Investment Risk Analysis: TOKLON LIMITED

1. Risk Rating: HIGH

The company presents significant solvency and liquidity concerns. With net current liabilities of £1.77 million against cash of just £5,343, the business is entirely dependent on external support and uncertain property disposals to meet its obligations. The going concern basis relies on planning permissions outside the directors' control.

2. Key Concerns

i. Severe Liquidity Deficit

The company holds only £5,343 in cash against current liabilities of £1,774,691. Net current liabilities stand at £(1,769,348). The company cannot meet its short-term obligations from its own resources and has no liquid buffer against operational or market disruptions.

ii. Going Concern Dependency on Uncertain Events

The directors' going concern assessment explicitly relies on: - Property sales subject to planning permission outcomes - Financial support from the parent company (curiously stated as "Toklon Limited" – the company itself) - Potential short-term financing that is neither arranged nor confirmed

The directors acknowledge that planning process timelines are "out of the control of the directors," yet classify slippage beyond 12 months as "remote." This optimism is not substantiated by binding arrangements.

iii. Circular Parent Company Reference

The going concern note states reliance on "its parent company, Toklon Limited." This is the company's own name, creating a circular and incoherent reference. This raises questions about whether there is an actual parent undertaking providing support, whether this reflects a group restructuring, or whether this represents a drafting error that undermines confidence in the accounts.

3. Positive Indicators

• Active Liability Reduction: Creditors fell from £11.01 million (2024) to £1.77 million (2025), a reduction of over £9 million, primarily funded by the disposal of £12.96 million in investments. This demonstrates active debt management.

• Shareholders' Funds Restored to Positive: After years of negative equity (2019-2022), shareholders' funds returned to positive territory in 2023 and remain positive at £44,818, albeit dramatically reduced from the prior year's £3.76 million.

• Filing Compliance: Accounts and confirmation statements are filed on time with no overdue items. The company has maintained active status for over 20 years.

• Completed Asset Disposals: The significant disposal of investments in the year demonstrates the company can execute asset sales when required.

4. Due Diligence Notes