Company Number: 13018294

Analysis Date: 2025-07-20 14:19 UTC

1. Risk Rating: HIGH
   Elmar Estates Ltd exhibits significant solvency risk, evidenced by persistent net liabilities and negative shareholders’ funds over multiple years. The company’s current liabilities exceed current assets, indicating liquidity challenges that could impair its ability to meet short-term obligations.

2. Key Concerns:

• Negative Net Assets and Shareholders’ Deficit: The company has maintained negative net assets from its incorporation in 2020 through 2023, with shareholders’ funds declining from -£12,679 to -£18,650. This sustained deficit points to accumulated losses and capital erosion.
• Working Capital Deficiency: Current liabilities (£303,000 consistently) significantly exceed current assets (£123,315 in 2023), resulting in negative net current assets (-£21,657 in 2023), suggesting potential cash flow constraints.
• High Secured Debt Load: The company carries a substantial bank loan of £303,000 secured against investment property, which may represent a refinancing risk if property values decline or rental income is insufficient.

3. Positive Indicators:

• Stable Investment Property Valuation: The investment property is valued consistently at £306,008 over the last two years, providing a tangible asset base backing the secured debt.
• Recent Profit Generation: In the latest financial year, the company recorded a profit of £8,568, which, although modest, reduced the retained losses and improved the equity position slightly.
• No Overdue Filings: The company’s accounts and confirmation statements are up to date, indicating compliance with statutory filing requirements and management diligence in governance.

4. Due Diligence Notes:

• Cash Flow Analysis: Investigate the company’s cash flow statements (not filed in public accounts) to understand operating cash generation and ability to service debt and creditors.
• Nature and Collectability of Debtors: £120,000 of debtors constitute the majority of current assets; verify their aging, security, and likelihood of collection.
• Loan Terms and Covenants: Examine the detailed terms of the £303,000 bank loan, including repayment schedule, interest rates, covenants, and potential triggers for default.
• Rental Income and Property Occupancy: Confirm ongoing rental income from the investment property, occupancy rates, and market conditions impacting valuation and cash flow.
• Director’s Plans for Capitalization: Given the low share capital (£1) and negative equity, assess any plans for recapitalization or external financing to improve solvency.