TOOLK-1T LTD

Executive Summary

TOOLK-1T LTD is currently in a financially fragile state, marked by negative net assets and recurring working capital deficits, though recent periods show some liquidity improvement. The company faces uncertainty about its standalone future, preparing to hive up assets to its parent, indicating significant restructuring ahead. Immediate focus on liquidity management, intra-group financing clarity, and strategic restructuring is essential to improve its financial health.

TOOLK-1T LTD - Analysis Report

Company Number: 13058861

Analysis Date: 2025-07-20 12:54 UTC

Financial Health Assessment Report for TOOLK-1T LTD

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1. Financial Health Score: D

Explanation:
The company demonstrates clear symptoms of financial distress, including persistent net current liabilities and shareholders' deficit over multiple periods. Although there has been some improvement recently, the financial “vital signs” indicate a fragile state with negative net assets and working capital deficits. The company is not in immediate liquidation but is preparing to hive up assets and trade, reflecting uncertainty about its going concern status.

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2. Key Vital Signs

Metric	Latest Period (30 Jun 2024)	Interpretation
Current Assets	£41,807	Reasonable short-term asset base, mostly cash.
Cash at Bank	£36,358	Healthy cash holding relative to total assets.
Debtors (Trade Receivables)	£5,449	Modest receivables, manageable.
Current Liabilities	£44,758	Exceeds current assets, causing working capital deficit.
Net Current Assets (Working Capital)	-£2,951	Negative working capital, a symptom of liquidity strain.
Net Assets (Equity)	-£2,951	Negative net worth, indicating accumulated losses exceed equity.
Share Capital	£1	Nominal capital; minimal equity buffer.
Profit & Loss Reserve	-£2,952	Accumulated losses over the life of the company.
Period length	15 months (extended period)	Longer reporting period may distort comparisons.

Trend Analysis:

• Net current liabilities reduced from -£5,884 (March 2023) to -£2,951 (June 2024), indicating some improvement in liquidity.
• Net assets improved from -£5,884 to -£2,951 but remain negative, indicating ongoing financial deficit.
• Cash increased significantly, a positive sign for short-term liquidity.
• Current liabilities increased substantially, largely due to amounts owed to group companies (£37,165), which could represent intra-group financing or delayed payments.

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3. Diagnosis: Financial Condition and Underlying Symptoms

Liquidity and Working Capital:
The company’s working capital is negative, which is a classic symptom of liquidity stress — current liabilities exceed current assets, meaning the company may struggle to meet short-term obligations without additional funding or asset sales.

Solvency and Equity Position:
Negative net assets and shareholders’ funds reflect accumulated losses and a weakened capital base. This “balance sheet weakness” suggests the company has been running at a loss or consuming capital for some time.

Cash Flow Health:
Despite negative working capital, the company holds a relatively healthy cash balance (£36,358). This “healthy cash flow” symptom suggests management is actively managing liquidity, perhaps supported by group funding.

Going Concern:
Directors disclosed that the company is preparing to hive up trade and assets to its parent company within 12 months, and financial statements were prepared on a basis other than going concern. This indicates uncertainty about the company’s future as a standalone entity, a serious sign of “chronic illness” in business terms.

Operational Activity:
No employees currently (average zero during last period), which may indicate minimal or outsourced operations. The company’s SIC codes relate to IT consultancy and other IT services, which may be project-based and variable in revenue.

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4. Recommendations: Prescriptions for Financial Wellness

1. Strengthen Liquidity Management:

   • Continue to monitor and improve working capital by negotiating better payment terms with creditors and accelerating debtor collections.
   • Ensure cash reserves are maintained to cover immediate liabilities and avoid liquidity crises.

2. Review Intra-Group Financing:

   • Clarify and formalize any amounts owed to the group to ensure transparency and manage repayment schedules that do not strain operational cash flows.
   • Consider whether refinancing or capital injections from the parent company are necessary.

3. Strategic Restructuring:

   • Since the company plans to hive up assets and trade, develop a clear plan for this transition to minimize disruption.
   • Consider if the current business model is sustainable independently or if integration with the parent offers better prospects.

4. Cost Control and Profitability Improvement:

   • Review operational costs to restore profitability and rebuild reserves.
   • Explore new revenue streams or projects aligned with IT consultancy services to enhance income.

5. Governance and Compliance:

   • Maintain timely filing of accounts and confirmation statements to avoid penalties and maintain company reputation.
   • Keep directors informed about financial risks and ensure transparency with stakeholders.

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Medical Analogy Summary:

TOOLK-1T LTD shows “symptoms of distress” with a “weakened balance sheet” and “negative working capital,” akin to a patient with chronic financial illness. While recent “vital signs” like improved cash reserves suggest some recovery, the underlying “diagnosis” points to fragile health. The company’s plan to hive up assets signals a need for a major “treatment intervention” (restructuring) to restore financial wellness.

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