Risk Assessment: SERVCA GROUP LIMITED

1. Risk Rating: MEDIUM-HIGH

Justification: While the company is technically solvent with growing net assets, the dramatic deterioration in cash reserves, an extremely thin liquidity position driven by opaque balance sheet items ("other debtors" and "other creditors" constituting ~94% and ~95% of their respective categories), and a complex group structure with apparent inconsistencies in PSC declarations present material concerns. The rapid balance sheet expansion—without proportional cash generation—warrants significant scrutiny.

2. Key Concerns

Concern 1: Severe Cash Deterioration

Cash has declined from £375,511 (2017) and £304,168 (2020) to just £36,223 as at 31 December 2024—a ~88% decline over four years despite total assets growing from £1.6M to £8.6M over the same period. This decoupling of asset growth from cash generation suggests the business may be consuming cash faster than it generates it, or that cash is trapped in group structures. A company with £8.6M in total assets holding only £36k in cash has virtually no buffer against operational disruption.

Concern 2: Opaque Balance Sheet Composition

The dominant balance sheet items raise significant transparency concerns: - Other debtors: £7,420,016 (94.6% of total debtors, up 40% YoY from £5,283,345) - Other creditors: £7,020,660 (94.6% of current creditors, up 41% YoY from £4,979,644)

These "other" categories are not typical trade balances and their nature is unexplained in the filed accounts. In an insurance broking context, these could represent premium trusts, reinsurance recoveries, or intercompany balances—but the magnitude and growth rate without explanatory notes is concerning. The near-mirroring of other debtors and other creditors (both ~£7M) could indicate the company is acting as a conduit for group cash flows, which creates dependency risk.

Concern 3: PSC Declaration Inconsistencies

The Persons with Significant Control register lists five separate PSCs, three of which are corporate entities each declaring ownership of more than 75% of shares and voting rights: - Superian Holdings Ltd (>75%) - Layhan Capital Ltd (>75%, appears twice) - Superian Insurance Group Ltd (>75%) - Mr Nomaan Jamal (individual, >75%)

It is mathematically impossible for multiple parties to each hold >75% of shares. This suggests either: (a) the PSC register reflects successive ownership changes not yet updated, (b) there are errors in filing, or (c) the structure involves overlapping control mechanisms. The accounts state the ultimate controlling party is Superian Insurance Group Ltd (100% shareholding), which further contradicts the PSC register. This inconsistency undermines confidence in governance transparency.

3. Positive Indicators

• Consistent Net Asset Growth: Net assets have grown steadily from £306,460 (2016) to £1,144,476 (2024), demonstrating accumulated profitability rather than erosion of the capital base.

• Regulated Industry Position: As a Lloyd's Broker operating within the Superian Insurance Group, the company operates under FCA/PRA regulatory oversight and Lloyd's minimum standards, providing some external governance discipline.

• Filing Compliance: Accounts are filed on time, confirmation statements are current, and the company has taken legitimate small company exemptions. No disqualification orders are recorded against directors.

• Controlled Liability Structure: Long-term creditors are minimal (£3,229), meaning the company is not carrying significant long-term debt. The liability profile is predominantly short-term, which in an insurance context often reflects premium trust accounting.

• Investment in Development: Capitalised development costs of £618,508 (with £377,172 added in-year) suggest investment in technology platforms, which aligns with the company's stated specialization in "complex placements."

4. Due Diligence Notes