TIDMCODE
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 GBP3.5 million (H1 2022: GBP2.4million), an increase of 46%
-- Record demand for consumer bootcamp training, delivering
revenues in H1 2023 of GBP2.8 million (H1 2022: GBP1.7 million)
driven by geographical expansion and entry into new disciplines
-- Gross profit increased 32% to GBP2.2 million (H1 2022: GBP1.7
million) with a gross margin of 63% generated by continued
investment into internal efficiencies and software
-- Underlying adjusted EBITDA of GBP0.04 million (H1 2022:
GBP0.42 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 GBP0.5 million showing ongoing growth
in profitability
-- Loss after tax of GBP0.2 million (Profit after tax H1 2022:
GBP0.2 million), delivering adjusted EPS of (2.07) pence (H1 2022:
4.59 pence)
-- Strong balance sheet with cash of GBP2.04 million (H1 2022:
GBP1.04 million) and net assets at the Period end of GBP5.5 million
(H1 2022: GBP2.4 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 GBP4.5 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
GBP0.75 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 GBP3.5 million, a 46%
increase compared to the same period last year, driven by high
demand for consumer bootcamp training, generating GBP2.8 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:
htt p s://www.investormeetcom p an y .com/northcoders- g roup- p
lc/re g ister-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.
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 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
Lucy Williams
Duncan Vasey
Buchanan Communications Tel: +44 (0) 20 7466 5000
Henry Harrison-Topham 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
.
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 GBP4.5 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 GBP3.5 million (H1 2022: GBP2.4
million), up 46% on the equivalent period last year. Consumer
Revenue, which includes core bootcamps and apprenticeship revenues,
generated revenue of GBP2.8 million, up 62% on the comparable
period in 2022. The division delivered EBITDA of GBP0.5 million
showing further efficiencies in the training model. Northcoders
Business Services division generated revenue of GBP0.3 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 GBP0.4 million in the period
since its acquisition.
Gross profit for the Period was GBP2.2 million (H1 2022: GBP1.7
million) at a gross margin of 63%. EBITDA, adjusted for share based
payments, was GBP0.04 million (H1 2022: GBP0.42 million) and loss
after tax was GBP0.25 million (H1 2022: profit of GBP0.19 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 GBP5.5 million (H1 2021: GBP2.44
million) of which cash was GBP2.0 million (H1 2021: GBP1.0
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
GBP750k 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 6 months
ended ended Year ended
30 June 30 June 31 December
2023 2022 2022
Notes UNAUDITED UNAUDITED AUDITED
GBP GBP GBP
---------------------------- -------- ------------ ------------ -------------
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 shareholders
of the parent (229,220) 164,989 368,352
---------------------------- -------- ------------ ------------ -------------
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
30 June 31 December
30 June 2023 2022 2022
Notes UNAUDITED UNAUDITED AUDITED
GBP GBP GBP
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 Merger Other Retained Total equity
capital premium option reserve reserve earnings attributable
reserve to owners
of the parent
GBP GBP GBP GBP GBP GBP GBP
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 6 months
ended ended Year ended
30 June 30 June 31 December
2023 2022 2022
UNAUDITED UNAUDITED AUDITED
GBP GBP GBP
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 GBP1.
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 GBP5,499,360,
including cash and cash equivalents of GBP2,044,849.
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 6 months Year ended
ended ended 31 December
30 June 30 June 2022 2022
2023 UNAUDITED AUDITED
UNAUDITED
GBP GBP GBP
Earnings for the purpose of basic
earnings per share being net
profit attributable to owners
of the parent (250,933) 193,460 359,538
Earnings for the purposes of
diluted earnings per share (250,933) 193,460 359,538
----------- -------------- -------------
Number of shares 6 months 6 months Year ended
ended ended 31 December
30 June 30 June 2022
2023 2022 AUDITED
UNAUDITED UNAUDITED
GBP GBP GBP
Weighted average number of ordinary
shares for the purposes of basic
earnings per share 7,941,963 6,944,445 7,019,909
Effects of dilutive potential
ordinary shares 88,976 155,365 147,010
Weighted average number of ordinary
shares for the purposes of diluted
earnings per share 8,030,939 7,099,810 7,166,919
----------- ----------- -------------
Earnings per share
Earnings 6 months 6 months Year ended
ended ended 31 December
30 June 30 June 2022
2023 2022 AUDITED
UNAUDITED UNAUDITED
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 6 months Year ended
ended ended 31 December
30 June 30 June 2022
2023 2022 AUDITED
UNAUDITED UNAUDITED
GBP GBP GBP
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
Customer
Development relationships
costs Licence Brand and contracts Technology Total
GBP GBP GBP GBP GBP GBP
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 1,361,420 101,899 140,160 53,513 164,706 1,821,698
Amortisation
and impairment
At 1 January
2023 234,634 50,950 - - - 285,584
Amortisation
charged for the
period 51,762 12,737 9,733 3,716 13,726 91,674
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 GBP1,270,725 arising
from the acquisition and GBP358,379 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
GBP
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
-------------
GBP
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 GBP371,074 and loss before tax of
GBP88,967 has been recognised relating to Tech Returners
Limited.
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END
IR SFUESAEDSELU
(END) Dow Jones Newswires
September 19, 2023 02:00 ET (06:00 GMT)
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