Risk Analysis: D M & A MACLEOD LIMITED

1. Risk Rating: MEDIUM-HIGH

The company exhibits a concerning trajectory of declining cash reserves and increasing liabilities over the available reporting period. While net assets remain positive at £612,497 (2016) and the company has operated since 2005, the 84.6% decline in cash from £523,457 (2013) to £80,794 (2016), coupled with liabilities more than tripling from £141,843 to £455,703 over the same period, raises material concerns about financial sustainability. The marine fishing industry's inherent volatility and regulatory exposure compounds these financial warning signs.

2. Key Concerns

i) Severe Cash Erosion Cash has declined from £523,457 (2013) to £80,794 (2016), representing an 84.6% reduction over three years. This rate of cash depletion, if continued, would leave the company critically exposed to any operational disruption or unexpected expenditure. The most recent year alone saw cash fall from £179,964 to £80,794—a 55% single-year decline.

ii) Accelerating Liability Growth Total liabilities have grown from £141,843 (2013) to £455,703 (2016), a 221% increase. Current liabilities of £455,703 against current assets of £555,215 yields a current ratio of approximately 1.22:1, which leaves minimal headroom. The composition of these liabilities requires urgent investigation—particularly whether they include any demand-repayable elements.

iii) Net Asset Deterioration Net assets declined 36.4% from £963,300 (2013) to £612,497 (2016). While the P&L reserve remains substantial at £612,477, the consistent year-on-year erosion suggests ongoing losses or distributions that are consuming the capital base. The £20 share capital indicates minimal equity cushion beyond retained profits.

3. Positive Indicators

• Positive Net Asset Position: Despite decline, net assets remain at £612,497, providing a meaningful buffer against short-term difficulties
• Working Capital Surplus: Net current assets of £99,512 (improved from £49,680 in 2015) indicate the company can meet short-term obligations, albeit tightly
• Long Operating History: Incorporated in 2005, the company has nearly two decades of trading history, suggesting resilience and market knowledge
• Going Concern Declaration: Directors have explicitly assessed going concern and found no material uncertainties
• Compliance: Accounts and confirmation statements are filed and not overdue; no disqualification records against directors
• Tangible Asset Base: £479,785 in tangible assets (likely including fishing vessels and property) provides potential collateral or realisation value

4. Due Diligence Notes

i) Data Currency Concern The most recent detailed financial data available is from October 2016—nearly nine years old. While filing records suggest accounts are made up to October 2025, the absence of interim financial data creates significant analytical uncertainty. Recent financial performance may differ materially from the trends identified above.

ii) Debtors Increase Debtors rose 54% from £186,152 to £286,689 between 2015 and 2016. This requires investigation to determine whether this reflects genuine revenue growth, deteriorating collection practices, or related party balances. Given the marine fishing industry, this may represent outstanding quota payments or catch proceeds awaiting settlement.

iii) Investments Doubling Investments increased from £84,263 to £169,732. The nature of these investments is unclear—whether they represent liquid securities or illiquid holdings materially affects risk assessment. This also partially explains the cash decline.

iv) Industry-Specific Risks Marine fishing (SIC 3110) faces unique regulatory risks including EU/Common Fisheries Policy quota allocations, seasonal volatility, and sustainability compliance. The £153,000 in fishing licences (intangible assets) represents a critical revenue-generating asset whose value depends on regulatory continuity.

v) Related Party Transactions As a family-controlled company (husband and wife directors, each holding 25-50% of shares), there is inherent risk of transactions that may not be at arm's length. The absence of an independent auditor (small company exemption claimed) amplifies this concern.

vi) Liability Composition The breakdown between trade creditors, taxation, and any borrowings within the £455,703 current liabilities is unknown. Whether this includes any secured lending or director loans would significantly alter the risk profile.