The directors present the strategic report for the year ended 31 December 2024.
Northcoders is a market leading provider of technology training for businesses and individuals with courses in, Software Engineering, Data Engineering, AI and Machine Learning, and Platform Engineering. Founded in 2015, the Group provides the highest quality online training to students across the UK via its proven NCore technology platform. Powered by IP rich technology, Northcoders offers bootcamp courses to individuals from a range of backgrounds, delivered through virtual learning. The Group also works with blue chip corporates across multiple sectors to help them to achieve their digital requirements, with teams as a service and to supply innovative solutions for the upskilling and reskilling of employees. With a keen focus of inclusivity, diversity and quality at its core, Northcoders aims to address the digital skills gap in the UK to meet the increasing demand for digital specialists at all levels, from businesses and public agencies.
The strategic priorities of the company are to drive sustainable growth in revenue and profit, to champion excellence across all brands and to create a rewarding workplace through improved operational efficiency. At Northcoders Inclusion is championed, if tech and AI is going to change the way that we all live, then we need to make sure that it is being programme by people from all backgrounds and walks of life. Diversity of thought is what is going to ensure that tech and AI is functional for all and that is why Northcoders’ goal is to make tech an accessible and attractive career for everyone.
Sources of revenue come from B2C training in Software Development, Data Engineering and AI. And also, B2B Business Solutions, via consultancy contracts through the brand Counter and corporate academies. Northcoders have trained 3,976 students to date and get 67% of graduates into work within 6 months of graduating. The business model is scalable due to its internal platforms and online teaching model and students are sourced from across the UK. There is vast market opportunity and although the digital training market is very fragmented, quality is kept at the forefront to ensure that the application numbers remain high.
The financial year ended 31 December 2024 (‘FY24’ or the ‘period’) marked another successful milestone for Northcoders, showcasing the strength of our core business model in technology training bootcamps. Learner enrolment across our suite of B2C and B2B bootcamp courses experienced growth compared to previous years, reflecting the increasing demand for our high‑quality training products. Despite continued market challenges, we have regained our profit margins and showed the resilience of our business. We have continued to adapt and innovate with new courses and course models, all whilst rebuilding our profit.
In FY24, 1,144 Northcoders students started their life-changing journey on one of our training bootcamps. Our courses remained hybrid/online in 2024 but have gone to fully online in 2025. This method of delivery continues to be the most efficient model for our teaching team to keep excellence at the heart of everything they do as our student numbers increase. Application numbers from potential students reached an all-time high of 17,159; the demand for our courses is not slowing down despite volatility in consumer spending.
Northcoders ended 2024 with a permanent headcount of 129 staff members. Efficiencies from our new teaching platform NCore have enabled us to grow with lower staff numbers needed.
NCore’s main business benefit is the ability to substantially decrease our student-to-tutor ratio whilst improving excellence in our courses by increasing the contact time offered to current and potential bootcamp students.
In FY24, Northcoders introduced a new mode of teaching, our Part-time course.
B2C training bootcamps stand as the cornerstone of the Group’s operations, representing 89% of our annual revenue. Our Consumer bootcamp courses cater to individuals of all ages and backgrounds aspiring to build careers in the technology sector, delivered over a 13‑week period to ensure comprehensive skill development.
The expansion of our hiring partners network has been a key focus, with over 510 partners now collaborating with us to provide life-changing opportunities for Northcoders’ graduates. Our average starting salary for students leaving the course remains high at £28,380. Within three years, our graduates typically experience significant salary increases as they progress into more senior roles, reflecting the value of our training programmes. Northcoders is on a mission to increase diversity within the technology industry; our statistics show 30% representation of women and 56% of non-university educated students within our cohorts.
Northcoders’ commitment to providing accessible and impactful training extends to skills bootcamps, tailored for adults aged 19 and over residing in England. These flexible courses, spanning over 13 weeks, offer participants the opportunity for a job interview upon completion. Moreover, corporate entities can leverage this scheme to either onboard new talent or enhance the skills of their existing workforce.
For over three years, Northcoders has been utilising Government skills bootcamp funding to offer scholarships, ensuring that individuals facing financial constraints can access our transformative training bootcamps and enhance their career prospects. There has been some changes to the provision following the change in government but we are confident that Skills bootcamps will remain a useful part of our business model.
Our Business Solutions division now named ‘Counter’ delivers a corporate-focused consultancy service by assembling teams of graduates, further honed in consultancy skills to become associate consultants. The associate consultants are paired with an experienced tech lead for deployment in businesses. Upon the completion of the engagement period, while the tech lead rejoins Northcoders, the associate consultants are offered the opportunity to transition into permanent roles within the client’s business at no extra cost.
This arrangement provides both immediate and long-term solutions for businesses, ensuring continuity and retention of expertise beyond the contract term. In a bid to diversify our service offerings, these teams are available both as autonomous ‘incubated’ groups and in collaboration with established consultancy firms. This strategy aims to enhance their service range while reducing dependency on higher-cost consulting services.
Additionally, the Business Solutions division also offers Academy programmes, designed for corporates looking to onboard emerging technologists or to re‑skill individuals from different sectors of their organisation, further contributing to a dynamic and innovative workforce.
Our Counter division has seen growth and has successfully signed new contracts as we move into 2025.
Financials
Despite a still turbulent economy, the Company delivered growth in revenue, gross profit margins and EBITDA. Performance was in line with expectations, and application numbers were higher than ever. Revenue, made up of B2C training bootcamps and Counter, increased to £8.5 million (FY23: £6.3m). Gross profit for the year was £5.7 million (FY23: £4.0m) with a reported gross profit margin (GPM) of 67% (FY23: 65%). The profit for the year before tax was £0.5 million (FY23: Loss £1.0m). Net assets as at 31 December 2024 were £0.1 million(FY23: liabilities £0.5m) of which cash was £1.1 million (FY23: £1.4m).
The cash balance at the year-end of £1.1 million will enable the Company to continue with its growth plans, whilst remaining prudent as appropriate with wider costs. Cash investment into internal infrastructure is expected to decrease heavily in the year ahead.
Current Trading and Outlook
Towards the latter part of FY24 and continuing into Q1 FY25 we have witnessed a positive shift in the technology hiring market. Counter has also seen a shift with new contracts secured, renewals gained from pilot contracts and a robust pipeline, providing us with confidence to further invest in the revenue growth. This momentum aligns with our strategic focus on expanding our offerings, leveraging our expertise and fulfilling our purpose as a company committed to driving diversity and accessibility in the technology industry.
Q1 FY25 has also seen us depart from our 10,000sq ft Manchester office, providing us with vast cost savings and the launch of our new Data & AI course.
The Group’s Board is upbeat about the promising outlook for FY25, profit margins are growing as we experience efficiencies from NCore and new government infrastructure is forcing diversification in training bootcamp revenues.
Risks and uncertainties
Revenue and Profitability
If the Company is unable to achieve or sustain profitability, the business could be severely harmed.
Operating results may fluctuate as a result of a number of factors, many of which are beyond its control.
If results fall below expectations, the trading price of the ordinary shares of the parent company may decline significantly.
If the Company does not realise sufficient revenue levels, it may require additional working capital, which may not be available on attractive terms, if at all.
Management constantly reviews the budget analysis and forecasts are flexed monthly in line with market expectations. All financials are reviewed in monthly Board and operating board meetings. Sales teams hold weekly KPI meetings.
ESFA and OfStEd Inspections
Northcoders’ DFE revenue is monitored via inspections from Ofsted and the Education and Skills Funding Agency (ESFA). If the Company receives a bad Ofsted rating, this could tarnish the reputation of the bootcamp and could even cause removal of future funding.
The team works hard to ensure we are fully compliant with all requirements. We have hired a quality lead to ensure that the whole provision meets regulatory standards. The Group has a strategy to diversify revenue streams to ensure that removal of future funding would not cause the business to shut down. The risk of this is now however low as we have just had a successful OFSTED inspection.
Economic Downturn
A downturn in the economy could force consumers to spend less and could also cause reduced hiring/hiring freezes amongst our partner businesses. The cost of living crisis could also prevent people from being able to take three months off work to do the course.
Ensure that we apply for as much DfE funding as possible so that we can give away free places. Have consultancy products available to support companies with hiring freezes.
Ability to Recruit and Retain Skilled Personnel
There is a huge digital skills gap in the industry, which could cause issues when wanting to grow the tech team. If the Company cannot recruit the right people, it will struggle to grow in line with forecasts.
Northcoders offers a very attractive employment package, with a 4.5-day working week, pension and holidays above the national average, employee assistance programmes and private healthcare insurance. We strive to ensure that our staff members are looked after while at work, and also provide a continuing professional development budget for all employees. We employ tutors directly off the bootcamp and have made sure our classroom teaching model relies more on high-level lecturers who have share‑options agreements in place.
Privacy or Data Protection Failure
The Company collects, maintains, transmits and stores data about its customers and employees, including personally identifiable information. However, the Company’s security measures may not detect or prevent all attempts to breach such security measures and protocols. A breach of such security measures and protocols could result in third parties gaining unauthorised access to customer and/or employee data stored by the Company, which could expose the Company to litigation, regulatory action and other potential issues.
The Company has a dedicated data protection officer who ensures that systems are in place to prevent a breach. The whole Northcoders team also has yearly data protection and general data protection regulation training. A new Sys Admin joins our head of I.T. and The Company has just renewed the Cyber Essentials plus accreditation.
Competition
Another coding bootcamp could replicate what we are providing in a better way. This would cause customers to choose the competition and we would struggle for sales.
Northcoders ensures its product is the market leader by constantly reviewing the course curriculum and changing what we teach in line with changes in the industry. We also make sure we continue to develop our offerings and maintain good legal control of IP.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2024.
Principal activities
The principal activity of the company continued to be that of the provision of software development training courses.
The results for the year are set out on page 12.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The company's principal financial instruments comprise cash balances and other payables and receivables that arise in the normal course of business. The risks associated with these financial instruments are credit risk, interest risk and liquidity risk.
Credit risk is the risk of financial loss to the company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from receivables from customers.
The carrying amounts of financial assets held at amortised cost represent the maximum credit exposure. Individuals who engage for courses at their own cost are required to pay for courses in advance, unless they are EdAid or StepEx receivables, which are subject to deferred credit terms, with repayments contingent on the future employment income of those individuals. Further details on these schemes are given in note 17. The company regularly monitors amounts outstanding for both time and credit limits. Defaults of customers are incorporated into credit risk controls. The company is not exposed to any significant credit risk in relation to any single counterparty or group or counterparties having similar characteristics.
The company is exposed to market risk through its use of financial instruments, and specifically to interest rate risk. Interest rate risk is the risk that the value of a financial instrument or cash flows associated with the instrument will fluctuate due to changes in market interest rates.
The company’s short-term financing attracts fixed interest rates, such that no material interest rate fluctuations are expected.
Liquidity risk is the risk that the company might be unable to meet its obligations as they fall due. The company manages its liquidity by forecasting cash inflows and outflows on a daily basis. The company’s objective is to ensure that it will have sufficient liquidity to meet its liabilities when they are due, under normal and stressed conditions.
Bank balances are managed centrally to maximise interest income and minimise interest expense, whilst ensuring that the company has sufficient liquid reserves to meet its operating needs.
Gerald Edelman LLP were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
The directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt a going concern basis in preparing the annual financial statements. Further details regarding the adoption of the going concern basis can be found in note 1.2 to the financial statements.
In accordance with Companies Act, 414C(11), the company has chosen to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, s7, to be contained in the directors' report. It has done so in respect of the review and analysis of the business during the current year.
The directors are responsible for the maintenance and integrity of the company website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
We have audited the financial statements of Northcoders Limited (the 'company') for the year ended 31 December 2024 which comprise the statement of comprehensive income, the statement of financial position, the statement of changes in equity 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 101 Reduced Disclosure Framework (United Kingdom Generally Accepted Accounting Practice).
Basis for 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 other information comprises the information included in the Strategic Report and the Directors’ report
other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the Strategic Report and the Directors’ report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year 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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Our audit procedures were primarily directed towards testing the accounting systems in operation upon which we have based our assessment of the financial statements for the period ended 31 December 2024.
We planned our audit so that we have a reasonable expectation of detecting material misstatements in the financial statements resulting from irregularities, fraud or non-compliance with law or regulations.
The extent to which the audit was considered capable of detecting irregularities including fraud
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-
compliance with laws and regulations, our procedures included the following:
The engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations.
Enquiring of management of whether they are aware of any non-compliance with laws and regulations.
Enquiring of management whether they have knowledge of any actual, suspected or alleged fraud.
Enquiring of management their internal controls established to mitigate risk related to fraud or noncompliance with laws and regulations.
Discussions amongst the engagement team on how and where fraud might occur in the financial statements and any potential indicators of fraud. As part of this discussion, we identified potential for fraud in posting of unusual journals.
Obtaining understanding of the legal and regulatory framework the company operates in focusing on those laws and regulations that had a direct effect on the financial statements or that had a fundamental effect on the operations. The key laws and regulations we considered in this context included UK Companies Act, tax legislation, employment law, Health and Safety, Data Protection Act, Education Skills Funding Agency, Ofsted, Anti-Bribery Act and Money Laundering Act.
Audit response to risks identified
Fraud due to management override
To address the risk of fraud through management bias and override of controls, we:
Performed analytical procedures to identify any unusual or unexpected relationships.
Audited the risk of management override of controls, including through testing journal entries for appropriateness.
Investigated the rationale behind significant or unusual transactions.
Performed testing on depreciation and debtor recoverability which are the accounting estimates requiring judgement from management.
Irregularities and non-compliance with laws and regulations
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures
which included, but are not limited to:
Agreeing financial statements disclosures to underlying supporting documentation.
Enquiring of management as to actual and potential litigation claims.
Reviewing legal and professional fees for indications of non-compliance with laws and regulations.
The test nature and other inherent limitations of an audit, together with the inherent limitations of any accounting and internal control system, mean that there is an unavoidable risk that even some material misstatements in respect of irregularities may remain undiscovered even though the audit is properly planned and performed in accordance with ISAs (UK). Furthermore, the more removed that laws and regulations are from financial transactions, the less likely that we would become aware of non-compliance. Our examination should therefore not be relied upon to disclose all such material misstatements or frauds, errors or instances of non-compliance that might exist. The responsibility for safeguarding the assets of the company and for the prevention and detection of fraud, error and non-compliance with law or regulations rests with the directors.
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 company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Northcoders Limited is a private company limited by shares incorporated in England and Wales. The registered office is Bloc,17 Marble Street, Manchester, M2 3AW. The company's principal activities and nature of its operations are disclosed in the directors' report.
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 £.
As permitted by FRS 101, the company has taken advantage of the following disclosure exemptions from the
requirements of IFRS:
the requirements of IAS 7 'Statement of Cash Flows' to present a statement of cash flows;
disclosure of key management personnel compensation;
comparative period reconciliations for the number of shares outstanding and the carrying amounts of property, plant and equipment and intangible assets;
a reconciliation of the number and weighted average exercise prices of share options, how the fair value of share-based payments was determined and their effect on profit or loss and the financial position;
comparative narrative information; and
the requirement of IAS 24 'Related Party Disclosures' to disclose related party transactions and balances between two or more members of a group.
Where required, equivalent disclosures are given in the group accounts of Northcoders Group Plc. The group accounts of Northcoders Group Plc are available to the public and can be obtained as set out in note 29.
The company has taken exemption from preparing group consolidated financial statements, as permitted by s400 of the Companies Act 2006, whereby the results of this company and its subsidiaries are included in the consolidated accounts of Northcoders Group Plc.
Determining the transaction price
The Company's revenue on over-time sales is generally based on fixed price contracts but these are subject to more variability as a result of the nature of the contract. Any variable consideration is constrained in estimating contract revenue in order that it is highly probable that there will not be a future reversal in the amount of revenue recognised when the final amounts of any variations has been determined.
Allocating amounts to performance obligations
Where the contracts include multiple performance obligations, which are determined to be separate performance obligations, the transaction price will be allocated to each performance obligation based on the stand-alone selling prices. Where these are not directly observable, they are estimated based on expected cost plus margin.
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.
Amortisation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:
Development costs 10 years
Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the income statement.
Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.
A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually, and whenever there is an indication that the asset may be impaired.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually, and whenever there is an indication that the asset may be impaired.
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.
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.
Debt instruments are classified as financial assets measured at fair value through other comprehensive income where the financial assets are held within the company’s business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
A debt instrument measured at fair value through other comprehensive income is recognised initially at fair value plus transaction costs directly attributable to the asset. After initial recognition, each asset is measured at fair value, with changes in fair value included in other comprehensive income. Accumulated gains or losses recognised through other comprehensive income are directly transferred to profit or loss when the debt instrument is derecognised.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership to another entity.
The company recognises financial debt when the company becomes a party to the contractual provisions of the instruments. Financial liabilities are classified as either 'financial liabilities at fair value through profit or loss' or 'other financial liabilities'.
Other financial liabilities, including borrowings, trade payables and other short-term monetary liabilities, are initially measured at fair value net of transaction costs directly attributable to the issuance of the financial liability. They are subsequently measured at amortised cost using the effective interest method. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.
Financial liabilities are derecognised when, and only when, the company’s obligations are discharged, cancelled, or they expire.
Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
Share capital represents the nominal value of shares that have been issued.
The capital contribution reserve represents the transfer of share option costs from the parent company where Northcoders Limited is the employer and primary recipient of the benefit of the employment of those staff.
The tax expense represents the sum of the tax currently payable and deferred tax.
Equity-settled share-based payments are measured at fair value at the date of grant by reference to the fair value of the equity instruments granted using the Black-Scholes model. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the estimate of shares that will eventually vest. A corresponding adjustment is made to equity.
When the terms and conditions of equity-settled share-based payments at the time they were granted are subsequently modified, the fair value of the share-based payment under the original terms and conditions and under the modified terms and conditions are both determined at the date of the modification. Any excess of the modified fair value over the original fair value is recognised over the remaining vesting period in addition to the grant date fair value of the original share-based payment. The share-based payment expense is not adjusted if the modified fair value is less than the original fair value.
Cancellations or settlements (including those resulting from employee redundancies) are treated as an acceleration of vesting and the amount that would have been recognised over the remaining vesting period is recognised immediately where applicable. Where employees forfeit options (for example on resignation) no further charge is accrued and the amounts recognised in the share option reserve to date are transferred to retained earnings. As the obligation to settle the reward is held by the parent company, Northcoders Group PLC there are no modifications in these company accounts for employees leaving during the vesting period,
The cumulative expense over the vesting period is recognised within the Capital Contribution Reserve,
At inception, the company assesses whether a contract is, or contains, a lease within the scope of IFRS 16. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Where a tangible asset is acquired through a lease, the company recognises a right-of-use asset and a lease liability at the lease commencement date. Right-of-use assets are included within property, plant and equipment, apart from those that meet the definition of investment property.
The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date plus any initial direct costs and an estimate of the cost of obligations to dismantle, remove, refurbish or restore the underlying asset and the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of other property, plant and equipment. The right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are unpaid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the company's incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise fixed payments, variable lease payments that depend on an index or a rate, amounts expected to be payable under a residual value guarantee, and the cost of any options that the company is reasonably certain to exercise, such as the exercise price under a purchase option, lease payments in an optional renewal period, or penalties for early termination of a lease. In doing so the company assesses expectations for the period of use based on break clauses and intention to retain, based on best estimations at inception and at each reporting period end date.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in: future lease payments arising from a change in an index or rate; the company's estimate of the amount expected to be payable under a residual value guarantee; or the company's assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
The company has elected not to recognise right-of-use assets and lease liabilities for short-term leases of machinery that have a lease term of 12 months or less, or for leases of low-value assets (typically where total cashflows are lower than £5,000), including IT equipment. The payments associated with these leases are recognised in profit or loss on a straight-line basis over the lease term.
Non-recurring items
Items which are material either because of their size or nature, and which are non-recurring, are presented within administrative expenses. The separate reporting of non-recurring items helps provide a better picture of the company’s underlying performance. Items which are included within the category include (but are not limited to):
Costs incurred in relation to major restructuring programmes;
Significant asset impairments relating to specific market events; and
Other particularly significant or unusual items.
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, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are outlined below.
Depreciation is provided so as to write down the assets to their residual values over their estimated useful lives as set out in the Company's accounting policy. The selection of these estimated lives requires the exercise of management judgement. Useful lives are regularly reviewed and should management's assessment of useful lives shorten/increase then depreciation charges in the financial statements would increase/decrease and carrying amounts of tangible assets would change accordingly.
The Company also assesses the useful life of intangible development assets based on experience of past use of those assets, and likely renewal periods to maintain and replace and renew aspects such as coding. Based on this the useful life is 10 years, which reflects management's expectation of consumption of the assets.
The Company is required to consider, on an annual basis, whether indications of impairment relating to such assets exist and if so, perform an impairment test. The recoverable amount is determined based on the higher of value in use calculations or fair value less costs to sell. The use of value in use method requires the estimation of future cash flows and the choice of a discount rate in order to calculate the present value of the cash flows. The Directors are satisfied that all recorded assets will be fully recovered from expected future cash flows.
The Company makes provision for anticipated tax consequences based on the likelihood of whether additional
taxes may arise. The Company recognises deferred tax assets to the extent to which it expects to be able to
utilise the balances against future taxable profits.
The Company has used the incremental borrowing rate to calculate the value of the lease liabilities relating to its property lease liabilities recognised under IFRS 16. The discount rate used reflects the estimated risks associated with borrowing against similar assets by the Company, incorporating assumptions for similar terms, security and funds at that time.
The carrying amounts of such liabilities are disclosed within the Group financial statements for Northcoders Group Plc.
The determination of the fair values of EMI options and warrants has been made by reference to the Black-Scholes model. The input with the greatest amount of estimation being the volatility of the Parent Company’s share price which has been derived via benchmarking against similar companies in the industry. Other key inputs are set out within the Group financial statements for Northcoders Group Plc.
The amount recognised as a provision is the best estimate of the expected credit loss that the Company is projected to incur on receivables. At each year end the Directors assess the risks and uncertainties surrounding receivable balances and use expected loss rates based on the historical credit losses experienced by the Company.
An estimate of variable consideration is recognised against DfE income due to the performance-based nature of the contract. The measurement of the consideration requires judgement and estimation around the expectation of what percentage of students who finish the DfE course go into a relevant job within the timescales of the contract. Job outcomes are regularly reviewed by management and the consideration is flexed as necessary.
Estimation of StepEx revenue is entirely contingent on the future earnings of students over a fixed period of time. It is calculated on a portfolio basis, looking at expectations of the amounts repayable from all students based on the stage of completion of the course. Variable revenues are not discounted to present value, and are not subject to expected credit loss calculations; instead, the amount is adjusted as each student reaches completion of their contractual earnings period and the final amounts are known because, it is assessed that there is no significant financing component involved.
Consumer revenue includes undiscounted EdAid sales of £nil (2023: £7,542) of which some of these contain a financing element. EdAid sales are governed by a formal credit agreement facilitated by a third party.
Also included within consumer revenue is undiscounted StepEx sales of £177,361 (2023: £29,924). StepEx sales are governed by a formal credit agreement facilitated by a third party. the discounted element based on expected repayment profiles inherent in the agreement at date of invoice.
In the case of Future Earnings Agreements, management make an estimate as to the individual’s future salary and accordingly recognise the most likely amount of revenue which they expect to receive from the individual. Note that the revenue estimate recognised in the financial statements is capped at the standard course fee, although there may be scope for certain individuals to pay fees in excess of this cap over the lifetime of the repayment term which is recognised as received.
The average monthly number of persons (including directors) employed by the company during the year was:
Their aggregate remuneration comprised:
In addition to the above, further employee costs have been incurred as part of the development costs, as disclosed in the intangible asset note. The total employment costs capitalised were £536,417 (2023: £714,204).
Excluded from the above are wage costs which have been recharged by the company to Tech Returners Limited (a company under common control) and Northcoders Group plc (parent) to reflect the work performed for those companies by Northcoders Limited employees, The recharges were £49,970 (2023 - £782,444).
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 3 (2023 - 2).
The charge for the year can be reconciled to the profit/(loss) per the income statement as follows:
In addition to the amount charged to the income statement, the following amounts relating to tax have been recognised directly in other comprehensive income:
The UK corporation tax rate was 19.00% until April 2023 when it increased to 25% for groups with taxable profits of over £250,000. Deferred tax at the reporting period end date was measured at 25% (2023: 25%).
The directors remain confident that these assets are worth at least their balance sheet values based on projected cashflows.
Leased assets are presented as right of use assets. Payments in respect of short term and low value leases (where leases have a value less than £5,000 or term less than 12 months) continue to be charged to the income statement on a straight-line basis over the lease term.
Leases are discounted at the company's incremental borrowing rate at inception of each lease.
Except as detailed below the directors believe that the carrying amounts of financial assets carried at amortised cost in the financial statements approximate to their fair values.
Details of the company's subsidiaries at 31 December 2024 are as follows:
Registered office addresses (all UK unless otherwise indicated):
The Directors consider that the carrying amount of trade and other receivables is approximately equal to their fair value. Included within trade receivables are undiscounted EdAid receivables of £9,856 (2023: £12,756). EdAid receivables are governed by a formal credit agreement facilitated by a third party. Some of the amounts receivable are subject to interest income which is charged at the official rate of RPI inflation. There is a discounted financing agreement implicit in the revenue recognition under IFRS 15, which has been calculated using an estimated discount rate of 7%. The cumulative discount recognised and not yet unwound as at the year end is £nil (2023: £Nil). In addition, trade receivables includes £134,904 (2023: £129,279) due from StepEx under a future earnings agreement. Management make an estimate as to the individual’s future salary and accordingly recognise a receivable capped at the standard course fee, although there may be scope for certain individuals to pay fees in excess of this cap over the lifetime of the repayment term which is recognised as received.
The Company applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss provision for trade receivables and contract assets. To measure expected credit losses on a collective basis, trade receivables and contract assets are grouped based on similar credit risk and ageing. The contract assets have similar risk characteristics to the trade receivables for similar types of contracts.
The average credit period given on sales (except for those sales party to student finance arrangements with StepEx or EdAid) is 30 days. The expected loss rates are based on the historical credit losses experienced by the Company. The Company has taken the exemption under FRS 101 to not present an analysis of its expected credit losses and associated credit risks.
Amounts owed by group undertakings relate to amounts due from Northcoders Tech Returners Limited.The company recognises interest income on amounts owed by fellow group undertakings at a rate of 3.9%. The balance is unsecured and has no fixed date of repayment. Northcoders Tech Returners Limited ceased trading activity during 2023.
The company has the following borrowings at 31 December 2024:
A Creative England loan on which undiscounted amounts of £nil (2023: £40,237) are due, and which has an interest rate of 11%. The loan is carried at £nil (2023: £39,664) in the financial statements. The loan is secured by way of a fixed and floating charge over all assets of Northcoders Limited.
A second Creative England loan taken out during 2022, on which undiscounted amounts of £343,750 (2023: £608,824) are due, and which has an interest rate of 11%. The loan is carried at £336,075 (2023: £513,017) in the financial statements. The loan is secured by way of a fixed and floating charge over all assets of the company.
A North of Tyne loan was taken out during the prior year with an interest rate of 6.5%, which has undiscounted cashflows of £121,172 and which is carried at £114,583 (2023: £177,083) in the financial statements. The loan is secured by way of a fixed and floating charge over all assets of the company.
Amounts owed to parent undertaking are unsecured, bear interest at a rate of 3.9% and have no fixed date of repayment.
Lease liabilities are classified based on the amounts that are expected to be settled within the next 12 months and after more than 12 months from the reporting date, as follows:
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon during the current and prior reporting period.
In the current year, deferred tax balances have been presented on an offset basis, on the grounds that all balances automatically unwind against each other within a few years of the reporting date.
The adjustment to prior year balances reflects two factors:
1. The correction of a mathematical calculation of tax losses in the prior year.
2. The omission of amendments to IAS 12 'Income Taxes' in respect of lease assets and liabilities.
Both changes are immaterial to the financial statements and have therefore been processed as an adjustment to the current year only.
The Company has estimated tax losses carried forward of £1,406,000 (2023 - £895,540), which are all recognised as a deferred tax asset. The losses do not expire.
At the balance sheet date, an amount of £45,366 (2023: £46,310) was payable to the scheme and is included within 'other payables'.
This reserve represents cumulative expense over the vesting period relating to the share-based payment awards settled by the parent company, Northcoders Group Plc.
No disclosure is provided by virtue of the exemptions offered by FRS 101.
Other information
The Company has taken advantage of the exemption available in FRS 101 whereby it has not disclosed transactions with the ultimate parent company or any wholly owned subsidiary undertaking of the group, which would otherwise be required by IAS 24 'Related party disclosures'.