REG - Northcoders Group - Final Results
25/04/2023 07:00
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RNS Number : 2812X Northcoders Group PLC 25 April 2023
25 April 2023
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 Final Results for the year ended
31 December 2022 ('FY22' or the 'Period').
Financial Highlights
· Group revenue up 86%(1) to £5.6 million (FY21: £3.0 million)
o Consumer revenue increased by 77%(1) to £4.9 million (FY21: £2.8
million)
o Corporate revenue increased by 189%(1) to £0.7 million (FY21: £0.3
million)
· Gross profit up 82%(1) to £3.9 million (FY21: £2.2 million) with a
gross profit margin of 70%
· Adjusted EBITDA slightly ahead of market expectations up 152%(1) to
£0.9 million (FY21: £0.4 million)
· Profit before tax £0.3 million (FY21: loss £0.5 million)
· Net assets increased to £4.6 million (FY21: 2.1 million)
· Cash balance as at 31 December 2022 of £2.8 million (31 December
2021: £1.6 million)
· Oversubscribed placing in November 2022, raising £2.1 million
(1) Based on underlying, not rounded, figures.
Operational Highlights
· Significant growth in demand with 8,470 applications in FY22 compared
to 3,662 in FY21
· Business Solutions division continues to grow with contract to hire
model, Developer Incubator the most successful product
· Developer Incubator contracts are around 12 months long, providing
excellent revenue visibility
· Major corporate partners including Rolls Royce, Disney, BBC, KPMG and
Sage
· Headcount increased to 101 to satisfy demand (FY21: 63)
· Significant geographic presence with physical hubs in Manchester,
Leeds, Newcastle and Birmingham. Online delivery has ensured Northcoders has
a presence in many more cities across the UK
Current Trading and Outlook
· Trading to date in-line with management expectations
· Favourable market dynamics with significant Government support (£1.5
billion allocated) for skills bootcamps where Northcoders is a key player
· Tech Returners acquired in February 2023, creating significant
opportunity for women in technology
· Business Solutions product offering started well with repeat business
orders
· Building on significant geographic expansion, a London presence for
the corporate market is the priority for FY23
· Significant momentum in Q1-23 and a record-breaking March, with 3,714
applications already received
· Excellent revenue visibility of £6.1 million (end of Q1-23), with
approximately 64% of revenue target achieved for full year
Commenting on the Final Results, Chris Hill, CEO of Northcoders, said: "I am
pleased to report our first full year results as a quoted company. We have had
a successful year, significantly growing revenue and profitability, whilst
keeping our core values at the heart of everything we do. A strategic
priority was to create a presence in many regions across the UK, which has
been achieved successfully during the period. We have also been able to
focus on the expansion of our Business Solutions division, which has been an
immense success with a number of major corporates onboarding and making repeat
orders. Digital transformation is a growing priority for corporates, trying to
find new and innovative ways of filling their teams and goals at a time of
economic restraint, and Northcoders is incredibly well placed to satisfy this
demand.
"In November 2022 we completed a placing, raising £2.1 million, which has
enabled us to set out on our growth path of teaching more technical
disciplines. We have experienced record demand and have navigated
macro-economic challenges successfully and we are in a strong position for
growth in FY23. The demand for Northcoders' services has never been higher,
with a record-breaking month in March 2023. With favourable market dynamics
such as the UK government committing billions of pounds for the provision of
skills bootcamps, Northcoders is well positioned to grow. The current year
has started strongly, and at the end of the first quarter revenue visibility
stood at £6.1 million, approximately 64% of target revenue for the year, and
subsequently, the Board has every confidence for the Group's prospects for the
remainder of the year."
Analyst meeting & Investor Meet Company Presentation
There will be a presentation today for sell-side analysts at the office of
Buchanan Communications, for any enquiries please contact Buchanan on
northcoders@buchanan.uk.com (mailto:northcoders@buchanan.uk.com) . 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, 25 April 2023 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 to 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)
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 investors.northcodersgroup.com (https://investors.northcodersgroup.com)
WH Ireland Limited (Nominated Adviser & Joint Broker) Tel: +44 (0)20 7220 1666
Mike Coe / Darshan Patel / Sarah Mather (Corporate Finance)
Peterhouse Capital Limited (Joint Broker) Tel: +44 (0) 20 7496 0930
Martin Lampshire www.peterhousecap.com (http://www.peterhousecap.com/)
Lucy Williams
Duncan Vasey
Buchanan Communications Tel: +44 (0) 20 7466 5000
Henry Harrison-Topham northcoders@buchanan.uk.com (mailto:northcoders@buchanan.uk.com)
Jamie Hooper
Peterhouse Capital Limited (Joint Broker) Tel: +44 (0) 20 7496 0930
Martin Lampshire www.peterhousecap.com (http://www.peterhousecap.com/)
Lucy Williams
Duncan Vasey
Buchanan Communications Tel: +44 (0) 20 7466 5000
Henry Harrison-Topham northcoders@buchanan.uk.com (mailto:northcoders@buchanan.uk.com)
Jamie Hooper
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 (https://investors.northcodersgroup.com) .
Chair's Statement
Introduction
Our first full year as a quoted company on AIM has been hugely successful.
We have been able to grow revenue and build profitability in line with
expectations, whilst keeping our core values at the heart of everything we do.
We have experienced record demand and have navigated the challenges of the
economic climate successfully to put us in a positive position for growth in
FY23. As set out at IPO, we have created a presence in many regions across
the UK and have been able to focus our efforts on the expansion of our
Business Solutions division. An oversubscribed placing in November 2022,
raising £2.1 million, has enabled us to set out on our growth path of
teaching more technical disciplines. In FY22 we developed courses in Software
Engineering and Data Engineering and Q1-23 has seen the introduction of Cloud
Engineering (Dev Ops). Our mission remains strong and we are improving our
product offering to 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, we are ready for 2023 to be our
most successful year to date.
In February 2023, post the Period end, we acquired Tech Returners Limited,
attracted amongst other things by the opportunity it affords to bring more
women back into technology, thereby helping us ensure we embrace the full
diversity and opportunity in the technology sector. Tech Returners, which
was founded in 2017, provides skilled tech professionals returning to the
industry accessible opportunities to refresh their skills. Together we are
stronger when it comes to our mission of 'closing the digital skills gap for
industry, whilst creating life changing outcomes for individuals' and we are
excited to see what we can achieve in 2023.
Financial review
FY22 has seen growth in revenue, profitability and investment into key areas
to ensure that we are ready for further growth in 2023 and beyond. Our 2022
revenue grew to £5.6 million from £3.0 million in FY21. This marks our
highest ever revenue year and indicates our potential for future growth. We
reported a 70% gross profit margin, in line with FY21, showing that we have
been able to navigate the cost increases as a result of inflation and the cost
of living crisis. Our adjusted EBITDA has increased to £0.9 million from
£0.4 million in FY21. 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 FY22 this comprised of share‑based payment expenses.
We now want to build on these results and ensure Northcoders is able to fulfil
its potential as we move to the next phase of our growth.
We have a strong foundation for growth in place. We are led by a group of
inspirational entrepreneurs with a clear strategy and plan, great products and
services which all underpinned by the culture, values and behaviours of an
ever-growing team of highly talented and committed experts. We are making a
genuine difference to individual learners and also to our corporate customers
who can grow their own talent supported, and in partnership with, Northcoders.
This is where we add significant value to our business customers.
Strategy
Growth remains our ambition, and FY22 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 amount of lives
that we change through our education, and sustainable growth in 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 across the
UK and beyond to ensure that we reach the people and businesses that need our
services the most. I once again need to acknowledge and thank our employees
for all of their efforts this year, they have continued to innovate and create
great experiences, learning and partnerships that our customers appreciate
whilst navigating ever-changing economic and market conditions.
Outlook
Trading in FY23 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 look forward to continuing working 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. I am extremely proud of the
whole Northcoders' team who have grown the organisation to where it is today
and continue to ensure that we are set up for the next exciting phase of our
development. The objective is 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.
Together, we believe there are exciting times and opportunities ahead!
Angela Williams
Non-Executive Chair
24 April 2023
Chief Executive Officer's Review
Introduction
The financial year ended 31 December 2022 ('FY22' or the 'Period') was a year
of growth for Northcoders, growth of existing revenue streams and the addition
of new ones. Demand for our core products is higher than ever, our team is
bigger than ever and we are now teaching more disciplines with courses in Data
Engineering and Cloud Engineering. We are proud to have completed an
oversubscribed fundraise in November 2022 and we are excited about the
acquisition of Tech Returners Limited which occurred in February 2023.
Financial review
The Group delivered a strong performance in FY22 and has maintained profit
margins despite the economic downturn and cost of living crisis in the UK.
Underlying performance was in line with expectations. Revenue, which
comprises consumer revenue and corporate revenue, increased by 86% to £5.6
million (FY21: £3.0 million).
Consumer revenue, which includes core bootcamps and apprenticeship revenues,
was £4.9 million (FY21: £2.8 million) and corporate revenue was £0.7
million (FY21: £0.3 million). There has been a shift away from
Apprenticeships and Student Finance due to the availability of Department for
Education scholarships, which is beneficial for cashflow going forwards.
We will however still have these mechanisms available to allow accessibility
and to provide a more diverse revenue mix. Gross profit for the year was
£3.9 million (FY21: £2.2 million) with a reported gross profit margin
('GPM') of 70% (FY21: 72%). The cost benefits of the hybrid model and
investments into internal software assets have allowed us to increase tech
sector wages and pay the whole team a £1,000 cost of living crisis bonus in
October 2022, whilst maintaining margins.
EBITDA, adjusted for share-based payments, was £0.9 million (FY21: £0.4
million), being a 152% increase on the prior year and slightly ahead of market
expectations.
We are pleased to announce the profit for the year before tax was £0.3
million (FY21: Loss £0.5 million). There was a small tax credit giving a
profit for the year of £0.4 million (FY21: Loss £0.4 million). Basic
earnings per share was 5.12 pence per share (FY21: Loss 6.13 pence). Net
assets as at 31 December 2022 were £4.6 million (FY21: £2.1 million) of
which cash was £2.8 million (FY21: £1.6 million).
The cash balance at the year end of £2.8 million will enable the Company to
continue with its plans of introducing new disciplines and moving into new
geographical markets. It will also enable the internal development team to
continue to develop software to create efficiencies within the teaching model
and in turn increase profit margins.
Operational review
During 2022 Northcoders has changed the lives of 653 people through our
bootcamp style training model. We have continued to prove that you can study
and have a successful outcome regardless of where you are in the world through
our hybrid/online teaching model. With a record number of students applying
(8,470), the demand for our courses is not slowing down, and now with 60
tutors we are in a great position to service this demand.
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. We have nurtured relationships with
corporates to ensure that there are jobs available for our students on
completion of the course and to help bridge the widening digital skills
shortage in the UK.
Northcoders Group ended 2022 with a permanent headcount of 101 members of
staff compared to the 63 we started the year with. Staff numbers are
expected to grow by a further 50 employees in FY23 with the headcount at 31
March 2023 standing at 122. During 2022 our internal development team has
been busy building software to differentiate us from competitors and create
efficiencies within our internal teams. We have set aside a budget for this
work to continue in FY23.
This team also monitors the industry and makes 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.
FY22 also saw the introduction of our new Business Solutions division. This
division monetises the relationships we have with corporates, providing them
with solutions to their tech team needs. Developer Incubator (our contract
to hire model) has been our most successful product with large, repeated
contracts signed with Rolls Royce.
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.
During FY22 Northcoders was awarded £5.8 million in Department for
Education funding. This new scheme of funding has a commitment by the
government to be around for the next six years with £1.5 billion allocated to
Skills Bootcamps. Northcoders' quality was acknowledged as being one of the
companies to have received the largest funding amounts and to have been
accepted onto the government's forward looking Dynamic Purchasing Scheme.
We have continued to increase the number of our hiring partners, which now
stands at over 400. Additions during the period included BBC, SAGE and
Disney. During the period, the Group has also engaged with a new funding
partner, Student Finance, 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 FY23, especially with the benefit of increased monthly marketing
spend and geographic presence. In Q1-23, we have received 3,714
applications, our highest quarter to date. Our graduate average starting
salary has increased to £26,756. In addition, we are proud to report
diversity statistics of 23% women into tech and 39% non-university educated
students.
Apprenticeships
Our Apprenticeship division is servicing students and corporates with recent
graduates receiving distinctions. The division has also been through a full
OFSTED inspection and we are proud to report a grade of GOOD. We will
continue to offer apprenticeships to students when the bootcamp style method
of training does not suit.
Business Solutions
We have introduced two new corporate-focused products to our Business
Solutions division; 'Accelerate' is hiring our juniors with the year-round
support of our mentors/senior developers and 'Incubate' is our 'contract to
permanent' consultancy model.
FY22 has seen investment and growth for our Business Solutions division,
revenue has increased to £0.7 million (FY21: £0.3 million), with the
Developer Incubator model receiving high demand. Customers included Rolls
Royce and EMaC, with Rolls Royce repeating their contract two times over.
Developer Incubator contracts are around twelve months long and therefore
also provide us with good, steady, revenue visibility.
Northcoders have also carried out a repeat contract with NHS digital on their
graduate academy, along with completing KPMG's graduate academy in 2022. We
now feel like the development of this division is complete and that we have a
range of products to fulfil the needs of corporates. As explained last year,
we are marketing the product for the first time and are pleased that the
service is being well received in the industry. We will continue to monitor
and make any necessary tweaks as we roll these products out on a larger scale
in 2023 through significant investment in marketing and hiring experienced
business development professionals.
Geographic expansion and hub roll out
As of 2022 Northcoders has a physical hub in Manchester, Leeds, Newcastle and
Birmingham, with main offices in Manchester and Leeds. In 2021, coming out
of the pandemic we had a strategy for the roll out of physical hubs in many
cities across the UK.
We are pleased that through online delivery we have been able to create a
presence in many more cities across the UK than planned, without the need for
physical hubs and the expenditure that comes with them. We currently have
funding and students that span the whole of the UK and we have taught
international students too. The next geographical focus will be on the
London corporate market.
Outlook
The demand for Northcoders' services has never been higher, with another
record-breaking month of applications in March 2023. The UK government are
putting billions of pounds aside for the provision of skills bootcamps and
Northcoders are at the forefront of the funding rounds. Digital
transformation remains a priority for business, and corporates are now, more
than ever, trying to find new and innovative ways of filling their teams and
goals at a time of economic restraint.
Our aim is to fulfil as much as possible of this increase in demand, and help
corporates to achieve their goals, whilst creating life-changing opportunities
for individuals from all walks of life.
The Group started FY23 with contracted bookings for the year to December 2023
of approximately £5.4 million, around 57% of the target revenue for the year.
At the end of Q1-23 revenue visibility stood at £6.1 million, approximately
64% of the target revenue for the year. Trading in the year to date has
commenced in line with management's expectations and the Board has confidence
for the Group's prospects for the remainder of the year.
Chris Hill
Chief Executive Officer
24 April 2023
Group statement of comprehensive Income
For the year ended 31 December 2022
FY22 FY21
Notes £ £
Revenue 4 5,598,863 3,010,357
Cost of sales (1,656,938) (848,392)
Gross profit 3,941,925 2,161,965
Other operating income 12,000 144,749
Expenditure (3,046,292) (1,947,239)
Adjusted EBITDA 6 907,633 359,475
Depreciation (171,521) (118,892)
Amortisation (85,167) (134,755)
Share-based payments (203,607) (114,341)
Total administrative expenses (3,506,587) (2,315,227)
Exceptional items 5 - (421,289)
Operating profit/(loss) 7 447,338 (429,802)
Investment revenues 11,765 8,574
Finance costs (112,674) (102,360)
Profit/(loss) before taxation 346,429 (523,588)
Taxation credit 13,109 165,464
Profit/(loss) for the year 359,538 (358,124)
Other comprehensive income:
Items that will not be reclassified to profit or loss
Tax relating to items not reclassified 8,814 (5,089)
Total items that will not be reclassified to profit or loss 8,814 (5,089)
Total other comprehensive profit/(loss) for the year 8,814 (5,089)
Total comprehensive profit/(loss) for the year 368,352 (363,213)
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.
FY22 FY21
Notes £ £
Earnings per share
Basic (pence per share) 5.12 (6.13)
Diluted (pence per share) 5.02 (6.13)
Adjusted (pence per share) 8.02 3.04
Group statement of financial position
As at 31 December 2022
FY22 FY21
£ £
Non-current assets
Intangible assets 871,845 495,071
Property, plant and equipment 416,727 525,067
Deferred tax asset 330,837 256,350
1,619,409 1,276,488
Current assets
Contract assets 1,947,922 801,119
Trade and other receivables 909,010 615,026
Current tax recoverable 82,309 143,042
Cash and cash equivalents 2,777,273 1,564,645
5,716,514 3,123,832
Current liabilities
Trade and other payables 665,575 467,282
Borrowings 391,367 219,386
Lease liabilities 196,243 181,043
Contract liabilities 5,239 21,813
1,258,424 889,524
Net current assets 4,458,090 2,234,308
Non-current liabilities
Borrowings 740,223 512,602
Lease liabilities 464,833 711,524
Deferred tax liabilities 230,713 134,474
1,435,769 1,358,600
Net assets 4,641,730 2,152,196
Equity
Called up share capital 76,889 69,444
Share premium account 4,801,444 2,891,314
Merger reserve 500 500
Share option reserve 228,480 134,715
Other reserve (50,000) (50,000)
Retained earnings (415,583) (893,777)
Total equity 4,641,730 2,152,196
Company statement of financial position
As at 31 December 2022
FY22 FY21
£ £
Non-current assets
Investments 317,949 114,341
Current assets
Trade and other receivables 4,406,187 2,657,865
Current liabilities - (38,566)
Net current assets 4,406,187 2,619,299
Total assets less current liabilities 4,724,136 2,733,640
Equity
Called up share capital 76,889 69,444
Share premium account 4,801,444 2,891,314
Other reserves (50,000) (50,000)
Share option reserve 228,480 134,715
Retained earnings (332,677) (311,833)
Total equity 4,724,136 2,733,640
As permitted by section 408 Companies Act 2006, the Company has not presented
its own income statement and related notes. The Company's loss for the
period was £130,686 (FY21: £323,817).
Group statement of changes in equity
For the year ended 31 December 2022
Share Share Retained
Share premium option Other Merger (deficit)/
capital account reserve reserve reserve earnings Total
£ £ £ £ £ £ £
Balance at 1 January 2021 - - - - 187,591 (729,639) (542,048)
Year ended 31 December 2021:
Loss for the year - - - - - (358,124) (358,124)
Other comprehensive income:
Tax relating to other comprehensive income - - - - - (5,089) (5,089)
Loss and total comprehensive loss 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
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 for the year - - - - - 368,352 368,352
Issue of share capital 7,445 2,076,387 - - - - 2,083,832
Costs of issue set against 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 4,801,444 228,480 (50,000) 500 415,583 4,641,730
Company statement of changes in equity
For the year ended 31 December 2022
Share Share Retained
Share premium Other option (deficit)/
capital account reserve reserve earnings Total
£ £ £ £ £ £
Balance at 6 May 2021 - - - - - -
Loss and total comprehensive income - - - - (323,817) (323,817)
Issue of share capital 19,444 3,480,555 - - - 2,960,758
Costs of float set against premium - (589,241) - - - -
Share options and warrants expense - - - 146,699 - 146,699
Share-for-share exchange 50,000 - (50,000) - - -
Cancellation of share options - - - (11,984) 115,984 -
Balance at 31 December 2021 69,444 2,891,314 (50,000) 134,715 (311,833) 2,733,640
Year ended 31 December 2022
Loss and total comprehensive income for the period - - - - (130,686) (130,686)
Issue of share capital 7,445 2,076,387 - - - 2,083,832
Costs of issue set against premium - (166,257) - - - (166,257)
Share options and warrants 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
Group statement of cash flows
For the year ended 31 December 2022
FY22 FY21
£ £
Cash flows from operating activities
Profit for the year after tax 359,538 (358,124)
Adjustment for non-cash items:
Taxation credited (13,109) (165,464)
Finance costs 112,674 102,360
Investment revenues (11,765) (8,574)
Equity settled share-based payment and warrants expense 203,607 146,699
Amortisation of intangible assets 85,167 134,755
Depreciation of property, plant and equipment 171,521 118,892
907,633 (29,456)
Increase in contract assets and trade and other receivables (1,435,445) (1,117,345)
Increase/(decrease) in trade and other payables 178,377 (152,740)
Cash absorbed by operations (349,435) (1,299,541)
Tax refunded 104,408 211,701
Net cash outflow from operating activities (245,027) (1,087,840)
Investing activities
Capitalised development costs (461,941) (268,537)
Purchase of property, plant and equipment (63,181) (42,706)
Investment revenues received 9,766 8,574
Net cash used in investing activities (515,356) (302,669)
Financing activities
Proceeds from issue of shares 1,917,575 2,910,758
Proceeds from borrowings 962,500 -
Repayment of bank loans and borrowings (573,087) (162,961)
Payment of lease liabilities (231,491) (215,954)
Interest paid (102,486) (102,360)
Net cash generated from financing activities 1,973,011 2,429,483
Net increase in cash and cash equivalents 1,212,628 1,038,974
Cash and cash equivalents at beginning of year 1,564,645 525,671
Cash and cash equivalents at end of year 2,777,273 1,564,645
Note to the statement of cash flows
For the year ended 31 December 2022
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 Financing New Other At 31 December
January
2022 cash flows leases/loans movements(1) 2022
£ £ £ £ £
Bank loans and borrowings 731,988 (573,087) 962,500 10,187 1,131,588
Lease liabilities 892,567 (231,491) - - 661,076
Total 1,624,555 (804,578) 962,500 10,187 1,792,664
At 1 Financing New Other At 31 December
January
2021 cash flows leases movements(2) 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
Total 1,616,612 (378,915) 389,687 (2,829) 1,624,555
(1. ) Other movements in the year ended 31 December 2022 includes:
· Unwinding of arrangement fees of £10,187 on other loans.
(2. ) 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.
Notes to the Group financial statements
For the year ended 31 December 2022
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 section 408 Companies Act 2006, the Company had not presented
its own Statement of Comprehensive Income. The Company's loss for the period
was £130,686 (FY21: £323,817).
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
twelve 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 2022. 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.
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 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
of 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 numbers and 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.
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.
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 as 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 standalone selling
prices. Where these are not directly observable, they are estimated based on
expected cost plus margin.
1.6 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 four years straight line
Development costs ten years straight line
The Directors have undertaken an assessment of the estimated useful life of
development costs and subsequently the estimation has changed from four years
to ten years.
1.7 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.
1.8 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.
An associate is an entity, being neither a subsidiary nor a joint venture, in
which the Group holds a long-term interest and has significant influence.
The Group considers that it has significant influence where it has the power
to participate in the financial and operating decisions of the associate.
Entities in which the Group has a long-term interest and shares control under
a contractual arrangement are classified as jointly controlled entities.
1.9 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 impaired.
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.
1.10 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.
1.11 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 recognised 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 (e.g. 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.
1.12 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.
1.13 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 earnings include all current and prior period retained earnings.
1.14 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.
1.15 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.
1.16 Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an
expense as they fall due.
1.17 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.
1.18 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
twelve 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.
1.19 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.
1.20 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.
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:
· amendments to IAS 37 Onerous Contracts - Cost of Fulfilling a Contract;
· amendments to IAS 16 Property, Plant and Equipment: Proceeds before
Intended Use;
· amendments to IFRS 3 'Reference to the Conceptual Framework';
· amendment to IFRS 1 'First-time Adoption of International Financial
Reporting Standards - Subsidiary as a First-time Adopter';
· amendment to IFRS 9 'Financial Instruments - Fees in the '10 per cent'
Test for Derecognition of Financial Liabilities'.
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):
Effective date - period
beginning on or after
IFRS 17 'Insurance Contracts' and subsequent withdrawal of IFRS 4 'Insurance 1 January 2023(1)
Contracts' and amendments to IFRS 17
Deferred Tax related to Assets and Liabilities arising from a single 1 January 2023(1)
transaction (Amendments to IAS 12 Income Taxes)
Amendments to IFRS 10 and IAS 28 Sale of contribution of assets between an 1 January 2023(1)
investor and its Associate or Joint Venture
Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice 1 January 2023(1)
Statement 2)
Definition of an Accounting Estimate (Amendments to IAS 8) 1 January 2023(1)
Lease Liability in a Sale and Leaseback (Amendments to IFRS 16) 1 January 2024(1)
Amendments to IAS 1 Presentation of Financial Statements - Non‑current 1 January 2024(1)
Liabilities with Covenants
Amendments to IAS 1 Presentation of Financial Statements - Deferral of 1 January 2024(1)
Effective Date Amendment (published 15 July 2020)
Amendments to IAS 1 Presentation of Financial Statements - Classification of 1 January 2024(1)
Liabilities as Current or Non-Current (Amendments to IAS 1) (published 23
January 2020)
((1) ) 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.
Change of accounting estimate
At the year end the Directors have undertaken an assessment of the estimated
useful life of development costs and subsequently the estimation of useful
economic life has changed from four years to ten years. This change in
accounting estimate is an adjustment of the carrying amount of an asset or
liability, or the amount of the periodic consumption of an asset, that results
from the assessment of the present status of, and expected future benefits and
obligations associated with, assets and liabilities. As it results from new
information or new developments it is only recognised as a prospective
adjustment.
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.
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 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 fees going forward. 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; and
· 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:
FY22 FY21
Revenue analysed by class of business £ £
Consumer bootcamps and apprenticeships 4,866,454 2,757,020
Corporate solutions 732,409 253,337
5,598,863 3,010,357
The Group further sub-analyses the consumer bootcamps and apprenticeships
segment to distinguish between the funding mechanism for the consumer revenue
stream. 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:
FY22 FY21
£ £
Training excluding apprenticeship income 4,177,900 1,724,117
Apprenticeship training income 688,554 1,032,903
4,866,454 2,757,020
The results of the Group are allocated to the following operating segments
consistent with the requirements of IFRS 8:
Consumer Corporate Central Total
Year ended 31 December 2022: £ £ £ £
Revenue 4,866,454 732,409 - 5,598,863
Cost of sales (1,452,254) (204,684) - (1,656,938)
Gross profit 3,414,200 527,725 - 3,941,925
Operating costs (72,392) (12,775) (3,421,420) (3,506,587)
Other operating income - - 12,000 12,000
Exceptional costs - - - -
Operating profit 3,341,808 514,950 3,409,420 447,338
Net finance costs - - (100,909) (100,909)
Profit/(loss) before taxation 3,341,808 514,950 (3,510,329) 346,429
Consumer Corporate Central Total
Year ended 31 December 2021: £ £ £ £
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)
FY22 FY21
Revenue analysed by geographical market £ £
United Kingdom 5,598,863 3,010,357
FY22 FY21
Other significant revenue £ £
Grants received 12,000 144,749
Consumer revenue includes undiscounted EdAid sales of £5,208 (FY21:
£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 £nil (FY21: £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 £nil (FY21: £127,617) 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;
· Leeds Enterprise Partnership claim of £nil (FY21: £17,132) 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; and
· Education and Skills Funding Agency grant of £12,000 (FY21: £nil)
received for the hire of apprentices.
Revenue from customers who individually accounted for more than 10% of total
Group revenue amounted to £4,845,368 (FY21: £1,042,967) from one customer
(FY21: one customer).
Assets and liabilities related to contract with customers:
The Group has recognised the following assets and liabilities related to
contracts with customers:
FY22 FY21
Contract assets £ £
At 1 January 801,119 19,030
Transfers in the year from contract assets to trade receivables (801,119) (19,030)
Excess of revenue recognised over cash (or rights to cash) being recognised 1,947,922 801,119
during the year
At 31 December 1,947,922 801,119
FY22 FY21
Contract liabilities £ £
At 1 January 21,813 120,388
Amounts recognised as revenue during the year (21,813) (120,388)
Amounts received in advance of performance and not recognised as revenue 5,239 21,813
during the year
At 31 December 5,239 21,813
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 Exceptional items
FY22 FY21
£ £
Expenditure
IPO costs - 421,289
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.
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 prior period
consist of IPO related costs. There are no exceptional costs for the current
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
FY22 FY21
Operating profit/(loss) for the year is stated after charging/(crediting): £ £
Government grants (12,000) (144,749)
Fees payable to the Company's auditor for the audit of the Company's financial 75,000 52,250
statements
Depreciation of property, plant and equipment 171,521 118,892
Amortisation of intangible assets (included within administrative expenses) 85,167 134,755
Share-based payments 203,607 114,341
8 Auditor's remuneration
FY22 FY21
Fees payable to the Company's auditor and associates: £ £
For audit services
Audit of the Group and subsidiary undertakings 75,000 52,250
9 Employees
The average monthly number of persons (including Directors) employed by the
Group during the year was:
FY22 FY21
Number Number
Executive Directors 3 3
Non-Executive Directors 2 2
Administration and operations 32 15
Client service delivery 50 28
Total 87 48
FY22 FY21
Their aggregate remuneration comprised: £ £
Wages and salaries 3,095,713 1,837,508
Social security costs 315,711 179,818
Pension costs 191,136 52,692
3,602,560 2,070,018
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:
FY22 FY21
£ £
Wages and salaries 358,439 178,978
Social security costs 44,805 10,925
Pension costs 16,130 3,933
419,374 193,836
10 Directors' remuneration
FY22 FY21
£ £
Remuneration for qualifying services 504,722 477,808
Amounts receivable under long-term incentive schemes 28,918 10,669
Company pension contributions to defined contribution schemes 7,706 863
541,346 489,340
The number of Directors for whom retirement benefits are accruing under
defined contribution schemes amounted to four (FY21: three). No pension
contributions have been recognised for Mr A N Parker.
Remuneration disclosed above includes the following amounts paid to the
highest paid Director:
FY22 FY21
£ £
Remuneration for qualifying services 161,939 217,950
Company pension contributions to defined contribution schemes 1,468 -
During the year to 31 December 2022 the Directors received remuneration as
follows:
Salary Share options Benefits in kind Pension Total
Director £ £ £ £ £
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
During the year to 31 December 2021 the Directors received remuneration as
follows:
Salary Share options Benefits in kind Pension Total
Director £ £ £ £ £
Mr A Batra 128,568 - 1,115 - 129,683
Mr C D Hill 217,950 - 650 - 218,600
Ms C Prior 74,434 10,669 258 183 85,544
Mrs S Lindsay 30,250 - - 313 30,563
Mr A N Parker 14,583 - - - 14,583
Ms A E Sharp 10,000 - - 367 10,367
475,785 10,669 2,023 863 489,340
The Directors of the Company control 32.76% (2021 - 36.87%) per cent of the
voting shares of the Company and hold 75,000 (2021 - 75,000) EMI share
options. No Directors exercised share options during the year.
- Ends -
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