DVTDIGITAL LTD

Executive Summary

DVTDIGITAL LTD exhibits weak financial health marked by persistent negative net current assets and shareholders deficits, heavily reliant on parent company support for its going concern. Despite some cash improvements, the company’s inability to cover current liabilities independently poses a high credit risk. Credit facilities are not recommended without substantial guarantees or improvements in financial performance.

DVTDIGITAL LTD - Analysis Report

Company Number: 12958212

Analysis Date: 2025-07-29 12:59 UTC

1. Credit Opinion: DECLINE
   DVTDIGITAL LTD demonstrates persistent and significant net current liabilities and shareholders deficits, indicating weak financial health and high risk in servicing debt obligations. The company’s working capital remains negative (£-105k in 2024), and the shareholders’ funds have deteriorated from £-135.6k in 2023 to £-105.1k in 2024, albeit showing a slight improvement. The company relies heavily on financial support from its immediate parent, Dynamic Visual Technologies Ltd, as noted in the going concern statement, which raises concerns about its standalone viability. Without stronger cash flow generation or equity injection, the risk of default is elevated. Therefore, credit facilities should be declined or only considered with significant credit enhancement or guarantees.

2. Financial Strength:
   The balance sheet reveals a small share capital (£100) and a substantial accumulated deficit (P&L reserve negative by over £105k). Current assets (£68k) are insufficient to cover current liabilities (£174k), resulting in net current liabilities of £-105k. No fixed assets are reported, limiting collateral value. The company’s reliance on related party balances (loans from group companies of £169k) further underscores its dependence on the parent group for liquidity support. The trend over four years shows ongoing losses and increasing liabilities relative to assets, indicating a fragile financial structure and limited resilience to economic downturns.

3. Cash Flow Assessment:
   Cash at bank increased to £50.8k in 2024 from £36.9k in 2023, indicating some improvement in liquidity. However, the company’s current liabilities remain high, and net working capital is negative. Debtors have decreased to £17.6k from £23.1k, which might reflect tighter credit control or lower sales. The absence of profitability data limits a full cash flow analysis, but the negative net current assets and ongoing losses suggest cash flow from operations is insufficient to cover short-term obligations without external funding.

4. Monitoring Points:

• Watch for changes in net current liabilities and shareholders funds to assess if financial health improves.
• Monitor related party balances for increases that may indicate ongoing reliance on parent company support.
• Track cash balances and debtor collections to ensure liquidity does not deteriorate further.
• Review any forthcoming audited accounts with profit and loss data for signs of operational improvement or further losses.
• Observe management’s strategy for achieving profitability and reducing deficits, including possible capital injections or cost controls.