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Registered number:
FOR THE YEAR ENDED 31 DECEMBER 2024
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ZEVANTEL EUROPE LIMITED
COMPANY INFORMATION
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ZEVANTEL EUROPE LIMITED
CONTENTS
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ZEVANTEL EUROPE LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2024
The directors of Zevantel Europe Limited ("the Company") present their strategic report for the year ended 31 December 2024.
Principal activity The Company is acting as a Mobile Virtual Network Operator ("MVNO") in the Netherlands, Sweden, Denmark, and Austria (until March 2023), and as a full MVNO in Germany (until September 2024). The Company is a full MVNO where it holds an MVNO agreement with Mobile Network Operators directly and acts as an MVNO where MVNO agreements are currently held by related party entities. The company provides mobile telecommunication services to predominantly ethnic migrant populations.
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ZEVANTEL EUROPE LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
The principal risks and uncertainties facing the Company have been reviewed in detail by the directors and no material additional risk or uncertainty has been identified other than those detailed below. These risks are broadly encompassed within competitive, operational and financial risk. The directors' risk management objectives consist of identifying and monitoring those risks which could have an adverse impact on the company's assets, profitability or cash flows.
Competitive risk The Company is acting as a Mobile Virtual Network Operator ("MVNO") in Germany (pre September 2024), Netherlands, Sweden, Denmark and Austria (pre March 2023), providing mobile telecommunication services to the predominantly ethnic migrant populations. The Company's various MVNO markets remain competitive with new entrants able to join relatively easily, resulting in pricing risk. It has proven difficult for any new entrant to achieve any scale, however, and the combination of any new entrant's inability to match Zevantel's tariff rates for any length of time as well as a lack of national distribution mitigates this risk. This competitive risk is further mitigated by regular reviews of competitive offerings and market providers. Actions are taken immediately where possible. Operational risk The main operational risk relating to the company is the operation of the telecommunication services agreement with the Mobile Network Operators and related party entities. The Company's ability to provide services to its customers depends on maintaining agreements with its related parties and Mobile Network Operator or acquiring new agreements with other Mobile Network Operators for network services. The Company does not have any dependency on voice or non-voice services from the Mobile Network Operator which it provides to its customers itself. The Company relies on its related party for voice and non-voice services. This overall operational risk is mitigated by ensuring that the term of the network service agreement is extended to a duration exceeding 12 months wherever possible. Financial risk The area of most significant financial risk is the ongoing reduction of MTR rates. MTR overall is on a downward glide path and is phasing out completely worldwide in the mobile telecoms industry as a result of regulatory action. This has an impact on the Company and implies a loss of MTR turnover in the future. This overall decline in MTR rates is not specific to Zevantel Europe Limited, it affects telecom companies across the world. However, to mitigate this potential loss of future turnover, termination costs of outgoing calls will be reduced, which will partly offset the turnover decline. The overall effect of this MTR decline is not regarded as significant to the company which, as with other telecom companies, will be seeking to replace the loss of turnover from alternative sources, for example, data services. Foreign exchange risks The Company's significant sales continue to be made in Euros (€). The Company also has certain balances due to or from related parties in other currencies and the company is therefore exposed to currency movements. As a matter of policy, the company chooses not to currently use financial derivatives or currency hedging to manage its exposure. Credit risk The Company's principal financial assets are bank balances, trade and other receivables. The Company's credit risk is primarily attributable to its trade receivables and balances from the related parties. The Company gives significant attention to credit risk as significant balances are due to and from related parties. Each related party is analysed individually for creditworthiness. Liquidity risk The Company's policy on liquidity risk is to ensure that sufficient cash is available to fund ongoing operations. In this respect, financing may be received from related party entities when required.
Interest rate risk
The Company has no interest-bearing liabilities and no interest-bearing assets other than its loans with related party entities and cash. Legal and regulatory risk The nature of the Company's industry continues to change and the complexities of products and services
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ZEVANTEL EUROPE LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
continue to vary with customer desires for innovative products. Regulatory authorities continue to consider the impact of changing business models in the industry and in response to customers changing preferences or government requests for additional tax turnover, the overall regulatory burden on operators continues to increase. Additionally, interpretations of laws and regulations vary by country. The Company continues to monitor each country's laws and regulations to ensure it is compliant.
Statement by the directors in the performance of their statutory duties in accordance with s172 (1) Companies Act 2006.
The board of directors of Zevantel Europe Limited consider, both individually and together, that they have acted in the way they consider, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole (having regard to the stakeholders and matters set out in s172 (1)(a-f) of the Act) in the decisions taken during the year ended 31 December 2024. In particular, by performance of the following:
∙Our business aims are designed to have a long-term beneficial impact on the Company and to contribute to its success.
∙Our employees are fundamental to business aims. We aim to be a responsible employer in our approach to the pay and benefits our employees receive.
∙Our business requires strong relationships with suppliers and others and we continually strive to maintain and improve these regularly.
∙The impact of the Company's operations on the community and environment is considered by the directors and reviewed regularly.
∙As the Board of Directors, our intention is to behave responsibly and ensure that management operates the business in a responsible manner, operating within the high standards of business conduct and good governance.
∙As the Board of Directors, our intention is to behave responsibly toward our shareholders and treat them fairly and equally, so they too may benefit from the success of our company.
Responsibility for robust and strong corporate governance lies with the board and the board recognises in full its obligation and continuing responsibility for organising and directing the overall affairs of the Company in a way that is in the best interest of the shareholders. This involves detailed discussion and strategic review of the financial and operational performance of the Company as well as a review of risk and internal controls.
The board is also responsible for the overall management of the company's business and is accountable to the shareholders for setting out the company strategy and performance review and for the long-term success of the Company, as well as ensuring that the company is adequately resourced, that the appropriate skills are in place and that the management team are meeting their objectives whilst ensuring that shareholder value is maintained.
On 30th September 2024, the Company’s MVNO (Mobile Virtual Network Operator) agreement with its MNO (Mobile Network Operator) partner was terminated (by the MNO) and Zevantel Europe Ltd ceased providing MVNO services in the German market. It is important to note that its affiliated company launched a new business in Germany offering mobile telecommunications services under new MVNO agreement with a different MNO in Germany. The cessation of MVNO services by Lycamobile Europe Ltd in the German market is not expected to impact the Group’s overall revenue.
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ZEVANTEL EUROPE LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
The Company has reported:
- a loss after tax for the year of €21.5m (2023: €10.4m); - net current liabilities of €31.6m (2023: €10.1m); and - net cash outflows from operating activities for the year of €1.2m (2023: €0.5m) as evidenced on page 16 in the Statement of Cashflows. 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 its future development, performance and position. This going concern assessment has given consideration to the Company's available cash flow, business model, strategy, regulatory environment, principal risks and uncertainties, recent financial performance and outlook. The going concern of the Company has been assessed taking into account the potential impact of certain scenarios arising from those uncertainties which have the greatest potential impact on the Company's ability to continue in operational existence throughout the assessment period. Specific consideration has been given to ongoing tax matters in certain European jurisdictions, including matters that remain subject to correspondence, appeal processes and ongoing discussions with relevant tax authorities. The directors have considered a range of potential outcomes, resulting in potential additional liabilities becoming payable during the going concern assessment period. The directors have also considered the wider economic environment and its potential impact on the Company's performance and that of its related parties. Scenario planning considered, amongst other matters: • a general market slowdown in new customer acquisitions and changes in customer behaviour; • changes in competitive market tariffs and market share; • reductions in operating costs, primarily in relation to subscriber acquisition costs, marketing spend and third-party customer service costs; • potential adverse outcomes in relation to ongoing tax matters; and • the timing and recoverability of material intercompany balances. The directors have reviewed trading and operational cash flow forecasts for the period to 30 September 2027 and have no reason to believe that cash generated from operating activities will be materially lower than that historically generated. This includes those factors which they consider could materially affect forecast cash flow during the period, both positively and negatively. This review has included sensitivity analysis over key assumptions and demonstrates that there are no material variations to the forecast cash flows generated from operations under reasonably foreseeable scenarios. 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 balances which are due to or from third parties and those arising from transactions with other companies under common control. The Company and its related parties form part of an operating model that ensures turnover and profits are economically allocated to the entities within the Group which have earned them. As such, the Company has substantial trading transactions with 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 provide funding to related parties, however there is no obligation to do so. Third-party liabilities are expected to be settled from forecast operating cash flows as they fall due in the normal course of business. The directors have further mitigated potential related party liquidity risk by obtaining undertakings from the owners of certain material related party creditor companies that outstanding balances will not be demanded for repayment for at least twelve months from the date of approval of these financial statements, unless sufficient surplus funds are available or repayment would not jeopardise, in the opinion of the directors, the Company's ability to meet its liabilities as they fall due. The directors have undertaken a detailed review of significant intercompany receivables. This assessment
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ZEVANTEL EUROPE LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
included consideration of the financial performance, cash flow forecasts, net asset positions and underlying asset values of the relevant debtor entities. Based on this review, the directors are satisfied that the material intercompany balances remain recoverable. Whilst operational cash headroom would be reduced in the event of delays in recovering certain balances, the directors do not consider that such delays would, either individually or collectively, jeopardise the Company's ability to continue as a going concern.
The directors acknowledge that, under a downside scenario, certain tax matters could crystallise during the assessment period. In assessing this risk, the directors have considered both the quantum and timing of potential settlements. Historically, where liabilities have arisen within the Group, arrangements have been reached with the relevant authorities which have allowed settlement over extended periods rather than requiring immediate repayment in full. Accordingly, the directors do not consider it likely that all such liabilities, should they arise, would become immediately payable. The directors have concluded, on the basis of the cash flow forecasts creditor undertakings received, and the recoverability of intercompany balances, that Zevantel Europe Limited will have access to adequate working capital resources to continue in operational existence and meet its liabilities as they fall due for a period of at least twelve months from the date of approval of these financial statements. Whilst uncertainty remains regarding the ultimate outcome and timing of resolution of certain tax matters, the directors do not consider that these matters give rise to a material uncertainty relating to events or conditions that may cast significant doubt upon the Company's ability to continue as a going concern. Accordingly, the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
This report was approved by the board and signed on its behalf.
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ZEVANTEL EUROPE LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2024
The directors present their report and the financial statements for the year ended 31 December 2024.
The directors are responsible for preparing the strategic report, the directors' report and the financial statements in accordance with applicable law and regulations.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the company's financial statements 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 to 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 loss for the year, after taxation, amounted to €21,467,301 (2023: loss €10,358,139).
The directors did not recommend the payments of a dividend (2023: €Nil).
The directors who served during the year and were appointed / resigned post year end were:
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ZEVANTEL EUROPE LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
The directors remain optimistic for the future. Activities planned to enhance performance include additional discounts for bundled services, which will include limited and unlimited national, international and data offers as well as additional top-up bonuses in the market. The directors aim to maintain a strategy to continue to improve performance and drive the business through targeted growth opportunities.
Uncertain tax positions and ongoing enquiries relating to VAT
There had been ongoing discussions and enquiries between Zevantel Europe Limited and HMRC regarding potential imputed interest on related party transactions between Zevantel Europe Limited and certain related party companies. Post year end Zevantel Europe Limited received communication from HMRC that this matter will not be pursued. As referred to in Note 3, Zevantel Europe Limited is in dispute with some tax authorities in relation to the treatment of VAT on certain classes of transactions. A provision has been recorded of €116,965,657 to reflect Zevantel Europe Limited's current best estimate of the potential exposure at 31 December 2024, including penalties and interest. The directors have recalculated the required amount as at 31 December 2024 in line with the positions taken by Zevantel Europe Limited. A number of the items within the VAT amount provided within creditors are currently under appeal and the directors remain confident of successful outcomes overall. In some cases tax authorities have raised assessments and Zevantel Europe Limited has sought advice and taken necessary steps to appeal or challenge the positions and postponed collections of most of the amounts. Zevantel Europe Limited expects a number of these disputes to continue for a number of months prior to any resolution.
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ZEVANTEL EUROPE LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
The company has chosen in accordance with section 414C(11) of the Companies Act 2006 (strategic report and directors' report) Regulations 2013 to set out in the company's strategic report information required by the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 Schedule 7 to be contained in the directors' report.
The auditor, Cooper Parry Group Limited, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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ZEVANTEL EUROPE LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ZEVANTEL EUROPE LIMITED
We have audited the financial statements of Zevantel Europe Limited (the 'company') for the year ended 31 December 2024, which comprise the profit and loss account, the balance sheet, the statement of changes in equity, the statement of cash flows, and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
In 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.
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.
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ZEVANTEL EUROPE LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ZEVANTEL EUROPE LIMITED (CONTINUED)
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
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.
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.
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 gained an understanding of the legal and regulatory framework applicable to the company and the industry in which it operates, and considered the risk of acts by the company that were contrary to applicable laws and regulations, including fraud. We discussed with management the policies and procedures in place regarding compliance with laws and regulations. We discussed amongst the audit team the identified laws and regulations, and remained alert to any indications of non-compliance.
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ZEVANTEL EUROPE LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ZEVANTEL EUROPE LIMITED (CONTINUED)
During the audit we focused on laws and regulations which could reasonably be expected to give rise to a material misstatement in the financial statements, including, but not limited to, the Companies Act 2006 and UK tax legislation. Our tests included agreeing the financial statement disclosures to underlying supporting documentation and enquiries with management.
Our procedures in relation to fraud included but were not limited to: inquiries of management whether they have any knowledge of any actual, suspected or alleged fraud, and discussions amongst the audit team regarding the risk of fraud such as opportunities for fraudulent manipulation of financial statements. We determined that the principal risks related to posting manual journal entries to manipulate financial performance and management bias through judgements in accounting estimates. We also addressed the risk of management override of internal controls, including testing journals and evaluating whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud. Our tests include agreeing the financial statement disclosures to underlying supporting documentation. Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulations. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation. In assessing the potential risks of material misstatement we obtained an understanding of; the entities operations, including the nature of its turnover sources and services and of its objectives and strategies to understand the classes of transactions, account balances, expected financial statement disclosures and business risks that may result in risks of material misstatement. We did not identify any matters relating to non-compliance with laws and regulations relating to fraud.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's 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.
for and on behalf of
Statutory Auditor
Broadwalk House
5th Floor
London
Date:
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ZEVANTEL EUROPE LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2024
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ZEVANTEL EUROPE LIMITED
REGISTERED NUMBER: 09385794
BALANCE SHEET
AS AT 31 DECEMBER 2024
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 17 to 32 form part of these financial statements.
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ZEVANTEL EUROPE LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2024
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ZEVANTEL EUROPE LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2024
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ZEVANTEL EUROPE LIMITED
ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 31 DECEMBER 2024
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ZEVANTEL EUROPE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Zevantel Europe Limited is a private company, limited by shares, incorporated in England and Wales under the Companies Act. The address of the registered office is given in the company information page and the nature of the Company's operations are set out in the strategic report.
2.Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the company's accounting policies (see note 3).
The following principal accounting policies have been applied:
The Company has reported:
∙a loss after tax for the year of €21.5m (2023: €10.4m loss);
∙net current liabilities of €31.6m (2023: €10.1m net current liability); and
∙net cash outflows from operating activities for the year of €1.2m (2023: €0.5m outflow) as evidenced on page 16 in the statement of cashflows.
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 its future development, performance and position. This going concern assessment has given consideration to the Company's available cash flow, business model, strategy, regulatory environment, principal risks and uncertainties, recent financial performance and outlook. The going concern of the Company has been assessed taking into account the potential impact of certain scenarios arising from those uncertainties which have the greatest potential impact on the Company's ability to continue in operational existence throughout the assessment period. Specific consideration has been given to ongoing tax matters in certain European jurisdictions, including matters that remain subject to correspondence, appeal processes and ongoing discussions with relevant tax authorities. The directors have considered a range of potential outcomes, resulting in potential additional liabilities becoming payable during the going concern assessment period. The directors have also considered the wider economic environment and its potential impact on the Company's performance and that of its related parties. Scenario planning considered, amongst other matters: • a general market slowdown in new customer acquisitions and changes in customer behaviour; • changes in competitive market tariffs and market share; • reductions in operating costs, primarily in relation to subscriber acquisition costs, marketing spend and third-party customer service costs; • potential adverse outcomes in relation to ongoing tax matters; and • the timing and recoverability of material intercompany balances. The directors have reviewed trading and operational cash flow forecasts for the period to 30 September 2027 and have no reason to believe that cash generated from operating activities will be materially lower than that historically generated. This includes those factors which they consider could materially affect forecast cash flow during the period, both positively and negatively. This review
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ZEVANTEL EUROPE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
has included sensitivity analysis over key assumptions and demonstrates that there are no material variations to the forecast cash flows generated from operations under reasonably foreseeable scenarios.
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 balances which are due to or from third parties and those arising from transactions with other companies under common control. The Company and its related parties form part of an operating model that ensures turnover and profits are economically allocated to the entities within the Group which have earned them. As such, the Company has substantial trading transactions with 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 provide funding to related parties, however there is no obligation to do so. Third-party liabilities are expected to be settled from forecast operating cash flows as they fall due in the normal course of business. The directors have further mitigated potential related party liquidity risk by obtaining undertakings from the owners of certain material related party creditor companies that outstanding balances will not be demanded for repayment for at least twelve months from the date of approval of these financial statements, unless sufficient surplus funds are available or repayment would not jeopardise, in the opinion of the directors, the Company's ability to meet its liabilities as they fall due. The directors have undertaken a detailed review of significant intercompany receivables. This assessment included consideration of the financial performance, cash flow forecasts, net asset positions and underlying asset values of the relevant debtor entities. Based on this review, the directors are satisfied that the material intercompany balances remain recoverable. Whilst operational cash headroom would be reduced in the event of delays in recovering certain balances, the directors do not consider that such delays would, either individually or collectively, jeopardise the Company's ability to continue as a going concern. The directors acknowledge that, under a downside scenario, certain tax matters could crystallise during the assessment period. In assessing this risk, the directors have considered both the quantum and timing of potential settlements. Historically, where liabilities have arisen within the Group, arrangements have been reached with the relevant authorities which have allowed settlement over extended periods rather than requiring immediate repayment in full. Accordingly, the directors do not consider it likely that all such liabilities, should they arise, would become immediately payable. The directors have concluded, on the basis of the cash flow forecasts creditor undertakings received, and the recoverability of intercompany balances, that Zevantel Europe Limited will have access to adequate working capital resources to continue in operational existence and meet its liabilities as they fall due for a period of at least twelve months from the date of approval of these financial statements. Whilst uncertainty remains regarding the ultimate outcome and timing of resolution of certain tax matters, the directors do not consider that these matters give rise to a material uncertainty relating to events or conditions that may cast significant doubt upon the Company's ability to continue as a going concern. Accordingly, the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
Functional and presentation currency
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ZEVANTEL EUROPE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
Transactions and balances
The company adopts specific turnover recognition criteria prior to turnover being recognised, as follows: Mobile service turnover This includes national and international airtime, data and roaming services provided to the end user. Airtime is invoiced to prepay customers at the time of top-up and to wholesalers at the time of voucher activation. Mobile service turnovers are recognised only when the services are consumed by the end user (usage). Turnover invoiced or received in advance of usage is deferred and released when consumed as services by the end users or when usage expires. Usage is determined as the amount of airtime used by the end customer after deducting trade discounts, commission payments, incentives, bonuses and free credits. Deferred turnover Deferred turnover for future usage of top-up payments is recognised as a liability on the balance sheet. The deferred turnover is released to the profit and loss account upon usage by the end users or on expiry of unused balances of end users and then recorded as turnover. Mobile termination turnover (MTT) Mobile termination turnover is recognised when the calls are terminated to Lycamobile Europe Limited through an interconnect partner. Turnover for bundle arrangements with multiple components of turnover For turnover bundles in which prepaid income is received in advance of usage for potentially one or more multiple turnover deliverables, the turnover is released to income according to the proportionate relative usage of the deliverables, each of which has been assigned a value. Identifying the fair value of each element of the deliverable is performed by assessing the tariffs at which the service or deliverable is normally sold on an individual basis after the deductions of any
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ZEVANTEL EUROPE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
Where it is too uncertain to clearly determine the proportion of the underlying elements of the turnover bundle, past customer usage experience is to be used to estimate the proportion of the bundle elements to allow the determination of the turnover to be recognised.
At each reporting date the Company assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.
The Company adds to the carrying amount of an item of fixed assets the cost of replacing part of such an item when that cost is incurred, if the replacement part is expected to provide incremental future benefits to the Company. The carrying amount of the replaced part is derecognised. Repairs and maintenance are charged to the profit and loss account during the period in which they are incurred.
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ZEVANTEL EUROPE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the profit and loss account.
Subscriber acquisition costs
Subscriber acquisition costs, which include the commission costs relating to acquiring new customers and any other costs associated with acquiring customers, are recognised in the profit and loss account when incurred.
The company has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet 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
Basic financial assets, which include trade and other debtors, cash and bank balances, are initially measured at their transaction price (adjusted for transaction costs except in the initial measurement of financial assets that are subsequently measured at fair value through profit and loss) and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, 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.
Discounting is omitted where the effect of discounting is immaterial. The company's cash and cash equivalents, trade and most other debtors due with the operating cycle fall into this category of financial instruments.
Impairment of financial assets
At the end of each reporting period financial assets measured at amortised cost are assessed for objective evidence of impairment. 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.
Financial assets are impaired when events, subsequent to their initial recognition, indicate the estimated future cash flows derived from the financial asset(s) have been adversely impacted. The impairment loss will be the difference between the current carrying amount and the present value of
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ZEVANTEL EUROPE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
the future cash flows at the asset(s) original effective interest rate.
If there is a favourable change in relation to the events surrounding the impairment loss then the impairment can be reviewed for possible reversal. The reversal will not cause the current carrying amount to exceed the original carrying amount had the impairment not been recognised. The impairment reversal is recognised in the profit or loss.
Basic financial liabilities
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 the deduction of all its liabilities.
Basic financial liabilities, which include trade and other creditors, bank loans and other loans are initially measured at their transaction price (adjusting for transaction costs except in the initial measurement of financial liabilities that are subsequently measured at fair value through profit and loss). When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future payments discounted at a market rate of interest, discounting is omitted where the effect of discounting is immaterial.
Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.
Trade creditors are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade creditors are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade creditors are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.
Derecognition of financial assets
Financial assets are derecognised when their contractual right to future cash flow expire, or are settled, or when the company transfers the asset and substantially all the risks and rewards of ownership to another party. If significant risks and rewards of ownership are retained after the transfer to another party, then the company will continue to recognise the value of the portion of the risks and rewards retained.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company's contractual obligations expire or are discharged or cancelled.
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ZEVANTEL EUROPE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Recoverability of amounts due from related parties Provision for impairment of the carrying value of amounts due from related parties is made based on management's estimate of the prospect of recovering the amounts due, which includes considering the solvency of the counterparty and its future outlook, based on budgets and forecasts prepared by management. Uncertain tax positions and ongoing enquiries relating to corporate taxes There had been ongoing discussions and enquiries between Lycamobile Europe Limited and HMRC regarding potential imputed interest on related party transactions between Lycamobile Europe Limited and certain related party companies. Post year end Lycamobile Europe Limited received communication from HMRC that this matter will not be pursued. Uncertain tax positions and ongoing enquiries relating to VAT Included within creditors within one year is an amount of €121,827,533 VAT relating to certain VAT positions (inclusive of potential penalties and interest) taken by Lycamobile Europe Limited since 1 January 2015 and disputes with some tax authorities. A number of the items within the VAT amount provided within creditors are currently under appeal and the directors remain confident of successful outcomes overall. The directors have recalculated the required amount as at 31 December 2024 in line with the positions taken by Lycamobile Europe Limited.
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ZEVANTEL EUROPE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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ZEVANTEL EUROPE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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ZEVANTEL EUROPE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
9.Taxation (continued)
From 1 April 2023, the rate of corporation tax in the United Kingdom has increased from 19% to 25%. Companies with profits of £50,000 or less are continuing to be taxed at 19%, which is a new small profits rate. Where taxable profits are between £50,000 and £250,000, the higher 25% rate will apply but with a marginal relief applying as profits increase.
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ZEVANTEL EUROPE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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ZEVANTEL EUROPE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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ZEVANTEL EUROPE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Foreign exchange reserve
Profit and loss account
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ZEVANTEL EUROPE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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ZEVANTEL EUROPE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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ZEVANTEL EUROPE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
The controlling party is A Subaskaran.
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