Company registration number 05869065 (England and Wales)
SOCHITEL UK LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
SOCHITEL UK LIMITED
COMPANY INFORMATION
Directors
J Ejikeme
M Fischer
S Jonas
F Nwoboshi
A Pereira
(Appointed 21 February 2024)
Company number
05869065
Registered office
Ibex House
Baker Street
Weybridge
Surrey
KT13 8AH
Auditor
MGI Midgley Snelling LLP
Ibex House
Baker Street
Weybridge
Surrey
KT13 8AH
SOCHITEL UK LIMITED
CONTENTS
Page
Strategic report
1 - 3
Directors' report
4 - 5
Independent auditor's report
6 - 8
Statement of comprehensive income
9
Balance sheet
10
Statement of changes in equity
11
Statement of cash flows
12
Notes to the financial statements
13 - 26
SOCHITEL UK LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -

The directors present the strategic report and the financial statements of the company for the year ended 31 December 2023.

Financial Review

During the year end 31 December 2023, Sochitel UK Limited (the "Company") continued to carry out its operations selling mobile airtime and data, and electronic gift vouchers. During the year end 31 December 2023, the company's turnover decreased by nearly 20.26% from prior year. Gross profit margin also decreased to 10.2% compared to 13.9% in 2022. This is however is more in line with 2021 levels of 9.6%.

 

Administrative expenses increased during the year, primarily due to a provision for doubtful debts of £1,000,000 which has been recognised in respect of amounts due from Agencies through which the Group operates in various Pan-African jurisdictions. These Agencies are independent legal entities and are not currently subsidiaries of the Group. They have been established to comply with local regulatory and banking requirements in jurisdictions where the Group seeks to operate. The provision represents amounts initially advanced to support the Agencies’ initial operational setup and working capital requirements, which are to be recovered by future invoicing, but for which the timing of this recoverability is uncertain.

 

Management believes that, as these operations mature and achieve sustainable profitability, there is potential for these Agencies to be integrated into the Group structure. Accordingly, while the provision reflects current uncertainty regarding recoverability, management remains confident in the long-term commercial viability of these arrangements and anticipates potential recovery in future periods.

 

Foreign exchange losses (£1,483,000) have been recognised resulting from the depreciation of the Nigerian Naira. However, normal operating expenses remained relatively stable year-on-year.

 

As a result of these factors, the company recorded a loss before tax of £2,736,761, compared to a profit of £1,932,081 in 2022. While the directors acknowledge the decline in financial performance, they have implemented strategic initiatives aimed at enhancing revenue, improving gross profit margins, and optimizing cost control measures. These actions are expected to strengthen the company’s financial position moving forward and initial results for 2025 show a return to profit.

Principal risks and uncertainties

The company operates in a dynamic market and faces certain risks and uncertainties, including:

The board actively monitors these risks using key performance indicators and implements risk mitigation strategies to safeguard the company's interests and sustain long-term growth.

Financial Risk Management

The company maintains adequate cash reserves to ensure sufficient working capital for supplier and creditor obligations. Working capital and cash reserves are reviewed weekly, ensuring financial stability. The company predominantly operates on a pre-paid model, where customers pay before receiving airtime, thereby effectively managing credit risk.

SOCHITEL UK LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
Key performance indicators

Our key financial performance indicators were considered to be the following:

 

The directors continue to assess performance against these indicators while pursuing initiatives to drive long-term profitability.

SOCHITEL UK LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -
Outlook and future developments

IDT Telecom, Inc. (IDT) retained its 74.99% shareholding in Sochitel UK Limited throughout 2023. IDT Corporation Inc., a NYSE-listed entity, remains the majority shareholder of the business.

 

Looking ahead, the company is well-positioned to leverage emerging market trends and technological advancements. Over the next 12 months, we plan to expand our digital voucher offerings, enhancing customer engagement and revenue opportunities.

 

Aligned with our growth strategy, we are actively exploring new opportunities across Pan-African markets. These expansions are expected to contribute to both revenue growth and long-term profitability. Additionally, we are identifying new products and markets to diversify our portfolio, ensuring continued agility and competitiveness in an evolving industry landscape.

 

While we remain optimistic about the future, we are mindful of potential risks such as economic fluctuations, foreign exchange volatility, and regulatory changes. The company remains committed to continuously evaluating and adapting its strategies to mitigate these risks and deliver sustained shareholder value.

 

On behalf of the board

J Ejikeme
Director
2 May 2025
SOCHITEL UK LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -

The directors present their annual report and financial statements for the year ended 31 December 2023.

Principal activities

The principal activity of the company is the sale of mobile phone airtime, data and other value added services.

Results and dividends

The results for the year are set out on page 8. The result for the year was a loss after tax of £2,373,509 (2022: profit £1,540,828).

No ordinary dividends were paid. The directors do not recommend payment of a final dividend.

Directors

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

J Ejikeme
M Fischer
N Ford
(Resigned 7 February 2024)
S Jonas
F Nwoboshi
A Pereira
(Appointed 21 February 2024)
Qualifying third party indemnity provisions

The Group maintains appropriate Directors' and Officers' Liability Insurance on behalf of the directors and Company secretary. In addition, individual qualifying third-party indemnity provisions are given to the directors and Company secretary which comply with the provisions of Section 234 of Companies Act 2006, and were in force throughout the year and up until the signing of the Annual Report.

Statement of directors' responsibilities

The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

 

Company law requires the directors to prepare financial statements for each financial year. Under that 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 these financial statements, the directors are required to:

 

 

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 any time the financial position of the 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 company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

SOCHITEL UK LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 5 -
Statement of disclosure to auditor

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.

On behalf of the board
J Ejikeme
Director
2 May 2025
SOCHITEL UK LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF SOCHITEL UK LIMITED
- 6 -
Opinion

We have audited the financial statements of Sochitel UK Limited (the 'company') for the year ended 31 December 2023 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the 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).

In our opinion the financial statements:

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 Auditor's 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 other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. 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. 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 course of 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 our audit:

SOCHITEL UK LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF SOCHITEL UK LIMITED
- 7 -
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 in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

Responsibilities of directors

As explained more fully in the directors' responsibilities statement, 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 is 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.

Auditor's 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 auditor's 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.

The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

In planning and designing our audit tests, we identify and assess the risks of material misstatements within the financial statements, whether due to fraud or error. Our assessment of these risks includes consideration of the nature of the industry and sector, the control environment and the business performance along with the results of our enquiries of management, about their own identification and assessment of the risks of irregularities. We are also required to perform specific procedures to respond to the risk of management override.

 

As a result of this assessment, we considered the opportunities and incentives that may exist within the company for fraud and identified that the greatest area of risk was in relation to management override, completeness of income and the recoverability of debtors.

We have obtained an understanding of the legal and regulatory frameworks that the company operates in from discussions with the directors and our knowledge of the company and its industry sector. We have focused on the provisions of those laws and regulations that have a direct effect on the determination of material amounts and disclosures in the financial statements. The key laws and regulations we considered in this context included the UK Companies Act and local tax legislation.

SOCHITEL UK LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF SOCHITEL UK LIMITED
- 8 -

We performed the following audit procedures after consideration of the above risks which included the following:

The engagement partner has assessed that all engagement team members were made aware of the relevant laws and regulations and potential fraud risks and were reminded to remain alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.

 

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 regulation. The 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 is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

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 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 company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Tracey Wickens
Senior Statutory Auditor
For and on behalf of MGI Midgley Snelling LLP
7 May 2025
Chartered Accountants
Statutory Auditor
Ibex House
Baker Street
Weybridge
Surrey
KT13 8AH
SOCHITEL UK LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 9 -
2023
2022
Notes
£
£
Turnover
3
24,147,213
30,281,362
Cost of sales
(21,674,549)
(26,066,047)
Gross profit
2,472,664
4,215,315
Administrative expenses
(5,196,551)
(2,299,029)
Operating (loss)/profit
5
(2,723,887)
1,916,286
Interest receivable and similar income
9
68,345
90,349
Interest payable and similar expenses
10
(81,219)
(74,554)
(Loss)/profit before taxation
(2,736,761)
1,932,081
Tax on (loss)/profit
11
363,252
(391,253)
(Loss)/profit for the financial year
(2,373,509)
1,540,828

The statement of comprehensive income has been prepared on the basis that all operations are continuing operations.

SOCHITEL UK LIMITED
BALANCE SHEET
AS AT 31 DECEMBER 2023
31 December 2023
- 10 -
2023
2022
Notes
£
£
£
£
Fixed assets
Intangible assets
12
233,365
204,033
Tangible assets
13
10,530
9,335
Investments
14
2,500
2,500
246,395
215,868
Current assets
Stocks
16
-
141,804
Debtors falling due after more than one year
17
56,288
-
0
Debtors falling due within one year
17
9,560,451
11,741,474
Cash at bank and in hand
202,431
37,588
9,819,170
11,920,866
Creditors: amounts falling due within one year
18
(10,579,875)
(10,277,535)
Net current (liabilities)/assets
(760,705)
1,643,331
Total assets less current liabilities
(514,310)
1,859,199
Creditors: amounts falling due after more than one year
19
(76,934)
(76,934)
Net (liabilities)/assets
(591,244)
1,782,265
Capital and reserves
Called up share capital
21
568,369
568,369
Share premium account
256,631
256,631
Profit and loss reserves
(1,416,244)
957,265
Total equity
(591,244)
1,782,265

These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.

The financial statements were approved by the board of directors and authorised for issue on 2 May 2025 and are signed on its behalf by:
J Ejikeme
Director
Company registration number 05869065 (England and Wales)
SOCHITEL UK LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
Share capital
Share premium account
Profit and loss reserves
Total
£
£
£
£
Balance at 1 January 2022
568,369
256,631
(583,563)
241,437
Year ended 31 December 2022:
Profit and total comprehensive income
-
-
1,540,828
1,540,828
Balance at 31 December 2022
568,369
256,631
957,265
1,782,265
Year ended 31 December 2023:
Loss and total comprehensive income
-
-
(2,373,509)
(2,373,509)
Balance at 31 December 2023
568,369
256,631
(1,416,244)
(591,244)
SOCHITEL UK LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 12 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from/(absorbed by) operations
25
266,216
(1,438,696)
Interest paid
(81,219)
(74,554)
Income taxes refunded
27,325
2,777
Net cash inflow/(outflow) from operating activities
212,322
(1,510,473)
Investing activities
Purchase of intangible assets
(62,547)
(58,848)
Purchase of tangible fixed assets
(5,883)
(5,950)
Interest received
68,345
90,349
Net cash (used in)/generated from investing activities
(85)
25,551
Financing activities
Loans (advanced)/received from parent undertaking
(47,394)
1,088,968
Net cash (used in)/generated from financing activities
(47,394)
1,088,968
Net increase/(decrease) in cash and cash equivalents
164,843
(395,954)
Cash and cash equivalents at beginning of year
37,588
433,542
Cash and cash equivalents at end of year
202,431
37,588
SOCHITEL UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 13 -
1
Accounting policies
Company information

Sochitel UK Limited is a private company limited by shares incorporated in England and Wales. The registered office is Ibex House, Baker Street, Weybridge, Surrey, KT13 8AH. The trading office is 3-4 Devonshire Street, London W1W 5DT.

1.1
Accounting convention

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 company has taken advantage of the exemption under section 401 of the Companies Act 2006 not to prepare consolidated accounts. The financial statements present information about the company as an individual entity and not about its group.

 

Sochitel UK Limited is a majority owned subsidiary of IDT Corporation and the results of Sochitel UK Limited are included in the consolidated financial statements of IDT Corporation which are available from 520 Broad Street, Newark, New Jersey, 07102, USA.

1.2
Going concern

The financial statements have been prepared on a going concern basis. The company incurred a loss for the year ended 31 December 2023 and continued to incur losses during the 2024 financial year. However, the company has returned to profitability in the first three months of 2025.true

The directors have considered the company’s forecasts and projections for at least 12 months from the date of approval of these financial statements, which include assumptions regarding future trading performance, cash flows, and funding requirements. These forecasts indicate that the company will be able to continue in operational existence and meet its obligations as they fall due.

The directors have also considered the following key factors in reaching their conclusion:

 

 

 

 

Based on the above, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future and have therefore adopted the going concern basis of accounting in preparing these financial statements.

SOCHITEL UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -
1.3
Turnover

Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.

Revenue is recognised from the provision of mobile airtime. Revenue is recognised when the significant risks and rewards of ownership have transferred to the buyer; the amount of revenue can be measured reliably; it is probable that the associated economic benefits will flow to the entity; and the costs incurred or to be incurred in respect of the transactions can be measured reliably. Revenue from the sale of airtime to wholesale customers is initially deferred and released as end users purchase airtime. Revenue from the sale of prepaid top-up cards and terminal sales vouchers is recognised when redeemed by the end user.

Revenue from the rendering of services relates to platform usage fees charges to other group companies.

1.4
Intangible fixed assets other than goodwill

Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.

 

The IT Platform represents Sochitel's internally developed system for mobile airtime transfers, the cost represents labour time and external costs incurred in developing the system which is an integral part of the business and gives rise to future economic benefit.

Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following basis:

IT Platform
10 Years
SMS Platform
10 Years
1.5
Tangible fixed assets

Tangible fixed assets are initially recorded at cost, and are subsequently stated at cost less any accumulated depreciation and impairment losses.

Depreciation is calculated so as to write off the cost or valuation of an asset, less its residual value, over the useful economic life of that asset as follows:

Leasehold improvements
the initial period of the lease
Computers
25% reducing balance

If there is an indication that there has been a significant change in depreciation rate, useful life or residual value of tangible assets, the depreciation is revised prospectively to reflect the new estimates.

1.6
Fixed asset investments

Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.

A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

SOCHITEL UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
1.7
Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

1.8
Financial instruments
Basic financial assets

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.

Other financial assets

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

Impairment of financial assets

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

 

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

 

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Basic financial liabilities

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.

SOCHITEL UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 16 -
Derecognition of financial liabilities

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

1.9
Equity instruments

Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

1.10
Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Current 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 company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax

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 carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

1.11
Employee benefits

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.

1.12
Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

1.13
Leases

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.

SOCHITEL UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 17 -
1.14
Foreign exchange

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

 

Intercompany transactions relating to the purchase of airtime and data are translated at the parallel rate.

2
Judgements and key sources of estimation uncertainty

In the application of the company’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.

Critical judgements

The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.

Impairment of intangibles

Determine whether there are indicators of impairment of the company's intangible assets. Factors taken into consideration in reaching such a decision include the economic viability and expected future financial performance of the asset.

Bad debt provisions

A full line by line review is carried out at the end of each month. Whilst every attempt is made to ensure that bad debt provisions are as accurate as possible, there remains a risk that the provisions do not match the level of debts which are ultimately proven to be uncollectable.

Key sources of estimation uncertainty

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.

Bad debt provisions relating to Agency balances

The provision for bad debts is based on management's assessment of the recoverability of agency balances. The provision is measured as the best estimate of the potential loss at the reporting date. Management considers all available information to determine whether an impairment adjustment is necessary and ensures that the provision reflects the probable risk of default.

 

Due to the uncertainty regarding the future viability of the agency, the provision is subject to ongoing review. Any changes in circumstances that affect the recoverability of agency receivables are reflected in the financial statements in the period in which they become known.

 

This assessment includes a review of the creditworthiness of agencies, future business plans and current economic conditions. As of the reporting date, the provision for bad debts was £1,000,000, which represents 95% of the total agency balances receivable.

SOCHITEL UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 18 -
3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by class of business
Sale of goods
22,510,410
28,372,122
Rendering of services
1,636,803
1,909,240
24,147,213
30,281,362
2023
2022
£
£
Turnover analysed by geographical market
Africa
9,789,314
9,968,760
Asia
239,055
1,031,492
Europe
4,714,805
7,665,387
United Kingdom
356,168
678,835
United States of America
9,047,871
10,936,888
24,147,213
30,281,362
2023
2022
£
£
Other revenue
Interest income
68,345
90,349

 

4
Exceptional item
2023
2022
£
£
Expenditure
Exceptional item
2,483,422
162,692

Exceptional items include a foreign exchange loss on Nigerian Naira balances, driven by the pound's appreciation against both the official and parallel exchange rates. Additionally, A provision for doubtful debts of £1,000,000 has been recognised in respect of amounts due from Agencies through which the Group operates in various Pan-African jurisdictions.

 

During the prior year £162,962 of cash was misappropriated by an employee. This amount is unrecoverable.

SOCHITEL UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 19 -
5
Operating (loss)/profit
2023
2022
Operating (loss)/profit for the year is stated after charging/(crediting):
£
£
Exchange losses/(gains)
1,483,422
(553,629)
Depreciation of owned tangible fixed assets
4,688
2,692
Amortisation of intangible assets
33,215
31,300
Operating lease charges
67,877
47,090

Foreign exchange losses of £1,483,422 (2022: £553,629 gains) are attributable to the fluctuation of the Naira rate during the year.

6
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
30,000
33,425
For other services
Other taxation services
5,700
1,000
7
Employees

The average monthly number of persons (including directors) employed by the company during the year was:

2023
2022
Number
Number
Management
3
3
Administration
15
15
Total
18
18

Their aggregate remuneration comprised:

2023
2022
£
£
Wages and salaries
978,131
1,100,407
Social security costs
108,034
132,017
Pension costs
73,196
123,039
1,159,361
1,355,463
SOCHITEL UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 20 -
8
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
370,743
394,489
Company pension contributions to defined contribution schemes
23,488
94,477
394,231
488,966

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2022:2).

Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
284,001
298,333
9
Interest receivable and similar income
2023
2022
£
£
Interest income
Other interest income
68,345
90,349
10
Interest payable and similar expenses
2023
2022
£
£
Interest on financial liabilities measured at amortised cost:
Interest on loans
69,236
73,777
Other finance costs:
Other interest
11,983
777
81,219
74,554
11
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
-
0
363,252
Adjustments in respect of prior periods
(363,252)
5,823
Total current tax
(363,252)
369,075
SOCHITEL UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
11
Taxation
2023
2022
£
£
(Continued)
- 21 -
Deferred tax
Origination and reversal of timing differences
-
0
22,178
Total tax (credit)/charge
(363,252)
391,253

The actual (credit)/charge for the year can be reconciled to the expected (credit)/charge for the year based on the profit or loss and the standard rate of tax as follows:

2023
2022
£
£
(Loss)/profit before taxation
(2,736,761)
1,932,081
Expected tax (credit)/charge based on the standard rate of corporation tax in the UK of 23.52% (2022: 19.00%)
(643,686)
367,095
Tax effect of expenses that are not deductible in determining taxable profit
13,250
-
0
Tax effect of utilisation of tax losses not previously recognised
449,668
(23,029)
Unutilised tax losses carried forward
169,112
-
0
Adjustments in respect of prior years
(363,252)
5,823
Permanent capital allowances in excess of depreciation
(337)
(966)
Other permanent differences
3,028
5,826
Other timing differences
8,965
14,326
Deferred tax adjustment
-
0
22,178
Taxation (credit)/charge for the year
(363,252)
391,253

 

The effective tax rate for the 3 months up to 31 March 2023 was 19.00%. From 1 April 2023, the corporation tax rate changed from 19.00% to 25.00%, which covered the remainder of the period, being 9 months.

 

Therefore the effective corporation tax charge based on 3 months at 19.00%, and 9 months at 25.00% will be 23.52% for the financial reporting period.

 

SOCHITEL UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 22 -
12
Intangible fixed assets
IT Platform
SMS Platform
Total
£
£
£
Cost
At 1 January 2023
418,064
40,867
458,931
Additions - internally developed
62,547
-
0
62,547
At 31 December 2023
480,611
40,867
521,478
Amortisation and impairment
At 1 January 2023
247,642
7,256
254,898
Amortisation charged for the year
29,128
4,087
33,215
At 31 December 2023
276,770
11,343
288,113
Carrying amount
At 31 December 2023
203,841
29,524
233,365
At 31 December 2022
170,422
33,611
204,033
13
Tangible fixed assets
Leasehold improvements
Computers
Total
£
£
£
Cost
At 1 January 2023
23,800
52,312
76,112
Additions
-
0
5,883
5,883
At 31 December 2023
23,800
58,195
81,995
Depreciation and impairment
At 1 January 2023
23,800
42,977
66,777
Depreciation charged in the year
-
0
4,688
4,688
At 31 December 2023
23,800
47,665
71,465
Carrying amount
At 31 December 2023
-
0
10,530
10,530
At 31 December 2022
-
0
9,335
9,335
14
Fixed asset investments
2023
2022
Notes
£
£
Investments in subsidiaries
15
2,500
2,500
SOCHITEL UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 23 -
15
Subsidiaries

Details of the company's subsidiaries at 31 December 2023 are as follows:

Name of undertaking
Registered office
Nature of business
Class of
% Held
shares held
Direct
Nomiworld Limited
Angelina Court 3 Olawale Dawodu Road Ikoyi, Lagos, Nigeria
Sale of mobile phone airtime
Ordinary
99.00
16
Stocks
2023
2022
£
£
Finished goods and goods for resale
-
0
141,804
17
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
1,027,905
2,011,835
Amounts owed by group undertakings
7,836,829
9,454,877
Other debtors
674,105
269,122
Prepayments and accrued income
21,612
5,640
9,560,451
11,741,474
2023
2022
Amounts falling due after more than one year:
£
£
Trade debtors
56,288
-
0
Total debtors
9,616,739
11,741,474

Amounts owed by group undertakings of £7,836,829 (2022: £9,454,877) are considered to be repayable on demand. This balance is unsecured.

 

£939,602 (2022: £1,751,656) of amounts owed by group undertakings earns interest of 5% per annum.

SOCHITEL UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 24 -
18
Creditors: amounts falling due within one year
2023
2022
£
£
Trade creditors
1,515,822
1,458,520
Amounts owed to parent undertaking
3,102,213
2,878,808
Amounts owed to group undertakings
5,318,808
4,892,270
Corporation tax
39,985
375,912
Other taxation and social security
99,273
112,950
Other creditors
444,324
509,075
Accruals and deferred income
59,450
50,000
10,579,875
10,277,535

Amounts owed to group undertakings of £5,318,808 (2022: £4,892,270) are considered to be repayable on demand and have no annual interest. This balance is unsecured.

 

Amounts owed to parent undertakings includes a loan of £1,721,783 (2022: £1,740,596) which is considered to be repayable on demand and has annual interest of 4% and another loan, which carries no interest, for working capital requirements of £1,060,387 (2022: £826,405). These amounts are unsecured.

 

The remaining balance of £319,840 (2022: £311,807) due to parent undertakings is considered to be repayable on demand and has no annual interest. This balance is unsecured.

19
Creditors: amounts falling due after more than one year
2023
2022
£
£
Amounts owed to parent undertakings
76,934
76,934

£76,934 (2022: £76,934) due to parent undertakings is due in greater than one year and has no annual interest. This balance is unsecured.

20
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
49,708
28,562

The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.

 

The amount outstanding at year end to pay over to the pension provider was £36,371 (2022: £45,893).

21
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
568,369
568,369
568,369
568,369
SOCHITEL UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 25 -
22
Operating lease commitments
Lessee

At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

2023
2022
£
£
Within one year
33,672
80,175
23
Related party transactions
Remuneration of key management personnel

The remuneration of key management personnel is as follows.

2023
2022
£
£
Aggregate compensation
530,941
609,118

Consultancy services are provided to the company for key management personnel. Consultancy fees of £138,000 (2022: £120,000) were incurred and are not included in the amount above.

Transactions with related parties

During the year the company entered into the following transactions with related parties:

Sales
Sales
Purchases
Purchases
2023
2022
2023
2022
£
£
£
£
Entities with control, joint control or significant influence over the company
9,002,202
13,471,928
133,698
-
0
Entities over which the entity has control, joint control or significant influence
6,373,324
5,993,089
3,398,420
10,974,273
24
Ultimate controlling party

The immediate parent company is IDT International Telecom Inc, a company registered and domiciled in the United States of America.

 

The ultimate parent undertaking and controlling party is IDT Corporation Inc, a company listed on the New York Stock Exchange. The results for Sochitel UK Ltd have been included in the consolidation of the ultimate parent financial statements.

SOCHITEL UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 26 -
25
Cash generated from/(absorbed by) operations
2023
2022
£
£
(Loss)/profit for the year after tax
(2,373,509)
1,540,828
Adjustments for:
Taxation (credited)/charged
(363,252)
391,253
Finance costs
81,219
74,554
Investment income
(68,345)
(90,349)
Amortisation and impairment of intangible assets
33,215
31,300
Depreciation and impairment of tangible fixed assets
4,688
2,692
Foreign exchange losses on loan received from parent undertaking
262,563
-
Movements in working capital:
Decrease in stocks
141,804
180,521
Decrease/(increase) in debtors
2,124,735
(6,956,127)
Increase in creditors
423,098
3,386,632
Cash generated from/(absorbed by) operations
266,216
(1,438,696)
26
Analysis of changes in net debt
1 January 2023
Cash flows
31 December 2023
£
£
£
Cash at bank and in hand
37,588
164,843
202,431
Borrowings excluding overdrafts
(2,567,001)
(215,169)
(2,782,170)
(2,529,413)
(50,326)
(2,579,739)
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