ORBITAL PROJECTS 5 LIMITED

Executive Summary

Orbital Projects 5 Limited shows high financial risk due to negative net current assets, zero cash reserves, and reliance on its parent company for ongoing support. The company benefits from significant parent-level funding initiatives and government contracts, but material uncertainty about going concern remains. Investors should carefully review the parent’s financial strength and funding pipeline to assess the subsidiary’s sustainability.

ORBITAL PROJECTS 5 LIMITED - Analysis Report

Company Number: SC721335

Analysis Date: 2025-07-29 14:43 UTC

1. Risk Rating: HIGH
   The company exhibits significant solvency and liquidity risks given its material net current liabilities, negative equity position, and reliance on parent company support for ongoing operations. The auditor’s report explicitly highlights material uncertainty regarding going concern.

2. Key Concerns:

• Negative Net Current Assets and Equity: As of 31 December 2023, Orbital Projects 5 Limited reported net current liabilities of £179,093 and shareholders’ funds of negative £166,699, indicating the company’s liabilities substantially exceed its assets.
• Dependence on Parent Company: The company’s going concern assumption relies heavily on financial support from its ultimate parent, Orbital Marine Power Limited. This dependence introduces risk if the parent’s support diminishes.
• Absence of Cash Reserves: The company held zero cash at year-end 2023, with current assets comprising solely of debtors (£10,039), raising immediate liquidity concerns for meeting short-term obligations (£189,132 due within one year).

3. Positive Indicators:

• Ongoing Funding and Grants: The parent company has secured significant funding packages and government contracts (including £4.5m in Q1 2024 and over £100m of potential project finance) which indirectly support the subsidiary’s operations and strategic growth.
• Audit Opinion: Despite the going concern uncertainty, the auditor issued an unqualified report and agreed with directors’ use of the going concern basis.
• Active Directors with Relevant Roles: The company has three current directors including a CFO and CEO, indicating a functioning governance structure.

4. Due Diligence Notes:

• Parent Company Financial Health: Review the financial position and liquidity of Orbital Marine Power Limited to assess the sustainability of their support.
• Project Funding Realization: Verify progress and likelihood of securing the project finance and equity funding referenced, including contracts for difference and grant awards.
• Cash Flow Forecasts: Obtain detailed cash flow projections for Orbital Projects 5 Limited and the wider group to evaluate short-term liquidity and funding runway.
• Intercompany Balances: Understand terms and repayment plans for the substantial amounts owed to group undertakings (£162,960 in 2023) which are interest-free and repayable on demand.
• Contingent Liabilities or Off-Balance Sheet Risks: Investigate any additional commitments or guarantees related to project SPVs or parent company obligations.

Executive Summary:
Orbital Projects 5 Limited currently faces high solvency and liquidity risks, evidenced by significant net current liabilities, negative equity, and zero cash balances at year-end. The company’s survival depends materially on its parent company’s ongoing financial support and success in securing project funding. While audit assurances and positive funding developments provide some comfort, investors should conduct thorough due diligence on the parent group’s financial health and funding prospects before committing capital.