REG - Northcoders Group - Interim Results
19/09/2023 07:00
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RNS Number : 8387M Northcoders Group PLC 19 September 2023
19 September 2023
Northcoders Group PLC
('Northcoders' or the 'Group' or 'Company')
Interim Results
Group continues to grow despite challenging macro environment
with record demand for consumer training bootcamps
Northcoders (AIM:CODE), an independent provider of training programmes for
software coding, announces its results for the six months ended 30 June 2023
('H1 2023' or the 'Period').
Financial Highlights
· Revenue grew to £3.5 million (H1 2022: £2.4million), an
increase of 46%
· Record demand for consumer bootcamp training, delivering
revenues in H1 2023 of £2.8 million (H1 2022: £1.7 million) driven by
geographical expansion and entry into new disciplines
· Gross profit increased 32% to £2.2 million (H1 2022: £1.7
million) with a gross margin of 63% generated by continued investment into
internal efficiencies and software
· Underlying adjusted EBITDA of £0.04 million (H1 2022: £0.42
million) in line with management expectations following investments into
Business Solutions and Tech Returners
· The Group's core business, Consumer Training Bootcamps,
achieved adjusted EBITDA of £0.5 million showing ongoing growth in
profitability
· Loss after tax of £0.2 million (Profit after tax H1 2022:
£0.2 million), delivering adjusted EPS of (2.07) pence (H1 2022: 4.59 pence)
· Strong balance sheet with cash of £2.04 million (H1 2022:
£1.04 million) and net assets at the Period end of £5.5 million (H1 2022:
£2.4 million)
Operating Highlights
· Positive growth in demand with record Consumer Training
Bootcamp course applications, more than doubling to 7,107 in the Period (H1
2022: 3,494)
· Q3 2023 has again seen record applications, now standing
at over 10,000
· Continued to secure Government funding for consumer
Skills Bootcamps, achieving a successful Department for Education Skills
Bootcamps bid giving a further £4.5 million revenue visibility for H2-2023
and FY-2024
· Strategy for geographical expansion continues to progress
with over 45% of the Company's Training Bootcamp learners now based outside of
Manchester and Leeds, a significant change from the Group's position at IPO
two years ago
· In February 2023 the Group acquired Tech Returners
Limited, which has now been fully integrated into the Business Solutions
division, with the pipeline now including several large corporate businesses
§ As part of Tech Returners brand offering, ReFrame, the North's largest
conference dedicated to Women in Technology has been launched in London and
through marketing and PR is creating significant corporate brand awareness in
the London region
· Business Solutions division signed its first public
sector contract with a significant central Government department which is due
to commence in Q4 2023
· Investment and roll out of nCore platform on track for
use across the Group in 2024, improving efficiency and supporting gross margin
growth
· New technology training courses continue to expand
· The Data Engineering discipline is performing strongly
with further investment having been made into course delivery. The Group is
now benefitting from significant cohorts of learners each quarter
· Launched a third discipline within the Consumer Training
Bootcamp division, Cloud Engineering. The first cohort launched in March
2023
Current trading and outlook
Despite the strategic momentum achieved in H1 2023 which ended in line with
management's expectations, the current financial year is presenting several
market challenges for the Group's Business Solutions division. FY23 was and
still is expected to be a second half weighted year but the outturn is
uncertain due to the prevailing headwinds encountered by the technology
market. Budget constraints, workforce reductions and recruitment freezes have
led to many corporate clients delaying and deferring budget commitment to
Northcoders' Academy, Your Return to Tech and Consultancy programmes.
In particular, one client is undergoing a substantial business reorganisation
leading to a division closure. As a result, their immediate demands for our
services have diminished below the £0.75 million we had been expecting with
the quantum now being uncertain. We are actively collaborating with them
during this transitional phase and remain optimistic about the possibility of
future work and contract fulfilment, as the client has expressed a keen
interest in continuing our partnership.
As a result of this contract, and the more cautious technology training market
conditions, the Group now expects revenue and profits for the year as a whole
to be significantly below current expectations. With its strong balance sheet,
the Board remains confident in Northcoders' ability to continue to deliver
significant growth as it delivers its strategy and continues to build its
reputation as a leading technology training provider in the UK. The Company
continues to work with blue chip corporates and now public bodies, as both
hiring partners and customers, to improve the UK's technology gap with digital
transformation remaining a priority.
Chris Hill, Chief Executive Officer of Northcoders, said: "Our performance to
date reaffirms our commitment to addressing the UK's digital skills gap as a
leading technology training provider. H1 2023 saw the Group's revenue
increase to £3.5 million, a 46% increase compared to the same period last
year, driven by high demand for consumer bootcamp training, generating £2.8
million in revenue, up 65% on H1 2022 performance.
"Northcoders' strategic acquisition of Tech Returners in February has already
yielded positive results, engaging several major corporate clients. The launch
of ReFrame, the North's largest Women in Technology conference in London, has
significantly boosted the Group's corporate brand awareness. Demand for
technology training beyond the original Coding courses continues to increase,
including for the Group's Data Engineering services, as well as Cloud
Engineering tuition having launched successfully. The Business Solutions
division signed its inaugural contract with a central government department
project set for Q4 2023.
"As outlined at the Trading Update in July, the market continues to be
challenging, with budget constraints, workforce reductions, and recruitment
freezes affecting the Business Solutions division, which means our growth in
the short term is expected to be slower than previously expected.
Nonetheless, Northcoders remains a key enabler of growth and innovation and
we are resolute in our pursuit of evolving to meet technology's ever-changing
demands, confidently providing sustainable long-term growth for all our
stakeholders."
Analyst meeting and Investor Meet Company presentation
A virtual meeting for sell-side analysts will be held at 9.30 a.m. today, 19
September 2023. Please contact Buchanan via northcoders@buchanan.uk.com if
you wish to join the meeting.
Northcoders will be also be presenting via the Investor Meet Company platform
today, 19 September 2023 at 6 p.m. (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. Questions can be submitted pre-event
via the Investor Meet Company dashboard up until 9.00 a.m. the day before the
meeting or at any time during the live presentation. To sign up to the
Northcoders Group presentation via Investor Meet Company please click the
following link:
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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.
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)
Steph Whitmore
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
Cloud 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) .
Introduction
The Board are pleased to present the Group's results for the six months ended
30 June 2023 ('H1 2023'). First and foremost, it is pleasing to report a
significant increase in demand for the Training Bootcamp courses during H1
2023. The number of applications more than doubled to an impressive 7,107,
compared to 3,494 in H1 2022. This growth underscores Northcoders'
reputation for delivering high-quality tech education.
The Group continues to benefit from financial support of the Government's
technology Skills Bootcamps initiative. This is exemplified by its success
in securing a new funding bid with the Department for Education worth £4.5
million over the next two years as well as additional bids currently underway.
It is another demonstration of Northcoder's reputation as a top tier
training provider dedicated to upskilling the workforce and provides a
substantial revenue stream for the future.
The Business Solutions division achieved a significant milestone by signing
its first public body contract as a training provider in a significant central
Government department project, scheduled to commence in 2023. This reflects
the Group's expertise and credibility in delivering impactful solutions to
Government bodies.
Despite this, the Board wants to address the challenges facing its Business
Solutions division in the context of the positive momentum during H1 2023.
The current financial year has brought forth market challenges that require
a more cautious outlook for the second half of the financial year. The
technology market has encountered headwinds, including unanticipated budget
constraints, workforce reductions, and recruitment freezes. These factors
have prompted many corporate clients to delay and defer their budget
commitments to the Group's Academy, Your Return to Tech, and Consultancy
programmes. The Group acknowledges these challenges and remains committed to
addressing them proactively, charting a course forward that ensures
Northcoders' continued growth and success.
Financial Review
Northcoders delivered a strong performance in the Period, with underlying
profitability in line with management expectations.
Revenue for the Period was £3.5 million (H1 2022: £2.4 million), up 46% on
the equivalent period last year. Consumer Revenue, which includes core
bootcamps and apprenticeship revenues, generated revenue of £2.8 million, up
62% on the comparable period in 2022. The division delivered EBITDA of £0.5
million showing further efficiencies in the training model. Northcoders
Business Services division generated revenue of £0.3 million and the Group is
confident in the decision to invest into sales, marketing and the expansion of
Business Services and the acquisition of Tech Returners will see benefits in
future years. Tech Returners generated revenue of £0.4 million in the period
since its acquisition.
Gross profit for the Period was £2.2 million (H1 2022: £1.7 million) at a
gross margin of 63%. EBITDA, adjusted for share based payments, was £0.04
million (H1 2022: £0.42 million) and loss after tax was £0.25 million (H1
2022: profit of £0.19 million). Basic earnings per share was a loss of
(3.16 pence per share (H1 2022: profit of 2.79 pence). Basic adjusted
earnings per share was a loss of 2.07 pence per share (H1 2022: profit of 4.59
pence). Net assets at the Period end were £5.5 million (H1 2021: £2.44
million) of which cash was £2.0 million (H1 2021: £1.0 million).
Operational Review
Northcoders' IPO strategy of geographical expansion beyond Manchester and
Leeds has yielded significant results. Over 45% of Training Bootcamp
learners now reside outside of these cities, marking a substantial shift from
the Group's position at IPO just two years ago. This expansion signifies
Northcoders' growing national presence.
In February 2023, the Group took a strategic step by acquiring Tech Returners.
Tech Returners' brands and services have seamlessly integrated into the
Business Solutions divisions and building a pipeline of potential new client
contracts. This move strengthens the Group's presence in the technology
training sector.
Northcoder's commitment to diversity and inclusion is further exemplified by
the launch of 'ReFrame', the North's largest Women in Technology conference,
as part of Tech Returners' offerings. Through effective marketing and public
relations efforts, ReFrame is creating substantial corporate brand awareness
in the London region.
Northcoders' Data Engineering division has showcased robust performance,
thanks to increased investment in the course delivery team. The division can
now efficiently train significant cohorts of learners each quarter, addressing
the rising demand for data engineering skills.
In line with the Group's expansion efforts, Northcoders launched its third
business unit, focusing on training bootcamp courses and Corporate Solutions
services in the Cloud Engineering discipline. The inaugural cohort was
successfully launched in March 2023, marking a promising start in this dynamic
field.
Northcoders remains steadfast in its commitment to a thoughtful, strategic
approach in product development. This approach yields positive results as
the tailored training programs resonate with a diverse audience. The Group's
innovative spirit drives us to adapt to the ever-evolving market landscape,
and after the successful launch of the Data Engineering discipline,
Northcoders is exploring further opportunities in its Consumer Training
division and other disciplines.
As a youthful organisation, the Group constantly reassess its business roadmap
to ensure that long-term, sustainable growth is fostered. As the final
quarter of 2023 is approached, the Board is confident about the new product
offerings and the trajectory of the business whilst being mindful of the wider
macroeconomic environment.
Current trading and prospects
Despite the strategic momentum achieved in H1-2023 which ended in line with
management's expectations, the current financial year is presenting several
market challenges for the Group's Business Solutions division. FY23 was and
still is expected to be a second half weighted year but the outturn is
uncertain due to the prevailing headwinds encountered by the technology
market. Budget constraints, workforce reductions and recruitment freezes, has
led to many corporate clients delaying and deferring budget commitment to
Northcoders' Academy, Your Return to Tech and Consultancy programmes.
In particular, a client is undergoing a substantial business reorganisation
including a division closure. As a result, their immediate demands for our
services have diminished below the £750k we had been expecting with the
quantum now being uncertain. We are actively collaborating with them during
this transitional phase and remain optimistic about the possibility of future
work and contract fulfilment, as the client has expressed a keen interest in
continuing our partnership.
As a result of this contract, and the more cautious technology training market
conditions, the Group now expects revenue and profits for the year as a whole
to be significantly below current expectations. With its strong balance
sheet, the Board remains confident in Northcoders' ability to continue to
deliver significant growth and continues to build its reputation as a
leading technology training provider in the UK. The Company continues to
work with blue chip corporates and now public bodies, as both hiring partners
and customers, to improve the UK's technology gap with digital transformation
remaining a priority.
Chris Hill
Chief Executive Officer
19 September 2023
Group Statement of Comprehensive Income
For the period ended 30 June 2023
6 months ended 6 months ended Year ended
30 June 2023 30 June 2022 31 December 2022
Notes UNAUDITED UNAUDITED AUDITED
£ £ £
Revenue 3,450,579 2,367,596 5,598,863
Cost of sales (1,269,645) (710,651) (1,656,938)
Gross profit 2,180,934 1,656,945 3,941,925
Other operating income - 7,500 12,000
Expenditure (2,141,561) (1,246,895) (3,046,292)
Adjusted EBITDA 39,373 417,550 907,633
Depreciation (83,115) (88,642) (171,521)
Amortisation (91,674) (38,366) (85,167)
Share based payment expense (86,852) (125,373) (203,607)
Total administrative expenditure (2,403,202) (1,499,276) (3,506,587)
Operating (loss)/profit (222,268) 165,169 447,388
Investment revenues 5,159 5,253 11,765
Finance costs (89,799) (52,246) (112,674)
(Loss)/profit before tax (306,908) 118,176 346,429
Taxation 55,975 75,284 13,109
Net (loss)/profit after tax (250,933) 193,460 359,538
Other comprehensive income:
Tax relating to items not reclassified 21,713 (28,471) 8,814
Total comprehensive (loss)/income for the year attributable to equity (229,220) 164,989 368,352
shareholders of the parent
Basic (loss) / earnings per share (pence) 3 (3.16) 2.79 5.12
Adjusted (loss) / earnings per share (pence) 3 (2.07) 4.59 8.02
Diluted (loss ) /earnings per share (pence) 3 (3.16) 2.72 5.02
Group Statement of Financial Position
As at 30 June 2022
Notes 30 June 2023 30 June 31 December
UNAUDITED 2022 2022
UNAUDITED AUDITED
£ £ £
Non-current assets
Intangible assets 4 1,444,440 636,625 871,845
Goodwill 5 1,270,725 - -
Property, plant and equipment 447,244 468,646 416,727
Deferred tax assets 379,892 338,848 330,837
3,542,301 1,444,119 1,619,409
Current assets
Contract assets 2,005,302 1,231,525 1,947,922
Trade and other receivables 725,875 681,621 909,010
Current tax receivable 109,832 143,042 82,309
Cash and cash equivalents 2,044,849 1,038,882 2,777,273
4,885,858 3,095,070 5,716,514
Current liabilities
Trade and other payables 978,145 502,435 665,575
Borrowings 369,767 223,195 391,367
Current tax liabilities 4,900 - -
Lease liabilities 230,315 190,032 196,243
Contract liabilities 53,306 21,405 5,239
1,636,433 937,067 1,258,424
Net current assets 3,249,425 2,158,003 4,458,090
Non-current liabilities
Borrowings 601,775 399,621 740,223
Lease liabilities 336,654 589,784 464,833
Deferred tax provision 353,937 170,159 230,713
1,292,366 1,159,564 1,435,769
Net assets 5,499,360 2,442,558 4,641,730
EQUITY
Share capital 80,115 69,444 76,889
Share premium 4,801,444 2,891,314 4,801,444
Merger reserve 500 500 500
Share option reserve 315,332 257,906 228,480
Other reserve 946,772 (50,000) (50,000)
Retained earnings (644,803) (726,606) (415,583)
Total equity 5,499,360 2,442,558 4,641,730
Group Statement of Changes in Equity
For the period ended 30 June 2023
Share Share Share option reserve Merger reserve Other reserve Retained earnings Total equity attributable to owners of the parent
capital premium
£ £ £ £ £ £ £
At 01 January 2022 (audited) 69,444 2,891,314 134,715 500 (50,000) (893,777) 2,152,196
Profit for the period - - - - - 193,460 193,460
Other comprehensive loss:
Tax adjustments on share based payments - - - - - (28,471) (28,471)
Total comprehensive income for the year - - - - - 164,989 164,989
Share option expense - - 125,373 - - - 125,373
Cancellation of share options - - (2,182) - - 2,182 -
At 30 June 2022 (unaudited) 69,444 2,891,314 257,906 500 (50,000) (726,606) 2,442,558
Profit for the period - - - - - 166,078 166,079
Other comprehensive loss:
Tax adjustments on share based payments - - - - - 37,285 37,285
Total comprehensive income for the year - - - - - 203,363 203,363
Share option and warrants expense - - 78,234 - - - 78,234
Cancellation of share options - - (19,365) - - 19,365 -
Share options exercised - - (88,295) - - 88,295 -
Issue of share capital 7,445 2,076,387 - - - - 2,083,832
Costs of share issues set against premium - (166,257) - - - - (166,257)
At 31 December 2022 (audited) 76,889 4,801,444 228,480 500 (50,000) (415,583) 4,641,730
Loss for the period - - - - - (250,933) (250,933)
Other comprehensive loss:
Tax adjustments on share based payments - - - - - 21,713 21,713
Total comprehensive income for the year - - - - - (229,220) (229,220)
Share option expense - - 86,852 - - - 86,852
Issue of share capital 3,226 - - - 996,772 - 999,998
At 30 June 2023 (unaudited) 80,115 4,801,444 315,332 500 946,772 (644,803) 5,499,360
Group Statement of Cashflows
For the period ended 30 June 2023
Notes 6 months ended 6 months ended Year ended 31 December 2022
30 June 2023 30 June 2022 AUDITED
UNAUDITED UNAUDITED
£ £ £
Cash flows from operating activities:
Profit/(loss) for the year (250,933) 193,460 359,538
Adjustments for:
Tax (credit)/charge (55,975) (75,284) (13,109)
Finance costs 89,799 52,246 112,674
Investment revenues (5,159) (5,253) (11,765)
Share based payment expense 86,852 125,373 203,607
Amortisation of intangible assets 91,674 38,366 85,167
Depreciation of tangible assets 83,115 88,642 171,521
39,373 417,550 907,633
Changes in working capital:
Decrease/(increase) in contract assets and trade & other receivables 244,532 (496,001) (1,435,445)
Increase/(decrease) in trade & other payables (183,937) 46,574 178,377
Cash (used in)/from operations 99,968 (31,877) (349,435)
Income taxes received 82,483 - 104,408
Net cash (outflow)/inflow from operating activities 182,451 (31,877) (245,027)
Cash flows from investing activities
Capitalised development costs (305,890) (179,920) (461,941)
Purchase of property, plant & equipment (64,320) (32,221) (63,181)
Acquisition of subsidiary (173,758) - -
Interest received 5,140 4,253 9,766
Net cash (used in) investing activities (538,828) (207,888) (515,356)
Cash flow from financing activities
Proceeds from issue of new shares - - 1,917,575
Proceeds from new bank loans and borrowings - - 962,500
Repayments of bank loans and borrowings (166,665) (112,427) (573,087)
Payment of lease obligations (141,363) (124,579) (231,491)
Interest paid (68,019) (48,992) (102,486)
Net cash (used in)/from financing activities (376,047) (285,998) 1,973,011
Net (decrease)/increase in cash and cash equivalents (732,424) (525,763) 1,212,628
Cash and cash equivalents at beginning of the period 2,777,273 1,564,645 1,564,645
Cash and cash equivalents at end of the period 2,044,849 1,038,882 2,777,273
Notes to the Financial Statements
For the period ended 30 June 2023
1. General information
Northcoders Group Plc is a public company limited by shares incorporated in
England and Wales. The registered address of the Company is Manchester
Technology Centre, Oxford Road, Manchester, M1 7ED. The consolidated financial
statements (or "financial statements") incorporate the financial statements of
the Company and entities (its subsidiaries) controlled by the Company
(collectively comprising the "Group").
The principal activity of the Group is the provision of digital training
courses.
2. Accounting policies
2.1. Basis of preparation
The financial information set out in these interim consolidated financial
statements for the six months ended 30 June 2023 is unaudited. The financial
information presented are not statutory accounts prepared in accordance with
the Companies Act 2006, and are prepared only to comply with AIM requirements
for interim reporting. Statutory accounts for the year ended 31 December
2022, on which the auditors gave an audit report which was unqualified and did
not contain a statement under Section 498(2) or (3) of the Companies Act 2006,
have been filed with the Registrar of Companies.
These financial statements have been prepared in accordance with international
accounting standards ("IFRS") as adopted by the United Kingdom ("UK") insofar
as these apply to interim financial statements.
The interim consolidated financial statements have been prepared using
consistent accounting policies as those adopted in the financial statements
for the year ended 31 December 2022.
The interim consolidated financial statements are prepared in sterling, which
is the functional currency of the Group. Monetary amounts in these interim
consolidated financial statements are rounded to the nearest £1.
The financial statements have been prepared on the historical cost basis,
modified to include the revaluation of certain financial instruments at fair
value.
2.2. Basis of consolidation
The Group financial statements consolidates those of the parent company and
the subsidiaries of which the parent has control. Control is established
when the parent is exposed, or has rights, to variable returns from its
involvement with the subsidiary and has the ability to affect those returns
through its power over the subsidiary.
Where a subsidiary undertaking is acquired/disposed of during the year, the
consolidated profits or losses are recognised from/until the effective date of
the acquisition/disposal, being the date on which control is obtained or lost.
All inter-company balances and transactions between group companies have been
eliminated on consolidation.
Where necessary, adjustments are made to the financial information of
subsidiaries to bring the accounting policies used into line with those used
by the Group.
The Group applies the acquisition method of accounting for business
combinations enacted after the date of creation of the Group, as detailed
further below. The consideration transferred by the Group to obtain control of
a subsidiary is calculated as the sum of the acquisition-date fair value of
assets transferred by the Group, liabilities incurred by the Group to the
former owners of the acquiree and the equity interest issued by the Group.
Acquisition costs are expensed as incurred.
The Group recognises identifiable assets acquired and liabilities assumed in a
business combination regardless of whether they have been previously
recognised in the acquired subsidiary's financial information prior to the
acquisition. Assets acquired and liabilities assumed are measured at their
acquisition-date fair values.
2.3. Going concern
As at 30 June 2023 the Group had net assets of £5,499,360, including cash and
cash equivalents of £2,044,849.
In preparing the interim 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
flows for the foreseeable future, being a period of at least 12 months from
the expected date of approval of the interim financial statements.
Forecasts are adjusted for reasonable sensitivities 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 "stress" case
scenarios. Overall, the Directors do not believe that the outcomes of such
testing gives rise to a material uncertainty around going concern.
At the time of approving the interim 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 interim
financial statements.
2.4 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 the 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.
· 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 of the
contracts with customers.
· For apprenticeship income, 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;
otherwise, income is recognised as for consumer bootcamps.
Determining the transaction price
The Group's revenue on over-time sales is generally based on fixed price
contracts but these are subject to more variability as a result of the nature
of the contract. Any variable consideration is constrained in estimating
contract revenue in order that it is highly probable that there will not be a
future reversal in the amount of revenue recognised when the final amounts of
any variations have been determined.
Allocating amounts to performance obligations
Where the contracts include multiple performance obligations, which are
determined to be separate performance obligations, the transaction price will
be allocated to each performance obligation based on the stand-alone selling
prices. Where these are not directly observable, they are estimated based on
expected cost plus margin.
2.5 Development assets
Expenditure on research activities, undertaken with the prospect of gaining
new scientific or technical knowledge and understanding, is recognised in the
income statement as an expense as incurred. Development costs incurred are
capitalised after the point at which the commercial and technical feasibility
of the product has been proven, and the decision to complete the development
has been taken and resources made available. The expenditure capitalised is
solely the cost of direct labour. Capitalised development expenditure is
stated at cost less accumulated amortisation and impairment losses.
Amortisation begins when an asset is acquired or becomes available for use and
is calculated on a straight-line basis to allocate the cost of assets over
their estimated useful lives as follows:
Licence
4 years straight line
Development costs
10 years straight line
3. Earnings per share
The calculation of the basic and diluted earnings per share is based on the
following data:
Earnings 6 months ended 6 months Year ended
30 June 2023 ended 31 December 2022
UNAUDITED 30 June 2022 AUDITED
UNAUDITED
£ £ £
Earnings for the purpose of basic earnings per share being net profit (250,933) 193,460 359,538
attributable to owners of the parent
Earnings for the purposes of diluted earnings per share (250,933) 193,460 359,538
Number of shares 6 months ended 6 months ended Year ended
30 June 2023 30 June 2022 31 December 2022
UNAUDITED UNAUDITED AUDITED
£ £ £
Weighted average number of ordinary shares for the purposes of basic earnings 7,941,963 6,944,445 7,019,909
per share
Effects of dilutive potential ordinary shares 88,976 155,365 147,010
Weighted average number of ordinary shares for the purposes of diluted 8,030,939 7,099,810 7,166,919
earnings per share
Earnings per share
Earnings 6 months ended 6 months ended Year ended
30 June 2023 30 June 2022 31 December 2022
UNAUDITED UNAUDITED AUDITED
Pence per weighted average shares (3.16)p 2.79p 5.12p
Pence per weighted average diluted shares (3.16)p 2.72p 5.02p
In the current period the Group has incurred losses and as such the diluted
earnings per share and adjusted diluted earnings per share are not amended
from the basis earnings per share and adjusted earnings per share. This is
in line with IAS 33 '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:
Adjusted Earnings per Share 6 months ended 6 months ended Year ended
30 June 2023 30 June 2022 31 December 2022
UNAUDITED UNAUDITED AUDITED
£ £ £
Profit/(loss) after taxation (250,933) 193,460 359,538
Adjusted for:
Share-based payment expense 86,852 125,373 203,607
Adjusted Earnings (164,081) 318,833 563,145
Pence per weighted average shares (2.07)p 4.59p 8.02p
Pence per weighted average diluted shares (2.07)p 4.59p 7.86p
4. Intangible fixed assets
Development costs Licence Total
£ £ Customer relationships and contracts £
£
Brand Technology
£ £
Cost
At 1 January 2023 1,055,530 101,899 - - - 1,157,429
Additions 305,890 - 140,160 53,513 164,706 664,269
At 30 June 2023 1,361,420 101,899 1,821,698
140,160 53,513 164,706
Amortisation and impairment
At 1 January 2023 234,634 50,950 - - - 285,584
Amortisation charged for the period 51,762 12,737 91,674
9,733 3,716 13,726
At 30 June 2023 286,396 63,687 9,733 3,716 13,726 377,258
Carrying amount
At 30 June 2023 1,075,024 38,212 130,427 49,797 150,980 1,444,440
At 31 December 2022 820,896 50,949 - - - 871,845
5. Business combinations
On 7 February 2023, Northcoders Group Plc acquired 100% of the ordinary share
capital of Tech Returners Limited. In accordance with IFRS 3 Business
Combinations, goodwill of £1,270,725 arising from the acquisition and
£358,379 of separable intangibles assets have been recognised.
The following amounts of assets, liabilities and contingent liabilities have
been provisionally recognised at the date of acquisition, based on book value:
Book value
£
Assets and liabilities acquired:
Tangible assets 2,054
Trade and other receivables 205,858
Cash and cash equivalents 70,258
Trade and other payables (316,746)
Provisional identifiable assets (38,576)
Goodwill 1,270,725
Brand 140,160
Customer relationships and contracts 53,513
Technology 164,706
Deferred tax on above (46,750)
Total purchase consideration 1,543,778
£
Consideration:
Cash 244,016
Share capital 1,000,000
Reduction of debt 82,181
Discounted deferred consideration 217,581
1,543,778
The deferred consideration is payable on 7 February 2024 and is included
within current liabilities. There is no contingent element pertaining to the
deferred consideration.
The acquisition carries a significant value of goodwill, which is
predominantly explained through the anticipated synergies and cross-sales from
the acquisition of a complementary business to the core trade of Northcoders
Group. Tech Returners Limited focuses on a similar sector but different
target consumer than the Group, and as such is expected to add significant
value to the comprehensive offering that the Group can provide to the market.
The June 2023 results for Tech Returners Limited have been consolidated with
those of the pre-existing Group members in these financial statements from the
date of acquisition. In the period to 30 June 2023 turnover of £371,074 and
loss before tax of £88,967 has been recognised relating to Tech Returners
Limited.
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