Investment Risk Analysis: KOORI LIMITED

1. Risk Rating: HIGH

Justification: KOORI Limited exhibits extreme leverage with total liabilities of £4.7M against net assets of only £771,679, yielding a debt-to-equity ratio of approximately 6:1. The company's liquidity position is precarious, with £2.8M of loans having migrated from long-term to current liabilities in the latest period, and its asset base is overwhelmingly concentrated in work-in-progress (property development stock) that must be successfully converted to cash to service obligations. The minimal share capital of £2 provides virtually no permanent equity cushion.

2. Key Concerns

Concern 1: Critical Refinancing Risk from Debt Reclassification

The most alarming development in the 2025 accounts is the shift of £2.8M in "other loans" from long-term creditors (2024: £3,044,000) to current creditors (2025: £2,801,000). This indicates these borrowings are now due within one year. Combined with existing bank borrowings of £1.54M also falling due within one year, the company faces approximately £4.34M in current debt obligations against cash of only £138,589. The ability to refinance or extend these facilities is critical to ongoing solvency.

Concern 2: Asset Concentration and Liquidity Mismatch

Current assets total £5.84M, but £5.5M (94%) is held in stocks (work-in-progress). Cash represents only 2.4% of current assets, and trade debtors are negligible at £4,862. This creates a severe liquidity mismatch—the company must successfully complete and sell property developments to generate cash for its near-term obligations. Any delay in development timelines, planning complications, or softening in the regional property market could quickly create a cash crisis.

Concern 3: Declining Net Asset Position and Minimal Equity Buffer

Net assets have deteriorated significantly from £1.46M (2021) to £771,679 (2025), a 47% decline over four years. With share capital of only £2, the entire equity base consists of retained earnings, which could be eliminated by a relatively modest decline in property valuations or project cost overruns. The company was technically insolvent as recently as 2017 (net assets of £-112,070), demonstrating the inherent volatility of this business model.

3. Positive Indicators

• Profitability Indicated: Retained earnings increased from £709,554 to £771,677 in the latest year, suggesting the company generated approximately £62k in profit, demonstrating ongoing trading viability.

• Regulatory Compliance: All filings are current with no overdue accounts or confirmation statements. The company has maintained consistent filing since 2006, indicating competent administrative governance.

• Long Operating History: The company has traded since 2006 and has navigated through previous insolvency (2017) to restore a positive net asset position, suggesting management experience in managing through cyclical property development challenges.

• Secured Lender Confidence: Bank facilities remain in place with £1.54M in current bank loans, suggesting lender comfort with ongoing operations despite the high leverage.

• Positive Working Capital: At £1.13M, net current assets remain positive, though the quality of this working capital is heavily dependent on WIP realization.

4. Due Diligence Notes