MORGAN PROPERTY (SCOTLAND) LTD

Executive Summary

Morgan Property (Scotland) Ltd maintains a strong asset foundation but displays signs of liquidity strain due to significant current liabilities exceeding current assets. The company’s financial health is supported by group funding and improving equity, yet enhanced cash flow management and formal funding arrangements are critical to sustain financial wellness.

MORGAN PROPERTY (SCOTLAND) LTD - Analysis Report

Company Number: SC702555

Analysis Date: 2025-07-29 15:06 UTC

Financial Health Assessment of MORGAN PROPERTY (SCOTLAND) LTD as at 31 October 2024

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1. Financial Health Score: C+

Explanation:
MORGAN PROPERTY (SCOTLAND) LTD demonstrates a moderate financial condition with strong asset backing but presents some concerning signs in liquidity and working capital management. The company’s net assets have improved year-on-year, reflecting retained earnings growth, but it is operating with significant net current liabilities ("working capital deficit"). This indicates symptoms of financial strain that require attention but are currently managed due to group support. Hence, a grade of C+ reflects a business that is stable but has noticeable stress points.

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2. Key Vital Signs

Vital Sign	Latest Value (2024)	Interpretation
Net Assets (Shareholders’ Funds)	£97,793	Positive net worth, improved from prior years, indicating accumulation of retained earnings and asset growth.
Investment Property Value	£550,000	Significant fixed asset underpinning company value; property is pledged as security for borrowings, providing a solid asset base.
Current Assets	£7,049	Very low current assets, mostly cash (£6,949), indicating limited short-term liquidity.
Current Liabilities	£459,256	Very high short-term obligations, mainly owed to group companies, causing a large working capital deficit.
Net Current Assets (Working Capital)	-£452,207	Negative working capital is a symptom of liquidity stress; short-term debts far exceed liquid assets.
Bank Loans (Short & Long Term)	£0 (2024)	Bank loans fully repaid or refinanced; prior year bank loans (£121,434) removed, reducing external debt burden.
Amounts Owed to Group Undertakings (Current Liabilities)	£443,780	Heavy reliance on intra-group funding to cover liabilities; this is a critical lifeline but a potential risk if support ceases.
Turnover	Not disclosed	Turnover not reported; company is in property letting, so rental income likely stable but not quantified here.
Employees	0	No staff, indicating a lean operation with minimal overheads.

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3. Diagnosis: What the Numbers Reveal

• Strong Asset Backbone: The company’s investment property valued at £550,000 forms a healthy core asset. This property underpins the company’s net worth and has been valued consistently, showing asset value stability.

• Symptoms of Liquidity Stress: The company runs with a substantial negative working capital position, indicating that current liabilities significantly exceed current assets. This is akin to a patient whose immediate cash reserves are insufficient to cover short-term debts—a "cash flow crunch."

• Reliance on Group Support: The bulk of current liabilities are amounts owed to group undertakings (£443,780), suggesting that the company’s liquidity is supported by related parties rather than external creditors or operational cash flow. This is a critical support mechanism but presents risk if group support changes.

• Improving Equity Position: Shareholders’ funds have increased from £65,372 in 2023 to £97,793 in 2024, reflecting retained profits or capital injections. This improvement is a positive sign of financial "recovery" or "healing."

• Debt Reduction: The company has successfully eliminated bank loans between 2023 and 2024, reducing secured debt and interest burden, which is a positive step toward financial health.

• No Turnover or Profit/Loss Reported: The absence of reported turnover and profit/loss statements limits insights into operational performance. However, as a property letting company, rental income presumably contributes to covering costs.

• No Employees: Operating without employees suggests low fixed costs and reliance on directors or external contractors, which can preserve cash flow.

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4. Recommendations: Actions to Improve Financial Wellness

• Improve Liquidity Management: The "symptom" of negative working capital must be addressed. Explore ways to increase current assets through enhanced cash flow management, including timely rent collection and controlling outflows.

• Formalise Group Support Arrangements: Since the company depends heavily on group funding, formalising loan agreements or funding commitments will provide clarity and reduce financial uncertainty.

• Diversify Funding Sources: Consider refinancing or negotiating extended payment terms with creditors to reduce pressure on current liabilities and avoid over-reliance on group companies.

• Regular Financial Reporting: Implement more detailed financial reporting including turnover, profit and loss accounts to better monitor operational performance and diagnose financial health trends proactively.

• Asset Utilisation: Evaluate opportunities to maximise income from investment property, including rent reviews or property enhancements to increase rental yield.

• Contingency Planning: Develop a contingency plan in case group funding is withdrawn; ensure access to external finance or cash reserves to avoid liquidity shocks.

• Monitor Covenants and Security: Since the property is secured to the bank, ensure compliance with loan covenants to avoid triggering defaults.

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Final Summary

MORGAN PROPERTY (SCOTLAND) LTD exhibits a sturdy asset base through its investment property but faces liquidity challenges evidenced by persistent negative working capital and heavy reliance on intra-group funding. While the company’s equity position is strengthening and bank debts have been reduced, liquidity symptoms suggest the need for better cash flow management and formalisation of funding support to ensure ongoing financial stability.