CHILLIE &SPICE LTD

Executive Summary

CHILLIE & SPICE LTD is currently facing significant financial distress, with negative working capital and equity after previously healthy years. Immediate action to improve cash flow, control costs, and possibly inject capital is essential to prevent further deterioration and restore financial health.

CHILLIE &SPICE LTD - Analysis Report

Company Number: SC688842

Analysis Date: 2025-07-29 20:43 UTC

Financial Health Assessment for CHILLIE & SPICE LTD

---

1. Financial Health Score: D

Explanation:
The company’s financial health score is graded as D, indicating significant distress signs. While it operated with positive net assets and working capital in previous years, the latest financial year shows a sharp deterioration, including negative net assets and net current liabilities. This suggests urgent attention is needed to restore financial stability.

---

2. Key Vital Signs

Metric	2024 (Latest Year)	Interpretation
Fixed Assets	£1,511	Low long-term asset base, typical for micro businesses.
Current Assets	£4,317	Significantly decreased from prior year (£9,880), indicating reduced liquid resources.
Current Liabilities	£6,232	Increased liabilities compared to previous year (£5,235), pressure on short-term obligations.
Net Current Assets	-£1,915	Negative working capital, a "symptom of distress" — unable to cover short-term debts with current assets.
Total Assets Less Current Liabilities	-£404	Indicates total assets cannot cover current liabilities, a worrying sign.
Net Assets / Shareholders’ Funds	-£3,085	Negative equity reflects accumulated losses or depletion of reserves.
Share Capital	£1.00	Nominal share capital, common in micro companies, but equity base is weak.

---

3. Diagnosis: What the Financial Data Reveals

• Declining Liquidity and Working Capital Stress:
  The company has transitioned from healthy positive net current assets (£4,645 in 2023) to a negative £1,915 in 2024, indicating a liquidity crunch. This means current liabilities now exceed current assets, akin to a patient whose vital signs show insufficient blood flow—here, cash flow is inadequate to meet short-term obligations.

• Negative Net Assets (Equity) and Shareholders’ Funds:
  Moving from positive net assets of £5,149 in 2023 to negative £3,085 in 2024 signals accumulated losses or write-downs. The company’s financial “immune system” is compromised, indicating potential insolvency risk if trends continue.

• Increase in Accruals and Deferred Income:
  Accruals and deferred income almost doubled (£1,175 to £2,681), suggesting the company has obligations or income recognized but not yet realized, potentially reflecting operational or cash flow timing issues.

• Stable Fixed Asset Base:
  The fixed asset base remains low and stable, which is typical for a micro business in the takeaway food sector, so no concerns in terms of asset overvaluation.

• Employee Count Stable:
  Average employees held steady at 3, which suggests no major workforce changes, but it also implies limited operational scale.

---

4. Recommendations: Steps to Improve Financial Wellness

• Immediate Cash Flow Management:
  Address the "symptom of distress" by improving cash inflows and managing outflows carefully. Consider renegotiating payment terms with suppliers or seeking short-term financing to cover working capital gaps.

• Cost Control and Operational Efficiency:
  Analyze operating expenses to identify cost-saving measures. Given the negative equity position, controlling overheads is critical to stop further erosion of net assets.

• Review Revenue Streams and Pricing:
  Explore increasing sales or adjusting pricing strategies to boost revenue. The takeaway food sector can be competitive; differentiating products or expanding delivery options could help.

• Seek External Financial Advice:
  Engage with financial advisors or accountants to explore restructuring options. If losses continue unchecked, the company risks insolvency.

• Consider Capital Injection:
  A fresh equity injection or loan from shareholders or investors could strengthen the balance sheet and restore working capital.

• Regular Monitoring:
  Implement monthly financial reviews to catch early warning signs and maintain a "healthy pulse" on financial performance.

---