HERRINGSTON FARMS LTD

Executive Summary

Herringston Farms Ltd demonstrates a stable financial position with positive net assets and improved working capital, supported by experienced directors in the farming sector. The company’s liquidity and asset base are adequate for current operations, but its short operational history and rising trade debtors suggest credit should be extended cautiously with ongoing monitoring of cash flow and asset quality. Overall, a conditional approval is recommended, balancing modest risk with reasonable repayment capability.

HERRINGSTON FARMS LTD - Analysis Report

Company Number: 13148800

Analysis Date: 2025-07-29 20:57 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Herringston Farms Ltd is a small, active private limited company engaged in mixed farming since 2021. The company’s financials show positive net assets (£209,817) and a modest but improving working capital position (£70,895 in 2023 vs £23,780 in 2022). The company has no overdue filings and no sign of distress such as liquidation or administration. However, its relatively short trading history, limited share capital (£120), and modest fixed asset base (£222,520 tangible assets) warrant cautious credit extension subject to ongoing monitoring. The company’s ability to service debt appears adequate given positive net current assets and cash balances (£264,128). The directors are experienced in farming and engineering, which supports sound management. Overall, the company shows financial stability but is still developing its asset base and cash flow track record, so credit should be granted with limits and periodic reviews.

2. Financial Strength:
   The balance sheet reflects a healthy net asset position of £209,817, stable compared to £206,335 in 2022. Tangible fixed assets decreased slightly from £266,153 to £222,520 due to depreciation and disposals but remain substantial relative to company size. Investments are minimal (£16,402) and likely non-liquid. Stock levels increased (crops and feed) from £174,202 to £206,747, indicating growing operational scale or inventory buildup. Trade debtors increased significantly (£35,725 vs £14,958), which may reflect higher sales or longer collection periods. Creditors due within one year remain stable at £447,561, covered by current assets of £518,456, giving a positive net current asset figure. There is a non-current loan of £100,000, manageable given equity and cash levels. The modest share capital reflects a typical farming enterprise setup. No audit was required, and accounts are unaudited but filed timely.

3. Cash Flow Assessment:
   Cash at bank increased to £264,128 from £223,632, showing an improvement in liquidity. Net current assets improved to £70,895 from £23,780, indicating enhanced working capital management. The company’s stock and debtor composition poses some risk if collection or inventory turnover slows, but no significant impairment or bad debts are noted. The presence of government grants and other income streams (e.g., electricity generation) diversifies cash flow sources. Overall, liquidity appears sufficient to meet short-term obligations, with cash reserves covering roughly 59% of current liabilities. The company should maintain focus on debtor collection efficiency and inventory control to sustain cash flow.

4. Monitoring Points:

• Debtor days and collection trends: The rise in trade debtors warrants monitoring to avoid cash flow strain.
• Stock valuation and turnover: Agricultural stock values can fluctuate; impairment or slow turnover risk should be watched.
• Profitability trends and cash generation: Await future P&L data to confirm ability to service debt from operations.
• Financing structure: Monitor the £100,000 long-term loan and any additional borrowings or changes in credit terms.
• Directors’ conduct and company filings: Continue ensuring timely filings and stable management involvement.
• External factors: Agricultural market risks, weather impact, and government subsidy changes may affect operational stability.