PRIME CITIES EMBASSY GARDENS LTD

Executive Summary

Prime Cities Embassy Gardens Ltd exhibits high financial risk due to significant negative net assets and a large working capital deficit. While the company holds substantial investment property assets and maintains regulatory compliance, its liquidity position and reliance on parent company funding raise material concerns. Further investigation into asset valuations, debt terms, and cash flow projections is essential before considering investment.

PRIME CITIES EMBASSY GARDENS LTD - Analysis Report

Company Number: 14934564

Analysis Date: 2025-07-29 17:23 UTC

1. Risk Rating: HIGH
   The company shows a significant net liability position, with shareholder deficit increasing from -£233,841 in 2023 to -£659,542 in 2024. Current liabilities far exceed current assets, resulting in a large net current liability of over £10 million, indicating liquidity stress. The reliance on substantial bank loans and amounts owed to the parent company further elevates solvency risk.

2. Key Concerns:

• Negative Net Assets and Shareholder Deficit: The company’s net liabilities suggest an erosion of equity, which is critical for solvency and long-term viability.
• Severe Working Capital Deficit: Current liabilities of approximately £10.5 million overshadow current assets of only £271,832, highlighting liquidity constraints and potential difficulty in meeting short-term obligations.
• High Financial Leverage and Related Party Debt: Over £7.4 million owed to the parent company and bank loans secured on investment property create dependency on refinancing and parent support, raising concerns over financial stability if external support wanes.

3. Positive Indicators:

• Substantial Investment Property Asset Base: The company holds investment properties valued at nearly £12.9 million, which may provide collateral and potential for future cash generation.
• No Overdue Filings and Compliance: Accounts and confirmation statement are filed on time with no overdue filings, indicating good regulatory compliance.
• Experienced Directors: Directors include professionals with backgrounds in real estate and law, which may support competent governance and operational management.

4. Due Diligence Notes:

• Confirm the valuation methodology and liquidity of the investment properties, including any restrictions on sale or encumbrances.
• Assess the terms and conditions of loans from the parent company and banks, including repayment schedules, covenants, and potential for refinancing.
• Investigate cash flow forecasts and working capital management plans to understand how the company intends to alleviate its short-term liquidity pressures.
• Review intercompany arrangements and dependency risks related to the parent company’s financial support.
• Clarify the business model and revenue generation given the absence of turnover data and limited operational history since incorporation in 2023.