MENDORE LIMITED
Company number 04255831 · 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.
Credit Analysis: MENDORE LIMITED (04255831)
1. Credit Opinion: APPROVE
Reasoning: Mendore Limited presents a strong credit profile underpinned by a robust balance sheet, excellent liquidity, and a demonstrated multi-year trajectory of consistent financial improvement. The company has transformed from an insolvent position in 2016-2017 (negative net assets of £22,745) to a well-capitalised business with £542,843 in net assets as at August 2025. Current liabilities can be covered 2.65 times over by current assets, and cash alone covers near-term obligations. Low bank borrowings and disciplined liability reduction evidence sound financial stewardship. The only caveats are the concentration in trade debtors and the absence of a filed profit & loss account, which limits visibility on margins and revenue trends.
2. Financial Strength
Balance Sheet Summary (Year Ending 31 August 2025):
| Item | £ | Commentary |
|---|---|---|
| Fixed Assets | 236,074 | Predominantly motor vehicles (£153,671) and plant/machinery |
| Current Assets | 546,430 | Strong position |
| Current Liabilities | (206,304) | Well-covered |
| Net Current Assets | 340,126 | Healthy working capital |
| Long-term Creditors | (104) | Negligible |
| Provisions | (33,253) | Requires clarification |
| Net Assets | 542,843 | Substantial and growing |
Key Ratios: - Current Ratio: 2.65x (strong — benchmark adequate is 1.5x) - Quick Ratio: 2.62x (excludes stock; very strong) - Cash Cover Ratio: 1.01x (cash alone covers all current liabilities) - Gearing (Liabilities/Net Assets): 38% (conservative leverage)
Trajectory Analysis: Net assets have grown every year since 2018, from £57,767 to £542,843 — a compound annual growth rate of approximately 38%. This represents a remarkable turnaround from the insolvent position in 2016-2017 and indicates profitable trading consistently reinvested into the business.
Tangible Fixed Assets: The asset base is heavily weighted toward motor vehicles (£153,671 net book value), of which £74,643 relates to assets held under hire purchase. Plant and machinery stands at £52,067. The company made £137,542 in additions during the year, indicating ongoing capital investment. This is a positive signal of management confidence in future trading.
Shareholders' Funds: Entirely composed of share capital (£100) and retained earnings (£542,743), demonstrating that growth has been funded organically through retained profits rather than external equity injections.
3. Cash Flow Assessment
Liquidity Position: - Cash at bank: £208,648 (down from £252,004 in 2024) - Trade debtors: £326,658 (up from £296,404 — a 10.2% increase year-on-year) - Stock: £6,658 (minimal — consistent with a manufacturer operating lean inventory)
Working Capital Quality: Net current assets of £340,126 provide a comfortable buffer. However, trade debtors represent 60% of current assets, which warrants attention. The increase of £30,254 in trade debtors year-on-year could indicate extended payment terms to customers or slower collections. Without revenue data, it is impossible to calculate debtor days precisely, but this should be monitored.
Creditor Position: - Trade creditors: £70,256 (up from £47,126 — a 49% increase) - Taxation and social security: £127,419 (down from £150,664) - HP contracts current: £2,127 (significantly reduced from £36,754 — near repayment completion) - Bank loans/overdrafts: £693 (negligible)
The reduction in HP commitments from £36,754 to £2,127 suggests a major finance obligation has been substantially cleared, freeing future cash flow. The increase in trade creditors may indicate the company is taking slightly longer to pay suppliers, though this could also reflect increased purchase volumes.
Cash Flow Observation: Cash decreased by £43,356 despite net assets growing by £55,317. This is explained by the £137,542 in capital additions and the increase in trade debtors. The operating cash generation appears sufficient to fund investment and still maintain a substantial cash buffer.
4. Monitoring Points
| Metric | Current Position | Concern Level | Watch For |
|---|---|---|---|
| Trade Debtors | £326,658 (60% of current assets) | Medium | Increasing debtor days; bad debt risk; customer concentration |
| Provisions | £33,253 | Medium | Nature of provisions (deferred tax, legal, warranty?) — need clarification |
| Employee Count | 14 (down from 16) | Low-Medium | Revenue impact; whether cost reduction or attrition |
| Motor Vehicle Assets | £153,671 NBV | Low | Disproportionate to business size; resale value risk |
| Revenue Visibility | No P&L filed | Medium | Request management accounts for margin and turnover trends |
| Cash Trend | £208,648 (declining from £252,004) | Low | Monitor if cash continues declining alongside debtor growth |
Recommended Covenants/Conditions (if facility granted): - Minimum cash cover ratio of 1.0x - Net assets not to fall below £400,000 - Monitor trade debtor days quarterly via management accounts - Clarification of provisions nature and expected timing
Positive Indicators to Continue Monitoring: - Continued reduction in HP obligations (now near-complete) - Sustained net asset growth - Strong retained earnings accumulation - No director disqualifications or adverse conduct records - Filing compliance — accounts and confirmation statements up to date