TRI-PACK PACKAGING SYSTEMS LIMITED
Company number 01146130 · Monitor this company
This analysis was written by an AI from the company's public filings. It may contain errors or omissions and is not financial or professional advice.
Credit Assessment: TRI-PACK PACKAGING SYSTEMS LIMITED
1. Credit Opinion: CONDITIONAL APPROVE
Tri-Pack Packaging Systems Limited is a long-established (incorporated 1973) manufacturer of plastic packaging products with a satisfactory balance sheet structure and healthy liquidity. The company demonstrates strong cash generation and positive equity growth, supporting creditworthiness. However, the significant balance sheet volatility observed between 2023-2024, the substantial long-term liabilities, and the absence of filed profit & loss data (small company exemption) warrant moderate caution. Approval is recommended subject to clarification of certain items and appropriate covenant structuring.
Key Condition: Full P&L disclosure should be obtained to assess true profitability and debt service coverage. The nature and terms of the £1.6M long-term liabilities require verification.
2. Financial Strength
Balance Sheet Summary (FY2025)
| Metric | FY2025 | FY2024 | Movement |
|---|---|---|---|
| Fixed Assets | £2,359,829 | £2,550,389 | -£190,560 |
| Current Assets | £2,896,731 | £3,281,360 | -£384,629 |
| Total Assets | £5,256,560 | £5,831,749 | -£575,189 |
| Current Liabilities | £1,588,135 | £2,170,254 | -£582,119 |
| Long-term Liabilities | £1,603,017 | £1,750,463 | -£147,446 |
| Provisions | £40,965 | £156,050 | -£115,085 |
| Net Assets | £2,024,443 | £1,754,982 | +£269,461 |
Capital Structure Analysis
| Component | FY2025 | % of Equity |
|---|---|---|
| Share Capital | £4,240 | 0.2% |
| Share Premium | £327,156 | 16.2% |
| Revaluation Reserve | £992,237 | 49.0% |
| Other Reserves | £1,000 | 0.05% |
| Retained Earnings | £699,810 | 34.6% |
| Total Equity | £2,024,443 | 100% |
Observations:
-
Revaluation reserve concern: Nearly half of shareholders' funds (£992k, 49%) comprises a revaluation reserve, likely relating to land and buildings. This inflates the net asset position and may not represent realisable value. Tangible net worth (excluding revaluations) is approximately £1,032k — significantly lower than reported.
-
Retained earnings recovery: Retained earnings grew by £269k (from £430k to £700k), indicating profitability in FY2025. This is a positive signal following the FY2024 contraction.
-
Historical net asset volatility: Net assets peaked at £2.84M in 2023 before dropping to £1.75M in 2024 — a £1.09M decline in a single year. This was driven by a substantial increase in current liabilities (from £1.69M to £2.17M). The partial recovery in 2025 is encouraging but the underlying cause of the 2024 spike requires explanation.
-
Gearing: Total liabilities to net assets stands at approximately 0.79x. When adjusted for the revaluation reserve, effective gearing is closer to 1.55x — moderate but manageable for a manufacturing business.
3. Cash Flow Assessment
Liquidity Position
| Metric | FY2025 | FY2024 | FY2023 |
|---|---|---|---|
| Cash | £1,216,793 | £1,473,716 | £1,051,986 |
| Debtors | £1,021,597 | £1,138,924 | N/A |
| Stocks | £658,341 | £668,720 | N/A |
| Current Assets | £2,896,731 | £3,281,360 | N/A |
| Current Liabilities | £1,588,135 | £2,170,254 | N/A |
Key Ratios
| Ratio | FY2025 | FY2024 | Assessment |
|---|---|---|---|
| Current Ratio | 1.82x | 1.51x | Satisfactory |
| Quick Ratio | 1.41x | 1.20x | Adequate |
| Cash to Current Liabilities | 0.77x | 0.68x | Improving |
| Working Capital | £1,308,596 | £1,111,106 | Healthy |
Observations:
-
Strong cash generation: Cash has grown from £339k (2019) to £1.22M (2025), a 259% increase over six years. This demonstrates robust cash conversion and suggests the business generates sufficient operating cash flow.
-
Working capital improvement: Net current assets increased by £197k to £1.31M, with the current ratio improving from 1.51x to 1.82x. The reduction in current liabilities by £582k is particularly positive, suggesting the 2024 spike was temporary (possibly a large trade creditor or short-term facility).
-
Debtor collection: Debtors decreased by £117k year-on-year, which could indicate improved collection or lower sales. Without turnover data, this is difficult to assess definitively.
-
Stock levels: Marginally decreased to £658k, representing approximately 23% of current assets — reasonable for a manufacturing operation.
-
Cash conversion cycle appears healthy: The combination of £1.02M debtors and £1.22M cash against £1.59M current liabilities provides adequate coverage.
4. Monitoring Points
Priority Monitoring Items
| Item | Risk Level | Detail |
|---|---|---|
| Long-term liabilities | Medium | £1.6M due after one year — nature, terms, and repayment schedule must be understood. Likely includes finance leases for manufacturing equipment. |
| Revaluation reserve | Medium | £992k represents 49% of equity. Monitor whether asset valuations remain supportable, particularly in current commercial property markets. |
| P&L performance | High | Small company filing exemption means no income statement is public. Obtain full management accounts to verify profitability and debt service capacity. |
| Sector exposure | Medium | Plastic packaging faces ESG headwinds and regulatory risk. Monitor for legislative changes affecting single-use plastics and packaging waste directives. |
| Related party transactions | Medium | Icelandic directors suggest potential overseas connections. Verify intercompany balances and any guarantees. |
Ongoing Covenant Suggestions
- Minimum net worth: £1.5M (adjusted for revaluation reserve, this provides adequate headroom)
- Current ratio: Minimum 1.25x
- Cash interest cover: To be established once full P&L obtained
- Debt/EBITDA: To be established; target maximum 3.0x
Positive Indicators to Track
- Continued growth in retained earnings (confirming profitability)
- Maintenance of cash balances above £750k
- Stable or improving current ratio
- No director disqualifications or late filings
Red Flags for Immediate Review
- Any further significant increase in current liabilities without corresponding revenue growth
- Deterioration in cash position below £500k
- Reduction in net assets below £1.5M
- Filing delays or overdue accounts
Additional Context
Ownership & Management: The Clarke family (three brothers) each hold 25-50% ownership, providing stable family control. The presence of Icelandic directors (Asgeir Porvardarson and Johann Oddgeirsson, both designated as Managing Director) suggests a potential connection to an Icelandic parent or investor, which should be clarified for group structure and guarantee purposes.
Business Resilience: As a 50+ year manufacturing business with a rebrand in 2019 (from Tri-Pack Plastics to Tri-Pack Packaging Systems), the company has demonstrated longevity. The pivot toward "sustainable packaging" per their website aligns with market trends, though the core SIC codes remain plastic manufacturing. Employee numbers are stable (39-40), indicating steady operations.
Sector Considerations: The UK plastic packaging sector faces ongoing regulatory pressure (Plastic Packaging Tax, Extended Producer Responsibility reforms, potential single-use restrictions). However, as a manufacturer rather than importer, Tri-Pack may benefit from domestic supply chain advantages and the ability to adapt product lines toward recyclable materials.