MONTRENT LTD

Executive Summary

Montrent Ltd has shown a modest recovery in net assets but continues to face significant working capital and liquidity challenges, primarily due to current liabilities exceeding current assets and reliance on director loans. Conditional approval is recommended, with close monitoring of cash flow, debtor collections, and the director loan position to mitigate credit risk. The company’s financial strength remains fragile given its minimal equity base and operational scale.

MONTRENT LTD - Analysis Report

Company Number: 13802354

Analysis Date: 2025-07-29 20:32 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Montrent Ltd shows a modest improvement in net assets from a negative £2.7k in 2023 to a positive £2.9k in 2024, indicating a turnaround but still reflecting a very thin equity base. The company operates in the employment placement sector (SIC 78109) and is relatively new (incorporated 2021). The presence of a significant director loan balance (£67.8k) unsecured and interest-free signals reliance on director funding, which may pose liquidity risk. Current liabilities exceed current assets by £43.7k, evidencing working capital pressure. Approval is conditional on monitoring cash flow closely and ensuring the director loan position does not worsen.

2. Financial Strength:
   The company’s balance sheet remains weak with net current liabilities of £43.7k despite a small positive net asset position of £2.9k. Fixed assets are primarily investments (£46.1k) that have remained stable. The small issued share capital (£1) reflects minimal equity injection. The large director loan (negative balance of £67.8k) is a key liability that is interest-free and repayable on demand but may impair financial flexibility. The turnaround from negative equity in previous years is a positive sign but overall financial strength is fragile.

3. Cash Flow Assessment:
   Cash on hand is low at £8.9k and current liabilities are substantial at £89.1k, resulting in negative working capital. Debtors increased significantly to £36.6k, partly due to a large "other debtors" balance of £30k, which could be related party or director advances and needs validation. The company’s ability to generate sufficient operating cash flows to meet short-term obligations is currently limited. The director loan provides some buffer but represents a risk if not managed properly.

4. Monitoring Points:

• Track working capital and ensure timely collection of debtors, especially the large other debtors balance.
• Monitor cash flow and liquidity ratios to avoid cash shortfalls.
• Observe any changes in director loan balances and repayment terms.
• Review ongoing profitability and net asset movement in future accounts filings.
• Confirm no adverse changes in business contracts or sector demand that may impair revenue streams.