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REGISTERED NUMBER: 06445363 (England and Wales)















THE SKILLS NETWORK LIMITED

STRATEGIC REPORT,

REPORT OF THE DIRECTORS AND

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 JULY 2024






THE SKILLS NETWORK LIMITED (REGISTERED NUMBER: 06445363)






CONTENTS OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2024




Page

Company Information 1

Strategic Report 2 to 4

Report of the Directors 5

Report of the Independent Auditors 6 to 8

Statement of Comprehensive Income 9

Statement of Financial Position 10

Statement of Changes in Equity 11

Statement of Cash Flows 12

Notes to the Statement of Cash Flows 13

Notes to the Financial Statements 14 to 21


THE SKILLS NETWORK LIMITED

COMPANY INFORMATION
FOR THE YEAR ENDED 31 JULY 2024







DIRECTORS: Mrs J Cox
Mr E C Grant
Mrs N Grant





REGISTERED OFFICE: Unit 16 Abbey Court
Benedict Drive
Selby
North Yorkshire
YO8 8RY





REGISTERED NUMBER: 06445363 (England and Wales)





AUDITORS: Duncan & Toplis Audit Limited, Statutory Auditor
Enterprise Way
Pinchbeck
Spalding
Lincolnshire
PE11 3YR

THE SKILLS NETWORK LIMITED (REGISTERED NUMBER: 06445363)

STRATEGIC REPORT
FOR THE YEAR ENDED 31 JULY 2024

The directors present their strategic report for the year ended 31 July 2024.

REVIEW OF BUSINESS
The Skills Network Limited ("TSN") has continued to grow, with turnover increasing to £22.6m (2023: £20.0m). The Board implemented changes in the senior leadership team and a full strategic financial review of activities resulting in the cost base being significantly reduced in 2024 leading to a profit before tax of £0.96m (2023: Loss before tax £1.9m).

During 2023 and 2024 we put in place the following changes, which improved the financial performance during 2023/24, and we expect this to continue onwards, as follows:

- Significant change of senior leadership, by appointing a new Chief Operating (and Financial) Officer and new Executive
Directors with skills and training sector specific experience at senior government and operational levels, leading to

- a strategic financial review of activities, which resulted in a 3 year plan to recover, consolidate and grow as follows:

- focus time and resource on our core activities, being AEB delivery, External Services, Bootcamps delivery and Tech
and Resource sales,

- Divest from and reduce exposure to non-core loss-making activities, including Apprenticeship delivery and
International delivery,
- Embed a new financial management approach, framework and focus on budget and cashflow management

- Invest in systems, resources and infrastructure, providing improvements and benefits to both customers and
internal operations.
- Revise divisional business plans, budgets and resources, to improve outcomes, eg

- New activities and direct contracts being won eg AEB Direct and Bootcamps, won during 2023/24 and ESFA
direct contract for 2024/25 delivering a significant positive financial uplift to 2023/24 and onwards,

- these programmes being recalibrated to be fully operational and make a financial contribution to the
business.

- Reviewing and amending the organisation's structure, to resize and reprioritise staffing, led to a significant
headcount and cost reduction.

- The robustness of our technology and operations, the sustainability of our online training model and increased income
has provided a sound base on which to grow. This continued reputation for excellence within Adult Education saw TSN as
one of the largest providers of sub contracted funding within the Further Education industry, resulting in a £2.7m increase
in turnover.

- Technology sales and digital Learning Resources has continued to perform strongly, and TSN is now the eLearning
technology provider of choice for an increasing number of partners in both the adult education sector and corporate
learning and development space. This performance has helped to ensure a robust and well diversified revenue stream.


THE SKILLS NETWORK LIMITED (REGISTERED NUMBER: 06445363)

STRATEGIC REPORT
FOR THE YEAR ENDED 31 JULY 2024

PRINCIPAL RISKS AND UNCERTAINTIES
The company's operations expose it to a variety of risks, including the risk of changes to UK government or education policy, price risk, liquidity risk, credit risk and stock. The company maintains a risk register to ensure all principal risks are identified and managed. The directors, along with the key managers of the company, meet regularly and review the risk register and agree any responses.

UK Government and Education Policy:
TSN operates within several ESFA and DfE government funded areas, as well as combined authorities with revenues coming from adult education budget, advanced learning loans, apprenticeships and bootcamps. We access this funding through direct contracts with ESFA and combined authorities, and subcontracts.

This funding is therefore subject to changes in the UK Government and/or education policy initiatives therefore will continue to carry some risk.

TSN manages this risk by ensuring well diversified sources of revenue and working closely with sector and government stakeholder and employing sector experts. TSN has positioned itself strongly as a provider of direct ESFA contracts alongside a subcontract offering and continues to invest in education software sales and online learning content.

Financial Instruments:
The company's operations expose it to a variety of risks including the following. The directors, along with the key managers of the company, meet regularly and manage the risks identified.

Price:
TSN has good employer and educational relations, ensuring current customer retention and continuous investment in evolving learning technology. Pricing risk is mixed between funding levels fixed by government and TSN controlled and managed pricing which is reviewed regularly by the Board.

Liquidity risk management:
Cash flow forecasting is performed continually and reviewed by management. The Board monitors the forecasts of the company's liquidity requirements to ensure it has sufficient cash to meet its operational needs.

Credit Risk:
Due to the nature of our FE College customer base, and draw down of ESFA funding, credit risk is vastly reduced across this sector. Where sales are to corporate and consumer markets we maintain a strong monitoring process and due to the nature of services provided to these markets can immediately revoke services where bad credit customer exists, reducing our future exposure or costs.

KEY PERFORMANCE INDICATORS
The directors use a number of financial KPIs to assess the performance of the business, as follows:

- Turnover for the year was £22,641,795 (2023: £19,970,563), representing a 13% growth on the previous year (2023: 7%
growth)

- Gross profit margin for the year has remained stable at 83.5%, compared to the previous year of 83.4%,

- Administration expenses have decreased to £17,912,298, being 79% of revenue, from the previous year of £18,592,991,
being 93% of revenue, and

- EBITDA (Earnings before Interest, Tax, Depreciation and Amortisation) and before exceptionals has increased to positive
£2,030,684 from negative (£1,185,241) in the previous year.

We place the same emphasis on several non-financial key performance indicators, such as:

- learner satisfaction,

- employer satisfaction and

- learner achievement rates.


THE SKILLS NETWORK LIMITED (REGISTERED NUMBER: 06445363)

STRATEGIC REPORT
FOR THE YEAR ENDED 31 JULY 2024

FUTURE GROWTH
Our strategic plan FY24-FY26 Recover, Consolidate and Growth

Our Vision - To be an outstanding technology based solutions provider in education and skills

Our Mission
- Our mission is to make learning and skills accessible to individuals and businesses through innovative technology and
e-learning solutions.
- We are dedicated to leading the transformation of learning and skills development, enriching lives, and enhancing
businesses through online learning and skills, while inspiring and nurturing this ethos nationwide.

Who are we
- We are online and technology enabled, supporting our own direct online and blended learning and skills delivery,
- in addition to providing technology and resources for others to deliver.
- In particular, we support those working in the government regulated learning and skills environment to deliver high quality
digital

Our values
- Learner/customer first
- Respect
- Trust and honesty
- Accountability
- Innovation

Equality, diversity and safeguarding at the heart of all we do.

TSN is in a strong position, with good employer and educational relations, ensuring current customer retention and continuous investment in evolving learning technology.

Investment in our learning resources, technology teams and system development is where we see longer term stability, growth and increased opportunities through our existing and new technology and services offer.

TSN is well set as a recognised supplier of learning technology to capitalise on the growth in both the education sector and the corporate market space.

We will utilise our best-in-class service support to maximise customer retention rate and growth of current contracts as a key growth element over the next three years.

ON BEHALF OF THE BOARD:





Mr E C Grant - Director


30 January 2025

THE SKILLS NETWORK LIMITED (REGISTERED NUMBER: 06445363)

REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 31 JULY 2024

The directors present their report with the financial statements of the company for the year ended 31 July 2024.

PRINCIPAL ACTIVITY
The principal activity is the delivery of education technology, content and services.

DIVIDENDS
No dividends will be distributed for the year ended 31 July 2024.

DIRECTORS
The directors shown below have held office during the whole of the period from 1 August 2023 to the date of this report.

Mrs J Cox
Mr E C Grant
Mrs N Grant

DISCLOSURE IN THE STRATEGIC REPORT
The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's
strategic report information required by Schedule 7 of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 to be contained in the directors' report. It has done so in respect of future developments, research & development and financial instruments.

STATEMENT OF DIRECTORS' RESPONSIBILITIES
The directors are responsible for preparing the Strategic Report, the Report of the Directors 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 United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). 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 and then apply them consistently;
-make judgements 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 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.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS
So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and each director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the company's auditors are aware of that information.

AUDITORS
The auditors, Duncan & Toplis Audit Limited, Statutory Auditor, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:





Mr E C Grant - Director


30 January 2025

REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF
THE SKILLS NETWORK LIMITED

Opinion
We have audited the financial statements of The Skills Network Limited (the 'company') for the year ended 31 July 2024 which comprise the Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity, Statement of Cash Flows and Notes to the Statement of Cash Flows, Notes to the Financial Statements, 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 July 2024 and of its profit 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 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 relating to events or conditions that, individually or collectively, may cast significant doubt on the 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 in the Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors 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.

In connection with our audit of the financial statements, 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 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 Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and
- the Strategic Report and the Report of the Directors have 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 Strategic Report or the Report of the Directors.

We have nothing to report in respect of the following matters where 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.

REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF
THE SKILLS NETWORK LIMITED


Responsibilities of directors
As explained more fully in the Statement of Directors' Responsibilities set out on page five, 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 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.

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 a Report of the Auditors 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.

The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

We have identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our general commercial experience, knowledge of the sector, a review of regulatory and legal correspondence and through discussions with Directors and other management obtained as part of the work required by auditing standards. We have also discussed with the Directors and other management the policies and procedures relating to compliance with laws and regulations. We communicated laws and regulations throughout the team and remained alert to any indications of non-compliance throughout the audit.

The potential impact of different laws and regulations varies considerably. Firstly, the company is subject to laws and regulations that directly impact the financial statements (for example financial reporting legislation) and we have assessed the extent of compliance with such laws as part of our financial statements audit. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including risk of override of controls) and determined that the principal risks were related to management bias in accounting estimates and judgemental areas of the financial statements such as intangible fixed asset recognition and treatment and accrued and deferred income, as well as the risk of inappropriate journal entries to increase reported profitability. Audit procedures performed by the engagement team included the identification and testing of material and unusual journal entries and challenging management on key accounting estimates, assumptions and judgements made in the preparation of the financial statements. We carried out detailed substantive tests on accounting estimates, including reviewing the methods used by management to make those estimates, re-performing the calculation, and reviewing the outcome of prior year estimates.

Secondly, the company is subject to other laws and regulations where the consequence for non-compliance could have a material effect on the amounts or disclosures in the financial statements. We identified the following areas as those most likely to have such an effect: Reputational risk, Accreditations, and Employment laws.

Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of the Directors and other management and inspection. This inspection included a review of the company's employment controls and certifications to ensure no areas of non-compliance or false advertisements. Additionally, online reviews were scrutinised for any evidence of reputational damage. Through these procedures, if we became aware of any non-compliance, we considered the impact on the procedures performed on the related financial statement items.

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. The further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. As with any audit, there is a greater risk of non-detection of irregularities as these may involve collusion, intentional omissions of the override of internal controls. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.

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 Report of the Auditors.

REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF
THE SKILLS NETWORK LIMITED


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 a Report of the Auditors 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.




Alistair Main FCA (Senior Statutory Auditor)
for and on behalf of Duncan & Toplis Audit Limited, Statutory Auditor
Enterprise Way
Pinchbeck
Spalding
Lincolnshire
PE11 3YR

30 January 2025

THE SKILLS NETWORK LIMITED (REGISTERED NUMBER: 06445363)

STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 JULY 2024

2024 2023
Notes £    £   

TURNOVER 3 22,641,795 19,970,563

Cost of sales 3,731,188 3,306,511
GROSS PROFIT 18,910,607 16,664,052

Administrative expenses 17,912,298 18,592,991
OPERATING PROFIT/(LOSS) 998,309 (1,928,939 )

Exceptional Items 5 34,697 59,693
PROFIT/(LOSS) BEFORE TAXATION 6 963,612 (1,988,632 )

Tax on profit/(loss) 7 (390,406 ) (23,749 )
PROFIT/(LOSS) FOR THE FINANCIAL YEAR 1,354,018 (1,964,883 )

OTHER COMPREHENSIVE INCOME - -
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 1,354,018
Prior year adjustment (514,827 )
TOTAL COMPREHENSIVE INCOME SINCE LAST
ANNUAL REPORT

(2,479,710

)

THE SKILLS NETWORK LIMITED (REGISTERED NUMBER: 06445363)

STATEMENT OF FINANCIAL POSITION
31 JULY 2024

2024 2023
Notes £    £    £    £   
FIXED ASSETS
Intangible assets 9 1,095,212 1,886,616
Tangible assets 10 22,647 91,795
1,117,859 1,978,411

CURRENT ASSETS
Stocks 11 - 163,521
Debtors 12 3,230,895 2,612,358
Cash at bank 1,343,417 190,476
4,574,312 2,966,355
CREDITORS
Amounts falling due within one year 13 4,313,849 4,530,056
NET CURRENT ASSETS/(LIABILITIES) 260,463 (1,563,701 )
TOTAL ASSETS LESS CURRENT LIABILITIES 1,378,322 414,710

PROVISIONS FOR LIABILITIES 15 - 390,406
NET ASSETS 1,378,322 24,304

CAPITAL AND RESERVES
Called up share capital 16 100 100
Retained earnings 17 1,378,222 24,204
SHAREHOLDERS' FUNDS 1,378,322 24,304

The financial statements were approved by the Board of Directors and authorised for issue on 30 January 2025 and were signed on its behalf by:





Mr E C Grant - Director


THE SKILLS NETWORK LIMITED (REGISTERED NUMBER: 06445363)

STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 JULY 2024

Called up
share Retained Total
capital earnings equity
£    £    £   
Balance at 1 August 2022 100 2,571,914 2,572,014
Prior year adjustment - (514,827 ) (514,827 )
As restated 100 2,057,087 2,057,187

Changes in equity
Dividends - (68,000 ) (68,000 )
Total comprehensive income - (1,964,883 ) (1,964,883 )
Balance at 31 July 2023 100 24,204 24,304

Changes in equity
Total comprehensive income - 1,354,018 1,354,018
Balance at 31 July 2024 100 1,378,222 1,378,322

THE SKILLS NETWORK LIMITED (REGISTERED NUMBER: 06445363)

STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 JULY 2024

2024 2023
Notes £    £   
Cash flows from operating activities
Cash generated from operations 1 1,595,426 184,756
Net cash from operating activities 1,595,426 184,756

Cash flows from investing activities
Purchase of intangible fixed assets (421,507 ) (834,446 )
Purchase of tangible fixed assets (29,638 ) (3,463 )
Sale of tangible fixed assets 8,660 22,393
Net cash from investing activities (442,485 ) (815,516 )

Cash flows from financing activities
Equity dividends paid - (68,000 )
Net cash from financing activities - (68,000 )

Increase/(decrease) in cash and cash equivalents 1,152,941 (698,760 )
Cash and cash equivalents at beginning of year 2 190,476 889,236

Cash and cash equivalents at end of year 2 1,343,417 190,476

THE SKILLS NETWORK LIMITED (REGISTERED NUMBER: 06445363)

NOTES TO THE STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 JULY 2024

1. RECONCILIATION OF PROFIT/(LOSS) BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

2024 2023
£    £   
Profit/(loss) before taxation 963,612 (1,988,632 )
Depreciation charges 1,025,087 743,698
Loss on disposal of fixed assets 277,950 -
2,266,649 (1,244,934 )
Decrease/(increase) in stocks 163,521 (3,510 )
(Increase)/decrease in trade and other debtors (618,537 ) 2,929,228
Decrease in trade and other creditors (216,207 ) (1,496,028 )
Cash generated from operations 1,595,426 184,756

2. CASH AND CASH EQUIVALENTS

The amounts disclosed on the Statement of Cash Flows in respect of cash and cash equivalents are in respect of these Statement of Financial Position amounts:

Year ended 31 July 2024
31.7.24 1.8.23
£    £   
Cash and cash equivalents 1,343,417 190,476
Year ended 31 July 2023
31.7.23 1.8.22
£    £   
Cash and cash equivalents 190,476 1,033,178
Bank overdrafts - (143,942 )
190,476 889,236


3. ANALYSIS OF CHANGES IN NET FUNDS

At 1.8.23 Cash flow At 31.7.24
£    £    £   
Net cash
Cash at bank 190,476 1,152,941 1,343,417
190,476 1,152,941 1,343,417
Total 190,476 1,152,941 1,343,417

THE SKILLS NETWORK LIMITED (REGISTERED NUMBER: 06445363)

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2024

1. STATUTORY INFORMATION

The Skills Network Limited is a private company, limited by shares , registered in England and Wales. The company's registered number and registered office address can be found on the Company Information page.

2. ACCOUNTING POLICIES

Basis of preparing the financial statements
These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention.

Critical accounting judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised 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.

Key sources of estimation uncertainty

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.

Useful economic lives of intangible estimates

The annual amortisation charge for intangible assets is sensitive to changes in the estimated useful economic lives and residual values of the assets. The useful economic lives and residual values are reassessed annually. They are amended when necessary to reflect current estimates, based on technological advancement, future investments and economic utilisation. Development costs of both software platforms and learning resources are written off over 3 years.

Revenue recognition

Where the outcome of a contract can be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the contract activity at the balance sheet date. The stage of completion is determined by identifying the expected learning period over which the managed delivery services and learner fund income revenues are recognised and management use historical data from learning records in order to make their estimates of expected course length. It is typical that invoices are raised for services at the commencement of respective contracts; this leads to deferred income which is then taken to revenue over time in line with progression through the contracted services.

The directors closely monitor actual outcomes against expected performance for individual contracts.

Recoverability of debtors

Management actively monitors the Company's aged receivables and puts in place provisions where there is considered objective evidence of impairment. The Company operates in the educational industry where the timing of receipt is uncertain as customers who are educational institutions are themselves reliant on receipt of government funding.

THE SKILLS NETWORK LIMITED (REGISTERED NUMBER: 06445363)

NOTES TO THE FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31 JULY 2024

2. ACCOUNTING POLICIES - continued

Turnover
Revenue 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 the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Revenue from contracts for the provision of educational services is recognised by reference to the stage of completion. When services are performed by an indeterminate number of acts over a specified period of time, an entity recognises revenue on a straight-line basis over the specified period unless there is evidence that some other method better represents the stage of completion.

Revenue is primarily comprised of income from:

- The delivery of training courses;
- The sale of learning materials; and
- The sale of licences to access and use the Company’s owned and hosted learner management
software (“EQUAL”) and/or learning content within it for a set period of time.

Revenue from the delivery of courses, where learning services are provided over a period of time, is recognised on a straight-line basis over the length of the course unless there is evidence that a different method better represents the stage of completion.

Revenue from the sale of learning materials (both physical and digital resources) is recognised at the point of sale only where the Company has no performance obligations (including the ongoing hosting of the resources) to satisfy following the point of sale.

Revenues from the sale of licences to access and use the Company’s hosted learner management system and/or associated learning content is recognised on a straight-line basis over the period of the licence. When revenue is earned and recognised by the Company prior to issuing of a formal invoice to the customer, the Company accounts for accrued income on that transaction which is subsequently reversed when the invoice is issued.

Where the company issues formal invoices in advance of earning revenues then the Company accounts for deferred income on those transactions and reverses it and recognises the associated revenue only when the revenue is earned in line with the policies described above.

Intangible assets
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.

Development costs are costs associated with the development of internal systems, websites and learning materials which are utilised to provide learning services and products to learners. Such costs are capitalised and amortised over their estimated useful lives.

Tangible fixed assets
Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life.
Short leasehold - 20% on cost
Fixtures and fittings - 25% on cost
Equipment - 33% on cost

Tangible fixed assets are stated at cost (or deemed cost) or valuation less accumulated depreciation and accumulated impairment losses. Cost includes costs directly attributable to making the asset capable of operating as intended.

THE SKILLS NETWORK LIMITED (REGISTERED NUMBER: 06445363)

NOTES TO THE FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31 JULY 2024

2. ACCOUNTING POLICIES - continued

Stocks
Stocks are valued at the lower of cost and estimated selling price less costs to complete and sell and after making due allowance for obsolete and slow moving items.

Financial instruments
The company 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 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.

Taxation
Taxation for the year comprises current and deferred tax. Tax is recognised in the Statement of Comprehensive Income, except to the extent that it relates to items recognised in other comprehensive income or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the statement of financial position date.

Deferred tax
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the statement of financial position date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Hire purchase and leasing commitments
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.

Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.

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 leases asset are consumed.

Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of 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.

THE SKILLS NETWORK LIMITED (REGISTERED NUMBER: 06445363)

NOTES TO THE FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31 JULY 2024

2. ACCOUNTING POLICIES - continued

Impairment of fixed assets
At each reporting period end date, the company 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.

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.

3. TURNOVER

The turnover and profit (2023 - loss) before taxation are attributable to the one principal activity of the company.

An analysis of turnover by class of business is given below:

2024 2023
£    £   
Educational Tech with Services 19,819,178 16,866,867
Educational Tech Resources 2,822,617 3,103,696
22,641,795 19,970,563

4. EMPLOYEES AND DIRECTORS
2024 2023
£    £   
Wages and salaries 8,321,170 9,039,547
Social security costs 931,070 990,024
Other pension costs 159,776 197,052
9,412,016 10,226,623

The average number of employees during the year was as follows:
2024 2023

Administrators 216 226
Seniors, supervisors and inductors 16 30
Managers 24 46
Operational 7 11
263 313

Included within staff costs are payroll costs totalling £359,503 (including social security costs and pension costs) which were capitalised during the year in relation to the development of EQUAL (2023: £217,869).

THE SKILLS NETWORK LIMITED (REGISTERED NUMBER: 06445363)

NOTES TO THE FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31 JULY 2024

4. EMPLOYEES AND DIRECTORS - continued

2024 2023
£    £   
Directors' remuneration 392,241 155,672
Directors' pension contributions to money purchase schemes 5,005 1,419

The number of directors to whom retirement benefits were accruing was as follows:

Money purchase schemes 3 3

Information regarding the highest paid director for the year ended 31 July 2024 is as follows:
2024
£   
Emoluments etc 160,192
Pension contributions to money purchase schemes 1,739

5. EXCEPTIONAL ITEMS
2024 2023
£    £   
Exceptional Items (34,697 ) (59,693 )

Exceptional items relate to costs incurred as part of restructuring.

6. PROFIT/(LOSS) BEFORE TAXATION

The profit (2023 - loss) is stated after charging:

2024 2023
£    £   
Hire of plant and machinery 8,514 16,327
Other operating leases 186,458 188,886
Depreciation - owned assets 90,586 110,535
Loss on disposal of fixed assets 277,950 -
Learning resources amortisation 582,287 275,386
Software platforms & websites amortisation 352,214 352,253
Auditors' remuneration 35,890 27,780

7. TAXATION

Analysis of the tax credit
The tax credit on the profit for the year was as follows:
2024 2023
£    £   
Deferred tax (390,406 ) (23,749 )
Tax on profit/(loss) (390,406 ) (23,749 )

UK corporation tax has been charged at 25% (2023 - 25%).

THE SKILLS NETWORK LIMITED (REGISTERED NUMBER: 06445363)

NOTES TO THE FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31 JULY 2024

7. TAXATION - continued

Reconciliation of total tax credit included in profit and loss
The tax assessed for the year is lower than the standard rate of corporation tax in the UK. The difference is explained below:

2024 2023
£    £   
Profit/(loss) before tax 963,612 (1,988,632 )
Profit/(loss) multiplied by the standard rate of corporation tax in the UK of 25%
(2023 - 25%)

240,903

(497,158

)

Effects of:
Expenses not deductible for tax purposes 4,534 13,853
Income not taxable for tax purposes (109,924 ) (212,853 )
Depreciation in excess of capital allowances 317,101 181,824
Adjustments to tax charge in respect of previous periods - (45,254 )

Use of brought forward losses (452,614 ) -
Deferred tax movement owing to losses (390,406 ) (23,749 )
Losses carried forward - 559,588

Total tax credit (390,406 ) (23,749 )

8. DIVIDENDS
2024 2023
£    £   
Interim - 68,000

9. INTANGIBLE FIXED ASSETS
Software
Learning platforms
resources & websites Totals
£    £    £   
COST
At 1 August 2023 2,310,746 3,145,643 5,456,389
Additions 62,004 359,503 421,507
Disposals (416,097 ) - (416,097 )
At 31 July 2024 1,956,653 3,505,146 5,461,799
AMORTISATION
At 1 August 2023 1,286,194 2,283,579 3,569,773
Amortisation for year 582,287 352,214 934,501
Eliminated on disposal (137,687 ) - (137,687 )
At 31 July 2024 1,730,794 2,635,793 4,366,587
NET BOOK VALUE
At 31 July 2024 225,859 869,353 1,095,212
At 31 July 2023 1,024,552 862,064 1,886,616

THE SKILLS NETWORK LIMITED (REGISTERED NUMBER: 06445363)

NOTES TO THE FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31 JULY 2024

10. TANGIBLE FIXED ASSETS
Fixtures
Short and
leasehold fittings Equipment Totals
£    £    £    £   
COST
At 1 August 2023 217,438 216,028 599,683 1,033,149
Additions - 960 28,678 29,638
Disposals - (694 ) (8,200 ) (8,894 )
At 31 July 2024 217,438 216,294 620,161 1,053,893
DEPRECIATION
At 1 August 2023 203,288 208,203 529,863 941,354
Charge for year 13,157 2,783 74,646 90,586
Eliminated on disposal - (694 ) - (694 )
At 31 July 2024 216,445 210,292 604,509 1,031,246
NET BOOK VALUE
At 31 July 2024 993 6,002 15,652 22,647
At 31 July 2023 14,150 7,825 69,820 91,795

11. STOCKS
2024 2023
£    £   
Learning materials - 163,521

12. DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
2024 2023
£    £   
Trade debtors 1,479,041 1,057,312
Bad Debt Provision (171,827 ) (171,780 )
Other debtors 162,671 161,599
Work in Progress 121,564 -
Prepayments and accrued income 1,639,446 1,565,227
3,230,895 2,612,358

13. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
2024 2023
£    £   
Trade creditors 566,663 1,461,538
Other taxes and social security 233,614 333,928
VAT 4,390 20,497
Other creditors 462,568 360,390
Accruals and deferred income 3,046,614 2,353,703
4,313,849 4,530,056

THE SKILLS NETWORK LIMITED (REGISTERED NUMBER: 06445363)

NOTES TO THE FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31 JULY 2024

14. LEASING AGREEMENTS

Minimum lease payments under non-cancellable operating leases fall due as follows:
2024 2023
£    £   
Within one year 194,048 194,048
Between one and five years 151,543 334,094
345,591 528,142

15. PROVISIONS FOR LIABILITIES
2024 2023
£    £   
Deferred tax
Accelerated capital allowances - 390,406

Deferred
tax
£   
Balance at 1 August 2023 390,406
Credit to Statement of Comprehensive Income during year (390,406 )
Balance at 31 July 2024 -

There are deferred tax assets totalling £275,880 due to tax losses that are not recognised within the financial statements due to uncertainty over when they will be utilised.

16. CALLED UP SHARE CAPITAL

Allotted, issued and fully paid:
Number: Class: Nominal 2024 2023
value: £    £   
100 Ordinary £1 100 100

17. RESERVES
Retained
earnings
£   

At 1 August 2023 24,204
Profit for the year 1,354,018
At 31 July 2024 1,378,222

18. PENSION COMMITMENTS

The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund. During the year the company made contributions of £152,109 (2023: £195,633). As at the year end amounts totalling £47,093 (2023: £30,606) were owed to the pension scheme.