TFC BURNT OAK LIMITED
Company number 07153395 · 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: TFC BURNT OAK LIMITED
1. CREDIT OPINION: CONDITIONAL
Reasoning: The company presents significant credit concerns despite being part of a larger group structure. While net assets are positive at £182,408, this is supported almost entirely by illiquid investment property. The most alarming feature is the 95% collapse in cash reserves from £669,030 to £33,382 in a single year, combined with worsening negative working capital of (£573,342). The company is loss-making (retained earnings fell by £66,592), carries substantial secured debt, and is exposed to a £13.5M group contingent liability with HSBC. Any credit facility would require robust group guarantees and specific covenants.
2. FINANCIAL STRENGTH
Balance Sheet Composition (March 2019):
| Item | 2019 | 2018 | Movement |
|---|---|---|---|
| Fixed Assets (Investment Property) | £1,755,750 | £1,274,708 | +£481,042 |
| Current Assets | £388,444 | £1,043,940 | -£655,496 |
| Current Liabilities | £961,786 | £1,268,012 | -£306,226 |
| Long-term Liabilities | £1,000,000 | £801,636 | +£198,364 |
| Net Assets | £182,408 | £249,000 | -£66,592 |
Key Observations:
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Asset Quality Concern: Approximately 90% of total assets are tied up in investment property (freehold land and buildings). While this provides security, it is inherently illiquid and subject to valuation risk. The property is stated at fair value, not historical cost.
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Working Capital Deficit: Net current liabilities of (£573,342) have worsened significantly from (£224,072). The company cannot meet its short-term obligations from current assets without disposing of fixed assets or drawing on group facilities.
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Equity Erosion: Shareholders' funds declined by 26.8% in the year. Retained earnings fell from £144,900 to £78,308, indicating the company consumed rather than generated value.
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Historical Volatility: The financial history shows dramatic swings — net assets were negative in 2016 (£-11,215) and 2017 (£-99,249) before recovering. This volatility raises questions about earnings stability.
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Share Capital: Only £140 in issued share capital, with £103,960 in share premium. Minimal equity cushion relative to the balance sheet size.
3. CASH FLOW ASSESSMENT
Liquidity Position — CRITICAL:
| Metric | 2019 | 2018 |
|---|---|---|
| Cash at Bank | £33,382 | £669,030 |
| Current Ratio | 0.40x | 0.82x |
| Quick Ratio (ex-stock) | 0.40x | 0.82x |
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Cash Collapse: The 95% reduction in cash is the single most concerning metric. This appears driven by £481,042 in property additions funded during the year, effectively converting liquid assets into illiquid property.
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No Operating Cash Flow Visibility: As an abridged filing, the income statement is not disclosed. We cannot assess operating cash generation. However, the deficit on retained earnings (£66,592) and absence of dividend payments suggests the company is not self-sustaining from operations.
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Debt Service Obligations: The £1,000,000 long-term bank loan (up from £801,636) is secured by a debenture with fixed and floating charges over all assets. Repayment terms beyond five years are not detailed, but this represents significant leverage on a company with £182,408 net assets.
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Group Facility Exposure: The contingent liability disclosure reveals a group HSBC facility of £13,471,230 (up from £11,898,254). While this is a group-level obligation, the cross-guarantee structure means TFC Burnt Oak's assets are potentially available to service group debt.
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Inter-company Balances: £593,383 owed to TFC Holdings London Ltd (parent). This represents a further claim on the company's resources, though it may be subordinated in practice.
4. MONITORING POINTS
| Metric | Risk Level | Action Required |
|---|---|---|
| Cash Position | 🔴 Critical | Monthly monitoring; cash flow forecasts required |
| Working Capital | 🔴 Critical | Quarterly review; covenant requiring minimum current ratio |
| Group Contingent Liability | 🔴 High | Annual confirmation of group facility status |
| Property Valuation | 🟡 Medium | Annual independent valuation; LTV monitoring |
| Inter-company Balances | 🟡 Medium | Confirm subordination; monitor for extraction |
| Profitability | 🟡 Medium | Require annual management accounts |
| Filing Compliance | 🟢 Low | Currently satisfactory |
Specific Conditions for Any Facility:
- Group Guarantee: Parent company TFC Holdings London Ltd must provide guarantee, given the inter-company position and group structure
- Financial Covenants: Minimum cash threshold (£50,000), maximum leverage ratio, and minimum working capital requirement
- Negative Pledge: No further property charges without consent
- Information Undertakings: Quarterly management accounts; annual audited accounts within 9 months of year-end
- Group Facility Monitoring: Annual confirmation from HSBC regarding the status and compliance of the £13.5M group facility
Business Resilience Assessment:
The company operates in food retail (Turkish/Mediterranean supermarket sector based on SIC codes and group branding), which provides some recession resilience as a necessity business. However, as a property-holding entity within a wider group, its standalone resilience is limited. The company has only 2 employees, suggesting it primarily holds property assets with operations conducted through related entities. Downturn resilience depends almost entirely on group support.
Management Quality:
- Accounts are filed on time and audited (by Alton & Co)
- Director Mr E Ucur is also secretary, with Mr H Ucur as fellow director
- Complex group structure with multiple inter-company relationships
- The significant related party balances (£593K to parent, £176K from EDA Quality Foods, £180K various other positions) require careful monitoring for potential asset stripping or cash extraction