EVERNEST ROOMS LIMITED

Executive Summary

Evernest Rooms Limited is recovering from prior financial strain with improved net assets but suffers from severe liquidity stress due to high short-term liabilities and reliance on director loans. Strategic cash flow management and refinancing are critical to stabilizing the company’s financial health and enabling sustainable operations.

EVERNEST ROOMS LIMITED - Analysis Report

Company Number: 12446894

Analysis Date: 2025-07-20 16:57 UTC

Financial Health Assessment of Evernest Rooms Limited as of 29 February 2024

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1. Financial Health Score: C (Fair)

Explanation:
Evernest Rooms Limited shows signs of stabilizing after previous periods of financial strain, with net assets improving from negative to positive territory. However, the company is burdened with significant short-term liabilities and negative working capital, indicating liquidity stress. The reliance on director loans to cover immediate obligations also suggests ongoing funding challenges. Thus, while the company is not currently in distress, its financial health is vulnerable and requires active management.

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2. Key Vital Signs

Metric	2024 Figure	Interpretation
Fixed Assets	£1,104,490	Represents substantial investment in property and equipment, core to business operations.
Current Assets	£5,243	Very low short-term assets, mainly cash and debtors, limiting liquidity.
Current Liabilities	£1,027,528	High short-term obligations, creating a liquidity mismatch.
Net Current Assets (Working Capital)	£-1,022,285	Negative working capital indicates symptoms of cash flow distress; company owes more short-term than it owns.
Net Assets (Shareholders’ Funds)	£82,205	Positive net worth; improved from prior years' losses, indicating gradual recovery or capital injection.
Director Loans (within Creditors)	£1,005,479	Heavy reliance on director funding to meet liabilities, which can be a risk if not repaid or replaced by other financing.
Profit & Loss Reserve	£82,105	Reflects accumulated retained earnings, improved from prior negative reserves, signaling return to profitability or equity support.
Cash	£3,234	Very low cash balance relative to liabilities, indicates tight daily liquidity and potential cash flow constraints.

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3. Diagnosis

Evernest Rooms Limited is akin to a patient who has emerged from a critical condition but remains fragile. The company’s fixed assets (property holdings) are its core strength, providing underlying value and stability. However, the balance sheet reveals a serious liquidity imbalance: current liabilities dwarf current assets by a tenfold margin. This negative working capital is a clear symptom of financial stress, suggesting the company has difficulty meeting short-term obligations from its readily available resources.

The significant director loans acting as creditor support are comparable to an emergency infusion of capital. While this has helped avoid insolvency, it is not a sustainable long-term funding source without formal repayment plans or refinancing. The company’s net assets have improved from negative to positive, a sign of improved profitability or capital injections, but the underlying cash flow remains weak.

The absence of an audit and limited financial disclosures (filleted accounts) restrict full insight into operational performance, but the financial position suggests a business in recovery but not yet fully stable. The property letting business model (SIC 68209) relies heavily on asset management and rental income, but the current financial structure points to ongoing liquidity challenges.

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4. Recommendations

• Improve Liquidity Management:
  Prioritize increasing current assets, particularly cash reserves, through better collection of receivables, controlling expenses, or securing short-term financing facilities to avoid liquidity crises.

• Refinance or Restructure Debt:
  Engage with lenders or directors to convert short-term director loans into longer-term financing or equity to reduce immediate repayment pressure and improve working capital.

• Enhance Cash Flow Forecasting:
  Develop detailed cash flow projections to anticipate shortfalls and plan financing needs proactively, ensuring “healthy cash flow” to cover operational and financial obligations.

• Cost Control and Revenue Enhancement:
  Review operational efficiencies to reduce overheads and explore opportunities to increase rental income or diversify revenue streams to build a stronger profit base.

• Transparency and Reporting:
  Consider moving beyond filleted accounts to fuller disclosures to improve stakeholder confidence and attract potential investors or lenders.

• Contingency Planning:
  Prepare for potential downturns by setting aside reserves or establishing credit lines, mitigating risks of cash shortages or unexpected expenses.

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Executive Summary

Evernest Rooms Limited has shown a positive shift in net assets, moving from losses to a modest surplus, indicating signs of financial recovery. However, the company faces significant liquidity challenges highlighted by large current liabilities and negative working capital, sustained by substantial director loans. Immediate focus on improving cash flow, refinancing short-term debts, and controlling costs is essential to stabilize financial health and ensure sustainable growth.