Credit Analysis: PASSCO C.I.C.

1. Credit Opinion: CONDITIONAL

Reasoning: PASSCO C.I.C. presents a mixed credit profile that warrants caution. While the company maintains a cash-positive balance sheet and benefits from institutional backing via the British Retail Consortium (BRC), several factors constrain an outright approval. The entity is micro-scale with minimal financial footprint, has no disclosed revenue for recent periods, and operates as a Community Interest Company with an asset lock that could complicate recovery in a distressed scenario. The five-fold increase in creditors (from £5,952 to £28,692) requires explanation before commitment. Any credit facility should be conditional upon satisfactory responses to these concerns and likely limited to modest amounts relative to the balance sheet.

2. Financial Strength

Balance Sheet Summary (FY2025): - Total Assets: £81,794 - Total Liabilities: £28,692 - Net Assets: £53,102 - Cash: £74,955

Positive Indicators: - Consistent positive net assets over the entire review period, growing from £24,777 (2019) to £53,102 (2025) - Strong liquidity position — cash represents 91.7% of total assets - No long-term liabilities disclosed - Net current assets of £53,102 provide reasonable working capital headroom

Concerning Indicators: - Creditor spike: Other creditors jumped from £5,952 to £28,692 year-on-year — a 381% increase against modest asset growth. This warrants immediate clarification. Is this accrued income, deferred revenue, or trade creditor obligations? - Micro-entity scale: With total assets under £82k, the balance sheet offers minimal cushion for any credit exposure - No share capital: Company limited by guarantee — members' liability is typically £1 each, providing no meaningful capital buffer - CIC asset lock: As a Community Interest Company, assets must be applied for community purposes. This statutory restriction could impair the bank's position in an insolvency scenario, as asset disposal is constrained

Trajectory: Net assets have grown ~62% over six years (£24,777 to £53,102), indicating steady but slow accumulation rather than dynamic growth.

3. Cash Flow Assessment

Liquidity Position: - Current ratio: £81,794 / £28,692 = 2.85x — adequate coverage of short-term obligations - Cash as proportion of current liabilities: 261% — the company can settle all current debts from cash reserves

Revenue and Cash Generation Concerns: - Turnover is only disclosed for FY2021 (£68,444). No revenue figures are available for FY2022-2025, which is a significant gap in assessing debt service capacity - The company reports zero employees throughout, suggesting operations may be outsourced or conducted by unpaid directors - Directors received no remuneration, indicating this may function as a quasi-trade body vehicle rather than a trading enterprise - Cash grew from £29,414 (2023) to £74,955 (2025), but without revenue disclosure, it is unclear whether this derives from operating income, member subscriptions, BRC funding, or other sources

Going Concern Note: The accounts explicitly state dependency on director support for the going concern basis. While the BRC ownership provides institutional comfort, this language signals fragility in standalone cash generation.

4. Monitoring Points

Key Monitoring Requirements:

1. Creditor Composition: Obtain breakdown of the £28,692 creditor balance — confirm whether this represents trade payables, accrued costs, or deferred income from the BRC or members
2. Revenue Verification: Request management accounts or subscription income data to establish debt service capacity
3. BRC Support Letter: Given the going concern dependency and PSC ownership, obtain a comfort letter or confirmation of ongoing support from the British Retail Consortium
4. Director Stability: Two directors resigned in late 2025/early 2026 (Barlow and Moody). Monitor for further board changes that could signal strategic shifts
5. CIC Restrictions: Ensure legal review confirms the bank's security position is not compromised by the asset lock provisions
6. Activity Levels: The zero-employee status and minimal trading activity raise questions about whether this entity is the appropriate counterparty for the proposed facility, or whether the BRC should provide the guarantee directly