D. R. COLLIN & SON LTD
Company number SC388209 · 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.
Commercial Credit Assessment: D. R. Collin & Son Ltd
1. Credit Opinion: APPROVE
Rationale: This is a well-established fish processing and wholesale business demonstrating strong financial fundamentals. The company exhibits exceptionally low leverage (total liabilities represent just 8.1% of total assets), a consistently growing net asset base (£8.2M to £10.6M over six years), and a significant improvement in profitability (PBT up 117% to £1.87M). The business has substantial asset backing and strong cash generation capacity to service debt obligations comfortably. The principal risks are operational (weather, supply) rather than structural financial weaknesses.
2. Financial Strength
Balance Sheet Summary (April 2025): | Metric | 2025 | 2024 | Movement | |--------|------|------|----------| | Total Assets | £12,753,260 | £12,247,892 | +£505,368 | | Total Liabilities | £1,039,290 | £952,649 | +£86,641 | | Net Assets | £10,578,827 | £10,320,289 | +£258,538 | | Shareholders' Funds | £10,578,827 | £10,320,289 | +£258,538 | | Cash | £2,105,473 | £1,492,428 | +£613,045 |
Key Observations:
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Gearing: Extremely conservative. The debt-to-equity ratio is approximately 0.10:1, indicating minimal reliance on external debt. Total liabilities are modest relative to the asset base.
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Net Asset Growth: Consistent upward trajectory from £8.2M (2019) to £10.6M (2025), representing approximately 29% growth over six years. This demonstrates retained profitability and sound financial stewardship.
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Asset Quality: The business holds substantial tangible assets (property, plant, fleet) in a sector where asset values are typically resilient. The company has been investing in fleet renewal, which supports operational efficiency.
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Capital Structure: Share capital of only £878 against £10.6M in shareholders' funds indicates significant accumulated retained earnings — a hallmark of prudent management and long-term value creation.
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Liquidity Buffer: Cash of £2.1M provides a meaningful buffer against operational disruptions, representing approximately 2x total liabilities.
3. Cash Flow Assessment
Profitability Indicators: | KPI | 2025 | 2024 | |-----|------|------| | Turnover | £51,671,713 | £49,629,052 | | Profit Before Tax | £1,868,456 | £860,061 | | Gross Profit Margin | 18.58% | 18.72% | | ROCE | 9.99% | 4.73% | | Collection Days | 50.2 | 50.1 |
Cash Flow Observations:
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Operating Performance: Turnover grew 4.1% year-on-year to £51.7M. While gross margin dipped slightly (18.58% vs 18.72%), the substantial improvement in PBT and ROCE (doubling from 4.73% to 9.99%) indicates strong operational leverage and cost management.
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Working Capital: Collection days are stable at approximately 50 days, which is reasonable for the food wholesale sector. The company appears to manage debtor risk effectively.
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Cash Generation: Cash increased by £613K to £2.1M despite ongoing fleet investment, demonstrating strong operating cash flow conversion.
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Debt Service Capacity: With PBT of £1.87M and minimal existing debt obligations, the company has substantial capacity to service new facilities. Interest coverage would be robust even with significant additional borrowing.
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Funding Structure: The strategic report references use of overdraft and equipment finance alongside operational cash flow, indicating the company utilises a diversified funding approach appropriate for its asset-intensive operations.
4. Monitoring Points
| Metric | Current Position | Watch Threshold | Rationale |
|---|---|---|---|
| Gross Margin | 18.58% | Below 16% | Quayside pricing pressure could erode margins; early warning of competitive stress |
| Cash Position | £2.1M | Below £1.0M | Seasonal working capital fluctuations in fishing; cash buffer critical for supply continuity |
| Net Assets | £10.6M | Below £9.5M | Sustained decline would indicate erosion of balance sheet strength |
| Employee Turnover | 33% | Above 45% | Labour-intensive operation; high turnover increases costs and operational risk |
| PBT | £1.87M | Below £0.8M | Profitability must sustain to support debt service and reinvestment |
| Leverage Ratio (Liabilities/Assets) | 8.1% | Above 20% | Currently very low; significant increase would alter risk profile |
| Filing Compliance | Current | Any overdue filing | Late filing could indicate governance concerns |
Sector-Specific Considerations:
- Weather/Supply Risk: Unpredictable weather creates production gaps and cost inefficiencies. Monitor quarterly trading for unusual volatility.
- Quayside Pricing: Competitive pressure on raw material costs is a structural industry challenge. Margin trends should be reviewed at each renewal.
- Staffing Cost Inflation: 10% year-on-year increase is significant. If this persists without corresponding revenue growth, profitability will be compressed.
- Foreign Exchange: Given the nature of the business, FX exposure should be monitored; hedging arrangements should be confirmed.
- Succession Planning: Mr James Cowe Cook holds 50-75% of shares. Clarity on succession and key-person risk is advisable for longer-term facilities.