MORRIS AND GRAHAM LTD

Executive Summary

Morris and Graham Ltd has moved from a difficult financial position with negative net assets to a positive net asset and working capital position in the latest financial year, indicating improved solvency and liquidity. However, the company’s short operating history with prior deficits and significant creditor turnover warrants careful scrutiny of creditor relationships and cash flow sustainability. Regulatory compliance appears sound with no overdue filings, supporting operational stability at this stage.

MORRIS AND GRAHAM LTD - Analysis Report

Company Number: 13127942

Analysis Date: 2025-07-20 13:57 UTC

1. Risk Rating: MEDIUM
   Morris and Graham Ltd has demonstrated a significant turnaround in financial position as of the latest accounts (year ended 31 March 2024), moving from net liabilities to net assets. However, the company is relatively young (incorporated 2021) and showed negative net assets in prior years, which introduces some caution. The current positive net asset position and working capital are encouraging but warrant monitoring over time.

2. Key Concerns:

• Historical negative net assets and shareholders’ funds for the first three years of operation (2021-2023) indicate past solvency challenges, which may reflect initial losses or capital structure issues.
• Significant reduction in current liabilities from £295k in 2023 to £25k in 2024, largely due to removal of large creditor balances, raises questions about creditor relationships and payment terms; it is important to verify whether this reflects real debt settlement or restructuring.
• Dividend payments of £38,973 in 2024 despite the prior years’ losses and recent turnaround may pressure liquidity and operational cash flow, potentially reducing reserves needed for business stability.

3. Positive Indicators:

• The company reported net current assets of £42,874 and net assets of the same amount in 2024, reversing previous deficits, which suggests improved financial health.
• Cash on hand increased significantly to £27,730 from £4,353 the previous year, indicating better liquidity management.
• No overdue filing deadlines for accounts or confirmation statements suggest good regulatory compliance and governance practices.
• Directors have been in place since incorporation without indication of disqualifications or compliance issues.

4. Due Diligence Notes:

• Investigate the nature and resolution of the large creditor balances recorded in 2023 and their removal in 2024 to understand sustainability of creditor management.
• Review operational cash flows and profit & loss statements (not included in filleted accounts) to confirm profitability and cash generation capacity given absence of income statement disclosure.
• Assess the rationale and funding source for dividend payments made in 2024 relative to recent profitability and cash reserves.
• Confirm ongoing contracts and pipeline in the construction sector to evaluate operational sustainability.
• Verify absence of director disqualifications or regulatory sanctions beyond public records.