ACCOUNTS - Final Accounts preparation

ACQUISITION OF Full Fibre Limited

RECOGNISED AMOUNTS OF IDENTIFIABLE ASSETS ACQUIRED AND LIABILITIES ASSUMED

Book value

Fair value

IRIS INFRA MASTER HOLDCO LIMITED - Company Information

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Registered number: 13055343

FULL FIBRE MASTER HOLDCO LIMITED

DIRECTORS' REPORT AND FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2021

FULL FIBRE MASTER HOLDCO LIMITED

COMPANY INFORMATION

DIRECTORS	Mr P Doyle (appointed 1 December 2020)
	Mr O Helm (appointed 8 January 2021)
	Mr W Jones (appointed 1 December 2020)
	Mr S Lowry (appointed 1 December 2020)
	Mr J Warner (appointed 8 January 2021)


REGISTERED NUMBER	13055343


REGISTERED OFFICE	Pynes Hill Court
	Pynes Hill
	Exeter
	EX2 5AZ


INDEPENDENT AUDITORS	Bishop Fleming LLP
	Chartered Accountants & Statutory Auditors
	2nd Floor Stratus House
	Emperor Way
	Exeter Business Park
	Exeter
	EX1 3QS

FULL FIBRE MASTER HOLDCO LIMITED

CONTENTS

	Page
Group strategic report	1 - 3
Directors' report	4 - 5
Directors' responsibilities statement	6
Independent auditors' report	7 - 10
Consolidated statement of comprehensive income	11
Consolidated statement of financial position	12
Company statement of financial position	13
Consolidated statement of changes in equity	14
Company statement of changes in equity	15
Consolidated Statement of cash flows	16
Consolidated analysis of net debt	17
Notes to the financial statements	18 - 35

FULL FIBRE MASTER HOLDCO LIMITED

GROUP STRATEGIC REPORT

FOR THE PERIOD ENDED 31 DECEMBER 2021

INTRODUCTION

The directors present their strategic report and the audited financial statements of the group for the 13-months ended 31 December 2021

BUSINESS REVIEW

The group was acquired by Basalt Infrastructure Partners GP III Limited, an Infrastructure investment fund on 1 December 2020. The group has the following structure:
Full Fibre Master Holdco Ltd
Full Fibre Holdco Ltd (100% owned)
Full Fibre Ltd (100% owned)
The group’s ultimate parent is Basalt Infrastructure Partners GP III Limited. The group’s principal activities are that of building and operating an ultra-fast full fibre broadband network in UK market towns and more rural areas.
The new ownership structure of the business enables funding for the group to grow and spread its fibre-only infrastructure business to at least 500,000 additional premises by 2025 and provide wholesale digital infrastructure access that local and national communications providers can resell to business and residential end-users.
The year saw significant growth of the network and staffing, with the launch of 2 new regional centres to accelerate build activities in Central and East Midlands to complement growth of existing operations in the West Midlands and South West.

PRINCIPAL RISKS AND UNCERTAINTIES
Management identify, assess and manage risks associated with the group’s business objectives and strategy. Risks arise from external sources, those which are inherent commercial risks in the market, and from operational risks contained within the systems and processes employed within the business. Overall risk exposure is managed by the Board of Full Fibre Master Holdco Limited.
The principal risks that the group is exposed to are detailed below along with the measures in place to mitigate the potential impacts of the risks.

		Risk	Mitigation
	Regulation	Despite the current support for alternative network operators, a shift in policy by Government or a failure by OfCom to address anti-competitive behaviour in the full fibre wholesale market could have an adverse impact on the group.	The group continues to engage proactively with OfCom and Government and take actions necessary to ensure its interests are appropriately represented and protected. This includes a programme of engagement across relevant Government departments, political stakeholders, and the industry regulator, OfCom. The group’s strategy also ensures pricing is suitable competitive / benchmarked against competitors to allow buffer against changing regulatory opinions.

Page 1

FULL FIBRE MASTER HOLDCO LIMITED

GROUP STRATEGIC REPORT (CONTINUED)

FOR THE PERIOD ENDED 31 DECEMBER 2021

Supply Chain	An inability to secure required materials in a timely manner to meet the planned build schedule due to global supply chain shortages, which could slow down the rollout rate of fibre network build.	The group has engaged with multiple suppliers for key materials and factored in long lead times when ordering goods to hold sufficient stock levels to minimise disruption to network build activity.
Competition	The number of new entrants engaged in building fibre network infrastructure has grown, increasing the risk of competitors building in the same towns as Full Fibre, providing potentially increased challenge to the group’s take-up / revenue position.	The group primarily targets areas of build where it has first mover advantage (i.e., no Openreach or other fibre presence). Whilst the number of entrants in the market has increased over the last 12 months, overbuild across our network footprint has been comparatively limited. The group regularly reviews the competitive landscape in their target build areas to help mitigate this risk.
Construction	The group partners with construction firms to deploy network assets. This exposes the group to wider macro-economic impacts on these firm’s cost bases. Shortages in the labour market, exacerbated by BREXIT enhance the risk of cost inflation in this area.	The group contracts with multiple construction partners to reduce the level of exposure to any single firm, with a robust supplier selection process. Delivery oriented contracts are in place with construction firms to ensure that Full Fibre only pays for work completed to required quality standards. We have ongoing supplier relationship management and monitoring of contractor financial position and make early interventions to support contractors where required. Contract rates are locked in with vendors.
IT Systems and Data	The group uses a wide range of IT systems and holds data on customers and employees. Loss or misuse of data could lead to reputational damage, regulatory action under GDPR and potential fines.	The group has experienced and dedicated resource for IT and information security to ensure appropriate management information and compliance with relevant rules and regulations regarding data.

Page 2

FULL FIBRE MASTER HOLDCO LIMITED

GROUP STRATEGIC REPORT (CONTINUED)

FOR THE PERIOD ENDED 31 DECEMBER 2021

	Technology Risk	The group is deploying high quality, fibre optic technology, which is superior in nature to existing copper infrastructure, and required for other technologies such as 5G and wireless communication. However, technological advances are an inherent risk rendering current technologies obsolete.	Fibre is a critical national infrastructure and given the time it will take to roll out fibre across a region, the likelihood of the obsolescence of this technology is low. Furthermore, other new technologies are considered still likely to require fibre backhaul solutions. Full Fibre is also deploying technology with capacity forecast to last in excess of 5 years, specifically XGS-PON services capable of delivering 10,000 Mbps services and has factored upgrade paths / costs into our business plans.
	Health & Safety	The group is involved in activities and environments that have the potential to cause serious injury to stakeholders or damage property, the environment, or its reputation. It is reliant on both in-house workforce and outsourced contractors operating to high standards and procedures.	The health and safety of people is the primary focus of the group. To control risk and prevent harm, the group is focused on achieving the highest standards of health and safety management. This is achieved by establishing effective health and safety procedures and ensuring that effective leadership and organisational arrangements are in place to operate to these procedures.

KEY PERFORMANCE INDICATORS

Performance is measured against detailed annual operating plans and rolling long-term financial forecast models.
The top key measures are:
• Number of Ready for Service (RFS) premises, defined as properties that can be connected to our network within our standard SLA
• Cost per Premises Passed
• Take-Up Rate of Premises Passed
• Average Revenue Per User
The group is in the build phase of its development and results to date have been in line with expectations.

This report was approved by the board on 1 March 2023 and signed on its behalf.

Mr O Helm

Director

Page 3

FULL FIBRE MASTER HOLDCO LIMITED

DIRECTORS' REPORT

FOR THE PERIOD ENDED 31 DECEMBER 2021

The directors present their report and the financial statements for the period ended 31 December 2021.

RESULTS AND DIVIDENDS

The loss for the period, after taxation, amounted to £7,837,772.

No dividends (£nil) were paid during the year ended 31 December 2021.
Despite continued disruption from the COVID-19 pandemic, 2021 saw the business significantly scale-up its workforce, network build capability and implement new systems and business processes to enable the business to scale in a controlled and sustainable manner. Scaling and build execution remained the primary focus, with the opening of our third Regional Build Centre in Derby in the last quarter of the year. 2021 saw the group complete the year with a significant increase in its Homes Passed network footprint.

DIRECTORS

The directors who served during the period were:

Mr P Doyle (appointed 1 December 2020)

Mr O Helm (appointed 8 January 2021)

Mr W Jones (appointed 1 December 2020)

Mr S Lowry (appointed 1 December 2020)

Mr J Warner (appointed 8 January 2021)

FUTURE DEVELOPMENTS

A fourth regional build centre for 2022 is planned to expand the Full Fibre’s network footprint.
2022 key business focus areas include further development of processes and system automation to efficiently deliver business scalability, together with investment in staff development, and the expansion of communications partner sales channels to transition the business priorities to a revenue generation orientation.

DISCLOSURE OF INFORMATION TO AUDITORS

Each of the persons who are directors at the time when this Directors' report is approved has confirmed that:

∙so far as the director is aware, there is no relevant audit information of which the Company and the Group's auditors are unaware, and

∙the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company and the Group's auditors are aware of that information.

POST BALANCE SHEET EVENTS

During 2022 a further £65,772,033 of unsecured loan notes were issued.
On 16 August 2022 the original loan note issued on 8 January 2021 of £5,555,556 was cancelled and replaced with a newly issued loan note of £10,392,800 to accurately reflect the funds flow at the time of acquisition. This will reclassify £4,837,244 into due greater than one year in line with the terms of the existing loan notes.

AUDITORS

The auditors, Bishop Fleming LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.

Page 4

FULL FIBRE MASTER HOLDCO LIMITED

DIRECTORS' REPORT (CONTINUED)

FOR THE PERIOD ENDED 31 DECEMBER 2021

This report was approved by the board and signed on its behalf.

Mr O Helm

Director

Date: 1 March 2023

Pynes Hill Court

Pynes Hill

Exeter

EX2 5AZ

Page 5

FULL FIBRE MASTER HOLDCO LIMITED

DIRECTORS' RESPONSIBILITIES STATEMENT

FOR THE PERIOD ENDED 31 DECEMBER 2021

The directors are responsible for preparing the Group strategic report, the Directors' report and the consolidated 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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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 Group and of the profit or loss of the Group for that period.

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

∙select suitable accounting policies for the Group'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 Group 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 the Group 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 the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Page 6

FULL FIBRE MASTER HOLDCO LIMITED

INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF FULL FIBRE MASTER HOLDCO LIMITED

OPINION

We have audited the financial statements of Full Fibre Master Holdco Limited (the 'parent Company') and its subsidiaries (the 'Group') for the period ended 31 December 2021, which comprise the Group Statement of comprehensive income, the Group and Company Statements of financial position, the Group Statement of cash flows, the Group and Company Statement of changes in equity 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 our opinion the financial statements:

∙give a true and fair view of the state of the Group's and of the parent Company's affairs as at 31 December 2021 and of the Group's loss for the period then ended;

∙have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

∙have been prepared in accordance with the requirements of the Companies Act 2006.

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 Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council'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 Group's or the parent 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 Auditors' 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.

Page 7

FULL FIBRE MASTER HOLDCO LIMITED

INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF FULL FIBRE MASTER HOLDCO LIMITED (CONTINUED)

OPINION ON OTHER MATTERS PRESCRIBED BY THE COMPANIES ACT 2006

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

∙the information given in the Group strategic report and the Directors' report for the financial period for which the financial statements are prepared is consistent with the financial statements; and

∙the Group strategic report and the Directors' report have been prepared in accordance with applicable legal requirements.

MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION

In the light of the knowledge and understanding of the Group and the parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group strategic report or 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:

∙adequate accounting records have not been kept by the parent Company, or returns adequate for our audit have not been received from branches not visited by us; or

∙the parent Company financial statements are not in agreement with the accounting records and returns; or

∙certain disclosures of directors' remuneration specified by law are not made; or

∙we have not received all the information and explanations we require for our audit.

RESPONSIBILITIES OF DIRECTORS

As explained more fully in the Directors' responsibilities statement set out on page 6, 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 Group's and the parent 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 Group or the parent Company or to cease operations, or have no realistic alternative but to do so.

Page 8

FULL FIBRE MASTER HOLDCO LIMITED

INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF FULL FIBRE MASTER HOLDCO LIMITED (CONTINUED)

AUDITORS' 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 Auditors' 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 Group 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 have considered the nature of the industry and sector, control environment and financial performance, key drivers for directors’ remuneration, bonus levels and performance targets;

∙We have considered the results of enquiries with management and the directors in relation to their own identification and assessment of the risks of irregularities within Group and the parent Company;

∙We have reviewed the documentation of key processes and controls and performed walkthroughs of transactions to confirm that systems are operating in line with documentation; and

∙We have considered the matters discussed among the audit engagement team regarding how and where fraud might occur in the financial statements and any potential indicators of fraud.

As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and identified the highest areas of risk to be in relation to revenue recognition and management override.
We also obtained an understanding of the legal and regulatory frameworks that the Group and the parent Company operates in, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The key laws and regulations we considered in this context included the UK Companies Act, FRS 102 and UK tax legislation.
In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements but compliance with which may be fundamental to the Group's and the parent Company’s ability to operate or to avoid a material penalty. These include data protection regulations, occupational health and safety regulations, employment law and the Communications Act 2003.
Our procedures to respond to the risks identified included the following:

∙Reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having direct effect on the financial statements.

∙Enquiring of management concerning actual and potential litigation and claims;

∙Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;

∙Reviewing board meeting minutes;

∙Performing detailed transactional testing in relation to the recognition of revenue; and

∙In addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries, and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of the business.

We also communicated relevant identified laws and regulations and potential fraud risk to all engagement team members and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from an error, as fraud may involve deliberate concealment by, for example, forgery,

Page 9

FULL FIBRE MASTER HOLDCO LIMITED

INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF FULL FIBRE MASTER HOLDCO LIMITED (CONTINUED)

misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it.

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 Auditors' 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 Auditors' 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.

Fleur Lewis FCA (Senior statutory auditor)

for and on behalf of

Bishop Fleming LLP

Chartered Accountants

Statutory Auditors

2nd Floor Stratus House

Emperor Way

Exeter Business Park

Exeter

EX1 3QS

8 March 2023

Page 10

FULL FIBRE MASTER HOLDCO LIMITED

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE PERIOD ENDED 31 DECEMBER 2021

	2021
Note	£


Turnover	4	504,828
Cost of sales		(327,776)
Gross profit		177,052
Administrative expenses		(6,985,331)
Operating (loss)/profit	5	(6,808,279)
Interest receivable and similar income	9	581
Interest payable and similar expenses	10	(1,030,074)
(Loss)/profit before taxation		(7,837,772)
(Loss)/profit for the financial period		(7,837,772)

(Loss) for the period attributable to:
Owners of the parent Company		(7,837,772)
		(7,837,772)

There were no recognised gains and losses for 2021 other than those included in the consolidated statement of comprehensive income.

There was no other comprehensive income for 2021.

The notes on pages 18 to 35 form part of these financial statements.

Page 11

FULL FIBRE MASTER HOLDCO LIMITED

REGISTERED NUMBER:13055343

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2021

		2021
Note		£

Fixed assets
Intangible assets	12		5,420,785
Tangible assets	13		7,435,600
			12,856,385
Current assets
Stocks	15	249,464
Debtors: amounts falling due within one year	16	1,449,679
Cash at bank and in hand	17	1,085,116
		2,784,259
Creditors: amounts falling due within one year	18	(7,330,111)
Net current (liabilities)/assets			(4,545,852)
Total assets less current liabilities			8,310,533
Creditors: amounts falling due after more than one year	19		(16,112,255)

Net (liabilities)/assets			(7,801,722)

Capital and reserves
Called up share capital	21	9,650
Share premium account	22	26,400
Profit and loss account	22	(7,837,772)
		(7,801,722)

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

Mr O Helm

Director

Date: 1 March 2023

The notes on pages 18 to 35 form part of these financial statements.

Page 12

FULL FIBRE MASTER HOLDCO LIMITED

REGISTERED NUMBER:13055343

COMPANY STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2021

		2021
Note		£

Fixed assets
Investments	14		36,051
			36,051
Current assets
Debtors: amounts falling due within one year	16	36,050
		36,050
Creditors: amounts falling due within one year		(36,051)
Net current (liabilities)/assets			(1)
Total assets less current liabilities			36,050


Net assets			36,050

Capital and reserves
Called up share capital	21	9,650
Share premium account	22	26,400
		36,050

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

Mr O Helm

Director

Date: 1 March 2023

The notes on pages 18 to 35 form part of these financial statements.

Page 13

FULL FIBRE MASTER HOLDCO LIMITED

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE PERIOD ENDED 31 DECEMBER 2021

	Called up share capital	Share premium account	Profit and loss account	Total equity
	£	£	£	£

Loss for the period	-	-	(7,837,772)	(7,837,772)
Shares issued during the period	9,650	26,400	-	36,050
At 31 December 2021	9,650	26,400	(7,837,772)	(7,801,722)

The notes on pages 18 to 35 form part of these financial statements.

Page 14

FULL FIBRE MASTER HOLDCO LIMITED

COMPANY STATEMENT OF CHANGES IN EQUITY

FOR THE PERIOD ENDED 31 DECEMBER 2021

	Called up share capital	Share premium account	Total equity
	£	£	£
Shares issued during the period	9,650	26,400	36,050
At 31 December 2021	9,650	26,400	36,050

The notes on pages 18 to 35 form part of these financial statements.

Page 15

FULL FIBRE MASTER HOLDCO LIMITED

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE PERIOD ENDED 31 DECEMBER 2021

			2021
			£

Cash flows from operating activities
Profit for the period	(7,837,772)
Adjustments for:
Amortisation of intangible assets	622,128
Depreciation of tangible assets	281,453
Interest received	(581)
(Increase)/decrease in stocks	(249,464)
(Increase)/decrease in debtors	(1,449,679)
Increase in creditors	2,667,857
Increase in amounts owed to groups	4,837,244
Net cash generated from operating activities	(1,128,814)

Cash flows from investing activities
Purchase of intangible fixed assets	(296,610)
Purchase of tangible fixed assets	(7,031,647)
Interest received	581
Net cash from investing activities	(7,327,676)
Cash flows from financing activities
Issue of ordinary shares	36,050
Repayment of loans	(50,000)
Other new loans	9,555,556
Net cash used in financing activities	9,541,606
Net increase in cash and cash equivalents	1,085,116
Cash and cash equivalents at the end of period	1,085,116

Cash and cash equivalents at the end of period comprise:
Cash at bank and in hand	1,085,116
	1,085,116

The notes on pages 18 to 35 form part of these financial statements.

Page 16

FULL FIBRE MASTER HOLDCO LIMITED

CONSOLIDATED ANALYSIS OF NET DEBT

FOR THE PERIOD ENDED 31 DECEMBER 2021


Cash flows	Acquisition and disposal of subsidiaries	At 31 December 2021
£	£	£

Cash at bank and in hand	1,085,116	-	1,085,116
Bank overdrafts	18,678	(18,678)	-
Debt due after 1 year	(12,141,950)	(50,000)	(12,191,950)
Debt due within 1 year	(5,224,224)	-	(5,224,224)
	(16,262,380)	(68,678)	(16,331,058)

The notes on pages 18 to 35 form part of these financial statements.

Page 17

FULL FIBRE MASTER HOLDCO LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2021

1.	GENERAL INFORMATION

Full Fibre Master Holdco Limited is a private company limited by shares incorporated in England and Wales. The company was incorporated on 01 December 2020.
The registered office is Pynes Hill Court, Pynes Hill, Exeter, Devon, England, EX2 5AZ.
The accounts are presented in GBP, the functional currency, and have been rounded to the nearest £.
The company's principal activity is a holding company. The principal activity of the Group during the year was that of other telecommunications activities.

2.ACCOUNTING POLICIES

2.1

BASIS OF PREPARATION OF FINANCIAL STATEMENTS

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 Group management to exercise judgement in applying the Group's accounting policies (see note 3).

The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of comprehensive income in these financial statements.

The following principal accounting policies have been applied:

2.2

BASIS OF CONSOLIDATION

The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date control ceases.
In accordance with the transitional exemption available in FRS 102, the group has chosen not to retrospectively apply the standard to business combinations that occurred before the date of transition to FRS 102, being 25 August 2020.

2.3

GOING CONCERN

The balance sheet shows that group has net liabilities of £7,801,722. The directors are of the opinion that this is entirely in accordance with the business’s financial plan and having reviewed the group’s financial position and anticipated future financial performance and cash flows, the directors expect the group to have adequate resources to continue operations for the foreseeable future. This is also in part dependent on the continued support of the group’s shareholders. As a result, the directors conclude that it is appropriate that the going concern basis is adopted in preparing the financial statements for the period ended 31 December 2021.

Page 18

FULL FIBRE MASTER HOLDCO LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2021

2.ACCOUNTING POLICIES (continued)

2.4

FOREIGN CURRENCY TRANSLATION

Functional and presentation currency

The Company's functional and presentational currency is GBP.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.

At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.

2.5

REVENUE

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:

Sale of goods

Revenue from the sale of goods is recognised when all of the following conditions are satisfied:

∙the Group has transferred the significant risks and rewards of ownership to the buyer;

∙the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;

∙the amount of revenue can be measured reliably;

∙it is probable that the Group will receive the consideration due under the transaction; and

∙the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Rendering of services

Revenue from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied:

∙the amount of revenue can be measured reliably;

∙it is probable that the Group will receive the consideration due under the contract;

∙the stage of completion of the contract at the end of the reporting period can be measured reliably; and

∙the costs incurred and the costs to complete the contract can be measured reliably.

2.6

OPERATING LEASES: THE GROUP AS LESSEE

Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.

Benefits received and receivable as an incentive to sign an operating lease are recognised on a straight-line basis over the lease term, unless another systematic basis is representative of the time pattern of the lessee's benefit from the use of the leased asset.

Page 19

FULL FIBRE MASTER HOLDCO LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2021

2.ACCOUNTING POLICIES (continued)

2.7

RESEARCH AND DEVELOPMENT

In the research phase of an internal project it is not possible to demonstrate that the project will generate future economic benefits and hence all expenditure on research shall be recognised as an expense when it is incurred. Intangible assets are recognised from the development phase of a project if and only if certain specific criteria are met in order to demonstrate the asset will generate probable future economic benefits and that its cost can be reliably measured.
If it is not possible to distinguish between the research phase and the development phase of an internal project, the expenditure is treated as if it were all incurred in the research phase only.
Development expenditure incurred on clearly defined projects whose outcome can be assessed with reasonable certainty is carried forward and amortisation is charged over three years from the date on which use of the asset commences.

2.8

INTEREST INCOME

Interest income is recognised in profit or loss using the effective interest method.

2.9

FINANCE COSTS

Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.

2.10

BORROWING COSTS

All borrowing costs are recognised in profit or loss in the period in which they are incurred.

2.11

PENSIONS

DEFINED CONTRIBUTION PENSION PLAN

The Group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group has no further payment obligations.

The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of financial position. The assets of the plan are held separately from the Group in independently administered funds.

Page 20

FULL FIBRE MASTER HOLDCO LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2021

2.ACCOUNTING POLICIES (continued)

2.12

INTANGIBLE ASSETS

GOODWILL

Goodwill represents the difference between amounts paid on the cost of a business combination and the acquirer’s interest in the fair value of the Group's share of its identifiable assets and liabilities of the acquiree at the date of acquisition. Subsequent to initial recognition, goodwill is measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is amortised on a straight-line basis to the Consolidated statement of comprehensive income over its useful economic life.

OTHER INTANGIBLE ASSETS

Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.

All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.

The estimated useful lives range as follows:

Software development

years

2.13

DEVELOPMENT COSTS

Development expenditure incurred on clearly defined projects whose outcome can be assessed with reasonable certainty is carried forward and amortisation is charged over three years from the date on which use of the asset commences.

2.14

TANGIBLE FIXED ASSETS

Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

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.

Assets under construction are accounted for at cost. They are not depreciated until the accounting period in which they are brought into use. The Company brings the assets into use only once the fibre cables being laid become live.

Page 21

FULL FIBRE MASTER HOLDCO LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2021

2.ACCOUNTING POLICIES (continued)

2.14

TANGIBLE FIXED ASSETS (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:

Long-term leasehold property	-	5 years
Plant and machinery	-	6.67 years
Motor vehicles	-	5 years
Fixtures and fittings	-	6.67 years
Computer equipment	-	3 years
Active Network	-	5-8 years
Passive Network	-	25 years
Assets under construction	-	Not depreciated

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 profit or loss.

2.15

VALUATION OF INVESTMENTS

Investments in subsidiaries are measured at cost less accumulated impairment.

Investments in unlisted Group shares, whose market value can be reliably determined, are remeasured to market value at each reporting date. Gains and losses on remeasurement are recognised in the Consolidated statement of comprehensive income for the period. Where market value cannot be reliably determined, such investments are stated at historic cost less impairment.

Investments in listed company shares are remeasured to market value at each reporting date. Gains and losses on remeasurement are recognised in profit or loss for the period.

2.16

STOCKS

Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first out basis. Work in progress and finished goods include labour and attributable overheads.

At each reporting date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.

2.17

DEBTORS

Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.

Page 22

FULL FIBRE MASTER HOLDCO LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2021

2.ACCOUNTING POLICIES (continued)

2.18

CASH AND CASH EQUIVALENTS

Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.

In the Consolidated statement of cash flows, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Group's cash management.

2.19

CREDITORS

Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.

2.20

FINANCIAL INSTRUMENTS

The Group only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties, loans to related parties and investments in ordinary shares.

Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However, if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms or in case of an out-right short-term loan that is not at market rate, the financial asset or liability is measured, initially at the present value of future cash flows discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost, unless it qualifies as a loan from a director in the case of a small company, or a public benefit entity concessionary loan.

Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the Consolidated statement of comprehensive income.

For financial assets measured at amortised cost, the impairment loss is measured as the difference between an asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective interest rate. If a financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.

For financial assets measured at cost less impairment, the impairment loss is measured as the difference between an asset's carrying amount and best estimate of the recoverable amount, which is an approximation of the amount that the Group would receive for the asset if it were to be sold at the reporting date.

Financial assets and liabilities are offset and the net amount reported in the Statement of financial position when there is an 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.

Page 23

FULL FIBRE MASTER HOLDCO LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2021

3.	JUDGEMENTS IN APPLYING ACCOUNTING POLICIES AND KEY SOURCES OF ESTIMATION UNCERTAINTY

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported for assets and liabilities as at the balance sheet date and the amounts reported for revenues and expenses during the year. However, the nature of estimation means that actual outcomes could differ from those estimates. The following have been considered to be significant estimates or judgements:
Useful economic life of fixed assets: Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives. The bases for depreciation charges are detailed in note 2.14 and are reviewed and adjusted prospectively if appropriate or if there is a significant change since the last reporting date. Useful lives are estimated by management with reference to manufacturers guidelines and existing knowledge and experience of the sector in which the business operates.
Carrying value of intangible and tangible assets: Management assesses the probability of expected future economic benefits using reasonable and supportable assumptions that represent their best estimate of the economic conditions that will exist over the useful life of the asset. Due to the specialised nature of the assets judgement is used to assess the degree of certainty attached to the flow of future economic benefits and the technical feasibility and success of the various projects. In reviewing for impairment, the carrying value of such assets is compared to the estimated discounted cashflows expected from the use of the assets which involves significant estimates on the part of management. If there is a material change in economic conditions, climate or other circumstances influencing the estimate of future cash flows or fair value the Company could be required to recognise impairment charges in the future.
Long term contract accounting: Contracts are valued (both in terms of cost and revenue) by the in house project managers based on their experience in the industry and their knowledge of the contract in question.
Useful economic life of intangible assets: Amortisation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives. The bases for amortisation charges are detailed in note 2.12 and are reviewed and adjusted prospectively if appropriate or if there is a significant change since the last reporting date. Useful lives are estimated by management with reference to license terms and existing knowledge and experience of the sector in which the business operates.
Impairment of fixed asset investments: At each reporting date management assess whether there are any indicators of impairment taking into account significant changes in the economic environment in which the entity operates, the trading performance of its subsidiaries and future revenue streams which require an element of judgement.

Page 24

FULL FIBRE MASTER HOLDCO LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2021

4.	TURNOVER
	An analysis of turnover by class of business is as follows:
		2021
		£

	Recurring revenue	129,699
	Activation fees	5,648
	Voucher revenue	5,000
	Network revenue	364,481
		504,828

All turnover arose within the United Kingdom.

5.	OPERATING (LOSS)/PROFIT
	The operating (loss)/profit is stated after charging:
		2021
		£

	Research & development charged as an expense	12,129
	Exchange differences	198
	Other operating lease rentals	196,202

6.	AUDITORS' REMUNERATION
	During the period, the Group obtained the following services from the Company's auditors:
		2021
		£

	Fees payable to the Group's auditors for the audit of the Group's financial statements	17,850
	Taxation compliance services	3,750
	All other services	4,900

Page 25

FULL FIBRE MASTER HOLDCO LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2021

7.	EMPLOYEES
	Staff costs, including directors' remuneration, were as follows:

		Group
		2021
		£


	Wages and salaries	2,435,617
	Social security costs	341,622
	Cost of defined contribution scheme	113,798
		2,891,037

The average monthly number of employees, including the directors, during the period was as follows:

			2021
			No.

		Employees	83

The Company has no employees other than the directors, who did not receive any remuneration.

8.	DIRECTORS' REMUNERATION
		2021
		£

	Directors' emoluments	262,500
	Group contributions to defined contribution pension schemes	1,100
		263,600

During the period retirement benefits were accruing to 1 directors in respect of defined contribution pension schemes.

9.	INTEREST RECEIVABLE
		2021
		£

	Other interest receivable	581
		581

Page 26

FULL FIBRE MASTER HOLDCO LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2021

10.	INTEREST PAYABLE AND SIMILAR EXPENSES
		2021
		£

	Bank interest payable	202
	Other loan interest payable	1,029,872
		1,030,074

11.	TAXATION

		2021
		£



	TOTAL CURRENT TAX	-

	DEFERRED TAX
	TOTAL DEFERRED TAX	-


	TAXATION ON PROFIT ON ORDINARY ACTIVITIES	-

	FACTORS AFFECTING TAX CHARGE FOR THE PERIOD
	The tax assessed for the period is higher than the standard rate of corporation tax in the UK of 19%. The differences are explained below:
					2021
					£

(Loss)/profit on ordinary activities before tax

(7,837,772)

	(Loss)/profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 19%	(1,489,177)
	EFFECTS OF:
	Expenses not deductible for tax purposes, other than goodwill amortisation and impairment	319,973
	Capital allowances for period in excess of depreciation	(24,278)
	Unrelieved tax losses carried forward	1,558,762
	Other differences leading to an increase (decrease) in the tax charge	(365,280)
	TOTAL TAX CHARGE FOR THE PERIOD	-

Page 27

FULL FIBRE MASTER HOLDCO LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2021

11.TAXATION (CONTINUED)

FACTORS THAT MAY AFFECT FUTURE TAX CHARGES

In the Spring 2021 budget the government announced that companies with a profit of greater than £250k would be subject to corporation tax rate of 25% from April 2023, companies with profits less than £50k would still be subject to the 19% rate. This change forms part of the Finance Bill and was substantively enacted in March 2021.

12.	INTANGIBLE ASSETS
	Group

	Computer software	Goodwill	Total
	£	£	£
COST
Additions	296,610	-	296,610
On acquisition of subsidiaries	43,133	5,703,170	5,746,303
At 31 December 2021	339,743	5,703,170	6,042,913
AMORTISATION
Charge for the period on owned assets	51,811	570,317	622,128
At 31 December 2021	51,811	570,317	622,128
NET BOOK VALUE
At 31 December 2021	287,932	5,132,853	5,420,785

Page 28

FULL FIBRE MASTER HOLDCO LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 DECEMBER 2021

	13.	TANGIBLE FIXED ASSETS
		Group

	Long-term leasehold property	Plant and machinery	Motor vehicles	Fixtures and fittings	Network	Computer equipment	Assets under construction	Total
	£	£	£	£	£	£	£	£
COST
Additions	42,241	220,850	37,075	53,691	2,378,346	261,558	4,037,886	7,031,647
Acquisition of subsidiary	9,882	61,846	125,593	3,538	386,813	13,572	84,162	685,406
Transfers between classes	-	-	-	-	1,773,609	-	(1,773,609)	-
At 31 December 2021	52,123	282,696	162,668	57,229	4,538,768	275,130	2,348,439	7,717,053
DEPRECIATION
Charge for the period on owned assets	6,047	26,109	38,586	16,960	143,423	50,328	-	281,453
At 31 December 2021	6,047	26,109	38,586	16,960	143,423	50,328	-	281,453
NET BOOK VALUE
At 31 December 2021	46,076	256,587	124,082	40,269	4,395,345	224,802	2,348,439	7,435,600

Page 29

FULL FIBRE MASTER HOLDCO LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2021

14.	FIXED ASSET INVESTMENTS

	Company

		Investments in subsidiary companies
		£
	COST
	Additions	36,051
	At 31 December 2021	36,051

SUBSIDIARY UNDERTAKINGS
The following were subsidiary undertakings of the Company:
Name	Registered office	Class of shares	Holding

	Full Fibre Holdco Limited	Pynes Hill Court, Pynes Hill, Exeter, England, EX2 5AZ	Ordinary	100%
	Full Fibre Limited	Pynes Hill Court, Pynes Hill, Exeter, England, EX2 5AZ	Ordinary	100%

The aggregate of the share capital and reserves as at 31 December 2021 and the profit or loss for the period ended on that date for the subsidiary undertakings were as follows:
Name	Aggregate of share capital and reserves	Profit/(Loss)
	£	£

	Full Fibre Holdco Limited	(94,702)	(130,753)
	Full Fibre Limited	(7,284,316)	(7,136,702)

15.	STOCKS
		Group
		2021
		£

	Work in progress (goods to be sold)	249,464
		249,464

Page 30

FULL FIBRE MASTER HOLDCO LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2021

16.

DEBTORS

		Group	Company
		2021	2021
		£	£


Trade debtors	450,977	-
Amounts owed by group undertakings	-	36,050
Other debtors	798,136	-
Prepayments and accrued income	200,566	-
	1,449,679	36,050

17.	CASH AND CASH EQUIVALENTS
		Group
		2021
		£

	Cash at bank and in hand	1,085,116
		1,085,116

18.	CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
		Group	Company
		2021	2021
		£	£

Trade creditors	1,376,986	-
Amounts owed to related parties	5,224,224	36,051
Other taxation and social security	205,404	-
Other creditors	266,168	-
Accruals and deferred income	257,329	-
	7,330,111	36,051

Amounts owed to related parties are loans from a company under common control which accrue interest at 8%. During the year interest of £386,980 was accrued on these balances.

Page 31

FULL FIBRE MASTER HOLDCO LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2021

19.	CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
		Group
		2021
		£

	Amounts owed to related parties	10,067,695
	Other creditors	2,124,255
	Deferred consideration	3,920,305
		16,112,255

Included in amounts owed to related parties are unsecured loan notes of £9,555,556 to a company under common control. The loan notes are repayable the earlier of seven years after date of creation of the instrument or an exit. Interest will accrue at 8% and will be capitalised on each 12 month anniversary of the date of the agreement if not paid. During the year interest of £512,139 was incurred on these loan notes.

20.	DEFERRED TAXATION

Deferred tax assets and liabilities are offset as they are expected to be settled on a net basis. There is a deferred tax liability of £281,279 due to accelerated capital allowances and a deferred tax asset in relation to losses of equal amount.
At the year end there is a unrecognised deferred tax asset of £1,640,423 due to unused trade losses.

21.	SHARE CAPITAL
		2021
		£

		ALLOTTED, CALLED UP AND FULLY PAID

		800,000 Ordinary shares of £0.01 each	8,000
		165,000 A ordinary shares of £0.01 each	1,650

			9,650

On 8 January 2021 the company issued 799,900 £0.01 ordinary shares at Par.
On 8 January 2021 the company issued 165,000 £0.01 A ordinary shares at £0.17 per share.

22.

RESERVES

Share premium account

Consideration received for shares issued above their nominal value net of transaction costs.

Profit and loss account

Profit and loss account represents cumulative profits or losses net of dividends paid and other adjustments.

Page 32

FULL FIBRE MASTER HOLDCO LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2021

23.	BUSINESS COMBINATIONS

On 8 January 2021 Full Fibre Holdco Limited, 100% subsidiary of Full Fibre Master Holdco Limited, acquired 100% of the shares of Full Fibre Limited for consideration of £5,555,556.
Full Fibre Limited's principal activities are that of building and operating an ultra-fast full fibre broadband network in UK market towns and more rural areas.
The business combination has been accounted for under the acquisition method. No adjustments were made to the financial statements of the subsidiary to bring the accounting policies used into line with those used by the group. All intra-group transactions, balances, income and expenses are eliminated on consolidation.
The goodwill of £5,703,170 arising from the acquisition is attributable to the expertise and experience of the workforce, customer relationships and anticipated future growth of the business. Management has estimated the useful life of this goodwill to be 10 years.

FIXED ASSETS
Tangible	685,406	685,406
Intangible	43,133	43,133
	728,539	728,539
CURRENT ASSETS
Stocks	85,769	85,769
Debtors	86,883	86,883
Cash at bank and in hand	1	1
TOTAL ASSETS	901,192	901,192
CREDITORS
Due within one year	(998,806)	(998,806)
Due after more than one year	(50,000)	(50,000)
TOTAL IDENTIFIABLE NET LIABILITIES	(147,614)	(147,614)


	Goodwill	5,703,170
	TOTAL PURCHASE CONSIDERATION	5,555,556

	CONSIDERATION
					£

Deferred consideration

5,555,556

Page 33

FULL FIBRE MASTER HOLDCO LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2021

23.BUSINESS COMBINATIONS (CONTINUED)

	CASH OUTFLOW ON ACQUISITION
					£

Cash and cash equivalents acquired (Overdraft)

18,677

	The results of Full Fibre Limited since acquisition are as follows:
				Current period since acquisition
				£

	Turnover	504,828
	(Loss) for the period since acquisition	(7,136,702)

24.	PENSION COMMITMENTS

The company operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the company in an independently administered fund. The pension cost charge represents contributions payable by the company to the fund and amounted to £114,898. Contributions totalling £30,582 were payable to the fund at the reporting date and are included in creditors.

25.	COMMITMENTS UNDER OPERATING LEASES
	At 31 December 2021 the Group and the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:
		Group	Company
		2021	2021
		£	£

Not later than 1 year	310,743	12,800
Later than 1 year and not later than 5 years	875,690	6,066
	1,186,433	18,866

Page 34

FULL FIBRE MASTER HOLDCO LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2021

26.

RELATED PARTY TRANSACTIONS

The Group has taken advantage of the exemption in Financial Reporting Standard 102 Section 33 "Related party disclosures" in not disclosing intra Group transactions where 100% of the voting rights are controlled within the Group.
During the year the Group paid a company owned by a director £26,288 for costs in relation to equipment and staff recharges. At the year end £2,696 was owed to the company.
During the year the Group made sales to a company owned by a director in relation to wholesale revenue for the monthly rental of circuits amounting to £5,557. At the year end £Nil was owed by the company.
During the year the group maintained a loan account with a director. The loan bears no interest. During the year £9,000 was paid into the company by a director. At the year end £252,669 was owed to a Director.
Included in other creditors are loans of £26,974 to shareholders which can be redeemed at the earliest of seven years or a departure from the company. Interest will accrue at 8% and will be capitalised on each 12 month anniversary of the date of the agreement if not paid. During the year interest of £2,111 was incurred on these loans.
Included in other creditors are loans of £367,327 to a Director who is also a shareholder. These can be redeemed at the earliest of seven years or a departure from the company. Interest will accrue at 8% and will be capitalised on each 12 month anniversary of the date of the agreement if not paid. During the year interest of £28,742 was incurred on these loans.
During the year the group issued unsecured loan notes totalling £722,839 to a Director who is also a shareholder. During the year interest of £45,156 was incurred on these loan notes. At the year end £767,994 was owed by the company. This balance is included in other creditors.
During the year the group issued unsecured loan notes totalling £876,361 to shareholders. During the year interest of £54,746 was incurred on these loan notes. At the year end £931,108 was owed by the company. This balance is included in other creditors.

27.	POST BALANCE SHEET EVENTS

28.	CONTROLLING PARTY

The company's immediate parent undertaking is Iris Holdco Limited (13055224). The directors are of the opinion the Company's ultimate parent undertaking is Basalt Infrastructure Partners III Gp Limited, a company incorporated in Guernsey.

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