The directors present the strategic report for the year ended 31 December 2025.
The KHK Group operates as a specialist provider of short term, secured bridging finance to property investors, developers, and SMEs across the UK. Lending activities are undertaken through the Group’s subsidiary companies – KHK One Ltd, KHK Two Ltd, KHK Three Ltd and KHK Four Ltd.
Loans are secured against UK residential or commercial property, typically with loan terms ranging from 6 to 24 months. The Group’s operating model is built around speed of execution, robust underwriting, and disciplined risk management, enabling it to support borrowers with time-sensitive funding requirements.
KHK Capital Ltd, the parent company, provides centralised governance, operational support and staffing across the Group.
The Group generates revenue through interest income, arrangement fees, exit fees, and extension fees across its lending subsidiaries.
The Group’s strategy is focused on disciplined growth of a well‑secured and diversified loan portfolio, supported by strong governance, prudent risk management, and reliable operational delivery. The business model is executed through selective origination, conservative credit assessment, and active oversight of each loan from drawdown to repayment.
Key elements of the strategy include:
Selective deployment of capital — Prioritising transactions with clear exit routes, credible counterparties, and security profiles aligned with the company’s risk appetite.
Disciplined credit management — Applying consistent underwriting standards, independent valuations, and structured due‑diligence processes to maintain portfolio quality.
Operational reliability — Maintaining efficient internal processes and decision‑making frameworks to support timely completions and strong broker relationships.
Active portfolio monitoring — Regularly reviewing borrower performance, security positions, and market conditions to identify emerging risks early.
Funding and liquidity management — Ensuring appropriate headroom within facilities and maintaining a stable funding base to support lending activity.
Medium term objectives are to preserve capital, maintain a balanced and diversified loan book, strengthen operational resilience, and deliver stable, risk adjusted returns for stakeholders.
The Group is exposed to a range of risks typical of short-term property lending. Key risks include:
Credit risk
Risk of borrower default or delays in executing exit strategies.
Managed through conservative LTVs, independent valuations, due diligence, and active loan monitoring.
Property market and valuation risk
Changes in UK property values affecting security coverage and borrower exits.
Mitigated through prudent initial valuations, diversification, and regular market review.
Liquidity and funding risk
Reduced access to funding or delays in capital inflows impacting lending capacity.
Managed through facility headroom, cash flow forecasting, and covenant monitoring.
Operational and process risk
Errors, delays, or control failures affecting loan execution or oversight.
Mitigated through documented procedures, segregation of duties, and oversight of third party providers.
Regulatory and compliance risk
Changes in regulation or non compliance affecting operations or reputation.
Managed through policies, training, and ongoing monitoring of regulatory developments.
Concentration risk
Exposure to specific borrowers, asset types, or geographies increasing vulnerability to localised events.
Mitigated through portfolio limits and diversification.
Macroeconomic and interest rate risk
Economic conditions or rate movements affecting borrower behaviour and refinancing markets.
Managed through monitoring of macro indicators and adjusting underwriting assumptions where appropriate.
The Group delivered a stable financial performance during the year, supported by continued demand for short-term property lending and disciplined management of the consolidated loan book. The results reflect controlled operating costs and predictable funding expenses.
Revenue Performance
Group turnover for the year was £15.1m (2024: £12.5m), driven primarily by interest income from the loan book and arrangement fees on new originations. Revenue growth was supported by an increase in average loan book size across the Group.
Interest income remained the Group’s principal revenue stream, with pricing remaining broadly consistent with prior-year.
Gross Profit
Gross profit for the year was £13.9m (2024: £11.7m). The improvement from prior year reflects the expansion of the loan book, with stable credit performance and impairments recognised during the year being minimal.
Administrative expenses
Administrative expenses totalled £2.3m (2024: £1.5m). Although a notable increase the costs remained relatively proportionate to the scale of operations.
Finance costs
Finance costs increased in line with utilisation of senior and junior funding lines and intercompany funding arrangements. Facility pricing and availability remained relatively stable throughout the year with no adverse changes to terms.
Loan Book and Credit Performance
The consolidated loan book increased to £116m (2024: £92m), supported by new originations and drawdowns on existing loans. Redemptions continued to occur broadly in line with expectations.
Profit Before Tax
Profit before tax remained relatively stable at £2.3m (2024: £2.3m). Higher gross profit was offset by increased administrative and finance costs, resulting in a consistent year on year profit before tax.
Balance Sheet Position
The Group’s balance sheet remains well-capitalised, with positive retained earnings, a diversified loan book and stable funding arrangements. Net assets at year end were £3.8m (2024: £3.7m).
Overall Assessment
The Directors consider the Group’s financial position to be sound and supportive of it’s strategic objectives for the forthcoming year.
The board monitors a range of non-financial indicators that reflect the operational effectiveness, credit discipline, and service quality of the Group. These measures provide early insight into portfolio performance, borrower behaviour, and the strength of internal processes.
Average loan‑to‑value across the portfolio — used to assess underwriting quality and the overall risk profile of the loan book relative to market conditions.
Arrears and default activity — monitored to identify emerging credit stress, the effectiveness of recovery strategies, and the performance of specific borrower segments or product types.
Operational turnaround times, including the average duration from initial application to drawdown — an indicator of process efficiency, borrower experience, and the effectiveness of third‑party partners such as valuers and solicitors.
Repeat engagement from borrowers and brokers — a measure of relationship strength, service quality, and the company’s reputation within the specialist lending market.
Staff retention, development, and training — reflecting the stability and capability of the team, particularly in underwriting, portfolio management, and compliance‑critical roles.
Compliance monitoring and audit outcomes — covering internal reviews, external audits, and regulatory checks, providing assurance over adherence to policies, lending standards, and statutory obligations.
These indicators collectively support the board’s assessment of the Group’s long‑term sustainability, operational resilience, and alignment with its risk appetite.
The Group benefits from a diversified structure, with lending activity undertaken across 4 subsidiaries and centralised operational support provided by the parent company. Going into 2026 the Group is supported by:
A range of funding partners, providing stable liquidity for ongoing lending activity.
Junior funding from KHK Capital Ltd, with approximately £41m of funds available for deployment across the subsidiaries.
Consolidated retained earnings standing at £3.8m;
A strong origination pipeline generated by the Group’s underwriting and business development teams, typically producing £10-£15m per month in eligible and creditworthy loans.
The Group expects the KHK One loan book to remain broadly stable, reflecting it’s maturity, established funding structure and consistent origination profile. However, other funding lines from both existing partners and new providers currently under review – are expected to support steady, organic growth in the total consolidated loan book over the medium term.
The Group is exempt from the Streamlined Energy and Carbon Reporting (SECR) requirements for the year ended 31 December 2025, as its total energy consumption for the period did not exceed 40MWh. Accordingly, the Group is not required to disclose energy consumption, greenhouse gas emissions or related matters in the Strategic Report.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2025.
Ordinary dividends were paid amounting to £1,620,000. The directors do not recommend payment of a further dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Moore Kingston Smith LLP were re-appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
United Kingdom company law requires the directors to prepare financial statements for each financial year. Under that law, the directors have elected to prepare the group and parent company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law, the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and parent company, and of the profit or loss of the group for that period.
In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether applicable United Kingdom Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and parent company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and parent company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and parent company, and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the group and parent company, and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
This report has been prepared in accordance with the provisions applicable to groups and companies entitled to the exemptions of the medium-sized companies regime.
We have audited the financial statements of KHK Capital Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2025 which comprise the Group Statement of Comprehensive Income, the Group Balance Sheet, the Company Balance Sheet, the Group Statement of Changes in Equity, the Company Statement of Changes in Equity, the Group Statement of Cash Flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
The information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
The strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
As part of an audit in accordance with ISAs (UK) we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the group's or the parent company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the group or the parent company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
Explanation as to what extent the audit was considered capable of detecting irregularities, including
fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities,
including fraud is detailed below.
The objectives of our audit in respect of fraud, are; to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses to those assessed risks; and to respond appropriately to instances of fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both management and those charged with governance of the company.
Our approach was as follows:
We obtained an understanding of the legal and regulatory requirements applicable to the company and considered that the most significant are the Companies Act 2006, UK financial reporting standards as issued by the Financial Reporting Council, and UK taxation legislation.
We obtained an understanding of how the company complies with these requirements by discussions with management and those charged with governance.
We assessed the risk of material misstatement of the financial statements, including the risk of material misstatement due to fraud and how it might occur, by holding discussions with management and those charged with governance.
We inquired of management and those charged with governance as to any known instances of noncompliance or suspected non-compliance with laws and regulations.
Based on this understanding, we designed specific appropriate audit procedures to identify instances of non-compliance with laws and regulations. This included making enquiries of management and those charged with governance and obtaining additional corroborative evidence as required.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
Use of our report
This report is made solely to the parent company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the parent company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the parent company and the parent company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
The notes on pages 20 to 30 form part of these financial statements.
The notes on pages 20 to 30 form part of these financial statements.
As permitted by section 408 of the Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £1,033,672 (2024 - £774,776 profit).
KHK Capital Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales limited by shares. The registered office is 7 Stratford Place, London, W1C 1AY.
The group consists of KHK Capital Limited and all of its subsidiaries.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
The consolidated group financial statements consist of the financial statements of the parent company KHK Capital Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 31 December 2025. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
The directors have a reasonable expectation that the group and parent company have adequate resources to continue in operational existence for at least one year from the date of approval of these financial statements. This is supported by the directors' assessment of the group's ability to settle its liabilities as they fall due. Due to the nature of the group’s activities, the directors are confident that the current economic climate has not impacted the going concern status of the group. The group also has revolving credit facilities with multiple third party lenders acting as a security agents which is used to finance the loans in issue. In assessing the ability of the group to continue as a going concern the director's have also considered the level of security held against each loan in issue. The group has deemed the level of security held sufficient to cover the loans.
As a result the directors believe that the group will be able to continue in business and meet its liabilities as they fall due for a period of at least twelve months from the date of approval of the financial statements.
Turnover represents arrangement fees, redemption fees on loan finance and interest receivable. Arrangement fees are recognised once loans are accepted by the borrowers and redemption fees are recognised when loans are redeemed.
Interest receivable represents interest on loan finance and is recognised using the effective interest method.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
The company only has financial instruments classified as basic and measured at amortised cost. The company has no financial instruments that are classified as 'other' or financial instruments measured at fair value.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Loan recoverability is a critical estimate in our financial reporting process. This estimate involves assessing the likelihood that outstanding loans will be repaid in full, considering various factors such as the borrower's financial condition, property valuations, and current economic conditions. The recoverability of loans directly impacts the valuation of our loan portfolio and the recognition of potential impairments.
The Group operates solely in the United Kingdom and accordingly, all turnover for the current and prior year is attributable to customers located in the UK.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
Details of the company's subsidiaries at 31 December 2025 are as follows:
KHKL Two, KHK Three and KHK Four were exempt from audit for the year ended 31 December 2025 under section 479A of the Companies Act 2006, as these entities are included in the consolidated financial statements of the Company.
The Company has given a statutory guarantee in respect of the liabilities of these subsidiary undertakings in accordance with section 479C of the Companies Act 2006, and the conditions for audit exemption were satisfied.
Included within the Group's other debtor balance is an impairment against loans advanced to third party borrowers amounting to £2,100,000 (2024 - £800,000) as the Directors are of the opinion that, at the present time, this represents the recoverable value.
The Group's other creditors balance includes a balance of £1,106,000 (2024: £5,006,000) relating to amounts owed by KHK Two to Charles Street Commercial Investments Limited.
Charles Street Commercial Investments Limited hold an all-monies debenture over the company. The creditor is secured by a fixed charge over any sub-mortgage or charge held by the company in respect of co-lent projects. The debenture provides security for all amounts owed now or in the future to Charles Street Commercial Investments Limited.
Other creditors due after one year relates exclusively to KHK One Limited's senior revolving credit facility with Shawbrook Bank Limited and Hampshire Trust Bank PLC. The facility matures in February 2029.
The facility is secured by TMF Trustee Limited, whom hold a fixed and floating charge over all assets of the company, both present and future.
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
During the year, companies under common control of the directors advanced funds to the company to assist with short‑term cash flow requirements. Advances of £150,000, £100,000 and £60,000 were made respectively. All advances were interest‑free, unsecured and were repaid in full on the following day. No amounts were outstanding at the reporting date.
During the year, a subsidiary of the company incurred an arrangement fee expense of £200,000 payable to a company under common control of the directors. The transaction was not benchmarked against external market terms. No amounts were outstanding at the reporting date.
During the year, the Company advanced a loan of £35,000 to a director of the Company. The loan was repaid in full within the same month that it was advanced. No interest was charged on the loan and there was no amount outstanding at the year end.
During the year, KHK One Limited advanced £150,000 to a director. The amount was fully repaid during the year and no balance remained outstanding at the year end. No interest was charged on this advance.