Company Number: 12823825

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

1. Credit Opinion: CONDITIONAL APPROVAL
   CHLY Ltd shows a small net asset base (£3,908) and persistent negative working capital (~£87k deficit), indicating short-term liquidity stress. The company relies heavily on intra-group funding (noted £129k owed to group undertakings), which may mask operational cash flow weaknesses. However, the company is active, filing accounts and returns on time, and shows modest asset stability with tangible fixed assets around £100k. Credit approval could be considered with conditions such as guarantees, monitoring of group support, and regular cash flow reviews due to the negative net current assets and dependence on group advances.

2. Financial Strength:
   The balance sheet reflects a low equity buffer (£3,908) and consistent negative net current assets (£87k deficit), signaling a working capital deficiency. Fixed assets are stable (£100k) but cannot cover short-term liabilities. Share capital is minimal (£100). Deferred tax liabilities (~£9k) further reduce net assets. The company’s net assets have decreased slightly from £5,250 last year to £3,908. Overall, financial strength is weak, with solvency relying on group funding and operational cash flow improvement.

3. Cash Flow Assessment:
   Cash at bank has improved from £26k to £41k, which is positive. However, current liabilities (~£150k) exceed current assets (~£63k), creating liquidity pressure. Debtors have decreased from £27k to £17k, potentially indicating tighter credit control or reduced sales. The company repaid director advances in full during the year, showing some cash management discipline. The reliance on amounts owed to group undertakings (£130k) suggests that ongoing liquidity depends on the parent company’s support rather than internal cash generation.

4. Monitoring Points:

• Monitor working capital and liquidity closely; negative net current assets should be reduced to avoid cash flow crises.
• Track intra-group funding levels and conditions to ensure external creditors are not exposed to withdrawal risk.
• Watch debtor collection trends to confirm cash inflows are improving and not deteriorating.
• Review profitability and future trading performance to assess ability to generate internal cash and rebuild equity.
• Confirm timely filings and absence of any director-related conduct issues or legal disputes.