Yahoo Finance Auditors refuse to sign off accounts of former Tory donor’s mobile firm
Auditors have refused to sign off on the accounts of a former Tory donor’s mobile firm amid concerns over almost £150m in personal loans.
Allirajah Subaskaran, the British-Sri Lankan tycoon behind Lycamobile, was dealt a blow after accountants expressed doubts over the company’s latest annual filing.
In particular, auditors said they had been unable to find sufficient evidence over loans totalling almost £150m.
They included roughly £106m lent by the mobile firm to a complex network of related companies registered in countries including Cyprus, Dubai and Singapore.
Almost £42m is also owed by Mr Subsakaran and “P Subsakaran”, which is believed to be his wife Prema.
Lycamobile, which provides pay-as-you-go SIM cards, said it fell to a £25m loss in its last financial year from £145m in revenues.
However, auditors at PKF Littlejohn raised concerns about the “completeness and accuracy” of £10.8m in deferred income listed in the accounts.
Mark Ling, senior statutory auditor at PKF, said: “These matters individually and together represent a material and pervasive issue, and we were unable to express an opinion on the financial statements of the company.”
Lycamobile did not provide any further detail relating to the deferred income, but this typically refers to prepayment from customers for services or products that have not yet been delivered.
Hinesh Shah, a forensic accountant at Pinsent Masons, said: “The fact that the auditors can’t get comfortable with the balance is unusual and implies they haven’t been able to obtain comfort over the balance based on information provided by the company.
“Normally, the company would do everything possible to get the auditors comfortable as otherwise, it leads to a qualification on the audit opinion, as has happened in this case.”
Lycamobile was contacted for comment.
It marks the latest setback for Lycamobile, which was founded in 2006 and sells pay-as-you-go cards targeted primarily at migrants making international calls.
The company was once a significant donor to the Tories, handing more than £2m to the party between 2011 and 2016 and supporting Boris Johnson’s campaign for re-election as London Mayor.
However, it has since been locked in a tax dispute with HMRC over VAT payments on certain phone transactions between 2012 and 2021.
Two further investigations relating to corporation tax have been dropped.
Lycamobile had set aside £99m to cover potential fines at the end of 2022, but bosses said the figure had increased since that date.
A tribunal hearing was listed for last month and a decision is expected in September at the earliest, after which the company may seek to appeal it.
Bosses added that the company could access financial support from related parties if required. The business reported sales of £145.3m in the year to December 2022.
The company’s previous auditors, KPMG, resigned in 2017, blaming issues in obtaining “sufficient audit evidence”. At the time, Lycamobile said it had made a decision to switch auditors.
