Company Number: 12842018

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

1. Credit Opinion: DECLINE
   Chilli Pepper Designs Limited shows persistent and worsening net liabilities over four years, with net assets deteriorating from -£5,869 in 2020 to -£11,935 in 2023. The company has negative working capital and net current liabilities each year, indicating an inability to cover short-term debts from current assets. The absence of positive equity or significant fixed assets reduces the company’s collateral value. These factors signal a weak financial position and a high risk of default on credit obligations. Without evidence of turnaround or external support, extending credit is not advisable.

2. Financial Strength:
   The company’s balance sheet reflects ongoing financial distress. Fixed assets have declined from £8,599 in 2020 to £2,483 in 2023, while current liabilities remain high relative to current assets. The net liabilities position worsened by over £7,000 in the latest year, driven by increasing accruals and deferred income. Shareholders’ funds are deeply negative, reflecting accumulated losses and no retained earnings to cushion against shocks. The micro-entity status limits reporting detail but does not obscure the clear trend of financial deterioration.

3. Cash Flow Assessment:
   Negative net current assets indicate liquidity constraints; current liabilities exceed current assets by approximately £6,000 in 2023. The company likely struggles to meet short-term obligations without additional working capital or cash infusion. The large prepayments and accrued income reported in prior years do not translate into liquid assets. The absence of positive cash flow indicators raises concerns about the company’s ability to generate sufficient operational cash to service debt or finance growth.

4. Monitoring Points:

• Watch for improvements in net current assets and reduction in current liabilities.
• Monitor any capital injections or shareholder funding to improve equity.
• Track changes in fixed assets and accruals to understand asset utilization and liability management.
• Review trading performance and cash flow statements if available to assess operational sustainability.
• Observe director statements or external events indicating restructuring or refinancing efforts.