Company Number: 13104334

Analysis Date: 2025-07-29 21:04 UTC

1. Risk Rating: LOW
   Kentmere Cartons Ltd demonstrates financial robustness with substantial shareholders’ funds (~£4.3m to £4.7m range), positive net current assets (£2.78m), no current liabilities reported in recent years, and no overdue filings. The auditor’s report confirms the financial statements present a true and fair view and the going concern assumption is appropriate. These factors collectively indicate low solvency and liquidity risk.

2. Key Concerns:

• Exceptional Pension Scheme Loss: The group recorded a one-off loss of £967,000 related to disposal of its defined benefit pension scheme, which impacts reported profitability and cash reserves. While non-recurring, it should be monitored for any residual financial impact.
• Turnover and Gross Margin Decline: Turnover decreased by 4.26% and gross profit margin reduced from 20.93% to 18.89%, reflecting pricing pressures in the packaging industry that could affect future earnings if not managed.
• Director and Secretary Turnover: Significant changes in directors and company secretary roles effective 31 March 2025, with multiple resignations and new appointments, may suggest governance transition risks that require oversight.

3. Positive Indicators:

• Strong Equity Base: Shareholders’ funds increased significantly since incorporation (from ~£1.38m in 2020 to over £4.3m in 2024), indicating retained earnings and capital growth.
• Solid Liquidity Position: Net current assets of £2.78m and absence of current liabilities in recent years demonstrate good working capital management.
• Timely Compliance: No overdue accounts or confirmation statements; filings are current indicating good regulatory compliance.
• Auditor’s Opinion: Unqualified audit report with no material misstatements or going concern issues noted reinforces confidence in financial reporting and governance.

4. Due Diligence Notes:

• Review details and future financial impact of the defined benefit pension scheme disposal, including any contingent liabilities or cash flow effects.
• Monitor industry trends affecting raw material prices and customer demand to assess sustainability of margins and turnover.
• Investigate reasons for recent governance changes in March 2025, including any impact on strategic direction or operational oversight.
• Examine the group structure and relationship with the trading subsidiary Kentmere Limited, understanding intra-group transactions and risks.
• Confirm dividend policy sustainability in light of recent dividend increases and cash reserve levels.
• Assess credit risk and customer concentration given the competitive market described.