PARROT QUAY LIMITED

Executive Summary

Parrot Quay Limited shows signs of financial stress primarily due to a severe liquidity shortfall despite positive net asset figures driven by investments. Immediate focus on managing short-term liabilities and improving cash flow is critical to stabilise the company’s financial health. Without urgent corrective measures, the company risks facing cash flow crises despite its asset base.

PARROT QUAY LIMITED - Analysis Report

Company Number: 12930151

Analysis Date: 2025-07-20 11:17 UTC

Financial Health Assessment for PARROT QUAY LIMITED (as of 31 October 2024)

---

1. Financial Health Score: D

Explanation:
The company exhibits serious liquidity concerns despite a positive net asset position in the latest year. The vast excess of current liabilities over current assets indicates symptoms of financial distress, akin to a patient with severe fluid imbalance—where the vital signs appear positive superficially (net assets), but the immediate cash flow and working capital position are dangerously weak. The company's ability to meet short-term obligations is compromised, which poses a risk to its ongoing viability without urgent intervention.

---

2. Key Vital Signs (Critical Financial Metrics)

Metric	2024 Value	Interpretation
Current Assets	£191,152	Very low compared to liabilities; poor liquidity
Cash at Bank	£174,327	Cash position is limited but stable
Debtors	£192,469	Reduced from previous year; collection may be slow
Current Liabilities	£9,686,879	Extremely high short-term obligations
Net Current Assets (Working Capital)	-£9,495,727	Severe working capital deficiency
Net Assets (Equity)	£198,645	Positive, showing recovery from prior deficits
Other Financial Assets (Investments)	£9,518,728	Significant but illiquid; may be difficult to convert quickly
Directors’ Loans (Other Creditors)	£7,338,945	Large portion of liabilities with no repayment terms; risk factor

Interpretation of Vital Signs:

• The negative working capital is a critical symptom of distress, showing the company owes far more in the short term than it has readily available assets to cover.
• The net assets turning positive from a prior negative position is a sign of some recovery or revaluation, but this is largely due to the fair value of investments rather than operational cash flow or core business strength.
• The large directors’ loans without repayment terms create uncertainty and potential liquidity risk, as these represent significant liabilities that are not time-bound but could be called at any moment.
• Cash levels are insufficient relative to current liabilities, indicating a risk of cash flow crises if liabilities need to be settled imminently.

---

3. Diagnosis: Overall Financial Condition

• Liquidity Crisis: The company is in a precarious liquidity position, with current liabilities outstripping current assets by nearly £9.5 million. This is comparable to a patient with low blood pressure and weak pulse—immediate action is required to stabilise the condition.
• Asset Quality and Valuation: The company holds substantial financial assets (£9.5 million) classified at fair value, which suggests a reliance on investments for value rather than operational profitability or cash generation. However, these assets may not be liquid enough to meet urgent liabilities without loss.
• Dependence on Directors: The significant amount owed to directors (over £7.3 million) with no repayment terms indicates a high reliance on internal financing. While this can be supportive, it also creates uncertainty and potential risk if the directors demand repayment.
• No Staff, No Operating Income: The company has no employees and minimal operational activity, indicating it might be a holding or investment vehicle rather than a trading business. This reduces the likelihood of generating operating cash flows to improve liquidity.
• Going Concern: Directors have stated the company is a going concern based on their continued support, but this is a soft assurance rather than a financial fact. Without external funding or operational cash flow, the going concern assumption is fragile.

---

4. Recommendations: Specific Actions to Improve Financial Wellness

1. Liquidity Management:

   • Negotiate repayment terms or restructuring of current liabilities, especially directors’ loans, to spread obligations over a longer period or convert into equity where possible.
   • Assess the feasibility of liquidating part of the financial asset portfolio to bolster cash reserves, but consider market conditions to avoid forced losses.

2. Operational Review:

   • Review the business model to determine if operational income streams can be developed or enhanced to improve cash flow and reduce reliance on financing.
   • If the company is primarily a fund management or investment holding entity, focus on improving investment returns and managing costs tightly.

3. Financial Planning and Forecasting:

   • Develop detailed cash flow forecasts highlighting timing of liabilities and expected inflows. This will help anticipate and prevent liquidity shortfalls.
   • Explore external funding options if internal support is insufficient, such as equity injection or bank facilities.

4. Governance and Transparency:

   • Improve communication with stakeholders regarding financial health and plans to address liquidity concerns.
   • Document and formalize repayment schedules for directors’ loans to reduce uncertainty.

---