Credit Analysis: FOODPACK LIMITED

1. Credit Opinion: DECLINE

Reasoning: Foodpack Limited is currently in liquidation. The company cannot service new debt facilities as it is undergoing a formal closure process. Any credit exposure would be irrecoverable. This is an absolute bar to lending.

The registered office has moved to Forvis Mazars LLP (insolvency practitioners), multiple directors resigned in late 2025, and both accounts and confirmation statements are overdue — all consistent with an insolvency process underway.

2. Financial Strength

Historical context only — the most recent filed accounts are from March 2018, making them nearly 7 years old:

Critical observations: - The apparent improvement in net assets is almost entirely driven by a property revaluation of £1.66m (net of deferred tax of £284k). Without this revaluation, the P&L reserve was only £125k on £12.9m turnover — extremely thin. - Tangible fixed assets of £5.19m dominated the balance sheet, but their realisable value in liquidation is uncertain and likely significantly below book value. - The company was asset-rich but cash-poor even before liquidation — a classic over-leveraged property-heavy structure.

Balance sheet leverage was high: Current liabilities of £3.68m against current assets of £3.90m, leaving working capital of only £228k on £12.9m turnover. This represented approximately 6.5 days of working capital coverage — perilously tight for a manufacturing business.

3. Cash Flow Assessment

Pre-liquidation cash position was deteriorating:

• Cash declined by 80% year-on-year — from £307k to £61k
• Operating cash flow nearly halved despite revenue growth of 9.4%
• The company was investing in plant/machinery (£385k) while carrying significant debt service costs (£130k interest)
• Debtors of £3.02m represented approximately 85 days of revenue — concerning collection efficiency, though the directors noted concentration on "blue chip" customers
• The business was consuming more cash than it generated, with net cash outflow of £246k

Working capital stress: Net current assets of £228k on nearly £13m turnover indicates the business was chronically under-capitalised for its scale.

4. Monitoring Points

While this company is no longer a going concern, the following are relevant for exposure management and lessons for similar sector lending:

• Culina Group Limited exposure: As 75%+ shareholder, Culina Group's position in the liquidation needs understanding — are they providing any guarantees or are they also exposed?
• Director conduct: Mr Hitchen remains a director. His involvement in other entities should be monitored for connected lending risks.
• Preferential creditors: Liquidator will examine transactions in the period before insolvency — any related-party preferential payments should be identified.
• Sector risk: Food manufacturing co-packing operates on thin margins with high working capital requirements. Future lending in this space requires robust cash flow forecasting and strong covenant structures.