PDR-DRAUGHTING LTD

Executive Summary

PDR-DRAUGHTING LTD is currently facing liquidity challenges and has a negative net asset position, indicating financial distress despite ongoing operations. The company shows symptoms of a working capital deficit and eroded equity, requiring urgent attention to cash flow management and capital strengthening. With focused corrective actions, including improved liquidity, cost control, and potential capital injection, the company can stabilize its financial health and improve its outlook.

PDR-DRAUGHTING LTD - Analysis Report

Company Number: 13510240

Analysis Date: 2025-07-29 16:40 UTC

Financial Health Assessment for PDR-DRAUGHTING LTD

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1. Financial Health Score: D

Explanation:
PDR-DRAUGHTING LTD exhibits clear symptoms of financial distress, primarily due to a persistent negative net current asset position (working capital deficit) and negative shareholders' funds in the latest financial year. While the company remains active and the director expresses confidence in continued support, the balance sheet shows signs of strain. This results in a below-average financial health grade, indicating caution and a need for corrective action.

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2. Key Vital Signs

Metric	2023 (£)	2022 (£)	Interpretation
Fixed Assets	17,236	18,906	Relatively stable long-term asset base.
Current Assets	7,286	21,566	Significant drop indicating reduced liquid resources.
Current Liabilities	36,462	40,326	Slight reduction but still high relative to current assets.
Net Current Assets	-29,176	-18,760	Negative working capital worsening, indicating liquidity stress.
Total Assets Less CL	-11,940	146	Shift from marginally positive to negative net assets.
Shareholders' Funds	-11,940	146	Negative equity signals accumulated losses or funding gaps.

Interpretation of Vital Signs:

• The company's "heart" of liquidity—current assets—has shrunk sharply while short-term obligations remain substantial. This "poor pulse" suggests difficulty meeting immediate financial commitments.
• Negative net current assets ("working capital deficit") is a classic symptom of financial strain, akin to a patient having insufficient blood flow to vital organs.
• The drop from positive to negative shareholders' equity is a critical warning sign, indicating that liabilities now exceed total assets, which can threaten solvency.
• Fixed assets remain stable, but this "structural support" is insufficient to offset current financial pressures.

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3. Diagnosis

Underlying Business Health:
PDR-DRAUGHTING LTD is currently experiencing financial distress characterized by liquidity challenges and erosion of net worth. The "symptoms" suggest the company is operating with a cash flow crunch, potentially relying on director support or external funding to sustain operations. The director's note on preparing accounts on a going concern basis "notwithstanding" net current liabilities implies awareness of these issues and reliance on continued backing.

The industry focus on "Other engineering activities" may involve project-based revenue with fluctuating cash inflows, which can exacerbate working capital pressures.

Given the micro company status and minimal staffing (average 2 employees), the scale of operations is small, which might limit financial flexibility.

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4. Recommendations

To restore financial wellness and mitigate risks, the company should consider the following actions:

1. Improve Liquidity:

   • Accelerate collection of receivables and reduce inventory levels if applicable.
   • Negotiate extended payment terms with suppliers to ease short-term cash flow.
   • Consider short-term financing solutions (e.g., overdrafts, invoice financing) cautiously to bridge gaps.

2. Strengthen Equity Base:

   • The director or shareholders could inject additional capital or convert loans into equity to restore positive net worth.
   • Explore grants or government funding schemes relevant to engineering SMEs.

3. Cost Control and Profitability:

   • Review operational expenses to identify areas for cost savings.
   • Focus on securing profitable contracts with clear payment terms to enhance cash generation.

4. Financial Planning and Monitoring:

   • Implement regular cash flow forecasting and budgeting to anticipate liquidity issues early.
   • Prepare contingency plans for adverse scenarios.

5. Seek Professional Advice:

   • Engage with an accountant or financial advisor for tailored restructuring or turnaround strategies.
   • Consider early dialogue with creditors if financial pressures intensify.

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Executive Summary