3M CONTRACTS LTD

Executive Summary

3M Contracts Ltd is a privately owned building completion company showing strong net asset growth and improved liquidity, with no overdue filings indicating sound compliance. However, significant long-term hire purchase liabilities and limited public financial disclosure introduce some financial and operational risk considerations. Further review of financing arrangements and operational profitability is recommended to fully assess sustainability.

3M CONTRACTS LTD - Analysis Report

Company Number: SC680007

Analysis Date: 2025-07-29 13:05 UTC

1. Risk Rating: MEDIUM

Justification: 3M Contracts Ltd demonstrates a positive net asset position and substantial growth in net current assets and shareholders' funds over recent years. However, the presence of significant long-term hire purchase liabilities and modest share capital introduces some financial leverage and potential liquidity risks, warranting a medium risk rating.

2. Key Concerns:

• Hire Purchase Liabilities: The company has incurred £61,585 in hire purchase contracts due after more than one year as of 2024, representing a significant financing obligation that could constrain cash flow if not managed prudently.
• Modest Share Capital: With only £2.00 in share capital, the company relies heavily on retained earnings and external financing, which may impact solvency if operating conditions deteriorate.
• Limited Financial Disclosure: The company filed under the small companies regime and is exempt from audit, meaning detailed financial performance data such as profit and loss figures are not publicly available, limiting comprehensive assessment of operational sustainability.

3. Positive Indicators:

• Strong Growth in Net Assets: Shareholders’ funds increased from £62,967 in 2023 to £149,072 in 2024, indicating accumulation of retained earnings and improved financial strength.
• Healthy Liquidity: Cash balances grew significantly from £49,719 in 2023 to £109,225 in 2024, supporting the company’s ability to meet short-term obligations.
• Timely Filing Compliance: Accounts and confirmation statements are up to date with no overdue filings, reflecting good regulatory compliance and governance.

4. Due Diligence Notes:

• Investigate the nature and terms of hire purchase agreements to evaluate repayment schedules, interest rates, and potential impact on cash flows.
• Review detailed operational performance and profitability metrics, if available, to assess sustainability beyond balance sheet strength.
• Confirm any contingent liabilities or off-balance sheet commitments not disclosed in the small company filings.
• Assess the adequacy of internal controls and governance given the small size and director structure.