PETALLICA FLOWER FARM C.I.C.

Executive Summary

Petallica Flower Farm C.I.C. is an early-stage community interest enterprise with modest asset growth and positive net equity but faces tight short-term liquidity due to current liabilities exceeding current assets. The business model’s dependence on grant funding and community projects introduces variability in cash flow. Conditional credit approval is recommended with focused monitoring on cash flow, funding continuity, and working capital management to mitigate repayment risk.

PETALLICA FLOWER FARM C.I.C. - Analysis Report

Company Number: 13407259

Analysis Date: 2025-07-20 15:00 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Petallica Flower Farm C.I.C. is a community interest company operating in sustainable flower farming and community support. The company shows modest asset growth and positive net assets as of the last accounts date, but it currently has a working capital deficit indicating tight short-term liquidity. The business model relies on grant funding and community projects, which introduces some variability and dependency risk. Credit approval is recommended with conditions, requiring monitoring of cash flow and funding continuity to ensure ongoing ability to meet obligations.

2. Financial Strength:

• Fixed assets have increased to £2,322, reflecting investment in plant and machinery, supporting operational capacity.
• Current assets stand at £23,470, with £22,558 held in cash, showing decent liquidity on face value.
• However, current liabilities are high at £24,384, leading to a net current liability of £914, indicating the company’s short-term liabilities exceed its current assets slightly.
• Net assets of £967 and positive shareholders funds signal an equity buffer, but the margin is narrow.
• The company’s turnover was low in prior years (£11,479 in 2022) with no turnover disclosed for 2023, consistent with a community interest model rather than commercial scale.
• The company maintains compliance with filing deadlines and is active, which is positive for governance.

3. Cash Flow Assessment:

• Cash increased from £11,722 to £22,558, showing improved cash holdings over the period.
• However, the high current liabilities and negative net current assets suggest working capital management is tight.
• Dependence on accruals and deferred income (£23,222) and grant funds is evident, which may not be stable or predictable income streams.
• The directors have paid themselves wages totaling £20,585 in the latest year, which is material relative to turnover and cash, indicating tight operational cash flow.
• The company’s ability to generate positive operating cash flows without grant funding should be assessed closely.

4. Monitoring Points:

• Monitor cash flow closely, especially the timing and continuity of grant funding and deferred income.
• Watch for any increases in current liabilities or delays in payments that could worsen liquidity.
• Track turnover and revenue generation trends to assess commercial sustainability beyond grants.
• Review director remuneration policy versus cash generation to ensure financial prudence.
• Keep oversight on working capital and the company’s ability to convert debtors into cash promptly.
• Given the community interest structure, monitor any changes in operational scope or funding environment that could impact financial stability.