BIG EASY RESTAURANTS LIMITED
Company number 02869565 · 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 Analysis: BIG EASY RESTAURANTS LIMITED
1. Credit Opinion: CONDITIONAL
The company presents an improving balance sheet with net assets rising from £228k (2023) to £2.03M (2024), but this is a holding company with minimal standalone revenue (£200k) and persistent operating losses (£1.79M in FY24). Profitability depends entirely on interest income from group subsidiaries (£3.3M). Lending to this entity without group-level guarantees or subsidiary security would carry unacceptable concentration risk. Any facility should be conditional on parent company guarantees, cross-group security, and satisfactory review of subsidiary financials.
2. Financial Strength
Balance Sheet Trajectory - Significant Improvement:
| Metric | FY2024 | FY2023 | FY2022 |
|---|---|---|---|
| Net Assets | £2,030,099 | £228,296 | £690,611 |
| Total Assets | £4,122,559 | £3,928,570 | £3,521,273 |
| Total Liabilities | £1,918,868 | £2,833,607 | £1,560,000 |
| Shareholders' Funds | £2,030,099 | £1,748,250 | £1,748,250 |
Positive indicators: - Net assets have strengthened materially, reversing the weak 2023 position - The P&L reserve has improved by £1.8M (profit after tax), restoring equity health - Historical shareholders' funds of £1.748M remained stable through 2019-2023, suggesting capital was preserved
Concerning indicators: - The 2016-2017 period showed deeply negative shareholders' funds (£-6.2M to £-6.3M), indicating prior severe financial distress that was subsequently resolved (likely through reorganisation/write-offs given the asset drop from £16M to £2-4M range) - Total assets have contracted significantly from the £13-16M range seen in 2016-2018, suggesting a major restructuring occurred - The £4 share capital with £2M+ in shareholders' funds indicates heavy reliance on retained profits rather than permanent capital
Asset Composition (FY2024): - Fixed assets: £1,928,052 (predominantly investments in subsidiaries at £1,910,850) - Current assets: £2,194,507 (debtors £1.78M, cash £247k, stocks £165k)
The investment in subsidiaries represents 46% of total assets. Recovery on these investments depends entirely on subsidiary performance and group solvency.
3. Cash Flow Assessment
Operating Performance:
| Metric | FY2024 | FY2023 |
|---|---|---|
| Turnover | £200,000 | £200,000 |
| Operating Loss | (£1,790,461) | (£1,453,651) |
| Interest Receivable | £3,300,000 | £800,000 |
| Profit Before Tax | £1,406,743 | (£780,390) |
| Profit After Tax | £1,871,803 | (£462,315) |
Critical observations:
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Standalone operating losses are chronic and worsening: Staff costs rose 8% and other operating expenses rose 43%, widening the operating loss to £1.79M from £1.45M. Without subsidiary interest income, this entity is commercially unviable.
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Interest income volatility is a major risk: The £3.3M interest income (up from £800k) appears to be inter-company charges from subsidiaries. This 312% increase year-over-year raises questions:
- Is this sustainable or a one-time catch-up?
- Are subsidiaries generating sufficient cash to service this interest?
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What are the terms of inter-company loans?
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Cash position: £247,482 represents improvement from £143,734 but remains modest relative to the balance sheet and operating cash requirements. The 2020-2019 period showed near-zero cash balances (£2,731 and £1,054 respectively), indicating this company has historically operated with razor-thin liquidity.
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Debtors of £1.78M: Predominantly inter-company balances. Collection risk is intrinsically linked to subsidiary solvency.
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Dividends: £70,000 paid - demonstrates capacity to return capital but also reduces retained liquidity.
Working Capital: Without full current liabilities breakdown, precise working capital assessment is limited. However, with £2.19M in current assets against £1.92M in total liabilities (some of which will be long-term), the current position appears adequate but not robust.
4. Monitoring Points
| Metric | Risk Level | Monitoring Frequency |
|---|---|---|
| Subsidiary financial performance | HIGH | Quarterly - obtain group consolidated accounts |
| Inter-company interest sustainability | HIGH | Semi-annual - verify subsidiary ability to service |
| Operating cost trajectory | MEDIUM | Annual - staff costs and overheads rising faster than revenue |
| Cash position | MEDIUM | Quarterly - historical vulnerability at low cash levels |
| Debtor ageing (inter-company) | MEDIUM | Semi-annual - ensure subsidiaries are settling |
| Group capital structure | MEDIUM | Annual - changes in Topstorm Limited structure |
| Dividend extraction | LOW | Annual - monitor for excessive upstream cash transfers |
Specific covenants to consider: - Minimum net assets covenant - Cash interest coverage at group level - Restriction on dividends if net current assets fall below threshold - Negative pledge on subsidiary shares without bank consent
Key risk factors: 1. Restaurant sector cyclicality and cost inflation (food, energy, labour) 2. Single-sector concentration (licensed restaurants) 3. Related party dependency for 100%+ of income 4. Historical financial distress (2016-2017) suggests vulnerability in downturns 5. Family control (Corrett family via Topstorm Limited) - limited governance checks