F. REDFERN & SONS LIMITED
Company number 03790258 · 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.
Commercial Credit Assessment: F. Redfern & Sons Limited
1. Credit Opinion: APPROVE
Rationale: This is a well-established, family-owned meat processing business with a 25-year trading history demonstrating consistent profitability and balance sheet growth. Net assets have grown from £2.69M (2015) to £4.78M (2024), representing a 78% increase over the period. Leverage is conservative at 26% (liabilities-to-net assets), and the current ratio stands at a healthy 3.4x. The business retains profits rather than distributing them, indicating long-term stewardship. The primary concern is the significant year-on-year increase in both debtors (+34%) and current liabilities (+52%), which warrants clarification but does not fundamentally undermine the creditworthiness of this asset-rich, low-geared business.
2. Financial Strength
Balance Sheet Summary (October 2024):
| Item | £ | Commentary |
|---|---|---|
| Tangible Fixed Assets | 2,079,837 | Land, buildings, plant & machinery |
| Current Assets | 4,228,826 | |
| - Stocks | 76,000 | Low inventory - typical for abattoir |
| - Debtors | 3,898,103 | Significant - 92% of current assets |
| - Cash | 254,723 | |
| Current Liabilities | (1,244,659) | |
| Net Current Assets | 2,984,167 | Strong working capital position |
| Provisions | (288,339) | Likely deferred tax |
| Net Assets | 4,775,665 | |
| Shareholders' Funds | 4,775,665 | Almost entirely retained earnings |
Key Observations:
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Equity Base: Share capital is a nominal £7. The entire net worth has been built through retained profits, demonstrating disciplined profit retention over decades. Retained earnings grew by approximately £445K in the latest year.
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Asset Quality: Tangible fixed assets of £2.08M include freehold land and buildings (£925K cost) and plant/machinery (£3.05M cost), supporting the view that this is a substantive operating business with real assets.
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Gearing: Total liabilities (£1.24M) against net assets (£4.78M) yields a debt-to-equity ratio of approximately 0.26:1. This is extremely conservative and provides significant capacity for additional borrowing if required.
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Debtor Concentration: Debtors of £3.9M represent a material concentration risk. At 92% of current assets, the business is heavily reliant on trade collections. The 34% year-on-year increase (from £2.91M to £3.90M) significantly exceeds the modest employee headcount growth (48 to 49), suggesting either revenue growth, extended payment terms, or collection issues. This requires specific enquiry.
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Liability Growth: Current liabilities increased by 52% from £817K to £1.24M. Without the income statement, the composition is unclear but could reflect increased trade creditors (potentially offsetting the debtor increase), tax liabilities, or short-term borrowings.
3. Cash Flow Assessment
Liquidity Position:
| Metric | 2024 | 2023 | Movement |
|---|---|---|---|
| Current Ratio | 3.4x | 4.1x | Weakening |
| Quick Ratio (ex-stocks) | 3.3x | 3.9x | Weakening |
| Cash | £254,723 | £239,534 | +6.3% |
| Working Capital | £2,984,167 | £2,506,220 | +19.1% |
Working Capital Assessment:
The working capital position remains strong at £2.98M, though the current ratio has dipped from 4.1x to 3.4x due to the disproportionate growth in current liabilities relative to current assets. This is still well above the typical 1.5x threshold for comfort.
Cash Generation:
Cash has remained relatively stable in the £240K-£255K range, though significantly below the 2015 peak of £867K. The business appears to be investing in fixed assets (£245K additions in 2024) while managing working capital demands.
Estimated Profitability:
Based on the movement in retained earnings: - FY2024: Approximately £445K profit (retained earnings increased from £4,330,977 to £4,775,657) - FY2023: Approximately £27K profit (much lower - the 2022-2023 period showed minimal growth)
This suggests a significant recovery or improvement in FY2024, which is positive. The 2023 year appears to have been a relatively flat period.
Cash Conversion Concern:
The high debtor balance relative to cash suggests potential cash conversion challenges. If debtors are primarily trade receivables from supermarket chains or large food service customers, payment terms may be extended. The debtor days calculation requires turnover data (not disclosed), but the absolute level warrants attention.
4. Monitoring Points
| Priority | Metric | Current Position | Action Required |
|---|---|---|---|
| HIGH | Debtor Composition & Ageing | £3.9M (34% increase) | Request aged debtor analysis; identify top 10 debtors; assess concentration risk |
| HIGH | Current Liability Composition | £1.24M (52% increase) | Obtain breakdown - trade creditors vs. tax vs. borrowings |
| MEDIUM | Confirmation Statement | Overdue | Request explanation; monitor for resolution |
| MEDIUM | Revenue & Margin Trends | Not disclosed | Request management accounts; assess profitability sustainability |
| MEDIUM | Industry Risk | Abattoir sector | Monitor regulatory changes (food safety, animal welfare); commodity price volatility |
| LOW | Capital Expenditure | £245K in FY2024 | Understand capex plans; assess whether further investment required |
| LOW | Succession Planning | Family business, 4 directors | Understand long-term ownership and management transition plans |
Sector-Specific Considerations:
The meat processing sector carries inherent risks including: - Regulatory compliance (Food Standards Agency, environmental health) - Commodity price volatility (livestock input costs) - Labour availability and cost (the sector faces well-documented recruitment challenges) - Food safety incidents (potential for significant reputational and financial impact) - Environmental and waste management obligations
The company's 25-year track record suggests effective management of these risks, but they remain ongoing monitoring points.
Filing Concern:
The confirmation statement is overdue. While not unusual for small companies, this should be rectified and may indicate administrative capacity constraints.