Lyca Mobile UK Auditor PKF Littlejohn Refuses to Sign Off Accounts
News reports have indicated that the auditor – PKF Littlejohn – for mobile network operator Lyca Mobile, which is a virtual operator (MVNO) on EE’s platform in the UK, were unable to sign off the company’s most recent accounts (to December 2022) due to various concerns, such as the recoverability of a due balance of nearly £150m.
According to Lyca’s latest company accounts (here), which were published at the start of this month, the operator had 1.7 million subscribers at the end of 2022, a churn rate of 9% and revenues of £145m (up from £138m). But they also made a loss after tax of £25.1m, which compares with a profit of £1.8m in 2021, and they’re still in dispute with HMRC over an issue related to the treatment of Value Added Tax (a provision of £99m has been recorded to reflect their current best estimate of potential exposure).
However, the accounts also included an independent auditor’s report (page 11) from PKF Littlejohn, which saw the auditor state that it did “not express an opinion on the accompanying financial statements” and that’s partly because they had “not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion” of those statements.
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The core issue seems to concern the recoverability of around £150m, which includes a balance of “£105,979,000 due from related parties“, as well as “£41,704,000 due from directors and parties associated with directors” and the “completeness and accuracy of the deferred income balance of £10,870,000” related to creditors. The Telegraph (paywall) has a bit more detail on these items.
Generally, it’s worth noting that PKF Littlejohn expressed some concerns around the statements in Lyca Mobile UK’s accounts in the previous year, too (here). But despite all this, the Directors’ report in the filing does still say they: “believe the company will be able to continue to operate and meet its obligations as they fall due for the foreseeable future.”
A spokesperson for Lyca Mobile said:
“Lyca has a number of successful private businesses and entities under common control, but it is not a ‘group’. There is no obligation to produce consolidated group accounts, nor to have these audited. As a result, no single auditor has a remit to audit or review related party transactions, which is noted by the auditor of Lycamobile UK as a reason for the disclaimer in the audit report.”
The development follows last year’s cyberattack (here), recent problems with 5G connectivity (here) and the conviction of Lyca’s French entities for money laundering and VAT fraud. The hope is that Lyca will be able to find a way through all the recent bumps, but then we’ve still got the outcome of the Information Commissioner’s Office (ICO) investigation into last year’s hack to come.
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Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on X (Twitter), Mastodon, Facebook, BlueSky, Threads.net and Linkedin.
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The fact they still haven’t address the leak in the financial and personal customer details is saying alot.
Yes, and there seems to be growing evidence in the public domain they weren’t truthful about this. I had fraud on a credit card and it looks very much like Lyca was the source of the leak of my card details. There is much more evidence on various money forums where people are complaining about fraud and the common link seems to be Lyca.
My credit card company just re-issued one of my cards for security reasons, checking it was the one I’d used for a SIM with Lyca at the end of last year. Company doesn’t say why but that could explain it.
D O D G Y
They have also been fined in France according to the FT:
Paris criminal court in October convicted Lycamobile’s French corporate entities of committing fraud
and
A Tory official last year said: “All donations to the Conservative party are properly and transparently declared to the Electoral Commission.
So is this another screw up to protect Lyca’s owners?
I tried Lyca last year just for 30 Day sim once i payed i couldn’t cancel the Auto renew or Remove Cancel my bank card i phoned Lyca customer service
they cancelled the Auto Renew but said they cant cancel Delete or REMOVE my card what Liars very dubious shady practice good job i didn’t trust them and used disposable bank card witch i cancelled with my Bank after the month the sim went in the bin
I tried Lyca last year just for 30 Day sim once i payed i couldn’t cancel the Auto renew or Remove Cancel my bank card i phoned Lyca customer service
they cancelled the Auto Renew but said they cant cancel Delete or REMOVE my card what Liars very dubious shady practice good job i didn’t trust them and used disposable bank card witch i cancelled with my Bank after the month the sim went in the bin
The accounts showed the company made a loss, It appears that in order to continue to trade they are dependent on revenues from related partners but the auditors seem to doubt these revenues will be available
This. Either they’re part of the group, they have a line of credit that’s not declared, or they’re trading while insolvent. Personally I would pick two of those.
Lyca and Lebara seem to have great deals – but have horrible service. No thanks
If we add a sudden Delight and Vectone mobile falls to have a full picture (both were in Lyca group) it looks very grim, doesn’t it?
I think Lycamobile is already in trouble and may go bust very soon. Just two weeks ago my active SIM card with daily use, I mean daily use just got deactivated without any reason. I have been calling the customer service daily but they seems don’t know what happened to the number or what to do, they will put me on hold for hours and eventually disconnected.