CREDIT ANALYSIS: FLOWER & HAYES LIMITED

1. CREDIT OPINION: DECLINE

Reasoning: The company is currently in Administration/Receiver Manager status. This is a formal insolvency proceeding indicating the company has failed to meet its financial obligations and is under the control of court-appointed administrators. The registered office has moved to FORVIS MAZARS LLP (a prominent insolvency practice) at 30 Old Bailey, confirming active insolvency proceedings. No new credit facilities should be considered under any circumstances.

2. FINANCIAL STRENGTH

Balance Sheet Analysis (as at 30 November 2022 - last filed):

Asset Composition Concerns: - Investment Property: £9.755M — Valued by directors, not independent valuers. Decreased by £147K in FY2022. Significant concentration risk. - Stocks: £16.837M — Represents 73% of current assets. In a construction company, this likely represents work-in-progress and development sites. Highly illiquid and subject to market value fluctuations. - Current Investments: £3.368M — Nature unclear from abridged accounts. - Cash: £169,876 — Dangerously low for a company with £32.7M in total assets and construction obligations.

Liability Structure: - Current Liabilities: £4.736M (down from £8.677M — suggesting some creditor settlement) - Long-term Liabilities: £10.988M (relatively stable) - Gearing appears manageable on paper, but asset quality and liquidity concerns are paramount.

Contingent Liability: NHBC bonds of £470,702 — typical for residential developers but adds to obligations.

3. CASH FLOW ASSESSMENT

Liquidity Position — CRITICAL:

Assessment: While the current ratio appears healthy, it is critically misleading. The current ratio is inflated by £16.837M in stocks (likely development land and work-in-progress) which are: - Highly illiquid - Subject to significant market risk in the current UK property environment - Difficult to convert to cash in a distressed scenario

True liquidity position is perilous: - Quick assets (cash + debtors + investments): £6.115M - Quick ratio against current liabilities: 1.29x — marginal - Cash alone covers only 3.6% of current liabilities

Cash has declined 39% year-on-year (£280K to £170K), indicating cash burn without corresponding revenue generation visible in abridged accounts.

4. MONITORING POINTS

Critical Red Flags:

1. Administration Status — The company is under formal insolvency proceedings. All credit facilities should be frozen immediately.

2. Accounts Overdue — Next accounts were due 30 November 2024 and are overdue, suggesting either administrative failure or deliberate withholding.

3. Director Instability — Three director resignations between December 2025 and June 2026 (Sharon Thorner twice, Shaun Brooks). Only Roderick Barry Thorner remains. This pattern often precedes or accompanies insolvency.

4. Director-Valued Property — £9.755M investment property valued by directors without independent valuation raises significant concerns about asset quality and potential overstatement.

5. Stock Concentration — £16.837M in stocks represents a material concentration. In administration, forced sales typically realise significantly less than book value.

6. Contingent Liabilities — NHBC bonds of £470,702 may be called upon if developments are incomplete.

If Monitoring Existing Exposure: - Engage immediately with the administrators (FORVIS MAZARS) - File proof of debt if applicable - Assess security position against specific assets - Monitor asset realisation progress - Review any personal guarantees from Roderick Barry Thorner

SECTOR CONTEXT

Construction (particularly commercial building — SIC 41201) faces significant headwinds in the current UK economic environment including rising material costs, planning delays, and commercial property market softening. A 100+ year-old construction business entering administration suggests fundamental structural issues beyond cyclical challenges.