TELESEMICA LIMITED

Executive Summary

Telesemica Limited is a young company with a weak financial position characterized by negative equity and working capital deficits. Despite reasonable cash on hand, current liabilities exceed current assets, raising concerns about short-term liquidity and ongoing viability. Given the accumulated losses and no clear evidence of sustainable profitability or capital support, credit extension is not recommended at this time.

TELESEMICA LIMITED - Analysis Report

Company Number: 13952118

Analysis Date: 2025-07-20 15:08 UTC

1. Credit Opinion:
   DECLINE
   Telesemica Limited shows signs of financial distress with negative net assets (£16,723) and net current liabilities (£34,837) as at 31 December 2023. The working capital deficit indicates short-term liquidity challenges. Despite a healthy cash balance (£293,461), current liabilities exceed current assets, signaling potential difficulties in meeting short-term obligations. The company has been trading for less than two years and is reporting accumulated losses, which raises concerns about its ability to generate sustainable profits and service debt. Without evidence of funding support from shareholders or improved profitability, the risk of default is elevated. Therefore, extending credit at this stage is not advisable.

2. Financial Strength:
   The balance sheet reveals a weak financial position. Fixed tangible assets are modest (£18,114) and have slightly increased since March 2023. However, the company’s shareholders’ funds are negative, reflecting accumulated losses that erode the equity base. The high deferred income (£323,707) suggests upfront payments for services or products not yet delivered, which could mask underlying cash flow issues. The relatively small share capital (£100) indicates limited capital buffer. Overall, the company’s financial leverage and capital structure are unfavorable from a credit perspective.

3. Cash Flow Assessment:
   Cash of £293,461 is a positive indicator but is offset by current liabilities of £394,768, resulting in a negative working capital position. Debtors have decreased from £62,260 to £41,893, which may indicate either improved collections or reduced sales; however, this should be monitored closely. The large deferred income balance may provide some liquidity cushion but also represents a future obligation. The cash position needs to be assessed in light of the company’s operational burn rate, which is unclear from the data but is likely significant given ongoing losses. Liquidity risk is present, and the company may require additional funding soon.

4. Monitoring Points:

• Track monthly cash flow and burn rate to assess liquidity trends.
• Monitor changes in deferred income and how quickly these liabilities convert into recognized revenue.
• Watch for improvements in net current assets and reduction in accumulated losses to strengthen equity.
• Review debtors aging and collection efficiency to maintain cash inflows.
• Observe any injections of shareholder funds or capital increases that could improve the financial position.
• Monitor directors’ strategic plans for profitability and cost management.