REGISTERED NUMBER: |
Lycamobile Europe Limited |
Strategic Report, Directors' Report and |
Audited Financial Statements |
for the Year Ended 31 December 2022 |
REGISTERED NUMBER: |
Lycamobile Europe Limited |
Strategic Report, Directors' Report and |
Audited Financial Statements |
for the Year Ended 31 December 2022 |
Lycamobile Europe Limited (Registered number: 09385794) |
Contents of the Financial Statements |
for the year ended 31 December 2022 |
Page |
Company Information | 1 |
Strategic Report | 2 |
Directors' Report | 6 |
Statement of Directors' Responsibilities | 8 |
Independent Auditors' Report | 9 |
Income Statement | 12 |
Other Comprehensive Income | 13 |
Balance Sheet | 14 |
Statement of Changes in Equity | 15 |
Cash Flow Statement | 16 |
Notes to the Cash Flow Statement | 17 |
Notes to the Financial Statements | 18 |
Lycamobile Europe Limited |
Company Information |
for the year ended 31 December 2022 |
Directors: |
Registered office: |
Registered number: |
Auditors: |
Statutory Auditor |
New Derwent House |
69-73 Theobalds Road |
London |
WC1X 8TA |
Lycamobile Europe Limited (Registered number: 09385794) |
Strategic Report |
for the year ended 31 December 2022 |
The directors of Lycamobile Europe Limited ("the Company") present their Strategic Report for the year ended 31 December 2022. |
Principal activity |
The Company is acting as a Mobile Virtual Network Operator ("MVNO") in the Netherlands, Sweden, Denmark, and Austria, and as a full MVNO in Germany. The Company is a full MVNO where it holds an MVNO agreement with Mobile Network Operators directly and acts as an MVNO where MVNO agreements are currently held by related party entities. The Company provides mobile telecommunication services to predominantly ethnic migrant populations. |
Review of business |
The Company reported €130.8m of revenue for the year ended 31 December 2022 (2021: €135.0m) with an increased gross profit percentage to 36.9% (2021: 32.7%). The overall revenue decreased mainly due to the general shift in the market from voice calls to data (WhatsApp, Teams, Zoom etc.) services which has negatively impacted revenue, and due to the reduction in Mobile Termination Revenue ("MTR") rates seen across the EU market. The Company is focusing on increasing its offerings in both national and international airtime to ensure it is competitive in the near future and is investing in the retention & customer value management ("CVM") team to focus on increasing the customer base through reduced churn. |
The Company is focusing on providing cutting edge customer services to capture additional market share, supported by promotional and advertising activity in the European market. |
Operating profit for the year is €11.8m (2021: €8.1m). Even though there was a decline in revenue (noted above), operating profit for the year increased due to the decrease in administrative expenses, primarily due to the positive foreign exchange movements experienced in the current year, along with a reversal of a provision in Germany. |
The Company adopts a usage policy for recognising revenue. The amount of revenue which is deferred until future use is held within the deferred income account in the Balance Sheet. The Company defers the recognition of revenue until such time as the customers use their balances or when the balances expire after a period of non utilisation as set out in the terms and conditions of the customer's contract. All amounts held in deferred income relating to future usage are identifiable to individual customers. |
Key performance indicators |
The Company continued to focus on improving its gross margin which is around 4.2% higher than the previous year. The Company's key performance indicators for the year ended 31 December 2022, used by the directors to assess the performance of the business, and performance against them, are summarised below: |
2022 | 2021 |
GP margin % (Gross profit/revenue %) | 36.9% | 32.7% |
Operating margin (Operating profit/revenue %) | 9.0% | 6.0% |
Profit for the financial year |
The profit for the year before taxation is €20.5m (2021: €4.6m). |
The Company trades with other affiliated related party companies (see note 18) and its affiliates and related parties are included in an operating model that ensures revenue and profits are economically allocated to the Company which has earned them. |
Principal risks and uncertainties |
The principal risks and uncertainties facing the Company have been reviewed in detail by the directors and no material additional risk or uncertainty has been identified other than those detailed below. These risks are broadly encompassed within competitive, operational and financial risk. The directors' risk management objectives consist of identifying and monitoring those risks which could have an adverse impact on the Company's assets, profitability or cash flows. |
Competitive risk |
The Company is acting as a Mobile Virtual Network Operator ("MVNO") in Germany, Netherlands, Sweden, Denmark and Austria, providing mobile telecommunication services to the predominantly ethnic migrant populations. The Company's various MVNO markets remain competitive with new entrants able to join relatively easily, resulting in pricing risk. It has proven difficult for any new entrant to achieve any scale, however, and the combination of any new entrant's inability to match Lycamobile's tariff rates for any length of time as well as a lack of national distribution mitigates this risk. This competitive risk is further mitigated by regular reviews of competitive offerings and market providers. Actions are taken immediately where possible. |
Lycamobile Europe Limited (Registered number: 09385794) |
Strategic Report |
for the year ended 31 December 2022 |
Operational risk |
The main operational risk relating to the Company is the operation of the telecommunication services agreement with the Mobile Network Operators and related party entities. The Company's ability to provide services to its customers depends on maintaining agreements with its related parties and Mobile Network Operator or acquiring new agreements with other Mobile Network Operators for network services. The Company does not have any dependency on voice or non-voice services from the Mobile Network Operator which it provides to its customers itself. The Company relies on its related party for voice and non-voice services. This overall operational risk is mitigated by ensuring that the term of the network service agreement is extended to a duration exceeding 12 months wherever possible. |
Financial risk |
The area of most significant financial risk is the ongoing reduction of MTR rates. MTR overall is on a downward glide path and is phasing out completely worldwide in the mobile telecoms industry as a result of regulatory action. This has an impact on the Company and implies a loss of MTR revenue in the future. This overall decline in MTR rates is not specific to Lycamobile Europe Limited, it affects telecom companies across the world. However, to mitigate this potential loss of future revenue, termination costs of outgoing calls will be reduced, which will partly offset the revenue decline. The overall effect of this MTR decline is not regarded as significant to the Company which, as with other telecom companies, will be seeking to replace the loss of revenue from alternative sources, for example, data services. |
Foreign exchange risks |
The Company's significant sales continue to be made in Euros (€). The Company also has certain balances due to or from related parties in other currencies and the Company is therefore exposed to currency movements. As a matter of policy, the Company chooses not to currently use financial derivatives or currency hedging to manage its exposure. |
Credit risk |
The Company's principal financial assets are bank balances, trade and other receivables. The Company's credit risk is primarily attributable to its trade receivables and balances from the related parties. The Company gives significant attention to credit risk as significant balances are due to and from related parties. Each related party is analysed individually for creditworthiness. |
Liquidity risk |
The Company's policy on liquidity risk is to ensure that sufficient cash is available to fund ongoing operations. In this respect, financing may be received from related party entities when required. |
Interest rate risk |
The Company has no interest-bearing liabilities and no interest-bearing assets other than its loans with related party entities and cash. |
Legal and regulatory risk |
The nature of the Company's industry continues to change and the complexities of products and services continue to vary with customer desires for innovative products. Regulatory authorities continue to consider the impact of changing business models in the industry and in response to customers changing preferences or government requests for additional tax revenue, the overall regulatory burden on operators continues to increase. Additionally, interpretations of laws and regulations vary by country. The Company continues to monitor each country's laws and regulations to ensure it is compliant. |
Lycamobile Europe Limited (Registered number: 09385794) |
Strategic Report |
for the year ended 31 December 2022 |
Section 172(1) statement |
Statement by the directors in the performance of their statutory duties in accordance with s172 (1) Companies Act 2006. |
The board of directors of Lycamobile Europe Limited consider, both individually and together, that they have acted in the way they consider, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole (having regard to the stakeholders and matters set out in s172 (1)(a-f) of the Act) in the decisions taken during the year ended 31 December 2022. In particular, by performance of the following: |
- Our business aims are designed to have a long-term beneficial impact on the Company and to contribute to its success. |
- Our employees are fundamental to our business aims. We aim to be a responsible employer in our approach to the pay and benefits our employees receive. |
- Our business requires strong relationships with suppliers and others and we continually strive to maintain and improve these relationships. |
- The impact of the Company's operations on the community and environment is considered by the directors and reviewed regularly. |
- As the Board of Directors, our intention is to behave responsibly and ensure that management operates the business in a responsible manner, operating within the high standards of business conduct and good governance. |
- As the Board of Directors, our intention is to behave responsibly toward our shareholders and treat them fairly and equally, so they too may benefit from the success of our company. |
Statement of corporate governance arrangements |
Responsibility for robust and strong corporate governance lies with the board and the board recognises in full its obligation and continuing responsibility for organising and directing the overall affairs of the Company in a way that is in the best interest of the shareholders. This involves detailed discussion and strategic review of the financial and operational performance of the Company as well as a review of risk and internal controls. |
The board is also responsible for the overall management of the Company's business and is accountable to the shareholders for setting out the Company strategy and performance review and for the long-term success of the Company, as well as ensuring that the Company is adequately resourced, that the appropriate skills are in place and that the management team are meeting their objectives whilst ensuring that shareholder value is maintained. |
Going concern |
The Company has reported: |
- a profit after tax for the year of €18.0m (2021: €3.8m); |
- net current assets of €0.2m (2021: liabilities of €17.8m); and |
- net cash inflows from operating activities for the year of €0.6m (2021: €5.6m) as evidenced on page 16 in the Cashflow Statement. |
The majority of the cash flows associated with investing and financing activities are ultimately either discretionary and/or with related parties under the control of Mr. A Subaskaran. |
The directors have reviewed the Company's business activities, together with the factors likely to affect the Company's future development, performance and position. This going concern assessment has given consideration to the Company's available cash flow, business model, strategy, regulatory environment, principal risks and uncertainties, recent financial performance and outlook, which are detailed in the Strategic Report on pages 2 to 5. The going concern of the Company has been assessed taking into account the potential impact of certain scenarios arising from the uncertainties which have the greatest potential impact on the going concern position of the Company in the periods under review. |
Given the unique conditions arising from the current cost of living crisis, specific consideration has been given to how the crisis may affect the results of the Company and its related parties as part of the going concern and this scenario planning considered the following possible impacts; |
- a general market slowdown in new customer acquisitions, and a reduction in churn rate; and |
- a reduction in operating costs, primarily in relation to subscriber acquisition costs, marketing and third-party customer service costs due to lower new customer acquisitions and lockdown restrictions. |
Based on these considerations the directors have prepared forecast trading cash inflows and outflows for the Company and have no reason to believe cash generated for operating activities will be less than that historically generated. |
The directors have reviewed these trading and operational cashflow forecasts for the Company for the period to 31 December 2024 including in the forecast those factors which the directors consider could materially affect forecast cashflow during the period, both positively and negatively. |
Lycamobile Europe Limited (Registered number: 09385794) |
Strategic Report |
for the year ended 31 December 2022 |
This review has included an overlay of probable sensitivity analysis to key assumption changes, including potential market tariff and market share changes, and demonstrates that there are no material variations to the forecast cash flow generated from operations. |
The directors have also reviewed the asset and liability bases of the Company as at the date of approval of these financial statements and separately considered those which are third party and those which are 'related' to other companies controlled by the same ultimate shareholder. |
The Company and its related parties form an operating model that ensures revenue and profits are economically allocated to the Company, within the Group which has earned them. As such, the Company has substantial trading transactions with other related party companies and there may be significant amounts due to or from those parties that are repayable on demand. The Company may also be called upon to fund related parties however there is no obligation to do so. |
Third party cash related liabilities will be settled from the cash flow forecasts as they fall due in the normal course of business via the MVNO Group Treasury function. Related party liabilities will be settled only when sufficient surplus working capital is available. |
The directors have further mitigated any potential related party risk by receiving an undertaking from the owners of certain material related party creditor companies that liabilities will not be demanded and repaid by the Company for at least twelve months from the date of signing these financial statements, unless sufficient surplus funds are available, or if doing so could jeopardise, in the opinion of the Company's directors, the Company's ability to meet its debts as they fall due. |
The directors have additionally concluded, following a review of related party receivables, that whilst operational cash headroom would be significantly reduced in the event of difficulty collecting these balances, this would not itself jeopardise the going concern conclusion that directors have reached. |
The trading and operational cashflow forecasts demonstrate that the Company will require support from related parties to settle the liability should it arise within the going concern period. |
The directors have concluded, on the basis of cash flow forecasts together with the support provided by related party companies sourced from within the operating model that Lycamobile Europe Limited will have access to adequate working capital resources to continue in operational existence for at least the next twelve months from the date of signing these financial statements. |
However, the related party MVNO providing the treasury function referred to above indicated the existence of a material uncertainty in its own reporting that may cast doubt on that Company's ability to continue to provide ongoing support. Nevertheless, after making enquiries, and considering uncertainties described above, the directors have reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. For these reasons, the directors continue to adopt the going concern basis in preparing the annual reports and accounts. |
On behalf of the board: |
Lycamobile Europe Limited (Registered number: 09385794) |
Directors' Report |
for the year ended 31 December 2022 |
The directors present their report with the financial statements of the Company for the year ended 31 December 2022. |
Dividends |
The profit for the year, after taxation, amounted to €18.0m (2021: €3.8m). The directors did not recommend the payments of a dividend (2021: €Nil). |
Future developments |
The directors remain optimistic for the future. Activities planned to enhance performance include additional discounts for bundled services, which will include limited and unlimited national, international and data offers as well as additional top-up bonuses in the market. The directors aim to maintain a strategy to continue to improve performance and drive the business through targeted growth opportunities |
Uncertain tax positions and ongoing enquiries relating to VAT |
There had been ongoing discussions and enquiries between Lycamobile Europe Limited and HMRC regarding potential imputed interest on related party transactions between Lycamobile Europe Limited and certain related party companies. Post year end Lycamobile Europe Limited received communication from HMRC that this matter will not be pursued. |
As referred to in Note 3, Lycamobile Europe Limited is in dispute with some tax authorities in relation to the treatment of VAT on certain classes of transactions. A provision has been recorded of €100,027,787 to reflect Lycamobile Europe Limited's current best estimate of the potential exposure at 31 December 2022, including penalties and interest. The Directors have recalculated the required amount as at 31 December 2022 in line with the positions taken by Lycamobile Europe Limited. A number of the items within the VAT amount provided within creditors are currently under appeal and the Directors remain confident of successful outcomes overall. In some cases tax authorities have raised assessments and Lycamobile Europe Limited has sought advice and taken necessary steps to appeal or challenge the positions and postponed collections of most of the amounts. Lycamobile Europe Limited expects a number of these disputes to continue for a number of months prior to any resolution. |
Directors |
The directors shown below have held office during the whole of the period from 1 January 2022 to the date of this report. |
Other changes in directors holding office are as follows: |
Directors indemnity insurance |
As permitted by Section 234 of the Companies Act 2006, the Company has purchased insurance cover on behalf of the directors, indemnifying them against certain liabilities which may be incurred by them in relation to the Company. |
Auditors |
The audit business of Haines Watts London LLP was acquired by Cooper Parry Group Limited on 14 November 2023. Haines Watts London LLP has resigned as auditor and Cooper Parry Group Limited has been appointed in its place. |
Streamlined energy and carbon reporting |
We are pleased to report on our energy and carbon emissions for the financial year ended 31 December 2022. |
Lycamobile Europe Limited and its related parties (Lycamobile Group) operate in the same premises in London Headquarters and share office spaces for their centralised employees. Statement of carbon emissions in compliance with Streamlined Energy and Carbon Reporting (SECR) covering energy use and associated greenhouse gas emissions relating to gas, electricity and transport, intensity ratios and information relating to energy efficiency actions are as follows: |
The calculation approach is based on invoicing/mileage (where applicable) and emissions factors have been taken from the BEIS 2020 Conversion Factors published in June 2020. |
Lycamobile Europe Limited (Registered number: 09385794) |
Directors' Report |
for the year ended 31 December 2022 |
2022 | 2021 |
Total energy use covering electricity, gas, other fuels and transport | kWh | 70,096.53 | 74,394.99 |
Total emissions generated through combustion of gas | kgc | 0.00 | 0.00 |
Total emissions generated through use of purchased electricity | kgc02e | 11,154.98 | 12,271.08 |
Total emissions generated through use of other fuels | kgc02e | 0.00 | 0.00 |
Total emissions generated through business travel | kgc02e | 5,376.42 | 5,256.38 |
Total gross emissions | kgc02e | 16,531.40 | 17,528.77 |
Intensity ratio (total gross emissions per office space) | kgc02e per sqft | 1.93 | 2.07 |
We are committed to responsible energy management and will practise energy efficiency throughout our group entities, wherever it's cost effective. We recognise that climate change is one of the most serious environmental challenges currently threatening the global community and we understand we have a role to play in reducing greenhouse gas emissions. |
Some measures have been taken to increase our energy efficiency including the upgrade to motion-triggered LED lighting in Lycamobile Headquarters and encouraging remote working as and where possible. |
Disclosure in the strategic report |
As permitted by paragraph 1A of schedule 7 to the Large and Medium Sized Companies and Groups (Accounts and Reports) Regulation 2008, certain matters including financial instruments and principal risks and uncertainties, which are required to be disclosed in the directors' report have been omitted as they are included in the Strategic Report on pages 2 to 5. |
Statement as to disclosure of information to auditors |
So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the Company's auditors are unaware, and each director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the Company's auditors are aware of that information. |
On behalf of the board: |
Lycamobile Europe Limited (Registered number: 09385794) |
Statement of Directors' Responsibilities |
for the year ended 31 December 2022 |
The directors are responsible for preparing the Strategic Report, the Directors' Report and the financial statements in accordance with applicable laws and regulations. |
Company law requires the directors to prepare financial statements for each financial year. Under the law, the directors have elected to prepare the 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 Company and of the profit or loss of the Company for that period. In preparing the financial statements, the directors are required to: |
- select suitable accounting policies and apply them consistently; |
- make judgements and accounting estimates that are reasonable and prudent; and |
- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Parent Company will continue in business. |
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at the time the financial position of the Company and able them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. |
Independent Auditors' Report to the Members of |
Lycamobile Europe Limited |
Opinion |
We have audited the financial statements of Lycamobile Europe Limited (the 'Company') for the year ended 31 December 2022 which comprise the Income Statement, Other Comprehensive Income, Balance Sheet, Statement of Changes in Equity, Cash Flow Statement and Notes to the Cash Flow Statement, Notes to the Financial Statements, including a summary of 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). |
In our opinion the financial statements: |
- | give a true and fair view of the state of the Company's affairs as at 31 December 2022 and of its profit for the year then ended; |
- | have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and |
- | have been prepared in accordance with the requirements of the Companies Act 2006. |
Basis for opinion |
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our 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 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 |
The directors are responsible for the other information. The other information comprises the information in the Strategic Report, the Directors' Report and the Statement of Directors' Responsibilities, but does not include the financial statements and our Auditors' Report thereon. |
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. |
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. |
Opinions on other matters prescribed by the Companies Act 2006 |
In our opinion, based on the work undertaken in the course of the 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. |
Independent Auditors' Report to the Members of |
Lycamobile Europe Limited |
Matters on which we are required to report by exception |
In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors' Report. |
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: |
- | adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or |
- | the financial statements are not in agreement with the accounting records and returns; or |
- | certain disclosures of directors' remuneration specified by law are not made; or |
- | we have not received all the information and explanations we require for our audit. |
Responsibilities of directors |
As explained more fully in the Statement of Directors' Responsibilities, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. |
In preparing the financial statements, the directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so. |
Auditors' responsibilities for the audit of the financial statements |
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditors' Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. |
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. |
We gained an understanding of the legal and regulatory framework applicable to the Company and the industry in which it operates, and considered the risk of acts by the Company that were contrary to applicable laws and regulations, including fraud. We discussed with management the policies and procedures in place regarding compliance with laws and regulations. We discussed amongst the audit team the identified laws and regulations, and remained alert to any indications of non-compliance. |
During the audit we focused on laws and regulations which could reasonably be expected to give rise to a material misstatement in the financial statements, including, but not limited to, the Companies Act 2006 and UK tax legislation. Our tests included agreeing the financial statement disclosures to underlying supporting documentation and enquiries with management. |
Our procedures in relation to fraud included but were not limited to: inquiries of management whether they have any knowledge of any actual, suspected or alleged fraud, and discussions amongst the audit team regarding the risk of fraud such as opportunities for fraudulent manipulation of financial statements. We determined that the principal risks related to posting manual journal entries to manipulate financial performance and management bias through judgements in accounting estimates. We also addressed the risk of management override of internal controls, including testing journals and evaluating whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud. Our tests include agreeing the financial statement disclosures to underlying supporting documentation. |
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulations. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation. |
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' Report. |
Independent Auditors' Report to the Members of |
Lycamobile Europe Limited |
Use of our report |
This report is made solely to the 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 Company's members those matters we are required to state to them in an Auditors' 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 Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed. |
for and on behalf of |
Statutory Auditor |
New Derwent House |
69-73 Theobalds Road |
London |
WC1X 8TA |
Lycamobile Europe Limited (Registered number: 09385794) |
Income Statement |
for the year ended 31 December 2022 |
2022 | 2021 |
Notes | € | € |
Turnover | 4 |
Cost of sales | ( |
) | ( |
) |
Gross profit |
Administrative expenses | ( |
) | ( |
) |
Operating profit |
Interest payable and similar expenses | 7 | ( |
) | ( |
) |
Profit before taxation | 8 |
Tax on profit | 9 | ( |
) | ( |
) |
Profit for the financial year |
Lycamobile Europe Limited (Registered number: 09385794) |
Other Comprehensive Income |
for the year ended 31 December 2022 |
2022 | 2021 |
Notes | € | € |
Profit for the year |
Other comprehensive income | - | - |
Total comprehensive income for the year |
Prior year adjustment | ( |
) |
Total comprehensive income since last annual report |
(40,861,266 |
) |
Lycamobile Europe Limited (Registered number: 09385794) |
Balance Sheet |
31 December 2022 |
2022 | 2021 |
Notes | € | € |
Current assets |
Debtors | 12 |
Cash at bank and in hand |
Creditors |
Amounts falling due within one year | 13 |
Net current assets/(liabilities) | ( |
) |
Total assets less current liabilities | ( |
) |
Capital and reserves |
Called up share capital | 16 |
Foreign exchange reserve | 17 |
Retained earnings | 17 | ( |
) | ( |
) |
Shareholders' funds | ( |
) |
The financial statements were approved by the Board of Directors and authorised for issue on |
Lycamobile Europe Limited (Registered number: 09385794) |
Statement of Changes in Equity |
for the year ended 31 December 2022 |
Called up | Foreign |
share | Retained | exchange | Total |
capital | earnings | reserve | equity |
€ | € | € | € |
Balance at 1 January 2021 |
Prior year adjustment | - | ( |
) | - | ( |
) |
As restated | ( |
) | ( |
) |
Changes in equity |
Total comprehensive income | - |
Balance at 31 December 2021 | 225 | (20,254,005 | ) | 2,474,272 | (17,779,508 | ) |
Changes in equity |
Total comprehensive income | - |
Balance at 31 December 2022 | ( |
) | 2,474,272 |
Lycamobile Europe Limited (Registered number: 09385794) |
Cash Flow Statement |
for the year ended 31 December 2022 |
2022 | 2021 |
Notes | € | € |
Cash flows from operating activities |
Cash generated from operations | 1 |
Tax paid | ( |
) | ( |
) |
Net cash from operating activities |
Cash flows from financing activities |
Interest (paid)/received | ( |
) | ( |
) |
Net cash from financing activities | ( |
) | ( |
) |
(Decrease)/increase in cash and cash equivalents | ( |
) |
Cash and cash equivalents at beginning of year |
2 |
323,848 |
Cash and cash equivalents at end of year | 2 | 2,307,021 | 2,442,666 |
Lycamobile Europe Limited (Registered number: 09385794) |
Notes to the Cash Flow Statement |
for the year ended 31 December 2022 |
1. | Reconciliation of profit before taxation to cash generated from operations |
2022 | 2021 |
€ | € |
Profit before taxation |
Intercompany provision | (640,880 | ) | (5,728,429 | ) |
Intercompany written off | (2,640,959 | ) | - |
Finance costs | 760,841 | 3,484,699 |
18,014,396 | 2,361,819 |
Decrease in stocks |
(Increase)/decrease in trade and other debtors | ( |
) |
Increase in trade and other creditors |
Cash generated from operations |
2. | Cash and cash equivalents |
The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of these Balance Sheet amounts: |
Year ended 31 December 2022 |
31/12/22 | 1/1/22 |
€ | € |
Cash and cash equivalents | 2,307,021 | 2,442,666 |
Year ended 31 December 2021 |
31/12/21 | 1/1/21 |
€ | € |
Cash and cash equivalents | 2,442,666 | 323,848 |
3. | Analysis of changes in net funds |
At 1/1/22 | Cash flow | At 31/12/22 |
€ | € | € |
Net cash |
Cash at bank and in hand | 2,442,666 | (135,645 | ) | 2,307,021 |
2,442,666 | ( |
) | 2,307,021 |
Total | 2,442,666 | (135,645 | ) | 2,307,021 |
Lycamobile Europe Limited (Registered number: 09385794) |
Notes to the Financial Statements |
for the year ended 31 December 2022 |
1. | Statutory information |
Lycamobile Europe Limited is a private company, limited by shares, incorporated in England and Wales under the Companies Act. The address of the registered office is given in the Company information page and the nature of the Company's operations are set out in the Strategic Report. |
2. | Accounting policies |
Basis of preparing the financial statements |
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006. |
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies (see note 3). These financial statements have been prepared under the historical cost convention. |
Revenue |
Revenue represents the amounts receivable for airtime services supplied by the Company, net of value-added tax, less trade discounts, incentives and bonuses. |
Revenue recognition |
The Company adopts specific revenue recognition criteria prior to revenue being recognised, as follows: |
Mobile service revenue |
This includes national and international airtime, data and roaming services provided to the end user. Airtime is invoiced to prepay customers at the time of top-up and to wholesalers at the time of voucher activation. Mobile service revenues are recognised only when the services are consumed by the end user (usage). Revenue invoiced or received in advance of usage is deferred and released when consumed as services by the end users or when usage expires. Usage is determined as the amount of airtime used by the end customer after deducting trade discounts, commission payments, incentives, bonuses and free credits. |
Deferred revenue |
Deferred revenue for future usage of top-up payments is recognised as a liability on the Balance Sheet. The deferred revenue is released to the Income Statement upon usage by the end users or on expiry of unused balances of end users and then recorded as revenue. |
Mobile termination revenue (MTR) |
Mobile termination revenue is recognised when the calls are terminated to Lycamobile Europe Limited through an interconnect partner. |
Revenue for bundle arrangements with multiple components of revenue |
For revenue bundles in which prepaid income is received in advance of usage for potentially one or more multiple revenue deliverables, the revenue is released to income according to the proportionate relative usage of the deliverables, each of which has been assigned a value. |
Identifying the fair value of each element of the deliverable is performed by assessing the tariffs at which the service or deliverable is normally sold on an individual basis after the deductions of any relevant offers, discounts or promotions. |
Where it is too uncertain to clearly determine the proportion of the underlying elements of the revenue bundle, past customer usage experience is to be used to estimate the proportion of the bundle elements to allow the determination of the revenue to be recognised. |
Lycamobile Europe Limited (Registered number: 09385794) |
Notes to the Financial Statements - continued |
for the year ended 31 December 2022 |
2. | Accounting policies - continued |
Tangible fixed assets |
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. |
At each reporting date the Company assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount. |
The Company adds to the carrying amount of an item of fixed assets the cost of replacing part of such an item when that cost is incurred, if the replacement part is expected to provide incremental future benefits for the Company. The carrying amount of the replaced part is derecognised. Repairs and maintenance are charged to the Income Statement during the period in which they are incurred. |
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method. |
Depreciation is provided on the following basis: |
Computer equipment | - | 20% straight line |
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date. |
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the Income Statement. |
Subscriber acquisition costs |
Subscriber acquisition costs, which include the commission costs relating to acquiring new customers and any other costs associated with acquiring customers, are recognised in the Income Statement when incurred. |
Financial instruments |
The Company only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties, loans to related parties and investments in ordinary shares. |
Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at the present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However, if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms or in case of an out-right short-term loan that is not at market rate, the financial asset or liability is measured, initially at the present value of future cash flows discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost, unless it qualifies as a loan from a director in the case of a small company, or a public benefit entity concessionary loan. |
Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the Income Statement. |
For financial assets measured at amortised cost, the impairment loss is measured as the difference between an asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective interest rate. If a financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. |
Lycamobile Europe Limited (Registered number: 09385794) |
Notes to the Financial Statements - continued |
for the year ended 31 December 2022 |
2. | Accounting policies - continued |
For financial assets measured at cost less impairment, the impairment loss is measured as the difference between an asset's carrying amount and the best estimate of the recoverable amount, which is an approximation of the amount that the Company would receive for the asset if it were to be sold at the reporting date. |
Financial assets and liabilities are offset and the net amount is reported in the Balance Sheet when there is an enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously. |
Debtors |
Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment. |
Cash and cash equivalents |
Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. |
Creditors |
Short-term creditors are measured at the transaction price. |
Finance costs |
Finance costs are charged to the Income Statement over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument. |
Provisions for liabilities |
Provisions are made where an event has taken place that gives the Company a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation. |
Provisions are charged as an expense to the Income Statement in the year that the Company becomes aware of the obligation, and are measured at the best estimate at the Balance Sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. |
When payments are eventually made, they are charged to the provision carried in the Balance Sheet. |
Functional and presentation currency |
Items included within the financial statements of the Company are measured using the currency of the primary economic environment in which it operates ("the functional currency"). The Company's functional and presentational currency is Euros (€). |
The results of overseas operations are translated into EUR at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations are translated at the rate ruling at the reporting date. Exchange differences arising on translating the net assets at the closing rate and the results of overseas operations at the actual rate are recognised in other comprehensive income within currency translation differences. |
Going concern |
The Company has reported: |
- a profit after tax for the year of €18.0m (2021: €3.8m); |
- net current assets of €0.2m (2021: liabilities of €17.8m); and |
- net cash inflows from operating activities for the year of €0.6m (2021: €5.6m) as evidenced on page 16 in the Cashflow Statement. |
The majority of the cash flows associated with investing and financing activities are ultimately either discretionary and/or with related parties under the control of Mr. A Subaskaran. |
Lycamobile Europe Limited (Registered number: 09385794) |
Notes to the Financial Statements - continued |
for the year ended 31 December 2022 |
2. | Accounting policies - continued |
The directors have reviewed the Company's business activities, together with the factors likely to affect the Company's future development, performance and position. This going concern assessment has given consideration to the Company's available cash flow, business model, strategy, regulatory environment, principal risks and uncertainties, recent financial performance and outlook, which are detailed in the Strategic Report on pages 2 to 5. The going concern of the Company has been assessed taking into account the potential impact of certain scenarios arising from the uncertainties which have the greatest potential impact on the going concern position of the Company in the periods under review. |
Given the unique conditions arising from the current cost of living crisis, specific consideration has been given to how the crisis may affect the results of the Company and its related parties as part of the going concern and this scenario planning considered the following possible impacts; |
- a general market slowdown in new customer acquisitions, and a reduction in churn rate; and |
- a reduction in operating costs, primarily in relation to subscriber acquisition costs, marketing and third-party customer service costs due to lower new customer acquisitions and lockdown restrictions. |
Based on these considerations the directors have prepared forecast trading cash inflows and outflows for the Company and have no reason to believe cash generated for operating activities will be less than that historically generated. |
The directors have reviewed these trading and operational cashflow forecasts for the Company for the period to 31 December 2024 including in the forecast those factors which the directors consider could materially affect forecast cashflow during the period, both positively and negatively. |
This review has included an overlay of probable sensitivity analysis to key assumption changes, including potential market tariff and market share changes, and demonstrates that there are no material variations to the forecast cash flow generated from operations. |
The directors have also reviewed the asset and liability bases of the Company as at the date of approval of these financial statements and separately considered those which are third party and those which are 'related' to other companies controlled by the same ultimate shareholder. |
The Company and its related parties form an operating model that ensures revenue and profits are economically allocated to the Company, within the Group which has earned them. As such, the Company has substantial trading transactions with other related party companies and there may be significant amounts due to or from those parties that are repayable on demand. The Company may also be called upon to fund related parties however there is no obligation to do so. |
Third party cash related liabilities will be settled from the cash flow forecasts as they fall due in the normal course of business via the MVNO Group Treasury function. Related party liabilities will be settled only when sufficient surplus working capital is available. |
The directors have further mitigated any potential related party risk by receiving an undertaking from the owners of certain material related party creditor companies that liabilities will not be demanded and repaid by the Company for at least twelve months from the date of signing these financial statements, unless sufficient surplus funds are available, or if doing so could jeopardise, in the opinion of the Company's directors, the Company's ability to meet its debts as they fall due. |
The directors have additionally concluded, following a review of related party receivables, that whilst operational cash headroom would be significantly reduced in the event of difficulty collecting these balances, this would not itself jeopardise the going concern conclusion that directors have reached. |
The trading and operational cashflow forecasts demonstrate that the Company will require support from related parties to settle the liability should it arise within the going concern period. |
The directors have concluded, on the basis of cash flow forecasts together with the support provided by related party companies sourced from within the operating model that Lycamobile Europe Limited will have access to adequate working capital resources to continue in operational existence for at least the next twelve months from the date of signing these financial statements. |
Lycamobile Europe Limited (Registered number: 09385794) |
Notes to the Financial Statements - continued |
for the year ended 31 December 2022 |
2. | Accounting policies - continued |
However, the related party MVNO providing the treasury function referred to above indicated the existence of a material uncertainty in its own reporting that may cast doubt on that Company's ability to continue to provide ongoing support. Nevertheless, after making enquiries, and considering uncertainties described above, the directors have reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. For these reasons, the directors continue to adopt the going concern basis in preparing the annual reports and accounts. |
3. | Critical accounting judgements and key sources of estimation uncertainty |
In preparing these financial statements, the directors have had to make the following key judgements: |
Recoverability of amounts due from related parties |
Provision for impairment of the carrying value of amounts due from related parties is made based on management's estimate of the prospect of recovering the amounts due, which includes considering the solvency of the counterparty and its future outlook, based on budgets and forecasts prepared by management. |
Uncertain tax positions and ongoing enquiries relating to corporate taxes |
There had been ongoing discussions and enquiries between Lycamobile Europe Limited and HMRC regarding potential imputed interest on related party transactions between Lycamobile Europe Limited and certain related party companies. Post year end Lycamobile Europe Limited received communication from HMRC that this matter will not be pursued. |
Uncertain tax positions and ongoing enquiries relating to VAT |
Included within creditors within one year is an amount of €100,027,787 VAT relating to certain VAT positions (inclusive of potential penalties and interest) taken by Lycamobile Europe Limited since 1 January 2015 and disputes with some tax authorities. A number of the items within the VAT amount provided within creditors are currently under appeal and the Directors remain confident of successful outcomes overall. The Directors have recalculated the required amount as at 31 December 2022 in line with the positions taken by Lycamobile Europe Limited. |
4. | Turnover |
The turnover and profit before taxation are attributable to the one principal activity of the Company. |
An analysis of turnover by geographical market is given below: |
2022 | 2021 |
€ | € |
Austria | 4,702,207 | 4,535,284 |
Denmark | 7,818,182 | 7,490,905 |
Germany | 59,848,861 | 69,116,265 |
Netherlands | 51,772,583 | 47,258,081 |
Sweden | 6,628,751 | 6,571,857 |
5. | Employees and directors |
There were no staff costs for the year ended 31 December 2022 nor for the year ended 31 December 2021. |
The average number of employees during the year was NIL (2021 - NIL). |
6. | Directors' emoluments |
2022 | 2021 |
€ | € |
Directors' remuneration |
Lycamobile Europe Limited (Registered number: 09385794) |
Notes to the Financial Statements - continued |
for the year ended 31 December 2022 |
7. | Interest payable and similar expenses |
2022 | 2021 |
€ | € |
Other Interest |
8. | Profit before taxation |
The profit is stated after charging/(crediting): |
2022 | 2021 |
€ | € |
Foreign exchange differences | ( |
) |
Fees payable to the Company's auditor for the audit of the Company's annual financial statements |
Non-audit services provided by the Company's auditor |
Tax compliance to the Company's auditor |
Intercompany provision | ( |
) | ( |
) |
Intercompany write off | ( |
) |
9. | Taxation |
Analysis of the tax charge |
The tax charge on the profit for the year was as follows: |
2022 | 2021 |
€ | € |
Current tax: |
UK corporation tax |
Deferred tax |
Tax on profit |
UK corporation tax has been charged at 19% (2021 - 19%). |
Reconciliation of total tax charge included in profit and loss |
The tax assessed for the year is lower than the standard rate of corporation tax in the UK. The difference is explained below: |
2022 | 2021 |
€ | € |
Profit before tax |
Profit multiplied by the standard rate of corporation tax in the UK of (2021 - |
Effects of: |
Expenses not deductible for tax purposes |
Income not taxable for tax purposes | ( |
) | ( |
) |
Depreciation in excess of capital allowances |
respect of previous periods - |
Adjust opening deferred tax to average rate | - | (4,611 | ) |
Prior year understated | 167,722 | - |
Total tax charge | 2,540,963 | 811,383 |
10. | Prior year adjustment |
A prior year adjustment has been raised to adjust for a provision on intercompany receivables for €44,655,432. This has reduced the profit in 2020 and thus the retained earnings balance. |
Lycamobile Europe Limited (Registered number: 09385794) |
Notes to the Financial Statements - continued |
for the year ended 31 December 2022 |
11. | Tangible fixed assets |
Computer |
equipment |
€ |
Cost |
At 1 January 2022 |
and 31 December 2022 |
Depreciation |
At 1 January 2022 |
and 31 December 2022 |
Net book value |
At 31 December 2022 |
At 31 December 2021 |
12. | Debtors: amounts falling due within one year |
2022 | 2021 |
€ | € |
Trade debtors |
Amounts owed by group undertakings |
Other debtors |
Deferred tax asset |
Prepayments and accrued income |
Included within the trade debtors balance is a provision for bad debts of €2,001,163 (2021: €1,910,467). |
13. | Creditors: amounts falling due within one year |
2022 | 2021 |
€ | € |
Trade creditors |
Amounts owed to group undertakings |
Tax |
VAT | 100,027,787 | 105,484,898 |
Accruals and deferred income |
14. | Financial instruments |
The Company’s financial instruments may be analysed as follows: |
2022 | 2021 |
€ | € |
Financial assets |
Financial assets measured at amortised cost | 177,126,172 | 153,713,472 |
Financial liabilities |
Financial liabilities measured at amortised cost | (30,326,716 | ) | (28,675,649 | ) |
Financial assets measured at amortised cost comprise cash, trade debtors, other debtors, amounts owed by related parties and accrued income. |
Lycamobile Europe Limited (Registered number: 09385794) |
Notes to the Financial Statements - continued |
for the year ended 31 December 2022 |
Financial liabilities measured at amortised cost comprise trade creditors, amounts owed to related parties and accruals. |
Information regarding the Company's exposure to risks are included within the Strategic Report on pages 2 to 5. |
15. | Deferred tax |
€ |
Balance at 1 January 2022 | ( |
) |
Provided during year |
Balance at 31 December 2022 | ( |
) |
16. | Called up share capital |
Allotted, issued and fully paid: |
Number: | Class: | Nominal | 2022 | 2021 |
value: | € | € |
Ordinary | €1.125 | 225 | 225 |
There are 200 ordinary shares in issue, which were issued at a nominal value of £1 per share. At the date of issue the exchange rate gave a nominal value of €1.125 per share. |
There is a single class of ordinary shares. There are no restrictions on dividends and the repayment of capital. |
17. | Reserves |
Foreign |
Retained | exchange |
earnings | reserve | Totals |
€ | € | € |
At 1 January 2022 | ( |
) | (17,779,733 | ) |
Profit for the year | - |
At 31 December 2022 | ( |
) | 214,698 |
Foreign exchange reserve |
The foreign exchange reserve has arisen as a result of the translation of items from the functional currency to the presentational currency up to 2017 where the presentational currency of the financial statements was the Pound Sterling (£). |
Retained earnings |
The profit and loss account represents cumulative profit or losses, net of dividends paid and other adjustments. |
18. | Net debt |
Related party debtors and creditors are not considered by the directors to be part of net debt, as they are working capital in nature. Such movements are therefore included within the movements in debtors and creditors included in the Cash Flow Statement. |
19. | Related party disclosures |
The Company's individual shareholders have similar interests in a range of related Companies. As these companies are under common control, transactions between Lycamobile Europe Limited and these companies are related party transactions. These are set out below: |
Lycatel (Ireland) Limited, Lycatel Services Limited, Hastings Denmark APS, Hastings Telecommunications and Services GmbH, and Lycatelcom Lda are wholly owned subsidiaries of WWW Holding Company Limited in which Mr A Subaskaran owns 97.8% of the issued share capital. Gnanam Telecom Centres AB are wholly owned subsidiaries of Lycatelcom Lda. |
Lycamobile Europe Limited (Registered number: 09385794) |
Notes to the Financial Statements - continued |
for the year ended 31 December 2022 |
Related party disclosures - continued |
Samra Trust incorporated in Jersey owns Salinasco Holdings Limited incorporated in Cyprus. Salinasco Holdings Limited owns 98% issued share capital of Lycamobile Netherlands Limited, Lycamobile BV, Lycamobile Denmark Limited, Lycamobile Ireland Ltd, Lycamobile Austria Ltd, Lycamobile Limited which in turn owns Lycamobile Sweden Limited (UK). Lycamobile Sweden AB is a wholly owned subsidiary of Lycamobile Sweden Limited (UK). |
Mohamed Al Amari, the director of Universal Distribution Services APS, is also the director of LBOS Sweden AB and Gnanam Telecom Centres AB. |
Mr. A Subaskaran owns: |
- 97.5% of the issued share capital of Lycamobile Distribution Limited. |
- 98% of the issued share capital of Lycamobile UK Limited, and Lycamobile Distribution Austria Ltd. |
- 98% of the issued share capital of LM Holdco Limited which owns 100% of Vectone Mobile Sweden Limited. |
- 98.5% of the issued share capital of Lycamobile Sweden Limited IRE, LBOS Sweden AB, Lycamobile GmbH, and Lycatel Germany GmbH. |
- 100% of the issued share capital of Lyca Group Holdings Limited which owns 100% of Lyca Finance Limited. |
As part of its year-end procedures, the Company performed an assessment of the recoverability of the amounts due from its related parties. A related party receivable is assessed at the statement of financial position date to determine whether there is objective evidence that is impaired. Related party receivable assets are impaired if there is objective evidence that indicates a loss event has occurred after the initial recognition of the assets. An impairment reversal of €640,880 was recognised in 2022 (2021: €5,728,428). |
Lycamobile Europe Ltd purchases international airtime minutes from Lycatelcom LDA. Lycatelcom LDA contracts with carriers to support MVNOs. Carrier contracts are centrally consolidated and managed by Lycatelcom LDA. It also allocates airtime to MVNOs as required. The function undertaken by Lycatelcom LDA allows for MVNO to collectively obtain bulk access to third party network services at wholesale rates. Lycamobile Europe Limited is able to offer cheap international airtime/data. Lycatelcom LDA has the knowledge and experience to procure, evaluate and assess carrier contracts and their associated risks, thereby offering the best selection of carriers to the MVNOs. |
All of the above transactions were made at an arm's length. |
As at the 31 December 2022, there was a net amount owed by related parties of €149,504,633 (2021: €125,322,403). During the year sales were made to related parties of €15,777,210 (2021: €14,854,434). During the year purchases were made from related parties of €88,471,509 (2021: €89,146,512). During the year net cash of €90,627,387 was loaned to related parties (2021: €72,865,280). There was a positive foreign exchange impact on the balances during the year of €2,922,302 (2021: negative impact of €5,010,681). During the year a provision was reversed of €640,880 (2021: €5,728,429). During the year, a creditor was written off of €2,640,959 (2021: €Nil). The companies are related by virtue of common control with Mr. A Subaskaran. |
The balances due by/(due to) for the year ended 31 December 2022 and 31 December 2021 are summarised overleaf. |
Lycamobile Europe Limited (Registered number: 09385794) |
Notes to the Financial Statements - continued |
for the year ended 31 December 2022 |
Related party disclosures - continued |
2022 | 2021 |
€ | € |
Lycamobile UK Limited | (2,749 | ) | (2,833 | ) |
Lycatel Services Limited | (1,021,656 | ) | (1,075,343 | ) |
Lycamobile Distribution Limited | (5,635,958 | ) | (5,272,735 | ) |
Lycatel (Ireland) Limited | (41,788 | ) | (8,210 | ) |
Lycamobile Austria Limited | (755,875 | ) | (820,498 | ) |
Lycamobile Netherlands Limited | (517,112 | ) | (1,219,781 | ) |
Lycamobile Sweden AB | (1,008,110 | ) | (947,046 | ) |
Lycamobile Sweden Limited IRE | (931,142 | ) | (733,084 | ) |
Hastings Denmark APS | - | (2,647,677 | ) |
Universal Distribution Services APS | (234,559 | ) | (155,569 | ) |
Lyca Finance Ltd | (2,255,000 | ) | - |
LBOS Sweden AB | 8,454 | (28,959 | ) |
Hastings Telecommunications and Services GmbH | (2,804,724 | ) | (2,798,167 | ) |
Lycamobile GmbH | (196,330 | ) | (161,244 | ) |
Lycatel Germany GmbH | (6,881,583 | ) | (6,899,671 | ) |
Lycamobile BV | (1,665,705 | ) | (1,493,498 | ) |
Lycatelcom Lda | 173,899,060 | 149,993,140 |
Gnanam Telecom Centres AB | (54,699 | ) | (79,003 | ) |
Vectone Mobile Sweden Limited | (395,890 | ) | (327,269 | ) |
Included within amounts owed by related parties at year end noted above is: €173,907,514 (2021: €149,993,140). Included within amounts owed to related parties at year end noted above is: €24,402,881 (2021: €24,670,737). |
20. | Ultimate controlling party |
The controlling party is A Subaskaran. |