REG - Northcoders Group - Final Results
26/04/2022 07:00
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RNS Number : 2742J Northcoders Group PLC 26 April 2022
For immediate release 26 April 2022
Northcoders Group PLC
('Northcoders', the 'Group' or the 'Company')
Final Results
Northcoders (AIM: CODE), an independent provider of training programmes for
software coding, is pleased to announce its maiden Final Results for the year
ended 31 December 2021 ('FY21' or 'the period').
Financial Highlights
· Revenue increased 124% to £3.0m (FY20: £1.3m) driven by successful
delivery of IPO growth strategy
o Consumer revenue, which includes core bootcamps and apprenticeship
revenues, of £2.8m (FY20: £1.2m)
o Corporate Solutions revenue was £0.3m (2020: £0.1m)
· Gross margin growth to 72% (FY20: 67%), moving towards 79% target in
2019 driven by cost benefits of new hybrid model
· Gross profit increased significantly to £2.2m (FY20: £0.9m)
· Adjusted EBITDA increased to £0.4m from a loss in 2020 (FY20: loss
of £0.3m)
· £3.5m raised at IPO (before expenses) to accelerate further growth
· Net assets as at 31 December 2021 were £2.2m (FY20: £0.5m) of
which cash was £1.6m (FY20: £0.5m).
Operational Highlights
· Continued to expand geographic footprint with new lease signed for
core hub in Leeds alongside existing Manchester campus
o New training hub opened in Newcastle and activity started in Birmingham
· Implemented new highly scalable hybrid course-delivery model blending
online and in person teaching to extend reach of Northcoders' training
o Driving record number of 3,662 students applying with 424 enrolling and
213 graduating so far
· Demand at record levels
o Continued to increase hiring partners to over 315, including new
businesses such as NHS Digital, PrettyLittleThing, Informa, AND Digital
Limited, Wren Kitchens Limited and Sky Betting & Gaming.
o Engaged with a new funding partner, StepEx Limited, allowing applications
from a more diverse range of backgrounds
o Awarded £1.65m government-funded scholarship in July 2021 and continue to
engage regarding future public funding arrangements
· Launched Apprenticeships course in January 2021 following
government's Education Skills Funding Agency accreditation
o 96 apprentices enrolled in the Period
o Contracts already begun across UK including companies such as
PrettyLittleThing and logistics company, Hermes
· Corporate Solutions division signed multiple new agreements including
with Ove Arup, Digital Applications International Limited (the independent IT
solution delivery company), and NHS Digital
· Grew staff count to 63 members (FY20: 37) to meet increased demand
Current Trading and Outlook
· In January 2022, successfully extended Department for Education
contract with additional £1.65m funding for courses to deliver between
February and September 2022
· In Q1 FY22, graduated 1,000(th) person through bootcamp
· Announced May 2022 opening of Birmingham training hub
· Received a special request from Jason Stockwood, the Chairman of
Grimsby Town Football Club, to establish a facility at the club's stadium;
this is planned for Q3 2022
· Company trading in line with expectations
· At the end of Q1 2022 revenue visibility stood at £3.6m, around 55%
of the target revenue for the year.
Chris Hill, CEO, commenting on the results said:
"We are delighted to report such a strong set of maiden financial results,
demonstrating that Northcoders is successfully delivering its IPO growth
strategy. Consumer and corporate demand for our services continues to
increase, and we are now extending our reach across the UK as planned through
our hybrid product offering.
"As the need for software and technology skills continues to increase, and
digital transformation takes priority for organisations in almost every
sector, Northcoders' market leading reputation is driving demand for our
training. This, coupled with our extended Government contract, gives us
confidence in our ability to fulfil our significant growth ambitions."
Analyst meeting
A virtual meeting for sell-side analysts will be held at 10.00 a.m. today, 26
April 2022. Please contact Buchanan via northcoders@buchanan.uk.com
(mailto:northcoders@buchanan.uk.com) if you wish to join the meeting. A
copy of the Full Year Results presentation will be available on the Group's
website later today: www.northcodersgroup.com
(https://www.northcodersgroup.com/) .
This announcement contains inside information for the purposes of Article 7 of
the UK version of Regulation (EU) No 596/2014 which is part of UK law by
virtue of the European Union (Withdrawal) Act 2018, as amended ("MAR"). Upon
the publication of this announcement via a Regulatory Information Service,
this inside information is now considered to be in the public domain.
- Ends -
For further enquiries:
Northcoders Group PLC Via Buchanan
Chris Hill, CEO Tel: +44 (0) 20 7466 5000
Charlotte Prior, CFO www.northcodersgroup.com (http://www.northcodersgroup.com/)
WH Ireland Limited (Nominated Adviser & Joint Broker) Tel: +44 (0)20 7220 1666
Mike Coe
Sarah Mather
Peterhouse Capital Limited (Joint Broker) Tel+44 (0) 20 7496 0930
Martin Lampshire www.peterhousecap.com (http://www.peterhousecap.com/)
Lucy Williams
Buchanan Communications
Henry Harrison-Topham northcoders@buchanan.uk.com (mailto:northcoders@buchanan.uk.com)
Stephanie Whitmore
Tilly Abraham
Notes to Editors
Northcoders is a market leading provider of B2B and B2C coding and software
development training. Founded in 2015, its business model operates a hybrid
structure with flagship sites in Manchester and Leeds supported by a best in
class digital offering to businesses and individuals across the UK.
Powered by IP rich technology, Northcoders' coding school offers boot camp
courses to consumers from a range of backgrounds, delivered through virtual
and physical learning. The Group also works with blue chip corporates across
multiple sectors to supply innovative EdTech solutions for the upskilling and
reskilling of employees, and is a registered provider of government-backed
apprenticeships in the field.
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 from corporates and government. It
operates in a significant and growing market with structural growth trends
further accelerated by Covid-19.
Northcoders was admitted to trading on AIM in July 2021 with the ticker
CODE.L. For additional information please visit www.northcodersgroup.com
(https://www.northcodersgroup.com/) .
Chairman's Introduction
The successful IPO in July 2021 has placed the business in a strong position
with the financial support to achieve its immediate commercial targets, and in
the twelve months under review significant progress has already been made.
I joined the Group as Chair in January 2022, after the period we are reporting
on, so will reflect first on what excited me about Northcoders. What I could
see was a company with enormous potential for the future and one with a great
market opportunity in front of it. Northcoders offers an excellent product,
has high quality people, and by facilitating growth in digital capability is
simultaneously significantly enhancing both corporate efficiency and the
prospects for our graduates throughout the UK. We do not have enough digital
capability across the UK, or the global market. The vision of Northcoders to
be able to train and expand the current and future talent pool, increasing and
improving digital skills and capacity across a broader spectrum of people, is
compelling.
Financial review
Despite the impact of Covid-19 and the distraction of the IPO, we had a year
of significant growth and met our market expectations. Our 2021 revenue grew
to £3.0m from £1.3m in 2020. This also represents growth from our previous
(pre Covid-19) highest revenue year of £2.0m in 2019. We also reported 72%
gross profit margin, which is moving towards our target of 79% (2019). Our
adjusted EBITDA has increased to £0.4m from a loss of £0.3m in 2020.
Now we want to build on those results. Northcoders has grown to date based on
the ideas and committed, hard work of a group of inspirational entrepreneurs.
I see my role, alongside the rest of the Board, as overseeing how we now
capture and maximise the essence of the culture, values and behaviour that has
made Northcoders successful to date whilst managing the necessary change that
will enable us to continue to be successful and able to grow in the future. We
will also need to continue to develop our strategic plan as the organisation
evolves and grows over time. With cultural clarity and strategic direction, we
will be able to continue to attract great people with the right talents and
motivation, to provide a great product and service, that will be able to make
a genuine difference for all the graduates and corporate customers that we
serve and train all over the UK.
Strategy
Growth is our ambition, of course. Growth financially, growth in customer
numbers, growth for the people who work for Northcoders, and growth for the
people we train. It will mean expanding the number of locations and broadening
our product set and the markets we serve. We would like to do that while
maintaining the entrepreneurial sense of a small organisation and creating
significant shareholder return. How we achieve this balance is going to be
our key challenge and we are up for the challenge.
Employees
It would be remiss of me not to acknowledge and thank our employees for all
their efforts in this year of significant change and evolution in our company.
That this has been achieved against the continuing backdrop of Covid-19 is to
their great credit.
I would like to acknowledge the contribution of my predecessor Sandra Lindsay
and thank her on behalf of the Company for all she did in supporting the
business up to and through its IPO.
Outlook
Trading in the current year to date has started well and we expect further
significant growth in the year ahead with the balance weighted to the second
half of the year. I am very much looking forward to working with the Board and
the Northcoders team to continue the excellent momentum of the past twelve
months, as we continue to implement the growth strategy set out at IPO.
There are, we believe, exciting times ahead!
Angela Williams
Non-Executive Chair
CEO's Statement
Introduction
The financial year ended 31 December 2021 ('FY21' or the 'Period') was a
momentous year for Northcoders with its successful IPO in July 2021 raising
new capital for the Company and providing it with the resources to implement
its growth strategy of expanding its geographical presence and product
offering.
IPO/flotation
In July 2021, the Company was admitted to trading on the AIM of the London
Stock Exchange and completed a fundraising, via a placing and subscription of
1,944,444 new ordinary shares at 180p per share, which raised £2.9m, net of
expenses.
The admission to AIM has enabled us to increase our marketing activities,
focus on geographical expansion, grow our team, and develop our internal tech
roadmap further. We have also started to look at our product‑extension
roadmap in more detail.
We also intended to use proceeds of the IPO as a cash flow buffer to be able
to offer more favourable payment terms to students through external student
finance providers. However, the receipt of £1.65m of funding from the
Department for Education (DfE) in 2021, with a further £1.65m to follow in
2022, has meant we can repurpose these funds.
Financial review
The Group delivered a strong performance in 2021 despite the continued impact
of Covid-19 generally and the resources required for the IPO more specially.
Underlying performance was in line with expectations and cash flow benefited
from the additional course funding available from the Group's contract under
the DfE's 'Lifetime Skills Guarantees' and 'Plan for Jobs' initiatives,
secured in July 2021. Non‑underlying costs were also lower than expectations
at the time of the IPO.
2021 revenue, which comprises consumer revenue and corporate revenue,
increased 124% to £3.0m (2020: £1.3m) and was also higher than our previous
highest revenue year of £2.0m in 2019.
Consumer revenue, which includes core bootcamps and apprenticeship revenues,
was £2.7m (2020: £1.2m) and corporate revenue was £0.3m (2020: £0.1m).
Gross profit for the year was £2.2m (2020: £0.9m) with a reported gross
profit margin ('GPM') of 72% (2020: 67%). The cost benefits of the new hybrid
model are driving a move back towards the GPM achieved in 2019 of 79%.
EBITDA, adjusted for share-based payments and exceptional items, was £0.4m
(2020: loss £0.3m).
The loss for the year before tax was £0.5m (2020: £1.2m), after recognising
£0.4m of exceptional costs. There was a tax credit of £0.2m (FY20: £0.3m)
giving a loss for the year of £0.4m (2020: £0.9m).
Basic earnings per share was a loss of 6.13p per share (2020: 18.84p). Basic
adjusted earnings per share was 3.04p per share (2020: a loss of 7.03p).
Net assets as at 31 December 2021 were £2.2m (2020: £0.5m) of which cash
was £1.6m (2020: £0.5m). The increase in cash and net assets has been
caused by company growth and the July 2021 IPO. This net position now puts the
company in a good place going forwards as we continue to realise our future
growth strategy and expansion.
Operational review
At the turn of 2021, Northcoders was operating online‑only due to the
coronavirus restrictions in place. Both physical hubs were closed, with
Manchester reopening on 4 May and Leeds on 21 June.
In 2021, we were able to fully implement a new hybrid course-delivery model
blending online and in-person teaching, which we had developed during the
course of 2020 in response to the pandemic. With a record number of students
applying (3,662), enrolling (424) and graduating (213) through our courses, we
enjoyed the benefits of this highly scalable new model. In this new operating
model, we stream all lectures to our various Northcoders hubs, but also to
students studying from home and remotely. We then have tutors on-hand via our
custom, internally built, help-desk system answering requests either in person
on campus, or remotely.
Operationally, we have been able to scale the business well, with all sectors
sharing service areas and the student-to-tutor ratio increasing only
gradually, ensuring we maintain quality. The new operating model has enabled
us to teach our bootcamp and apprenticeship courses with little or no
disruption from coronavirus lockdowns or other restrictions. But it has also
proven our model to be resilient and scalable whilst maintaining our quality
standards and reputation.
Northcoders Group ended 2021 with a permanent headcount of 63 members of staff
compared to the 37 we started the year with. Staff numbers are expected to
grow by a further 30 employees in FY22 with the headcount at 31 March 2022
standing at 79.
During 2021, we were also able to set up a team focused on creating internal
software. This team works with an aim of creating efficiencies across the
business, improving the quality of service for our learners and end users,
while providing a new rich source of data to inform and improve our sales and
marketing activity. This has resulted in a new version of the Learn to Code
platform that was successfully launched in Q1 2022, a fully functional jobs
board and the current help-desk system that is used by all bootcamp learners.
The team will also monitor the industry and make any necessary changes to the
curriculum.
The entire technical team at Northcoders spends time on rotation in this
internal development team. This enables every member of the technical team to
stay up to date with modern software techniques and processes, enabling
Northcoders tutors to deliver the most cutting-edge and relevant
methodologies/content to our learners and clients.
Consumer bootcamps
Consumer bootcamp courses are designed for individuals seeking a career as a
software developer and are delivered over a 13-week period.
Consumer demand for the Group's core bootcamp courses grew strongly during the
Period. In July 2021, Northcoders' quality was acknowledged when the Group was
successfully awarded a £1.65m government-funded scholarship programme for its
training courses.
We received over five times the number of applications for the scholarship
places we had available, demonstrating the strength of demand for quality
training.
We have continued to increase the number of our hiring partners, which now
stands at over 315. Additions during the Period included NHS Digital,
PrettyLittleThing, Informa, AND Digital Limited, Wren Kitchens Limited and Sky
Betting & Gaming.
During the Period, the Group has also engaged with a new funding partner,
StepEx Limited, allowing more students from a diverse range of backgrounds to
benefit from the life-changing education that the Group provides.
Consumer demand for the Group's core bootcamp courses is expected to continue
to grow in FY22, especially with the benefit of increased monthly marketing
spend and geographic presence. In Q1 2022, we graduated our one thousandth
person through the coding bootcamp since our first course in 2016. We
anticipate we will graduate at least half that number again in 2022. Our
learner retention rate is 95%. We continue to achieve an Oxbridge‑beating
placement rate of 94%, with average starting salaries in software for our
coding bootcamp graduates now at £26,488.
In January 2022 we reported that the Department for Education had advised that
funding has been increased further, due to the successful delivery of student
courses through the first funding round. The increase entails a further
£1.65m in funding for training courses which we expect to deliver between
February and September 2022. To date, we have awarded £0.7m of this funding.
Apprenticeships
Northcoders launched its apprenticeships courses in January 2021.
Subsequently, the Group has delivered contracts across the UK with learners
from companies based as far south as Plymouth and as far north as Darlington
and Penrith. An increasing number of large employers, such as online fashion
retailer PrettyLittleThing, and logistics company Hermes, are seeing the
benefit of engaging with Northcoders to deliver apprenticeship courses on
their behalf. In the Period, the Group has also launched its new
apprenticeship 'hire to train' programme which is proving to be very popular
with both corporates and individuals alike.
Corporate solutions
Our corporate solutions division services corporates when their needs do not
fall within hiring a bootcamp graduate or putting a staff member on an
apprenticeship. We work with each individual corporate company to work out a
solution to their digital needs. This could be in the form of a tailored
internal training programme through a premium consultancy project, or it could
be that Northcoders take on their software engineering project in house.
We continued to develop our corporate solutions revenue in 2021 with revenues
of £0.3m (2020: £0.1m). Even more pleasingly, we signed contracts for both
software training and software engineering services, totalling £0.5m, in the
Period, of which £0.2m carries forward into FY22. Northcoders signed
agreements in the year with Ove Arup, Digital Applications Limited (the
independent IT solution delivery company), and NHS Digital, as well as working
on mobile app development for two start-up companies. We have also secured
further software development work for Manchester City Council's Adult
Education department.
It is becoming apparent that bespoke, localised training for the corporate
sector is a growing opportunity to drive the growth of Northcoders nationwide.
In response, we expect to invest £0.3m in 2022 into internal intangible
assets with an exciting tech roadmap in place. Continuing with our product
development, and responding to market demand, we will be introducing a premium
consultancy product. This offers packaged solutions and mentorship services to
clients who need to grow and upskill their software teams rapidly. Alongside
that, using a similar revenue model, we will also be providing bespoke
onboarding and training academies for clients who need to train either new or
existing workforces in specific skills.
Geographic expansion and hub roll out
The year commenced with the Company having two hubs in Manchester and Leeds
(albeit they were closed due to Covid). During the year:
· a new lease has been signed in Leeds for a premises that can
accommodate the Company's recent growth as a result of the increasing brand
awareness;
· a training hub in Newcastle was opened;
· activity commenced in Birmingham with a number of students being signed
up in the region. Marketing in the region commenced, although the opening of a
physical hub was deferred due to uncertainty around the UK Government's winter
Covid plans. We are now set to open Birmingham in May 2022; and
· the Company received a special request from Jason Stockwood, the
Chairman of Grimsby Town Football Club, to establish a facility at the club's
stadium; this is planned for Q3 2022.
In due course there will be a Northcoders presence in many more cities
throughout the country, not just in the north of England. Areas that are on
the initial target list include Liverpool and Sheffield, where we already have
graduates and current remote learners. With the availability of the online
offering the Company is taking advantage of its ability to move into new
locations remotely in the first instance and thereafter follow up with a
local, physical presence.
Outlook
Northcoders is a market leader in software engineering training and its market
opportunity is vast. The UK Commission for Employment and Skills estimated
that 1.2m new technically skilled people are needed by 2022 to satisfy future
skills needs in the UK. Digital transformation is a huge priority for
organisations across the UK and the need for coding skills spans across almost
every sector. Our aim is to fulfil as much as possible of this increase in
demand whilst creating life-changing opportunities for individuals.
To meet this demand, we will continue to identify new geographic regions where
it is believed that a Northcoders presence and hybrid product offering, both
in-person and online, would be successful. We will also continue to review our
products and endeavour to provide solutions tailored to corporate needs and
the needs of the industry.
The Group started FY22 with contracted bookings for the year to December 2022
of approximately £3m, approximately 46% of the target revenue for the year.
At the end of Q1 2022 revenue visibility stood at £3.6m, around 55% of the
target revenue for the year. Trading in the year to date has commenced in line
with management's expectations and this, together with the extension of the
DfE contract, gives the Board confidence for the Company's prospects for the
remainder of the year.
Chris Hill
Chief Executive Officer
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2021
2021 2020
Notes £ £
Revenue 2 3,010,357 1,341,493
Cost of sales (848,392) (449,319)
Gross profit 2,161,965 892,174
Other operating income 144,749 153,635
Expenditure (1,947,239) (1,300,865)
Adjusted EBITDA 4 359,475 (255,056)
Depreciation (118,892) (244,854)
Amortisation (134,755) (44,347)
Share-based payments (114,341) -
Total administrative expenses (2,315,227) (1,590,066)
Exceptional items 3 (421,289) (590,788)
Operating loss (429,802) (1,135,045)
Investment revenues 8,574 2,200
Finance costs (102,360) (112,705)
Loss before taxation (523,588) (1,245,550)
Taxation credit 6 165,464 303,443
Loss for the year (358,124) (942,107)
Other comprehensive income:
Items that will not be reclassified to profit or loss
Tax relating to items not reclassified (5,089) -
Total items that will not be reclassified to profit or loss (5,089) -
Total other comprehensive loss for the year (5,089) -
Total comprehensive loss for the year (363,213) (942,107)
Earnings per share 7
Basic (pence per share) (6.13) (18.84)
Diluted (pence per share) (6.13) (18.84)
Adjusted (pence per share) 3.04 (7.03)
Total comprehensive loss for the year is all attributable to the owners of the
Parent Company. All losses after taxation arise from continuing operations.
Consolidated Statement of Financial Position
For the year ended 31 December 2021
2021 2020
Notes £ £
Non-current assets
Intangible assets 495,071 361,289
Property, plant and equipment 525,067 211,566
Deferred tax asset 256,350 159,521
1,276,488 732,376
Current assets
Trade and other receivables 10 1,416,145 298,800
Current tax recoverable 143,042 241,799
Cash and cash equivalents 1,564,645 525,671
3,123,832 1,066,270
Current liabilities
Trade and other payables 467,282 518,472
Borrowings 219,386 191,901
Lease liabilities 181,043 167,916
Deferred revenue 21,813 120,388
889,524 998,677
Net current assets 2,234,308 67,593
Non-current liabilities
Borrowings 512,602 694,195
Lease liabilities 711,524 562,746
Deferred tax liabilities 134,474 85,076
1,358,600 1,342,017
Net assets/(liabilities) 2,152,196 (542,048)
Equity
Called up share capital 69,444 -
Share premium account 2,891,314 -
Merger reserve 500 187,591
Share option reserve 134,715 -
Other reserve (50,000) -
Retained earnings (893,777) (729,639)
Total equity 2,152,196 (542,048)
Consolidated Statement of Changes in Equity
For the year ended 31 December 2021
Notes Share Share premium account Share Other Merger reserve Retained (deficit)/ Total
capital £ option reserve £ earnings £
£ reserve £ £
£
Balance at 1 January 2020 - - - - 187,591 212,468 400,059
Year ended 31 December 2020:
Loss and total comprehensive loss for the year - - - - - (942,107) (942,107)
Balance at 31 December 2020 - - - - 187,591 (729,639) (542,048)
Year ended 31 December 2021:
Loss for the year - - - - - (358,124) (358,124)
Other comprehensive loss:
Tax adjustments on share based payments - - - - - (5,089) (5,089)
Total comprehensive income for the year - - - - - (363,213) (363,213)
Issue of share capital 19,444 3,480,555 - - - - 3,499,999
Costs of float set against premium - (589,241) - - - - (589,241)
Merger reserve transfer - - - - (187,091) 187,091 -
Share options and warrants expense - - 146,699 - - - 146,699
Share-for-share exchange 50,000 - - (50,000) - - -
Cancellation of share options - - (11,984) - - 11,984 -
Balance at 31 December 2021 69,444 2,891,314 134,715 (50,000) 500 (893,777) 2,152,196
Consolidated Statement of Cashflows
For the year ended 31 December 2021
£ £ £ £
Cash flows from operating activities
Loss for the year after tax (358,124) (942,107)
Adjustment for non-cash items:
Taxation charged (165,464) (303,442)
Finance costs 102,360 112,592
Finance income (8,574) (2,085)
Gain on disposal of property, plant and equipment - (11,708)
Amortisation of intangible assets 134,755 44,347
Depreciation of property, plant and equipment 118,892 244,840
Impairment of tangible assets - 590,788
Equity-settled share-based payment and warrants expense 146,699 -
Government grant income via present value adjustment - (15,615)
(29,456) (282,390)
(Increase)/decrease in trade and other receivables (1,117,345) 39,678
Decrease in trade and other payables (152,740) (157,310)
Cash absorbed by operations (1,299,541) (400,022)
Tax refunded 211,701 24,443
Net cash outflow from operating activities (1,087,840) (375,579)
Investing activities
Purchase of intangible assets (268,537) (165,216)
Purchase of property, plant and equipment (42,706) (15,878)
Proceeds on disposal of property, plant and equipment - 2,409
Business combination, net of cash received - (17,973)
Investment revenues received 8,574 150
Net cash used in investing activities (302,669) (196,508)
Financing activities -
Proceeds from issue of shares 2,910,758
Proceeds of new bank loans - 925,000
Repayment of bank loans and borrowings (162,961) (105,296)
Payment of lease liabilities (215,954) (54,424)
Interest paid (102,360) (88,723)
Net cash generated from financing activities 2,429,483 676,557
Net increase in cash and cash equivalents 1,038,974 104,470
Cash and cash equivalents at beginning of year 525,671 421,201
Cash and cash equivalents at end of year 1,564,645 525,671
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 2021 Financing cash flows New leases Other movements(1) At 31 December 2021
£ £ £ £ £
Bank loans and borrowings 885,950 (162,961) - 8,999 731,988
Lease liabilities 730,662 (215,954) 389,687 (11,828) 892,567
1,616,612 (378,915) 389,687 (2,829) 1,624,555
At 1 January 2020 Financing cash flows New leases Other movements(2) At 31 December 2020
£ £ £ £ £
Bank loans and borrowings 46,267 819,704 - 19,979 885,950
Lease liabilities 139,323 (54,424) 782,809 (137,046) 730,662
185,590 765,280 782,809 (117,067) 1,616,612
1. Other movements in the year ended 31 December 2021 includes:
· unwinding of present value adjustment of £8,999 to bank loans; and
· accrual for rent due but unpaid on lease liabilities.
2. Other movements in the year ended 31 December 2020 includes:
· the amount of £20,724 within bank loans and borrowings relating to the
bounce bank loan consolidated on business combination; and
· disposal of leases of £137,046.
Notes to the Final Results information
For the year ended 31 December 2021
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.
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 Group's transition to UK Adopted International Accounting Standards was
completed during the preparation of the Historical Financial Statements
contained in the Admission Document upon the Group's admission to AIM.
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 section 408 of the Companies Act 2006, the Company has not
presented its own statement of comprehensive income. The Company's loss for
the period was £323,817.
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
twelve months following the acquisition date.
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) and the Group's
share of its interests in joint ventures and associates.
All financial statements are made up to 31 December 2021. 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 in consolidating the
results, as Northcoders Group PLC was only incorporated on 6 May 2021 and
control of Northcoders Limited was acquired by Northcoders Group PLC via 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.
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 twelve 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
different scenarios for the Board to challenge, including a 'stress' case
scenario of losing the apprenticeship licence and associated revenues.
However, in this case scenario there would be increased tutor capacity and the
Directors would expect bootcamp revenue to increase. Overall, 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.
2 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 has operating segments as follows:
· 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.
· 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.
· Central - Where revenues or costs cannot be meaningfully allocated to
either primary operating segment, these are allocated to the Central segment.
Due to the specific nature of the Group's market, each component of revenue
naturally falls within one of these segments. The operating segments are
monitored by the Group's chief operating decision maker and strategic
decisions are made on the basis of adjusted segment operating results. All
assets, liabilities and revenues are located in, or derived in, the United
Kingdom.
The revenues are allocated to the following operating segments:
2021 2020
£ £
Revenue analysed by class of business
Consumer bootcamps and apprenticeships 2,757,020 1,194,069
Corporate solutions 253,337 147,424
3,010,357 1,341,493
The Group further sub-analyses the consumer bootcamps and apprenticeships
segment to distinguish between its original core revenue streams for consumer
training, and the apprenticeship income. This split does not represent
individual operating segments as defined in IFRS 8, however the Directors have
presented the split in order to provide relevant information for the purposes
of these financial statements. This is split as follows:
2021 2020
£ £
Training excluding apprenticeship income 1,724,117 1,072,659
Apprenticeship training income 1,032,903 121,410
2,757,020 1,194,069
The results of the Group are allocated to the following operating segments
consistent with the requirements of IFRS 8:
Year ended 31 December 2021:
Consumer Corporate Central Total
£ £ £ £
Revenue 2,757,020 253,337 - 3,010,357
Cost of sales (721,133) (127,259) - (848,392)
Gross profit 2,035,887 126,078 - 2,161,965
Operating costs (114,542) (20,213) (2,180,472) (2,315,227)
Other operating income - - 144,749 144,749
Exceptional costs - - (421,289) (421,289)
Operating profit 1,921,345 105,865 2,457,012 429,802
Net finance costs - - (93,786) (93,786)
Profit/(loss) before taxation 1,921,345 105,865 (2,550,798) (523,588)
Year ended 31 December 2020:
Consumer Corporate Central Total
£ £ £ £
Revenue 1,194,069 147,424 - 1,341,493
Cost of sales (379,769) (69,550) - (449,319)
Gross profit 814,300 77,874 - 892,174
Operating costs (37,695) (6,652) (1,545,719) (1,590,066)
Other operating income - - 153,635 153,635
Exceptional costs - - (590,788) (590,788)
Operating profit 776,605 71,222 1,982,872 1,135,045
Net finance costs - - (110,505) (110,505)
Profit/(loss) before taxation 776,605 71,222 (2,093,377) (1,245,550)
2021 2020
£ £
Revenue analysed by geographical market
United Kingdom 3,010,357 1,341,493
2021 2020
£ £
Other significant revenue
Grants received 144,749 153,635
Consumer bootcamps and apprenticeships revenue includes undiscounted EdAid
sales of £156,733 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 £10,064 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:
· Government grant for COVID-19 job retention scheme grant and business
rates relief grant totalling £127,617 (2020 - £138,020) which are credited
to the income statement in the period in which the expenditure for which they
are intended to contribute towards has been incurred.
· Time-value benefit derived on a Coronavirus Business Interruption
Loan (CBILS) totalling £nil (2020 - £15,615), which is recognised on receipt
of the loan.
· Leeds Enterprise Partnership claim of £17,132 (2020 - £nil)
received from West Yorkshire Combined Authority as an incentive for opening
the Leeds office. There were no future performance obligations attached to the
grant and therefore amount is credited to the income statement in the period
in which it was received. Since this is not considered to be part of the main
revenue generating activities, this is presented separately from revenue as
other income.
Revenue from customers who individually accounted for more than 10% of total
Group revenue amounted to £1,042,967 from one customer (2020 - there were no
customers who individually accounted for more than 10% of total Group
revenue).
Assets and liabilities related to contract with customers:
The Group has recognised the following assets and liabilities related to
contracts with customers:
Contract assets 2021 2020
£ £
At 1 January 19,030 -
Transfers in the year from contract assets to trade receivables (19,030) -
Excess of revenue recognised over cash (or rights to cash) being recognised 801,119 19,030
during the year
At 31 December 801,119 19,030
Contract liabilities 2021 2020
£ £
At 1 January 120,388 343,154
Amounts recognised as revenue during the year (120,388) (343,154)
Amounts received in advance of performance and not recognised as revenue 21,813 120,388
during the year
At 31 December 21,813 120,388
Contract assets and contract liabilities are included within "trade and other
receivables" and "trade
and other payables" respectively 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.
3. Exceptional items
2021 2020
£ £
Expenditure
IPO costs 421,289 -
Impairment of right of use asset - 529,570
Impairment of leasehold improvements - 61,218
IPO costs comprise of expenditure relating to the Group's listing and include;
PR and marketing, IPO related bonus accrual, IFRS conversion and preparation
of Historical Financial Information, investor relation website, tax
structuring, audit and consultancy expenditure. As these costs relate to the
Group's admission to trading on AIM, which occurred on 27 July 2021, the costs
have been recognised at this point in time and are classified as exceptional
in these financial statements.
In January 2020 the Group took occupation of a new office with significant
space for student training, which was occupied on a 5 year lease resulting in
the recognition of a right of use asset. As a result of the Covid-19 pandemic,
the Group had to materially change its primary focus of operations to online
delivery with the availability of physical support, and subsequently moving
towards a hybrid model using a blended learning approach of online and
in-person, meaning that the majority of this site is now functionally
redundant. As a result of this the Directors have recognised an impairment of
the right of use asset for the 67.65% which can no longer be used, calculated
by reference to floorspace; this impairment totals £nil (2020 - £529,570).
An impairment for amounts included in leasehold improvements has also been
recognised on the same basis, resulting in an impairment charge of £nil (2020
- £61,218).
4. 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 period consist of IPO
related costs and share based payments.
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.
5. Operating Loss
2021 2020
£ £
Operating loss for the year is stated after charging/(crediting):
Government grants (144,749) (153,635)
Fees payable to the company's auditor for the audit of the company's financial 52,250 -
statements
Depreciation of property, plant and equipment 118,892 244,854
Profit on disposal of property, plant and equipment - (11,707)
Amortisation of intangible assets (included within administrative expenses) 134,755 44,347
Impairment of property, plant and equipment - 61,218
Impairment of right of use asset - 529,570
Share-based payments 114,341 -
6. Taxation
2021 2020
£ £
Current tax
UK corporation tax on profits for the current period (108,800) (154,628)
Adjustments in respect of prior periods (4,143) (14,717)
Total UK current tax (112,943) (169,345)
Deferred tax
Origination and reversal of temporary differences (21,390) (137,866)
Changes in tax rates (31,131) 3,768
(52,521) (134,098)
Total tax credit (165,464) (303,443)
The charge for the year can be reconciled to the (loss)/profit per the income
statement as follows:
2021 2020
£ £
(Loss)/profit before taxation (523,588) (1,245,550)
Expected tax credit based on a corporation tax rate of 19% (2020: 19%): (99,482) (236,655)
Effect of expenses not deductible in determining taxable profit 37,513 1,018
Adjustment in respect of prior years (4,060) (14,717)
Effect of change in UK corporation tax rate (37,243) 4,073
Research and development tax credit (78,663) (61,509)
Share based payment charge (3,864) -
Other 20,335 4,347
Taxation credit for the year (165,464) (303,443)
In addition to the amount charged to the income statement, the following
amounts relating to tax have been recognised directly in other comprehensive
income:
2021 2020
£ £
Deferred tax arising on:
Actuarial differences recognised as other comprehensive income 5,089 -
The UK corporation tax rate was 19% throughout the year.
In the March 2021 Budget, a change to the future UK corporation tax rate was
announced, indicating that the rate will increase to 25% from April 2023. This
was substantively enacted on 24 May 2021. Deferred tax balances at the
reporting date are therefore measured at 25% (2020 - 19%).
7. Earnings per share
2021 2020
£ £
Number of shares
Weighted average number of ordinary shares for basic earnings per share 5,841,706 5,000,001
Earnings (all attributable to equity shareholders of the company)
Continuing operations
Loss for the period from continued operations (358,124) (942,107)
Earnings per share for continuing operations
Basic and diluted earnings per share (pence per share) (6.13) (18.84)
The number of shares in existence immediately prior to the Group's admission
to AIM is used at all earlier periods. The Group did not exist in the
comparative year, however the creation of the Group via a share-for-share
exchange is a transaction without corresponding incoming resource, hence
earlier periods are restated to reflect this.
In the current and comparative year the Group has incurred losses and as such
has not presented any dilutive shares in accordance with IAS 33 'Earnings per
share'. However, the Group does have a number of share options and warrants
that would dilute the earnings per share should the Group become profitable.
Adjusted earnings per share
The Directors use adjusted earnings before exceptional costs and share based
payment expenses. This creates an alternative performance measure which the
Directors believe reflects a fair estimate of ongoing profitability and
performance. The calculated Adjusted Earnings for the current period of
accounts is as follows:
2021 2020
£ £
Number of shares
Weighted average number of ordinary shares for basic earnings per share 5,841,706 5,000,001
Effect of dilutive potential ordinary shares:
- Weighted average number outstanding share options 148,487 -
- Weighted average number outstanding warrants 27,293 -
Weighted average number of ordinary shares for diluted earnings per share 6,017,486 5,000,001
Adjusted earnings
Loss for the period (358,124) (942,107)
Adjusted for: - -
Exceptional costs 421,289 590,788
Share based payment expense 114,341 -
Adjusted earnings for basic and diluted earnings per share 177,506 (351,319)
Adjusted earnings per share
Basic earnings per share (pence per share) 3.04 (7.03)
Diluted earnings per share (pence per share) 2.95 (7.03)
For adjusted earnings per share the effects of the share options and warrants
has been shown in the diluted weighted average number of shares as the
adjusted earnings show a profit.
8 Intangible assets
Development costs Licence Total
£ £ £
Cost
At 1 January 2020 159,837 - 159,837
Additions - internally generated 165,215 - 165,215
Additions - business combinations - 101,899 101,899
At 31 December 2020 325,052 101,899 426,951
Additions - internally generated 268,537 - 268,537
At 31 December 2021 593,589 101,899 695,488
Amortisation and impairment
At 1 January 2020 21,315 - 21,315
Charge for the year 44,347 - 44,347
At 31 December 2020 65,662 - 65,662
Charge for the year 109,280 25,475 134,755
At 31 December 2021 174,942 25,475 200,417
Carrying amount
At 31 December 2021 418,647 76,424 495,071
At 31 December 2020 259,390 101,899 361,289
Development costs compromise employee costs of £193,836 and software
development consultancy costs of £74,701.
The licence intangible asset arose when Northcoders Limited acquired the share
capital of Northcoders TechEd Limited on 14 December 2020. The consideration
paid in excess of the acquired net assets is solely recognised as a licence
intangible because the licence was the sole asset held by TechEd at
acquisition. Accordingly the directors have determined that the value paid,
which was determined on an arm's length basis represents the fair value of the
licence. The licence has an estimated useful life of 4 years from acquisition.
The Group tests intangible assets for impairment annually. Assets are assessed
for impairment by comparing the carrying values with the value-in-use
calculation, which is determined by calculating the net present value ("NPV")
of future cashflows arising from the intangible assets.
The NPV of future cash flows is based on budgets and forecasts for the next 3
years to 2024, using growth rates based on projections, which are based on
market expectations for the Group. A discount rate of 17.3% has been used
based on the Group's estimated cost of capital, and varied based on the risk
profile of the underlying assets. The outcome of the impairment test is
insensitive to a 5% reduction in growth, or a 2% increase in the discount
rate.
9 Contracts with customers
2021 2020 2020
Period end Period end Period start
£ £ £
Contracts in progress
Contract assets 801,119 19,030 -
10 Trade and other receivables
2021 2020
£ £
Trade receivables 626,455 208,698
Provision for bad and doubtful debts (56,765) -
569,690 208,698
Contract assets 801,119 19,030
Other receivables 3,215 68,521
Prepayments 42,121 2,551
1,416,145 298,800
The Directors consider that the carrying amount of trade and other receivables
is approximately equal to their fair value. Included within trade receivables
are undiscounted EdAid receivables of £146,714. EdAid receivables are
governed by a formal credit agreement facilitated by a third party. Some of
the amounts receivable are subject to interest income which is charged at the
official rate of RPI inflation. There is a discounted financing agreement
implicit in the revenue recognition under IFRS 15, which has been calculated
using an estimated discount rate of 7%. The cumulative discount recognised and
not yet unwound as at the year end is £2,999 (2020 - £nil).
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