ loans, which can be flexible but also a risk if not repaid timely.
Shareholders’ Funds	£20,480	Reflects equity funding; turnaround from negative equity in prior years is a positive sign.
Share Capital	£1,000	Nominal share capital typical for a small private company, no significant equity injection seen recently.
Profit and Loss Account (Retained Earnings)	-£42,469	Accumulated losses remain substantial; company has not yet returned to profitability.
Average Employees	3	Small team size consistent with a micro or small company classification.

---

3. Diagnosis: What the Financial Data Reveals

• Symptoms of Past Financial Distress:
  From 2020 to 2023, the company’s balance sheet showed negative net assets and negative working capital. This "symptom of distress" reflected ongoing losses and insufficient liquidity, putting solvency at risk.

• Signs of Recent Recovery:
  The 2024 financials show a marked improvement: net assets turned positive (£20,480), and working capital swung from negative to positive (£19,957). Cash reserves increased nearly fivefold. This suggests a recent capital injection or improved operational cash flow, indicating a healthier liquidity position and stronger solvency.

• Reliance on Directors’ Loans:
  A significant portion of current liabilities (£10,904) are directors’ loans, which often serve as an informal funding lifeline. While flexible, this reliance signals that external financing or profitability has not yet fully sustained the business.

• Profitability and Earnings Quality:
  The retained earnings remain deeply negative (-£42,469), showing the business has accumulated losses over time and is not yet profitable. This points to an ongoing need to improve operational performance and generate sustainable profits.

• Asset Base:
  Fixed assets are minimal (£523), typical for a consultancy/IT services firm where human capital is key. This low capital intensity implies less risk tied up in illiquid assets but also fewer collateral options for financing.

• Business Model Indicators:
  The company operates in management consultancy and IT services, sectors that often have variable cash flow and depend on client contracts and receivables management. The relatively high debtor balance (£15,469) relative to turnover history suggests receivables management is crucial to maintain liquidity.

---

4. Recommendations: Specific Actions to Improve Financial Wellness

1. Improve Profitability:
   Focus on increasing revenues and controlling costs to move the profit and loss account from negative to positive territory. Consider reviewing pricing, client acquisition strategies, and service delivery efficiency.

2. Strengthen Cash Flow Management:
   Tighten credit control and reduce debtor days to convert outstanding invoices into cash more rapidly. Healthy cash flow is the heart of financial wellness—"healthy cash flow" prevents liquidity crises.

3. Reduce Dependence on Directors’ Loans:
   Explore formal financing options (bank loans, equity investment) to reduce reliance on informal director funding and improve financial stability and governance.

4. Build Equity Capital:
   Consider new equity injections or retained earnings accumulation to strengthen the balance sheet and provide a buffer against future shocks.

5. Regular Financial Monitoring:
   Implement monthly or quarterly financial reviews focusing on cash flow, working capital, and profitability metrics to detect early "symptoms of distress" and respond swiftly.

6. Strategic Planning:
   Develop a clear business plan targeting growth in high-margin services within IT consultancy and management consultancy to leverage sector opportunities and enhance revenue quality.

---

Medical Analogy Summary

DOMINUS TECH LTD. was recently in a state of "financial illness" marked by negative net assets and strained liquidity—akin to a patient with low blood pressure and poor organ perfusion. The latest accounts indicate a significant "recovery," with improved liquidity ("healthy cash flow") and positive net assets, suggesting the company is now in a stable condition but still convalescing. Ongoing attention to profitability and reducing dependence on informal funding is essential to ensure full financial health and prevent relapse.

---