LONGMEAD LIMITED

Executive Summary

LONGMEAD LIMITED shows a significant increase in fixed assets but faces a severe liquidity challenge with current liabilities far exceeding current assets, indicating financial strain. The company has positive net worth but is at risk of cash flow distress without immediate action to improve liquidity and operational capacity. Prompt financial management and strategic restructuring are critical to restoring financial health.

LONGMEAD LIMITED - Analysis Report

Company Number: 12635364

Analysis Date: 2025-07-29 18:47 UTC

Financial Health Score: C

Explanation:
LONGMEAD LIMITED exhibits a mixed financial profile. The company shows growth in fixed assets but simultaneously a dramatic rise in current liabilities, resulting in a tenuous working capital position. The lack of current assets and zero employees also raise concerns about operational sustainability. Overall, the financial "vital signs" suggest caution—while the company has a positive net asset position, it is experiencing symptoms of financial strain that warrant close monitoring and intervention.

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Key Vital Signs

1. Fixed Assets

   • 2024: £9,101,276 (previously £656,126 in 2023)
   • Interpretation: A significant increase in long-term assets, possibly indicating investment in property or equipment. This suggests an attempt at growth or capital expansion.

2. Current Assets

   • 2024: £0 (unchanged from 2023)
   • Interpretation: No short-term liquid assets such as cash or receivables. Indicates a lack of immediate liquidity to cover short-term obligations.

3. Current Liabilities

   • 2024: £8,566,759 (up from £162,443 in 2023)
   • Interpretation: A sharp increase in debts due within one year. This is a symptom of financial distress, raising concerns about the company’s ability to meet near-term commitments.

4. Net Current Assets (Working Capital)

   • 2024: -£8,566,759 (negative working capital)
   • Interpretation: The company’s short-term debts vastly exceed its short-term assets, indicating potential cash flow problems and liquidity risk.

5. Net Assets / Shareholders’ Funds

   • 2024: £534,518 (up from £493,684 in 2023)
   • Interpretation: Positive net worth but modest compared to liabilities. The net assets reflect the value of fixed assets minus liabilities, but the large current liabilities reduce financial flexibility.

6. Employees

   • Average number: 0
   • Interpretation: No employees reported, indicating possible operational scale-back or reliance on contractors/outsourcing.

7. Share Capital

   • £1.00
   • Interpretation: Minimal share capital, typical for micro companies but suggests limited equity base.

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Symptoms Analysis

• Liquidity Crisis: The absence of current assets combined with high current liabilities is a classic symptom of liquidity distress. The company may struggle to pay suppliers, creditors, or meet short-term expenses, risking insolvency if not addressed.
• Asset-heavy but Cash-poor: The large fixed asset increase implies capital investment but without corresponding cash or receivables, it could mean assets are illiquid or tied up in non-cash forms (e.g., property).
• Operational Dormancy: Zero employees suggest the company is either in an incubation phase, relying heavily on external resources, or has scaled down operations significantly.
• Growth vs. Risk: While net assets have increased slightly, this is overshadowed by the ballooning current liabilities, indicating risk of financial distress if working capital issues persist.

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Diagnosis

The company’s financial "pulse" reveals a condition akin to a patient with a strong skeleton (fixed assets) but failing heart function (cash flow). The micro-entity has invested heavily in fixed assets without building sufficient liquid reserves to cover short-term debts. The negative working capital signals a liquidity crunch, which is a serious symptom that could escalate to insolvency if not corrected. The lack of employees may reflect limited operational capacity, which could either be a strategic cost-saving measure or a warning of reduced business activity. Overall, while the company remains solvent with positive net assets, it is facing financial stress requiring prompt management attention.

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Prognosis

If the company continues on this trajectory without improving liquidity and operational capacity, it risks cash flow failure. The prognosis depends on converting fixed assets to cash, securing additional working capital, or restructuring liabilities. Without intervention, the symptoms could worsen, potentially leading to insolvency procedures. However, if the company can stabilize cash flow and manage liabilities effectively, it has a reasonable chance to recover and return to financial health.

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Recommendations for Financial Wellness Improvement

1. Improve Liquidity:

   • Seek short-term financing or credit facilities to cover current liabilities.
   • Accelerate receivables collection or convert fixed assets into liquid assets if possible.

2. Working Capital Management:

   • Negotiate extended payment terms with suppliers to ease cash outflows.
   • Monitor cash flow forecasts closely to anticipate and manage liquidity gaps.

3. Operational Review:

   • Evaluate the lack of employees and assess if hiring or outsourcing is necessary to support business activities.
   • Consider whether the asset acquisition aligns with current operational needs.

4. Financial Restructuring:

   • Explore refinancing options for current liabilities to spread repayment over a longer term.
   • Review shareholder funding options to increase equity base and reduce reliance on debt.

5. Strategic Planning:

   • Develop a clear business plan to leverage the fixed assets efficiently and generate sustainable cash flows.
   • Consider professional advice for turnaround strategies if cash flow issues persist.

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