PERCYS BAKING UK LTD

1. Credit Opinion: CONDITIONAL

The company displays a rapidly strengthening balance sheet, with net assets growing from £162 in 2019 to £3.50m at 31 December 2025, positive net current assets of £974k, and all statutory filings up to date. However, the filed accounts are filleted and the profit and loss account is not publicly available, so profitability, operating cash generation, and debt service capacity cannot be verified from public records. A sharp increase in debtors (including £390k due from group undertakings) and the introduction of £1.23m of creditors due after more than one year require clarification before unsecured credit is approved. Approval should be conditional on receipt of recent management accounts, a breakdown of long-term creditors, and evidence of repayment sources.

2. Financial Strength: Balance Sheet Health

• Net assets / shareholders’ funds: £3.498m at 31 December 2025, up from £2.107m at 31 December 2024. Called-up share capital increased by £1m to £2.5m, indicating a material capital injection during the year.
• Fixed assets: £3.751m, comprising tangible assets of £1.781m (mainly plant and machinery) and investments in subsidiary undertakings of £1.97m. The investment balance rose by £1.42m during the year.
• Liquidity position: Net current assets of £974k (current assets £1.99m less current creditors £1.016m), giving a current ratio of approximately 1.96:1.
• Gearing: Long-term creditors of £1.227m against equity of £3.498m implies modest balance-sheet gearing of roughly 35%. Bank loans within long-term creditors are small (£30k); the balance is “other creditors” whose terms and security are not disclosed in the filed extract.
• Trend: The company has moved from a negligible net asset position in 2018–2019 to a substantial equity base, supported by consistent filings and no insolvency proceedings.

3. Cash Flow Assessment: Liquidity and Working Capital

• Cash at bank: £392k at 31 December 2025, down from £784k in 2024. The decline is consistent with significant capital expenditure (£889k additions to plant and machinery and £1.42m in investments).
• Working capital: Current assets of £1.99m comfortably cover current liabilities of £1.016m. Trade creditors are £650k and there are no corporation tax or social security liabilities shown in current creditors for 2025.
• Debtor composition: Total debtors rose to £813k from £117k in the prior year. This includes £369k trade debtors, £390k due from group undertakings, and £54k accrued income/prepayments. The group-related balance may not be immediately available to service external debt.
• Limitation: Without a filed profit and loss account, operating cash flow, EBITDA, and debt service coverage cannot be assessed. The cash balance is adequate for near-term obligations but the reduction warrants monitoring.

4. Monitoring Points

• Obtain quarterly management accounts including profit and loss, cash flow statement, and debtor ageing.
• Review recoverability and terms of the £390k amount due from group undertakings.
• Clarify the nature, security, and repayment profile of the £1.197m long-term “other creditors.”
• Monitor cash balance trends and the company’s ability to fund further capital expenditure without additional bank borrowing.
• Confirm turnover, gross margin, and trading performance to assess resilience in food manufacturing.
• Track any changes to the PSC register, board composition, or filing compliance status.