Lebara Germany Limited

Lebara Germany Limited

Düsseldorf

Befreiender Jahresabschluss zum Geschäftsjahr vom 01.01.2023 bis zum 31.12.2023

LEBARA GERMANY LIMITED

London/UK

ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2023

Company Registration Number 06830549

Table of contents

Officers and professional advisors

Strategic report

Directors' report

Statement of director's responsibilities in respect of the annual report and the financial statements

Independent auditor's report to the members of Lebara Germany Limited

Statement of comprehensive income

Statement of financial position

Statement of changes in equity

Notes to the financial statements

Officers and professional advisors For the year ended 31 December 2023

Strategic report For the year ended 31 December 2023

The directors present the strategic report of the Company for the year ended 31 December 2023.

Review of the business

The principal activity of Lebara Germany Limited is that of providing support services (including sales and marketing) to Lebara Mobile Germany Limited, for which a fee (based on the amount of Lebara Mobile Germany Limited's turnover) is earned. Lebara Mobile Germany Limited provides mobile telecommunication services to customers in Germany through a broad range of distribution channels including national retailers, national distributors, wholesalers, independent retailers and the internet. Up until 30 March 2023, the company had previously provided these services to Lebara Limited. Due to a group restructuring project, these support services were provided to Lebara Mobile Germany Limited from 1 April 2023.

The Company is a wholly owned subsidiary of Lebara Holding Limited, incorporated in the United Kingdom. The ultimate parent company is Lithium Topco Limited, a company incorporated in Jersey. Please refer to related parties on note 15 for further details of ultimate parent company.

Results and performance

The results of the Company for the year show a profit on ordinary activities after tax of €0.4m (2022: €1.8m) on turnover of €11.5m (2022: €16.4m). The shareholder's deficit of the Company totals €22.4m (2022: €23.3m).

Business environment

The Company's performance is dependent on how successful Lebara Mobile Germany Limited is at generating revenue from its German customers and increasing its customer base. The German mobile virtual network operator (MVNO) market, in which Lebara Mobile Germany Limited operates, is extremely competitive, with a number of active MVNOs including brands offering similar price deals, giving rise to aggressive pricing structures.

Strategy

The Company will continue to assist Lebara Mobile Germany Limited in consolidating the group's position in the German market and will concentrate its efforts on achieving maximum growth through the provision of sales, marketing and other support services.

Key performance indicators

As the Company's income is dependent on the performance of Lebara Mobile Germany Ltd and will always be profitable in terms of the agreement with Lebara Mobile Germany Limited, it does not have any specific key performance indicators. The key performance indicators of Lebara Mobile Germany Limited, which affect the results of the Company are, therefore as follows:

We note the prior year comparative shows the Germany KPIs which had previously been trading in Lebara Limited and moved to Lebara Mobile Germany Limited from 1 April 2023. The lower customer base is due to lower gross additions despite lower churn.

Principal risks and uncertainties

The Directors have overall responsibility for the establishment and oversight of the Company's risk management framework. The Company's risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. The Company has identified the following significant risk factors: market risk, operational risk, regulatory and compliance risk.

Market risk

The market in which the group operates is competitive. Competition can lead to a reduction in the rate at which Lebara Mobile Germany Limited adds new customers and/or to a decrease in the size of it's market share which, in turn, will have an impact on the Company's performance. Market risk is closely monitored by the Directors, with a focus on performance by channel, client base segment and calling corridor. The performance is measured against real time data, and corrective actions are implemented if necessary. The group's pricing and marketing teams also play key roles in monitoring competition and other dynamics.

Operational risk

Operational risks exist at a group level but nonetheless affect the Company. They predominantly arise from a network interruption causing a sub-standard service delivery manifesting from reduced service availability. Such interruptions could be internal or external. Operational risk is mitigated by ensuring that people with the right skill sets and responsibilities manage network systems, having processes in place to ensure that network performance is monitored at all times, and establishing the right partnerships and governance mechanisms with the partners who provide the Company with equipment, capacity and services.

Regulatory and compliance risk

The group operates in a regulated industry and, as such, its mobile telecoms services activities are regulated. The group's in-house legal team ensures that the Company complies with all regulatory requirements.

Financial risks to which the Company is exposed are detailed in the Directors' report. The risks above are closely monitored by the director and corrective actions are implemented if necessary.

Future developments

The Directors are confident that through proactive customer communications, responsive marketing plans, and continuous investment in new products and technologies, the Company will continue to deliver low-cost, high-quality service to its customers whilst improving its competitive advantage against its direct competitors.

Events after the statement of financial position date

There are no events after the statement of financial position date that require adjustments nor disclosures to these set of financial statements.

Directors' report

For the year ended 31 December 2023

The Directors present this report and the audited financial statements of the Company for the year ended 31 December 2023.

Future developments

Likely future developments are discussed in the Strategic report.

Dividends

No dividend has been declared and none is recommended (2022: €nil).

Directors

The Directors who served the Company during the year, and subsequently, were as follows:

F. J. Pearce

R. A. Darwent

B. P. Dowd

G. J. M. Verheesen - Appointed on 3 March 2023, resigned 31 October 2023

C. Jepp - Resigned 25 January 2023

K. Schumacher - Appointed 13 October 2023

The Company is a wholly owned subsidiary of Lebara Holding Limited and the interests of the group directors are disclosed in the financial statements of the intermediate parent company, Lebara Group B.V.

Disabled employees

The Company is an inclusive employer and gives full consideration to applications for employment from disabled persons and will explore and where practicable implement reasonable adjustments. Where existing employees become disabled, it is the Company's policy to where practicable accommodate reasonable adjustments to provide continuing employment under normal terms and conditions. The Company provides equal opportunity in access to training, career development, and promotion and will explore any potential additional support needed to create equity for disabled employees where appropriate.

Employee involvement

We communicate with our employees through regular team and department / country meetings as well as our quarterly global CEO town hall, all of which facilitate two-way communication. We provide information and updates via our company intranet and through regular email communications. We involve our employees and obtain their feedback through this communication and by conducting staff surveys, utilising feedback tools like our new 'Voice It' staff feedback form and by establishing committees, employee resource groups and working parties to empower, consult and involve our employees in the continuous improvement of our people and business practices. We encourage our staff to be enterprising, one of our employee values and we ensure that we both listen and act on their feedback too.

Political contributions

The Company made no political donations nor incurred any political expenditure during the year (2022: €nil).

Financial risk management objectives and policies

The Company's operations expose it to a variety of financial risks that include credit risk, liquidity risk, interest rate risk and foreign exchange rate risk.

Credit risk

The Company's credit risk to related parties is mitigated through the Group's consolidated structure and its financial and operational ability to support its individual companies throughout the Group.

Trade receivables

The Company's only customer is that of Lebara Mobile Germany Ltd whose customers, excluding related parties, comprises of large national distributors who purchase SIM cards and vouchers to sell to the market. Customer credit risk is managed by the Company's established credit policy (terms of up to 30 days), procedures and controls relating to customer credit risk management. Credit quality of a customer is assessed, and credit limits are defined in accordance with this assessment. The requirement for an impairment is analysed at each reporting date on an individual basis for these clients.

Cash deposits

Credit risk from balances with banks and financial institutions is managed in accordance with the Lebara group policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. The Company evaluates the concentration of risk with respect to cash deposits as low.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company's approach for managing liquidity is to ensure, as far as possible, that it will have sufficient cash reserves readily available to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation. In this respect, financing may be received from fellow group undertakings.

Interest rate risk

The Company has no interest-bearing liabilities and no interest-bearing assets other than its loans with group companies and cash.

Foreign exchange risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. As the Company does not have any sales, purchases or balances denominated in foreign currencies, its exposure to foreign exchange risk is regarded as low.

Business relationships

We invest heavily in innovation so that we can continue to offer customers the best propositions and customer experience. We ensure customer feedbacks on service improvements are heard and addressed.

The Company depends on a sole mobile network operator (MNO) and limited suppliers to provide equipment and services to develop and upgrade its products and operate its business. Over the years, we have built good relationship with our MNO and suppliers and will continue to maintain transparency and fair dealing in our interaction with them.

Going concern

The financial statements have been prepared on a going concern basis as the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for a period of at least 12 months from the date of approval of the financial statements.

A consolidated liquidity forecast, at the level of Lebara Group BV (the parent holding company), including country operational level analysis, has been prepared for a period of more than 12 months from the date of approval of these financial statements. The forecast indicates that, whilst taking into account reasonable downsides, sufficient funds are expected to be generated within the Company so as to meet the liabilities of the Company as they fall due.

Sensitivity analyses have been applied to the consolidated liquidity forecasts to assess a range of potential impacts from key risks, as well as assessing the timing and likelihood of other potential significant outflows. In the analyses, key business driver assumptions were modelled with varying degrees of impact and duration, the resulting sensitised liquidity forecasts support the going concern assumption, accordingly the Company continues to adopt the going concern basis in preparing the financial statements.

Qualifying indemnity provisions

The Company has granted indemnities to all its directors against any potential liability in respect of proceedings brought by third parties, subject to the conditions set out in sections 234 and 235 of the Companies Act 2006 Such qualifying third-party indemnity provisions remain in force as at date of approving the Directors' report.

Disclosure of information to auditor

The Directors who held office at the date of approval of this Directors' report confirm that, so far as they are each aware, there is no relevant audit information of which the Company's auditor is unaware; and the director has taken all the steps that he ought to have taken as a director to make himself aware of any relevant audit information and to establish that the Company's auditor is aware of that information.

By order of the Board

Statement of director's responsibilities in respect of the annual report and the financial statements For the year ended 31 December 2023

The directors are responsible for preparing the strategic report, directors' 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, comprising FRS 101 Reduced Disclosure Framework 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 the profit or loss of the Company for that period.

In preparing these financial statements, the directors are required to:

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 2006. The directors are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Independent auditor's report to the members of Lebara Germany Limited For the year ended 31 December 2023

Opinion

We have audited the financial statements of Lebara Germany 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 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 101 Reduced Disclosure Framework (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report and the directors' report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

Responsibilities of directors

As explained more fully in the directors' responsibilities statement set out on page 8, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

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 specific procedures for this engagement and the extent to which these 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 the company not complying with the applicable laws and regulations including fraud, in particular those that could have a material impact on the financial statements. This included those regulations directly related to the financial statements, including financial reporting, tax legislation and distributable profits. In relation to the industry this included the UK General Data Protection Regulation, EU Roaming Regulations, European Commission Telecom Regulations, Employment Law and Health & Safety Regulations.

The risks were discussed with the audit team and we remained alert to any indications of non-compliance throughout the audit. We carried out specific procedures to address the risks identified. As follows:

To address the risk of management override of controls, we carried out testing of journal entries and other adjustments for appropriateness and evaluated the business rationale of significant transactions outside the normal course of business.

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.

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

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

For and on behalf of Price Bailey LLP

Statutory Auditor

Chartered Accountants

24 Old Bond Street

London

W1S 4AP

Statement of comprehensive income For the year ended 31 December 2023

All of the activities of the Company are classed as continuing. The Company has no recognised other comprehensive income other than the results set out above.

The notes on pages 15 to 29 form an integral part of these financial statements.

Statement of financial position As at 31 December 2023

The notes on pages 15 to 29 form an integral part of these financial statements.

The Company's registration number is 06830549.

These financial statements were approved and authorised for issue by the board of directors and signed on its behalf by:

Statement of changes in equity For the year ended 31 December 2023

The notes on pages 15 to 29 form an integral part of these financial statements.

Notes to the financial statements For the year ended 31 December 2023

1. Accounting policies

Lebara Germany Limited ("the Company") is a private company limited by shares incorporated and domiciled in England, United Kingdom. It has a branch which is registered in Germany. Registered office and principal place of business is: 7th Floor, Import Building, 2 Clove Crescent, London, England, E14 2BE.

These financial statements have been prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework ("FRS 101").

In preparing these financial statements, the Company applies the recognition, measurement and disclosure requirements of UK adopted international accounting standards but makes amendments where necessary in order to comply with the Companies Act 2006 and has set out below where advantage of the FRS 101 disclosure exemptions has been taken.

The Company's intermediate parent undertaking, Lebara Group B.V. (a company incorporated in the Netherlands), includes Lebara Germany Limited in its consolidated financial statements. The consolidated financial statements of Lebara Group B.V. are prepared in accordance with International Financial Reporting Standards and are available to the public and may be obtained from Entrada 111, 1114 AA Amsterdam- Duivendrecht, Netherlands.

In these financial statements, the Company has applied the exemptions available under FRS 101 in respect of the following disclosures:

The Company proposes to continue to adopt the reduced disclosure framework of FRS 101 in its next financial statements.

The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these financial statements.

a) Measurement convention

The financial statements are prepared on the historical cost basis. The functional currency of the Company is Euro.

b) Going concern

The financial statements have been prepared on a going concern basis as the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for a period of at least 12 months from the date of approval of the financial statements.

A consolidated liquidity forecast, at the level of Lebara Group B.V. (the parent holding company), including country operational level analysis, has been prepared for a period of more than 12 months from the date of approval of these financial statements. The forecast indicates that, whilst taking into account reasonable downsides, sufficient funds are expected to be generated within the Company so as to meet the liabilities of the Company as they fall due.

Sensitivity analyses have been applied to the consolidated liquidity forecasts to assess a range of potential impacts from key risks, as well as assessing the timing and likelihood of other potential significant outflows. In the analyses, key business driver assumptions were modelled with varying degrees of impact and duration, the resulting sensitised liquidity forecasts support the going concern assumption, accordingly the Company continues to adopt the going concern basis in preparing the financial statements.

c) Turnover

General

Turnover relates to costs plus transfer pricing adjustments recognised for services performed for other group companies. Such services are charged to the other group companies in terms of the agreement between the Company and other group companies and are recognised as income on a monthly basis as the services are provided. The group companies are invoiced at an annual basis and consideration is payable when invoiced.

Support and service fees

The Company performs services on behalf of Lebara Mobile Germany Limited, a fellow subsidiary. Such services are charged to Lebara Mobile Germany Limited in terms of the agreement between the Company and Lebara Mobile Germany Limited and are recognised as income on a monthly basis as the services are provided.

Interest income

Interest income is recognised as interest accrues using the effective interest method.

d) Intangible assets

Intangible assets that are acquired by the Company are stated at cost less accumulated amortisation and less accumulated impairment losses.

Amortisation

Amortisation is charged to the profit and loss account on a straight-line basis over the estimated useful lives of the intangible assets. The estimated useful life of the Company's software is between 3 and 5 years.

e) Tangible fixed assets

Tangible fixed assets are stated at cost less depreciation and accumulated impairment losses. Where parts of an item of tangible fixed assets have different useful lives, they are accounted for as separate items of tangible fixed assets.

Depreciation is charged to the profit and loss account on a straight-line basis over the estimated useful lives of each part of an item of tangible fixed assets. The estimated useful lives are as follows:

f) Provisions

A provision is recognised on the balance sheet when the Company has a present legal or constructive obligation as a result of a past event that can be reliably measured, and it is probable that an outflow of economic benefits will be required to settle the obligation.

g) Taxation

Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the profit and loss account except to the extent that it relates to items recognised directly in equity or other comprehensive income, in which case it is recognised directly in equity or other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realisation of settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised to a maximum of 7 years of losses.

h) Foreign currencies

Transactions in foreign currencies are translated to the Company's functional currency at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are retranslated to the functional currency at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recorded in the profit and loss account.

i) Leases

The Company leases an office and motor vehicles. Rental contracts are typically made for fixed periods but may have extension options.

Contracts may contain both lease and non-lease components. The Company allocates the consideration in the contract to the lease and non-lease components based on their relative stand-alone prices. However, for leases of real estate for which the Company is a lessee and for which it has major leases, it has elected not to separate lease and non-lease components and instead accounts for these as a single lease component.

Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor. Leased assets may not be used as security for borrowing purposes.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in the Company, the lessee's incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.

Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

Right-of-use assets are measured at cost comprising the following:

Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis. If the Company is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset's useful life. The Company has chosen not to revalue for the right-of-use buildings held by the Company.

Payments associated with short-term leases of equipment and vehicles and all leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT equipment and small items of office furniture.

Information about critical accounting estimates and judgements in the application of lease accounting is disclosed in note 17.

Employee benefits

Short-term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognised for the amount expected to be paid if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

Termination benefits

Termination benefits are recognised as an expense when the Company has demonstrably committed to a formal detailed plan to either terminate employment before the normal retirement date or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. Termination benefits for voluntary redundancies are recognised as an expense if the Company has made an offer of voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably.

j) Non-derivative financial instruments

Non-derivative financial instruments comprise trade and other debtors, cash and cash equivalents, interestbearing intercompany loans, and trade and other creditors.

Trade and other debtors

Trade and other debtors are recognised initially at their transaction price. Subsequent to initial recognition, they are measured at amortised cost using the effective interest method, less any impairment losses. Other debtors are recognised initially at fair value.

Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part of the Company's cash management are included as a component of cash and cash equivalents.

Interest-bearing intercompany loans

Interest-bearing intercompany loans are recognised initially at fair value. Subsequent to initial recognition, they are stated at amortised cost using the effective interest method.

Trade and other creditors

Trade and other creditors are recognised initially at fair value. Subsequent to initial recognition, they are measured at amortised cost using the effective interest method.

k) Impairment

Financial assets

The financial assets at amortised cost consist of deposits, trade receivables and cash and cash equivalents.

The Company measures loss allowances at an amount equal to 12-month expected credit losses (ECLs) for deposits and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

The Company measures loss allowances for trade receivables at an amount equal to lifetime ECLs. The impairment provision on financial assets measured at amortised cost have been calculated in accordance with IFRS 9's expected credit loss provision.

Non-financial assets

The carrying amounts of the Company's non-financial assets, other than stocks, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated. An impairment loss is recognised if the carrying amount of an asset exceeds its recoverable amount. Impairment losses are recognised in profit or loss.

2. Turnover

The turnover and profit before tax is attributable to the Company's principal activity.

3. Expenses and auditor's remuneration

Operating profit is stated after charging:

Exceptional costs relate to expenditure incurred relating to the strategic reorganisation of operations of the Company which are considered exceptional by nature of their size and significance to the Company.

4. Staff numbers and costs

The average number of persons employed by the Company (including directors) during the year, analysed by category, was as follows:

The Company does not operate a defined contribution pension scheme. It only pays social security for state pensions.

5. Directors' remuneration

The Directors' aggregate remuneration in respect of qualifying services to the Company is as follows:

The remuneration of the highest paid director is €216k (2022: €261k), with €nil (2022: €nil) company contributions to money purchase schemes during the year. During the year no retirement benefits were accruing for directors under money purchase schemes (2022: nil). Some directors of the company are also directors or officers of other companies within the group. The cost has been borne by another entity in the Group.

6. Finance cost

7. Tax on profit

Reconciliation of effective tax rate

The reconciliation between profit before tax and tax expense for the year is as follows:

8. Intangible assets

The amortisation of the intangible assets was charged to the administrative expenses line in the Statement of Comprehensive Income.

9. Tangible assets

The depreciation of the tangible fixed assets was charged to the administrative expenses line in the Statement of Comprehensive Income.

10. Leases

Right of use assets

Lease liabilities

Nature of leasing activities

Property

The company leases its principal place of business at Zollhof 17, 40221 Dusseldorf. The lease lasts until June 2025. The rent is a fixed amount paid monthly in euros. The Company has the right to extend the property lease for a period of five years.

Motor vehicles

The existing company motor vehicle leases expired in 2022. The motor vehicle leases now used by the company are classified as short-term leases as they are for a period of less than 12 months.

11. Debtors

Amounts falling due within one year

Amounts owed by group undertakings are unsecured and are repayable on demand. Interest of €nil (2022: €nil) was charged during the year on intercompany loans.

12. Deferred taxation

Movement during the year is as follows:

At 31 December 2023, Lebara Germany Limited had corporate income tax (CIT) losses of €11.6m (2022: €12.6m loss) and trade losses of €11.1m (2021: €12.1m loss). It is forecast that over the next 7 years the entity will fully utilise these CIT and trade losses. Deferred tax assets have been recognised at 15.8% and 15.4% respectively. This results in a deferred tax asset of €3,863k as at 31 December 2023.

13. Creditors: amounts falling due within one year

Amounts owed to group undertakings, excluding current payable balances in respect of monthly charges, are unsecured and are repayable on demand. Interest of €60k (2022: €104k) was incurred during the year on intercompany loans.

The Company's fellow subsidiary, Lebara Limited, has provided a letter of support to the Company outlining its intentions to provide financial support for a minimum of 12 months from the date of this financial report.

14. Called-up share capital

15. Related parties

Controlling entity

Until 30 March 2023, the Company was a wholly owned subsidiary of Lebara Mobile Group B.V. which is owned by Lebara Finance 2 B.V., incorporated in Netherlands.

Starting on 30 March 2023, the Company became wholly owned by Lebara Holding Limited, incorporated in the United Kingdom.

The Company's ultimate parent company is Lithium Topco Limited, a company registered in Jersey.

The smallest group in which the results of the Company are consolidated is that headed by Lebara Group B.V. The consolidated financial statements of Lebara Group B.V. may be obtained from the registered office: Entrada 111, 1114AA Amsterdam-Duivendrecht, Netherlands. The largest group in which the results of the Company are consolidated is that headed by Lithium UK Bidco Limited. The consolidated financial statements of Lithium UK Bidco Limited may be obtained from: 8 Sackville Street, London, England, W1S 3DG.

16. Commitments and contingencies

The Company acts as guarantor in accordance with the bond terms for Lithium Midco II Limited FRN EUR 100,000,000 First Lien Notes 2020/2025 ISIN NO 001 0872609. Lithium Midco II Limited and Lebara Group B.V. are intermediate parent companies of Lebara Germany Limited.

17. Accounting estimates and judgements

The preparation of the Company's financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

Management have identified the following accounting estimate and assumption which it considers to be critical due to its impact on the Company's financial statements.

Deferred tax

Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised.

Judgement is required when determining the probable future taxable profits. The Company has assessed the availability of future taxable profits using a seven-year forecast of the Company's operation.

Changes in the assumptions which underpin the forecast of the Company's operations could have an impact on the amount of future taxable profits and consequently on the period over which the deferred tax asset would be recovered.

Leases

Estimates

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in the Company, the lessee's incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.

To determine the incremental borrowing rate, the Company:

Judgements

In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated).

For leases of offices and equipment, the following factors are normally the most relevant:

Most extension options in offices and vehicles leases have not been included in the lease liability, because the Company could replace the assets without significant cost or business disruption.

As at 31 December 2023, potential future cash outflows of €Nil (2022: €Nil) (undiscounted) have not been included in the lease liability because it is not reasonably certain that the leases will be extended (or not terminated).

The lease term is reassessed if an option is actually exercised (or not exercised) or the Company becomes obliged to exercise (or not exercise) it. The assessment of reasonable certainty is only revised if a significant event or a significant change in circumstances occurs, which affects this assessment, and that is within the control of the lessee. During the current financial year, the financial effect of revising lease terms to reflect the effect of exercising extension and termination options was an increase in recognised lease liabilities and right-of-use assets of €Nil (2022: €Nil).

18. Events after the statement of financial position date

There are no events after the statement of financial position date that require adjustments nor disclosures to these set of financial statements.