BOLT_SERVICES_UK_LIMITED - Accounts

The directors present the strategic report for the year ended 31 December 2022, for Bolt Services UK Limited ("the Company"). The Company is a wholly owned subsidiary of Bolt Holdings OÜ which is ultimately owned by Bolt Technology OÜ (together with subsidiaries - "the Group").

In 2022, as a result of changes in the regulatory environment in the UK, Bolt modified its ride-hailing arrangement with the drivers and customers in the UK. As a result of these changes, from August 2022 the Company started acting as a principal in the UK market and, therefore, recognised revenue on a gross basis. Prior to August 2022 revenue was paid by Bolt Operations OÜ for marketing and other support services as per the intercompany agreement.

Growth was primarily driven by developments across our existing footprint, successfully continuing to increase market share and win leading positions, alongside driving cost efficiency initiatives.

We also strengthened efforts to further enhance the experience for drivers and riders during the year via quality, safety and process improvements, among other areas. This included, for example, adding several new features to our product and improving the onboarding experience for drivers. We rolled out a number of new safety features such as expanded selfie checks, driver trip sharing, unsafe areas mapping and vehicle duplication checks, to name a few, aimed at giving our users additional peace of mind and enhancing regulatory compliance.

As reported in the Company’s Statement of Comprehensive Income, the loss for the year is £47,295,510 (2021: profit of £288,951). Current year loss was mainly driven by high administrative costs due to changes in our business model and expansion, alongside additional tax and legal provisions.

The Company had a net liability position of £44,174,134 as at 31 December 2022 due to losses generated in the reporting year (31 December 2021: net asset position of £1,567,711). The Group has already executed its commitment to invest in the Company, injecting additional share capital in 2023 to address the net liability position.

Management continually monitors the key risks facing the Company. The principal risks and uncertainties facing the Company are as follows:

Economic Downturn

Economic downturn could impact the level of usage of the Bolt app by end-users. The Company manages these risks by continually updating the services offered to ensure that the services match the needs of the end-users.

Competitor pressure

Competitor pressure could also have a negative impact on the revenue the Company generates. If competitors offer similar services at lower prices, then customers may be tempted to go elsewhere. As with the economic downturn, the services are continually updated to remain relevant and attractive to our user-base.

Uncertainty in the tax and regulatory environment

As disclosed in the Notes to the financial statements, the Company faces risks from an uncertain tax and regulatory environment. The Company is in dialogue with the HMRC in respect of historical VAT position. Additionally, on-demand platform service providers are at times subject to legal claims and regulatory scrutiny. Such issues are inherently subjective due to the complexity and uncertainty and the judicial processes in the UK.

Technology and Cybersecurity

We may experience security or data privacy breaches or other unauthorised or improper access to, use of, alteration of or destruction of our proprietary or confidential data, employee data, or platform user data. In addition, cyberattacks, including computer malware, ransomware, viruses, spamming, and phishing attacks could harm our reputation, business, and operating results. Management is monitoring these risks and proactively working to mitigate them.

Climate change

Climate change policy may adversely impact the business, such as the London Congestion Zone and various clean air zones that may be implemented in major towns and cities where Bolt operates in the future. Examples in London include the congestion Charge Zone and Ultra Low emission Zone schemes which impose fees on drivers in fossil-fueled vehicles, that may impact our ability to attract or maintains drivers on our platform. If we experience Driver supply constraints to the extent, we may need to increase driver incentives. We have made climate related commitments that require us to invest significant effort, resources, and management time. For instances, we have partnered with Weflex, enabling drivers to transition in using electric vehicles on a flexible rent-to-buy scheme. And our pilot scheme with Splend is helping 500 ride-hailing drivers own an electric vehicle. Circumstances may arise, including those beyond our control, that may require us to revise the contemplated timeframes for implementing these commitments.

Financial Risks

Bolt Services UK Limited principal financial liabilities comprise trade and other creditors. The main purpose of these financial liabilities is to finance the local operations. The Company's financial assets include other debtors and cash & cash equivalents that derive directly from its operations. The financial risk is also associated with market risk, credit risk and liquidity risk.

Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises interest rate risk, currency risk, and other price risk, such as equity price risk and commodity risk. The UK entity is only exposed to currency risk; however, this is limited to intercompany transactions only.

Credit Risk

Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The UK entity is exposed to credit risk from its operating activities and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions, and other financial instruments. The UK entity manages its credit risk by ensuring that it is exposed only to customers and financial institutions with good credit quality, which is assessed based on an extensive credit rating scorecard.

Liquidity Risk

Liquidity risk is the risk that the UK entity will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The UK entity manages its liquidity by having effective collaboration with payment service providers used to collect money from end-users. The time to time settlement from payment service providers have been set in a way to ensure that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation.

Supply chain Risk (drivers)

We are financially dependent on drivers to generate revenue from orders placed by passengers. The number of drivers on the platform can vary, with sustained decreases in Drivers potentially resulting in decreases in revenue. We consistently investigate opportunities to improve the proposition to Drivers, thereby improving the quality of service we are able to deliver to our passengers.

The key financial performance indicators during the year were as follows:

£’000            2022        2021

Turnover            237,877        14,364

Gross profit        16,501        14,364

The increase in revenue is due to the impact of the changes in the business model since August 2022 when the Company started acting as principal and recognized revenue on gross basis. Prior to the business model change the turnover was derived from recharge of expenses and associated fees in accordance with intercompany agreement.

Gross profit is calculated as revenue less the cost of sales, which primarily comprises riders costs under the principal business model in 2022.

Other key operating performance indicators during the year were as follows:

KPI(s)                    2022 vs 2021 change

Number of the accepted bookings            32%

The average number of employees in 2022 was 141 (2021: 86). Attracting, retaining, respecting and growing a diverse group of employees is incredibly important to us. In accordance with our Harassment, Equality & Diversity policy, we have continued our efforts to offer equal opportunities, rights and obligations for all employees regardless of gender, ethnicity, race, age, sexual orientation, disability, religion, transgender identity or expression, with the goal of ensuring that Bolt is a workplace where employees can thrive and be at their best.

On behalf of the board

The directors present their annual report and financial statements for the year ended 31 December 2022.

Until August 2022 the principal activity of the Company was to provide marketing and support services to Bolt Operations OÜ by acting as a licensed operator for Bolt in the United Kingdom.

On 1 August 2022 the business model changed due to the regulatory changes, whereby Private Hire Vehicles Operators were required to enter into the contracts as Principals with the passengers for the provision of transportation services.

The results for the year are set out on page 11.

No ordinary dividends were paid. The directors do not recommend payment of a final dividend.

Going concern

For the year ended 31 December 2022, the Company operations generated a loss after tax and, as a result, the net current assets shifted to net current liabilities. In December 2023, the share capital of the Company was increased by £35m by its parent company, Bolt Holdings OÜ, a company registered in Estonia, to shift back the Company into a positive net asset position. Additionally, as of 23 February 2024, Bolt Services UK Limited has received a letter of support from its ultimate controlling party Bolt Technology OÜ, that confirms it will continue to provide the necessary financial support to the Company and will not seek the repayment of intercompany balances to enable Bolt UK Limited to meet its liabilities as they fall due for a period at least 12 months from the date of signing these financial statements.

Based on sufficient cash reserves maintained by the Company and the continuing support of the Group, the directors have a reasonable expectation that the Company has adequate resources to continue as a going concern and settle its liabilities as they fall due for the foreseeable future and the financial statements were prepared on a going concern basis.

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

In December 2023, the Company received a cash injection of £35m from its parent company, Bolt Holdings OÜ (a company registered in Estonia) by increasing the share capital of the company.

Notwithstanding the uncertain macroeconomic environment going into 2023, we continue to see vast growth opportunities across the UK market. We continue to focus on our mission to accelerate the transition from privately owned vehicles to shared mobility, as we continue to scale our platform and capture network effects, enabling us to further improve our value proposition to our users. We continue to deliver product enhancements and innovations, driving improvements in quality and safety, among other core focus areas. Simultaneously, we continue to put focus on our sustainability commitments to proactively decrease our environmental impact as a company and drive positive change in cities by offering sustainable mobility solutions.

As part of our expansion efforts, Bolt launched Black Cabs in London in April, 2023. Black Cabs are not impacted by the UTAG* ruling, therefore, the booking agent model applies instead of the principal model. Drivers invoice passengers and the Company invoices a commission to taxis.

*The judgment of the UTAG vs TfL court case in 2021 stated that the operator (Bolt) must contract as the principal in London. As a result Bolt UK changed its legal status to principal in August 2022 and consequently recognised revenue on a gross basis instead of on a net basis.

PricewaterhouseCoopers LLP were appointed as auditors to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.

The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulation.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have prepared the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”, and applicable law).

Under company law, 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 of the profit or loss of the company for that period. In preparing the financial statements, the directors are required to:

•     select suitable accounting policies and then apply them consistently;

•     state whether applicable United Kingdom Accounting Standards, comprising FRS 102 have been followed, subject to any material departures disclosed and explained in the financial statements;

•     make judgements and accounting estimates that are reasonable and prudent; and

•     prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors are also 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 enable them to ensure that the financial statements comply with the Companies Act 2006.

In the case of each director in office at the date the directors’ report is approved:

•     so far as the director is aware, there is no relevant audit information of which the company’s auditors are unaware; and

•     they have taken all the steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the company’s auditors are aware of that information.

This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.

In our opinion, Bolt Services UK Limited’s financial statements:

• give a true and fair view of the state of the company’s affairs as at 31 December 2022 and of its loss for the year then ended;

• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”, and applicable law); and

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

We have audited the financial statements, included within the Annual Report and Financial Statements (the “Annual Report”), which comprise: the balance sheet as at 31 December 2022; the statement of comprehensive income and the statement of changes in equity for the year then ended; and the notes to the financial statements, which include a description of the significant accounting policies.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We remained independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, which includes the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

Conclusions relating to going concern

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.

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.

However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the company's ability to continue as a going concern.

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

Reporting on other information

The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon.The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon.

In connection with our audit of the financial statements, 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 audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial statements or a material misstatement of the other information. 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 based on these responsibilities.

With respect to the Strategic report and Directors' report, we also considered whether the disclosures required by the UK Companies Act 2006 have been included.

Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and matters as described below.

Strategic report and Directors' report

In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and Directors' report for the year ended 31 December 2022 is consistent with the financial statements and has been prepared in accordance with applicable legal requirements.

In light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we did not identify any material misstatements in the Strategic report and Directors' report.

As explained more fully in the Statement of directors' responsibilities in respect of the financial statements, the directors are responsible for the preparation of the financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view. The directors are also responsible for such internal control as they 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.

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 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.

Based on our understanding of the company and industry, we identified that the principal risks of non-compliance with laws and regulations related to Private Vehicle Hire licences (“PHV”) requirements, UK Employment Law and Data Protection legislation (including GDPR), and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the financial statements such as the Companies Act 2006 and UK tax legislation. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate journal entries and management bias in accounting estimates. Audit procedures performed by the engagement team included:

• Enquiry of management, internal legal counsel and those charged with governance as to any actual and potential litigation and claims; as well as any instances of non-compliance with laws, regulations or fraud;

• Reviewing minutes of meetings of those charged with governance;

• Assessing the matters reported to the internal whistleblower helpline;

• Challenging assumptions and judgments made by management in determining significant accounting estimates in particular in relation to legal claims;

• Auditing the risk of management override of controls, including through performing unpredictable procedures and testing journal entries and other adjustments;

• Enquiry of entity's staff in tax function and review of correspondence with tax authorities to identify any instances of non-compliance with tax related laws and regulations; and

• Reviewing financial statements disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations.

There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.

A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.uk/auditors responsibilities. This description forms part of our auditors’ report.

Use of this report

This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Other required reporting

Companies Act 2006 exception reporting

Under the Companies Act 2006 we are required to report to you if, in our opinion:

• we have not obtained all the information and explanations we require for our audit; or

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

• certain disclosures of directors’ remuneration specified by law are not made; or

• the financial statements are not in agreement with the accounting records and returns.

We have no exceptions to report arising from this responsibility.

The Statement of Comprehensive Income has been prepared on the basis that all operations are continuing operations.

The notes on pages 16 - 34 form part of these financial statements.

The notes on pages 16 - 34 form part of these financial statements.

These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.true

Bolt Services UK Limited is a private company limited by shares incorporated in the United Kingdom (England). The registered office is Leather Market, Unit J, Taper Studios, 175 Long Lane, London SE1 4GT.

These financial statements are prepared on a going concern basis, under the historical cost convention. These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of the exemptions available under paragraph 1.12 of FRS 102 from the following disclosure requirements:

• Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;

• Section 26 ‘Share based Payment’ paragraphs 26.18(b) A reconciliation of opening and closing number and weighted average exercise price of share options, 26.19 How the fair value of options granted was measured, 26.20 The measurement and carrying amount of liabilities for cash-settled share-based payments and 26.21 The explanation of modifications to arrangements.

• Section 33 ‘Related Party Disclosures’ paragraph 33.1A which dispenses with the requirement to disclose transactions entered into between two or more members of a group where the subsidiary is a wholly owned subsidiary of such member and paragraph 33.7: Compensation for key management personnel.

The financial statements of the company are consolidated in the financial statements of Bolt Technology OÜ. These consolidated financial statements are available from its registered office, Vana-Lõuna tn 15, 10134 Tallinn, Harju maakond, Estonia.

The accounting policies have been applied consistently to all years presented, unless otherwise stated.

The Company continues to be supported by Bolt Technology OÜ. Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

For the year ended 31 December 2022, the Company operations generated a loss after tax and, as a result, the net current assets shifted to net current liabilities. In December 2023, the share capital of the Company was increased by £35m by its parent company, Bolt Holdings OÜ, a company registered in Estonia, to shift back the Company into a positive net asset position. Additionally, as of 23 February 2024, Bolt Services UK Limited has received a letter of support from its ultimate controlling party Bolt Technology OÜ, that confirms it will continue to provide the necessary financial support to the Company and will not seek the repayment of intercompany balances to enable Bolt UK Limited to meet its liabilities as they fall due for a period at least 12 months from the date of signing these financial statements.

Based on sufficient cash reserves maintained by the Company and the continuing support of the Group, the directors have a reasonable expectation that the Company has adequate resources to continue as a going concern and settle its liabilities as they fall due for the foreseeable future and the financial statements were prepared on a going concern basis.

Until the beginning of August 2022, when the business model changed, turnover was recognised in respect of services provided to other group companies in relation to recharge of expenses and associated fees in accordance with the agreement signed with the ultimate parent company. Revenue was recognised net of VAT.

As per income derived from Intercompany invoices on support services, the rate used in FY22 was 4.1% markup on costs instead of 3.9% mark up as in FY21.

Following the business model change, the company modified its arrangement with the drivers and end-users. Since then revenue is derived from the provision of transportation services to end-users, net of sales taxes, such as VAT.

Principal versus agent consideration

Management concluded that the company is acting as a principal in the arrangement with end-users and therefore recognised revenue on a gross basis. In reaching this conclusion, management considered the extent to which the company controls the services it provides to end-users. Bolt acts as a principal due to the following:

- it has discretion in establishing pricing

- it controls service before it is transferred by being responsible for identification of drivers

- it is responsible for fulfilling the transportation service promised to end-user.

Bolt recognises revenue from end-users on a gross basis when a trip is complete. Incentives provided to end-users are recorded as revenue reduction when Bolt does not receive a distinct good or service. As such, revenue is recognised net of discounts, incentives and refunds. Payments to drivers in exchange for transportation services are recognized as Cost of Sales.

Commission is additional revenue earned from the facilitation of transportation services. It includes booking fees, as well as business service fees from business customers.

Tangible fixed assets are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost less their residual values over their useful lives on the following bases:

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.

At each reporting period end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

Cash and cash equivalents are basic financial assets and include cash in hand and deposits held at call with banks.

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

Basic financial liabilities, including creditors, and loans from fellow group companies, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.

Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

Provisions are recognised when the company has a legal or constructive present obligation as a result of a past event, it is probable that the company will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation. Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision is measured at present value, the unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

The company 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 the profit and loss account when they fall due. Amounts not paid are shown in accruals as a liability in the balance sheet.

The Bolt Group has an equity-settled share option plan. The plan was implemented to motivate employees to become shareholders, in order to ensure that the financial performance is improved and to allow employees to benefit from an increase in the value of shares as a result of their work. The options are issued by the ultimate controlling party that is Bolt Technology OU (see Note 20).

Equity-settled share-based payments are measured at fair value at the date of grant by reference to the fair value of the equity instruments granted using the Black-Scholes model. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the estimate of shares that will eventually vest. The Company recognises its share of the group share-based payment cost by expensing the amount arising directly from the entity’s headcount.

A corresponding adjustment is made to Other reserves. When the terms and conditions of equity-settled share-based payments at the time they were granted are subsequently modified, the fair value of the share-based payment under the original terms and conditions and under the modified terms and conditions are both determined at the date of the modification. Any excess of the modified fair value over the original fair value is recognised over the remaining vesting period in addition to the grant date fair value of the original share-based payment. The share-based payment expense is not adjusted if the modified fair value is less than the original fair value.

Cancellations or settlements (including those resulting from employee redundancies) are treated as an acceleration of vesting and the amount that would have been recognised over the remaining vesting period is recognised immediately.

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

A matter that requires management judgement is determining whether Bolt UK acts as a principal or an agent in its transactions with drivers and end-users, as this determines whether revenue is recognised and presented on a gross or net basis. As disclosed elsewhere in this report, the Company has responded to changes in the regulatory environment and has modified its arrangement with drivers in the UK as from August 2022. As a result of this change, management has determined that the Company now acts as a principal in the provision of transportation services. This impacts both the presentation of revenue, as well as the presentation of incentives provided to drivers and riders to the extent that they are not customers.

The following estimates have had the most significant effect on amounts recognised in the financial statements.

The employment status of individuals engaged in the “gig” or “on-demand” economy, within the ride-hailing industry and beyond, continues to be a topical issue in the UK. Legal challenges against the status of individuals working in this way have continued to be pursued through the Courts in the relevant assessment period. In some cases, individuals engaged through such models have been reclassified as workers (an intermediate employment status unique to the UK, who benefit from some but not all employment rights but are still self-employed for tax purposes); whereas other cases have seen the Courts uphold models using independent contractor status – including the most recent decision of the UK Supreme Court concerning Deliveroo.

In common with other businesses who engage with individuals on these models, a small percentage of PHV drivers engaged by Bolt have commenced Employment Tribunal proceedings in the UK seeking to claim worker status – and bringing associated claims relating to national minimum wage and holiday pay payments (as yet unquantified by them and therefore sums sought uncertain). Bolt recognises that despite the careful consideration which has been given to its operating structure, this is an area of legal uncertainty. Bolt will defend claims submitted.

The preliminary hearing on the question of status is not expected before September 2024. Bolt understands that those representing the claimants in the proceedings would appeal any outcome in which they were unsuccessful. If the claimants were to succeed, there would need to be further hearings to address any remedy. As a result of the aforementioned, Bolt expects the outcome of potential payment of any claims, if unsuccessful and regardless of any appeals, to be determined in 2025 or later.

Management have applied judgement, sought external legal advice and concluded that a provision should be recognised in relation to the sums payable in the event that Bolt is unsuccessful in defending the claims (see note 12). The provision requires a number of significant estimates and assumptions by management, with a significant level of estimation risk as result of uncertain number of drivers’ claims, the complexity and evolving nature of the law and Bolt’s business model which could result in the eventual outcome varying significantly to that which has been estimated. For the purposes of these calculations, management notes that there continues to be significant legal uncertainty over the applicability of worker concepts to individuals who, like Bolt drivers, use multiple applications (and private arrangements with PHV operators) to simultaneously receive offers of journeys; how to account for expenses and other minimum wage entitlements across such platforms and operators and the concept of holiday given the hyper flexible arrangements (with no obligations) in place.

Directors concluded that Bolt Services UK Ltd is the company liable for any payments if the claims are successful due to it holding the UK operating licences. On this basis the provision was recorded in Bolt Services UK Ltd’s financial statements for the claims issued.

As disclosed in note 18, the Company is also involved in a dispute with HMRC in respect of VAT. HMRC has made a decision on 28 February 2023 in which it found that the Company has no right to apply the VAT Notice 709/5 (Tour Operator Margin Scheme) to the resupply of transportation services. The Company appealed it in the First Tier Tax Tribunal. The Tribunal made a decision in the case on 15 December 2023 which is positive for the Company. The Tribunal found that the supply of private hire vehicle ride hailing services is a service commonly provided by tour operators or travel agents and, therefore, the Company is allowed to use TOMS. HMRC appealed the decision on 15 January 2024 claiming that the Tribunal erred in law. Management has applied judgment in deciding whether, in accordance with the First Tier Tax Tribunal’s decision, the Company will be able to recover from HMRC the amount of overpaid VAT. Given the case was appealed to the Upper Tribunal, management has decided that the recovery of the funds was not virtually certain and, therefore, has not recognised a receivable in respect of the funds remitted.

The directors have agreed with the company's auditors that the auditor's liability to damages for breach of duty in relation to the audit of the company's financial statements for the year to 31 December 2022 should be limited to the greater of £5M or 5 times the auditor's fees, and that in any event the auditor's liability for damages should be limited to that part of any loss suffered by the company as is just and equitable having regard to the extent to which the auditor, the company and any third parties are responsible for the loss in question. The shareholders waived the need for approval of this limited liability agreement, as required by the Companies Act 2006, by a resolution dated 17 November 2023.

The average monthly number of persons (including directors) employed by the company during the year was:

Their aggregate remuneration comprised:

No directors (2021: 1) exercised their share options in the parent's shares during the year.

Changes in tax rates and factors affecting the future tax charge

The UK Government announced in the 2021 budget that from 1 April 2023, the rate of corporation tax in the United Kingdom will increase from 19% to 25%. This new law was substantively enacted on 24 May 2021. Deferred taxes at the balance sheet date have been measured using these enacted tax rates.

The actual (credit)/charge for the year can be reconciled to the expected (credit)/charge for the year based on the profit or loss and the standard rate of tax as follows:

Bolt Services UK Limited operates using the principal model, where customers are the end users of the services provided. Specific bad debts are recognised on a regular basis when users fail to pay, due to fraud or chargeback. The company does not have a policy of accounting for general bad debt provisions. Trade debtors reflects the net balance after deducting charges due to fraud or chargeback.

Amounts owed by group undertakings consists of inter-company invoices that Bolt Services UK Limited has issued to either Bolt Operations OÜ or Bolt Technology OÜ for the financial year, based on the transfer pricing agreement. The balance is interest free and repayable on demand.

Amounts owed to group undertakings are unsecured, interest free and repayable on demand.

The company is involved in a number of legal matters in connection with the conduct of its business. Where a future outflow of economic resources is probable, a provision was recognised.

The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:

The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.

The Group has an equity-settled share option plan. The plan was implemented to motivate employees of the Group to become shareholders, in order to ensure that the financial performance is improved and to allow employees to benefit from an increase in the value of shares as a result of their work.

Subject to participants’ continued employment, option packages typically vest over a period of four years. Vested Options provide participants the opportunity to exchange Options for shares at a pre-agreed exercise price. The vesting period starts on the grant date. Most packages have a 1-year cliff period, so the first 25% of options vest on the first anniversary from the grant date. The remaining 75% of the options will then vest quarterly over the following 36 months. The Group has no legal or constructive obligation to repurchase or settle the options in cash, and the Group has no history or intention of settling the equity-settled options in cash.

As a general rule, participants may exercise vested options when 10 years have passed from the grant date. As at 31 December 2022 there are no exercisable options. Share-based payments expense is recognised under Employee benefits expenses in 2022 in the amount of £1,553,665 (2021: £763,921).

There is a single class of ordinary shares. There are no restrictions on the distribution of dividends and the repayment of capital.

At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

Bolt Services UK Limited ("the Company") is involved in a dialogue with HMRC regarding its VAT position. HMRC has issued an assessment in July 2022 that was duly paid by the Company. Although the matter is still outstanding, management considers any additional risk as remote based on the correspondence and confirmations received to date.

We have appealed a HMRC decision in which they depart from their published guidance and disagree with Bolt’s interpretation to apply VAT Notice 709/5 (Tour Operator Margin Scheme) to the resupply of transportation services. The essence of the dispute is an argument on whether Bolt can qualify for the Tour Operator Margin Scheme and apply VAT only on the margin of bought and resold services. The First Tier Tax Tribunal decision dated 15 December 2023 was positive for Bolt, it found that Bolt’s supply of private hire vehicle ride hailing services is a service commonly provided by tour operators or travel agents and therefore Bolt is allowed to use TOMS. HMRC appealed the decision on 15 January 2024 claiming that the Tribunal erred in law. The proceedings will now continue in the next court instance - the Upper Tribunal.

In December 2023, the Company received a cash injection of £35m from its parent company, Bolt Holdings OÜ (a company registered in Estonia) by increasing the share capital of the company.

The immediate parent company is Bolt Holdings OÜ, a company registered in Estonia. The ultimate controlling party is Bolt Technology OÜ, a company also registered in Estonia.

The financial statements of the company are consolidated in the financial statements of Bolt Technology OÜ. These consolidated financial statements are available from its registered office, Vana-Lõuna tn 15, 10134 Tallinn, Harju maakond, Estonia.

On 27 January 2022, all the shares of the company were transferred to Bolt Holdings OÜ from Bolt Technology OÜ.