GD NETWORKS LIMITED

Executive Summary

GD Networks Limited is a newly established micro-entity with limited financial resources and negative working capital, relying on director loans for liquidity. While it currently lacks a strong capacity to service external debt independently, conditional credit approval may be considered with stringent monitoring of cash flow and trading performance. Enhanced financial strength and evidence of sustainable cash generation are critical before increasing credit exposure.

GD NETWORKS LIMITED - Analysis Report

Company Number: 13874189

Analysis Date: 2025-07-20 13:32 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   GD Networks Limited is a very young micro-entity with limited trading history and modest financial resources. The company shows a small net asset base (£821) and negative working capital (£-184), indicating a tight liquidity position. The directors have advanced unsecured, interest-free loans to the company, which supports its funding needs but also reflects reliance on director support rather than operational cash flow. The company’s ability to service external debt independently is currently limited. Credit approval can be considered but should be conditional upon regular monitoring of trading performance and cash flows, with limits on exposure until stronger financial evidence emerges.

2. Financial Strength:
   The balance sheet reflects a low level of fixed assets (£1,005) and a small net asset position (£821). Current liabilities slightly exceed current assets, resulting in negative net current assets of £184. This suggests working capital pressure and potential liquidity constraints. The capital structure relies heavily on director loans rather than equity or third-party financing. There is no indication of accumulated retained earnings or P&L reserves, consistent with the company’s early stage. No audit has been conducted due to micro-entity exemption, so financial statements may have limited assurance.

3. Cash Flow Assessment:
   Current assets have significantly decreased from £44,776 in 2023 to £13,629 in 2024, while current liabilities also decreased but remain slightly higher than current assets. This shrinking asset base alongside ongoing liabilities signals tight liquidity and limited cash reserves. The company’s reliance on director advances (£8,632) is a key source of liquidity. The absence of interest or repayment terms on this loan suggests the company depends on continued director support for short-term cash flow needs. Working capital is negative, indicating potential challenges in meeting short-term obligations without additional funding.

4. Monitoring Points:

• Track changes in net current assets quarterly to assess liquidity trends.
• Monitor director loan balances and any changes in repayment or interest terms.
• Review trading performance, especially turnover and profitability when available, to gauge operational cash generation.
• Watch for timely filing of accounts and confirmation statements to ensure statutory compliance.
• Assess any changes in ownership or director structure that may impact governance and financial stewardship.
• Evaluate any external financing attempts or increases in equity capital that could strengthen the balance sheet.