Financial Health Assessment: DOMO PROPERTIES LIMITED

1. Financial Health Score: E

Explanation: The company is technically insolvent on a balance sheet basis, with liabilities exceeding assets by nearly £110,000. It survives only through the grace of a related-party creditor and the director's own property valuation. This is a patient in critical condition, kept alive by life support from the wider group structure.

2. Key Vital Signs

Blood Pressure — Solvency

Reading: The company's net assets have been negative since 2018 and are deteriorating at an accelerating rate. The P&L reserve worsened by approximately £42,000 in 2024 alone — representing ongoing trading losses bleeding the business dry. This patient has been in a state of chronic insolvency for seven years.

Heart Rate — Liquidity

Reading: The current ratio of 0.017 is critically low — for every £1 of short-term obligations, the company has less than 2p in liquid assets. The working capital deficit of over £600,000 means the company cannot possibly meet its current liabilities from its own resources. Cash has also declined by 27% year-on-year. The circulatory system is failing.

Cholesterol — Leverage & Debt Structure

Reading: Total liabilities of approximately £1.295 million sit against total assets of £1.185 million. The debt structure reveals a heavy reliance on two sources: - Bank loan (£678,738): Secured by a charge over the investment property — this is the "blocked artery" that cannot be shifted without property disposal. - Related-party loan (£600,919): Interest-free and repayable on demand — this is the "ventilator" keeping the company breathing. If this support were withdrawn, immediate insolvency would follow.

The related-party loan increased by £34,400 during 2024, suggesting the company required additional group funding to stay afloat.

BMI — Asset Quality

Reading: The investment property represents 99.1% of total assets. This extreme concentration means the company's entire financial health rests on a single asset. Critically, this valuation was carried out by a director — not an independent RICS-qualified valuer. If the property is worth even 10% less than stated, total assets would fall to £1,067,976, pushing net liabilities to approximately (£227,180).

3. Diagnosis

Chronic Insolvency with Group-Dependent Life Support

The financial data reveals a company that has been technically insolvent for the majority of its existence (since at least 2018). The underlying business model appears to be a property investment vehicle that generates insufficient rental income to cover its financing costs, resulting in persistent annual losses.

Key Pathologies Identified:

1. Persistent Losses: The P&L reserve has deteriorated from (£9,511) in 2018 to (£126,197) in 2024 — cumulative losses of over £116,000 over six years. The business is hemorrhaging value.

2. Going Concern Dependency: The company can only continue as a going concern because: - The related-party creditor (£600,919 owed) has not demanded repayment - The loan is interest-free, removing a significant cost burden - No independent property valuation challenges the asset side

3. Related-Party Dominance: The inter-company loan represents 97.6% of current liabilities and 46.4% of total liabilities. The entire financial structure is dependent on the continued forbearance of a related entity.

4. Minimal Shareholder Investment: With only £3 in share capital, the shareholders have invested virtually nothing at risk. The £16,514 non-distributable reserve appears to be the original investment premium, meaning total equity contribution is just £16,517 against liabilities of nearly £1.3 million.

5. No Revenue Visibility: The accounts show no turnover figure (directors elected not to include the profit and loss account), zero employees, and minimal trade creditors. This raises questions about whether the property is generating meaningful rental income.

4. Recommendations

Immediate Treatment (Critical Priority)

1. Obtain Independent Property Valuation: The director-performed valuation is a significant governance concern. An independent RICS Red Book valuation should be obtained immediately to establish the true asset value and determine whether the secured bank loan is adequately covered.

2. Going Concern Assessment: Directors must formally assess and disclose whether the company can continue as a going concern. Written confirmation from the related-party creditor that the loan will not be called within 12 months is essential.

3. Review Banking Covenants: With a bank loan of £678,738 secured on the property, any breach of loan covenants (likely given negative net assets) could trigger repayment demands. Directors should proactively engage with the lender.

Medium-Term Recovery Plan

4. Convert Related-Party Loan to Equity: The £600,919 inter-company loan should be partially or fully converted into equity. This would: - Reduce current liabilities substantially - Improve the net asset position - Demonstrate commitment from the group structure

5. Assess Property Income Generation: If the property is not generating sufficient rental income to cover costs, consider: - Re-letting at market rates - Property disposal to realise value and clear debts - Refinancing at more favourable terms

6. Improve Financial Governance: Consider appointing an independent non-executive director and obtaining voluntary audit to strengthen stakeholder confidence.

Preventive Health Measures

7. Cash Flow Forecasting: With only £7,046 in cash, the company has virtually no buffer for unexpected expenses. A 12-month rolling cash flow forecast should be implemented.

8. Monitor Related-Party Position: The increasing related-party loan (up £34,400 in 2024) suggests the company cannot fund itself. This trend must be reversed or formally structured.

Prognosis

Guarded to Poor. Without material changes, this company will continue to accumulate losses and remain dependent on group support. The property valuation is the linchpin — if it is accurate and the property market remains stable, the bank loan is covered at approximately 58% loan-to-value. However, any downward revaluation of the property would immediately deepen the insolvency. The company is viable only as part of the wider group structure; as a standalone entity, it would not survive.