QPC Limited (02622653) — Investment Risk Analysis

1. Risk Rating: HIGH

QPC Limited is balance-sheet insolvent on a standalone basis, with net liabilities of £14.55m as at 31 March 2025 — a position that has deteriorated every year across the nine years of available history (from -£10.17m in 2017). The company reported a loss of £1.55m in FY2025 and held cash of just £673 at year end. Its continued operation is explicitly dependent on financial support from its ultimate parent and controlling shareholder, as stated in the going concern note. The rating is moderated only by the fact that the overwhelming majority of its liabilities are intra-group rather than owed to external creditors.

2. Key Concerns

a) Chronic balance-sheet insolvency with no standalone path to recovery Liabilities exceed assets by £14.55m, and the accumulated P&L deficit stands at -£14.6m against share capital of only £50,000. Negative equity has deepened in every reported year since at least 2017, indicating structural, not cyclical, losses. Absent a capital injection, debt write-off, or group restructuring, this position cannot self-correct.

b) Acute liquidity fragility Cash at bank fell from £253,590 to £673 during FY2025 — effectively nil for a business employing 23 people. Net current liabilities stand at £14.57m. While £14.85m of current creditors are amounts owed to group undertakings, external obligations are not trivial: trade creditors (£148k), other creditors (£1.0m, up from £830k), taxation (£180k), and bank borrowings (£65.5k). The company cannot service these from its own resources.

c) Total dependence on group support for going concern The directors' going concern conclusion rests entirely on "the support of both the ultimate controlling parent and the ultimate controlling shareholder" and group cash balances of £3.75m. The £14.85m intra-group creditor is classified as falling due within one year, meaning the parent could technically demand repayment at short notice. Any deterioration in the parent's position, or a change in group strategy, would immediately crystallise the insolvency. The FY2025 swing from a £46.6k profit to a £1.55m loss also raises questions about earnings visibility.

3. Positive Indicators

• Group backing is real and disclosed: The company is consolidated into QPC 2020 Limited (accounts publicly available), and the support arrangement has been formalised sufficiently for the auditor to issue an unqualified opinion (Alexander & Co LLP, 22 December 2025).
• External creditor exposure is limited: Roughly 91% of current liabilities are intra-group; genuine third-party debt is proportionately modest.
• Compliance record is clean: Accounts and confirmation statements are current with nothing overdue; the company has a 34-year trading history and maintains a workforce of 23.
• Some trading traction: Trade debtors rose from £194k to £336k year-on-year, which may indicate revenue growth (though it could equally signal slower collections — see below).
• Transparency: The accounts voluntarily include an audit and a candid going concern disclosure, which is preferable to silence on the issue.

4. Due Diligence Notes

1. Obtain the QPC 2020 Limited consolidated accounts — the entire risk assessment hinges on the parent's capacity and willingness to fund the deficit. Verify group cash of £3.75m and the group's own solvency.
2. Nature of the support letter: Is the parent undertaking legally binding? Is the £14.85m intercompany debt subordinated, interest-bearing, or repayable on demand? Its classification as a current liability is a technical vulnerability.
3. Composition of "other creditors" (£1.0m) — this grew by £170k in the year and is the largest external liability; its nature is undisclosed in the filing copy.
4. Post-balance-sheet trading: The accounts were signed in December 2025, nine months after year end. Request management accounts to establish whether FY2026 has stabilised, particularly given the £1.55m FY2025 loss.
5. Governance concentration: Xxxxxx Xxxxxxxxname shown to subscribers resigned as director on 31 October 2025, leaving P G Smith (also the ultimate controlling party) as sole director. Understand the reason for the departure and succession plans. Note also the related-party balance with Mazaru Limited (£21,600, interest-bearing at 4.64%, repayable on demand) — a company connected to the same director.
6. Anomalies to clarify: Corporation tax appears as both a debtor and a creditor at £72,560 (likely group relief mechanics, but worth confirming); debtor ageing should be reviewed given the 73% rise in trade debtors.
7. Bank facilities: £65.5k of loans/overdrafts — confirm whether these are secured or cross-guaranteed within the group.

Limitation: The filing copy omits the profit and loss account, so turnover, margin, and cost-base analysis is not possible from public data. This assessment is based on balance-sheet and disclosure evidence only.

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