ACCOUNTS - Final Accounts
ACCOUNTS - Final Accounts
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Registered number:
FOR THE YEAR ENDED 31 DECEMBER 2022
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ST GILES SCHOOLS OF LANGUAGES LIMITED
COMPANY INFORMATION
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ST GILES SCHOOLS OF LANGUAGES LIMITED
CONTENTS
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ST GILES SCHOOLS OF LANGUAGES LIMITED
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
The directors present the Strategic report and financial statements for the year ended 31 December 2022.
The 2022 Accounts demonstrated a strong recovery from the Covid 19 pandemic years. This was despite the difficult first quarter when the Omicron outbreak still depressed student demand for our courses by around -59% as compared with 2019. However, looking at 2022 student numbers as a whole, we were only down about -41% v 2019 but we were up +160% on 2021 figures.
Another pleasing factor is that even in 2021 the group was able to declare a respectable gross and net profit and the 2022 figures show substantial improvement on profitability as compared with 2021. The improvements in the financial performance during the past couple of years reflects the measures we took as a business to weather the covid storm. This involved closing our US operations in 2020, substantial cost cutting measures including centralising our bookings and accounting operations. We also reduced sales and marketing costs by cutting back on our overseas travel budgets and reducing printing and postage costs. This involved utilising more effectively on-line client meetings and on-line fairs/workshop attendance opportunities and increasing availability of downloadable brochures. This was achieved without sacrificing student or client satisfaction or growth. Sustainable but significant price increases were set whilst retaining our competitive position in the marketplace and this helped to improve margins in spite of inflationary pressures. We also improved accommodation margins by expanding residential options for our students, which also reflected the increasing demand away from homestay and towards residence hall options. The group was also able to successfully refinance our business by converting our CBILS government backed covid loans to a longer-term commercial loan which gave us significant cash flow gains and as part of this package we reduced our bank loans by over 20% as compared with EOY 2021 to reduce interest charges. We were pleased to avoid the necessity of directors’ loans which we had anticipated when we started 2022. Overall, the directors were pleased with the groups’ financial performance and entered 2023 with greater confidence. Technology and innovation The Group successfully upgraded its e-school facilities available to our students both before and during the whole length of their courses to enrich their learning experience and monitor their progress by outsourcing to a new provider. The Group also decided to outsource its payroll activities for all of its operations excluding Head Office staff, which is relatively manageable. This initiative has helped to reduce the pressure on our accounting team at relatively modest cost and has been implemented in a pretty seamless manner. Our people The increased centralisation announced during the Covid years has been a major factor in helping the organisation run more cost effectively. Nevertheless, the overall administration remains well below 2019. However, we have still had to increase the size of that team in order to cope with increased post-Covid demand. Fortunately, the increases in profitability have enabled us to reintroduce profit-related pay (PRP) for most of our long serving staff for 2023, and we are confident that this will continue. Staff recruitment has remained a major challenge and is leading to the Group being placed under pressure to raise salaries, although we have been able to price this into our fees increases. The Group has had to raise its budget for HR consultancy, administration and legal fees and expects this to continue for the foreseeable future. We continue to appreciate the flexibility and loyalty of our team, and have endeavoured to recognise this through our wage review policies.
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ST GILES SCHOOLS OF LANGUAGES LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
St Giles Schools of Languages is managed in a prudent and sustainable manner, minimising financial risk whilst providing a high level of funding for investment back into the business. The dividends paid to shareholders have always been determined after a careful consideration of the future financial needs of the Group and the policy of the Directors has been to fund new developments, including additional site and property acquisitions, from retained earnings. The Board suspended dividend payments during the Covid years, but now plans to reintroduce dividend payments from 2023. The principal risks and uncertainties facing the Group are described below. The company is forecasting that it will end 2023 on a continued growth path, both in terms of turnover and profitability.
Financial risk management objectives and policies There are a number of potential risks and uncertainties which could impact the Group's performance, and these are considered by the Board on a regular basis. The Group board and regional management teams consider the risks of all significant business decisions and changes in the external environment and in the Group's operations. The key risks affecting the business are as follows: Operating risk The Group's reputation and continued success depends on its ability to provide services which are valued by its clients. The Group regularly reviews the quality of its services both internally and through formalised client feedback and evaluation. Market risk The Group operates in a specialised market and seeks to maintain a competitive advantage by offering an appropriate and relevant service range and providing a high level of customer service from professional and dedicated staff. The Group keeps abreast of developments in the market through maintaining strong relationships with its clients. Personnel risk The Group is a privately owned business and places great emphasis on recruiting and training high quality staff. The directors consider staff resourcing and succession planning issues on a regular basis. Financial risk The Group is principally funded from retained profits and is reliant on converting these profits into cash. Financial monitoring, forecasting and planning are continuous processes and emphasis is placed on balancing maintenance or growth of profit margin against investment in resources to maintain delivery of a high quality of service to its customers. However, due to the pandemic, the Board secured a government backed CBILS loan in 2020 to manage its cashflow. In 2022, the Board agreed with its bankers to convert the existing CBILS loan into a 10-year commercial loan to reduce cashflow demands in the forthcoming year and beyond. Current trading and outlook As we approach the last quarter of 2023, the financial outlook looked more sanguine. Although Adult courses have not recovered to pre-Covid levels, there has been considerable growth since 2022 and the Juniors market has fully recovered. The Board was able to cut its bank loan by more than had been anticipated, and to finance a large expansion in its London Central residence hall, which are expected to enable the company to increase profitability on its accommodation provisions and lower interest charges.
This report was approved by the board on 31 August 2023 and signed on its behalf.
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ST GILES SCHOOLS OF LANGUAGES LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
The directors present their report and the financial statements for the year ended 31 December 2022.
The directors are responsible for preparing the Group Strategic Report, the Directors' Report and the consolidated 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 the Group and of the profit or loss of the Group for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙make judgements and accounting estimates that are reasonable and prudent;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group 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 the Group 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 the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The profit for the year, after taxation, amounted to £1,156,792 (2021 - loss after taxation of £1,248,861).
The directors do not recommend a final dividend (2021 - £Nil).
The directors who served during the year were:
Please see the strategic report for more information.
The Group has an ongoing policy of providing feedback to employees, not only on their individual performance, but on the performance of the business. To this end, an annual conference is held with key employees attending.
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ST GILES SCHOOLS OF LANGUAGES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
Where existing employees become disabled, it is the Group's policy, wherever practicable, to provide continuing employment under normal terms and conditions. The Group would also aim to provide training and career development and promotion to disabled employees wherever appropriate.
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 and the Group's auditors are 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 and the Group's auditors are aware of that information.
The auditor, Barnes Roffe LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board on
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ST GILES SCHOOLS OF LANGUAGES LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ST GILES SCHOOLS OF LANGUAGES LIMITED
We have audited the financial statements of St Giles Schools of Languages Limited (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 31 December 2022, which comprise the Group Statement of Comprehensive Income, the Group and Company Balance Sheets, the Group Statement of Cash Flows, the Group and Company Statement of Changes in Equity and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council'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.
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 Group's or the parent Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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ST GILES SCHOOLS OF LANGUAGES LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ST GILES SCHOOLS OF LANGUAGES LIMITED (CONTINUED)
The other information comprises the information included in the Annual Report other than the financial statements and our Auditor's Report thereon. The directors are responsible for the other information contained within the Annual 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.
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Group 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 Group Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Directors' Report.
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ST GILES SCHOOLS OF LANGUAGES LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ST GILES SCHOOLS OF LANGUAGES LIMITED (CONTINUED)
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 Group 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:
In identifying and assessing risks of material misstatement in respect of irregularities we considered the following:
∙Obtained an understanding of the nature of the industry and sector, including the legal and regulatory frameworks that the group and parent company operates in and how the group and parent company are complying with the legal and regulatory frameworks;
∙Enquired of management, and those charged with governance, about their own identification and assessment of the risks of irregularities, including any known actual, suspected or alleged instances of fraud;
∙Discussed matters about non-compliance with laws and regulations and how fraud might occur including assessment of how and where the financial statements may be susceptible to fraud.
All relevant laws and regulations identified at a Group level and areas susceptible to fraud that could have a material effect on the financial statements were communicated. Any instances of non-compliance with laws and regulations identified were considered in our audit approach.
The most significant laws and regulations were determined as follows:
∙UK GAAP FRS 102 and Companies Act;
∙Tax compliance regulations.
Additional audit procedures performed by the audit engagement team included:
∙Review of the financial statement disclosures and testing to supporting documentation;
∙Completion of disclosure checklists to identify areas of non-compliance.
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ST GILES SCHOOLS OF LANGUAGES LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ST GILES SCHOOLS OF LANGUAGES LIMITED (CONTINUED)
The areas that we identified as being susceptible to material misstatement due to fraud were:
∙Revenue Recognition;
∙Management Override;
∙Controls over areas such as wages and bank controls;
∙Going concern.
Audit procedures in report to the identified areas above:
∙Obtaining an understanding of the processes and controls around revenue recognition;
∙Substantively testing revenue via various testing including transactional and cut off;
∙Reviewed and substantively testing the controls around wages and bank;
∙Evaluation of the appropriateness of the accounting policies;
∙Testing the appropriateness of journal entries and other adjustments;
∙Assessing whether the judgements made in making accounting estimates are indicative of a potential bias;
∙Evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business;
∙Inspection of all recent reports and certification from the relevant bodies; and
∙Detailed review of post balance sheet trading and forecasts including variance analysis and enquiry with management.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditor's 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.
for and on behalf of
Chartered Accountants
Statutory Auditor
Leytonstone House
London
E11 1GA
Date:
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ST GILES SCHOOLS OF LANGUAGES LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
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ST GILES SCHOOLS OF LANGUAGES LIMITED
REGISTERED NUMBER: 00596651
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2022
The financial statements were approved and authorised for issue by the board and were signed on its behalf on
The notes on pages 15 to 33 form part of these financial statements.
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ST GILES SCHOOLS OF LANGUAGES LIMITED
REGISTERED NUMBER: 00596651
COMPANY BALANCE SHEET
AS AT 31 DECEMBER 2022
The financial statements were approved and authorised for issue by the board and were signed on its behalf on
The notes on pages 15 to 33 form part of these financial statements.
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ST GILES SCHOOLS OF LANGUAGES LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
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ST GILES SCHOOLS OF LANGUAGES LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
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ST GILES SCHOOLS OF LANGUAGES LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2022
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ST GILES SCHOOLS OF LANGUAGES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
St Giles Schools of Languages Limited (the "Company") is a private company limited by shares, incorporated in England and Wales. The business address is 154 Southampton Row, London, WC1B 5JX.
2.Accounting policies
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 Group management to exercise judgement in applying the Group's accounting policies (see note 3).
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements.
The following principal accounting policies have been applied:
The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Balance Sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated Statement of Comprehensive Income from the date on which control is obtained. They are deconsolidated from the date control ceases.
The directors pay careful attention to the cost base of the Company ensuring not only that it is kept at a level to satisfy the commercial requirements but also that it remains appropriate to the level of activity of the Company and the financial resources available to it.
The company was significantly affected by the COVID-19 pandemic and had to take measures in order to keep the company a going concern. The loss making subsidiary in the US was closed last year and the directors extended the capital repayment terms for the CBIL loan. The company also continued to make use of the CJRS scheme when it was available. The directors maintain a close watch over the continuing global restrictions caused by the pandemic taking appropriate action when necessary. The Company prepares and reviews its financial forecast and projections regularly and these indicate that the company will be able to operate within the current level of the CBIL facility. The company also has a strong cash position from which it can operate for the next year. Based on the above, the directors expect the Company to have adequate resources to continue to adopt the going concern basis of accounting in preparing these financial statements.
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ST GILES SCHOOLS OF LANGUAGES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
Functional and presentation currency
Transactions and balances
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ST GILES SCHOOLS OF LANGUAGES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
Accommodation fees are recognised upon the dates of the tenancy. Tenancy dates that span the year end are recognised on when exact dates of the courses occur. Other revenue is recognised upon the date on which the service occurs.
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ST GILES SCHOOLS OF LANGUAGES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
Goodwill represents the difference between amounts paid on the cost of a business combination and the acquirer's interest in the fair value of the group's share of its identifiable assets and liabilities of the acquiree at the date of acquisition. Subsequent to initial recognition, goodwill is measured at cost less accumulated amortisation and accumulated impairment losses.
Goodwill is considered to have a finite useful life however as a reliable estimate of the useful life cannot be made, the useful life is defaulted to ten years.
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ST GILES SCHOOLS OF LANGUAGES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
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.
The estimated useful lives range as follows:
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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ST GILES SCHOOLS OF LANGUAGES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
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ST GILES SCHOOLS OF LANGUAGES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Critical judgements in applying accounting policies Fixed assets The directors are of the opinion that the market value of properties as 31 December 2022 would significantly exceed the net book values included in the financial statements, but they are unable to quantify this excess in the absence of a professional valuation, the costs of which are not considered justifiable in the view of the Group's intention to retain ownership of its existing properties for use in its business for the foreseeable future.
Analysis of turnover by country of destination:
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ST GILES SCHOOLS OF LANGUAGES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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ST GILES SCHOOLS OF LANGUAGES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 23
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ST GILES SCHOOLS OF LANGUAGES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
10.Taxation (continued)
Factors that may affect future tax charges
At the 2021 Budget on 3 March 2021, the Government announced that the corporation tax rate will increase to 25% for companies with profits greater than £250,000 with effect from 1 April 2023, as well as announcing a number of other changes to allowances and treatment of losses.
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements. The profit after tax of the parent Company for the year was £
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ST GILES SCHOOLS OF LANGUAGES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 25
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ST GILES SCHOOLS OF LANGUAGES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 26
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ST GILES SCHOOLS OF LANGUAGES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
13.Tangible fixed assets (continued)
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ST GILES SCHOOLS OF LANGUAGES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 28
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ST GILES SCHOOLS OF LANGUAGES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 29
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ST GILES SCHOOLS OF LANGUAGES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 30
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ST GILES SCHOOLS OF LANGUAGES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 31
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ST GILES SCHOOLS OF LANGUAGES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 32
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ST GILES SCHOOLS OF LANGUAGES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
The Group operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Group in an independently administered fund. The pension cost charge represents contributions payable by the Group to the fund and amounted to £115,541 (2021 - £85,055). Contributions totaling £12,916 (2021 - £118 due from) were due to the fund at the balance sheet date.
The Group considers Mark Lindsay as the ultimate controlling party.
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