QC PRIVATE EQUITY SERVICES LIMITED

Risk Rating: MEDIUM Justification: While the company maintains a stable net asset position and has a long operating history, it exhibits significant liquidity deterioration and total dependency on related-party revenue. The sharp decline in cash reserves, coupled with a balance sheet heavily reliant on intercompany debtors, introduces moderate solvency and operational concerns that require closer scrutiny.

Key Concerns: - Severe Liquidity Deterioration: Cash at bank has plummeted from £294,133 in 2022 to just £43,746 in 2024. With current liabilities standing at £414,648, the company has minimal liquid cash to meet its near-term obligations without realizing debtor balances. - Related Party Revenue Dependency: The company operates as a captive service entity, deriving 100% of its investment advisory fees from associated Quadriga Capital entities. Revenue is calculated on a "cost-plus" basis agreed between the parties, meaning it lacks external market pricing validation and is entirely vulnerable to group-level restructuring or strategic shifts. - Debtor Concentration Risk: Current assets total £1,014,361, but £970,615 (approx. 95.6%) is tied up in debtors—presumably almost entirely intercompany. If the parent or sister companies delay payment or face financial distress, this company's working capital will be immediately and severely compromised.

Positive Indicators: - Consistent Net Asset Position: Despite fluctuating turnover, net assets have remained remarkably stable, hovering between £470,762 and £612,730 over the past seven years. This suggests underlying balance sheet resilience and controlled liability management. - Return to Profitability: The company returned to a modest profit of £12,275 in 2024, recovering from a £25,292 loss in 2023, indicating that the cost-plus margin structure is currently covering administrative overheads. - Regulatory Compliance: The company is actively filing its accounts and confirmation statements on time, with no overdue filings. It has a long, uninterrupted operating history since 1999.

Due Diligence Notes: - Intercompany Debtor Ageing: It is critical to obtain the breakdown of the £970,615 debtor balance. Determine the payment terms, ageing profile, and whether any provisions for bad debt exist. Given the related-party nature, assess if these are genuine arms-length receivables or disguised equity contributions. - Ultimate Controlling Party Structure: The accounts note a change in the ultimate controlling party in June 2023, from "Chariot Charitable Trust" to "Chariot Charitable Trust Limited". The background and financial substance of this trust structure, and its jurisdiction, should be investigated to understand the broader group stability. - Currency Translation Exposure: The directors' report explicitly states that the company's functional currency is the Euro (EUR), yet the filed financial statements are presented in GBP (£). Further investigation is required to understand the impact of FX fluctuations on the true economic value of the company and whether intercompany balances are matched by currency. - Going Concern Validity: The directors assert going concern status based on future expected cash flows from associated companies. Given the drastic drop in cash, due diligence should verify the enforceability of the Investment Advisory Agreements and confirm that the associated companies have the financial capacity to continue paying advisory fees.