STEM_Learning_Limited - Accounts

The Directors present the strategic report for the year ended 31 July 2020.

Supported by – and in partnership with – Government, learned bodies, charitable trusts and employers, STEM Learning is dedicated to raising young people’s engagement and achievement in STEM (Science, Technology, Engineering and Maths) subjects. It is the largest provider of STEM education and careers support in the UK. It is world class at translating research, scientific expertise and pedagogical knowledge into practice at scale to:

• develop and support the expertise of teachers and school and college leaders

• inspire groups and communities

• engage employers and industry.

Despite the effects of the COVID-19 pandemic, the organisation continued to expand – reaching into every school and FE college in the UK. In addition to transformational residential CPD at the National STEM Learning Centre, a further 27,500 teachers engaged with local, high-quality STEM-specific CPD, including 12,500 teachers who engaged with our newly developed remote CPD offer during COVID-19 school closures. Almost 280,000 UK-based teachers are registered with stem.org.uk to receive support. In the year, 71,000 teachers downloaded quality-assured, curriculum-linked teaching and career resources; and more than 39,000 STEM Ambassador volunteers, representing around 7,000 employers, took part in 31,000 activities with schools, colleges and other young people’s groups.

Other achievements during the year:

• made a difference where most needed – we worked with 200 schools in some of the UK’s most disadvantaged communities. By supporting classroom teachers and facilitating links with local communities, we increased both uptake and resulting grades of GCSEs in STEM subjects

• certified over 1,000 additional teachers competent to teach computing science – in our first full year as lead of the National Centre for Computing Education we scaled up significantly to reach 9,784 schools

• in January 2020, we introduced STEM Certificates – formally recognising the contribution of teachers and STEM Ambassadors to STEM education in the UK and the young people they work with. This successful initiative saw engagement almost double that of industry standards. In August, we celebrated our 20,000th certificate

• made lasting step-change improvements in STEM education through scaled-up, tailored in-school support. We targeted CPD and resources in 44 locations throughout the UK, providing subject expertise to meet the needs of individual funders and the schools they support

• sprang into action to address urgent needs of teachers, parents and young people as a result of COVID-19. Within three weeks, we moved our face-to-face CPD to remote delivery, created home-learning web pages with free content, developed online lessons for science and computing across all key stages, and put in place infrastructure to support virtual STEM Ambassador activities. 

The company activities and related income streams are reflected in the financial results for the year ended 31 July 2020, as summarised below:

The net profit for the year is due to the finalisation of the 2018 USS pension valuation. This led to a change in agreed pension deficit contribution rates, resulting in the pension provision decreasing to £3.01 million (2019: £4.48 million). The underlying trading profit for the year is £Nil (2019: £215k).

The cash flow statement shows a net cash inflow from operating activities of £5,416k during the year ended 31 July 2020. Cash forecasts for future periods show that the company will retain adequate cash balances to enable it to trade and perform its activities normally.

Overall, programmes continue to cover their costs. Over the next 4 years, the company has planned a small profit in order to protect against contractual risks.

The company continues to adhere to a deficit reduction plan for the USS pension scheme, agreed by member institutions in September 2019. These accounts provide for STEM Learning’s share of the total scheme deficit of £3.6 billion.

To comply with FRS102 reporting requirements, adjustments to the trading accounts are made to recognise the USS pension deficit and provide for unused holiday pay taken at 31 July 2020. The size of the pension deficit puts the company in a negative reserves position.

Extract of our KPIs

*There have been an additional 30,000 non-UK online CPD days worth of CPD.

STEM Learning has a measurable impact. By investing in teachers, we maximise our economic benefit as each teacher teaches thousands of young people over their career. We adopt a double-bottom-line approach when evaluating progress, putting financial results and KPI data alongside the impact on UK STEM education and economy.

In the last year STEM Learning engaged with 176,200 teachers and influenced over 12.3 million young people. With this reach, the positive impact on the UK economy is £218 million – a multiple of 6.7 times the joint turnover of STEM Learning and the ENTHUSE Trust. This is a conservative calculation based on the following estimated impacts:

Impact of STEM Careers            £175 million

The UK suffers from low productivity caused in part due to skills shortages. Evidence shows schools which engage with STEM Learning see improved pupil outcomes – with more students achieving science GCSE and A levels – and a better understanding of the depth and breadth of STEM-related careers. For each additional young person who follows a STEM career, £2.5m of economic value is added.

Impact of increased teacher retention     £23 million

Becoming a great teacher takes time and experience but the UK has a high turnover of teaching staff and many young teachers. The cost to recruit and train a teacher is, on average, £23k. Evidence shows teachers are 160% more likely to remain in the profession following engagement with STEM Learning subject-specific CPD due to increased confidence, motivation and wellbeing – important at a time of challenging STEM teacher shortages, while also enabling more young people to benefit from experienced and effective teachers.

Impact of reduced NEETs             £20 million

Evidence shows the positive impact of high-quality teaching is disproportionally higher with disadvantaged pupils – those who are at greater risk of becoming NEET (Not in Education, Employment or Training). STEM Learning CPD is proven to improve teaching quality. The average cost to society of each young person who experiences a period of being NEET is £235k.

STEM Learning has a good understanding of its operating environment. Its risk management infrastructure is mature and independently proven to be effective while enabling the organisation to respond rapidly to challenges. Strong financial control systems are in place and the organisation continues to operate within available funding. The Directors believe that the company remains financially sound with confirmed support from new and some existing funders. Resource is focused on the reduction of funding risk through diversification and the integration of new programmes of STEM support.

The most significant risks faced by STEM Learning include: continuity of revenue – COVID-19 may result in austerity, alongside a reliance on short and fixed-term funding; mission creep, resulting in a sub-optimal offer; failure to achieve and demonstrate impact, resulting in not knowing if we are achieving our mission or allocating resources effectively; unforeseen shocks to business continuity; risks of compliance – such as cyber security and fraud that significantly threaten going concern; failure to innovate and exploit opportunities, wasting the potential of our resources and opportunity to improve STEM education. These risks have been specifically identified for regular scrutiny by internal audit. Risks have been mitigated to an acceptable level through the trusted reputation with schools and funders and evidence of impact.

By order of the board

The Directors present their annual report and financial statements for the year ended 31 July 2020.

To support high-quality Science Technology Engineering and Mathematics (STEM) education, which is a priority for the country’s technological, social and economic future and will be critical for the UK to deliver its Industrial Strategy, recover from the effects of COVID-19 and thrive post-Brexit. There is an ongoing need to provide STEM professional development for teachers and technicians and to support employers and schools to ensure young people have the knowledge and skills they need to participate fully as the creators and citizens of tomorrow.

Because STEM Learning has a significant presence within the STEM sector the Directors have voluntarily applied the six principles of Wates Corporate Governance, as follows:

The Directors who held office during the year and up to the date of signature of the financial statements were as follows:

The results for the year are set out on page 14. There are no dividends to declare.

Saffery Champness LLP have expressed their willingness to continue in office.

The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with 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;

•     state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;

•     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.

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.

We have audited the financial statements of STEM Learning Limited (the 'company') for the year ended 31 July 2020 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and 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 FRS 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 2020 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 Auditor's 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

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:

• the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

• the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Other information

The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

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 there is a material misstatement in the financial statements or a material misstatement of the other information. 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.

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 and the directors' report.

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.

As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the 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.

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: http://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.

The profit and loss account has been prepared on the basis that all operations are continuing operations.

STEM Learning Limited is a private company limited by shares incorporated in England and Wales. The registered office is National STEM Learning Centre, University of York, Heslington, York, YO10 5DD.

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £'000.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

Although the company has net liabilities of £true2,688k the Directors have prepared forecasts and sensitivities for a period of at least 12 months from the date of approval of these financial statements which show that the company can meet its financial liabilities as they fall due. The company has a strong cash position of £8,839k at 31 July 2020. The net liabilities position stated is after the defined benefit scheme pension deficit of £3,010k, this has decreased in the year as a result of a change in the agreed pension deficit contribution rates. The forecasts prepared by the Directors reflect the increased pension contributions, and the company is expected to maintain a positive cash position over the course of the next 12 months. Therefore, at the time of approving the financial statements, the Directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future and the Directors continue to adopt the going concern basis of accounting in preparing the financial statements.

In addition, the company has responded positively to new challenges associated with the COVID-19 pandemic.  Scenarios have been produced to model the impact on its CPD programme, and the company has expanded its offer to include remote and blended CPD.  The Directors consider that this approach minimises the risk of any short term reduction in course fee income over the remainder of 2020.

Turnover represents amounts receivable for services net of VAT and trade discounts and grants receivable, which are treated in accordance with accounting policy 1.13.

Revenue is recognised to the value of the work completed on contracts. Funding claims may be made for a higher value, with the agreement of the funder, and represents the reimbursement for costs incurred plus a payment on account to be held as deferred income. The funder expects the full value of costs to be incurred over the life of the contract.

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation 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 credited or charged to profit or loss.

At each reporting period end date, the company reviews the carrying amounts of its tangible 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.

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

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.

Basic financial assets, which include debtors, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

Basic financial liabilities, including creditors, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Other financial liabilities, including debt instruments that do not meet the definition of a basic financial instrument, are measured at fair value through profit or loss.

Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.

Debt instruments may be designated as being measured at fair value though profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs.

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

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 company participates in the Universities Superannuation Scheme (USS), a defined benefit scheme which is contracted out of the State Second Pension (S2P). The assets of the scheme are held in a separate trustee-administered fund. Because of the mutual nature of the scheme, the scheme's assets are not hypothecated to individual institutions and a scheme-wide contribution rate is set. The company is therefore exposed to actuarial risks associated with other institutions' employees and is unable to identify its share of the underlying assets and liabilities of the scheme on a consistent and reasonable basis and therefore, as required by Section 28 of FRS 102 "Employee benefits", accounts for the scheme as if it were a defined contribution scheme.

As a result, the amount charged to the income and expenditure account represents the contributions payable to the scheme in respect of the accounting period. Since the company has entered into an agreement (the Recovery Plan that determines how each employer within the scheme will fund the overall deficit), the institution recognises a liability for the contributions payable that arise from the agreement to the extent that they relate to the deficit and the resulting expense in the income and expenditure account. The liability for the recovery plan is recognised at fair value.

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.

Grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.

Grants relating to turnover are recognised as income over the periods when the related costs are incurred. Grants relating to an asset are recognised in income systematically over the asset's expected useful life. If part of such a grant is deferred it is recognised as deferred income rather than being deducted from the asset's carrying amount.

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.

The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.

FRS 102 makes the distinction between a Group Plan and a multi-employer scheme. A Group Plan consists of a collection of entities under common control typically with a sponsoring employer. A multi-employer scheme is a scheme for entities not under common control and represents (typically) an industry-wide scheme such as that provided by USS. The accounting for a multi-employer scheme where the employer has entered into an agreement with the scheme that determines how the employer will fund a deficit results in the recognition of a liability for the contributions payable that arise from the agreement (to the extent that they relate to the deficit) and the resulting expense is recognised in profit or loss. The directors are satisfied that the scheme provided by USS meets the definition of a multi-employer scheme and has therefore recognised the discounted fair value of the contractual contributions under the funding plan in existence at the date of approving the financial statements.

An analysis of the company's turnover is as follows:

The average monthly number of persons (including directors) employed by the company during the year was:

Their aggregate remuneration comprised:

Included in wages and salaries are amounts relating to temporary staff costs, training and other people related costs of £215,293 (2019: £278,073).

Included in pensions costs is a £1,541,036 gain (2019: £3,104,833 loss) in relation to the defined benefit pension scheme.

The number of directors for whom retirement benefits are accruing under defined benefit schemes amounted to 1 (2019 - 1).

The number of directors who received remuneration for qualifying services during the year amounted to 3 (2019 - 3)

Investment income includes the following:

The actual charge for the year can be reconciled to the expected charge/(credit) for the year based on the profit or loss and the standard rate of tax as follows:

There is an unrecognised deferred tax asset of £571,867 in relation to short-term timing differences.

Capital grants represent contributions received towards expenditure on fixed assets. These are credited to the profit and loss account by instalments over the expected useful economic life of the related asset to match the depreciation charge. They do not represent an obligation on the company to make a payment to a third party.

The company participates in the Universities Superannuation Scheme (the scheme). Throughout the current and preceding periods, the scheme was a defined benefit only pension scheme until 31 March 2016 which was contracted out of the State Second Pension (S2P).

The assets of the scheme are held in a separate trustee-administered fund. Because of the mutual nature of the scheme, the scheme’s assets are not hypothecated to individual institutions and a scheme-wide contribution rate is set. The institution is therefore exposed to actuarial risks associated with other institutions’ employees and is unable to identify its share of the underlying assets and liabilities of the scheme on a consistent and reasonable basis and therefore, as required by Section 28 of FRS 102 “Employee benefits”, accounts for the scheme as if it were a defined contribution scheme.

The obligation to fund the past deficit on the Universities Superannuation Scheme (USS) arises from the contractual obligation with the USS to deficit payments in accordance with the deficit recovery plan. In calculating this provision, management have estimated future staff levels within the USS scheme for the duration of the contractual obligation and salary inflation. Key assumptions are set out below.

As a result, the amount charged to the income and expenditure account represents the contributions payable to the scheme in respect of the accounting period. Since the institution has entered into an agreement (the Recovery Plan that determines how each employer within the scheme will fund the overall deficit), the institution recognises a liability for the contributions payable that arise from the agreement to the extent that they relate to the deficit and the resulting expense in the income and expenditure account.

The total gain/cost charged to the profit and loss account is £1,470,251 gain (2019: £4,207,202 cost) as shown in note 5.

Deficit recovery contributions due within one year for the institution are £140,000 (2019: £117,000).

The latest available complete actuarial valuation of the Retirement Income Builder is at 31 March 2018 (“the valuation date”), which was carried out using the projected unit method.

A valuation as at 31 March 2020 is underway but not yet complete.

Since the institution cannot identify its share of USS Retirement Income Builder (defined benefit) assets and liabilities, the following disclosures reflect those relevant for the scheme as a whole.

The 2018 valuation was the fifth valuation for the scheme under the scheme-specific funding regime introduced by the Pensions Act 2004, which requires schemes to adopt a statutory funding objective, which is to have sufficient and appropriate assets to cover their technical provisions. At the valuation date, the value of the assets of the scheme was £63.7 billion and the value of the scheme’s technical provisions was £67.3 billion indicating a shortfall of £3.6 billion and a funding ratio of 95%.

Defined benefit liability numbers for the scheme have been produced using the assumptions shown below:

The assets and liabilities of the scheme as a whole are:

Scheme assets £63.7bn (2019: £60.0bn)

Total scheme liabilities £67.3bn (2019: £67.5bn)

FRS102 total scheme deficit £3.6bn (2019: £7.5bn)

Assumed life expectations on retirement at age 65:

A new deficit recovery plan was put in place as part of the 2018 valuation, which requires payment of 2% of salaries over the period 1 October 2019 to 30 September 2021 at which point the rate will increase to 6%. The 2020 deficit recovery provision reflects this plan.

Amounts recognised in the profit and loss account of STEM Learning Limited

The amounts included in the balance sheet arising from the company's obligations in respect of defined benefit plans are as follows:

Movements in the present value of defined benefit obligations

At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

Amounts contracted for but not provided in the financial statements:

The remuneration of key management personnel, including the directors, is as follows.

During the year the company entered into the following transactions with related parties:

STEM Learning Limited occupies buildings owned by University of York for no charge.

The trustees of the ENTHUSE Charitable Trust include Rosemary Bailey and Ian Duffy who acted as directors of the company during the year.

Simon Chaplin who is a director of the company, was also a director of Wellcome Trust during the year.

In addition, the Wellcome Trust provided capital grants of £82,842 (2019: £229,155) in the year.

The following amounts were outstanding at the reporting end date:

The following amounts were outstanding at the reporting end date:

The company is under the control of the Universities of Leeds, Sheffield, York and Sheffield Hallam, who each own 25% of the share capital during the year.