TECH5 UK SERVICES LTD

Executive Summary

TECH5 UK SERVICES LTD maintains a stable but very tight financial position with minimal working capital and equity. The company shows signs of growth but operates with limited financial buffers, which could lead to liquidity risks without careful management. Strengthening working capital, improving receivables management, and enhancing equity are key steps to ensure ongoing financial health and resilience.

TECH5 UK SERVICES LTD - Analysis Report

Company Number: SC689029

Analysis Date: 2025-07-29 20:54 UTC

Financial Health Assessment Report: TECH5 UK SERVICES LTD

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1. Financial Health Score: C

Explanation:
The company shows stability in maintaining a positive net current asset position, albeit with very slim working capital margins (£100). The balance sheet is balanced but minimal in scale, reflecting a young and small enterprise with limited equity (£100 share capital). The steady increase in debtors and current liabilities over recent years suggests growing activity but also rising obligations. Overall, these indicators point to a business that is solvent but operating with a very thin margin of safety—akin to a patient with stable vital signs but low reserves, requiring careful monitoring and proactive management to avoid distress.

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2. Key Vital Signs

Metric	Latest (FY 2024)	Interpretation
Debtors (Receivables)	£22,021	Increasing receivables indicate rising sales or intercompany balances; potential liquidity tied up in amounts owed.
Current Liabilities	£21,921	Current obligations have increased proportionately with debtors, indicating growing short-term financial demands.
Net Current Assets	£100	Minimal positive working capital; indicates tight liquidity with very little buffer to cover short-term debts.
Shareholders’ Funds	£100	Minimal equity base; reflects very small capitalisation and limited retained earnings.
Employee Count	2	Very small workforce, consistent with a micro or small company profile.
Company Status	Active	Operating normally with no signs of distress or overdue filings.

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3. Diagnosis

Symptoms Analysis:

• The company exhibits "healthy cash flow" in that current assets slightly exceed current liabilities, meaning it can meet immediate debts, but only just.
• The increase in debtors from £3,707 (2023) to £22,021 (2024) alongside a similar increase in current liabilities from £3,607 to £21,921 suggests that the company is expanding its activities or intercompany dealings but is also accumulating obligations on a comparable scale. This balance is delicate and could quickly tip into liquidity strain if receivables are delayed or liabilities accelerate.
• The consistent net current asset figure of just £100 over several years signals a static working capital position—akin to a patient whose vital signs are stable but dangerously low, requiring close monitoring for any signs of deterioration.
• Share capital and equity remain minimal, indicating limited financial cushion to absorb losses or fund growth internally.
• The company is exempt from audit and files accounts promptly, which reduces regulatory risk but also limits transparency on profitability and cash flows.

Underlying Business Health:

• The company’s financial statements do not include a profit and loss account, so profitability signals are absent. This lack of detailed income statement data limits full diagnostic insight.
• The company operates in IT consultancy and software development—industries with variable cash flow patterns and often dependent on project timing and client payments.
• The sole director and founder controls 100% equity through the parent Tech5 SA in Switzerland, indicating centralized control and potential support, which may be a stabilizing factor.

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4. Recommendations

To improve financial wellness and reduce risk of distress, the company should consider:

1. Increase Working Capital Buffer:

   • Aim to grow net current assets beyond the minimal £100 to create a financial cushion. This can be achieved by faster collection of receivables or negotiating longer credit terms with suppliers.

2. Monitor and Manage Receivables:

   • Given the large increase in debtors, implement robust credit control procedures to ensure receivables are collected promptly and reduce risk of cash flow crunch.

3. Enhance Equity Base:

   • Infuse additional share capital or retain earnings to strengthen shareholders’ funds, providing a buffer against unforeseen expenses and supporting growth.

4. Profitability Transparency:

   • Consider including profit and loss accounts in future filings to give stakeholders better insight into operational performance, which aids strategic decisions and builds confidence.

5. Cash Flow Forecasting:

   • Regularly update cash flow projections to anticipate and manage liquidity needs, particularly given the tight working capital position.

6. Leverage Parent Company Support:

   • Engage with the ultimate parent, Tech5 SA, to secure financial or operational support if needed, especially during growth phases or cash flow volatility.

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