CROWD NETWORK LIMITED

Executive Summary

Crowd Network Limited is showing signs of financial recovery with recent profitability and positive cash flow forecasts but remains highly leveraged with negative equity. Conditional approval is recommended, contingent on close monitoring of liquidity, debt servicing, and equity strengthening initiatives. The company’s ability to sustain growth and manage refinancing risk will be critical for credit risk mitigation.

CROWD NETWORK LIMITED - Analysis Report

Company Number: 12490027

Analysis Date: 2025-07-20 13:10 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Crowd Network Limited is an active private limited company operating in telecommunications and holding activities. The company exhibits a turnaround with profitability emerging since June 2024 and a positive operating budget forecast for 2024-25. However, the company currently has negative net equity due to a significant long-term loan (£1,065,000) with repayments deferred until January 2026. This creates financial leverage risk. Approval is recommended with conditions that the company demonstrates sustained profitability, positive cash flow, and adherence to repayment schedules on the refinancing arrangement. Close monitoring of liquidity and debt servicing is essential.

2. Financial Strength:
   The balance sheet shows tangible fixed assets of £17,547 and net current assets of £177,786 as of August 2024, indicating positive short-term liquidity. However, total liabilities after one year amount to £1,065,000, leading to net liabilities of £869,667 and a shareholders’ deficit of the same magnitude. The company’s equity is negative due to accumulated losses (£2,729,668 in P&L reserve) offset by a substantial share premium account (£1,859,989). While the company is building asset base and improving working capital, the large long-term debt and negative equity reduce financial resilience.

3. Cash Flow Assessment:
   Cash at bank decreased to £213,525 from £351,488 in the prior year, reflecting some cash burn or investment outflow despite improved trading. Trade debtors increased slightly to £139,998, while trade creditors increased to £128,121, maintaining a reasonable working capital cycle. Positive net current assets provide some liquidity buffer. The company’s strict cash flow monitoring and forecasting process is a positive control. However, repayment of the sizeable long-term loan starting 2026 will require robust cash flow generation. The company’s recent profitability since mid-2024 and favourable budget variance are encouraging signs.

4. Monitoring Points:

• Continued profitability and actual vs budgeted revenue and net profit performance
• Cash flow sufficiency to meet operating needs and future loan repayments starting 2026
• Management’s progress on securing additional equity investment to strengthen the balance sheet
• Trends in working capital components (debtors, creditors) and liquidity ratios
• Any changes in long-term debt terms or refinancing arrangements
• Director and control stability, noting that one major shareholder (Mr. Michael James Blood) holds 75-100% control