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Registered number: 03211405 EC ENGLISH CAMBRIDGE LIMITED DIRECTORS' REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022
EC ENGLISH CAMBRIDGE LIMITED COMPANY INFORMATION
Directors | A Mangion
| W W Tin
| M Vassallo (appointed 1 May 2022)
| M Xuereb (resigned 1 May 2022)
Registered number | 03211405
Registered office | Tennyson House
| Cambridge Business Park
| Cambridge
| CB4 0WZ
Trading Address | Gibson House
| 57 - 61 Burleigh Street
| Cambridge
| CB1 1DJ
Independent auditors | Price Bailey LLP
| Chartered Accountants & Statutory Auditors
| Tennyson House
| Cambridge Business Park
| Cambridge
| CB4 0WZ
EC ENGLISH CAMBRIDGE LIMITED CONTENTS
| Page
Directors' Report | 1 - 2
Independent Auditors' Report | 3 - 6
Statement of Income and Retained Earnings | 7
Balance Sheet | 8
Notes to the Financial Statements | 9 - 22
EC ENGLISH CAMBRIDGE LIMITED DIRECTORS' REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 The directors present their report and the financial statements for the year ended 31 December 2022.
Directors
The directors who served during the year were:
A Mangion
W W Tin
M Vassallo (appointed 1 May 2022)
M Xuereb (resigned 1 May 2022)
Directors' responsibilities statement
The directors are responsible for preparing the Directors' Report and the financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing these financial statements, the directors are required to: ∙select suitable accounting policies for the Company's financial statements and then apply them consistently; ∙make judgments and accounting estimates that are reasonable and prudent; ∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business. The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Disclosure of information to auditors
Each of the persons who are directors at the time when this Directors' Report is approved has confirmed that: ∙so far as the director is aware, there is no relevant audit information of which the Company's auditors are unaware, and ∙the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company's auditors are aware of that information.
Auditors
Under section 487(2) of the Companies Act 2006, Price Bailey LLP will be deemed to have been reappointed as auditors 28 days after these financial statements were sent to members or 28 days after the latest date prescribed for filing the accounts with the registrar, whichever is earlier. Page 1
EC ENGLISH CAMBRIDGE LIMITED DIRECTORS' REPORT (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2022
Small companies note
In preparing this report, the directors have taken advantage of the small companies exemptions provided by section 415A of the Companies Act 2006. This report was approved by the board and signed on its behalf.
................................................ W W Tin Director
Date: 29 September 2023
Page 2
EC ENGLISH CAMBRIDGE LIMITED INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF EC ENGLISH CAMBRIDGE LIMITED
Opinion
We have audited the financial statements of EC English Cambridge Limited (the 'Company') for the year ended 31 December 2022, which comprise the Statement of Income and Retained Earnings, the Balance Sheet and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice). In our opinion the financial statements: ∙give a true and fair view of the state of the Company's affairs as at 31 December 2022 and of its loss for the year then ended; ∙have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and ∙have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Material uncertainty related to going concern
We draw attention to note 2.2 in the financial statements, which discusses the directors' assessment of the impact of COVID-19 on the company's ability to continue as a going concern. The company's projected financial results, cash flows and financial position, as well as the adequacy of funding, are dependent on the extent and timing of recovery from the adverse confitions being experienced. As stated in note 2.2, these events or conditions, along with the other matters as set forth in note 2.2, indicate that a material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter. In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. Page 3
EC ENGLISH CAMBRIDGE LIMITED INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF EC ENGLISH CAMBRIDGE LIMITED (CONTINUED)
Other information
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' Report thereon. The directors are responsible for the other information contained within the Annual Report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit: ∙the information given in the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and ∙the Directors' Report has been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Directors' Report. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion: ∙adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or ∙the financial statements are not in agreement with the accounting records and returns; or ∙certain disclosures of directors' remuneration specified by law are not made; or ∙we have not received all the information and explanations we require for our audit; or ∙the directors were not entitled to prepare the financial statements in accordance with the small companies regime and take advantage of the small companies' exemptions in preparing the Directors' Report and from the requirement to prepare a Strategic Report.
Responsibilities of directors
As explained more fully in the Directors' Responsibilities Statement set out on page 1, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so. Page 4
EC ENGLISH CAMBRIDGE LIMITED INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF EC ENGLISH CAMBRIDGE LIMITED (CONTINUED)
Auditors' responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditors' Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: We gained an understanding of the legal and regulatory framework applicable to the company and the industry in which it operates and considered the risk of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations. This included those regulations directly related to the financial statements, including financial reporting, tax legislation and distributable profits and industry regulations including GDPR, employment law and health and safety. We communicated the identified laws and regulations with the audit team and remained alert to any indications of non-compliance throughout the audit. We carried out specific procedures to address the risks identified. These included the following: - agreeing the financial statement disclosures to underlying supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements; - enquiries of management including those responsible for key regulations; and - performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud. In addressing the risk of management override of controls, we carried out testing of journal entries and other adjustments for appropriateness, assessing whether the judgements made in making accounting estimates are indicative of a potential bias and evaluating the business rationale of significant transactions outside the normal course of business. Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation. A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' Report. Page 5
EC ENGLISH CAMBRIDGE LIMITED INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF EC ENGLISH CAMBRIDGE LIMITED (CONTINUED)
Use of our report
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an Auditors' Report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed. Andrew Booth (Senior Statutory Auditor) for and on behalf of Price Bailey LLP Chartered Accountants Statutory Auditors Tennyson House Cambridge Business Park Cambridge CB4 0WZ 29 September 2023 Page 6
EC ENGLISH CAMBRIDGE LIMITED STATEMENT OF INCOME AND RETAINED EARNINGS FOR THE YEAR ENDED 31 DECEMBER 2022
| 2022 | 2021
Note | £ | £
Turnover | 3 | 1,391,258 | 542,280
Cost of sales |  | (993,155) | (518,712)
Gross profit |  | 398,103 | 23,568
Administrative expenses |  | (1,792,679) | (2,227,879)
Other operating income | 4 | - | 141,005
Operating loss | 5 | (1,394,576) | (2,063,306)
Tax on loss | 8 | 94,961 | 44,570
Loss after tax |  | (1,299,615) | (2,018,736)
Retained earnings at the beginning of the year |  | (13,476,597) | (11,457,861)
Loss for the year |  | (1,299,615) | (2,018,736)
Retained earnings at the end of the year |  | (14,776,212) | (13,476,597)
The notes on pages 9 to 22 form part of these financial statements.
Page 7
EC ENGLISH CAMBRIDGE LIMITED REGISTERED NUMBER: 03211405 BALANCE SHEET AS AT 31 DECEMBER 2022
|  | 2022 |  | 2021
Note |  | £ |  | £
Fixed assets |  |  |  |  |
Intangible assets | 9 |  | 85,965 |  | 117,471
Tangible assets | 10 |  | 170,315 |  | 373,783
|  |  | 256,280 |  | 491,254
Current assets |  |  |  |  |
Stocks |  | 6,392 |  | 6,032 |
Debtors: amounts falling due within one year | 11 | 8,261,376 |  | 5,905,756 |
Cash at bank and in hand | 12 | 85,207 |  | 10,764 |
|  | 8,352,975 |  | 5,922,552 |
Creditors: amounts falling due within one year | 13 | (22,858,045) |  | (19,502,188) |
Net current liabilities |  |  | (14,505,070) |  | (13,579,636)
Total assets less current liabilities |  |  | (14,248,790) |  | (13,088,382)
Creditors: amounts falling due after more than one year | 14 |  | (88,412) |  | (109,033)
Provisions for liabilities |  |  |  |  |
Other provisions | 15 |  | (186,778) |  | (26,950)
Net liabilities |  |  | (14,523,980) |  | (13,224,365)
Capital and reserves |  |  |  |  |
Called up share capital | 16 |  | 250,000 |  | 250,000
Share premium account | 17 |  | 2,232 |  | 2,232
Profit and loss account | 17 |  | (14,776,212) |  | (13,476,597)
|  |  | (14,523,980) |  | (13,224,365)
The financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime and in accordance with the provisions of FRS 102 Section 1A - small entities. The financial statements were approved and authorised for issue by the board and were signed on its behalf on 29 September 2023.
................................................ W W Tin
Director
The notes on pages 9 to 22 form part of these financial statements. Page 8
EC ENGLISH CAMBRIDGE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022
1. | General information
EC English Cambridge Limited is a private company limited by shares incorporated in England within the United Kingdom. The registered office is Tennyson House, Cambridge Business Park, Cambridge, CB4 0WZ. The principal activity of the Company continued to be that of the provision of English Language courses and related services to international students. 2.Accounting policies
| 2.1 | Basis of preparation of financial statements
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Section 1A of Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006. The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies. The following principal accounting policies have been applied:
| 2.2 | Going concern
EC English Cambridge Limited forms part of the EC Group. The Group saw continued recovery during 2022, following the significant impact in recent years of the Covid-19 pandemic, and expects to further recover in 2023 and beyond. However, in common with businesses operating in the same or similarly impacted sectors, all forecasts reached at this stage remain subject to a significant degree of underlying uncertainty in a period of considerable macroeconomic and geopolitical volatility. The global economy has also witnessed a substantial rise in inflation rates over the past year. This inflationary trend has been driven by several factors, including increased commodity prices, supply chain disruptions, and changes in government policies. As a multinational company with operations spanning across various regions, the Group has not been immune to these inflationary pressures. To mitigate the potential risks associated with global inflation, management has intensified the focus on operational efficiency and cost control measures. The group has also reviewed the pricing strategies and adjusted them accordingly while aiming to maintain competitive pricing. The Directors and senior management continue to closely monitor developments in all areas of the business and to react in an agile and decisive manner to ensure the Group’s continued viability and to manage the Group’s liquidity demands within its resources. It is the Directors’ intention that EC English Cambridge Limited will continue to receive support from the group as required. Based on the above, and while there remains a material uncertainty that may cast significant doubt upon the ability of the company to continue as a going concern, the directors consider that it continues to be appropriate to adopt the going concern basis of accounting and the financial statements do not include any adjustments should this basis not be appropriate.
| 2.3 | Financial instruments
The Company has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments. Page 9
EC ENGLISH CAMBRIDGE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 2.Accounting policies (continued)
| 2.3 | Financial instruments (continued)
The Company has elected to apply the recognition and measurement provisions of IFRS 9 Financial Instruments (as adopted by the UK Endorsement Board) with the disclosure requirements of Sections 11 and 12 and the other presentation requirements of FRS 102. Financial instruments are recognised in the Company's Balance Sheet when the Company becomes party to the contractual provisions of the instrument. Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously. Basic financial assets Basic financial assets, which include trade and other receivables, cash and bank balances, are initially measured at their transaction price including transaction costs and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Discounting is omitted where the effect of discounting is immaterial. The Company's cash and cash equivalents, trade and most other receivables due with the operating cycle fall into this category of financial instruments. Other financial assets Other financial assets, which includes investments in equity instruments which are not classified as subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the recognised transaction price. Such assets are subsequently measured at fair value with the changes in fair value being recognised in the profit or loss. Where other financial assets are not publicly traded, hence their fair value cannot be measured reliably, they are measured at cost less impairment. Impairment of financial assets Financial assets are assessed for indicators of impairment at each reporting date. Financial assets are impaired when events, subsequent to their initial recognition, indicate the estimated future cash flows derived from the financial asset(s) have been adversely impacted. The impairment loss will be the difference between the current carrying amount and the present value of the future cash flows at the asset(s) original effective interest rate. If there is a favourable change in relation to the events surrounding the impairment loss then the impairment can be reviewed for possible reversal. The reversal will not cause the current carrying amount to exceed the original carrying amount had the impairment not been recognised. The impairment reversal is recognised in the profit or loss. Financial liabilities Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instruments any contract that evidences a residual interest in the assets of the Company after the deduction of all its liabilities. Basic financial liabilities, which include trade and other payables, bank loans and other loans are initially measured at their transaction price after transaction costs. When this constitutes a financing Page 10
EC ENGLISH CAMBRIDGE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 2.Accounting policies (continued)
| 2.3 | Financial instruments (continued)
transaction, whereby the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Discounting is omitted where the effect of discounting is immaterial. Debt instruments are subsequently carried at their amortised cost using the effective interest rate method. Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade payables are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial. Other financial instruments Derivatives, including forward exchange contracts, futures contracts and interest rate swaps, are not classified as basic financial instruments. These are initially recognised at fair value on the date the derivative contract is entered into, with costs being charged to the profit or loss. They are subsequently measured at fair value with changes in the profit or loss. Debt instruments that do not meet the conditions as set out in FRS 102 paragraph 11.9 are subsequently measured at fair value through the profit or loss. This recognition and measurement would also apply to financial instruments where the performance is evaluated on a fair value basis as with a documented risk management or investment strategy. Derecognition of financial instruments Derecognition of financial assets Financial assets are derecognised when their contractual right to future cash flow expire, or are settled, or when the Company transfers the asset and substantially all the risks and rewards of ownership to another party. If significant risks and rewards of ownership are retained after the transfer to another party, then the Company will continue to recognise the value of the portion of the risks and rewards retained. Derecognition of financial liabilities Financial liabilities are derecognised when the Company's contractual obligations expire or are discharged or cancelled. Page 11
EC ENGLISH CAMBRIDGE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 2.Accounting policies (continued)
| 2.4 | Turnover
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the turnover can be reliably measured. Revenue is recognised as follows: Tuition revenue - Course fees are brought to account when service is provided and is spread evenly over the duration of the course. Discounts and bursaries given to students are netted against tuition revenue. Accommodation revenue - Accommodation revenue is recognised as the accommodation service is provided. Other revenue - Other revenue is recognised when the amount can be reliably measured and it is probable that future economic benefits will flow to the entity.
| 2.5 | Foreign currency translation
Functional and presentation currency The Company's functional and presentational currency is Sterling, rounded to the nearest pound. Transactions and balances Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions. At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined. Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the Statement of Income and Retained Earnings within 'finance income or costs'. All other foreign exchange gains and losses are presented in profit or loss within 'other operating income'.
| 2.6 | Government grants
Grants are accounted under the accruals model as permitted by FRS 102. Grants relating to expenditure on tangible fixed assets are credited to profit or loss at the same rate as the depreciation on the assets to which the grant relates. The deferred element of grants is included in creditors as deferred income. Grants of a revenue nature are recognised in the Statement of Income and Retained Earnings in the same period as the related expenditure.
| 2.7 | Tangible fixed assets
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Page 12
EC ENGLISH CAMBRIDGE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 2.Accounting policies (continued)
| 2.7 | Tangible fixed assets (continued)
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives. Depreciation is provided on the following basis:
|  |  |  | Short-term leasehold property | - | Over the shorter of the lease term and their useful life, being over 10 years
|  |  |  | Fixtures, fittings & equipment | - | 3 - 7 years straight line or over the lease term
|  |  |  | Computer equipment | - | 4 years straight line
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
| 2.8 | Intangible assets
Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses. All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years. Intangible assets are amortised at the following rates: Goodwill - 10 year straight line Computer software - 5 years straight line
| 2.9 | Operating leases: the Company as lessee
Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.
| 2.10 | Stocks
Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first out basis. At each balance sheet date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.
| 2.11 | Cash and cash equivalents
Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value. Page 13
EC ENGLISH CAMBRIDGE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 2.Accounting policies (continued)
| 2.12 | Taxation
Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively. The current corporation tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the Company operates and generates income.
| 2.13 | Creditors
Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.
| 2.14 | Debtors
Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.
| 2.15 | Provisions for liabilities
Provisions are made where an event has taken place that gives the Company a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation. Provisions are charged as an expense to profit or loss in the year that the Company becomes aware of the obligation, and are measured at the best estimate at the balance sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. When payments are eventually made, they are charged to the provision carried in the Balance Sheet.
| 2.16 | Pensions
Defined contribution pension plan The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations. The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Balance Sheet. The assets of the plan are held separately from the Company in independently administered funds. Page 14
EC ENGLISH CAMBRIDGE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022
3. | Turnover
| An analysis of turnover by class of business is as follows:
|  |  |  |  | 2022 | 2021
|  |  |  |  | £ | £
| Tuition and related services | 872,146 | 353,329
| Accommodation and transport | 519,112 | 188,950
|  | 1,391,258 | 542,279
| All turnover arose within the United Kingdom.
4. | Other operating income
|  |  |  |  | 2022 | 2021
|  |  |  |  | £ | £
| Coronavirus job retention scheme | - | 141,005
5. | Operating loss
| The operating loss is stated after charging:
|  |  |  |  | 2022 | 2021
|  |  |  |  | £ | £
| Exchange differences | 92,365 | (19,153)
| Other operating lease rentals | 274,129 | 550,554
|  | 181,764 | 569,707
6. | Auditors' remuneration
| During the year, the Company obtained the following services from the Company's auditors:
|  |  |  |  | 2022 | 2021
|  |  |  |  | £ | £
| Fees payable to the Company's auditors for the audit of the Company's financial statements | 22,800 | 27,285
| The Company has taken advantage of the exemption not to disclose amounts paid for non-audit services as these are disclosed in the consolidated accounts of the parent Company.
Page 15
EC ENGLISH CAMBRIDGE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022
7. | Employees
|  |  |  |  | 2022 | 2021
|  |  |  |  | £ | £
| Wages and salaries | 1,001,681 | 1,107,272
| Social security costs | 86,546 | 92,705
| Cost of defined contribution scheme | 15,609 | 33,721
|  | 1,103,836 | 1,233,698
| The average monthly number of employees, including directors, during the year was 34 (2021 - 35).
Page 16
EC ENGLISH CAMBRIDGE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022
8. | Taxation
|  |  |  |  | 2022 | 2021
|  |  |  |  | £ | £
| Corporation tax |  |
| Adjustments in respect of previous periods | (94,961) | -
| Deferred tax |  |
| Origination and reversal of timing differences | - | (44,570)
| Taxation on loss on ordinary activities | (94,961) | (44,570)
| Factors affecting tax charge for the year
| The Company has estimated tax losses of £4,546,000 (2021 - £3,710,000) available for carrying forward against future taxable profits.
9. | Intangible assets
|  | Computer software | Goodwill | Total
|  | £ | £ | £
| Cost |  |  |
| At 1 January 2022 | 157,390 | 199,989 | 357,379
| At 31 December 2022 | 157,390 | 199,989 | 357,379
| Amortisation |  |  |
| At 1 January 2022 | 39,919 | 199,989 | 239,908
| Charge for the year on owned assets | 31,506 | - | 31,506
| At 31 December 2022 | 71,425 | 199,989 | 271,414
| Net book value |  |  |
| At 31 December 2022 | 85,965 | - | 85,965
| At 31 December 2021 | 117,471 | - | 117,471
Page 17
EC ENGLISH CAMBRIDGE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022
10. | Tangible fixed assets
|  | Short-term leasehold property | Fixtures and fittings | Computer equipment | Total
|  | £ | £ | £ | £
| Cost |  |  |  |
| At 1 January 2022 | 841,302 | 440,425 | 1,627,208 | 2,908,935
| Additions | 4,228 | 5,291 | - | 9,519
| At 31 December 2022 | 845,530 | 445,716 | 1,627,208 | 2,918,454
| Depreciation |  |  |  |
| At 1 January 2022 | 705,022 | 398,501 | 1,431,629 | 2,535,152
| Charge for the year on owned assets | 73,036 | 6,538 | 133,413 | 212,987
| At 31 December 2022 | 778,058 | 405,039 | 1,565,042 | 2,748,139
| Net book value |  |  |  |
| At 31 December 2022 | 67,472 | 40,677 | 62,166 | 170,315
| At 31 December 2021 | 136,280 | 41,924 | 195,579 | 373,783
11. | Debtors
|  |  |  |  | 2022 | 2021
|  |  |  |  | £ | £
| Trade debtors | 101,569 | 45,238
| Amounts owed by group undertakings | 8,003,362 | 5,753,624
| Other debtors | - | 2,688
| Prepayments and accrued income | 156,445 | 104,206
|  | 8,261,376 | 5,905,756
12. | Cash and cash equivalents
|  |  |  |  | 2022 | 2021
|  |  |  |  | £ | £
| Cash at bank and in hand | 85,207 | 10,764
Page 18
EC ENGLISH CAMBRIDGE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022
13. | Creditors: Amounts falling due within one year
|  |  |  |  | 2022 | 2021
|  |  |  |  | £ | £
| Payments received on account | 45,180 | 41,352
| Trade creditors | 194,584 | 130,681
| Amounts owed to group undertakings | 21,869,057 | 18,504,970
| Other taxation and social security | 180,649 | 423,240
| Other creditors | 16,753 | 10,283
| Accruals and deferred income | 551,822 | 391,662
|  | 22,858,045 | 19,502,188
14. | Creditors: Amounts falling due after more than one year
|  |  |  |  | 2022 | 2021
|  |  |  |  | £ | £
| Accruals and deferred income | 88,412 | 109,033
15. | Provisions
|  | Dilapidations
|  | £
| At 1 January 2022 | 26,950
| Charged to profit or loss | 159,828
| At 31 December 2022 | 186,778
Page 19
EC ENGLISH CAMBRIDGE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022
16. | Share capital
|  |  |  |  | 2022 | 2021
|  |  |  |  | £ | £
|  | Allotted, called up and fully paid |  |
|  | 250,000 (2021 - 250,000) Ordinary shares of £1.00 each | 250,000 | 250,000
17. | Reserves
Share premium account The share premium represents amounts paid to the company for shares in excess of the par value. Profit and loss account The profit and loss accounts represents accumulated comprehensive income of the year and prior periods less any dividends paid.
18. | Contingent liabilities
The company has undertaken an operating lease for the building 'Dolphin House' on behalf of a fellow subsidiary, House of English Limited, with an annual rent of £414,000. The lease term is for a period of 15 years starting from 23 June 2010. The commitment is that of House of English Limited though the company has legal responsibility for the lease. A fellow subsidiary, EC English Bristol Limited, entered into an operating lease for the building 63 Queen Square with an annual commitment of £110,110. A guarantee on this building was provided by EC English Cambridge Limited. The lease terms is ten years from 2021. A fellow subsidiary, EC English Manchester Limited, entered into an operating lease for the building 'Boulton House' with annual rent commitments of £120,000 for a period of 10 years starting from 24 March 2014, where guarantees were provided by EC English Cambridge Limited. A fellow subsidiary undertaking, EC English Bristol Limited, made use of the Coronavirus Large Business Interruption Loan Scheme made available by the UK Government in response to COVID-19 pandemic. In respect of this loan EC English Cambridge Limited acts as a guarantor. The directors do not expect that EC English Cambridge Limited will be required to make payments in their role as guarantor; however, the possibility of outflows exist under the terms of the guarantee. EC English Cambridge Limited has given a guarantee for the full amount of this loan which was £3,000,000 at the year end. Any possible outflow by EC English Cambridge Limited as a guarantor to the loan is expected to be limited by virtue of the following fellow subsidiaries also acting as joint guarantors: House of English Limited, EC English London Limited, EC English Manchester Limited, EC English Oxford Limited and Embassy Educational Services (UK) Limited.
19. | Pension commitments
The company operates a defined contribution pension scheme. The assets of the scheme are held seperately from those of the company in an independently administered fund. The pension costs charge represents contributions payable by the company to the fund and amounted to £15,609 (2021 - £33,721). Contributions of £6,580 (2021 - £6,433) were payable to the fund at the balance sheet date. Page 20
EC ENGLISH CAMBRIDGE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022
20. | Commitments under operating leases
| At 31 December 2022 the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:
|  |  |  |  | 2022 | 2021
|  |  |  |  | £ | £
| Not later than 1 year | 335,507 | 259,179
| Later than 1 year and not later than 5 years | 928,279 | 964,662
| Later than 5 years | 77,222 | 292,259
|  | 1,341,008 | 1,516,100
Page 21
EC ENGLISH CAMBRIDGE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022
21. | Related party transactions
| The company recieved recharged amounts of £132,581 from EC English Holdings Limited. In 2021 the Company paid recharged amounts of £19,102 to to EC English Holdings Limited in respect of central overheads. At 31 December 2022 the company was owed by/(to) the following fellow group entities:
|  | 2022 | 2021
|  | £ | £
| House of English Limited | (1,331,901) | (1,456,369)
| EC Montreal | (6,905) | (2,292)
| EC English Bristol Limited | (1,881,143) | (1,925,012)
| EC English London Limited | (15,298,064) | (11,645,433)
| EC English Cape Town (Pty) Limited | 7,100 | 3,915
| EC English Holdings Limited | (1,509,438) | (488,395)
| EC English Malta Limited | 142,489 | 82,391
| EC English Manchester Limited | 263,172 | 267,303
| EC English Oxford Limited | 1,000,678 | 959,946
| EC USA Holdings Inc | (214,199) | (174,390)
| EC Vancouver | (29,664) | (28,178)
| European Language Centre Limited | 1,693,893 | (1,672,669)
| Zamma Holdings Limited | 171,521 | 171,521
| EC UK Investments Limited | 4,480 | 3,630
| EC English Boston Inc | 3,973 | 4,016
| EC English New York Inc | 5,356 | 5,475
| EC Miami Language Center Inc | (358) | (264)
| EC Los Angeles Inc | 1,367 | 1,555
| Oswego Campus | 13 | 13
| EC San Diego Language Center Inc | 4,796 | 4,819
| EC San Francisco Language Center Inc | (8,015) | (6,760)
| EC English Washington DC | (2,074) | (1,851)
| EC English Toronto Limited | (2,715) | 659
| EC English Dublin Limited | 33,893 | 39,316
| EC Holdings Limited | (1,400,000) | 7,180
| Embassy Educational Services Ltd | 4,477,066 | 3,079,467
| EC English Australia Pty Ltd | 8,984 | 19,061
|  | (13,865,695) | (12,751,346)
22. | Controlling party
The Company's immediate parent undertaking is EC English Holdings Limited, a company incorporated in Malta. The consolidated financial statements of EC Global Limited, the parent of EC English Holdings Limited, can be requested from its registered office at Language House, M. Mangion Street, St Julians, Malta. The ultimate controlling party is Zamma Holdings Limited, a company incorporated in Malta.
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