Interim Results

Northcoders Group PLC
19 September 2023
 

19 September 2023

 

 

Northcoders Group PLC

('Northcoders' or the 'Group' or 'Company')

 

Interim Results

Group continues to grow despite challenging macro environment

with record demand for consumer training bootcamps

 

Northcoders (AIM:CODE), an independent provider of training programmes for software coding, announces its results for the six months ended 30 June 2023 ('H1 2023' or the 'Period').

 

Financial Highlights

·        Revenue grew to £3.5 million (H1 2022: £2.4million), an increase of 46%

·        Record demand for consumer bootcamp training, delivering revenues in H1 2023 of £2.8 million (H1 2022: £1.7 million) driven by geographical expansion and entry into new disciplines

·        Gross profit increased 32% to £2.2 million (H1 2022: £1.7 million) with a gross margin of 63% generated by continued investment into internal efficiencies and software

·        Underlying adjusted EBITDA of £0.04 million (H1 2022: £0.42 million) in line with management expectations following investments into Business Solutions and Tech Returners

·        The Group's core business, Consumer Training Bootcamps, achieved adjusted EBITDA of £0.5 million showing ongoing growth in profitability

·        Loss after tax of £0.2 million (Profit after tax H1 2022: £0.2 million), delivering adjusted EPS of (2.07) pence (H1 2022: 4.59 pence)

·        Strong balance sheet with cash of £2.04 million (H1 2022: £1.04 million) and net assets at the Period end of £5.5 million (H1 2022: £2.4 million)

 

Operating Highlights

·          Positive growth in demand with record Consumer Training Bootcamp course applications, more than doubling to 7,107 in the Period (H1 2022: 3,494)

·          Q3 2023 has again seen record applications, now standing at over 10,000

·          Continued to secure Government funding for consumer Skills Bootcamps, achieving a successful Department for Education Skills Bootcamps bid giving a further £4.5 million revenue visibility for H2-2023 and FY-2024

·          Strategy for geographical expansion continues to progress with over 45% of the Company's Training Bootcamp learners now based outside of Manchester and Leeds, a significant change from the Group's position at IPO two years ago

·          In February 2023 the Group acquired Tech Returners Limited, which has now been fully integrated into the Business Solutions division, with the pipeline now including several large corporate businesses

§ As part of Tech Returners brand offering, ReFrame, the North's largest conference dedicated to Women in Technology has been launched in London and through marketing and PR is creating significant corporate brand awareness in the London region

·          Business Solutions division signed its first public sector contract with a significant central Government department which is due to commence in Q4 2023

·          Investment and roll out of nCore platform on track for use across the Group in 2024, improving efficiency and supporting gross margin growth

·          New technology training courses continue to expand

·          The Data Engineering discipline is performing strongly with further investment having been made into course delivery.  The Group is now benefitting from significant cohorts of learners each quarter

·          Launched a third discipline within the Consumer Training Bootcamp division, Cloud Engineering.  The first cohort launched in March 2023

 

Current trading and outlook

 

Despite the strategic momentum achieved in H1 2023 which ended in line with management's expectations, the current financial year is presenting several market challenges for the Group's Business Solutions division. FY23 was and still is expected to be a second half weighted year but the outturn is uncertain due to the prevailing headwinds encountered by the technology market. Budget constraints, workforce reductions and recruitment freezes have led to many corporate clients delaying and deferring budget commitment to Northcoders' Academy, Your Return to Tech and Consultancy programmes.

 

In particular, one client is undergoing a substantial business reorganisation leading to a division closure. As a result, their immediate demands for our services have diminished below the £0.75 million we had been expecting with the quantum now being uncertain. We are actively collaborating with them during this transitional phase and remain optimistic about the possibility of future work and contract fulfilment, as the client has expressed a keen interest in continuing our partnership.

 

As a result of this contract, and the more cautious technology training market conditions, the Group now expects revenue and profits for the year as a whole to be significantly below current expectations. With its strong balance sheet, the Board remains confident in Northcoders' ability to continue to deliver significant growth as it delivers its strategy and continues to build its reputation as a leading technology training provider in the UK.  The Company continues to work with blue chip corporates and now public bodies, as both hiring partners and customers, to improve the UK's technology gap with digital transformation remaining a priority.

 

Chris Hill, Chief Executive Officer of Northcoders, said: "Our performance to date reaffirms our commitment to addressing the UK's digital skills gap as a leading technology training provider.  H1 2023 saw the Group's revenue increase to £3.5 million, a 46% increase compared to the same period last year, driven by high demand for consumer bootcamp training, generating £2.8 million in revenue, up 65% on H1 2022 performance.

 

"Northcoders' strategic acquisition of Tech Returners in February has already yielded positive results, engaging several major corporate clients. The launch of ReFrame, the North's largest Women in Technology conference in London, has significantly boosted the Group's corporate brand awareness.  Demand for technology training beyond the original Coding courses continues to increase, including for the Group's Data Engineering services, as well as Cloud Engineering tuition having launched successfully.  The Business Solutions division signed its inaugural contract with a central government department project set for Q4 2023.

 

"As outlined at the Trading Update in July, the market continues to be challenging, with budget constraints, workforce reductions, and recruitment freezes affecting the Business Solutions division, which means our growth in the short term is expected to be slower than previously expected.  Nonetheless, Northcoders remains a key enabler of growth and innovation and we are resolute in our pursuit of evolving to meet technology's ever-changing demands, confidently providing sustainable long-term growth for all our stakeholders."

 

Analyst meeting and Investor Meet Company presentation

 

A virtual meeting for sell-side analysts will be held at 9.30 a.m. today, 19 September 2023.  Please contact Buchanan via northcoders@buchanan.uk.com if you wish to join the meeting.

 

Northcoders will be also be presenting via the Investor Meet Company platform today, 19 September 2023 at 6 p.m. (BST).  The meeting will be hosted by Chris Hill (CEO) and Charlotte Prior (CFO), and there will be an opportunity for Q&A at the end of the session.  Questions can be submitted pre-event via the Investor Meet Company dashboard up until 9.00 a.m. the day before the meeting or at any time during the live presentation.  To sign up to the Northcoders Group presentation via Investor Meet Company please click the following link:

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.

 

 

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 £4.5 million over the next two years as well as additional bids currently underway.  It is another demonstration of Northcoder's reputation as a top tier training provider dedicated to upskilling the workforce and provides a substantial revenue stream for the future.

 

The Business Solutions division achieved a significant milestone by signing its first public body contract as a training provider in a significant central Government department project, scheduled to commence in 2023.  This reflects the Group's expertise and credibility in delivering impactful solutions to Government bodies.

 

Despite this, the Board wants to address the challenges facing its Business Solutions division in the context of the positive momentum during H1 2023.  The current financial year has brought forth market challenges that require a more cautious outlook for the second half of the financial year.  The technology market has encountered headwinds, including unanticipated budget constraints, workforce reductions, and recruitment freezes.  These factors have prompted many corporate clients to delay and defer their budget commitments to the Group's Academy, Your Return to Tech, and Consultancy programmes.  The Group acknowledges these challenges and remains committed to addressing them proactively, charting a course forward that ensures Northcoders' continued growth and success.

 

Financial Review

 

Northcoders delivered a strong performance in the Period, with underlying profitability in line with management expectations.

 

Revenue for the Period was £3.5 million (H1 2022: £2.4 million), up 46% on the equivalent period last year.  Consumer Revenue, which includes core bootcamps and apprenticeship revenues, generated revenue of £2.8 million, up 62% on the comparable period in 2022.  The division delivered EBITDA of £0.5 million showing further efficiencies in the training model.  Northcoders Business Services division generated revenue of £0.3 million and the Group is confident in the decision to invest into sales, marketing and the expansion of Business Services and the acquisition of Tech Returners will see benefits in future years. Tech Returners generated revenue of £0.4 million in the period since its acquisition.

 

Gross profit for the Period was £2.2 million (H1 2022: £1.7 million) at a gross margin of 63%. EBITDA, adjusted for share based payments, was £0.04 million (H1 2022: £0.42 million) and loss after tax was £0.25 million (H1 2022: profit of £0.19 million).  Basic earnings per share was a loss of (3.16 pence per share (H1 2022: profit of 2.79 pence).  Basic adjusted earnings per share was a loss of 2.07 pence per share (H1 2022: profit of 4.59 pence).  Net assets at the Period end were £5.5 million (H1 2021: £2.44 million) of which cash was £2.0 million (H1 2021: £1.0 million).

 

Operational Review

 

Northcoders' IPO strategy of geographical expansion beyond Manchester and Leeds has yielded significant results.  Over 45% of Training Bootcamp learners now reside outside of these cities, marking a substantial shift from the Group's position at IPO just two years ago.  This expansion signifies Northcoders' growing national presence.

 

In February 2023, the Group took a strategic step by acquiring Tech Returners.  Tech Returners' brands and services have seamlessly integrated into the Business Solutions divisions and building a pipeline of potential new client contracts.  This move strengthens the Group's presence in the technology training sector.

 

Northcoder's commitment to diversity and inclusion is further exemplified by the launch of 'ReFrame', the North's largest Women in Technology conference, as part of Tech Returners' offerings.  Through effective marketing and public relations efforts, ReFrame is creating substantial corporate brand awareness in the London region.

 

Northcoders' Data Engineering division has showcased robust performance, thanks to increased investment in the course delivery team.  The division can now efficiently train significant cohorts of learners each quarter, addressing the rising demand for data engineering skills.

 

In line with the Group's expansion efforts, Northcoders launched its third business unit, focusing on training bootcamp courses and Corporate Solutions services in the Cloud Engineering discipline.  The inaugural cohort was successfully launched in March 2023, marking a promising start in this dynamic field.

 

Northcoders remains steadfast in its commitment to a thoughtful, strategic approach in product development.  This approach yields positive results as the tailored training programs resonate with a diverse audience.  The Group's innovative spirit drives us to adapt to the ever-evolving market landscape, and after the successful launch of the Data Engineering discipline, Northcoders is exploring further opportunities in its Consumer Training division and other disciplines.

 

As a youthful organisation, the Group constantly reassess its business roadmap to ensure that long-term, sustainable growth is fostered.  As the final quarter of 2023 is approached, the Board is confident about the new product offerings and the trajectory of the business whilst being mindful of the wider macroeconomic environment.

 

Current trading and prospects

Despite the strategic momentum achieved in H1-2023 which ended in line with management's expectations, the current financial year is presenting several market challenges for the Group's Business Solutions division.  FY23 was and still is expected to be a second half weighted year but the outturn is uncertain due to the prevailing headwinds encountered by the technology market. Budget constraints, workforce reductions and recruitment freezes, has led to many corporate clients delaying and deferring budget commitment to Northcoders' Academy, Your Return to Tech and Consultancy programmes.

 

In particular, a client is undergoing a substantial business reorganisation including a division closure. As a result, their immediate demands for our services have diminished below the £750k we had been expecting with the quantum now being uncertain. We are actively collaborating with them during this transitional phase and remain optimistic about the possibility of future work and contract fulfilment, as the client has expressed a keen interest in continuing our partnership.

 

As a result of this contract, and the more cautious technology training market conditions, the Group now expects revenue and profits for the year as a whole to be significantly below current expectations.  With its strong balance sheet, the Board remains confident in Northcoders' ability to continue to deliver significant  growth and continues to build its reputation as a leading technology training provider in the UK.  The Company continues to work with blue chip corporates and now public bodies, as both hiring partners and customers, to improve the UK's technology gap with digital transformation remaining a priority.

 

 

Chris Hill

Chief Executive Officer

19 September 2023

 



 

Group Statement of Comprehensive Income

For the period ended 30 June 2023

 

 


 

 

Notes

6 months ended

30 June 2023

UNAUDITED

6 months ended

30 June 2022

UNAUDITED

Year ended

31 December 2022

AUDITED


 

£

£

£


 


 


Revenue

 

3,450,579

2,367,596

5,598,863

Cost of sales

 

(1,269,645)

(710,651)

(1,656,938)

Gross profit

 

2,180,934

1,656,945

3,941,925


 




Other operating income

 

-

7,500

12,000


 




Expenditure

 

(2,141,561)

(1,246,895)

(3,046,292)

Adjusted EBITDA

 

39,373

417,550

907,633

 

 




Depreciation

 

(83,115)

(88,642)

(171,521)

Amortisation

 

(91,674)

(38,366)

(85,167)

Share based payment expense

 

(86,852)

(125,373)

(203,607)


 




Total administrative expenditure

 

(2,403,202)

(1,499,276)

(3,506,587)


 




Operating (loss)/profit

 

(222,268)

165,169

447,388

 

 




Investment revenues

 

5,159

5,253

11,765

Finance costs

 

(89,799)

(52,246)

(112,674)

(Loss)/profit before tax

 

(306,908)

118,176

346,429


 




Taxation

 

55,975

75,284

13,109

Net (loss)/profit after tax

 

(250,933)

193,460

359,538


 




Other comprehensive income:

 




Tax relating to items not reclassified

 

21,713

(28,471)

8,814

Total comprehensive (loss)/income for the year attributable to equity 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

 

 

Notes

30 June 2023

UNAUDITED


30 June

2022

UNAUDITED


31 December

2022

AUDITED

 

 

£

 

£

 

£

Non-current assets







Intangible assets

4

1,444,440


636,625


871,845

Goodwill

5

1,270,725


-


-

Property, plant and equipment

 

447,244


468,646


416,727

Deferred tax assets

 

379,892


338,848


330,837


 

3,542,301


1,444,119


1,619,409


 






Current assets

 






Contract assets

 

2,005,302


1,231,525


1,947,922

Trade and other receivables

 

725,875


681,621


909,010

Current tax receivable

 

109,832


143,042


82,309

Cash and cash equivalents

 

2,044,849


1,038,882


2,777,273


 

4,885,858


3,095,070


5,716,514


 






Current liabilities

 






Trade and other payables

 

978,145


502,435


665,575

Borrowings

 

369,767


223,195


391,367

Current tax liabilities

 

4,900


-


-

Lease liabilities

 

230,315


190,032


196,243

Contract liabilities

 

53,306


21,405


5,239


 

1,636,433


937,067


1,258,424


 






Net current assets

 

3,249,425

 

2,158,003

 

4,458,090


 






Non-current liabilities

 






Borrowings

 

601,775


399,621


740,223

Lease liabilities

 

336,654


589,784


464,833

Deferred tax provision


353,937


170,159


230,713


 

1,292,366


1,159,564


1,435,769


 






Net assets

 

5,499,360

 

2,442,558

 

4,641,730


 






EQUITY

 

 

 

 

 

 

Share capital

 

80,115


69,444


76,889

Share premium

 

4,801,444


2,891,314


4,801,444

Merger reserve

 

500


500


500

Share option reserve

 

315,332


257,906


228,480

Other reserve

 

946,772


(50,000)


(50,000)

Retained earnings

 

(644,803)


(726,606)


(415,583)

Total equity


5,499,360

 

2,442,558

 

4,641,730


 

Group Statement of Changes in Equity

For the period ended 30 June 2023

 

 

 

 

 

 

 

 

 

Share

capital

Share

premium

Share option reserve

Merger reserve

Other reserve

Retained earnings

 

Total equity attributable to owners of the parent

                       

£

£

£

£

£

£

 

£

At 01 January 2022 (audited)

69,444

2,891,314

134,715

500

(50,000)

(893,777)

 

2,152,196










Profit for the period

-

-

-

-

-

193,460


193,460

Other comprehensive loss:









Tax adjustments on share based payments

-

-

-

-

-

(28,471)


(28,471)

Total comprehensive income for the year

-

-

-

-

-

164,989


164,989

Share option expense

-

-

125,373

-

-

-


125,373

Cancellation of share options

-

-

(2,182)

-

-

2,182


-










At 30 June 2022 (unaudited)

69,444

2,891,314

257,906

500

(50,000)

(726,606)


2,442,558

 








Profit for the period

-

-

-

-

-

166,078


166,079

Other comprehensive loss:









Tax adjustments on share based payments

-

-

-

-

-

37,285


37,285

Total comprehensive income for the year

-

-

-

-

-

203,363


203,363

Share option and warrants expense

-

-

78,234

-

-

-


78,234

Cancellation of share options

-

-

(19,365)

-

-

19,365


-

Share options exercised

-

-

(88,295)

-

-

88,295


-

Issue of share capital

7,445

2,076,387

-

-

-

-


2,083,832

Costs of share issues set against premium

-

(166,257)

-

-

-

-


(166,257)


 

 

 

 

 

 

 

 

At 31 December 2022 (audited)

76,889

4,801,444

228,480

500

(50,000)

(415,583)


4,641,730










Loss for the period

-

-

-

-

-

(250,933)


(250,933)

Other comprehensive loss:









Tax adjustments on share based payments

-

-

-

-

-

21,713


21,713

Total comprehensive income for the year

-

-

-

-

-

(229,220)


(229,220)

Share option expense

-

-

86,852

-

-

-


86,852

Issue of share capital

3,226

-

-

-

996,772

-


 999,998

 

 

 

 

 

 

 

 

 

At 30 June 2023 (unaudited)

80,115

4,801,444

315,332

500

946,772

(644,803)


             5,499,360


Group Statement of Cashflows

For the period ended 30 June 2023

 

 

 

 

 

 


Notes

6 months ended

 30 June 2023

UNAUDITED

6 months ended

 30 June 2022

UNAUDITED

Year ended 31 December 2022

AUDITED


 

£

£

£

Cash flows from operating activities:




Profit/(loss) for the year


(250,933)

193,460

359,538

Adjustments for:





Tax (credit)/charge


(55,975)

(75,284)

(13,109)

Finance costs


89,799

52,246

112,674

Investment revenues


(5,159)

(5,253)

(11,765)

Share based payment expense


86,852

125,373

203,607

Amortisation of intangible assets


91,674

38,366

85,167

Depreciation of tangible assets


83,115

88,642

171,521



39,373

417,550

907,633

Changes in working capital:





Decrease/(increase) in contract assets and trade & other receivables


244,532

(496,001)

(1,435,445)

Increase/(decrease) in trade & other payables


(183,937)

46,574

178,377

Cash (used in)/from operations


99,968

(31,877)

(349,435)






Income taxes received


82,483

-

104,408






Net cash (outflow)/inflow from operating activities

 

182,451

(31,877)

(245,027)






Cash flows from investing activities





Capitalised development costs


(305,890)

(179,920)

(461,941)

Purchase of property, plant & equipment


(64,320)

(32,221)

(63,181)

Acquisition of subsidiary


(173,758)

-

-

Interest received


5,140

4,253

9,766






Net cash (used in) investing activities


(538,828)

(207,888)

(515,356)

 

 

 

 

 

Cash flow from financing activities

 

 

 

 

Proceeds from issue of new shares

 

-

-

1,917,575

Proceeds from new bank loans and borrowings

 

-

-

962,500

Repayments of bank loans and borrowings

 

(166,665)

(112,427)

(573,087)

Payment of lease obligations

 

(141,363)

(124,579)

(231,491)

Interest paid

 

(68,019)

(48,992)

(102,486)

 

 

 

 

 

Net cash (used in)/from financing activities

 

(376,047)

(285,998)

1,973,011

 

 

 

 

 

Net (decrease)/increase in cash and cash equivalents

 

(732,424)

(525,763)

1,212,628

Cash and cash equivalents at beginning of the period

 

2,777,273

1,564,645

1,564,645

 

 

 

 

 

Cash and cash equivalents at end of the period

 

2,044,849

1,038,882

2,777,273

 

 

 

 

 

 

 

 

 

 

 

 



 

Notes to the Financial Statements

For the period ended 30 June 2023

 

1.   General information

 

Northcoders Group Plc is a public company limited by shares incorporated in England and Wales. The registered address of the Company is Manchester Technology Centre, Oxford Road, Manchester, M1 7ED. The consolidated financial statements (or "financial statements") incorporate the financial statements of the Company and entities (its subsidiaries) controlled by the Company (collectively comprising the "Group").

 

The principal activity of the Group is the provision of digital training courses.

 

2.   Accounting policies

2.1.  Basis of preparation

 

The financial information set out in these interim consolidated financial statements for the six months ended 30 June 2023 is unaudited.  The financial information presented are not statutory accounts prepared in accordance with the Companies Act 2006, and are prepared only to comply with AIM requirements for interim reporting.  Statutory accounts for the year ended 31 December 2022, on which the auditors gave an audit report which was unqualified and did not contain a statement under Section 498(2) or (3) of the Companies Act 2006, have been filed with the Registrar of Companies.

 

These financial statements have been prepared in accordance with international accounting standards ("IFRS") as adopted by the United Kingdom ("UK") insofar as these apply to interim financial statements.

 

The interim consolidated financial statements have been prepared using consistent accounting policies as those adopted in the financial statements for the year ended 31 December 2022.

 

The interim consolidated financial statements are prepared in sterling, which is the functional currency of the Group.  Monetary amounts in these interim consolidated financial statements are rounded to the nearest £1.

 

The financial statements have been prepared on the historical cost basis, modified to include the revaluation of certain financial instruments at fair value.

 

2.2.  Basis of consolidation

 

The Group financial statements consolidates those of the parent company and the subsidiaries of which the parent has control.  Control is established when the parent is exposed, or has rights, to variable returns from its involvement with the subsidiary and has the ability to affect those returns through its power over the subsidiary.

 

Where a subsidiary undertaking is acquired/disposed of during the year, the consolidated profits or losses are recognised from/until the effective date of the acquisition/disposal, being the date on which control is obtained or lost.

 

All inter-company balances and transactions between group companies have been eliminated on consolidation.

 

Where necessary, adjustments are made to the financial information of subsidiaries to bring the accounting policies used into line with those used by the Group.

 

The Group applies the acquisition method of accounting for business combinations enacted after the date of creation of the Group, as detailed further below. The consideration transferred by the Group to obtain control of a subsidiary is calculated as the sum of the acquisition-date fair value of assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interest issued by the Group. Acquisition costs are expensed as incurred.

 

The Group recognises identifiable assets acquired and liabilities assumed in a business combination regardless of whether they have been previously recognised in the acquired subsidiary's financial information prior to the acquisition. Assets acquired and liabilities assumed are measured at their acquisition-date fair values.

 

2.3. Going concern

 

As at 30 June 2023 the Group had net assets of £5,499,360, including cash and cash equivalents of £2,044,849.

 

In preparing the interim financial statements, the Directors have considered the principal risks and uncertainties facing the business, along with the Group's objectives, policies and processes for managing its exposure to financial risk. In making this assessment the Directors have prepared cash flows for the foreseeable future, being a period of at least 12 months from the expected date of approval of the interim financial statements.

 

Forecasts are adjusted for reasonable sensitivities that address the principal risks and uncertainties to which the Group is exposed, thus creating a number of different scenarios for the board to challenge including "stress" case scenarios.  Overall, the Directors do not believe that the outcomes of such testing gives rise to a material uncertainty around going concern.

 

At the time of approving the interim financial statements, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Thus, the Directors continue to adopt the going concern basis of accounting in preparing the interim financial statements.

 

2.4 Revenue

 

Revenue from providing services is recognised in the accounting period in which the services are rendered. Services are typically provided over short periods of time, spanning typically a few months at most.  However, for fixed-price contracts that span accounting periods, revenue is recognised based on the actual service provided to the end of the reporting period as a proportion of the total services to be provided because the customer receives and uses the benefits simultaneously.  Where the Group has contracts where the period between the transfer of the promised services to the customer and payment exceeds one year, the Group adjusts the transaction price for the time value of money. Revenue is determined as follows:

 

·    For consumer bootcamps, income is received in advance of the service being provided and is recognised on a pro-rata basis across the course delivery, based on delivery dates for those courses. Any income received in advance is recognised as deferred revenue.

·    For corporate solutions, amounts are invoiced in arrears for development work performed along with any associated costs, based on the number of hours spent on each contract at agreed contractual rates for those delivering the course. Where appropriate, any amounts to be invoiced are recognised as accrued revenue, and any amounts invoiced in advance are recognised as deferred revenue, in line with performance obligations of the contracts with customers.

·    For apprenticeship income, the Group receives lump-sum drawdowns at regular intervals, which typically are billed in arrears resulting in accrued income. In addition, the Group receives a contingent success fee, payable at the end. The Group makes an assessment of the probability of success and accrues this on a percentage of completion basis as the course progresses; otherwise, income is recognised as for consumer bootcamps.

 



 

Determining the transaction price

The Group's revenue on over-time sales is generally based on fixed price contracts but these are subject to more variability as a result of the nature of the contract.  Any variable consideration is constrained in estimating contract revenue in order that it is highly probable that there will not be a future reversal in the amount of revenue recognised when the final amounts of any variations have been determined.

 

Allocating amounts to performance obligations

Where the contracts include multiple performance obligations, which are determined to be separate performance obligations, the transaction price will be allocated to each performance obligation based on the stand-alone selling prices.  Where these are not directly observable, they are estimated based on expected cost plus margin.

 

2.5 Development assets

 

Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognised in the income statement as an expense as incurred. Development costs incurred are capitalised after the point at which the commercial and technical feasibility of the product has been proven, and the decision to complete the development has been taken and resources made available. The expenditure capitalised is solely the cost of direct labour. Capitalised development expenditure is stated at cost less accumulated amortisation and impairment losses.

 

Amortisation begins when an asset is acquired or becomes available for use and is calculated on a straight-line basis to allocate the cost of assets over their estimated useful lives as follows:

Licence                                       4 years straight line

Development costs                               10 years straight line

 

 



 

3.   Earnings per share

 

The calculation of the basic and diluted earnings per share is based on the following data:

 

Earnings

6 months ended

30 June 2023

UNAUDITED

6 months

ended

30 June 2022

UNAUDITED

Year ended

31 December 2022

AUDITED

 

£

£

£

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 ended

30 June 2023

UNAUDITED

6 months ended

30 June 2022

UNAUDITED

Year ended

31 December 2022

AUDITED

 

£

£

£

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 ended

30 June 2023

UNAUDITED

6 months ended

30 June 2022

UNAUDITED

Year ended

31 December 2022

AUDITED





Pence per weighted average shares

(3.16)p

2.79p

5.12p





Pence per weighted average diluted shares

(3.16)p

2.72p

5.02p

 

In the current period the Group has incurred losses and as such the diluted earnings per share and adjusted diluted earnings per share are not amended from the basis earnings per share and adjusted earnings per share.  This is in line with IAS 33 'Earnings per share'. 

 

The Directors use adjusted earnings before exceptional costs and share based payment expenses.  This creates an alternative performance measure which the Directors believe reflects a fair estimate of ongoing profitability and performance.  The calculated Adjusted Earnings for the current period of accounts is as follows:

 



 

 

Adjusted Earnings per Share

6 months ended

30 June 2023

UNAUDITED

6 months ended

30 June 2022

UNAUDITED

Year ended

31 December 2022

AUDITED

 

£

£

£

Profit/(loss) after taxation

(250,933)

193,460

359,538

Adjusted for:




Share-based payment expense

86,852

125,373

203,607





Adjusted Earnings

(164,081)

318,833

563,145

 

Pence per weighted average shares

(2.07)p

4.59p

8.02p





Pence per weighted average diluted shares

(2.07)p

4.59p

7.86p

 

 

4.      Intangible fixed assets

 

Development costs

£

Licence

£

 

 

 

Brand

£

 

Customer relationships and contracts

£

 

 

 

Technology

£

Total

£

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 £1,270,725 arising from the acquisition and £358,379 of separable intangibles assets have been recognised.

 

The following amounts of assets, liabilities and contingent liabilities have been provisionally recognised at the date of acquisition, based on book value:

 

 

 

 

Book value

£

Assets and liabilities acquired:




 Tangible assets



2,054

 Trade and other receivables



205,858

 Cash and cash equivalents



70,258

 Trade and other payables



(316,746)

Provisional identifiable assets

 

 

(38,576)





 Goodwill



1,270,725

 Brand



140,160

 Customer relationships and contracts



53,513

 Technology



164,706

 Deferred tax on above



(46,750)

   Total purchase consideration

 

1,543,778





 

 

 

 

£

Consideration:




 Cash



244,016

 Share capital



1,000,000

 Reduction of debt



82,181

 Discounted deferred consideration



217,581

 

 

 

1,543,778





 

The deferred consideration is payable on 7 February 2024 and is included within current liabilities.  There is no contingent element pertaining to the deferred consideration.

 

The acquisition carries a significant value of goodwill, which is predominantly explained through the anticipated synergies and cross-sales from the acquisition of a complementary business to the core trade of Northcoders Group.  Tech Returners Limited focuses on a similar sector but different target consumer than the Group, and as such is expected to add significant value to the comprehensive offering that the Group can provide to the market.

 

The June 2023 results for Tech Returners Limited have been consolidated with those of the pre-existing Group members in these financial statements from the date of acquisition.  In the period to 30 June 2023 turnover of £371,074 and loss before tax of £88,967 has been recognised relating to Tech Returners Limited.

 

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