MJM HAULAGE LTD

Executive Summary

MJM Haulage Ltd demonstrates strong liquidity and steadily improving net assets, reflecting a financially stable and well-managed small business. The company exhibits healthy cash flow and working capital, but should carefully balance dividend payments with reinvestment to ensure sustainable growth. With prudent financial controls and strategic planning, the company is well-positioned to maintain its positive financial health.

MJM HAULAGE LTD - Analysis Report

Company Number: SC684155

Analysis Date: 2025-07-29 19:49 UTC

Financial Health Assessment of MJM Haulage Ltd as of 31 December 2023

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1. Financial Health Score: B

Explanation:
MJM Haulage Ltd demonstrates solid financial stability with strong liquidity and growing net assets, reflecting a healthy financial position. However, some caution is warranted due to significant fluctuations in debtor balances and reliance on a single director/owner for capital and operations. The absence of an audit and limited employee base also suggest the company is still small and developing, limiting complexity but also resilience.

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2. Key Vital Signs

Metric	Value (2023)	Interpretation
Net Current Assets	£114,498	Strong positive working capital indicating the company can comfortably meet short-term obligations.
Cash at Bank	£99,685	Healthy cash balance providing liquidity buffer, more than tripled since 2022 (£46,605).
Debtors	£42,096	Reduced significantly from £106,746 in 2022, improving cash flow but warrants monitoring for credit risk.
Current Liabilities	£27,283	Substantial reduction from prior year’s £57,484, easing financial pressure.
Net Assets / Shareholders’ Funds	£114,498	Growing equity base, up from £95,867 in 2022 and £10,074 in 2020, indicating retained earnings and accumulated profits.
Director's Loan Account	£1,999 (creditor)	Relatively low balance owed to director, down from £11,999 in 2022, reducing related party risk.
Dividends Paid	£30,000 (2023)	Increased dividends paid to director, reflecting profit distribution but potentially impacting retained earnings.
Employees	1 (including director)	Very lean operation, which may limit capacity but controls overheads.

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3. Diagnosis: Financial Health and Business Condition

MJM Haulage Ltd shows a healthy cash flow profile, as evidenced by a substantial increase in cash reserves and a marked reduction in current liabilities. The company’s working capital is robust, demonstrating the ability to cover short-term debts comfortably, which is a key sign of financial vitality and operational efficiency.

The sharp decrease in debtors from £106,746 in 2022 to £42,096 in 2023 is a positive symptom, indicating improved collections or reduced credit sales, reducing risk of bad debts. However, it also could imply tighter credit policies or fewer sales on credit, which should be balanced carefully to maintain sales volume.

The company’s net assets have grown steadily over four years, signaling accumulated profitability and prudent financial management. Shareholders’ funds are solid, reflecting retained earnings and the company’s ability to reinvest profits for growth.

The liabilities owed to the director have decreased significantly, lowering potential conflict or cash flow pressure related to director financing. However, the company continues to pay substantial dividends to the director, which could be a symptom of extracting profits aggressively, potentially limiting reinvestment capacity.

The business operates with a very small workforce (just one employee including the director), indicating a lean and possibly highly specialized operation. While this reduces overhead costs, it could also limit scalability and pose operational risk if key personnel are unavailable.

The company benefits from exemption from audit, reflecting its small size and simple structure, but this also means less external scrutiny, so internal controls and financial discipline are crucial.

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4. Recommendations: Actions to Improve Financial Wellness

• Maintain strong cash flow discipline: Continue to monitor debtor balances and tighten credit control where necessary to sustain or improve liquid reserves.
• Assess dividend policy: While paying dividends signals profitability, ensure that payouts do not compromise working capital or growth opportunities. Consider retaining more earnings to fund expansion or buffer against unexpected expenses.
• Plan for growth and resilience: Explore options to increase operational capacity, whether by adding staff or investing in assets, to reduce dependency on the director and support scaling.
• Strengthen financial reporting: Although audit exemption is in place, consider periodic internal or external financial reviews to ensure accuracy and identify risks early.
• Manage related party transactions transparently: Keep director loans and related party dealings well documented and at arm’s length to avoid conflicts of interest.
• Prepare for potential market fluctuations: Given the company operates in non-hazardous waste collection, monitor market trends and regulatory changes that could impact revenues or costs.

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