MORRE INTERIORS LIMITED
Company number 12359149 · 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.
Commercial Credit Assessment: MORRE INTERIORS LIMITED
1. Credit Opinion: CONDITIONAL
Reasoning: This company presents a mixed credit profile. While demonstrating strong revenue growth evidenced by significant asset expansion (total assets grew 27% from £587,985 to £749,257 year-on-year), the balance sheet is dangerously thin with net assets of just £102 and negative working capital of (£14,600). The extraction of £238,038 via related party loans from shareholders, whilst being reduced, represents a material concern given the minimal equity cushion. The construction installation sector carries inherent cyclical risk, and this business lacks the financial resilience to weather a meaningful downturn. Credit may be extended but only with appropriate safeguards.
2. Financial Strength
Balance Sheet Analysis:
| Metric | 2024 | 2023 | Movement |
|---|---|---|---|
| Total Assets | £749,257 | £587,985 | +27% |
| Total Liabilities | £717,462 | £551,370 | +30% |
| Net Assets | £102 | £188 | -46% |
| Shareholders' Funds | £102 | £188 | -46% |
Key Concerns:
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Near-zero equity: Net assets of £102 on a balance sheet of £749,257 represents an equity ratio of 0.01%. This provides virtually no buffer against losses or asset write-downs.
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P&L reserve deterioration: The profit and loss account fell from £88 to £2, indicating the company likely recorded a loss in 2024 (or adjustments wiped out retained profits). Without the P&L account (directors have opted not to file it), we cannot quantify the exact trading performance.
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Share capital remains minimal: At £100, the shareholders have not injected meaningful permanent capital into the business.
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Long-term creditors: £31,693 falling due after more than one year (down from £36,427), suggesting some modest longer-term borrowing or arrangements.
Positive indicators: Fixed assets are being maintained with £5,497 of additions in the year, suggesting ongoing investment in the business capability.
3. Cash Flow Assessment
Working Capital Position:
| Component | 2024 | 2023 |
|---|---|---|
| Stocks | £293,920 | £144,725 |
| Debtors | £245,321 | £236,462 |
| Cash | £163,621 | £150,436 |
| Total Current Assets | £702,862 | £531,623 |
| Current Liabilities | (£717,462) | (£551,370) |
| Net Current Assets | (£14,600) | (£19,747) |
Current Ratio: 0.98:1 (2024) vs 0.96:1 (2023)
Assessment:
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Negative working capital: The company cannot cover its short-term obligations from current assets alone. It relies on cash flow timing and debtor collections to meet creditor demands. This is a structural vulnerability common in construction but nonetheless concerning.
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Stock doubling: Stocks increased 103% from £144,725 to £293,920. In the construction installation sector, this likely represents work-in-progress on contracts. However, if contracts are delayed or disputed, this inventory could become illiquid.
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Related party loan - critical issue: £238,038 is owed by employee/shareholders (classified within debtors). This represents 33.8% of total current assets. While the loan has reduced by £56,270 from the prior year (£294,308), this remains a significant extraction of funds from a business with negligible equity. If these funds are not recoverable, the company would be technically insolvent.
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Cash position: Cash of £163,621 provides some liquidity headroom, and has grown modestly. However, this must be viewed against £717,462 of current liabilities.
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Debtor days unknown: Without revenue data, we cannot calculate debtor days, but debtors have grown only modestly (3.7%), which is proportionate to the asset growth and suggests reasonable collection practices.
4. Monitoring Points
| Metric | Current Position | Threshold for Concern |
|---|---|---|
| Net Assets | £102 | Falling below zero (insolvency) |
| Net Current Assets | (£14,600) | Further deterioration |
| Related Party Loan | £238,038 | Any increase from current level |
| Current Ratio | 0.98:1 | Falling below 0.90:1 |
| Stock Levels | £293,920 | Continued rapid increase without revenue justification |
| Cash Position | £163,621 | Significant decline |
| Filing Compliance | Up to date | Any overdue filings |
Specific monitoring actions:
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Related party transactions: Require quarterly confirmation that the shareholder loan is not increasing. Any further extraction should trigger immediate review.
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Contract pipeline: The rapid asset growth suggests significant contract wins. Request visibility on forward order book and contract completion schedules to assess whether stock (WIP) will convert to cash.
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Trade creditor ageing: With £717,462 in current liabilities, understand the composition - how much is trade creditors vs. accruals vs. HMRC liabilities. Late payment to subcontractors (common in construction) could indicate cash stress.
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Personal guarantees: Given the £102 net assets, any credit facility should carry personal guarantees from the PSCs (Mr J R Morrell and Mrs N J Morrell).
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Sector conditions: Monitor UK construction sector health, particularly fit-out and installation sub-segment, which is sensitive to commercial property cycles.
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Annual accounts: Continue to review filed accounts for deterioration in net assets, increase in related party loans, or deterioration in working capital.