The directors present the strategic report for the period ended 31 May 2023.
The Futurelearn Group, working in partnership with leading UK and overseas universities, launched the UK's first platform for Massive Open Online Courses in September 2013. Since its launch, at 31 May 2023 the Group has built a community of over 20.0 million registered learners (31 July 2022: over 18.9 million) from all countries in the world. These learners have signed up to over 46.9 million courses between them. Courses and content are being produced by over 200 partners, comprising leading UK and international universities, including the British Council, the British Heart Foundation and other specialist education providers and global centres of research excellence.
The Company generated turnover of £7.34m for the 10 month period ended 31 May 2023 (2022: £10.14m). This turnover came from the sale of Monthly and Annual subscriptions, Short courses, Microcredentials and ExpertTracks courses, the provision of services to its partners and membership fees.
The other key performance indicators monitored by the business are gross margins, operating costs, EBITDA, the number of courses open for enrolment and learning each month, the volume of traffic to the Group’s website, conversion of visitors into enrolments, conversion of these enrolments to purchase, average order value and the retention of paying learners.
Since May 2023, the funds raised through investment have been strategically allocated towards the marketing, development, and expansion of the Group's product portfolio and revenue streams. Our dedicated team has been actively enhancing the core platform, empowering our business to effectively promote and sell our products.
With a fresh perspective from our new investor and management team, we're embarking on a journey of innovation and efficiency. We're streamlining our product offerings, implementing cost-effective measures, and optimizing our business processes to steer the company towards profitability. This proactive approach ensures a dynamic transformation, setting the stage for sustainable growth and success.
The key business risks affecting the Group relate to the market demand for the product offer in a sector that is still in relatively early stages of digital development and rapidly innovating, the availability of in demand content from partner universities and other organisations for the global delivery of online courses, the security and performance of the Group's technical platform and the ability to generate revenue models that can sustain the business in the longer term.
The Group's ability to continue to operate as a going concern for the foreseeable future is explained in the Directors’ Report and note 1.5 to the financial statements.
On 30th November 2022 the Company underwent an acquisition by GAH Education Holdings Limited, a division of the Global University Systems Group ("GUS Group"). In collaboration with our new owners, the management has devised a fresh strategic blueprint and financial model aimed at harnessing benefits and synergies across the broader GUS Group landscape.
Integral to our revenue growth within the Group is the esteemed FutureLearn partner network, pivotal in delivering top-tier content and courses. Currently, we're enhancing our platform to streamline course publication processes, fostering continued expansion of partner courses for learners. Our focus remains on nurturing our learner community, enhancing engagement levels, and enriching the learner experience and course.
In tandem with the introduction of monthly subscriptions and an expanding course repertoire, coupled with ongoing platform refinement and bolstered marketing capabilities, we anticipate increased revenue growth from individual learners. Furthermore, as our course offerings multiply, we're bolstering our business-to-business revenue stream by offering scalable course access to enterprises, governments, and higher education institutions. This strategic focus underscores our commitment to operational efficiency and profitability.
At the heart of our strategic agenda lie two paramount initiatives. We're intensifying our efforts in the international market, bolstering customer base expansion and delivering tailored enterprise solutions for corporations and governments. Additionally, a significant strategic focus revolves around promoting online degrees, overseeing enrolment growth, and enhancing online program management. This includes forgoing multi-year partnerships with reputable universities, solidifying our position as a leader in online education.
The newly appointed management team is deeply committed to ensuring FutureLearn's viability and sustainability as well as upholding its position as a market leader in its category.
Key performance indicators
| 10 months ending 31/05/2023 | 12 months ending 31/07/2022 |
| £'000 | £'000
|
Gross profit margin | 67.3% | 49.5% |
Operating costs | 18,831 | 22,405 |
Turnover | 7,336 | 10,141 |
On behalf of the board
The directors present their annual report and financial statements for the period ended 31 May 2023.
The results for the period are set out on .
In the 10 months ended 31 May 2023, the loss before taxation of the Group was £13.8m (2022: £17.4m). The loss represents the cost of product development, communications and marketing, and partner engagement.
No ordinary dividends were paid. The directors do not recommend payment of a further dividend.
The directors who held office during the period and up to the date of signature of the financial statements were as follows:
The auditor, Saffery LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
The Group maintains its cash balances across 2 main banking institutions being National Westminster Bank and HSBC. FutureLearn prices its products in five different currencies (GBP, Euros, US Dollars, Indian Rupees and Australian Dollars) and manages the inherent currency risk by reviewing and resetting pricing levels across the currencies on a monthly basis.
Two rounds of investment from The Open University and SEEK took place in the financial year: £2.8m was invested in early November with a further £8.9m on 30th November 2022. The Company was then acquired, on the same day, by its new parent company GAH Education Holdings Limited which is part of the Global University Systems (GUS) Group. Since May 2022, the Company has received additional £3.5m funds from the GUS Group. On 31st of May 2024, the company was then acquired by UK Academic Holdings Ltd, which is also part of the Global University Systems Group.
The Company has received a letter of support from UK Academic Holdings Ltd, which itself has received a letter of support from Global University Systems B.V, which means that the Directors consider that it is appropriate to prepare these financial statements on a going concern basis.
We have audited the financial statements of FutureLearn Limited (the 'parent company') and its subsidiaries (the 'group') for the period ended 31 May 2023 which comprise the group statement of comprehensive income, the group statement of financial position, the company statement of financial position, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows, the company statement of cash flows and notes to the financial statements, including 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).
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 Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’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.
Conclusions relating to going concern
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.
Based on the work we have performed, we have not identified any material uncertainties, other than that disclosed in the strategic report, directors' report and note 1.4, relating to events or conditions that, individually or collectively, may cast significant doubt on the group or the parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The directors are responsible for the other information. The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. 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.
Opinions 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 strategic report and the directors' report for the financial period for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or 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 by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company 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.
As explained more fully in the directors' responsibilities statement, 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 parent 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 parent company or to cease operations, or have no realistic alternative but to do so.
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 auditor's 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 specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud are detailed below.
Identifying and assessing risks related to irregularities:
We assessed the susceptibility of the group and parent company’s financial statements to material misstatement and how fraud might occur, including through discussions with the directors, discussions within our audit team planning meeting, updating our record of internal controls and ensuring these controls operated as intended. We evaluated possible incentives and opportunities for fraudulent manipulation of the financial statements. We identified laws and regulations that are of significance in the context of the group and parent company by discussions with directors and by updating our understanding of the sector in which the group and parent company operates.
Laws and regulations of direct significance in the context of the group and parent company include The Companies Act 2006 and UK Tax legislation.
Audit response to risks identified
We considered the extent of compliance with these laws and regulations as part of our audit procedures on the related financial statement items including a review of group and parent company financial statement disclosures. We reviewed the parent company's records of breaches of laws and regulations, minutes of meetings and correspondence with relevant authorities to identify potential material misstatements arising. We discussed the parent company's policies and procedures for compliance with laws and regulations with members of management responsible for compliance.
During the planning meeting with the audit team, the engagement partner drew attention to the key areas which might involve non-compliance with laws and regulations or fraud. We enquired of management whether they were aware of any instances of non-compliance with laws and regulations or knowledge of any actual, suspected or alleged fraud. We addressed the risk of fraud through management override of controls by testing the appropriateness of journal entries and identifying any significant transactions that were unusual or outside the normal course of business. We assessed whether judgements made in making accounting estimates gave rise to a possible indication of management bias. At the completion stage of the audit, the engagement partner’s review included ensuring that the team had approached their work with appropriate professional scepticism and thus the capacity to identify non-compliance with laws and regulations and fraud.
There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the parent 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 parent 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 parent company and the parent company's members as a body, for our audit work, for this report, or for the opinions we have formed.
These financial statements have been prepared in accordance with the provisions relating to medium-sized groups.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s loss for the year was £13,873,764 (2022 - £17,429,572 loss).
FutureLearn Limited (“the company”) is a private company limited by shares incorporated in England and Wales. The registered office is Buchanan House, 30 Holborn, London, England, EC1N 2HS.
The group consists of FutureLearn Limited and all of its subsidiaries.
The reporting period for these financial statements was shortened from 31 July 2023 to 31 May 2023, in order to align the accounting reference date with that of other entities within the group. Comparative amounts in the financial statements (including the related notes) represent those for a full year and, therefore, are not entirely comparable.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £'000.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
The consolidated group financial statements consist of the financial statements of the parent company FutureLearn Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 31 May 2023. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
Entities in which the group holds an interest and which are jointly controlled by the group and one or more other venturers under a contractual arrangement are treated as joint ventures. Entities other than subsidiary undertakings or joint ventures, in which the group has a participating interest and over whose operating and financial policies the group exercises a significant influence, are treated as associates.
Investments in joint ventures and associates are carried in the group statement of financial position at cost plus post-acquisition changes in the group’s share of the net assets of the entity, less any impairment in value. The carrying values of investments in joint ventures and associates include acquired goodwill.
If the group’s share of losses in a joint venture or associate equals or exceeds its investment in the joint venture or associate, the group does not recognise further losses unless it has incurred obligations to do so or has made payments on behalf of the joint venture or associate.
Unrealised gains arising from transactions with joint ventures and associates are eliminated to the extent of the group’s interest in the entity.
These financial statements are prepared on the going concern basis. The directors have a reasonable expectation that the Group will continue in operational existence for the foreseeable future.
The Group relies on the continued support of Global University Systems B.V to meet its working capital requirements. At the time of approving the financial statements the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. The directors have received a letter of support from its immediate parent, UK Academic Holdings Ltd, which itself has received a letter of support from Global University Systems B.V, and therefore continue to adopt the going concern basis of accounting in preparing the financial statements.
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
Revenue from online learning services is recognised when the services are supplied to the external customers against the orders received or when the terms of the contract have been satisfied.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The group considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Investments in associates are initially recognised at the transaction price (including transaction costs) and are subsequently adjusted to reflect the group’s share of the profit or loss, other comprehensive income and equity of the associate using the equity method. Any difference between the cost of acquisition and the share of the fair value of the net identifiable assets of the associate on acquisition is recognised as goodwill. Any unamortised balance of goodwill is included in the carrying value of the investment in associates.
Losses in excess of the carrying amount of an investment in an associate are recorded as a provision only when the company has incurred legal or constructive obligations or has made payments on behalf of the associate.
In the parent company financial statements, investments in associates are accounted for at cost less impairment.
Entities in which the group has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's statement of financial position when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and 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, which include debtors, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method 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. Financial assets classified as receivable within one year are not amortised.
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Where items recognised in other comprehensive income or equity are chargeable to or deductible for tax purposes, the resulting current or deferred tax expense or income is presented in the same component of comprehensive income or equity as the transaction or other event that resulted in the tax expense or income. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
For cash-settled share-based payments, a liability is recognised for the goods and services acquired, measured initially at the fair value of the liability. At the balance sheet date until the liability is settled, and at the date of settlement, the fair value of the liability is remeasured, with any changes in fair value recognised in profit or loss for the period.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Bad and doubtful debt judgements
At the year end, the debtor balances are reviewed, and management carries out a line by line review of the circumstances surrounding each debt; were it is deemed to be a bad debt the debt is written off or where it is deemed to be a doubtful debt a provision is made against the debt.
Impairments in respect of learning resources internally capitalised as intangible assets
At the year end the performance of each course is reviewed in relation to revenue generated by said course. If specific revenue targets area not being hit by one course management will impair the value of the course opposed to amortising it over the three year period as noted in the relevant accounting policy.
During the period to 31 May 2023, the company incurred significant costs in relation to the sale of the business to the GUS Group, subsequent restructuring, and redundancy payments to directors.
As a prudent measure, intangible assets have been impaired significantly, per the impairment policy of the company, to write down courses whose earning potential was unable to be supported by revenue data.
The average monthly number of persons (including directors) employed by the group and company during the period was:
Their aggregate remuneration comprised:
The actual charge for the period can be reconciled to the expected credit for the period based on the profit or loss and the standard rate of tax as follows:
Impairment tests have been carried out where appropriate and the following impairment losses have been recognised in profit or loss:
The impairment losses in respect of financial assets are recognised in other gains and losses in the income statement.
More information on impairment movements in the period is given in note 11.
Details of the company's subsidiaries included in consolidation at 31 May 2023 are as follows:
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
The Group operated a share scheme for members of the Senior Leadership Team (the "B share scheme"). As at 31 July 2022, there were no senior leadership team members actively enrolled in the scheme. The scheme is now closed and information below is provided for context to comparative figures.
Under this scheme, a class of shares (known as B Ordinary Shares) representing up to 10% of the parent company's share capital may be allocated by the Board to members of the scheme.
The B shares are purchased by the scheme members at fair market value and vest over a period of four years. The terms attached to the shares mean that they have a value only when the Company is worth more than £100 million. The opportunities to sell the shares are limited to specific liquidity events as defined by the Board. The B shares have no voting rights but they do have dividends rights.
Restructuring costs relate to changes in team structure made during the year including previous amount provided for being reversed due to members inside the scheme leaving the business and as such forfeiting their B shares.
During the reporting period, the company issued 2,404,200 Ordinary £1 shares at a value of £1.158 per share with a total consideration received of £2,784,064. These shares hold the same rights and voting power of the pre-existing Ordinary shares. The company additionally issued 89,378 Ordinary shares at a value of £99.99 per share with a total consideration received of £8,937,723.
The company purchased own shares for cancellation of 250,000 B Ordinary £0.01 shares at a value of £0.01 per share for a total consideration £2,500.
The holders of B Ordinary Shares shall not be entitled to receive notice of or to attend, speak or vote at any general meetings of the company, and shall not be entitled to receive or vote on any proposed written resolutions of the company.
On 1 December 2023, 4,111,468 ordinary shares of £1.00 each in the capital of the Company were re-designated as 4,111,468 A ordinary shares of £1.00 each, having the same rights as the holders of Ordinary Shares and the entitlement to receive notice of and to attend, speak and vote at all general meetings of the Company.
However, the holders of A Ordinary shares shall not be entitled to vote on any matters relating to any management incentive plan that may be implemented by the Company or any of its subsidiaries from time to time.
Other reserves total a negative £4,796 (2023: £4,336 positive) and consist of a foreign exchange reserve as a result of translation of the Australian entity's statements.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
Group
During the period up until the date of sale to the GUS Group, FutureLearn Limited incurred charges of £203,795 (2022: £381,878) from The Open University for various costs related to course services, staff and training. FutureLearn Limited received degree enrolment and partner fees totalling £244,800 (2022: £275,482) from The Open University. At year end, the company was owed £nil (2022: nil) in relation to its degrees contract.
The above transactions were carried out on an arm's length basis.
The Open University and SEEK Limited provided a £8.9m capital contribution prior to acquisition as a condition of the completion of the sale.
Company
The Company has taken advantage of the exemption permitted by section 33 'Related Party Disclosures', not to provide disclosures of transactions entered into with other wholly-owned members of the group.
During the period up until the date of sale to the GUS Group, FutureLearn Limited incurred charges of £203,795 (2022: £381,878) from The Open University for various costs related to course services, staff and training. FutureLearn Limited received degree enrolment and partner fees totalling £244,800 (2022: £275,482) from The Open University. At year end, the company was owed £nil (2022: nil) in relation to its degrees contract.
The above transactions were carried out on an arm's length basis.
The Open University and SEEK Limited provided a £8.9m capital contribution prior to acquisition as a condition of the completion of the sale.
The Company was involved in an internal group restructuring since the previous year. The ultimate controlling party remains the same. The previous immediate parent of the Company was GAH Education Holding Limited.
The immediate parent undertaking of FutureLearn Limited is UK Academic Holdings Ltd. Its registered office is 30 Holborn, Buchanan House, London, England, EC1N2HS.
The ultimate controlling party of FutureLearn Limited is the Heritage Trust.
The smallest group of undertakings for which group financial statements have been drawn up including FutureLearn Limited is that headed by Global University Systems Holding B.V. whose financial statements are publicly available, copies of which may be obtained from its registered office at Passeerdersgracht 23, 1016XG Amsterdam, The Netherlands.
The largest group of undertakings for which group financial statements have been drawn up including FutureLearn Limited is that headed by Academic Bridge B.V whose financial statements are publicly available, copies of which may be obtained from its registered office at Passeerdersgracht 23, 1016XG Amsterdam, The Netherlands.