The Directors present the strategic report for the year ended 31 December 2023.

The principal activity of the company continued to be the provision of telecommunication services as a Mobile Virtual Network Operator ("MVNO") within the UK market. Lycamobile UK Limited ("the Company") first launched mobile operations in the United Kingdom in September 2008 and is now one of the largest MVNO's in the United Kingdom, with industry awards for excellence and innovation for its services and products. As an MVNO provider, the Company provides telecommunication services to the customers via third party national mobile networks provided by Mobile Network Operators under contractual agreements.

The Company initially developed for the expatriate communities in the UK and has fast become a global brand synonymous with connecting customers with their loved ones across oceans, borders and networks at the cheapest possible price.

The Company invested heavily to upgrade/develop its own telecom platforms to provide continuous award-winning services to its customers as well as its related parties.

In addition, the Company's success involves investing heavily in marketing and promotional activities to attract new customers while retaining existing customers.

Corporate Governance

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 interests of the shareholders. This involves detailed discussion and strategic review of the financial and operational performance of the Company as well as review of risk and internal controls.

In particular, the Company adopts an entrepreneurial business approach, providing leadership and expertise to other related party companies.

The Board is also responsible for the overall management of the Company’s business and is accountable to the shareholders as well as for the setting out the Company strategy and performance review and for the long-term success of the Company. This includes ensuring that the Company is adequately resourced, that the appropriate skills in place and that the management team are meeting their objectives whilst ensuring that shareholder value is maintained.

The Company reported £186m revenue for the year ended 31 December 2023 compared to £145m for the previous year, which represents an increase of 28%. The gross profit margin has increased to 58% in the year ended 31 December 2023 from 53% in the year ended 31 December 2022. The increase in revenue is driven by higher data usage in line with market demand and increase in support services..

The Company made a loss for the year of £44.4m (year ended 31 December 2022: loss: £25.1m), mainly due to an increase in administrative expenses and impairment expenses.

The Company adopts a usage policy for recognising income. The amounts of income which are deferred until future use are held within the deferred income account in the Statement of Financial Position. The Company defers the recognition of income until such time as the customers use their balances or or when the balances expire after a period of non-utilisation as set in the terms and conditions of the customers contract. All amounts held in deferred income relating to future usage are identifiable to individual customers.

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 grouped within competitive, operational, regulatory 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 United Kingdom MVNO market remains 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 changes market providers. Actions are taken immediately where possible.

Operational Risk

The main operational risk relating to the Company is the operation of the telecommunication service agreement with Mobile Network Operator. The Company's ability to provide services to its customers depends on maintaining an agreement with Mobile Network Operator or acquiring a new agreement with other Mobile Network Operators for network services. The Company currently operates solely within a long-term telecommunication service agreement for the 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. This overall operational risk is mitigated by ensuring that the term on the network service agreement is extended to a duration of 12 months wherever possible.

Compliance Risk & Regulatory Risk

Subsequent to the UK exiting from the European Union, EU-derived rules applicable to communication providers and Ofcom's governance and regulations on telecoms markets have been implemented in UK law. Additionally, UK telecom operators will continue to be able to provide cross-border telecoms services and operate within the EU, under the World Trade Organisation's General Agreement on Trade in Services (GATS). The Company is monitoring the situation closely and remain vigilant to any future regulatory and compliance risks as a consequence of the UK officially exiting the EU.

The Company's principal activities are regulated by the Office of Communications (OFCOM). Regulatory changes may have adverse financial effects on prices, for example, regulating certain charges on mobile termination revenue and roaming charges. This has an impact on the Company and implies a loss of revenue in the future. These overall regulatory changes are not specific to Lycamobile and affects telecom companies across the world. However, to mitigate this potential loss of future revenue, termination costs of outgoing calls will reduce, which will partly offset the revenue decline. The overall effect of this revenue 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.

Another of the key governing bodies relevant to the Company is the Information Commissioner's Office (ICO). The regulations and laws that the Company must comply with, including Ofcom General Conditions and data legislation, are designed to support customers. Failure to comply with data protection and privacy obligations may result in financial penalties, regulatory oversight, significant brand damage and legal action. To mitigate the risk, the Company has a centralised legal team who monitor the Company's compliance to regulations. The Company continues to invest to meet GDPR requirements and has a dedicated Data Protection Officer to monitor compliance.

Financial Risk

The Company has undertaken a risk assessment within the non-trading areas of the business, which could have a material effect on the performance of the business. These are classified under financial risk, categorised into foreign exchange, credit risk and liquidity risk.

Foreign Exchange Risk

The Company's sales continue to be made in British pounds sterling. The Company also has certain balances due to or from related parties in other currencies, primarily Euros, 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 cash in bank, trade and other receivables. the Company's credit risk is primarily attributable to the amounts due from related parties. The amounts presented in the Statement of Financial Position are presented net of any impairment. Each balance is reviewed and an assessment of recoverability of the balance has been made individually, with any impaired amount taken directly to profit and loss. The credit risk on bank balances is considered limited because the counterparties are banks with high credit ratings. The Company has a significant concentration of credit risk as a result of significant balances due to and from related parties.

The Company has undergone a process to review the recoverability of intercompany balances owing at the year end. In doing so it has taken the step to reduce the value of the debtors outstanding based upon various criteria, including the counterparties' profitability, financial stability and subsequent repayment.

Liquidity Risk

The Company's policy on liquidity risk is to ensure that sufficient cash is available to fund on-going operations. The Company, in conjunction with related parties, monitors rolling forecasts to ensure it has sufficient cash to meet operational needs.

Active subscribers represent active customers as at 31 December 2023 and 31 December 2022. Subscribers are defined as active customers if they have made an outbound call, text or used data in the preceding 90 days' period.

Churn is a measure of the number of customers that have been inactive on the network during the last 90 days as a percentage of the active subscriber base.

The Company has net current liabilities of £37.5m as at 31 December 2023 from a net current asset position of £9.5m in year ended 31 December 2022.

The loss for the year after taxation is £44.4m (year ended 31 December 2022: loss of £25.1m)

The Company trades with other affiliated and related party companies (see note 21) and the Company, 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.

Future Development

The Director remains optimistic for the operational and financial outlook in 2025 across all key performance indicators. With continued investment in new products and technologies, the Company will ensure delivery of low cost, high quality services to its customers whilst improving its competitive advantage against its direct competitors.

The Company will undertake a strategic transformation during 2026 designed to streamline operations, enhance digital capabilities, improve customer service and position the company for sustainable growth in a competitive market.

This transformation is designed to:

• Improve efficiency and deliver significant cost savings.

• Boost innovation by leveraging advanced digital capabilities and automation.

• Enhance customer service across all markets.

This is a seamless transition with no disruption to our high standards of service and collaboration.

Lyca continues to be financially strong and focused on long-term growth. These strategic changes allow Lyca to reinvest in key areas, strengthen operations, and deliver even greater value to partners and customers worldwide.

Post Balance Sheet Events

Transformation Program

As a result of the transformation program detailed above, some roles were made redundant in the UK during the first half of 2025 as they are duplicated in other areas of the organisation. There is no impact at all on the UK business, most of the roles concerned being either duplicated or relocated roles.

ICO Malware Attack

In the early hours of 30 September 2023, the Company encountered a significant Cyber Security incident that led to the unavailability of several servers within their UK data centre environment.

The Company has since then been engaged in dialogue with the ICO in connection with the malware attack.

The Company has no indication at present from the ICO that they are contemplating a finding that would include a financial penalty for the business.

VAT Case

The Company has an ongoing VAT dispute with HMRC. On the 18th July 2024, the First-Tier Tribunal made an in-principal decision based on important points of law as to how Lyca, and other telecommunication providers, should provide for VAT. The Tribunal acknowledged the difficulty in deciding the case which raised complicated points of law and Lyca was pleased that the Tribunal found that there should be an adjustment to the amount of VAT assessed in relation to some of the products.

The Tribunal did not make a ruling on the final amount of VAT For accounting and compliance purposes however, Lyca has accounted for the provision in full.

The Tribunal granted Lyca leave to appeal on the basis that the Company had raised arguable errors of law. The Appeal will be heard later this year and Lyca is confident that the Upper Tribunal will make a favourable ruling. 

On behalf of the board

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

The results for the year are set out on page 14.

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

We are pleased to report on our energy and carbon report for the financial year ended 31 December 2023.

Lycamobile UK Limited and its related parties (Lycamobile Group) operates in the same premises in its London Headquarters and share office spaces for its centralised employees. Statement of carbon emmissions in compliance with Streamlined Energy 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 Conversion Factors 2023 published in June 2023 by Department for Energy Security & Net Zero.

We have followed the 2019 HM Government Environmental Reporting Guidelines. We have also used the GHG Reporting Protocol – Corporate Standard and have used the 2020 UK Government’s Conversion Factors for Company Reporting.

The chosen intensity measurement ratio is total gross emissions in metric tonnes CO2e per sqft, the recommended ratio for the sector.

We are committed to responsible energy management and will practice energy efficiency throughout our group entities, whatever it's cost impact. 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 include the upgrade to motion triggered LED lighting in Lycamobile Head quarters and encourage remote working where possible.

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:

• select suitable accounting policies and then apply them consistently;

• make judgements and accounting estimates that are reasonable and prudent;

• state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the 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 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.

The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report.

So far as the 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 Director has taken all the necessary steps that they ought to have taken as a director in order to make themselves aware of all relevant audit information and to establish that the Company’s auditor is aware of that information.

Disclaimer of opinion

We were engaged to audit the financial statements of Lycamobile UK Limited (the 'company') for the year ended 31 December 2023 which comprise the statement of comprehensive income, the statement of financial position, 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).

We do not express an opinion on the accompanying financial statements of the company due to the significance of the matter described in the basis for disclaimer of opinion of our report, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these financial statements.

Basis for disclaimer of opinion

We were appointed as auditors of the company on 12 September 2024. During our engagement, we have been unable to obtain sufficient and appropriate audit evidence over:

1. 1.    The recoverability of a balance of £53,055,844 due from directors and parties associated with directors and a balance of £73,788,480 due from related parties which is included in the debtors on the balance sheet as at 31st December 2023

2. 2.    The company's ability to rely on the liquidity of the group, consisting of related parties and entities under common control (together 'the group'), to provide financial support, should it be required within management's going concern forecast period.

Management's forecast for the going concern period indicates that in order to remain a going concern, the company will need to be able to collect its related party debtors or would need to be able to rely upon the financial support from the group should it be required. We were unable to obtain sufficient and appropriate audit evidence on the recoverability of the related party debtor balances and assumptions included within the group's liquidity assessment were subject to high degree of uncertainty.

On the basis that the related party debtors represent a substantial proportion of the financial statements, and the use of the going concern basis is fundamental to the user's understanding, these matters individually and together represent a material and pervasive issue, therefore, we were unable to express an opinion on the financial statements of the company.

Opinions on other matters prescribed by the Companies Act 2006

Because of the significance of the matter described in the Basis for disclaimer of opinion section of our report, we have been unable to form an opinion, whether based on the work undertaken in the course of the audit:

• the information given in the strategic report and the director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

• the strategic report and the director's report have been prepared in accordance with applicable legal requirements.

Notwithstanding our disclaimer of an opinion on the financial statements, in light of the knowledge and understanding of the company and its environment obtained in the course of the audit performed subject to the pervasive limitation described above, we have not identified material misstatements in the strategic report or the director's report.

Arising from the limitation of our work referred to above:

• we have not obtained all the information and explanations that we considered necessary for the purpose of our audit; and

• we were unable to determine whether adequate accounting records have been kept.

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:

• 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 director's remuneration specified by law are not made.

As explained more fully in the director's responsibilities statement, the director is 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 director determines 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 director is 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 director either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so.

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.

Detecting fraud and irregularities
Notwithstanding our disclaimer of opinion on the financial statements, based on our understanding of the company and the industry, we identified the principal risks of non-compliance with laws and regulations that could reasonably be expected to have a direct effect on the financial statements. We obtained our understanding in this regard through discussions with management, industry research, and application of cumulative audit knowledge and experience of the sector.

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

We determined the principal laws and regulation relevant to the company in this regard to be those arising from Companies Act 2006, FRS 102, telecommunications statutes and regulations, tax legislation, and employment laws.

We designed our audit procedures to ensure the audit team considered whether there were any indication of non-compliance by the company with those laws and regulations. These procedures included, but were not limited to:

• making enquires of management and legal counsel;

• reviewing legal/ regulatory correspondence received in the financial period and subsequent to the year end;

• reviewing legal and professional expenses

• Discussing with management their policies and procedures regarding compliance with laws and regulations;

• Communicating identified laws and regulations throughout our engagement team and remaining alert to any indications of non-compliance throughout our audit; and
• Considering the risk of acts by the company which were contrary to the applicable laws and regulations, including fraud.

We also identified the risks of material misstatement of the financial statements due to the possibility of fraud. We considered, in addition to the non-rebuttable presumption of a risk of fraud arising from management override of controls, that revenue recognition was also a risk and we performed substantive testing with no issues found. We also tested accounting estimates and judgements relating to VAT provision and fair valuation of interest free loans to directors , which we concluded were reasonable; and

We addressed the risk of fraud arising from management override of controls by performing audit procedures which included, but were not limited to the testing of journals; reviewing accounting estimates for evidence of bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.

There are inherent limitations in the audit procedures described above. The more removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by forgery or intentional misrepresentation, for example, or through collusion.

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.

Other matters

The financial statements of Lycamobile UK Limited for the year ended 31 December 2022 were audited by another auditor, who issued a disclaimer of opinion on 23 May 2024

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.

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

Lycamobile UK Limited is a private company limited by shares incorporated in England and Wales. The registered office is 3rd Floor, Walbrook Building, 195 Marsh Wall, London, E14 9SG.

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 and presentational currency of the Company. Monetary amounts in these financial statements are rounded to the nearest £1,000 unless otherwise stated.

The financial statements have been prepared under the historical cost convention, modified to include the revaluation of investment properties and non-interest bearing loans which have been stated at fair value.

The principal accounting policies adopted are set out below.

The financial statements have been prepared on a going concern basis. The Directors believe the Company will be able to continue to operate and meet its obligations as they fall due for the foreseeable future.true

The Company has reported:-

• an operating loss for the year of £32.8m (2022: loss £18.5m);

• net current liabilities of £37.5m (2022: net assets of £9.5m); and

• net cash inflows from operating activities for the year of £7.9m (2022: £34.3m)

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 Group's (consisting of related parties and entities under the common control of Mr A Subaskaran, together "the Group") available cash flow, business model, strategy, regulatory environment, principal risks and uncertainties, recent financial performance and outlook, which are detailed in the Strategic Report. The going concern positions of the Company in the periods under review.

As part of the going concern, the Company has considered the following possible impacts;

• A general market slowdown in new customer acquisitions, and an increase in churn rate in line with market condition.

• A change in operating costs, primarily in relation to subscriber acquisition costs, marketing and third-party customer service costs.

Based on these consideration 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 2027 including in the forecast those factors which the Directors consider could materially affect 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 cashflow 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 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 settled from the cash flow forecasts as they fall due in the normal course of business via MVNO group Treasury function. Related party liabilities will be settled only when sufficient surplus working capital is available.

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 the Directors have reached.

As referred to in note 2(iv), the Company is in dispute with HM Revenue and Customs ("HMRC"), in relation to treatment of VAT on certain classes of transactions. A provision has been recorded of £104m to reflect the Company's current best estimate of the potential exposure as at 31 December 2023. The Directors have increased the provision in line with the VAT position taken by the Company since that date. The full amount provided within creditors is currently under appeal with HMRC. HMRC has raised protective assessments in prior years and 2024 in relation to this dispute. In accordance with required practice, the Company has in both instances sought to postpone the collection of these amounts. The postponement of the prior year assessment has been accepted by HMRC while the postponement of 2024 assessment is currently being reviewed.

These financial risks have been further mitigated by the availability of financial support from related parties, should it be required. The Directors have confirmed the validity of this conclusion by undertaking a review of the cashflows for the related party companies within the MVNO group which show sufficient cashflow headroom for this potential provision to be met from wider operational cashflow.

On the basis of their assessment of the Company's financial position, the Directors consider that the Company is well placed to manage its business risks successfully and have a reasonable expectation that the Company will be able to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing these financial statements.

Revenue is measured at the fair value of the consideration received or receivable and represents amounts recoverable for the services supplied stated net of value added taxes. 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 by end user. Mobile service revenues are recognised only when the services are actually 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 users or when usage expires. Usage is determined as the amount of airtime used by the end customer and deducting trade discounts, incentives, bonuses and free credits.

Deferred Income

Deferred income for future usage of top-up payments is recognised as a liability on the Statement of Financial Position. The deferred income is released to the Statement of Comprehensive Income upon usage by the end users or on expiry of unused balances of end users and then recorded a turnover.

Mobile Termination Revenue (MTR)

Mobile termination revenue is recognised when the calls are terminated to Lycamobile through an interconnect partner.

Revenue for Support Services

Revenue from the supply of mobile equipment support services to related parties is recognised when the service is provided.

Interest Income

Interest income is recognised using the effective interest rate method.

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses. Such cost includes costs directly attributable to making the asset capable of operating as intended.

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

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.

Investment property, which is property held to earn rentals and/or for capital appreciation, is initially recognised at cost, which includes the purchase cost and any directly attributable expenditure. Subsequently it is measured at fair value at the reporting end date, as determined by external valuers and derived from the current market rents and investment property yields for comparable real estate, adjusted if necessary for any difference in the nature, location or condition of the specific asset. Changes in fair value are recognised in profit or loss.

At each reporting period end date, the Company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

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.

The Company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the Company's statement of financial position when the Company becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally 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.

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, 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.

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.

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.

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its 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.

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

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.

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

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement 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 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 income statement, 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.

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.

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due. Amounts not paid are shown within accruals in the Balance Sheet.

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.

Transactions in foreign currencies are translated to the Company's functional currency at the foreign exchange rate ruling at the reporting date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the foreign exchange rate ruling at that date. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are retranslated to the functional currency at foreign exchange rates ruling at the dates the fair value was determined. Foreign exchange differences arising on translation are recognised in profit or loss.

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.

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.

The Company applies a market rate of interest to loans provided to associates and related parties at rates less than market rate. The Company reviews available rates in the market-place for comparable loans, giving consideration to the risk, term and security offered for the loan, and applies this rate to discount the loans based upon the expected repayment.

The change in respect of periodic depreciation is derived after determining an estimate of an asset's expected useful life and the residual value at the end of its life. Increasing an asset's expected life and the expected residual value at the end of its life. Increasing an asset's expected life or its residual value would result in a reduced depreciation charge in the statement of comprehensive income.

The useful lives and residual values of tangible fixed assets are determined by management at the time the asset is acquired and reviewed annually for appropriateness. The lives are based on historical experience with similar assets as well as anticipation of future events which may impact their life such as technology.

Historically changes in useful lives and residual values have not resulted in material changes to the depreciation charge.

The Company makes an estimate of the recoverable value of trade and other debtors. When assessing impairment of trade and other debtors, management considers factors including the current credit rating of the debtor, the ageing profile of debtors and historical experience. See note 14 for the net carrying amount of the debtors which is net of associated impairment provision.

Included within creditors due within one year is an amount of £104m relating to certain VAT positions (inclusive of interest) taken by the Company between 1 July 2012 and 31 December 2023. The full VAT amount provided within creditors is currently under appeal. The Directors have subsequently increased the provision in line with the VAT position taken by the Company.

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

Their aggregate remuneration comprised:

The Company employed on average 97 employees, but has outsourced all its administrative and support services to other related parties. The transactions are disclosed in Note 21.

The Director's remuneration during the year ended 31 December 2023 consisted of payments to the three Directors who were active during the period for qualifying services. This amounted to £2,275,086 (2022: £1,007,000).

Remuneration for the key management personnel for services provided to Lycamobile UK Limited was £2,696,366 (2022: 1,370,000).

Total remuneration paid to the highest paid director of Lycamobile UK Limited was £2,182,363 (2022: £929,000). No amount was paid in terms of long-term incentive schemes or any pension contributions were made on behalf of the director. All Directors' emoluments are aggregate remuneration in respect of qualifying services.

Changes to the UK corporation tax rates were enacted as part of the Finance Bill 2021. Effective from 1 April 2023, the rate of corporation tax in the UK for the company increased from 19% to 25%. As a result, the applicable rate for the year ended 31 December 2023 is 23.52%

Deferred taxes at the balance sheet date have been measured using these enacted tax rates and reflected in these financial statements

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

Motor vehicles stated in the above tangible fixed assets include cars acquired on hire purchase agreements.

Computer equipment stated in the above tangible fixed assets includes equipment purchased on finance lease agreements. As at 31 December 2023, equipment purchased on finance lease agreements had a net book value of £nil (2022: £72,021). The depreciation charged in the year on leased equipment was £nil (2022: £187,397).

The 2022 valuations were made by external valuers Cushman & Wakefield LLP (C&W), on an open market value for existing use basis, it is included in the annual report for 2023 as no significant changes in the market of the property has been noted.

The freehold investment properties have been valued at £1,640,000.The valuation has been carried out in accordance with the current UK edition of the RICS Valuation - Professional Standards published by The Royal Institution of Chartered Surveyors ("the Red Book"). The valuation of each of the investment property has been prepared on the basis of fair value which is the market value of the property defined as 'the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties, in an arm's length transaction'.

Financial assets

Financial assets measured at amortised cost held as of year ended 31 December 2023 is £138,521,452 (2022: £177,305,701)

Financial Liabilities

Financial liabilities measured at amortised cost held as of year ended 31 December 2023 is £66,639,762 (2022: £59,914,492)

The balances in other debtors due after more than one year represent deposits on telecommunications services which are not refundable until the contract term expires, which in this case is greater than one year.

Long term loans to related parties were initially at a rate that is less than market value and have been discounted back at a commercial rate over the term of the loan. The difference between the fair value of the loan and the original loan value at the transition date has been recorded as a capital contribution within equity (see note 21 for details).

Loans to Directors and Parties Associated to Directors

Loans to parties listed below represent transactions that had initially been provided at a rate that is less than market value and have been discounted back at a commercial rate over the expected term of the loan. Transactions that fall under this category are as follows:

In addition to the above, A Subaskaran owed the company £103,312 as at the year end. This amount is included in other debtors and was settled shortly after the year end.

The following are the major deferred tax liabilities and assets recognised by the Company and movements thereon:

The Company makes contributions to defined contribution pension schemes. The assets of the schemes and held separately from those the Company in independently administered funds. The pension cost charge represents contributions payable by the Company to the funds and amounted to £247,000 (2022: £136,000). Contributions amounting to £57,000 (2022: £30,000) were payable at the reporting date.

The company has one class of ordinary shares which carry no right to fixed income.

During the year £2,161,967 (year ended 31 December 2022: £3,000,000) was recognised as an expense in profit and loss in respect of operating lease rentals.

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:

VAT Case

On the 18th July 2024, the First-Tier Tribunal (“the Tribunal”) made an in-principal decision based on important points of law as to how the Company, and other telecommunication providers, should provide for VAT. The Tribunal did not make a ruling on the final amount of VAT due. For accounting and compliance purposes the Company has accounted for the provision in full. Whilst the Company was pleased with the tribunal’s decision, the Company exercised its right to seek permission to the appeal the decision on various grounds. The Tribunal granted the Company to appeal. The appeal is due to be heard in November 2025.

Transformation Program

The Company has embarked on a strategic transformation project in conjunction with its related parties which began during the year to the 31st December 2024.

The benefits of the transformation will be to:

• Improve efficiency and deliver significant cost savings.

• Boost innovation by leveraging advanced digital capabilities and automation.

• Enhance customer service across all markets.

As part of this review, some of the roles in the Company have been made redundant, with redundancies being phased during the year. The redundancies relate solely to duplicated roles or where the role is either moving offshore, or already being carried out offshore. The redundancy process was advised and supported throughout by experiences external consultants to ensure the Company followed all required compliance and regulatory procedures.

This is a seamless transition with no disruption to the Company’s high standards of service and collaboration

ICO Investigation on Malware Attack

In September 2023, the company experienced a cyberattack that resulted in unauthorised access to customer data. The company promptly initiated containment measures and notified relevant authorities, including the Information Commissioner’s Office (ICO). As of the date of approval of these financial statements, the ICO’s investigation into the incident remains ongoing.

The Company's individual shareholders have similar interests in a range of related companies. As these companies are under common control, transactions between Lycamobile UK Ltd and these companies are related party transactions. These are set out below:

Mr A Subaskaran also has an interest in Universal Marketing Services SUARL and Gnanam Foundation (of which Mr A Subaskaran is on board of trustees). During the year, the Company made a donation of £401,588 (2022: £624,000) to Gnanam Foundation.

Lycatel (Ireland) Limited, Lycatel Services Limited, Switchware Limited, Lyca Media II Limited and Lycatelcom Lda are wholly owned subsidiaries of WWW Holding Company Limited in which Mr A Subaskaran owns 98.4% of the issued share capital.

Mrs P Subaskaran is an ultimate beneficiary of Samra Trust incorporated in Jersey which owns Salinasco Holdings Limited incorporated in Cyprus. Salinasco Holdings Limited owns 98% issued share capital of Lycamobile USA Inc, Lycamobile Switzerland Limited, Lycamobile Belgium Limited, Lycamobile Norway Limited, Lycamobile Norway Nuf, Lycamobile Denmark Limited, Lycamobile Ireland Ltd, Lycamobile Denmark ApS, Lycamobile sp z.o.o, Lycamobile SRL (Romania),

Mr A Subaskaran owns 98.5% of the issued share capital of Lycatel Distribution UK Limited, Docklands Data Centre Ltd, Lyca Health Limited and Thames Quay Properties Holdings Limited, which in turn owns 100% of the share capital of Thames Quay Properties II Ltd and Thames Quay Properties III Ltd.

Mr A Subaskaran is ultimate beneficiary of Albena and Ceuta Trust incorporated in Cyprus which owns Agadirco Holdings Limited (incorporated in Cyprus) and Catalinaco Holdings Limited (incorporated in Cyprus). Agadirco Holdings Limited owns 49.25% issued share capital of Pettigo Comércio Internacional Lda (a company registered in Portugal- formerly known as Hastings Trading E Servicos Lda) and Catalinaco Holdings Limited owns 49.25% issued share capital of Pettigo Comércio Internacional Lda.

Pettigo Comércio Internacional Lda owns 100% issued share capital of U Can Fly Limited and Onestopsim Lda. Pettigo Comércio Internacional Lda also owns 63.05% of the issued share capital of Lycatel BPO Pvt Ltd (a company registered in India) and 99.99% of the issued share capital of Lyca Digital Pvt Ltd (a company registered in India).

Also, Pettigo Comércio Internacional Lda owns 100% issued share capital of Proton Global Investments Limited (a company registered in Dubai) which holds 60% of ordinary share capital of Plintron Holding Pte. Limited (a company registered in Singapore) which in turn owns Plintron Mobility Solutions Pvt Ltd (a company registered in India, formerly known as Plintron Gobal Technologies Pvt Ltd) and Plintron Europe Limited. Mr M Sundaram and Ms S Radhakrishnan equally own 40% of the ordinary share capital of Plintron Holdings Pte Limited and own 100% of the ordinary share capital of Plintron Management & Technology Services FZCO.

Gnanam Properties Limited is owned by Mr and Mrs Subaskaran. Two Directors of Switchware Limited and Lycatel Property Services Limited jointly own Anglo-Indian Beverages Limited.

Mr A Subaskaran also owns 61% of the issued share capital of Lycatech Services Pvt Limited (Formerly known a Plintron Technologies Pvt Limited, a company registered in India).

Mr A Subaskaran owns 100% of the issued share capital of Lyca Group Holdings Limited which in turn owns 100% of the issued shares of Lyca Finance Limited and Lycamobile Holdings Limited.

During the period, the Company purchased airtime from Lycatelcom Lda for its termination of international minutes. In addition, management fees were received or paid to Lycatelcom Lda for its administrative support and IT support service. Outsourced support service fees were charged by Lycatel BPO Pvt Ltd for its back-office function. Network operational support service fees were charged by Plintron Mobility Solutions Pvt Ltd and Plintron Management & Technology Services FZCO for managing its telecom switches and network. Switching maintenance support service fees were charged by Lycatech Services Pvt Ltd, marketing support service fees were charged by Lycatel Distribution UK Limited for its outdoor branding of products, Digital marketing fees were charged by Lyca Digital Pvt, marketing fees were charged by Lycamedia II Ltd and Lyca Media Limited, space rental was charged by Docklands Data Centre Ltd for its telecom equipment location, travel management fees were charged by U Can Fly Ltd for its business related travel by employees, rent was charged by Gnanam Properties Limited, printing & marketing materials were provided by Lycatel Services Limited and annual rent was charged by Thames Quay Properties II Ltd for its office supplies.

The Company also purchased airtime from Tunisia Services SARL.

During the period the Company made administrative and telecom equipment & network provider support services and termination of airtime to Lycatelecom Lda, administrative support to Pettigo Comercio International, Lda and WWW Holding Company Limited. The Company also recharged specific expenses to Lycatel Services Limited.

During the year, the Company made sales of sim cards to OneStopsim LDA.

The Company granted loans to Mr. A Subaskaran and to parties associated to Mr. A Subaskaran. The terms of the loans and the balances are disclosed in note 14.

During the period the Company outsourced all of the administrative and support services to Lycatelecom Lda, a company with common directors and shareholders.

During the year the Company exchanged funds with various entities, which are summarised below.

Lycamobile UK Limited ("LM UK" or "the Company") is part of the Company controlled by Mr A Subaskaran. Mr A Subaskaran owns 98% of LM UK's share capital and controls numerous other entities with which LM UK trades, buys services or exchanges funds ("the Company"). As a part of its year-end procedures, the Company performed an assessment of the recoverability of the amounts due from its related companies. An intercompany and related party receivable is assessed at the reporting date to determine whether there is objective evidence that it is impaired. Intercompany and related party receivable assets are impaired if there is objective evidence indicating that a loss event has occurred after the initial recognition of the assets. As a result of the assessment of recoverability of intercompany balances, £41.3m of impairment losses recognised against intercompany receivables during the year, details of which are shown in the following table.

The Company along with other related parties provided a comfort letter to the bank as security for supporting the operations of other related parties. No claims have ben raised against such comfort letter. Post year end, the Company has revoked the comfort letter.

A summary of the transactions with the related parties during the current and prior period is below:

Mr A Subaskaran owns 98% of the Company's issued share capital.

During the current financial year, the company discovered a prior year error in the discounting of shareholder loans. The loans had been incorrectly discounted over five years instead of the correct three-year term, leading to an overstatement of the loan receivable and an understatement of equity due to an excessive capital distribution adjustment.