MORRIS PROPERTY DEVELOPMENTS LTD

Executive Summary

Morris Property Developments Ltd shows signs of financial strain with negative net assets and a significant working capital deficit. Although the company is growing its asset base in property projects, liquidity is tight with minimal cash and high current liabilities. Credit approval should be conditional on evidence of funding support and improved cash flow management to mitigate short-term repayment risk.

MORRIS PROPERTY DEVELOPMENTS LTD - Analysis Report

Company Number: 13481270

Analysis Date: 2025-07-29 20:19 UTC

1. Credit Opinion:
   CONDITIONAL - Morris Property Developments Ltd exhibits significant financial stress, reflected in negative net assets (£-15,598) and persistent net current liabilities (£-280,217). The company operates in property development, a capital-intensive sector, and has increased its investment properties and work-in-progress inventory, indicating active projects. However, current liabilities exceed current assets by a large margin, and cash balances are negligible (£582), raising concerns about liquidity and short-term repayment capacity. The presence of £180,000 in long-term loans adds to financial obligations. Approval is only recommended if there is clear evidence of committed funding support or an improved cash flow plan; otherwise, credit exposure should be limited.

2. Financial Strength:
   The balance sheet shows an increase in fixed assets (investment properties) from £409,619 to £444,619 and recognition of work in progress (£301,449), suggesting business growth or project expansion. However, the company remains insolvent on a net asset basis, with shareholders’ funds negative and deteriorated from the prior year (£-4,710 to £-15,598). Substantial current liabilities (£746,478) primarily consist of trade creditors and short-term obligations, which far exceed current assets (£466,261). The company has introduced a £180,000 long-term loan within the last year, increasing leverage. Overall, the financial strength is weak due to negative equity and poor liquidity metrics.

3. Cash Flow Assessment:
   Cash on hand is minimal (£582), and net current liabilities indicate a working capital deficit (£-280,217), signaling potential difficulties meeting short-term obligations without additional financing. Debtors are significant (£164,230) but likely linked to intra-group or related parties ("amounts owed by participating interests"), which may not translate to immediate cash inflows. The company’s operational cash generation is unclear from the data, but given the large current liabilities and low cash, liquidity risk is elevated. Monitoring of debtor collection and creditor payment terms is critical.

4. Monitoring Points:

• Liquidity ratios (current ratio, quick ratio) to monitor improvements or deterioration in working capital.
• Timeliness and completeness of accounts and confirmation statement filings (currently up to date).
• Movement in long-term debt and creditor concentrations.
• Cash flow forecasts and actual cash collections from debtors, especially related party amounts.
• Any changes in project pipeline or asset valuations affecting investment properties and work in progress.
• Directors’ financial support or capital injections to address negative net assets.