REG - Northcoders Group - Final Results
30/04/2024 07:00
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RNS Number : 4939M Northcoders Group PLC 30 April 2024
30 April 2024
Northcoders Group PLC
('Northcoders', the 'Group' or the 'Company')
Final Results
Northcoders (AIM: CODE), a market leader in technology training in the UK, is
pleased to announce its Final Results for the year ended 31 December 2023
('FY23' or the 'Period').
Financial Highlights
· Group revenue up to a record £7.1 million, increasing 27% from £5.6
million in FY22 driven by geographic expansion and entry into new disciplines
· Gross profit increasing 13% to £4.4 million (FY22: £3.9 million)
with a gross profit margin of 63%
· Adjusted EBITDA of £0.1 million (FY22: £0.9 million), in line with
market expectations, Loss after tax of £1.0 million (Profit after tax FY22:
£0.4 million), following investment in infrastructure and nascent B2B
training division
· Cash balance as at 31 December 2023 of £1.6 million (FY22: £2.8
million)
· Net assets increased to £4.8 million (FY22: £4.6 million)
Operational Highlights
· Record growth in numbers of individuals trained, increasing to 2,852
(FY22: 1,685demonstrating Northcoders ability to rapidly scale its training
services
· Focus on student outcomes leading to further growth in hiring
partners with 465 (FY22: 407) partnered with in the Period
· Relationship with UK Government continues to strengthen, achieving a
£4.5 million bid to fund students in H2-2023 and FY-2024, as announced in
September 2023
o Further £10 million bid win announced in January 2024
· B2C bootcamps now taught across the UK, including new regions such as
Scotland - significant growth since IPO - and experiencing strong demand for
new technology disciplines such as Cloud Engineering (DevOps)
· B2B Business Solutions began first central Government contract in Q4
2023 and continues to develop strong pipeline of corporate business
opportunities
· Successful acquisition of Tech Returners in February 2023 to help
further improve access to technology, strongly focussing on facilitating
women's return to the workplace following career breaks
· NCore learning platform ready for roll out in FY24 to companywide
efficiencies and further margin growth
Current trading and outlook
· Both B2C and B2B divisions starting FY24 strongly, with record B2C
applications and a growing pipeline for B2B contracts
· £10 million DfE contract announced in January 2024, giving further
revenue visibility for FY-2024 and H1-2025 and underpinning an 18.6% increase
in revenue per student
· Revenue access and contracted visibility already reaching £8.3
million for FY24
· Planned launch of flexible, part time courses announced on 4 April
2024, to increase access to training for individuals from a wider array of
backgrounds
· As anticipated, positive Ofsted monitoring visit in February 2024,
ensuring future funding safeguarded and credibility of Northcoders offering
maintained
· Northcoders trading in line with market expectations for FY24
Chris Hill, CEO, commenting on the results said:
"I am pleased to report another year of record revenue growth with further
increasing demand for our high-quality training products. Despite the subdued
technology hiring market making FY23 more challenging in certain areas of the
business, we have continued to fulfil our ambitious growth strategy.
"We have continued to scale our B2C division using our growth levers of
geographic expansion, increasing technology disciplines that we teach, and
introducing new training formats. We have also further developed our nascent
B2B division, using the Group's strong reputation in technology training to
build our pipeline of new business prospects. Our position is strong as the
hiring market returns and look forward to providing more updates in due
course.
"There's no doubt that digital transformation continues to be at the forefront
of business priorities, driving individual and corporate training demand for
our services. This, combined with the long term bi-party Government funding
commitments to upskilling private and public sectors, leaves Northcoders well
positioned to continue to scale the business and deliver value to our
shareholders."
Analyst meeting & Investor Meet Company Presentation
There will be a presentation for sell-side analysts at Buchanan
Communications, 107 Cheapside, London EC2V 6DN, for any enquiries please
contact Buchanan on northcoders@buchanancomms.co.uk . A copy of the Final
Results presentation will be available on the Group's website later today:
investors.northcodersgroup.com (https://investors.northcodersgroup.com/)
Northcoders will also be presenting via the Investor Meet Company platform
today, 30 April 2024 at 6pm (BST). The meeting will be hosted by Chris Hill
(CEO) and Charlotte Prior (CFO), and there will be an opportunity for Q&A
at the end of the session. To sign up for the Northcoders presentation please
click the following link:
https://www.investormeetcompany.com/northcoders-group-plc/register-investor
(https://www.investormeetcompany.com/northcoders-group-plc/register-investor)
.
- Ends -
For further enquiries:
Northcoders Group plc Via Buchanan
Chris Hill, CEO Tel: +44 (0) 20 7466 5000
Charlotte Prior, CFO www.northcodersgroup.com
WH Ireland Limited (Nominated Adviser & Joint Broker)
Tel: +44 (0)20 7220 1666
Mike Coe / Darshan Patel / Sarah Mather (Corporate Finance)
Fraser Marshall/ George Krokos (Sales)
Tel+44 (0) 20 7496 0930
Peterhouse Capital Limited (Joint Broker)
Martin Lampshire www.peterhousecap.com
Lucy Williams
Duncan Vasey
Buchanan Communications
Henry Harrison-Topham northcoders@buchanancomms.co.uk
Stephanie Whitmore
Notes to Editors
Northcoders is a market leading provider of technology training for businesses
and individuals with courses in, Software Engineering, Data Engineering and
Platform Engineering. Founded in 2015, the Group's business model operates a
hybrid structure with a flagship site in Manchester and other sites in Leeds,
Birmingham and Newcastle supported by a proven digital offering to support its
students across the UK.
Powered by IP rich technology, Northcoders offers boot camp courses to
individuals from a range of backgrounds, delivered through virtual and
physical learning. The Group also works with blue chip corporates across
multiple sectors to help them to achieve their digital requirements, with
teams as a service and to supply innovative solutions for the upskilling and
reskilling of employees. With a keen focus of inclusivity, diversity and
quality at its core, Northcoders aims to address the digital skills gap in the
UK to meet the increasing demand for digital specialists at all levels, from
businesses and public agencies.
Northcoders was admitted to trading on AIM in July 2021 with the ticker
CODE.L. For additional information please visit
investors.northcodersgroup.com.
Chair's statement
Introduction
FY23 has seen Northcoders once again successfully grow revenue to record
levels, achieve record student applications, invest into new training products
and platforms, and grow headcount despite a period of great macro-economic
uncertainty. The technology market has been incredibly challenging with
organisations experiencing headcount reductions, budget constraints and an
uncertain economy. Despite these challenges, Northcoders has successfully
grown its B2C and B2B bootcamps more efficiently, by maximizing the use of our
new technology platform, whilst keeping our core values at the heart of
everything we do.
We have experienced record demand for training courses and have helped to
change the lives of over 3,000 people. We continue to scale geographically
in many UK regions, including new areas such as Scotland.
Q1 FY23 saw the introduction of the new Cloud Engineering ('DevOps') programme
which has gone from strength to strength throughout 2023. This was in line
with our strategic plan and was supported by the delivery of our new NCore
platform which is enabling us to scale efficiently and provide an excellent
learning experience for all our customers.
Our mission remains sound, and our flexible product offering is ensuring we
remain the solution for individuals and businesses regardless of the economic
situation. Our team is well equipped, and our processes are refined and
working effectively.
In February 2023 we acquired Tech Returners Limited ('Tech Returners'), an
award-winning company which helps individuals return to technology later in
life. This provides us with the opportunity to develop and attract an even
broader audience, including more women seeking a return to technology, thereby
helping us ensure we are leading the way in driving diversity and opportunity
for all across the technology sector. We are pleased to report that the
integration of Tech Returners is complete and is working effectively as part
of the Group, benefiting from shared service areas and efficiencies while also
providing an opportunity to support corporates to deliver their Environmental,
Social, and Governance ('ESG') and Equality, Diversity, and Inclusion ('EDI')
ambitions.
Financial review
FY23 has seen a 27% growth in revenue to £7.1 million from £5.6 million in
2022, and profits have been invested into new courses and service offerings.
This marks our highest ever revenue year and provides further evidence of
Northcoders strong momentum, giving a positive indicator for future growth. We
reported a 63% gross profit margin, which whilst lower than 2022, demonstrates
that we have been able to navigate the cost increases generated by inflation
and the cost of living crisis.
The Group's adjusted EBITDA(1) was £0.1 million in line with market
forecasts, down from £0.9 million in 2022. Whilst profitability has been
impacted by the challenging market in 2023, our young entrepreneurial
management team believe there have been numerous learnings from the Period.
Helping us to focus on our core strengths, excellent products and services and
fully maximise their potential. We are confident that with this more
cautious, prudent approach we can continue to grow profit alongside our record
revenues.
(1)The Directors have used adjusted EBITDA as an Alternative Performance
Measure (APM) in the preparation of these financial statements. EBITDA
represents earnings before interest, tax, depreciation and amortisation. The
adjusted element removes non-recurring items which are not relevant to the
underlying performance and cash generation of the business; in 2023 this
comprised of share‑based payment expenses, business restructuring costs and
non‑recurring overstated accrual of revenue. In 2022 the adjusted element
removed share-based payment expenses.
We have strong foundations in place, led by a group of inspirational
entrepreneurs with a clear strategy and plan. We have great products and
services all underpinned by the culture, values and behaviours of an
ever-growing team of highly talented and committed experts. We are well
positioned for further growth.
We are proud that we are making a genuine difference to individual learners
and to our corporate customers who can grow their own talent, supported by,
and in partnership with, Northcoders. This is where we add significant value
to our business customers.
Strategy
Growth, resilience and quality profitable earnings are our ambition. 2023 has
shown that we can achieve growth and develop new and exciting products to
ensure that we remain in line with our mission. The growth that we strive for
is growth in the number of lives that we change through our education, and
increasingly the amount and range of companies and businesses that we provide
solutions to. We now have the infrastructure in place to deliver this on a
much larger scale, whilst creating efficiencies within our teaching model and
therefore increasing profitability.
Once again, I want to acknowledge and thank our employees for all their
efforts this year. They have continued to innovate and create great
experiences, learning and partnerships that our customers appreciate, and
consistently provide excellent feedback, whilst navigating ever‑changing
economic and market conditions.
Outlook
Trading in the current year to date has started well. B2C bootcamp
applications and registrations remain at record‑breaking levels, and we are
seeing an increase in the Business Solutions' pipeline. Winning another, even
larger Government contract with the Department for Education, as outlined
below by our CEO, reaffirms the ongoing quality and reputation of Northcoders
training and gives us fantastic visibility for the year ahead. I am very much
looking forward to continuing to work with the Board and the Northcoders team
to progress the excellent momentum of the past twelve months, as we continue
to implement our growth strategy.
It is a privilege to lead Northcoders as Chair and I am extremely proud of the
whole Northcoders team who have grown the organisation to where it is today.
We are set up for the next exciting phase of our development: to make a
difference to the lives of learners across the UK and deliver growth for our
shareholders, learners, the businesses we work with and the Northcoders team.
We are making a positive impact, and I am confident that together, as one
Northcoders team, we will be able to deliver our strategy and plans and take
advantage of the opportunities ahead - exciting times!
Angela Williams
Non-Executive Chair
29 April 2024
Chief Executive Officer's review
Introduction
The financial year ended 31 December 2023 ('FY23' or the 'period') marked
another successful milestone for Northcoders, showcasing the strength of our
core business model in technology training bootcamps. Learner enrolment across
our suite of B2C and B2B bootcamp courses experienced significant growth
compared to previous years, reflecting the increasing demand for our
high‑quality training products. Despite the commendable performance in our
training bootcamps, FY23 presented challenges amidst the prevailing headwinds
in the technology market.
Factors such as budget constraints, workforce reductions and recruitment
freezes impacted corporate clients, leading to delays and deferrals in budget
commitments to our B2B Corporate Solutions division, Your Return to Tech,
and Consultancy programmes. The downturn in the technology jobs market also
impacted graduates looking for jobs. Outcomes for our DfE students that are
unsuccessful or slower than our agreed contractual time frame mean that we
receive a lower than possible amount of revenue.
These challenges made FY23 our most demanding trading year yet; however,
amidst these challenges, we maintained resilience and adaptability, as
evidenced by our record revenues.
Financial review
Despite heavy investment into growth areas of the business, and a downturn in
the tech economy, the Group delivered growth in revenue and has been able to
keep gross profit margins above 60%. Underlying performance was in line with
expectations, and student numbers were higher than ever. Revenue, made up of
B2C training bootcamps and Business Solutions, increased by 27% to £7.1
million (FY22: £5.6m). Gross profit for the year was £4.4 million (FY22:
£3.9m) with a reported gross profit margin (GPM) of 63% (FY22: 70%). EBITDA,
adjusted for share-based payments and exceptional/ non-recurring items, was
£0.1 million (FY22: £0.9m). The main reason for the drop in EBITDA in 2023
was investment made for growth, at a time that didn't allow immediate payback.
This has however put us into a strong position moving into 2023. A tougher
economic landscape also made growing revenues more expensive, and our cost of
acquisition increased. We are now seeing this ease off and our pipelines are
strong.
The loss for the year before tax was £1.2 million (FY22: Profit £0.3m).
There was a small tax credit giving a loss for the year of £1.0 million
(FY22: £13k profit). Basic earnings per share was loss 12.62p per share
(FY22: 5.12p). Net assets as at 31 December 2023 were £4.8 million
(FY22: £4.6m) of which cash was £1.6 million (FY22: £2.8m).
The cash balance at the year-end of £1.6 million will enable the Company to
continue with its growth plans, whilst remaining prudent as appropriate with
wider costs. Cash investment into internal infrastructure is expected to
decrease in the year ahead and the new, extended contract with the Department
for Education (DfE) won in January 2024 will enable cash generation to
strengthen.
Operational review
In FY23, 1,167 Northcoders students started their life-changing journey on one
of our training bootcamps. Our hybrid/online business model remains the
delivery method of choice for these learners and continues to be the most
efficient model for our teaching team to keep excellence at the heart of
everything they do as our student numbers increase. Application numbers from
potential students reached an all-time high of 13,878; the demand for our
courses is not slowing down despite volatility in consumer confidence.
Northcoders ended 2023 with a permanent headcount of 128 staff members
compared to the 101 staff members at the start of the year. The Group invested
in our business and administration support team to ensure we have a strong
backbone as we embark on further growth. Most of the headcount increase was in
areas such as Finance, IT Support, HR, Marketing, Compliance, and Contract
Management.
Alongside growth, our focus in FY23 extended to scrutinising costs to increase
future profit margins within our established course offerings. Outside of the
delivery of our core training bootcamp, the Group's technical team have been
focused on our end-to-end learner management and automation platform, NCore.
NCore is now being rolled out into early‑stage use and is expected to be
fully operational before the end of 2024.
NCore's main business benefit is the ability to substantially decrease our
student-to-tutor ratio whilst improving excellence in our courses by
increasing the contact time offered to current and potential bootcamp
students.
In FY23, Northcoders introduced a new technical discipline to our course
offering: Cloud engineering. Feedback from learners and hiring partners has
been positive. Our Data Engineering bootcamps division has also gone from
strength to strength with record applications.
Consumer training bootcamps
B2C training bootcamps stand as the cornerstone of the Group's operations,
representing 83% of our annual revenue. Our Consumer bootcamp courses cater to
individuals of all ages and backgrounds aspiring to build careers in the
technology sector, delivered over a 13‑week period to ensure comprehensive
skill development.
The expansion of our hiring partners network has been a key focus, with over
465 partners now collaborating with us to provide life-changing opportunities
for Northcoders' graduates. This growth has contributed to an impressive rise
in the average starting salary for our graduates, now reaching £29,303.
Within three years, our graduates typically experience significant salary
increases as they progress into more senior roles, reflecting the value of our
training programmes.
Northcoders is on a mission to increase diversity within the technology
industry; our statistics show 28% representation of women and 38% of
non-university educated students within our cohorts.
Looking ahead to 2024 and beyond, our growth initiatives within the Consumer
bootcamp division include the introduction of additional technical service
lines and expanded coding languages and frameworks. Notably, Python, well
suited for Data Engineering and AI projects, and Java, addressing an
underserved sector in our industry, are among the focus areas. Additionally,
we are set to launch a new consumer-oriented offering: a part-time 'learn as
you earn' programme. Leveraging our influential brand power, we anticipate
substantial demand and growth resulting from this initiative.
Skills bootcamps
Northcoders' commitment to providing accessible and impactful training extends
to skills bootcamps, tailored for adults aged 19 and over residing in England.
These flexible courses, spanning over 13 weeks, offer participants the
opportunity for a job interview upon completion. Moreover, corporate entities
can leverage this scheme to either onboard new talent or enhance the skills of
their existing workforce.
For over two years, Northcoders has been utilising Government skills bootcamp
funding to offer scholarships, ensuring that individuals facing financial
constraints can access our transformative training bootcamps and enhance their
career prospects.
Business Solutions
Our Business Solutions division delivers a corporate-focused consultancy
service by assembling teams of graduates, further honed in consultancy skills
to become associate consultants. The associate consultants are paired with an
experienced tech lead for deployment in businesses. Upon the completion of the
engagement period, while the tech lead rejoins Northcoders, the associate
consultants are offered the opportunity to transition into permanent roles
within the client's business at no extra cost.
This arrangement provides both immediate and long-term solutions for
businesses, ensuring continuity and retention of expertise beyond the contract
term. In a bid to diversify our service offerings, these teams are available
both as autonomous 'incubated' groups and in collaboration with established
consultancy firms. This strategy aims to enhance their service range while
reducing dependency on higher-cost consulting services.
Additionally, the Business Solutions division also offers Academy programmes,
designed for corporates looking to onboard emerging technologists or to
re‑skill individuals from different sectors of their organisation, further
contributing to a dynamic and innovative workforce.
As reported at our half-year results announcement in September 2023, FY23
presented the Business Solutions division with various market challenges.
Notable among these were budgetary constraints, workforce reductions and
recruitment freezes within the technology sector. These conditions resulted in
a number of corporate clients delaying or pausing their participation in
Northcoders' Academy and Consultancy programmes. Pleasingly, we are now seeing
improvement in conditions for our Business Solutions division.
Tech Returners
The Group acquired Tech Returners Limited in Q1 FY32 with the aim to further
diversify Northcoders' Business Solutions division and add a new income stream
to the Group's growing corporate‑focused business model. Founded in 2016,
Tech Returners specialises in remote training and the placement of
senior-level professionals looking to re-enter the technology sector of the
workplace. The business uses its industry-leading knowledge and techniques to
up-skill corporate-sponsored individuals or existing corporate teams for large
corporate clients across several industries. Tech Returners runs a yearly
conference named 'Reframe Women In Tech', it is a not for profit conference
with a mission to make personal development accessible for all and to reframe
the narrative around women in tech.
Tech Returners faced the same macroeconomic hurdles as our Business Solutions
division. In response, management introduced a new lower commitment training
model called TR4: The 4-Week Returner Launchpad. Our latest model provides
businesses with quicker access to diverse talent through our bespoke programme
for returners. Early adoption of TR4 is positive and the Board has been
pleased to see two new corporate contracts signed in the first few weeks
since launch.
Current Trading and Outlook
Towards the latter part of FY23 and continuing into Q1 FY24 we have witnessed
a positive shift in Corporate engagement for our Business Solutions division.
New contracts have been secured, and our business development pipeline is
robust, providing us with confidence to further invest in the revenue growth
of our Business Solutions division. This momentum aligns with our strategic
focus on expanding our offerings, leveraging our expertise and fulfilling our
purpose as a company committed to driving diversity and accessibility in the
technology industry.
A significant milestone was achieved on 16 January 2024, as Northcoders
announced the successful win of its largest-ever DfE Government funding round.
This development provides an increase in funding revenue per student,
bolstering the Group's profitable growth trajectory and mitigating
inflation‑linked costs.
Further to the new funding, on 15 February 2024, we received a monitoring
visit from Ofsted, which yielded a positive result, comparable with a 'Good in
all areas' result should Ofsted's recent visit have been a full inspection.
Satisfactory compliance with Ofsted's rules and best practice guidance
safeguards the delivery and funding of our skills bootcamp provision and
ensures us that we are doing the best by our students. The full report is
hosted online and can be found on Ofsted's website. As a result of higher
profit margins in Skills bootcamps and feedback of the course being more
favourable amongst students we have decided to stop offering Apprenticeships
as a learning mechanism for our courses. This has resulted in an impairment
provision against the ESFA license in the accounts.
The UK Government's significant investment in skills bootcamps presents
a prime opportunity for the Group to make a meaningful impact. Positioned at
the forefront of these funding initiatives, our aim is to meet the heightened
demand, empowering corporates to achieve their objectives while simultaneously
creating transformative opportunities for individuals across diverse
backgrounds.
The Group's Board is upbeat about the promising outlook for FY24, bolstered by
record‑high revenue access and contracted visibility already reaching £8.3
million for FY24. This marks a substantial 40% increase compared to January
2023. Profit margins are growing as we experience efficiencies from NCore and
an increase seat price per head from the DfE contract, instilling strong
confidence in meeting market expectations for the year ahead. Looking beyond,
revenue visibility for FY25 already stands at an impressive £3.6 million.
Chris Hill
Founder and Chief Executive Officer
29 April 2024
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
2023 2022
Notes £ £
Revenue 7,102,319 5,598,863
4
Cost of sales (2,658,650) (1,656,938)
Gross profit 4,443,669 3,941,925
Other operating income - 12,000
Expenditure (4,364,300) (3,046,292)
Adjusted 79,369 907,633
EBITDA
6
Depreciation (172,582) (171,521)
Amortisation and impairment (234,225) (85,167)
Share-based (186,542) (203,607)
payments
Total administrative expenses (4,957,649) (3,506,587)
Non-recurring (562,603) -
items
5
Operating (1,076,583) 447,338
(loss)/profit
7
Investment 14,170 11,765
revenues
Finance (163,260) (112,674)
costs
(Loss)/profit before taxation (1,225,673) 346,429
Taxation 218,745 13,109
credit
(Loss)/profit for the year (1,006,928) 359,538
Other comprehensive income:
Items that will not be reclassified to profit or loss
Tax relating to items not reclassified (3,725) 8,814
Total items that will not be reclassified to profit or loss (3,725) 8,814
Total other comprehensive profit/(loss) for the year (3,725) 8,814
Total comprehensive profit/(loss) for the year (1,010,653) 368,352
Total comprehensive profit/(loss) for the year is all attributable to the
owners of the parent company. All profit/(loss) after taxation arise from
continuing operations.
GROUP STATEMENT OF COMPREHENSIVE INCOME (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
2023 2022
£ £
Earnings per share
Basic (pence per share) (12.62) 5.12
Diluted (pence per share) (12.62) 5.02
Adjusted (pence per share) (4.81) 8.02
GROUP STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2023
2023 2022
£ £
Non-current assets
Goodwill 1,310,086 -
Intangible assets 1,747,400 871,845
Property, plant and equipment 316,986 416,727
Deferred tax asset 158,837 330,837
3,533,309 1,619,409
Current assets
Contract assets 1,398,018 1,947,922
Trade and other receivables 671,724 909,010
Current tax recoverable 43,945 82,309
Cash and cash equivalents 1,617,172 2,777,273
3,730,859 5,716,514
Current liabilities
Trade and other payables 1,101,275 665,575
Current tax liabilities 4,937 -
Borrowings 293,355 391,367
Lease liabilities 212,112 196,243
Contract liabilities 206,500 5,239
1,818,179 1,258,424
Net current assets 1,912,680 4,458,090
Non-current liabilities
Borrowings 474,300 740,223
Lease liabilities 154,070 464,833
Deferred tax liabilities - 230,713
628,370 1,435,769
Net assets 4,817,619 4,641,730
Equity
Called up share capital 80,115 76,889
Share premium account 4,801,444 4,801,444
Merger reserve 500 500
Share option reserve 401,714 228,480
Other reserve 946,774 (50,000)
Retained earnings (1,412,928) (415,583)
Total equity 4,817,619 4,641,730
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2023
2023 2022
£ £ £ £
Non-current assets
Investments 2,105,539 317,949
Current assets
Trade and other receivables 3,964,447 4,406,187
Current liabilities
Trade and other payables 246,614 -
Net current assets 3,717,833 4,406,187
Total assets less current liabilities 5,823,372 4,724,136
Equity
Called up share capital 80,115 76,889
Share premium account 4,801,444 4,801,444
Other reserves 946,774 (50,000)
Share option reserve 401,714 228,480
Retained earnings (406,675) (332,677)
Total equity 5,823,372 4,724,136
As permitted by s408 Companies Act 2006, the company has not presented its own
income statement and related notes. The company's loss for the period was
£87,306 (2022: £130,686 loss).
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
Share Share Other Share Merger Retained Total
capital premium account reserve option reserve reserve earnings
£ £ £ £ £ £ £
Balance at 1 January 2022 69,444 2,891,314 (50,000) 134,715 500 (893,777) 2,152,196
Year ended 31 December 2022:
Profit for the year - - - - - 359,538 359,538
Other comprehensive income:
Tax adjustments on share based payments - - - - - 8,814 8,814
Total comprehensive income - - - - - 368,352 368,352
Transactions with owners:
Issue of share capital 7,445 2,076,387 - - - - 2,083,832
Costs of issue set against share premium - (166,257) - - - - (166,257)
Share options expense - - - 203,607 - - 203,607
Cancellation of share options - - - (21,547) - 21,547 -
Share options exercised - - - (88,295) - 88,295 -
Balance at 31 December 2022 76,889 4,801,444 (50,000) 228,480 500 (415,583) 4,641,730
GROUP STATEMENT OF CHANGES IN EQUITY (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
Share Share Other Share Merger Retained Total
capital premium account reserve option reserve reserve earnings
£ £ £ £ £ £ £
Year ended 31 December 2023:
Loss and total comprehensive income - - - - - (1,006,928) (1,006,928)
Other comprehensive income:
Tax adjustments on share based payments - - - - - (3,725) (3,725)
Total comprehensive income - - - - - (1,010,653) (1,010,653)
Transactions with owners:
Issue of share capital 3,226 - - - - - 3,226
Merger relief - - 996,774 - - - 996,774
Share options expense - - - 186,542 - - 186,542
Cancellation of share options - - - (13,308) - 13,308 -
Balance at 31 December 2023 80,115 4,801,444 946,774 401,714 500 (1,412,928) 4,817,619
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
Share capital Share premium account Other reserve Share option reserve Retained earnings Total
£ £ £ £ £ £
Balance at 1 January 2022 69,444 2,891,314 (50,000) 134,715 (311,833) 2,733,640
Year ended 31 December 2022:
Loss and total comprehensive income - - - - (130,686) (130,686)
Transactions with owners:
Issue of share capital 7,445 2,076,387 - - - 2,083,832
Costs of issue set against share premium - (166,257) - - - (166,257)
Share options expense - - - 203,607 - 203,607
Cancellation of share options - - - (21,547) 21,547 -
Share options exercised - - - (88,295) 88,295 -
Balance at 31 December 2022 76,889 4,801,444 (50,000) 228,480 (332,677) 4,724,136
Year ended 31 December 2023:
Loss and total comprehensive income - - - - (87,306) (87,306)
Transactions with owners:
Issue of share capital 3,226 - - - - 3,226
Merger relief - - 996,774 - - 996,774
Share options expense - - - 186,542 - 186,542
Cancellation of share options - - - (13,308) 13,308 -
Balance at 31 December 2023 80,115 4,801,444 946,774 401,714 (406,675) 5,823,372
GROUP STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
2023 2022
£ £ £ £
Cash flows from operating activities
(Loss)/profit for the year after tax (1,006,928) 359,538
Adjusted for non-cash items:
Taxation credited (218,745) (13,109)
Finance costs 163,260 112,674
Investment revenues (14,170) (11,765)
Gain on disposal of property, plant and equipment (83) -
Equity settled share based payment and warrants expense
186,542 203,607
Amortisation of intangible assets 208,751 85,167
Depreciation of property, plant and equipment 172,582 171,521
Impairment of intangible assets 25,474 -
(483,317) 907,633
Decrease/(increase) in contract assets and trade and other receivables
891,421 (1,435,445)
Increase in contract liabilities 201,261 -
Increase/(decrease) in trade and other payables (71,390) 178,377
Cash generated from/(absorbed by) operations 537,975 (349,435)
Tax refunded 113,461 104,408
Net cash inflow/(outflow) from operating activities
651,436 (245,027)
Investing activities
Capitalised development costs (751,400) (461,941)
Purchase of property, plant and equipment (86,110) (63,181)
Proceeds on disposal of property, plant and equipment
339 -
Purchase of subsidiaries (173,758) -
Investment revenues received 14,170 9,766
Net cash used in investing activities (996,759) (515,356)
Financing activities
Proceeds from issue of shares - 1,917,575
Proceeds from borrowings - 962,500
Repayment of bank loans and borrowings (418,177) (573,087)
Payment of lease liabilities (279,826) (231,491)
Interest paid (116,775) (102,486)
Net cash (used in)/generated from financing activities
(814,778) 1,973,011
GROUP STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
2023 2022
£ £ £ £
Net (decrease)/increase in cash and cash equivalents (1,160,101) 1,212,628
Cash and cash equivalents at beginning of year 2,777,273 1,564,645
Cash and cash equivalents at end of year 1,617,172 2,777,273
NOTE TO THE STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
Changes in liabilities arising from financing activities
The table below details changes in the Group's liabilities arising from
financing activities, including both cash and non-cash changes. Liabilities
arising from financing activities are those for which cash flows were, or
future cash flows will be, classified in the Group's Consolidated Statement of
Cash Flows as cash flows from financing activities.
At 1 January Financing New loans and cash flows new leases Other movements* At 31 December
2023 2023
£ £ £ £ £
Bank loans and borrowings 1,131,588 (418,177) 36,793 17,451 767,655
Lease liabilities 661,076 (279,826) 47,256 (62,324) 366,182
1,792,664 (698,003) 84,049 (44,873) 1,133,837
At 1 January Financing cash flows New leases Other movements* At 31
2022 December
2022
£ £ £ £ £
Bank loans and borrowings 731,988 (573,087) 962,500 10,187 1,131,588
Lease liabilities 892,567 (231,491) - - 661,076
1,624,555 (804,578) 962,500 10,187 1,792,664
*Other movements in the year ended 31 December 2023 includes;
(1) Unwinding of arrangement fees of £17,451 on other loans.
(2) Lease modification of £62,324.
*Other movements in the year ended 31 December 2022 includes;
(1) Unwinding of arrangement fees of £10,187 on other loans.
NOTES TO THE GROUP FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
1 Accounting policies Company information
Northcoders Group Plc is a public company limited by shares incorporated in
England and Wales. The registered office is Manchester Technology Centre,
Oxford Road, Manchester, Lancashire, M1 7ED. The company's principal
activities and nature of its operations are disclosed in the directors'
report.
The Group consists of Northcoders Group Plc and all of its subsidiaries.
1.1 Accounting convention
The Group financial statements have been prepared in accordance with UK
Adopted International Accounting Standards in conformity with the requirements
of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional
currency of the group. Monetary amounts in these financial statements are
rounded to the nearest £1.
The financial statements have been prepared under the historical cost
convention, modified to include the revaluation of certain financial
instruments at fair value. The principal accounting policies adopted are set
out below.
The individual parent company meets the definition of a qualifying entity
under FRS 101 Reduced Disclosure Framework. As permitted by FRS 101, the
company has taken advantage of the following disclosure exemptions from the
requirements of IFRS:
(a) the requirements of IFRS 7 'Financial Instruments: Disclosure';
(b) the requirements within IAS 1 relating to the presentation of certain
comparative information;
(c) the requirements of IAS 7 'Statement of Cash Flows' to present a statement
of cash flows;
(d) paragraphs 30 and 31 of IAS 8 'Accounting policies, changes in
accounting estimates and errors' (requirement for the disclosure of
information when an entity has not applied a new IFRS that has been issued but
it not yet effective); and
(e) the requirements of IAS 24 'Related Party Disclosures' to disclose related
party transactions and balances between two or more members of a Group.
As permitted by S408 Companies Act 2006, the Company had not presented its own
Statement of Comprehensive Income. The company's loss for the period was
£87,306 (2022: £130,686).
1.2 Business combinations
The cost of a business combination is the fair value at the acquisition date
of the assets given, equity instruments issued and liabilities incurred or
assumed, plus costs directly attributable to the business combination. The
excess of the cost of a business combination over the fair value of the
identifiable assets, liabilities and contingent liabilities acquired is
recognised as goodwill.
The cost of the combination includes the estimated amount of contingent
consideration that is probable and can be measured reliably, and is adjusted
for changes in contingent consideration after the acquisition date.
Provisional fair values recognised for business combinations in previous
periods are adjusted retrospectively for final fair values determined in the
12 months following the acquisition date.
1.3 Basis of consolidation
The consolidated group financial statements consist of the financial
statements of the parent company Northcoders Group Plc together with all
entities controlled by the parent company (its subsidiaries).
All financial statements are made up to 31 December 2023. Where necessary,
adjustments are made to the financial statements of subsidiaries to bring the
accounting policies used into line with those used by other members of the
group.
All intra-group transactions, balances and unrealised gains on transactions
between group companies are eliminated on consolidation. Unrealised losses are
also eliminated unless the transaction provides evidence of an impairment of
the asset transferred.
Subsidiaries are consolidated in the group's financial statements from the
date that control commences until the date that control ceases.
The Group applied the principles of merger accounting as part of the historic
acquistion of Northcoders Limited. Northcoders Group Plc was incorporated on 6
May 2021 and attained control of Northcoders Limited by means of a
share-for-share exchange on 24 June 2021. Merger accounting requires that the
results of the Group are presented as if the Group has always been in its
present form, and does not require a re-evaluation of fair values as at the
point of acquisition. Accordingly, as a result of this merger accounting, a
merger reserve is recognised within equity which represents the difference
between the net assets of the Group and the retained profits recognised by the
Group as at 24 June 2021.
During the year, 100% of the share capital of Tech Returners Limited was
acquired by Northcoders Limited. Acquisition accounting applies to this
transaction.
Accounting policies 1.6, 1.7 and 1.9 are also relevant to the basis of
consolidation.
1.4 Going concern
In preparing the financial statements, the directors have considered the
principal risks and uncertainties facing the business, along with the Group's
objectives, policies and processes for managing its exposure to financial
risk. In making this assessment the directors have prepared cash flow
forecasts for the foreseeable future, being a period of at least 12 months
from the date of approval of the financial statements.
Forecasts are adjusted for reasonable sensitives that address the principal
risks and uncertainties to which the Group is exposed, thus creating a number
of different scenarios for the board to challenge. Even under the worst-case
scenario identified, the directors do not believe this to cause a material
uncertainty around going concern.
At the time of approving the financial statements, the directors have a
reasonable expectation that the Group 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.
1.5 Revenue
Revenue from providing services is recognised in the accounting period in
which the services are rendered. Services are typically provided over short
periods of time, spanning typically a few months at most. However, for
fixed-price contracts that span accounting periods, revenue is recognised
based on the actual service provided to the end of the reporting period as a
proportion of the total services to be provided because the customer receives
and uses the benefits simultaneously. Where the Group has contracts where the
period between the transfer of the promised services to the customer and
payment exceeds one year, the Group adjusts transaction price for the time
value of money. Revenue is determined as follows:
· For consumer bootcamps, income is received in advance of the service
being provided and is recognised on a pro-rata basis across the course
delivery, based on delivery dates for those courses. Any income received in
advance is recognised as deferred revenue. Apprenticeship income is a funding
mechanism for the consumer revenue stream. The Group receives lump-sum
drawdowns at regular intervals, which typically are billed in arrears
resulting in accrued income. In addition, the Group receives a contingent
success fee, payable at the end. The Group makes an assessment of the
probability of success and accrues this on a percentage of completion basis as
the course progresses.
· For corporate solutions, amounts are invoiced in arrears for
development work performed along with any associated costs, based on the
number of hours spent on each contract at agreed contractual rates for those
delivering the course. Where appropriate, any amounts to be invoiced are
recognised as accrued revenue, and any amounts invoiced in advance are
recognised as deferred revenue, in line with performance obligations per
contracts with customers.
· For consultancy contracts, amounts are recognised on a pro-rata basis
throughout the length of the contract unless a performance obligation states
otherwise.
· For conference events, income is recognised once the event has taken
place. Any income received in advance is recognised as a contract liability
until the performance obligation has been satisfied.
Determining the transaction price
The Group's revenue on over-time sales is generally based on fixed price
contracts but these are subject to more variability as a result of the nature
of the contract. Any variable consideration is constrained in estimating
contract revenue in order that it is highly probable that there will not be a
future reversal in the amount of revenue recognised when the final amounts of
any variations has been determined.
Allocating amounts to performance obligations
Where the contracts include multiple performance obligations, which are
determined to be separate performance obligations, the transaction price will
be allocated to each performance obligation based on the stand-alone selling
prices. Where these are not directly observable, they are estimated based on
expected cost plus margin.
1.6 Goodwill
Goodwill represents the excess of the cost of acquisition over the fair value
of the net identifiable assets of the acquired subsidiary at the date of
acquisition. Goodwill on acquisition of the subsidiaries is included in
intangible assets. Goodwill is tested annually for impairment and carried at
cost less accumulated impairment losses. Impairment losses on goodwill are not
reversed. Gains and losses on the disposal of an entity include the carrying
amount of goodwill relating to the entity sold.
1.7 Intangible assets other than goodwill
The Group's other intangible assets are stated at cost less accumulated
amortisation and impairment losses. Where assets are acquired through business
combinations, the Group uses an appropriate fair value technique in order to
determine cost. Intangible assets are tested annually for impairment or
otherwise when circumstances change.
Amortisation begins when an asset is acquired or becomes available for use and
is calculated on a straight- line basis to allocate the cost of assets over
their estimated useful lives as follows:
Licence 4 years straight line
Technology 5 years straight line
Development costs 10 years straight line
Brand 6 years straight line
Customer relationships 6 years straight line
Customer contracts 6 years straight line
1.8 Property, plant and equipment
Property, plant and equipment are initially measured at cost and subsequently
measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets
less their residual values over their useful lives on the following bases:
Leasehold improvements Over the term of the lease
Fixtures and fittings 25% straight line
Computers 33% straight line
Right of use assets Over the term of the lease
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 recognised in the income statement.
1.9 Non-current investments
Interests in subsidiaries, associates and jointly controlled entities are
initially measured at cost and subsequently measured at cost less any
accumulated impairment losses. The investments are assessed for impairment at
each reporting date and any impairment losses or reversals of impairment
losses are recognised immediately in profit or loss.
A subsidiary is an entity controlled by the parent company. Control is the
power to govern the financial and operating policies of the entity so as to
obtain benefits from its activities.
1.10 Impairment of tangible and intangible assets
At each reporting end date, the group reviews the carrying amounts of its
tangible and intangible 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 group estimates
the recoverable amount of the cash-generating unit to which the asset belongs.
Intangible assets with indefinite useful lives and intangible assets not yet
available for use are tested for impairment annually, and whenever there is an
indication that the asset may be impair
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.
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.
1.11 Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with
banks, other short-term liquid investments with original maturities of three
months or less, and bank overdrafts. Bank overdrafts are shown within
borrowings in current liabilities.
1.12 Financial assets
Financial assets are recognised in the group's statement of financial position
when the group becomes party to the contractual provisions of the instrument.
Financial assets are classified into specified categories, depending on the
nature and purpose of the financial assets.
At initial recognition, financial assets classified as fair value through
profit and loss are measured at fair value and any transaction costs are
recognised in profit or loss. Financial assets not classified as fair value
through profit and loss are initially measured at fair value plus transaction
costs.
Financial assets at fair value through profit or loss
When any of the above-mentioned conditions for classification of financial
assets is not met, a financial asset is classified as measured at fair value
through profit or loss. Financial assets measured at fair value through profit
or loss are recognized initially at fair value and any transaction costs are
recognised in profit or loss when incurred. A gain or loss on a financial
asset measured at fair value through profit or loss is recognised in profit or
loss, and is included within finance income or finance costs in the statement
of income for the reporting period in which it arises.
Financial assets held at amortised cost
Financial instruments are classified as financial assets measured at amortised
cost where the objective is to hold these assets in order to collect
contractual cash flows, and the contractual cash flows are solely payments of
principal and interest. They arise principally from the provision of goods and
services to customers (eg trade receivables). They are initially recognised at
fair value plus transaction costs directly attributable to their acquisition
or issue, and are subsequently carried at amortised cost using the effective
interest rate method, less provision for impairment where necessary.
Financial assets at fair value through other comprehensive income
Debt instruments are classified as financial assets measured at fair value
through other comprehensive income where the financial assets are held within
the group's business model whose objective is achieved by both collecting
contractual cash flows and selling financial assets, and the contractual terms
of the financial asset give rise on specified dates to cash flows that are
solely payments of principal and interest on the principal amount outstanding.
A debt instrument measured at fair value through other comprehensive income is
recognised initially at fair value plus transaction costs directly
attributable to the asset. After initial recognition, each asset is measured
at fair value, with changes in fair value included in other comprehensive
income. Accumulated gains or losses recognised through other comprehensive
income are directly transferred to profit or loss when the debt instrument is
derecognised.
Impairment of financial assets
Financial assets, other than those measured at fair value through profit or
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 of the investment have
been affected.
The Group recognises lifetime expected credit losses (ECL) for trade
receivables and amounts due on contracts with customers. The expected credit
losses on these financial assets are estimated based on the Group's historical
credit loss experience, adjusted for facts that are specific to the debtors,
general economic conditions and an assessment of both the current as well as
the forecast director of conditions at the reporting date, including time
value of money where appropriate. Lifetime ECL represents the expected credit
losses that will result from all possible default events over the expected
life of a financial instrument.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash
flows from the asset expire, or when it transfers the financial asset and
substantially all the risks and rewards of ownership to another entity.
1.13 Financial liabilities
The group recognises financial debt when the group becomes a party to the
contractual provisions of the instruments. Financial liabilities are
classified as either 'financial liabilities at fair value through profit or
loss' or 'other financial liabilities'.
Other financial liabilities
Other financial liabilities, including borrowings, trade payables and other
short-term monetary liabilities, are initially measured at fair value net of
transaction costs directly attributable to the issuance of the financial
liability. They are subsequently measured at amortised cost using the
effective interest method. For the purposes of each financial liability,
interest expense includes initial transaction costs and any premium payable on
redemption, as well as any interest or coupon payable while the liability is
outstanding.
Derecognition of financial liabilities
Financial liabilities are derecognised when, and only when, the group's
obligations are discharged, cancelled, or they expire.
1.14 Equity instruments
Equity instruments issued by the parent company are recorded at the proceeds
received, net of direct issue costs. Dividends payable on equity instruments
are recognised as liabilities once they are no longer payable at the
discretion of the company.
Share capital represents the nominal value of shares that have been issued.
Share premium represents the excess of the subscription price over the par
value of shares issued.
Share option reserve relates to amounts recognised for the fair value of share
options and warrants granted in accordance with IFRS 2.
Other reserve represents the nominal value of the share for share exchange.
Merger reserve represents the carrying value of the investment in the
subsidiary undertaking at the point of the share for share exchange.
Retained earning include all current and prior period retained earnings.
1.15 Taxation
The tax expense represents the sum of the tax currently payable and deferred
tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable
profit differs from net profit as reported in the income statement 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
group's liability for current tax is calculated using tax rates that have been
enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit, and is accounted for using the balance sheet liability method.
Deferred tax liabilities are generally recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which deductible
temporary differences can be utilised. Such assets and liabilities are not
recognised if the temporary 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 income statement, 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 group 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.
1.16 Employee benefits
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 inventories or non-current assets.
The cost of any unused holiday entitlement is recognised in the period in
which the employee's services are received.
1.17 Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an
expense as they fall due.
1.18 Share-based payments
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. A corresponding adjustment is
made to equity.
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.
1.19 Leases
At inception, the group assesses whether a contract is, or contains, a lease
within the scope of IFRS 16. A contract is, or contains, a lease if the
contract conveys the right to control the use of an identified asset for a
period of time in exchange for consideration. Where a tangible asset is
acquired through a lease, the group recognises a right-of-use asset and a
lease liability at the lease commencement date. Right-of-use assets are
included within property, plant and equipment, apart from those that meet the
definition of investment property.
The right-of-use asset is initially measured at cost, which comprises the
initial amount of the lease liability adjusted for any lease payments made at
or before the commencement date plus any initial direct costs and an estimate
of the cost of obligations to dismantle, remove, refurbish or restore the
underlying asset and the site on which it is located, less any lease
incentives received.
The right-of-use asset is subsequently depreciated using the straight-line
method from the commencement date to the earlier of the end of the useful life
of the right-of-use asset or the end of the lease term. The estimated useful
lives of right-of-use assets are determined on the same basis as those of
other property, plant and equipment. The right-of-use asset is periodically
reduced by impairment losses, if any, and adjusted for certain remeasurements
of the lease liability.
The lease liability is initially measured at the present value of the lease
payments that are unpaid at the commencement date, discounted using the
interest rate implicit in the lease or, if that rate cannot be readily
determined, the group's incremental borrowing rate. Lease payments included in
the measurement of the lease liability comprise fixed payments, variable lease
payments that depend on an index or a rate, amounts expected to be payable
under a residual value guarantee, and the cost of any options that the group
is reasonably certain to exercise, such as the exercise price under a purchase
option, lease payments in an optional renewal period, or penalties for early
termination of a lease.
The lease liability is measured at amortised cost using the effective interest
method. It is remeasured when there is a change in: future lease payments
arising from a change in an index or rate; the group's estimate of the amount
expected to be payable under a residual value guarantee; or the group's
assessment of whether it will exercise a purchase, extension or termination
option. When the lease liability is remeasured in this way, a corresponding
adjustment is made to the carrying amount of the right-of-use asset, or is
recorded in profit or loss if the carrying amount of the right-of-use asset
has been reduced to zero.
The group has elected not to recognise right-of-use assets and lease
liabilities for short-term leases of machinery that have a lease term of 12
months or less, or for leases of low-value assets including IT equipment. The
payments associated with these leases are recognised in profit or loss on a
straight-line basis over the lease term.
1.20 Grants
Grants for revenue expenditure are credited in the income statement as other
operating income in the period in which the expenditure for which they are
intended to contribute towards has been incurred.
1.21 Foreign exchange
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.
1.22 Non-recurring items
Items which are material either because of their size or nature, and which are
non-recurring, are presented within their relevant consolidated income
statement category, but highlighted through separate disclosure. The separate
reporting of non-recurring items helps provide a better picture of the group
and company's underlying performance. Items which are included within the
non-recurring category include (but are not limited to):
· Costs incurred in relation to the integration of significant
acquisitions and other major restructuring programmes;
· Significant goodwill or other asset impairments relating to specific
market events;
· Revenue clawback due to the inability to claim for job outcomes after
the period. The reason for this being the shift in outcomes rate due to the
post covid tech economy crash; and
· Other particularly significant or unusual items.
2 Adoption of new and revised standards and changes in accounting policies
In the current year, the following new and revised standards and
interpretations have been adopted by the group and have an effect on the
current period or a prior period or may have an effect on future periods:
· IFRS 17 'Insurance contracts' and subsequent withdrawal of IFRS 4
'Insurance Contracts' and amendments to IFRS 17
· Deferred tax related to Assets and Liabilities arising from a single
transaction (Amendments to IAS 12 Income Taxes)
· International Tax Reform - Pillar Two Model Rules (Amendments to IAS
12)
· Disclosure of Accounting Policies (Amendments to IAS 1 amnd IFRS
Practive Statement 2)
· Definition of an Accounting Estimate (Amendments to IAS 8)
Standards which are in issue but not yet effective
At the date of authorisation of these financial statements, the following
standards and interpretations, which have not yet been applied in these
financial statements, were in issue but not yet effective (and in some cases
had not yet been adopted by the UK):
Supplier Finance Arrangements (Amendments Effective date - period beginning on or after
to IAS 7 and IFRS 7) 1 January 2024*
Non-current Liabilities with Covenants (Amendments to IAS 1) and 1 January 2024*
Classification of Liabilities as Current or Non-current (Amendments to IAS 1)
Lease Liability in a Sale and Leaseback 1 January 2024*
(Amendments to IFRS 16)
Lack of Exchangeability (Amendments to IAS 1) 1 January 2025*
* These standards, amendments and interpretations have not yet been endorsed
by the UK and the dates shown are the expected dates.
The adoption of all above standards is not expected to have any impact on the
Group's financial statements.
3 Critical accounting estimates and judgements
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, if the revision affects only that period, or in the
period of the revision and future periods if the revision affects both current
and future periods.
The estimates and assumptions which have a significant risk of causing a
material adjustment to the carrying amount of assets and liabilities are
outlined below.
Critical judgements
Capitalisation of development costs
The Group recognises as intangible fixed assets development costs that are
considered to meet the relevant capitalisation criteria. The measurement of
such costs and assessment of their eligibility in line with the appropriate
capitalisation criteria requires judgement and estimation around the time
spent by eligible staff on development, expectations around the ability to
generate future economic benefit in excess of cost and the point at which
technical feasibility is established.
Useful lives and impairment of non-current assets (including right of use assets)
Depreciation is provided so as to write down the assets to their residual
values over their estimated useful lives as set out in the Group's accounting
policy. The selection of these estimated lives requires the exercise of
management judgement. Useful lives are regularly reviewed and should
management's assessment of useful lives shorten/increase then depreciation
charges in the financial statements would increase/decrease and carrying
amounts of tangible assets would change accordingly.
The Group is required to consider, on an annual basis, whether indications of
impairment relating to such assets exist and if so, perform an impairment
test. The recoverable amount is determined based on the higher of value in use
calculations or fair value less costs to sell. The use of value in use method
requires the estimation of future cash flows and the choice of a discount rate
in order to calculate the present value of the cash flows. The Directors are
satisfied that all recorded assets will be fully recovered from expected
future cash flows.
Deferred tax
The Group makes provision for anticipated tax consequences based on the
likelihood of whether additional taxes may arise. The Group recognises
deferred tax assets to the extent to which it expects to be able to utilise
the balances against future taxable profits.
Key sources of estimation uncertainty
Incremental borrowing rates applied to calculate lease liabilities
The Group has used the incremental borrowing rate to calculate the value of
the lease liabilities relating to its property lease liabilities recognised
under IFRS 16. The discount rate used reflects the estimated risks associated
with borrowing against similar assets by the Group, incorporating assumptions
for similar terms, security and funds at that time.
Share based payments
The determination of the fair values of EMI options and warrants has been made
by reference to the Black- Scholes model. The input with the greatest amount
of estimation being the volatility of the company's share price which has been
derived via benchmarking against similar companies in the industry.
Expected credit losses
The amount recognised as a provision is the best estimate of the expected
credit loss that the Group is projected to incur on receivables. Each year end
the Directors assess the risks and uncertainties surrounding receivable
balances and use expected loss rates based on the historical credit losses
experienced by the Group.
Revenue provision
An estimate of variable consideration is recognised against DFE income due to
the performance based nature of the contract. The measurement of the
consideration requires judgment and estimation around the expectation of what
percentage of students who finish the DFE course go into a relevant job within
the timescales of the contract. In 2023 this adjustment reduces revenue by
£364,021 and reduces current assets. Job outcomes are regularly reviewed by
management and the consideration is flexed as necessary. This is a change in
estimate of the variable consideration to the previous year. In the previous
year, management presumed all revenue would be received, outcome rates were
high enough to justify not needing an adjustment. Due to an in inflation of
jobs due to the pandemic, this estimate was incorrect and the rectification of
this has been included in non-recurring items, see note 5.
4 Revenue
IFRS 8 'Operating Segments' requires operating segments to be identified on
the basis of internal reports of the Group that are regularly reviewed by the
Group's chief operating decision maker. The chief operating decision maker of
the Group is considered to be the Board of Directors.
The Group previously reported under the following operating segments:
4.1 Consumer bootcamps and apprenticeships - Individuals go through a
selection process and a 13- week coding bootcamp programme to the point where
they are in-demand, career ready Junior Software Engineers. Existing employees
of businesses can undertake a 13-month 'On the Job' apprenticeship programme
for junior software engineers. This is delivered with an on-programme
assessment to one or more apprentices utilising government-backed funding from
the Education and Skills Funding Agency ("ESFA"). All training income is
deferred or accrued as appropriate in order to recognise this on a percentage
of completion basis, which is typically on a straight line period over the
delivery of the course.
4.2 Corporate solutions - On completion of a course, the Group may seek
to place an individual with an employer and such placement fees are included
in this segment. No such fees have been recognised in the current year, and in
the prior year such fees were invoiced directly to the employer. The Group has
decided to not charge these fee's going forwards. This segment further
includes practical developments created on behalf of other companies who
engage the Group and also bespoke training programmes delivered to large
groups from selected organisations.
4.3 Central - Where revenues or costs cannot be meaningfully allocated
to either primary operating segment, these are allocated to the Central
segment.
Following the acquisition of Tech Returners Limited during the year, the way
that financial information is reviewed has changed. The Group's chief
operating decision maker now considers cash flows from a consolidated group
perspective and thus the Board of Directors consider it reasonable and
appropriate to treat the whole business as one single operating segment. All
strategic decisions are made on the basis of the consolidated operating
results.
All assets, liabilities and revenues are located in, or derived in, the United
Kingdom.
The results of the Group are allocated to the single operating segment
consistent with the requirements of IFRS 8:
2023 2022
£ £
Revenue 7,102,319 5,598,863
Cost of sales (2,658,650) (1,656,938)
Gross profit 4,443,669 3,941,925
Operating costs (4,957,649) (3,506,587)
Other operating income - 12,000
Non-recurring costs (562,603) -
Operating profit (1,076,583) 447,338
Net finance costs (149,090) (100,909)
Profit/(loss) before taxation (1,225,673) 346,429
2023 2022
£ £
Revenue analysed by geographical market
United Kingdom 7,102,319 5,598,863
2023 2022
£ £
Other significant revenue
Grants received - 12,000
Revenue includes undiscounted EdAid sales of £7,542 (2022: £5,208) of which
some of these contain a financing element. EdAid sales are governed by a
formal credit agreement facilitated by a third party. An adjustment of £nil
(2022: £nil) has been recognised in finance income to reflect the discounted
element based on expected repayment profiles inherent in the agreement at date
of invoice.
Also included within revenue is undiscounted StepEx sales of £29,924 (2022:
nil). StepEx sales are governed by a formal credit agreement facilitated by a
third party. An adjustment of £nil (2022: nil) has been recognised in finance
income to reflect the discounted element based on expected repayment profiles
inherent in the agreement at date of invoice.
Grants received comprises the following:
4.4 Education and Skills Funding Agency grant of £nil (2022: £12,000)
received for the hire of apprentices.
Revenue from customers who individually accounted for more than 10% of total
Group revenue amounted to £5,778,001 (2022: £4,845,368) from one customer
(2022: one customer).
Assets and liabilities related to contract with customers:
The Group has recognised the following assets and liabilities related to
contracts with customers:
Contract assets 2023 2022
£ £
At 1 January 1,947,922 801,119
Transfers in the year from contract assets to trade receivables (1,595,005) (801,119)
Non-recurring item - irrecoverable amounts written off
(352,917) -
Excess of revenue recognised over cash (or rights to cash) being recognised
during the year
1,398,018 1,947,922
At 31 December 1,398,018 1,947,922
Contract liabilities 2023 2022
£ £
At 1 January 5,239 21,813
Amounts recognised as revenue during the year (5,239) (21,813)
Amounts received in advance of performance and not recognised as revenue
during the year
206,500 5,239
At 31 December 206,500 5,239
Contract assets and contract liabilities are both shown on the face of the
statement of financial position. They arise from the Group's contracts because
cumulative payments received from customers at each balance sheet date do not
necessarily equal the amount of revenue recognised on the contracts.
5 Non-recurring items
2023 2022
£ £
Expenditure
Irrecoverable amounts 485,770 -
Acqusition costs 57,269 -
Business restructuring costs 19,564 -
562,603 -
Irrecoverable amounts
Having reviewed the recoverability of contract assets, management have
assessed that a portion of income accrued during 2022, amounting to £458,770,
is irrecoverable and has therefore been written off as an non- recurring item.
The Group recognises revenue in accordance with IFRS 15 and the specific
provisions relating to variable consideration. At the time of recognising the
contract asset, the Group had every expectation that the amounts would be
recoverable. The contracts are performance-based and external factors and
conditions arising during 2023, which could not be foreseen, have had a
detrimental impact to the recoverability of these contract assets. In
particular, following the Covid-19 pandemic, the number of job opportunities
for course participants has diminished, resulting in reduced performance-based
revenue. Such factors and conditions have been taken into account in
recognising revenue as at 31 December 2023.
Acquisition costs
Acquisition costs pertain to legal and professional fees incurred as part of
the acquisition of Tech Returners Limited during the year. Such costs are
non-recurring and hence deemed non-recurring.
Business restructuring costs
Non-recurring restructuring costs in the form of redundancy and severance
payments were incurred by the Group as part of its retreat from the
apprenticeship market.
6 Adjusted EBITDA
The Directors have used an Alternative Performance Measure ("APM") in the
preparation of these financial statements. The Consolidated Income Statement
has presented Adjusted EBITDA, where EBITDA represents Earnings Before
Interest, Tax, Depreciation and Amortisation. The adjusted element removes non
recurring items which are not relevant to the underlying performance and cash
generation of the business. Non- recurring items for the current year are
disclosed in note 5. There are no non-recurring costs for the prior year.
The Directors have presented this APM because they feel it most suitably
represents the underlying performance and cash generation of the business, and
allows comparability between the current and comparative period in light of
the rapid changes in the business (most notably its admission to AIM and
associated costs), and will allow an ongoing trend analysis of this
performance based on current plans for the business.
7 Operating loss
2023 2022
£ £
Operating (loss)/profit for the year is stated after charging/(crediting):
Exchange losses 896 -
Government grants - (12,000)
Fees payable to the company's auditor for the audit of the group and company's 115,000 75,000
financial statements
Depreciation of property, plant and equipment 172,582 171,521
Profit on disposal of property, plant and equipment (83) -
Amortisation of intangible assets (included within administrative expenses) 208,751 85,167
Impairment of intangible assets (included within administrative expenses) 25,474 -
Share-based payments 186,542
203,607
8 Auditor's remuneration
2023 2022
Fees payable to the company's auditor and associates: £ £
For audit services
Audit of the financial statements of the group and company 75,000 -
Audit of the Group and subsidiary undertakings 40,000 75,000
115,000 75,000
9 Employees
The average monthly number of persons (including directors) employed by the
group during the year was:
2023 2022
Number Number
Executive Directors 3 3
Non-Executive Directors 2 2
Administration and operations 44 32
Client service delivery 75 50
Total 124 87
Their aggregate remuneration comprised:
2023 2022
£ £
Wages and salaries 4,294,730 3,095,713
Social security costs 441,671 315,711
Pension costs 446,996 191,136
5,183,397 3,602,560
In addition to the above, further employee costs have been incurred as part of
the development costs. The total employment costs which have been capitalised
as development are:
2023 2022
£ £
Wages and salaries 621,977 358,439
Social security costs 58,668 44,805
Pension costs 34,531 16,130
715,176 419,374
10 Directors' remuneration
2023 2022
£ £
Remuneration for qualifying services 555,322 504,722
Amounts receivable under long term incentive schemes 43,383 28,918
Company pension contributions to defined contribution schemes 38,489 7,706
637,194 541,346
The number of directors for whom retirement benefits are accruing under defined contribution schemes
amounted to 4 (2022: 4). No pension contributions have been recognised for Mr
A N Parker.
Remuneration disclosed above includes the following amounts paid to the
highest paid director:
2023 2022
£ £
Remuneration for qualifying services 170,842 161,939
Company pension contributions to defined contribution schemes 13,625 1,468
During the year to 31 December 2023 the directors received remuneration as
follows:
Director Salary Share options Benefits in Pension Total
£ kind
£ £ £ £
Mr A Batra 142,361 - 1,615 11,389 155,365
Mr C D Hill 170,312 - 530 13,625 184,467
Ms C Prior 150,833 43,383 359 12,100 206,675
Mr A N Parker 35,000 - - - 35,000
Mrs A M Williams 54,312 - - 1,375 55,687
552,818 43,383 2,504 38,489 637,194
During the year to 31 December 2022 the directors received remuneration as
follows:
Director Salary Share options Benefits in Pension kind Total
£ £ £ £ £
Mr A Batra 127,250 - 1,370 1,468 130,088
Mr C D Hill 153,812 - 781 1,468 156,061
Ms C Prior 132,714 28,918 307 1,468 163,407
Mrs S Lindsay
(resigned 4 January 2022) 357 - - - 357
Mr A N Parker 35,000 - - - 35,000
Mrs A M Williams (appointed 5 January 2022)
53,131 - - 3,302 56,433
502,264 28,918 2,458 7,706 541,346
The directors of the Company control 30.66% (2022: 36.76%) per cent of the
voting shares of the Company and hold 175,000 (2022: 75,000) EMI share
options. No Directors exercised share options during the year.
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