DE GOURNAY LIMITED
Company number 02718451 · Monitor this company
This analysis was written by an AI from the company's public filings. It may contain errors or omissions and is not financial or professional advice.
Financial Health Score: B-
Explanation: The company presents a structurally sound balance sheet—positive and growing equity, substantial cash reserves, and no external bank debt—comparable to a patient with strong bone density and stable vital signs. However, recent indicators show weakening: turnover and profit have declined for two consecutive years, gross margin has narrowed slightly, and the audit opinion is qualified over the recoverability of a significant director-related debtor balance. This combination supports a “B-” grade: fundamentally healthy, but requiring close monitoring and targeted treatment.
Key Vital Signs
| Vital Sign | Latest Reading | Interpretation |
|---|---|---|
| Turnover (revenue) | £14.80m (2025), down from £15.99m in 2024 and £17.34m in 2023 | The company’s “appetite” is declining. Sales have contracted for two years, with third-party sales falling more sharply (£11.55m to £9.68m). This suggests demand or market-share pressure rather than an immediate crisis, but it is a clear downward trend. |
| Profitability | Profit before tax £406k (2025), roughly halved from £802k in 2024; gross margin 46.8% vs 48.2% | The body is burning less efficiently. Profitability has compressed significantly even though gross margins remain healthy in absolute terms. Operating costs or overheads appear to be outpacing revenue. |
| Cash and liquidity | Cash at bank £2.87m (2025), up from £1.04m in 2024; no external debt stated | Blood circulation is strong. The company holds substantial cash and owes no external bank debt, giving it short-term resilience. Cash more than doubled during the year despite lower profits, suggesting working-capital movements or timing of receipts and payments. |
| Solvency (net assets) | £6.86m (2025), up from £6.50m in 2024 and £44k in 2016 | Bone density is excellent and improving over the long term. Shareholders’ funds have grown consistently over nearly a decade, indicating retained profits have been reinvested rather than distributed. |
| Audit opinion | Qualified opinion on recoverability of £4.26m owed by companies related to a director (included in other debtors due within one year) | An inconclusive test result on a significant item. This balance equals roughly 62% of net assets. If a portion proves unrecoverable, it would materially weaken the balance sheet. The auditor nevertheless confirms the going-concern basis is appropriate. |
| Filing compliance | Accounts and confirmation statement up to date; no overdue filings | No compliance “fever”; the company meets its statutory obligations. |
Diagnosis
Overall condition: Stable but requiring monitoring.
The company is not in distress. It has no external debt, positive and growing equity, and strong cash reserves. The auditor has not identified a material uncertainty about going concern. However, the clinical picture shows several symptoms:
- Revenue contraction: Two consecutive years of falling turnover suggest the business model is facing headwinds (the strategic report references prevailing economic and geo-political circumstances).
- Profit compression: Profit before tax fell by about half year-on-year, indicating cost pressures or pricing pressure.
- Concentration and recoverability risk: The £4.26m director-related debtor balance is a large exposure relative to equity. The accounts state that the auditor received confirmations of the balances but could not obtain sufficient evidence to verify recoverability in full. This is the most material financial risk identified.
- Foreign exchange exposure: International operations create FX risk, and the company does not currently use hedging beyond maintaining funds in multiple currency accounts.
No allegations of wrongdoing are made or implied; the audit qualification is a limitation on evidence, not a finding of impropriety.
Prognosis
Short-term outlook: Guarded but stable.
The company can meet its obligations as they fall due, supported by cash reserves and no external debt. The going-concern basis remains appropriate per the auditor.
Medium-term outlook: Dependent on two variables.
1. Resolution of the director-related debtor balances. If impairment is required, net assets could fall sharply—a full write-off would reduce equity by roughly 62%, though the company would likely remain solvent.
2. Revenue recovery. Without sales growth, continued profit compression may erode the cash buffer over time.
Long-term: The historical record shows the company can grow from a small base to a multi-million-pound business. If management can stabilise turnover and resolve the outstanding receivables, the prognosis improves.
Recommendations
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Resolve the related-party receivables (priority). Formalise recovery efforts, obtain independent valuations or security where possible, and consider whether a provision for impairment is prudent. The board should document its assessment of recoverability to address the audit qualification in the next reporting cycle.
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Protect the revenue line. Investigate the causes of the 7.5% turnover decline and the sharper fall in third-party sales. Consider targeted marketing, pricing review, or expansion into newer markets, as noted in the strategic report.
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Manage foreign exchange risk. Given international operations and no hedging, evaluate simple hedging tools or currency matching to reduce earnings volatility.
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Preserve liquidity. Maintain the strong cash position. Avoid taking on external debt unless clearly needed for growth, and monitor working-capital cycles closely.
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Review dividend and capital policy. No dividends were paid in 2025. With cash reserves building and retained profits available, the board should articulate a clear policy on profit distribution versus reinvestment.
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Strengthen cost control. Since gross margin remains healthy but profit before tax halved, review overheads and operating expenses to identify efficiencies.