TIDMCODE
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 GBP5.6 million (FY21: GBP3.0 million)
o Consumer revenue increased by 77%(1) to GBP4.9 million (FY21:
GBP2.8 million)
o Corporate revenue increased by 189%(1) to GBP0.7 million
(FY21: GBP0.3 million)
-- Gross profit up 82%(1) to GBP3.9 million (FY21: GBP2.2
million) with a gross profit margin of 70%
-- Adjusted EBITDA slightly ahead of market expectations up
152%(1) to GBP0.9 million (FY21: GBP0.4 million)
-- Profit before tax GBP0.3 million (FY21: loss GBP0.5 million)
-- Net assets increased to GBP4.6 million (FY21: 2.1 million)
-- Cash balance as at 31 December 2022 of GBP2.8 million (31 December 2021: GBP1.6 million)
-- Oversubscribed placing in November 2022, raising GBP2.1 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 (GBP1.5 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 GBP6.1 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 GBP2.1
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 GBP6.1 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 . A copy of the Final
Results presentation will be available on the Group's website later
today: 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
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
WH Ireland Limited (Nominated Adviser & Joint Tel: +44 (0)20 7220 1666
Broker)
Mike Coe / Darshan Patel / Sarah Mather (Corporate
Finance)
Peterhouse Capital Limited (Joint Broker) Tel: +44 (0) 20 7496 0930
Martin Lampshire www.peterhousecap.com
Lucy Williams
Duncan Vasey
Buchanan Communications Tel: +44 (0) 20 7466 5000
Henry Harrison-Topham 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 .
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 GBP2.1 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 GBP5.6 million from
GBP3.0 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
GBP0.9 million from GBP0.4 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 GBP5.6 million (FY21: GBP3.0
million).
Consumer revenue, which includes core bootcamps and
apprenticeship revenues, was GBP4.9 million (FY21: GBP2.8 million)
and corporate revenue was GBP0.7 million (FY21: GBP0.3 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 GBP3.9 million (FY21: GBP2.2 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 GBP1,000 cost of living crisis bonus in October 2022,
whilst maintaining margins.
EBITDA, adjusted for share-based payments, was GBP0.9 million
(FY21: GBP0.4 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 GBP0.3 million (FY21: Loss GBP0.5 million). There was a small
tax credit giving a profit for the year of GBP0.4 million (FY21:
Loss GBP0.4 million). Basic earnings per share was 5.12 pence per
share (FY21: Loss 6.13 pence). Net assets as at 31 December 2022
were GBP4.6 million (FY21: GBP2.1 million) of which cash was GBP2.8
million (FY21: GBP1.6 million).
The cash balance at the year end of GBP2.8 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
GBP5.8 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 GBP1.5 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
GBP26,756. 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 GBP0.7 million (FY21: GBP0.3
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 GBP5.4 million, around 57% of the
target revenue for the year. At the end of Q1-23 revenue visibility
stood at GBP6.1 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 GBP GBP
------------------------------------------------------------ ----- ----------- -----------
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 GBP GBP
--------------------------- ------ ---- ------
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
GBP GBP
------------------------------ --------- ---------
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
--------- ---------
GBP GBP
-------------------------------------- --------- ---------
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 GBP130,686 (FY21:
GBP323,817).
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
GBP GBP GBP GBP GBP GBP GBP
----------------------------------------- ------- --------- -------- -------- --------- ---------- ---------
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
GBP GBP GBP GBP GBP GBP
--------------------------------------------------- ------- --------- -------- -------- ---------- ---------
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
GBP GBP
------------------------------------------------------------ ----------- -----------
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 At 31 December
January Financing New Other
2022 cash flows leases/loans movements(1) 2022
GBP GBP GBP GBP GBP
-------------------------- --------- ---------- ------------ ------------- --------------
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 At 31 December
January Financing New Other
2021 cash flows leases movements(2) 2021
GBP GBP GBP GBP GBP
-------------------------- --------- ---------- ------------ ------------- --------------
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 GBP10,187 on other loans.
(2.) Other movements in the year ended 31 December 2021
includes:
-- Unwinding of present value adjustment of GBP8,999 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 GBP1.
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 GBP130,686 (FY21:
GBP323,817).
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 1 January 2023(1)
4 'Insurance Contracts' and amendments to IFRS 17
Deferred Tax related to Assets and Liabilities arising from a single 1 January
transaction (Amendments to IAS 12 Income Taxes) 2023(1)
Amendments to IFRS 10 and IAS 28 Sale of contribution of assets 1 January
between an investor and its Associate or Joint Venture 2023(1)
Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS 1 January 2023(1)
Practice 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 1 January
-- current Liabilities with Covenants 2024(1)
Amendments to IAS 1 Presentation of Financial Statements - Deferral 1 January 2024(1)
of Effective Date Amendment (published 15 July 2020)
Amendments to IAS 1 Presentation of Financial Statements - Classification 1 January 2024(1)
of 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 GBP GBP
--------------------------------------- --------- ---------
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
GBP GBP
----------------------------------------- --------- ---------
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: GBP GBP GBP GBP
------------------------------ ----------- --------- ----------- -----------
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: GBP GBP GBP GBP
------------------------------ ---------- --------- ----------- -----------
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 GBP GBP
---------------------------------------- --------- ---------
United Kingdom 5,598,863 3,010,357
------------------------------------------ --------- ---------
FY22 FY21
Other significant revenue GBP GBP
-------------------------- ------ -------
Grants received 12,000 144,749
---------------------------- ------ -------
Consumer revenue includes undiscounted EdAid sales of GBP5,208
(FY21: GBP156,733) 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 GBPnil (FY21:
GBP10,064) 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 GBPnil (FY21: GBP127,617)
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 GBPnil (FY21:
GBP17,132) 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 GBP12,000 (FY21:
GBPnil) received for the hire of apprentices.
Revenue from customers who individually accounted for more than
10% of total Group revenue amounted to GBP4,845,368 (FY21:
GBP1,042,967) 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 GBP GBP
-------------------------------------------------------------------------------------------- --------- --------
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 during the year 1,947,922 801,119
-------------------------------------------------------------------------------------------- --------- --------
At 31 December 1,947,922 801,119
-------------------------------------------------------------------------------------------- --------- --------
FY22 FY21
Contract liabilities GBP GBP
----------------------------------------------------------------------------------------- -------- ---------
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 during the year 5,239 21,813
----------------------------------------------------------------------------------------- -------- ---------
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
GBP GBP
------------ ----- -------
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): GBP GBP
------------------------------------------------------------------------------------------ -------- ---------
Government grants (12,000) (144,749)
Fees payable to the Company's auditor for the audit of the Company's financial statements 75,000 52,250
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: GBP GBP
------------------------------------------------------ ------ ------
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: GBP GBP
---------------------------------------- --------- ---------
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
GBP GBP
---------------------- ------- -------
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
GBP GBP
-------------------------------------------------------------- ------- -------
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
GBP GBP
-------------------------------------------------------------- ------- -------
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 Pension Total
in kind
Director GBP GBP GBP GBP GBP
-------------------------------------------- ------- ------------- -------- ------- -------
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 Pension Total
in kind
Director GBP GBP GBP GBP GBP
-------------- ------- ------------- -------- ------- -------
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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END
FR IIMFTMTJTBTJ
(END) Dow Jones Newswires
April 25, 2023 02:00 ET (06:00 GMT)
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