DREWGUNN PROPERTIES LTD

Executive Summary

Drewgunn Properties Ltd is currently experiencing financial distress characterized by negative working capital, a deficit in net assets, and liquidity challenges due to high short-term liabilities and depleted current assets. Without immediate measures to improve liquidity and restructure debt, the company risks insolvency. Proactive management of cash flow, capital injection, and creditor negotiations are critical to restoring financial health.

DREWGUNN PROPERTIES LTD - Analysis Report

Company Number: 13296831

Analysis Date: 2025-07-29 19:15 UTC

Financial Health Assessment of Drewgunn Properties Ltd

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1. Financial Health Score: D (At Risk)

Explanation:
The company shows a concerning financial condition characterized by persistent net current liabilities, negative net assets, and a shrinking equity base. While it is operational and not in liquidation, the financial "vital signs" suggest symptoms of financial distress requiring urgent attention to avoid further deterioration.

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2. Key Vital Signs

Metric	2024 (£)	Interpretation
Fixed Assets	977,437	Indicates substantial investment in long-term property assets, a positive but illiquid asset.
Current Assets	0	No short-term liquid assets available to cover immediate expenses — a red flag.
Current Liabilities	992,725	High short-term debts due within a year, representing liquidity pressure.
Net Current Assets	-992,725	Negative working capital, symptomatic of cash flow strain and potential liquidity crunch.
Net Assets (Equity)	-15,288	Negative shareholder equity, signifying liabilities exceed assets—a "symptom" of insolvency risk.
Share Capital	2.00	Minimal equity capital, indicating limited owner investment buffer.
Average Employees	2	Small operational scale consistent with micro-entity classification.

Additional Notes:

• The company’s net assets have remained negative over the last three years, worsening slightly from (£15,619) to (£15,288), indicating no real recovery.
• The balance sheet shows a significant increase in current liabilities from previous years, nearly doubling from £586k to £992k, while current assets have been depleted to zero, worsening liquidity.
• The company holds a micro-entity filing status with minimal reporting obligations, limiting detailed cash flow data but the working capital figures point to liquidity risk.

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3. Diagnosis

Drewgunn Properties Ltd's financial "symptoms" indicate a company struggling with liquidity and solvency challenges:

• Liquidity Distress: The absence of current assets to cover current liabilities means the company may struggle to meet short-term obligations as they fall due, akin to a patient with a dangerously low blood pressure requiring immediate intervention.
• Solvency Concerns: Negative net assets reflect a balance sheet "imbalance" where debts exceed the value of owned assets, signaling a weakened financial foundation.
• Asset Concentration Risk: Heavy reliance on fixed assets (property) means the company’s value is tied up in illiquid assets that cannot be quickly converted to cash to remedy short-term cash flow issues.
• Operational Scale: With only 2 employees and micro categorization, the company is small but the financial stress is disproportionate to its size, suggesting potential operational inefficiencies or financing structure issues.

Overall, Drewgunn Properties Ltd presents with the "symptoms of distress" commonly seen in companies facing cash flow insufficiency and potential solvency pressure. If left unaddressed, these could lead to formal insolvency procedures.

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4. Recommendations

To restore financial wellness and stabilize its condition, Drewgunn Properties Ltd should consider the following:

1. Improve Liquidity Position:

   • Seek short-term financing or overdraft facilities to cover immediate liabilities.
   • Negotiate extended payment terms with creditors to ease cash outflows.
   • Dispose of non-core or underperforming assets if possible to generate cash.

2. Reassess Capital Structure:

   • Consider injecting new equity capital to bolster shareholder funds and improve solvency ratios.
   • Explore restructuring existing debt to more manageable terms or longer maturities.

3. Enhance Cash Flow Management:

   • Implement rigorous cash flow forecasting and monitoring to identify potential shortfalls early.
   • Tighten control over receivables and payables to optimize working capital.

4. Operational Review:

   • Evaluate operating expenses and employee costs relative to revenue generation to improve profitability.
   • Explore opportunities to increase revenue streams from property lettings or related activities.

5. Professional Advisory:

   • Engage financial and insolvency advisors promptly to develop a turnaround plan and avoid insolvency risk.
   • Regularly review and update financial strategies based on market and operational changes.

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