SPP FLEXIBLE PACKAGING LIMITED

Executive Summary

SPP Flexible Packaging Limited shows stable financial footing with improving net assets and positive working capital, supported by increased cash balances and manageable secured debt. The company’s recent growth in fixed assets funded by hire purchase contracts requires close cash flow monitoring to ensure continued debt servicing capability. With no adverse director conduct and timely filings, credit can be extended on a conditional basis, pending ongoing review of receivables and financing commitments.

SPP FLEXIBLE PACKAGING LIMITED - Analysis Report

Company Number: SC718282

Analysis Date: 2025-07-29 15:05 UTC

1. Credit Opinion: APPROVE with conditions. SPP Flexible Packaging Limited is an active private limited company operating in the packaging sector with stable and improving net assets over the recent two years. The company demonstrates a positive working capital position and has no overdue filings. However, its relatively recent incorporation (Dec 2021) and presence of hire purchase liabilities suggest some reliance on external financing, which warrants ongoing monitoring. The directors have not opted for audit exemption, but the accounts are unaudited, so caution on financial statement accuracy is prudent. Overall, credit extension can be supported given no adverse director records and sound control by a major shareholder group.

2. Financial Strength: The company has shown net asset growth from £178k at 2022 year-end to £235k at the end of 2023, an increase of about 32%. Tangible fixed assets increased substantially due to new plant and machinery additions, partly funded by hire purchase contracts. Net current assets remain positive at £201k, though reduced from prior year, reflecting a decrease in current assets primarily driven by lower debtors and stock levels. The gearing level is moderate with secured debts of £41k on hire purchase contracts, and bank loans of £26k outstanding after one year. Shareholders’ funds exceed £235k, indicating reasonable equity backing for liabilities. Overall, the balance sheet reflects financial stability with adequate capitalisation for the company's scale.

3. Cash Flow Assessment: Cash at bank increased significantly from £190k to £328k, suggesting improved liquidity and cash management. Trade debtors decreased markedly from £554k to £303k, which may indicate better collection or reduced sales volume; this should be further investigated to ensure no adverse impact on revenue. Current liabilities fell from £691k to £508k, driven by reduced trade creditors and other payables, enhancing working capital. However, hire purchase obligations have emerged both within current and non-current liabilities, indicating some cash flow commitments related to asset financing. The company currently maintains sufficient liquidity to cover short-term obligations, but ongoing cash flow monitoring is necessary given the hire purchase liabilities.

4. Monitoring Points:

• Debtor collection performance and ageing profile: The sharp reduction in debtors year-on-year may reflect changing sales or credit terms; delays or bad debts could impact liquidity.
• Hire purchase and lease obligations: These secured liabilities have increased, requiring regular review of repayment capacity to avoid default risk.
• Stock levels: The reduction in stock from £151k to £48k is notable; inventory management should be monitored to prevent supply chain or production issues.
• Profitability trends: As income statement data is not provided, it is important to review profitability trends and margins when available to assess ongoing debt servicing ability.
• Director and shareholder changes: No disqualifications are recorded, but as a closely held company, governance and decision-making transparency should be maintained.