AD INNOVATIONS LIMITED
Company number 09291890 · Monitor this company
This analysis was written by an AI from the company's public filings. It may contain errors or omissions and is not financial or professional advice.
Credit Assessment: AD INNOVATIONS LIMITED
1. Credit Opinion: CONDITIONAL
Rationale: The company demonstrates a strong upward trajectory in net assets and has a clearly invested director, but several red flags require further scrutiny before full approval. The most significant concern is the near fourfold increase in current liabilities (from £30,721 to £128,754) which materially impacts working capital position. Additionally, the director loan balance of £77,192 raises questions about the nature of the company's funding structure and whether operational cash flow is sufficient to service external debt obligations. Micro-entity filing limits mean we have no visibility on profitability, turnover, or cash flow — critical metrics for any credit decision.
2. Financial Strength
Balance Sheet Trend — Net Assets Growth:
| Year | Net Assets | YoY Change |
|---|---|---|
| 2021 | £25,570 | — |
| 2022 | £31,988 | +25% |
| 2023 | £49,824 | +56% |
| 2024 | £83,486 | +69% |
| 2025 | £142,800 | +71% |
The balance sheet has strengthened materially over four consecutive years, growing from £25,570 to £142,800 — a cumulative increase of approximately 458%. This is a positive indicator of retained earnings and business accumulation.
Fixed Assets: Jumped from £21,870 to £99,828, indicating significant capital investment. The accounts reference goodwill, motor vehicles, computer equipment, furniture, and leased assets — suggesting a combination of business acquisition and operational investment.
Capitalisation: Share capital remains at just £105, with the entirety of net assets comprising retained profits (P&L reserve). This is typical for micro-entities but means there is minimal loss-absorbing cushion beyond accumulated earnings.
Leverage Concern: Total liabilities of £128,754 against net assets of £142,800 gives a debt-to-equity ratio of approximately 0.90x. While not excessive in isolation, the composition of those liabilities requires investigation — specifically how much relates to trade creditors, short-term loans, or the director's loan account.
3. Cash Flow Assessment
Working Capital Position:
| Metric | 2025 | 2024 | Change |
|---|---|---|---|
| Current Assets | £171,760 | £92,350 | +86% |
| Current Liabilities | £128,754 | £30,721 | +319% |
| Net Current Assets | £43,006 | £61,629 | -30% |
| Current Ratio | 1.33x | 3.01x | Significant decline |
Despite growth in current assets, the disproportionate increase in current liabilities has eroded the working capital position. The current ratio has fallen from a comfortable 3.01x to a tighter 1.33x. While 1.33x remains above the typical minimum threshold of 1.0x, the direction of travel is concerning.
Director Loan Account: The company owes the director £77,192 (up from £1,410). This represents approximately 54% of net assets and 60% of current liabilities. Key questions: - Is this truly subordinated, or does the director require repayment in the near term? - If the director calls this loan, liquidity would be severely impaired. - The dramatic increase suggests the director has funded recent capital expenditure personally rather than through operational cash flow.
Cash Flow Visibility: As a micro-entity, no cash flow statement or profit & loss account is filed. We cannot determine whether the business is generating operating cash flow or relying on director funding and creditor stretching to finance operations.
4. Monitoring Points
| Metric | Current Position | Watch Threshold |
|---|---|---|
| Current Ratio | 1.33x | Below 1.0x — trigger for review |
| Director Loan Balance | £77,192 | Any demand for repayment; changes to terms |
| Current Liabilities Trend | £128,754 | Continued rapid growth without matching asset growth |
| Net Current Assets | £43,006 | Decline below £20,000 |
| Filing Compliance | Up to date | Any overdue filings |
Specific Monitoring Requirements:
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Director Loan Terms: Establish whether the £77,192 is repayable on demand or has formal repayment terms. If on demand, this should be treated as an immediate contingent liability reducing effective working capital.
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Composition of Current Liabilities: Request a breakdown — how much relates to trade creditors, short-term borrowings, HMRC obligations, and the director loan? This is essential for understanding true trade creditor days and payment behaviour.
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Profitability Confirmation: Request management accounts or tax computations to verify the business is trading profitably and generating cash. The retained profit growth is encouraging but cannot be confirmed without P&L visibility.
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Nature of Fixed Asset Investment: The £78,000 increase in fixed assets warrants explanation — is this a business acquisition, property, or equipment? This impacts understanding of future cash generation capacity.
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SIC Code Clarification: The dual classification of "Mixed Farming" and "Other Professional Activities" is unusual. Clarification on the actual trading activity would improve sector risk assessment.
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Credit Reference Checks: No adverse filings, disqualifications, or CCJs are noted for the director, but full credit searches on both the company and Mr Dixon should be completed.