TOTEMIQ LIMITED

Executive Summary

TOTEMIQ LIMITED currently shows signs of financial distress with negative net assets and working capital deficits, indicating liquidity issues that threaten solvency. While compliant with regulatory filings, urgent measures on cash flow management and capital restructuring are recommended to stabilize the business and improve its financial outlook.

TOTEMIQ LIMITED - Analysis Report

Company Number: 14848317

Analysis Date: 2025-07-29 16:51 UTC

Financial Health Assessment for TOTEMIQ LIMITED (as of 31 March 2025)

---

1. Financial Health Score: D

Explanation:
The company shows clear symptoms of financial distress, reflected in its negative net assets and working capital position. While it remains active and compliant with filings, the balance sheet reveals deteriorating financial stability. The score 'D' indicates significant caution is warranted, with urgent attention needed to restore financial health.

---

2. Key Vital Signs

Metric	2025 Value (£)	Interpretation
Fixed Assets	17,828	Moderate level of long-term assets; slight reduction from prior year but stable.
Current Assets	13,496	Increased compared to prior year, indicating more cash or receivables on hand.
Current Liabilities	35,498	Substantial short-term debts, increased by ~39% from prior year; a red flag for liquidity.
Net Current Assets (Working Capital)	-22,002	Negative working capital indicating inability to cover short-term debts with current assets.
Total Assets Less Current Liabilities	-4,174	Negative overall net assets, showing liabilities exceed assets; a critical warning sign.
Shareholders' Funds (Equity)	-4,174	Negative equity reflects accumulated losses or financial strain; shareholders’ funds are eroded.
Employees	1	Micro-entity with minimal staff, possibly limiting operational scale and cash burn.

---

3. Diagnosis: Financial Symptoms and Underlying Business Health

• Liquidity Stress: The company’s current liabilities significantly exceed current assets, resulting in a negative working capital of £22,002. This is akin to a patient having low blood volume — the business may struggle to meet short-term obligations, risking insolvency if not addressed promptly.

• Eroded Net Worth: The net asset position has swung from a modest positive (£209) to a negative £4,174 over the last financial year. This indicates cumulative losses or increased debt burden, putting the company in a state comparable to an organ failure risk — the foundation of the business is weakened.

• Asset Base Decline: Fixed assets have decreased by around 25% from £23,771 to £17,828, which may indicate asset sales or depreciation. This shrinking asset base reduces collateral value and long-term stability.

• Micro-Entity Scale: With only one employee and micro-entity status, the company operates at a very small scale. This limits flexibility but also restricts complexity and overheads.

• Compliance and Governance: The company is up to date with filings and accounts, showing responsible 'patient monitoring' practices.

• Industry Context: Operating in "Other specialised construction activities," a sector often sensitive to cash flow timing and project cycles, the negative working capital is particularly concerning as delays in payments or cost overruns could quickly worsen financial strain.

---

4. Recommendations: Prescription for Financial Recovery

1. Improve Liquidity Management:

   • Prioritize collection of receivables and manage payables to reduce current liabilities.
   • Consider short-term financing options (overdrafts or invoice financing) to bridge liquidity gaps.

2. Cost Control and Revenue Enhancement:

   • Review operating expenses carefully to minimize cash burn.
   • Focus on securing higher-margin contracts or prompt payment terms to improve cash inflow.

3. Capital Injection or Restructuring:

   • Explore options for fresh equity investment from shareholders or external investors to replenish net assets.
   • If shareholders are unable, consider restructuring debt or negotiating terms with creditors.

4. Asset Utilization:

   • Evaluate the fixed assets to determine if any can be liquidated without impairing operations to raise cash.
   • Alternatively, consider leasing equipment if capital expenditure constraints persist.

5. Financial Monitoring and Forecasting:

   • Implement robust cash flow forecasting with scenario planning to detect future distress early.
   • Regularly monitor key financial ratios and liquidity metrics as vital signs.

6. Seek Professional Advice:

   • Consider consulting insolvency practitioners or financial advisors early if liquidity issues persist to avoid formal distress procedures.

---

Summary

TOTEMIQ LIMITED exhibits serious financial symptoms, notably negative net assets and working capital, indicating liquidity and solvency challenges typical of a business under stress. Prompt interventions around cash flow management, cost control, and potential capital support are essential to restore financial health and prevent deterioration.