Company Number: SC718273

Analysis Date: 2025-07-29 15:04 UTC

1. Risk Rating: MEDIUM

Justification: D3 HAO LIMITED shows a significant level of long-term bank borrowing secured against investment property assets, with net current liabilities and very limited liquid assets. However, the company holds substantial investment property valued at £468,216 which supports its asset base. The presence of a director's loan repayable on demand and ongoing negative working capital present liquidity concerns, but absence of overdue filings or regulatory issues mitigates risk somewhat.

2. Key Concerns:

• Liquidity Pressure: The company has net current liabilities of approximately £97,855 and cash of only £1,797 as of 31 December 2023, indicating potential short-term cash flow challenges.
• High Leverage: Bank loans of £366,690 represent significant long-term debt relative to net assets of £4,905. This leverage could impair solvency if property values decline or rental income decreases.
• Director's Loan Repayable on Demand: £97,451 owed to the director is classified as a current liability repayable on demand, which could create immediate cash demands and increase liquidity risk.

3. Positive Indicators:

• Investment Property Holding: The company’s primary asset is investment property valued at £468,216, providing a tangible and potentially appreciating asset base.
• No Overdue Filings: Annual accounts and confirmation statements are up to date, indicating regulatory compliance and good governance.
• Sole Director and Shareholder Stability: Mr. Hao Deng has held directorship and significant control since incorporation with no reported disqualifications or governance issues.

4. Due Diligence Notes:

• Verify the terms and covenants of the bank loan(s), including any security interests and repayment schedules, to assess refinancing or default risk.
• Confirm the rental income stream and occupancy rates supporting the investment property, including any lease agreements.
• Assess the director's loan arrangement, repayment terms, and the director’s ability and willingness to support the company financially if needed.
• Investigate any contingent liabilities or off-balance sheet commitments related to the property assets.
• Review the valuation methodology of the investment property, ensuring it reflects current market conditions.