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Registered number: 03841479
ETEACH UK LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2021
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COMPANY INFORMATION
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CLA Evelyn Partners Limited
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Chartered Accountants & Statutory Auditor
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CONTENTS
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Directors' Responsibilities Statement
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Independent Auditor's Report
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Statement of Comprehensive Income
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Statement of Changes in Equity
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Notes to the Financial Statements
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STRATEGIC REPORT
FOR THE YEAR ENDED 31 OCTOBER 2021
The directors present the Strategic Report of the Company for the year ended 31 October 2021.
Principal activities
The principal activity of the Company continued to be that of the provision of specialist software, recruitment and advertising services for the education sector. The Company works with over 7,500 schools and colleges to deliver recruitment solutions which combine leading technology with sector knowledge and experience. The Company finds clients the right solution to deliver the best candidates and recruitment outcomes quickly, easily and cost effectively. Whilst there has been continued investment in, and development of, each of the Company’s key service areas there have been no changes in the Company's principal activities in the year under review.
Business review
Our financials reflect the success of our operating strategies as shown by profitability growth. The directors consider that the key performance indicators of the group are earnings before interest, taxation, depreciation and amortisation (EBITDA), School and College licence sales and renewals, candidate traffic and outstanding website performance.
The Company’s preferred measure of true profitability – EBITDA – was £1,266,902 (2020 - £1,037,262) for the year. Eteach UK Limited’s profit and loss account shows turnover for the year of £7,599,828 (2020 - £7,451,199), and operating profit attributable to the Company of £476,961 (2020 - £91,949). The year-on-year improvement in operating profit is largely due to increased efficiency across all teams with an emphasis on customer service leading to further increased licence renewals across the customer base. In addition, the Company has maintained its financial discipline by reducing overhead costs. The Company has continued improving and upgrading our products and maintained investment in the development of our websites.
Eteach offers our clients a range of products, constantly adapting to the changing landscape of the education sector to ensure we offer an excellent, cost-effective solution, coupled with the latest innovative technology to help our customers make the best recruitment decisions.
Our strategy incorporates not only solutions for our customers, but assistance to our candidates by encouraging them to be proactive in their job search through providing free, immediate access to great jobs, easy-to-use online tools, resources and career advice. We also foster an international community of teachers through our site as well as social media, blogs and regular newsletters. We continue to deliver an excellent customer focussed service, which is demonstrated in our licence product client renewal rates which continue to remain in excess of 95% as in prior years.
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STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2021
Candidate statistics
∙Over 2.3 million total candidates registered at end of October 2021 (2020 - 2.1 million)
∙More than 129,000 new candidates registered in the year (2020 - 95,000)
∙Visitors to our websites came from over 235 countries in the year (2020 - 229)
∙Organic traffic has grown on the new website to 45% (2020 - 43%)
∙Mobile traffic is growing and now above 61% (2020 - 57%)
Website performance
∙We advertised over 50,300 jobs on our website (2020 - 51,000)
∙7,500 schools advertised with us in the year (2020 - 7,500)
∙We have in excess of 8.7 million (2020 - 7.4 million) users and 29.6 million page views (2020 - 27 million)
Eteach has invested to strengthen its senior management and sales teams and with an experienced workforce and trusted partners positioned worldwide, the directors consider that Eteach is well-positioned to continue with its organic mode of growth.
The directors have decided not to declare a dividend in favour of reinvesting this year’s profits in the business to maximise potential and will utilise cash for future growth plans.
Principal risks and uncertainties
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The Company’s sole credit risk relates to its trade debtors. As well as ensuring Multi Academy Trust's, Local Authority's and individual schools adhere to the Government’s published payment term policies, the Company operates a robust credit control procedure whereby payments received are matched against client receivables daily. Our collection procedures incorporate regular contact with our debtors to ensure timely payment is received, and prompt action is initiated when necessary. Cash flow is closely monitored, and effective controls are in place to ensure sufficient funds are always available. The Company manages strategic and commercial risks through an ongoing systems development programme, to maintain and enhance its competitive market position and comprehensive technical platform. Operational and other financial risks and uncertainties are actively managed by regular management review of financial performance, client and candidate activity.
This report was approved by the board and signed on its behalf.
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DIRECTORS' REPORT
FOR THE YEAR ENDED 31 OCTOBER 2021
The directors present their report and the financial statements for the year ended 31 October 2021.
The profit for the year, after taxation, amounted to £476,961 (2020 - £153,153).
No dividends were paid or proposed during the year (2020 - £Nil).
The directors who served during the year were:
D A S Burn (resigned 30 September 2021)
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I Weideman (appointed 30 September 2021)
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Matters covered in the Strategic Report
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Where necessary, disclosures relating to future developments have been made in the Strategic Report and have not been repeated here in accordance with Section 414C of the Companies Act 2006.
Disclosure of information to auditor
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Each of the persons who are directors at the time when this Directors' Report is approved has confirmed that:
∙so far as the director is aware, there is no relevant audit information of which the Company's auditor is unaware; and
∙the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company's auditor is aware of that information.
The auditor, CLA Evelyn Partners Limited, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 OCTOBER 2021
The directors are responsible for preparing the Strategic Report, the Directors' Report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Company's financial statements and then apply them consistently;
∙make judgements and accounting estimates that are reasonable and prudent; and
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ETEACH UK LIMITED
Opinion
We have audited the financial statements of Eteach UK Limited (the 'Company') for the year ended 31 October 2021 which comprise the Statement of Comprehensive Income, the Balance Sheet, the Statement of Changes in Equity and the 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 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 October 2021 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
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.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ETEACH UK LIMITED (CONTINUED)
Other information
The other information comprises the information included in the Annual Report and financial statements, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information contained within the Annual Report and financial statements. 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.
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Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Strategic Report and the Directors’ Report for the financial 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.
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Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors’ Report.
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We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
∙adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
∙the financial statements are not in agreement with the accounting records and returns; or
∙certain disclosures of directors’ remuneration specified by law are not made; or
∙we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the Directors’ Responsibilities Statement set out on page 4, 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.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ETEACH UK LIMITED (CONTINUED)
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
We obtained a general understanding of the company’s legal and regulatory framework through enquiry of management concerning their understanding of relevant laws and regulations and the entity’s policies and procedures regarding compliance.
We understand the company complies with requirements of the framework through:
∙Updating operating procedures, manuals and internal controls as legal and regulatory requirements change;
∙The Directors’ close involvement in the day-to-day running of the business, meaning that any litigation or claims would come to their attention directly.
In the context of the audit, we considered those laws and regulations which determine the form and content of the financial statements, which are central to the company’s ability to conduct business and where failure to comply could result in material penalties. We have identified the following laws and regulations as being of significance in the context of the company;
∙The Companies Act 2006 and FRS 102 in respect of the preparation and presentation of the financial statements.
The senior statutory auditor led a discussion with senior members of the engagement team regarding the susceptibility of the entity’s financial statements to material misstatement, including how fraud might occur. The key areas identified as part of the discussion were with regard to the manipulation of the financial statements through manual journals and incorrect recognition of revenue.
The procedures carried out to gain evidence in the above areas included;
∙Testing of revenue transactions to underlying documentation; and
∙Testing of manual journal entries, selected based on specific risk assessments applied based on the client processes and controls surrounding manual journals; and
∙Discussions with management and those charged with governance, including consideration of known or suspected instances of non-compliance with laws and regulations and fraud.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: 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.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ETEACH UK LIMITED (CONTINUED)
Nicholas Jacques (Senior Statutory Auditor)
for and on behalf of
CLA Evelyn Partners Limited
Chartered Accountants
Statutory Auditor
45 Gresham Street
London
EC2V 7BG
2 August 2022
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STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 OCTOBER 2021
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Interest receivable and similar income
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Profit for the financial year
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There was no other comprehensive income for 2021 (2020 - £Nil).
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The notes on pages 12 to 26 form part of these financial statements.
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ETEACH UK LIMITED
REGISTERED NUMBER:03841479
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BALANCE SHEET
AS AT 31 OCTOBER 2021
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Provisions for liabilities
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The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 12 to 26 form part of these financial statements.
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STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 OCTOBER 2021
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Comprehensive income for the year
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Comprehensive income for the year
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2021
Eteach UK Limited is a private company, limited by shares, domiciled and incorporated in England and Wales (registered number: 03841479). The registered office address is 1 Arlington Square, Downshire Way, Bracknell, RG12 1WA.
2.Accounting policies
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Basis of preparation of financial statements
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The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the Company's accounting policies (see note 3).
The following principal accounting policies have been applied:
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Financial reporting standard 102 - reduced disclosure exemptions
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The Company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
∙the requirements of Section 7 Statement of Cash Flows;
∙the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);
∙the requirements of Section 33 Related Party Disclosures paragraph 33.7.
This information is included in the consolidated financial statements of The Eteach Group Limited as at 31 October 2021 and these financial statements may be obtained from Companies House.
The financial statements have been prepared on a going concern basis. The Company made a profit of £476,961 (2020 - £153,153) for the year ended 31 October 2021 and had net assets of £1,968,745 (2020 - £1,491,784) at the balance sheet date.
The financial statements have been prepared on a going concern basis. The results for the Company shows a positive EBITDA for the year. The directors have assessed, based on current projections, including considering the potential impact of the COVID-19 pandemic, that there is reasonable assurance the Company will have adequate resources to meet the on-going costs of the business for a minimum of 12 months from the date of signing the financial statements.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2021
2.Accounting policies (continued)
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Foreign currency translation
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Functional and presentation currency
The Company's functional and presentational currency is GBP.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.
Foreign exchange gains and losses are presented in profit or loss within 'administrative expenses'.
Turnover represents the total invoice value excluding value added tax, of sales made during the year and derives from the provision of goods falling within the Company's ordinary activities. The two principal classes of turnover are as follows:
∙Provision of recruitment services for the education sector; turnover is recognised when the services are provided to the customer. Permanent revenue is recognised on start date of the candidate and temporary revenue is recognised based on approved time sheets. Amounts not yet invoiced are included in accrued income in the Balance Sheet; and
∙Subscription revenue is recognised on a straight-line basis over the term of the contract. Turnover not recognised in profit or loss is classified as deferred income in the Balance Sheet.
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Operating leases: the Company as lessee
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Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.
Government grants are recognised based on the accrual model and are measured at the fair value of the asset received or receivable. Grants are classified as relating either to revenue or to assets. Grants relating to revenue are recognised in 'other operating income' over the period in which the related costs are recognised. A grant that becomes receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the entity with no future related costs is recognised in 'other operating income' in the period in which it becomes receivable.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2021
2.Accounting policies (continued)
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Intangible assets - website development costs
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Website development costs are charged to profit or loss in the year of expenditure, unless individual projects satisfy all of the following criteria:
a)the project is clearly defined and related expenditure is separately identifiable;
b)the project is technically feasible and commercially viable;
c)current and future costs are expected to be exceeded by future sales; and
d)adequate resources exist for the project to be completed.
In such circumstances, the costs are capitalised and treated as an intangible fixed asset and amortised over a period of three years, commencing in the period the Company starts to benefit from the expenditure. Expenditure incurred on maintaining websites and expenditure incurred on developing website used only for advertising and promotional purposes is written off as incurred.
The expected useful economic life of development costs is estimated based on the business plans which set out the development plan and time to market the associated project.
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2021
2.Accounting policies (continued)
Defined contribution pension plan
The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.
The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Balance Sheet. The assets of the plan are held separately from the Company in independently administered funds.
A liability is recognised to the extent of any unused holiday pay entitlement which has accrued at the balance sheet date and carried forward to future periods. This is measured at the undiscounted salary cost of the future holiday entitlement so accrued at the balance sheet date.
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Provisions for liabilities
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Provisions are made where an event has taken place that gives the Company a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.
Provisions are charged as an expense to profit or loss in the year that the Company becomes aware of the obligation, and are measured at the best estimate at the balance sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties.
When payments are eventually made, they are charged to the provision carried in the Balance Sheet.
Financial assets and financial liabilities are recognised in the Balance Sheet when the Company becomes a party to the contractual provisions of the instrument.
Trade and other debtors and creditors are classified as basic financial instruments and measured on initial recognition at transaction price. Debtors and creditors are subsequently measured at amortised cost using the effective interest rate method. A provision is established when there is objective evidence that the Company will not be able to collect all amounts due.
Cash and cash equivalents are classified as basic financial instruments and comprise cash in hand and at bank, short-term bank deposits with an original maturity of three months or less and bank overdrafts which are an integral part of the Company’s cash management.
Financial liabilities and equity instruments issued by the Company are classified in accordance with the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2021
2.Accounting policies (continued)
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Current and deferred taxation
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The tax expense for the year comprises current and deferred tax. Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the Company operates and generates income.
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the balance sheet date, except that:
∙The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and
∙Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.
Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2021
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Judgements in applying accounting policies and key sources of estimation uncertainty
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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 directors consider that the following judgements have had the most significant effect on amounts recognised in the financial statements:
Leases
Determine whether leases entered into by the Company either as a lessor or lessee are operating or finance leases. These decisions depend on an assessment of whether the risks and rewards of ownership have been transferred from the lessor to the lessee on a lease by lease basis.
Impairment of fixed assets
Determine whether there are indicators of impairment of the Company's tangible and intangible fixed assets. Factors taken into consideration in reaching such decision include the economic viability and expected future financial performance of the asset.
The directors consider that the key sources of estimation uncertainty in preparing the financial statements are:
Intangible fixed assets
Intangible fixed assets are amortised over their useful lives taking into account residual values, where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors. In re-assessing asset lives, factors such as technological innovation product life cycles and maintenance programmes are taken into account. Residual value assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal values.
Intangible asset recognition
Website development costs are charged to profit or loss in the year of expenditure unless individual projects satisfy certain criteria. Costs are typically made up of salaries and benefits and third-party service fees. When assessing whether website development costs meet the asset recognition criteria, management considers factors including the related sales and profit projections, market forecasts and historical experience.
Tangible fixed assets
Tangible fixed assets are depreciated over their useful lives taking into account residual values, where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors. in re-assessing asset lives, factors such as technological innovation, product life cycles and maintenance programmes are taken into account. Residual value assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal value.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2021
3.Judgements in applying accounting policies (continued)
Impairment of debtors
The Company makes an estimate of the recoverable value of trade and other debtors. When assessing the impairment of trade and other debtors, management considers factors including the current credit rating of the debtor, the ageing profile of debtors and historical experience. See note 13 for the net carrying amount of the debtors and associated impairment provision.
The whole of the turnover is attributable to the principal activity.
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All turnover arose within the United Kingdom.
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Government grants receivable
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In 2021, Government grants of £56,067 (2020 - £117,084) were received under the Coronavirus Job Retention Scheme as part of a Government initiative to provide immediate financial support as a result of the COVID-19 pandemic to reimburse the Company for 80% of the wages of certain employees who were placed on a temporary period of absence but were kept on the payroll.
There are no future related costs in respect of these grants which were received solely as compensation for costs incurred in the year.
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The operating profit is stated after charging:
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Other operating lease rentals
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Amortisation of intangible fixed assets
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Depreciation of tangible fixed assets
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2021
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Fees payable to the Company's auditor and its associates for the audit of the Company's annual financial statements
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The Company has taken advantage of the exemption not to disclose amounts paid for non-audit services as these are disclosed in the group accounts of the parent company.
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Staff costs, including directors' remuneration, were as follows:
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Cost of defined contribution scheme
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The average monthly number of employees, including the directors, during the year was as follows:
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The employees disclosed above are employed by a fellow subsidiary, Eteach Group Services Limited. All staff costs incurred by the fellow subsidiary are recharged to Eteach UK Limited in the current and prior year.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2021
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The highest paid director received remuneration of £120,000 (2020 - £317,848).
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The value of the Company's contributions paid to a defined contribution pension scheme in respect of the highest paid director amounted to £Nil (2020 - £Nil).
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There were no directors in the Company's defined contribution pension scheme during the year (2020 - Nil).
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Current tax on profits for the year
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Adjustments in respect of previous periods
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Origination and reversal of timing differences
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Taxation on profit/(loss) on ordinary activities
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2021
10.Taxation (continued)
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Factors affecting tax credit for the year
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The tax assessed for the year is lower than (2020 - lower than) the standard rate of corporation tax in the UK of19% (2020 -19%). The differences are explained below:
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Profit on ordinary activities before tax
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Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2020 - 19%)
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Expenses not deductible for tax purposes
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Adjustment in R&D tax credit
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Adjustment to deferred tax opening and closing average rate
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Deferred tax not recognised
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Adjustments to tax charge in respect of previous year
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Adjustment to brought forward values
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Total tax charge for the year
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Factors that may affect future tax charges
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The Company has approximately £928,995 (2020 - £928,995) of tax losses available for offset against future trading profits from a previously acquired trade, subject to agreement by HM Revenue and Customs.
Finance Bill 2021 includes legislation to increase the main rate of corporation tax from 19% to 25% from 1 April 2023. These changes are not included above as Finance Bill 2021 was not substantively enacted by the year end.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2021
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Website development costs
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2021
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Computer equipment and software
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Amounts owed by group undertakings
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Prepayments and accrued income
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Corporation tax recoverable
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2021
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Cash and cash equivalents
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There is a fixed and floating charge over the Company's assets as security for the bank.
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Creditors: Amounts falling due within one year
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Other taxation and social security
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Accruals and deferred income
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Charged to profit or loss
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The deferred tax asset is made up as follows:
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Accelerated capital allowances
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Tax losses carried forward
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2021
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Allotted, called up and fully paid
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1 Ordinary share of £1.00
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Profit and loss account
This reserve relates to the cumulative retained earnings less amounts distributed to shareholders.
The Company operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the Company in an independently administered fund. The pension cost charge represents contributions payable by the Company to the fund and amounted to £77,402 (2020 - £85,845). Contributions totalling £664 (2020 - £2,145) were payable to the fund at the reporting date.
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Commitments under operating leases
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At 31 October the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:
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Later than 1 year and not later than 5 years
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2021
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Related party transactions
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The Company has taken advantage of the exemption in FRS 102 Section 33.1A to not disclose transactions with wholly owned group entities.
At 31 October 2021, an amount of £1,083,650 (2020 - £824,060) was owed by J P Howells, a director of the Company. No interest is charged on advances made to or on the balance owed by the director at the year end.
During the year, three family members of J P Howells, received remuneration totalling £227,572 (2020 - £290,414).
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The immediate and ultimate parent undertaking is The Eteach Group Limited, a company registered in England and Wales.
The largest and smallest group of undertakings for which group accounts for the year ended 31 October 2021 have been drawn up, is that headed by The Eteach Group Limited. The registered office address of The Eteach Group Limited is 1 Arlington Square, Downshire Way, Bracknell, RG12 1WA. Copies of the group accounts are available from Companies House.
The ultimate controlling party is J P Howells, by virtue of their shareholding and directorship in the ultimate parent undertaking.
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