Risk Analysis: DPGS LIMITED (02888940)

1. Risk Rating: HIGH

Justification: The company is balance sheet insolvent with negative shareholders' funds of £163,985 and has sustained this position for at least nine consecutive years. It is entirely dependent on related party creditors who are owed £211,561, with no visible means of repayment. While currently dormant, the structural insolvency and lack of any revenue-generating capacity present significant financial risk.

2. Key Concerns

Concern 1: Structural Insolvency

Shareholders' funds have remained at (£163,985) since at least 2017, with retained losses of (£238,985) against share capital of just £75,000. Current liabilities of £211,561 vastly exceed current assets of £47,576, creating net current liabilities of (£163,985). The company has no revenue, no employees, and no apparent means to service or repay these obligations.

Concern 2: Related Party Dependency

The entire creditor balance of £211,561 is owed to a related company where directors S S Kandola and G Dhaliwal also hold positions. The company's continued existence is entirely contingent upon this related party not demanding repayment. If this creditor were to call in the debt, the company would be unable to meet its obligations and would face compulsory liquidation.

Concern 3: Static Financial Position Over Extended Period

The balance sheet figures have remained identical for at least nine years (2017-2025), which is highly unusual. While dormant company status may explain limited movement, the complete absence of any change—including to the related party debtor of £25,537—raises questions about whether the accounts faithfully represent ongoing economic arrangements or whether inter-company balances remain properly reconciled and recoverable.

3. Positive Indicators

• Compliance: Accounts and confirmation statements are filed on time with no overdue filings, demonstrating administrative diligence.
• Longevity: The company has been registered for over 30 years (incorporated 1994), suggesting stability in its corporate structure.
• Dormant Status Acknowledged: The company has properly declared its dormant status, and the accounts explicitly state the entity was dormant throughout the period, providing transparency about the lack of trading activity.
• No Disqualification Orders: There are no recorded director disqualifications for the officers listed.
• Parent Company Structure: The existence of an immediate parent (DPMK Limited) and controlling shareholder (Dough Trading Limited) may indicate this entity serves a specific purpose within a wider group, and inter-company debts may be managed at group level.

4. Due Diligence Notes

Priority Investigations:

1. DPMK Limited and Dough Trading Limited: Examine the financial health of the parent and major shareholder. If these entities are also under financial stress, the willingness and ability to continue supporting DPGS Limited must be questioned. The duplicate PSC entry for Dough Trading Limited should also be clarified.

2. Nature of the £211,561 Related Party Creditor: Determine whether this is an interest-bearing loan, trading balance, or capital contribution disguised as debt. If it could be recharacterised as equity, the insolvency position may be less severe than presented. Confirm whether this debt is subordinated or has any formal repayment terms.

3. Recoverability of the £25,537 Related Party Debtor: This amount has remained static for multiple years. Assess whether this represents a genuine recoverable balance or an irrecoverable balance that should be written off, which would further erode shareholders' funds.

4. SIC Code Discrepancy: The registered SIC code (56103 - Take-away food shops and mobile food stands) is inconsistent with dormant status and no described principal activity. Clarify whether this is a legacy classification or whether there are plans to reactivate trading.

5. Group Structure Purpose: Understand why a dormant, insolvent entity is being maintained within the group. This may have legitimate tax or structural reasons, but could also indicate potential preference or transaction at undervalue risks if the company were to enter formal insolvency.

6. Director Interests: Map all directorships held by S S Kandola and G Dhaliwal to understand the full scope of related party transactions and potential conflicts of interest.