Report and Consolidated Financial Ststements for the year ended 31 July 2024 EDUCATION FOR INDUSTRY GROUP Education ft)r Industry Group (Formerly Fashion Retail Academy), a company limited by guarantee, registered in England and Wales Registered Number.. 05507547 Registered Charity Number.. 1119540
Report and Consolidated Financial Statsments for the year ended 31 July 2024 Contents Page number Board of Directors, Senior Postholders and Professional advisers Directors, Report (including Strategic Report) Statement of Corporate Governance and Internal Control 17 The Board's Statement on the Group's regularity, propriety and compliance with funding body terms and conditions of funding 21 Statement of Responsibilities of the Members of the Board 22 Independent Auditors, Report to the Board 23 Consolidated Statement of Comprehensive Income 27 Consolidated and Academy Statement of Changes in ReseNes 28 Balance Sheets at 31 July 2024 29 Consolidated Cash Flow Statement 30
Report and Consolidated Financial Statements for the year ended 31 July 2024 BOARD OF DIRECTORS. SENIOR POSTHOLDERS AND PROFESSIONAL ADVISERS Board of Directors The Directors of Education for Industry Group (EFI Group) during the year and up to the date of approval of the annual report and financial statements are as listed below.. Kim Longman, Chair Lee Lucas, Principal and CEO James Barron Laura Charles Zareer Ghadially (appointed 10 September 2024) Linda Drew Fiona Gaughan Sally Harris Susanna Kempe Elaine Smith (resigned 29 November 2023} Vanessa Spence Pauline Tambling (until 1 December 2023} Simon Williams Mr G Cooper acted as Company Secretary throughout the period. Sonlor postholdern Senior postholders are defined as members of the EFI Group Leadership Team and were represented by the following in 2023124.. Lee Lucas, Principal and CEO., Accounting officer Simon Mayfield, Director of Finance and Resources Beverley Imrie, Director of Industry Relationships, EFI Training Mashrin Chowdhury, Director of Operations and Partnerships Amanda Colvin, Director of Marketing and Sales Chris Amadeo, Director of Strategy and Funding Chris Maja, Director of Technology and Digitsl Innovation Tracy Pritchard, Director of Academic Excellence Professlonal advisers Flnancial statements audltors and reporting accountants: Cmwe U.K. LLP 55 Ludgate Hill London EC4M 7JW Internal audltors: MHA (End date 22 October 2023) 2 London Wall Place London EC2Y SAU Buzzacott LLP {Start date 23 October 2023) 1 Churchill Place London E14 5HP
Report and Consolidated Financial Statements for the year ended 31 July 2024 Bankers: Bank of Scotland The Mound Edinburgh EH1 1YZ Barclays Level 11, 1 Churchill Place London E14 5HP HSBC 2nd fioor, 16 King Street, Covent Garden London WC2E 8JF Solicitors: Bates Wells Braithwalte 10 Queen Street Place London EC4R 1 BE
Report and Consolidated Financial Statements for the year ended 31 July 2024 STRATEGIC REPORT The Directors present their report and the audited financial statements for the year ended 31 July 2024. Nature, Objectives and Strategies Legal status Education for Industry Group (EFI Group) was registered as a private company limited by guarantee in June 2005 as Fashion Retail Academy (Company Number 05507547). The change of name to EFI Group was registered 26 March 2024. Its current registered office is Electra House, 84 Moorgate, London, EC2M 6SE. EFI Group obtained charitable status on 7 June 2007 when it became registered with the Charity Commission (Charity Number 1119540). The company's governing document is its Articles of Association as approved by a special resolution of the members of the company on 13 February 2024. The accounts have been prepared in accordance with FRSI02. Mission The EFI Group's mission statement is.. "To transform Ilvos, careers and Industry thmugh the creatlon and delivory of speclallst educatlon and training" Publlc Beneflt In setting and reviewing the EFI Group's strategic objectives, the Board has had due regard for the Charity Commission's guidan on public benefit and particularly upon its supplementary guidance on the advancement of education. The guidance sets out the requirement that all organisations wishing to be recognised as charities must demonstrate, explicitly, that their aims are for the public benefit. In delivering its mission, the EFI Group provides the following identifiable public benefits through the advancement of edLJcation: High-quality teaching dening participation and tackling social exclusion Excellent employment record for students Strong student support systems and financial bursaries Exceptional links with employers, industry and commerce which future proof students, careers
Report and Consolidated Financial Statements for the year ended 31 July 2024 GOVERNORS, REPORTIINCLUDING STRATEGIC REPORn CONTINUED Table A 2019120 Achieved 1767 2020121 Achieved 1833 2021122 Achieved 2002 2022123 Achieved 2203 2023124 Achieved 2471 Total enrolments (accredited provision) OA Annual increase 8% 40 100 120 Table B 2019120 2020121 2021122 2022123 2023124 1553 Traditional Fast Track 1137 1204 90 1384 1518 64 62 43 57 HE Apprenticeshi Online 335 337 363 344 324 231 202 1g3 246 387 52 150 1767 1833 2002 2203 2471 As the above data shows, the diversification and grovrth strategies as part of our core Strategic Growth plan are effective. Growth in student numbers have historically been accommodated in our existing single site and the EFI Group reached 1000kn utilisation of these spaces by 2020121. The Strategic Plan included a Propety Strategy sought to address our estates question and provide solutions for the next steps for the EFI Group to accommodate growth in student numbers. The EFI Group subsequently implemented a 'Bridging strategy, which accommodated our growth over three sites, and this continued into 2023124 whilst we waited to take occupation of the new, larger permanent site. The start of 2024125 has now seen the move to our new premises at Electra House which has consolidated the three spaces we have previously occupied to one and has accommodated the increased trend of growth in learner numbers. 2023124 also saw the acquisition of London College of Beauty Therapy (LCBT) in February 2024 which added an additional site. We continue to raise the profile of the EFI Group as a centre of excellence.. Increased brand recognition through wider, targeted outdoor campaigns and digital campaigns. Increasing PR presence and the continued use of a PR agency. Continued Work with retail brands through curriculum components (such as work placements) and innovations {through our Industry Working Groups, Industry Advisory Committee and Trailblazers).
Report and Consolidated Financial Ststements for the year ended 31 July 2024 GOVERNORS, REPORT (INCLUDING STRATEGIC REPORT) CONTINUED Flnancial objectives The EFI Group's financial objectives are: strategic.. Increase commercial income through our non-accredited offer and other services that leverage value from our brand. Also increase this income with our know how and our IP including from EFI Awards, non-accredited delivery, complimentary marketable service and online courses. Double student enrolment population by 2030. This will be achieved through the points listed below. Surplus: Generate an operating surplus beeen 50kn and 15°/o annually for reinvestment. £1.5m commercial income110 % of revenue income to come from business to business activities by 2030. Secure.. Maintain 4 months of operating expenditure in reserves. Continue to focus on value for money and efficiency. Ensure our reliance on any single income stream does not routinely exceed 400A. The strategic growth plan continues to support these financial objectives.. Maintained reliance on mainstream FE funding (ESFA contracts) which now represents 660/0 of revenue income {730/0 in 20221231 {530/0 Including donation) Higher Education diversification now accounts for 14 % of revenue income (21Vo in 2022123). The decrease is due to the donation income for the fit out of the new premises. Numerically income has grown year on year. Fee income now accounts for 29/0 of revenue income (4 % in 2022123} Fee paying students naturally declined as ESFA funded student numbers have increased and the impact of the donation has skewed this figure. Apprenticeship diversification accounts for 30/0 of revenue income (30/0 in 2022123) The current efficiency model is based on the Business Plan which highlights EFI Group is to continue to invest in the physical environment, increase enrolment and achieve financial efficiencies. The EFI Group's liquidity position remains strong,. a current ratio of 2.2 (4.69 in 20221231, target liquidity should be more than 1..1. Buslne88 environment Ph sical environment The EFI Group continues to invest in the physical resources of the premises and facilities to ensure that the students are offered an excellent environment and up to date IT and teaching and learning resources. Significant investment was made in 2023124 as part of the fit out for Electra House and amounted to a £1.5m investment in IT and Audio Visual included in the overall investment. Our new site at Electra House comprises a 50,000 sqft building and is nearly twice the size of our previous premises. It offers a unique learning environment which is highly praised by staff, students and industry partners alike. The project has been several years in the making and enables EFI Group to meet our future growth and objectives. Fit out works were completed in time for the 2024125 academic year. Com etitive environment There is no direct competitor currently as a specialist education provider in fashion retail. This specialisation in vocational education is most valuable when accompanied by an identified need for specialist skills by an employer. Othér providers offer some of the same courses to those run at the EFI Group although the increase to our Level 3 Fashion Retail Diploma course continues to rise and take market share from other providers. In the HE space, our courses have multiple similar competitors, however, our accelerated 2-year programme, guaranteed interviews upon completion and industry mentorship scheme, along with our wider unique selling points, (strong and increasing Contact and
Report and Consolidated Financial Statements for the year ended 31 July 2024 GOVERNORS, REPORT{INCLUDING STRATEGIC REPORTI CONTINUED relationships with Industry and high dests'nation and employment rates) sets us above competitor provision. Marketing of the EFI Group's courses remains strong and continues to drive application volume increases through targeted, data driven campaigns and outdoor advertising. PR efforts during the year have continued to be strong to increase wider awareness of the EFI Group. Student demand is healthy and outstrips available places and our new premises is already at full capacity. With demand from a wide geographic area, more students are coming to the EFI Group over local general Further Education Colleges. This provides the EFI Group with a necessity to support travel and study costs for learners most at need. This is being managed by the maximum distribution of formal Government bursary monies and the supplementing of this by other funds from the EFI Group's own reserves. During 2023124, the EFI Group received: 4,393 applications for its FE mainstream provision, representing a 610/0 increase from the previous year's application volumes. However, this figure represents a change in the way dats is reported and duplicate applications have been excluded. Conversion to enrolment through our applicant services team increased year on year which led to the increase of enrolments. 925 applications (550 in 2022123) for its HE provisions, representing a 68 0/0 increase slight dip from Previous year's application volumes but demonstrates the flux in HE applications sector- wide due to Covid. 359 applications for its online provision, a 1270/0 increase in the previous year's volumes, demonstrating a significant growth in interest in this new provision that was first introduced in the 2022123 academic year. Apprenticeship provision have no comparable application statistics. We anticipate our numbers rising steadily as the pipeline of partnerships continue to flourish as we respond to industry need in the post-covid era and as we continue to add new Standards to our portfolio of available apprenticeships in line with demand from the industry.
Report and Consolidated Financial Statements for the year ended 31 July 2024 GOVERNORS, REPORTIINCLUDING STRATEGIC REPORT) CONTINUED Student enrolments by level and age were as shown in the table below.. TABLE C Level 3 including National Diplomas Age Year Level Level Higher Education Apprenticeship Onllne TOTAL 16to 18- year olds 2023124 88 1203 171 83 59 1607 2022123 2021122 2020121 2019120 53 78 61 59 1239 1036 826 676 123 149 161 163 85 68 61 57 37 24 20 47 1539 1355 1129 1002 19+ year olds 2023124 17 131 241 328 147 864 2022123 2021122 2020121 2019120 25 31 17 39 121 138 205 263 259 295 276 278 209 169 182 184 50 664 634 680 765 students 2023124 1220 302 324 387 150 2471 2022123 2021122 2020121 2019120 53 79 61 60 1264 1080 843 715 244 287 366 426 344 363 337 335 246 193 202 231 52 2203 2002. 1809. 1767 This does not include the Traineeship Students enrolled in each respective year, NIL in 2023124 NIL in 2022123- 13 in 2021122 year and 24 2020121 year. The introduction of the traineeships in 202012021 was part of the EFI Group's response to needs of both industry and youth unemployment because of COVID and supporting the Governments drive in traineeships. In 2023124 the EFI Group received £11,081,375 in funding from the ESFA, including £175,428 Learner Support Funds. (£8,239,674 and £144,057 in 2022123). Student achievement was as follows.. The Pass rate is defined as the number of students passing expressed as a percentage of those completing a course" the achievement rate is defined as the number of students passing as a percentage of those starting a course. The table below shows the EFI Group's performance over the last five years.. FE mainstream students Academic Year 19120 20121 21122 22123 23124 Retention 84.80 88.5% 91.00 91.5° Pass 99.7° 98.0 % 97.8% Achievement 820/0 91.00/0 86.70/0 89.0% 90.50/0
Report and Consolidatsd Financial Statements for the year ended 31 July 2024 GOVERNORS, REPORTIINCLUDING STRATEGIC REPORD CONTINUED Online Students Academic Year Retention Pass 2022123 87% 2023124 55% 100% 890/0 Achievement 80% IAhilst a clear focus on further improving our KPIS remain, notably almost all KPI statistics evidence an improvement on the last year. This speaks to the enhancements made within FE delivery for which we anticipate seeing further improvements in the year to come. The KPIS and related performance against each are attendance 830/0, retention 920A, learners that state the quality of teaching is at least good 800/0 and number of live enrolments 1406. The Principal and senior leadership team have taken decisive action to drive enhancement to our quality KPIS by recruiting new senior leadership and restructuring key roles in quality assurance, including the increased rigour and focus of governance and the impact of these actions is starting to be felt. In relation to Higher Education, our second graduating cohort obtsined the following classification for their undergraduate degrees.. Flrst Cla88 Upper Second 55/0 Lower Second 33% Third 0/0 Business Management Buying and Merchandisin8 Marketing and Communication 240/0 180 190 48¥0 26¥. 50 Current and Futuro Development and Performance Current erformance headlines EFI Gro The EFI Group preempts and directly responds to the fast-paced evolving skills needs of the Fashion and Retsil industry and leverages insight through dedicated industry research (which in 2017 led to the creation of a range of new Coufses including an accelerated Higher Education offer and the then Fashion Retail Academy {FRA) Competency Wheel, which now underpins the entire curriculum strategy). Reconducted in 2020 this research once again underpins the direction of travel for curriculum innovation, delivery, pedagogy and assessment. The EFI Group's financial health is excellent as a result of its leadership and continues to generate an operating surplus of £5,786,000. This is used for reinvestment and to manifest strategic opportunities both for longer term security and to benefit our students and team members. The EFI Group continues to drive applications for our unique offer and as such has secured consistent year on year growth in student numbers over the past 10 years, bucking the tfends of the sector. The EFI Group has an ambitious future focused strategy to capitalise upon its numerous successes, further enhance its existing operations and create 8 new era for its students, its staff and the industry it serves. As a future focused provider the EFI Group Strategic Plan clearly articulates our direction of travel, this coupled with our research into the skills trends of industry, forms a core focus for our curriculum development and broader commercial objectives. The EFI Group remains well placed to capitalise on both our track record and the enormous array of opportunities available to us domestically and internationally. In our specialism, we have collective strength and the support of more than 145 retail brands, which demonstrates our relevance and ability to support the talent pipeline of retailers across the nation and indeed the globe. The past 18 years have brought enormous value to both our students and the industry as a whole. Almost 10
Report and Consolidated Financial Statements for the year ended 31 July 2024 GOVERNORS. REPORT (INCLUDING STRATEGIC REPORT) CONTINUED 14,000 graduates now work in industry and that number is increasing by more than a thousand per year. In fact, in a significant number of retail companies, you will find a EFI Group graduate in meaningful sustained employment throughout London and the UK. As the industry continues to evolve at a pa, so too will the EFI Group curriculum to ensure that this rate of employment not only continues, but meets the future skills needs of a highly competitive and fast changing industry. The EFI Group continues to forecast both the skills requirements of our industry and navigate the funding and educational landscapes to provide the right courses for our students and we are forecasting increases in student numbers in future years. Stskeholder Relationships In line with other colleges, the EFI Group has many stakeholders, these include.. Students ESFA Government Agencies and Bodies Sponsors & industry partners Stsff Local employers Local Authorities The local community FE and HE institutions (in particular Falmouth University who validate our Degree programmes). Professional bodies Our Industry Advisory Committee and Industry Working Groups. Awarding Bodies and Validating partners The EFI Group recognises the importance of these relationships and engages in regular communication with them through meetings and correspondence. In particular, the EFI Group continues to nurture our well-developed strong links with the sponsors and with other fashion retail employers. These enable the EFI Group to offer relevant and valuable substantial periods of work placement to all its students on Level 3 courses or above, ensure that the training and education provided remains relevant and up to date and aids in staff development. In many cases these work placements lead directly to employment. The EFI Group's success in working with employers to develop industry focused and relevant programmes with excellent outcomes was further endorsed by our successful bid in obtaining recognition through the Mayor's Skills Academies Quality Mark for both the creative and digital sector. The EFI Group is currently in the process of completing its registration with the Office for Students (OFS). Registration application documents have been submitted in October 2024 which are pending a response from the OFS. The OFS are the independent regulator for HE in England. For EFI Group all HE products, Level 4 courses and Apprenticeships above Level 4 fall into this area of regulation. This is a significant part of both our income and learner numbers. Our Assessment takes place on Tuesday 4th and Wednesday 5th February 2025. Providers of higher education in England are not legally required to register with the Office for Students (Ofs), but choosing to do so offers significant benefits that can make registration highly advantageous. 11
Report and Consolidated Financial Statements for the year ended 31 July 2024 GOVERNORS, REPORT (INCLUDING STRATEGIC REPORT) CONTINUED Em er Relationshi s 2023124 The EFI Group continues to build on and enjoys strong links with industry partners. enhancing and bringing unique value to our students, development. In total we have worked with 153 brands this academic year across several initiatives: Work Placements 351 placements over 68 brands including URBN, Mulberry, TFG, M&S, River Island 39 brands including AIISaints, Monsoon, Ann Summers, John Lewis 14 brands across 44 projects including Karen Millen, Soho Square Studios, WGSN, Accenture 96 tslks across 46 brands including The Selfhood, Fenwick, Oddmuse, Orlebar Brown, Frasers Group 22 panellists across 15 brands including The Coded, Harrods, END. 43 Mentors across 27 brands including Oliver Bonas, ASDA, Nike 97 Mentors across 27 brands including Space NK, ASOS, Ralph Lauren, Kurt Geiger 24 Focus Groups across 22 brands including Boden, Dr Martens, The White Company Careers Fairs (Sept, May, July) Industry Projects Masterclasses Panel Discussions FE Mentoring {L3 & L4) HE Mentoring (Year 1) Focus Groups Our Industry Partners have also supported on new courses and curriculum enhancements in 2023124.. New Apprenticeship course.. Level 5 Coaching Professional New Apprenticeship course.. Level 4 Corporate Responsibility & Sustainabilit Practitioner Revised Industry Training product strategy Focus groups held to inform the curriculum of the new course- All Saints, Nobody's Child, M&S Focus groups held to Inform the curriculum of the new course- New Look, URBN, ASOS Brands gave insight into challenges and skills gaps in the industry to shape new strategy - Space NK, Jigsaw, Harve Nicols, Selfrid es ASOS Financlal results For 2023124, the EFI Group generated a net surplus of £5,895,000 which is £603,000 after removing the donation for Electra House fit out {2022123.' £734,000 surplus after adjusting for impairment losses). Capital expenditure in 2023124 amounted to £4,032,000 (2022123.. £583,000). The increase is due to Electra House fit-out costs and related professional fees. The majority of the EFI Group's activities do not qualify as a charge in the corporation tax computation with effect from 7 June 2007, when it became a registered charity. The acquisition of LCBT was completed on 2 February 2024. Founded in 1999, LCBT is the UK'S largest vocational provider for beauty therapy, hair, media makeup, and related qualifications. LCBT holds dominant position in Beauty Therapy registrations with potential for growth through diversification and efficient resource utilisation. Poor marketing and course planning have led to financial losses. It offers the EFI Group significant scope for income enhancement through effective resourcing. Further opportunities to enhance profit may also be achieved through consideration of the new Group structures. The acquisition of LCBT presents a unique opportunity for EFI Group, strategically aligned with our objectives. A trading subsidiary company, FRA Enterprises Limited IFRAEL) was established on 16 January 2009, through which the EFI Group's commercial activities including room hire, hospitality and short courses 12
Report and Consolidated Financial Statements for the year ended 31 July 2024 GOVERNORS, REPORTIINCLUDING STRATEGIC REPORT) CONTINUED were previously conducted. In 2020, FRAEL was re-purposed as an End Point Assessment Organisation and renamed Fashion and Retail Awards Limited. It was then renamed Education for Industry Awards Limited in March 2024. Treasu olicies and ob'ectives The Treasury Management, Investment and Reserves Policy of the EFI Group regulates the banking, investment and cash holding of the group. The objective of the policy is to achieve a balance beleen optimising financial arrangements and the risks associated with those activities. As per the latest policy approved by the Board in June 2024, sufficient reserves should be set aside to meet 4 months of expected annual expenditure including depreciation. For 2023124, the reserves policy criteria was satisfied. Free reserves of £5,325,000 at 31 st July 2024 cover 4 months of expenditure including deprecation pro-rata as per the consolidated statement of comprehensive income of £5,354,000 (full year expenditure of £16,063,000). The investments are risk averse and deposits are made which are readily accessible. Cash flows A net cash inflow from operating activities of £4,059,000 (2022123 inflow.. £645,000), reflects the operational cash generation during the year. uidi The Charity continues to hold substantial cash at bank balances with £8,155,000 at the end of July 2024 (2022123 £4,733,000}, which gives a current ratio of 2 (2022123.. 4.69>. Goin concern The EFI Group has continued to maintain a strong liquidity position. At the year end, the total cash bank balance amounted to £8,907,000. Cash balances have seen a significant rise by £4,059,000 in the year. The current ratio is at 2.2 meaning that the business has the repayment capacity of its current liabilities over 2 times, utilising its liquid assets. The EFI Group remains comfortable meeting its commitments as they fall due. The EFI Group has had consecutive years of strong surplus generation and achieved a net surplus of £5,786,0001£603k after removing the donation for Electra House fit out), in the draft accounts for 2023124, (2022123 £734,000 surplus after a one off impairment adjustment). This has increased signifi'cantly due to the forementioned donation received. It is anticipated that 2024125 will result in a deficit year which is budgeted to produce an operating deficit of £1,589,000 excluding the impact of the donation for fit-out costs and added operational expenditure for Electra House. This is mainly driven by additional rent ft)r the new premises which while not paid in cash (a rent free period of 21 months has been agreed with the landlord) is recognised in the P&L under accounting principles. Additional teaching staff have also been included in the budget to accommodate the signifi'cant increase in student numbers the added space at Electra House offers. Future years will not continue to make losses. This is because in 2025126 the ESFA will award additional income for the growth in learners seen in the current year 2023124 such is the way the lagged contract works. In addition, our long term forecasting also includes growth in HE learners which we have increased significantly in 2024125 and which will drive an increase in income. It is anticipated that this growth will continue and a strategy roadmap is being developed to add new HE courses backed by robust market analysis and research. The increase in national insurance contributions have been added to the January Forecast which resets the budget based on current actuals and has been offset by increased HE income. Funding for the EFI Group in 2024125 has been confirmed at £13,697,000 from ESFA {including £279,000 of student and fi'nancial support). The EFI Group maintains diversification of income and provision by continuing to run HE funded courses which now accounts for 21 % of revenue income. The EFI Group continues to nurture its well4eveloped strong links with sponsors and other fashion retail 13
Report and Consolidated Financial Statements for the year ended 31 July 2024 GOVERNORS, REPORTIINCLUDING STRATEGIC REPORTI CONTINUED employers. These enable the EFI Group to offer relevant and valuable substantial periods of work placement to all its students on Level 3 courses or above, and ensures that the training and education provided remains relevant and up to date and also aids in staff development. In many cases these work placements lead directly to employment. In conclusion, the EFI Group is therefore considered a going concern for at least 12 months from the signing date. Current and future develo ments The EFI Group's successful grovrth in fashion-related programmes set the stsge for expansion into the beauty industry through the acquisition ofthe London College of Beauty Therapy (LCBT) in February 2024. LCBTS current state, despite financial challenges, offers a strategic foothold with its significant government funding contracts and established market presence. A detailed due diligence process, supported by reputable firms ensured Board approval of the acquisition from 2nd February 2024. The acquisition facilitstes financial sustainability, immediate growth, and a broader social impact. Prfncipal Risks and Uncertalntlos The EFI Group employs 260 full time equivalent staff (2022123.. 141) of whom 130 (2022123: 50} are teaching related stsff. The EFI Group continues to further develop its systems of internal control. Crowe UK continues as the external auditors following a thorough tendering process in 2020, Audit Committee and Board approval. MHA were the EFI Group's Internal Auditors until the start of the 2022123 academic year. Buzzacott took over from the activities of MHA and in the year conducted reviews of the EFI Group's internal controls. These reviews were reported to the Audit Committee and actions reviewed by the Audit Committee to establish progress. The Audit Committee reviewed the risk register at all three meetings in 2023124 and an updated Risk Register was agreed. The following are the principal risk factors that may affect the EFI Group with the mitigation actions fully articulated in the Strategic Risk Register which is regularly reviewed by our Audit Committee. The below forms part of the 'emerging' risks section of the document among other risks identified linking to the strategy. Inflation drives higher costs for goods and services leading to budgetary constraints and a possible reduction in operating surplus. OFS.. failure to gain approval with the Office For Students impedes our ability to gain Tier4 licence and ability to recruit non 'home' students causing reputational damage and loss of potential market for Level 4 and undergraduate provision in future. Inflation, rising costs and other economic conditions result in families having less disposable income which leads to depressed appetite for funding travel for students and therefore a reduction in applications and enrolments. Risk of reduced attendance and retention due to bursary funds being depleted, caused by an increase in bursary applications. Poor perceived student experience leads to negative multi platform public reviews leading to a loss of confidence and applications, reducing income from enrolments Advance Learner Loans.. changing student demographic at enrolment (fewer 19+ students taking ALLS) results in a reduction to the Groups contracted Loan facility resulting in a cap, should student numbers grow in future growth would not be guaranteed. HE Fee and student No. Gov policy.. Government policy results in a reduce fee income per student leading to a reduction in operating surplus I Potential cap to students recruitment numbers leads 14
Report and Consolidated Financial Ststements for the year ended 31 July 2024 GOVERNORS, REPORT(INCLUDING STRATEGIC REPORT) CONTINUED to loss of income I growth and diversification strategies are impeded. New course launches designed to support the industry fail to attract sufficient application volumes to make them financially viable, leading to loss of income andlor cancellation of coursels Integration of LCBT takes longer than planned resulting in lower cost reduction and leads to reduce operating surplus for Group as a result of inefficiencies in synergy Acquisition of LCBT does not make forecast NPV I ROI leading to fi'nancial constraints for Group Full group and division dynamics l interactions and dependencies result in forecast KPIS not being met in one or more areas Increased staff turnover due to higher workloads caused by the acquisition, competing priorities and management time. Critical BAU activities for Group or Divisions are compromised due to significant work in acquisition, integration and restructure leading to increased financial, management time or other impacts. Resistsnce to change / ability to adopt change and be agile in relation to new staff from LCBT. Risk inadequately skilled members being brought into Group roles The strategic risk register outlines these and other risks deemed applicable. The register outlines the assurance, controls and mitigating actions on how we manage and minimise these risks. overnment fundin The EFI Group places considerable reliance on continued government funding through the ESFA. In 2023124 52 % (2022123.. 730/0> of the EFI Group's revenue was publicly funded. The remainder of the EFI Group income comes via tuition fees for both further education adult learners and from Higher Education fee income. Business continui The EFI Group is at risk from external influences beyond its control which interrupt the smooth operations of the business. To meet these challenges, the EFI Group has an operational business continuity plan {BCP) to enable it to continue provision in the short to medium term. This is reviewed regularly and fully tested in August 2021. In addition, the EFI Group has a business continuity insurance in place which is reviewed annually. A rework to the BCP plan, Lockdown procedures and Disaster Recovery policies is undemay and due to be reviewed by the Audit Committee in the forthcoming academic year. uidi The EFI Group's cashflows are healthy, the unrestricted funds have remained relatively stsble at £10,978,000 (£6,169,000 in 2022123). Student numbers increased in 2023124 in comparison to 2022123 by 120/0 and the EFI Group benefitted from in year lagged funding payments as well as a boost to our Higher Education numbers in comparison to the previous year. The EFI Group is debt free which provides a significant degree of comfort. Equal opportunities and employment of dlsabled per80n8 The EFI Group is committed to ensuring equality of opportunity for all who learn and work here. It respects and values positively differences in race, gender, sexual orientation, physical ability and age. It strives vigorously to remove conditions, which place people at disadvantage. This policy is resourced, implemented and monitored on a planned basis. The EFI Group considers all applications from persons with disability, bearing in mind the aptitudes of the individuals concerned. Where an existing employee becomes disabled or their disability worsens, every effort is made to ensure that employment with the EFI Group continues. The EFI Group's policy is to provide training, career development and opportunities for promotion, which are, as far as possible, identical to those for other employees. 15
Report and Consolidated Financial Statements for the year ended 31 July 2024 GOVERNORS, REPORT (INCLUDING STRATEGIC REPORT) CONTINUED Dlsability statement The EFI Group seeks to achieve the objectives set down in the Equality Act 2010. a) The EFI Group has made significant investment in ensuring its premises have appropriate disability access. Information, advice and support is provided to all students with disabilities. b) The admissions policy for all students is available from the Registry Office. Appeals against a decision not to offer a place are dealt with under the complaints policy. c) The EFI Group has appointed specialist lecturers to support students with learning difficulties andlor disabilities. There is a continuing programme of staff development to ensure the provision of a high level ofappropriate support for students who have learning difficulties andlor disabilities. d) Specialist programmes are described in the EFI Group's prospectus. Achievements and destinations are published in standard format. e) Counselling and welfare services are described in the EFI Group's Student Guide, which is issued to students together with the Complaints and Disciplinary Procedure leaflets at induction. Disclosure of information to auditors The Directors who held office at the date of approval of this report confirm that, so far as they are each aware, there is no relevant audit information of which the EFI Group's auditors are unaware; and each Director has taken all the steps that he or she ought to have taken to be aware of any relevant audit information and to estsblish that the EFI Group's auditors are aware of that information. Approved by order of the Board on 30 January 2025, and slgned on Its behalf by: Klm Longman Chair Registered Address: Education for Industry Group, 84 Moorgate, London, England, EC2M 6SE 16
Report and Consolidated Financial Statements for the year ended 31 July 2024 STATEMENT OF CORPORATE GOVERNANCE AND INTERNAL CONTROL The following statement is provided to enable readers of the annual report and financial statements of the EFI Group to obtain a better understanding of its governance and legal structure. This statement covers the period from 1st August 2023 to 31 st July 2024 and up to the date of approval of the annual report and financial statements. The EFI Group endeavours to conduct its business i. in accordance with the seven principles identified by the Committee on Standards in Public Life (selflessness, integrity, objectivity, accountability, openness, honesty and leadership),. and ii. Whilst not having adopted the UK Corporate Governance Code 2018 the EFI Group has due regard to its principles and guidan. The Board The Directors who served on the Board during the year and up to the date of signature of this report were as listed below.. EFI Grou Board Members durin 2023124 Date of Appointment Term of office (years) Board meetings attendedl Possible 2023124 Kim Longman Chair 13 July 2005 Reappointed 13 July 2008, 12 July 2011, 11 June 2014, 9 March 2017, 2 July 2020 and 30 Janua 2024 2 December 2018 Rea ointed 9 December 2021 27 June 2017 Reappointed 2 July 2020 and 30 January 2024 4 Februa 2022 2 December 2018 Rea ointed g December 2021 10 September 2024 818 James Barron 818 Laura Charles 618 Linda Drew Fiona Gaughan 818 618 Zareer Gh8di8lly 010 Sall Harris Susanna Kem Lee Lucas (Principall Elaine Smith 11 Janua 2021 and 30 Janua 2024 3 March 2021 and 30 Janua 2024 6 October 2014 818 818 818 nla 11 June 2014 Reappointed 9 March 2017 and 2 July 2020 Resi ned 29 November 2023 2 December 2018 Rea ointed 9 December 2021 18Ma 2021 until 1 December 2023 30Ma 2022 212 Vanessa Spence 518 Pauline Tamblin Simon Williams 112 618 The Clerk to the Board and Company Secretary is Graham Cooper. It is the Board's responsibility to bring independent judgement to bear on issues of strategy, performance, resources and standards of conduct. The Board is provided with regular and timely information on the overall financial performance of the EFI Group together with other information such as performance against funding targets, proposed capital expenditure, quality matters and personnel related matters such as health and safety and environmental issues. The Board meets at least once every term. 17
Report and Consolidated Financial Statements for the year ended 31 July 2024 STATEMENT OF CORPORATE GOVERNANCE AND INTERNAL CONTROL (CONTINUED) All governance business was conducted through the Board. The Audit Committee provided an additional level of scrutiny in accordance with its terms of reference. The Clerk to the Board maintains a register of financial and personal interests of the members of the Board. The register is available for inspection at the registered address. All members of the Board are able to take independent professional advi in furtherance of their duties at the EFI Group's expense and have access to the Clerk to the Board, who is responsible to the Board for ensuring that all applicable procedures and regulations are complied with. The appointment, evaluation and removal of the Clerk are matters for the Board as a whole. Formal agendas, papers and reports are supplied to members of the Board in a timely manner, prior to Board meetings. Briefings are also provided on an ad hoc basis. There is a clear division of responsibility in that the roles of the Chair and Principal are separate. Appointments to the Board Under Article 26, all new appointments to the Board are a matter for the consideration of the Board as a whole. The Board is responsible for ensuring that appropriate training is provided for Directors as required. The Principal is an ex-officio Director. All other Directors are appointed for a term of office not exceeding three years, following which they are eligible for re-appointment. It is generally expected that Directors will serve for up to three consecutive terms of office, but a Director may be appointed for further consecutive terms of office if the Board believes that to be in the best interests of the company. The company has an induction policy for new appointments to the Board. This covers, strategy, the regulatory and educational environment within which the EFI Group operates and ensuring that new members are aware of their responsibilities as Directors, and as trustees of the charity. New Directors also visit the EFI Group to meet with senior staff and to hear directly from students, Additional training and briefings are also provided. Director responsibilities relating to safeguarding of students was a focus of training during the year. Audlt Commlttee The Audit Committee comprises a minimum of three members and is chaired by a member of the Board. Quoracy is members and the committee met three times during the year. All members where in attendance at each meeting with the exception of the March meeting where of the possible three where in attendance. Membership currently includes a co-opted member with professional audit experience who is not a member of the Board. The Committee operates in accordance with written terms of reference approved by the Boafd. The Audit Committee meets a minimum of three times a year and provides a forum for reporting by the EFI Group's Internal Auditors and External Auditors, who have access to the Committee for independent discussion, without the presence of the EFI Group's management. The Committee also receives and considers reports from the funding bodies as they affect the EFI Group's business. Management is responsible for the implementation of audit recommendations and undertakes periodic follow-up reviews to ensure such recommendations have been implemented. The EFI Group's internal auditors monitor the systems of internal control, risk management controls and governance processes in accordance with an agreed plan of input and report their findings to management and the Audit Committee. The Audit Committee also advises the Board on the appointment of internal, and external auditors and their remuneration for both audit and non-audit work. Internal control Scope of responsibility 18
Report and Consolidated Financial Statements for the year ended 31 July 2024 STATEMENT OF CORPORATE GOVERNANCE AND INTERNAL CONTROL ICONTINUED) The Board is ultimately responsible for the EFI Group's system of internal control and for reviewing its effectiveness. However, such a system is designed to manage rather than eliminate the risk of failure to achieve business objectives, and can provide only reasonable and not absolute assurance against material misstatement or loss. The Board has delegated the day-to-day responsibility to the Principal, as Accounting Officer, for maintaining a sound system of internal control that supports the achievement of the EFI Group's policies, aims and objectives, whilst safeguarding the public funds and assets for which he is personally responsible, in accordance with the responsibilities assigned to him in the funding agreements beeen the EFI Group and the ESFA. He is also responsible ft)r reporting to the Board any material weaknesses or breakdowns in internal control. The purpose of the system of internal control The system of internal control is designed to manage risk to a reasonable level rather than to eliminate all risk of failure to achieve policies, aims and objectives., it can therefore only provide reasonable and not absolute assurance of effectiveness. The system of internal control is based on an on-going process designed to identify and prioritise the risks to the achievement of EFI Group policies, aims and objectives, to evaluate the likelihood of those risks being realised and the impact should they be realised, and to manage them efficiently, effectively and economically. The system of internal control has been in place in the EFI Group for the period ended 31 July 2024 and up to the date of approval of the financial statements. Capacity to handle risk The Board has reviewed the key risks to which the EFI Group is exposed together with the operating, financial and compliance controls that have been implemented to mitigate those risks. The Board is of the view that there is a formal on-going process for identifying, evaluating and managing the EFI Group's significant risks that has been in place for the period ended 31 July 2024 and up to the date of approval of the financial statements. This process is regularly reviewed by the Board. The risk and Gontrol framework The system of internal control is based on a framework of regular management information, administrative procedures including the segregation of duties, and a system ofdelegation and accountability. In particular, it includes: comprehensive budgeting systems with an annual budget, which is reviewed and agreed by the Board; regular reviews by the Board of periodic and annual financial reports which indicate financial performance against forecasts., setting targets to measure financial and other performan., clearly defined capital investment control guidelines,. and the adoption of formal project management disciplines, where appropriate. Review of effectiveness As Accounting Officer, the Principal has responsibility for reviewing the effectiveness of the system of internal control. His review of the effectiveness of the system of internal control is informed by.. the work of the executive managers within the EFI Group who have responsibility for the development and maintenance of the internal control framework., and comments made by the EFI Group's financial statement auditors and the internal auditors in their management letters and other reports. Ov8rall, th8 reports hav8 indicat8d v8ry complim8ntary and 8ff8CtIV8 governance and risk management processes to manage the achievement of the EFI Group's objectives. The Board completed a self assessment of its own effectiveness during the year. The results were discussed by the Board at its meeting on 22nd May 2024. A number of actions for improvement were identified and have been implemented. 19
Report and Consolidated Financial Statements for the year ended 31 July 2024 STATEMENT OF CORPORATE GOVERNANCE AND INTERNAL CONTROL (CONTINUED) Going concern After making appropriate enquiries, the Board considers that the continue in operational existence for the foreseeable fut contracts and fee income are secure. For this reason, i preparing the financial statements. l Group has adequate resources to ave satisfied ourselves that funding s to adopt the going concern basis in Klm Longman Chair 30,, January 2025 Lucas Principa O & Accountlng Offlcer 30th January 2025 20
Report and Consolidated Financial Ststements for the year ended 31 July 2024 THE BOARD'S STATEMENT ON THE EFI GROUP'S REGULARITY. PROPRIETY AND COMPLIANCE WITH FUNDING BODY TERMS AND CONDITIONS OF FUNDING The EFI Group has considered its responsibility to notify the ESFA of material irregularity, impropriety and non-compliance with ESFA terms and conditions of funding, under the funding agreements in place beeen the EFI Group and the ESFA. As part of our consideration, we have had due regard to the requirements of the funding agreements. We confirm, on behalf of the EFI Group, that after due enquiry, and to the best of our knowledge, we are able to identify any material irregularor improper use of funds by the EFI Group, or material non-compliance with the ESFA'S terms and conditions of funding under the EFI Group's funding agreements. We confirm that no instances of material irregularity, impropriety or discovered to date. If any instances are identified after the date of the ESFA. ding non-compliance have been tat nt, these will be notified to Klm Longman Chalr 30th January 2025 LeeL as Principal, CEO & Accounting Offlcer 30th January 2025 21
Report and Consolidated Financial Ststements for the year ended 31 July 2024 STATEMENT OF RESPONSIBILITIES OF THE MEMBERS OF THE BOARD Company law requires the members of the Board to prepare financial ststements for each financial year that give a true and fair view of the state of affairs ofthe EFI Group and of the profit or loss of the EFI Group for that period. Wlthin the terms and conditions of the funding agreements agreed beeen the ESFA and the Board of the EFI Group, the Board, through its Principal, is required to prepare financial statements for each financial year in accordance with the Statement of Recommended Practice - Accounting for Further and Higher Education and which give a true and fair view of the state of affairs of the EFI Group and the result for that year. In preparing the financial statements, the Board is required to.. Select suitable accounting policies and apply them consistently., make judgements and estimates that are reasonable and prudent., state whether applicable Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and prepare financial statements on the going concern basis, unless it is inappropriate to assume that the EFI Group will continue in operation. Members of the Board are responsible for ensuring that expenditure and income are applied for the purposes intended by Parliament and that the financial transactions conform to the authorities that govern them. The members of the board are responsible for keeping proper accounting records which disclose with reasonable accuracy, at any time, the financial position of the EFI Group, and enable them to ensure thatthe financial ststements comply with the Companies Act 2006 and other relevant accounting standards. They are responsible for taking steps that are reasonably open to it in order to safeguard the assets of the EFI Group and to prevent and detect fraud and other irregularities. The governors are responsible for the maintenance and integrity of the charity,. and financial information included on the charity's website. Members of the Board are responsible for ensuring that funds from the ESFA are used only in accordance with the funding agreements with the ESFA and any other conditions that the ESFA may prescribe from time to time. Members of the Board must ensure that there are appropriate financial and management controls in place in order to safeguard public and other funds and to ensure they are used properly. In addition, members of the Board are responsible for securing economical, efficient and effective management of the EFI Group's resources and expenditure, so that the benefits that should be derived from the application of public funds by the ESFA are not put at risk. So far as each member of the Board is aware, there is no relevant audit information of which the auditors are unaware, and each member of the Board has taken all the steps that helshe ought to have taken as a member of the Board in order to make himselflherself aware of any relevant audit information and to estsblish that the auditors are aware of that information. Independent Auditors The auditors, Crowe LLP, have confirmed theirwillingness to continue in office and the Board has approved their reappointment. Signed on behalf of tho Board Kim Longman Chair 30th January 2025 22
Report and Consolidated Financial Statements for the year ended 31 July 2024 INDEPENDENT AUDITOR'S REPORTTO THE MEMBERS OF EDUCATION FOR INDUSTRYGROUP Opinion We have audited the financial ststements of Education for Industry Group {'the charity,) and its subsidiaries ('the group'l for the year ended 31 July 2024 which comprise the Consolidated Statement of Comprehensive Income, Consolidated and Charity Statement of Changes in Reserves, Balance Sheets, Consolidated Cash Flow Statement and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 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 Group's and the Charity's affairs as at 31 July 2024 and of the group's income and expenditure, for the year then ended,. have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice., and have been prepared in accordan with the requirements of the Companies Act 2006. Basis for oplnion We conducted our audit in accordance with International Standards on Auditing (UK) IISAS (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 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. Concluslon8 relatlng to golng concem In auditing the financial statements, we have concluded that the governor's 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 charity's or the group's ability to continue as a going concern for a period of at least e1ve months from when the financial statements are authorised for issue. Our responsibilities and the responsibilities of the governors with respect to going concern are described in the relevant sections of this report. Other Information The governors are responsible for the other information contsined within the annual report. The other information comprises the information included in the annual report, otherthan the financial ststements 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. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. 23
Report and Consolidated Financial Statements for the year ended 31 July 2024 INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF EDUCATION FOR INDUSTRY GROUP (CONTINUED) Opinions on other matters prescribed by the Companles Act 2006 In our opinion based on the work undertaken in the course of our audit: the information given in the governors, report, which includes the directors, report and the strategic report prepared for the purposes of company law, 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 included within the governors, report have been prepared in accordance with applicable legal requirements. Matters on which we are required to report by exceptlon In light of the knowledge and understanding of the group and charity and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors, report included within the governors, report. 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 and proper accounting records have not been kept., or the financial statements are not in agreement with the accounting records and returns., or certain disclosures of governors, remuneration specified by law are not made,. or we have not received all the information and explanations we require for our audit. Re8pon8ibilitie8 of governors As explained more fully in the statement of responsibilities of the members of the board set out on page 23 the governors (who are also the directors of the charity for the purposes of company lawl 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 governors 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 governors are responsible ft)r assessing the charity'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 governors either intend to liquidate the charity or to cease operations, or have no realistic alternative but to do so. Auditor'8 re8pon8lbllltles for the audlt of the flnanclal statement8 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 ofthese financial statements. Details of the extent to which the audit was considered capable of detecting irregularities, including fraud and non-compliance with laws and regulations are set out below. A further description ofour responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at.. www.frc.org.uklauditorsresponsibilities. This description forms part of our auditor's report. 24
Report and Consolidated Financial Statsments for the year ended 31 July 2024 INDEPENDENT AUDITOR'S REPORTTO THE MEMBERS OF EDUCATION FOR INDUSTRY GROUP ICONTINUED) Extent to which the audit was considered capable of dete¢ting irregularities, including fraud Irregularities, including fraud, are instances of non-compliance with laws and regulations. We identified and assessed the risks of material misstatement of the fi'nancial statements from irregularities, whether due to fraud or error, and discussed these beeen our audit team members. We then designed and performed audit procedures responsive to those risks, including obtaining audit evidence sufficient and appropriate to provide a basis forour opinion. We obtained an understanding of the legal and regulatory frameworks within which the charity and group operates, focusing on those laws and regulations that have a direct effect on the determination of material amounts and disclosures in the financial statements. The laws and regulations we considered in this context were the Companies Act 2006 and the Charities Act 2011 together with the Statement of Recommended Practice.. Accounting for Further and Higher Education 2019 (the 2019 FE HE SORP} and in accordance with Financial Reporting Standard 102 - 'The Financial Reporting Standard applicable in the United Kingdom and Republic of 5reland" {FRS 102). We assessed the required compliance with these laws and regulations as part of our audit procedures on the related financial statement items. In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements but compliance with which might be fundamental to the Group's ability to operate or to avoid a material penalty. We also considered the opportunities and incentives that may exist within the charity and the group forfraud. The laws and regulations we considered in this context for the UK operations were health and safety regulation, taxation legislation, employment legislation and General Data Protection Legislation (GDPR}. Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of the Governors and other management and inspection of regulatory and legal corresponden, if any. We identified the greatest risk of material impact on the financial statements from irregularities, including fraud, to be within the recognition of income and the override of controls by management. Our audit procedures to respond to these risks included enquiries of management, and the Audit Committee about their own identification and assessment of the risks of irregularities, sample testing on the posting of journals,. tested the application cut-off and revenue recognition, particularly around revenue grants from ESFA, tuition fees and donations., reviewing accounting estimates for biases, reviewing regulatory correspondence with the Charity Commission and Otsted; and reading minutes of meetings of those charged with governance. Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misststements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non- compliance with laws and regulations (irregularities} is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. I n addition, as with any audit, there remained a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing non-compliance and cannot be expected to detect non- compliance with all laws and regulations. 25
Report and Consolidated Financial Statements for the year ended 31 July 2024 Use of our report This report is made solely to the charity'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 charity'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 charity and the charity's members as a body. for our audit work, for this report, or for the opinions we have formed. Jayne Rowe Senior Statutory Auditor For and on behalf of Crowe U.K. LLP statutory Auditor London Date: 20 March 2025 26
Report and Consolidated Financial Statements for the year ended 31 July 2024 Consolidated Statement of Comprehensive Income For the year ended 31 July 2024 Unrestrlcted Funds Restrlcted Funds Year onded 31 July Year ended 31 July 2023 Group £'ooo 2024 Group £'ooo Note Income Funding Body Grants Tuition fees and Educational Contracts 12,522 12,522 10,565 3,692 124 3,816 3,551 Other income Interest income 433 433 272 22 22 Donations 5,183 5,183 Total Income 16,669 5,307 21,976 14,388 Expenditure Staff costs Other operating expenses. Depreciation and amortisation 8,306 7,430 345 8,306 7,430 345 6,217 7,708 733 10111 Total expenditure 16,081 16,081 14,658 Surplusl(deflclt) for the year 15 588 5,307 5,895 (270) Total comprehenslve Incomp.Illoss) for the year 588 5,307 5,895 (270) 27
Report and Consolidated Financial Ststements for the year ended 31 July 2024 Consolidated and Charity Ststement of Changes in Reserves Forthe year ended 31 July 2024 Income and Incomo and Expenditure Expenditure account- account- Unrestricted Restrlcted £'ooo £'ooo Total £'ooo Group Balance at 1st August 2022 6,354 85 6,439 Deficit from the income and expenditure account (217) (53} (270) Balance at 318t July 2023 6,137 32 6,169 Surplus from the income and expendlture account 588 5,307 5,895 Balance at 31st July 2024 6,725 5,339 12,064 Income and Income and Expenditure Expendlture account- account- Unrestricted Restricted £'ooo £'ooo Totsl £'ooo Charlty Balance at 1st August 2022 6,354 85 6,439 Deficitfrom the income and expenditure account (217} {53) 1270) Balance at 31st July 2023 6,137 32 6,169 Surplus from the Income and expenditure account 454 5,307 5,761 Balance at 31 st July 2024 6,591 5,339 11,930 28
Report and Consolidated Financial Statements for the year ended 31 July 2024 Balance Sheets At 31 July 2024 Group 31 July 2024 £000 Charity 31 July 2024 £000 Gmup Charity 31 July 2023 31 July 2023 Note Flxed assets Intangible Assets Tangible Assets Investments Total fixed assets 10 11 12 1,059 5,197 5,197 1,941 7,138 1,462 1,462 6,256 1,462 1,462 Current asset8 Debtors Cash at bank and in hand Total current assets 13 1,826 8,907 10,733 1,470 8,155 9,625 1,136 4,848 5,984 1,251 4,733 5,984 Current liabilities Creditors.. amounts falling due within one year 14 (4,9251 (4,833) (1,277) (1,277) Net Current assets 5,808 4,792 4,707 4,707 Total a88ets le88 current Ilabllltles 12,064 11,930 6,169 6,169 Non current liabilltle8 Creditors.. amounts falling due after more than one year Net assets 12,064 11,930 6,169 6,169 Reserves Unrestricted income reseNe Restricted income reserve 6,725 5,339 6,591 5,339 6,137 32 6,137 32 16 12,064 11,930 6,169 6,169 The surplus for the parent only is £5,761 k {2022123.' deficit £270k). The financial statements on pages 28 to 49 were approved by the Bo on 30 January 2025 and were signed on its behalf by.. uthorised for issue Klm Longman Chair ucas Principal and Chie Education for Industry Group, a private company limited by guarantee, registered in England and Wales. Registered Number 05507547 29
Report and Consolidated Financial Statements for the year ended 31 July 2024
Consolidated Cash Flow Statement
For the year ended 31 July 2024
| Note | 2024 | 2023 | |
|---|---|---|---|
| Cash inflow from operating activities | |||
| Surplus/(deficit) for the year | 15 | 5,895 | (270) |
| Adjustment for non-cash items | |||
| Depreciation | 10/11 | 345 | 733 |
| Impairment Loss | - | 2,153 | |
| Increase in debtors | 13 | (690) | (330) |
| Increase/(Decrease) in creditors due within one year | 14 | 3,648 | (615) |
| Investment income | (22) | - | |
| Release from Capital grants | - | (1,040) | |
| Adjustment for investing or financing activities | |||
| Interest payable | - | 14 | |
| Net cash inflow from operating activities | 9,176 | 645 | |
| Cash flows from investing activities | |||
| Purchase of intangible assets | 10 | (1,115) | - |
| Payments made to acquire fixed assets | 11 | (4,032) | (584) |
| Proceeds on disposal of tangible assets | 11 | 8 | - |
| Interest received | 22 | - | |
| Net cash outflow from investing activities | (5,117) | (584) | |
| Cash flows from financing activities | |||
| Interest paid | - | (11) | |
| Net cash outflow from financing activities | - | - | |
| Increase in cash and cash equivalents in the year | 4,059 | 50 | |
| Cash and cash equivalents at beginning of the year | 4,848 | 4,798 | |
| Cash and cash equivalents at end of the year | 8,907 | 4,848 |
30
Report and Consolidated Financial Statements for the year ended 31 July 2024 Notes to the financial statements 1. Accounting policies Statement of accountlng pollcles The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the financial statements. Basis of preparation These financial statements have been prepared in accordance with the Statement of Recommended Practice.. Accounting for Further and Hig17er Education 2019 (the 2019 FE HE SORP) and in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland" (FRS102). The Charity is a public benefit entity and has therefore applied the relevant benefit requirements of FRS 102. Basis of accounting The financial ststements are prepared in accordance with the historical cost convention as modified by the use of previous valuations as deemed cost at transition for certain non-current assets. The Education for Industry Group has not presented its own profit and loss account as permitted by Section 408 of the Companies Act 2006. The surplus for the financial year in the accounts of the Education for Industry Group is £5,895k (2022123 deficit £270k). Basls of consolldatlon The consolidated financial statements include the Charity and its subsidiaries, London College of Beauty Therapy, Education for Industry Awards Limited and FRA Enterprises 2020. The results of the subsidiary during the year are included in the consolidated income and expenditure account. Uniform accounting policies have been adopted in both entities and any profi'ts or losses on intra group transactions have been eliminated. All financial statements are made up to 31 July 2024. The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Statement of Financial Position, 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 Profit and Loss Account from the date on which control is obtained. See note 18 for more inft)rmation on how the acquisition has been treated London College of Beauty Therapy (LCBTI is a private company limited by guarantee, and its principal activities is other education. LCBT was acquired in it's entirety on 2 February 2024. Education for Industry Awards Limited is a private company limited by guarantee, and its principal activities are to be an End Point Assessment Organisation for the Charity. It has an authorised share capital of 10,000 shares of £1 each, and has an allotted share capital of £1 held by Education for Industry Group. FRA Enterprises 2020 was incorporated on 8th July 2019. From 1st August 2020, FRA Enterprises 2020 Ltd did not carry out any trading activities. Going concern The Board is confident that the EFI Group holds sufficient cash to continue to operate and to meet all its commitments as they fall due for the foreseeable future (12 months from the signing date), and that the EFI Group remains a going concern. The EFI Group remains a going concern e1ve months from the date the accounts from the date the accounts have been signed. The Charity has continued to maintain a strong liquidity position. At the year end, the total cash bank balance amounted to £8,907,000. Cash balances have seen a slight rise by £50,000 in the year. The current ratio is at 4.6g meaning that the business has the repayment capacity of its current liabilities nearly 5 times over utilising its liquid assets. The Charity remains comfortable meeting its commitments as they fall due. 31
Report and Consolidated Financial Statements for the year ended 31 July 2024 Notss to the financial statements (Continued) The Group has had consecutive years of strong surplus generation and achieved a net surplus of £5,895,000, largely due to the donation of £5,183,000 for fixed assets, in the accounts for 2023124 which when removed gives a surplus of £712,000 {2022123 £734,000 after adjustment for impairment}. The FY2024125 financial year budgeted a £1,589,000 deficit, mainly due to the accounting treatment recognition of the Electra House rent which is rent free for 21 months, for which we are required to allocate a cost, and added teachers and support staffing costs for the increase in learners due to the new premises. The ESFA contract is anticipated to grow in FY2025126 based on the significant growth in learner numbers in the current year and continues to maintain a strong cash balance. Funding for the Charity in 2024125 has been confirmed at £9,163,000 from the ESFA (including £171,000 of student and financial support). This includes an extraordinary increase of £624k to be used for key priorities. The Charity maintains diversification of income and provision by continuing to run HE funded courses which now accounts for 21 % of revenue income. The EFI Group continues to nurture its well-developed strong links with sponsors and other fashion retail employers. These enables the Group to offer relevant and valuable substantial periods ofwork placement to all its students on Level 3 courses or above, and ensures that the training and education provided remains relevant and up to date and also aids in staff development. In many cases these work placements lead directly to employment. The EFI Group's successful growth in fashion-related programmes set the stage ft)r expansion into the beauty industry through the acquisition of the London College of Beauty Therapy (LCBT) in February 2024. LCBT'S state at acquisition, despite financial challenges, offers a strategic foothold with its significant government funding contracts and established market presence. A detailed due diligence process, supported by reputable firms was completed and the Board unanimously agreed with the decision to support the acquisition in the special Board meeting held on 17 January 2024. The acquisition facilitates financial sustainability, immediate growth, and a broader social impact. The EFI Group acquired the entire issued share capital of LCBT, on the following basis.. Initial consideration payable of£500k', plus Any excess cash in the event that the actual working capital at completion is greater than the target working capital forecast which is subject to due diligence but not less than £380k', plus Deferred consideration of 75 % of the Government Funded Income in FY23124 that exceeds the government funded income in FY22123. This amount will be capped at £385k and any excess above this will be paid as follows; Any excess first earn-out payments., plus 500/0 of the amount by which the government funded income in FY24125 exceeds the government funded income in FY23124 The total of all contingent deferred consideration shall be capped at £510k. Given the information provided in the accounts, the EFI Group is a going concern. Recognition of Income Government revenue grants from EFA and SFA include funding body recurrent grants and other grants and are accounted for under the accrual model as permitted by FRS 102. Funding body recurrent grants are measured in line with best estimates for the period of what is receivable and depend on the particular income stream involved. Any under or over achievement for the Adult Skills Budget is adjusted for and reflected in the level of recurrent grant recognised in the income and expenditure account. The final grant income is normally determined with the conclusion of the year end reconciliation process with the funding body following the year end, and the results of any funding audits. 16-18 learner-responsive funding is not normally subject to reconciliation and is therefore not subject to contract adjustments. Bursaries are accounted for gross as expenditure and not deducted from income. 32
Report and Consolidated Financial Ststements for the year ended 31 July 2024 Notes to the financial ststements (continued) Income from tuition fees is recognised in the period for which it is receivable and includes all fees payable by students. Government capital grants are capitalised, held as deferred income and recognised in income over the expected useful life of the asset, under the accrual method as permitted by FRS 102. Income from grants, contracts and other services rendered is included to the extent of the completion of the contract or service concerned. All income from short-term deposits is credited to the income and expenditure account in the period in which it is earned. Income within LCBT is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates. IAthen cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference beeen the fair value of the consideration and the nominal amount received is recognised as interest income. Revenue from the sale of goods is recognised when the signifi'cant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the Costs Incurred or to be incurred in respect of the transaction can be measured reliably. Donations Donations received by the Charity are recognised in the income and expenditure account in the period in which they are receivable. The Charity received funding of £5,183,000 for the premises relocation in the year, treated as a donation. Accountlng for po8t4mployment benefits The Charity operates Iwo pension schemes, both of which are defined contribution.. 1. Peoples Pension Staff are auto-enrolled into the People's Pension scheme on joining the EFI Group, subject to eligibilitylmeeting the auto-enrolment requirements. Staff auto-enrolled remain in this scheme unless they opt out. The employer's contribution is 3°/0 and the employee's contribution is 5¥0. 2. Prudential Stakeholder Pension (administered by Prudential plc.} Staff are able tojoin this pension after they have passed their probation period (probation is 3 or 6 months depending on the role). With the exception of the CEO, the employer matches contributions of up to So. There is no limit to employee contribution, meaning staff can exceed the 50/0 but the employer contribution is capped at 50/0. The most common contribution rates are 5 % employer and 50/0 employee. Employees are advised that they must opt out of People's Pension before joining the Prudential scheme as they cannot be in 2 schemes at once. The assets ofthe scheme are held separately from those ofthe company in an independently administered fund. The total amount paid into the scheme by the Charity in the year to 31 July 2024 was £118,320 (2022123 £141,459). Short term Employment benefits Short term employment benefits such as salaries and compensated absences (holiday pay} are recognised as an expense in the year in which the employees render service to the Charity. Any unused benefits are accrued and measured as the additional amount the Charity expects to pay as a 33
Report and Consolidated Financial Statsments for the year ended 31 July 2024 Notes to the financial ststsments (continued) result of the unused entitlement. Redundancy costs are recognised as an expense in the period in which the charity becomes irrevocably committed to incurring the costs and the main features of the plans have been announced to affected employees. Two staff members have childcare vouchers supplied by Edenred. This scheme is closed to new entrants. A Tech Scheme is also in operation and open to all staff with fixed contracted hours. Staff request the amount they need to purchase their chosen technology equipment and if approved, the amount is provided on a retail e-voucher. Once the voucher is received by the member of staff, payroll deductions commence (12 deductions in total). Applications are made by the member of stsff and assessed by the HR team in terms of affordability and length of contract remaining if they are on a fixed term contract. Staff can apply in any given month meaning the number of staff on the scheme varies from month to month depending on when their loan started. Around 10 staff are on the scheme at any one time. Goodwlll Goodwill, being the amount paid in connection with the acquisition of London College of Beauty Therapy, is being amortised evenly over its estimated useful life of ten years. Tangible flxed as8ets Tangible fixed assets are stated at historical purchase cost less accumulated depreciation and accumulated impairment losses. Cost includes the original purchase price of the asset and the costs attributable to bringing the asset to its working condition for its intended use. Leasehold improvements Leasehold propety improvements are depreciated over the period of the lease, 20 years. Fixtures and fittings and computer equipment Fixtures and fittings and computer equipment costing less than £1,000 per individual item are written off to the statement of comprehensive income in the period of acquisition. All other equipment is capitalised at cost. Depreciation is provided at rates calculated to write off the cost, less estimated residual value based on prices prevailing at the date of acquisition of each asset, evenly over its expected useful life, as follows.. Fixtures and Fittings 5 years Computer Equipment 3 years Plant and machinery 3-5 years Assets in Constmction These are capitalised as assets in construction until the assets are brought into use. Once brought into use, they are depreciated in accordance with the useful economic life of the asset class to which it is transferred Leased assets Costs in respect of operating leases are charged on a straight-line basis over the lease term. Maintenance of premises The cost of routine corrective maintenance is charged to the income and expenditure account in the period that it is incurred. Taxatlon The Charity is an exempt charity within the meaning of section 467 of the Corporation Tax Act 1988 (CTA 2010). Accordingly, the Charity is potentially exempt from taxation in respect of income or capital gains received within categories covered by sections 466 to 493 of CTA 2010 or section 256 of the Taxation of Chargeable Gains Act 1992, to the extent that such income or gains are applied to exclusively charitable purposes.
Report and Consolidated Financial Statements for the year ended 31 July 2024 Notes to the financial ststements {continued) Fund Accounting Unrestricted reserves represent those resources which may be used towards meeting any of the charitable objects of the Charity at the discretion of the board. Restricted reserves refer to monies received such as bursaries from the ESFA which are used for charitsble purposes and for student welfare. The Charity is generally unable to recover input VAT it suffers on goods and services purchased. Non- pay expenditure is therefore shown inclusive of VAT with any partial recovery netted off against those amounts. Current Asset Investments Current asset investments include sums on short-term deposit with Bank of Scotland. Flnancial Instruments The Charity has financial assets and financial liabilities of a kind that qualify as basic fi'nancial instruments, which are initially recognised at transaction value and subsequently measured at amortised cost using the effective interest method. Financial assets held at amortised cost comprise cash at bank and in hand, together with trade and other debtors excluding prepayments. Financial liabilities held at amortised cost comprise trade and other creditors. Valuatlon of Investment8 Investments in subsidiaries are measured at cost less accumulated impairment. Provlslon8 Provisions are recognised when the Charity has a present legal or constructive obligation as a result of a past event, it is probable that a transfer of economic benefit will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Learner Support Fund8 The Charity acts as an agent in the collection and payment of Learner Support Funds, educational maintenance allowances, and Adult Learning Grant and residential bursaries. Related payments received from the EFAJSFA and subsequent disbursements to students are excluded from the Income and Expenditure account and are shown separately in Note 21, except for the 5 per cent of the grant received which is available to the Charity to cover administration costs relating to the grant. The Charity employs one member of staff dedicated to the administration of Learner Support Fund applications and payments. Judgements in applylng accountlng pollcles and k•y 8ource8 of estlmatlon uncertainty In preparing these financial statements, management have made the following judgements.. Determined whether leases entered into by the Charity either as a lessor or a 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. All leases have been identified as operating. Determined whether there are indicators of impairment of the group's fixed assets. Factors taken Into consideration in reaching such a decision include the economic viability and expected future financial performance of the asset and where it is a component of 8 larger cash-generating unit, the viability and expected future performance of that unit. Other key sources of estimation uncertainty Tangible fi'xed 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 and maintenance programmes are taken into account. Residual value assessments consider issues such as fvture market conditions, the remaining life of the asset and projected disposal values. 35
Report and Consolidatsd Financial Statements for the year ended 31 July 2024 Notes to the financial statements (continued) 2. Funding Body Grants Unrestricted Funds Restricted Funds Year ended 31 July 2024 Group Year ended 31 July 2023 Group £'ooo £'ooo £'ooo £'ooo Education Funding Agency 11.435 11,435 8,384 Skills Funding Agency 794 794 Council Funding 293 293 242 Release of deferred LSC capitsl grant 1,108 Release of deferred GLA capital grant 267 12,522 12,522 3. Tuition Fees and educational contracts Unrestricted Funds Restricted Funds Year ended 31Jul 2024 Group Year ended 31-Jul 2023 Group £'ooo £'ooo £'ooo £'ooo HE degrees income 2,997 UK Further Education students 3,692 3,692 124 124 3,816 3,816 554 3,551 36
Report and Consolidated Financial Statements for the year ended 31 July 2024 Notes to the financial statements (continued) 4. Other Income Year ended 31Jul 2024 Group £'ooo Year ended 31-Jul 2023 Group £'ooo Sundry other income 433 433 272 272 5. Donations Year ended 31-Jul 2024 Group £'ooo Year ended 31-Jul 2023 Group £'ooo Donation from Gresse Street Limited for the refurbishment of Electra House 5,183 5,183 6. Staff numbers The average number of employees (head count based or number of staff employed during the year is given below along with the nnthlY average number of persons (including senior post-holdets) employed by the Academy duiing the year, expressed as full-time equrvalenls (FTE'S) Year to 31 Juty 2024 Year to 3 July 2023 Average number of stsff 260 169 The monthly average number of persons (including senior post-holders) employed by the Academy during the year, expressed as full-'Me equivalents (FTE'S) was: Year to 2024 FTE'S Year to 2023 FTE'S Teaching staff Student support and Curriculum SeNices Staff Academy support staff 76 70 52 197 50 45 46 141 37
Report and Consolidated Financial Ststements for the year ended 31 July 2024 Notes to the financial statements (continued) 7. Staff costs Year ended 31 July 2024 Group £'ooo Year ended 31 July 2023 Group £'ooo Wages and salaries 7,317 5,490 Agency staff 12 Social security costs 721 526 Other pension costs 238 8,306 6,217 Year ended 31 July 2024 Group £'ooo 2,858 2,439 3,009 Year ended 31 July 2023 Group £'ooo 1,972 2,092 2,147 Teaching departments- teaching staff Student support and Curriculum Services staff Charity support staff 8,3C 6,211 Teaching costs comprise staff primarily employed as teachers and tutors. Student Support and Curriculum Services Staff comprise study support, curriculum planning, library and work placement staff. There are also Apprenticeships and Commercial staff. Charity support staff comprises all other staff, including Finance, HR, IT and Marketing. The number of employees whose gross emoluments exceeded £60,000 were: 2024 2023 £60,001 to £65.000 £65.001 to £70,000 £70,001 to £75,000 £75,001 to £80,000 £80,001 to £85,000 £85,001 to £90,000 £90.001 to £95,000 £95.001 to £100,000 £120,001 to £125,000 £175.001 to £180,000 £190,001 to £195,000 13 10 The above emoluments include payments to the Head of the Charity (Accounting Officer) 38
Report and Consolidated Financial Ststements for the year ended 31 July 2024 Notes to the financial statements (continued) One member of part-time staff re]VeS less than £60,000 in the year but would have received at least £60,000 on a full-time basis. This employee is part-time 0.3 FTE and is paid £21,115 per annum Temilnatlon costs: Termination and redundancy costs were incurred for five employees in the year 2023124 of £83,707 (Nil employees in 2022123}. 8. Senior post-holders, emoluments SeThor posthokjers a defined as the pnpaI and 9 directors of the c(ryany. Year to 31 July 2024 Numb•r Year to 31 2023 Nwthr The rllKrt)er 01 seThor was: 10 Sernor post.hokJers' emollmerts are made w) as follows. Y•ar to 31 Juty 2024 Yeaf to 31 Juty 2023 Wages a1 salaTies Social seclty costs Pengon ConbOn$ 915 115 61 702 48 840 abcNe emolwnerts incIse amounts payab* io Ihe Pnncipal (who is also tr ghest paid sernor p0.hokIer) ol.. Y•arto 31 July 2024 £000 194 26 Year to 31 2023 £000 179 24 27 230 Wages aThJ salaries Social security C(tsts Pension C0ntnb10r 249 39
Report and Consolidated Financial Ststements for the year ended 31 July 2024 Notes to the financial statements (continued) The EFI Group keeps its salary scales under regular review, and as a minimum, reviews every 3 years. Ad hoc benchmarking and realigning of pay also takes place for specific roles when there is a business case to do so. Benchmarking and re-alignment of the Senior Leadership Team (SLT) pay t¢)ok place in 2021122 resulting in increases for some roles to ensure we remain competitive, and to ensure parity amongst the EFI Group leadership team. th regards to other increases, there is no automatic annual increase; it is determined by performance. Bonuses and performance related salary increases are reviewed on an annual basis. These are informed by the EFI Group's performance development process which consists of monthly check-ins which assess objectives and impact, culminating in an annual performance review in September. Each employee will re1ve a score from 1-5 in their annual review {1 being inadequate and 5 being the best imaginable) based on their performance. This score then dictates the pay % increase they will receive, subject to sector recommendations, EFI Group funds etc. All increases are signed off by the Chair of Governors and Principal & CEO and usually take effect in September. During this time, the Chair of Governors and Principal & CEO also assess cases of exceptional performancelimpact which may warrant a bonus, put forward by either the Principal & CEO or the SLT. Bonuses are occasionally considered outside of this window but only as an exception. The above process applies to all staff (including SLT), other than the Principal and Clerk to the Governors. Any emoluments ft)r these roles are decided by the Board. Accounting officer's basic salary divided by the median pay of all other corporation employees (all on a full-time equivalent basis) is equal to 4.6 Accounting officer's total emoluments divided by the median pay of all other corporation employees (all on a full- time equivalent basis) is equal to 5.9 9. Other operating expenses Unrestrlcted Funds Restrlcted Funds Year ended 31 July 2024 Group £'ooo Year ended 31 July 2023 Group £'ooo £'ooo £'ooo Teaching support services Other support services Administration and central seNices 1,176 221 1,176 221 1,110 119 4,184 4,184 2,328 732 Premise costs Rent 1,849 1,849 1,272 2,153 Impairment 7,430 7,430 40
Report and Consolidatsd Financial Statements for the year ended 31 July 2024 Notes to the financial statsments Icontinued) 10. Intangible assets Group and Company Goodwill Cost At 1 August 2023 Additions At31 July 2024 1,115 Amortisatlon At 1 August 2023 Charge for Ihe year At 31 July 2024 Net book valuo At 31 July 2024 1,059 At31 July 2023 41
Report and Consolidated Financial Statements for the year ended 31 July 2024 Notss to the financial statements (continued) 11. Fixed assets (Group & Charity) TANGIBLE AS ETS Fixtures Assets under Leasehokl Computer Equipment Improv6ments Fittings Construction Total £¢XJO £thJo £000 At 1 August 2023 Additions 7,995 1.921 1,301 998 12.216 4,032 Dtsposals {1021 {1021 At 31 July 2024 7,996 1,956 1,231 4,962 16,146 Accumulated depreclatlon: Al 1 August 2023 Charge for year Disposals At 31 July 2024 7,995 1,587 1,172 10,754 163 125 1951 1,202 195} 1,750 10,948 Net Book Valu• At 31 July 2024 4,%2 1197 At 31 July 2023 335 128 998 1,482 42
Report and Consolidated Financial Statements for the year ended 31 July 2024 Notes to the financial statements (continued) 12. Fixed asset investments This is the investment to purchase LCBT on 2 February 2024. Investments in subsidiary companies Company £000 Cost or valuation Additions 1,941 At 31 July 2024 Net book value At 31 July 2024 43
Report and Consolidated Financial Statements for the year ended 31 July 2024 Notes to the financial statements (continued) 13. Debtors Group Yearto 31 July 2024 £000 Charfty Year to 31 July 2024 £000 Group Year to 31 Juty 2023 £000 Charity Year to 31 Juty 2023 £000 Amounts falling due within one year.. Trade debtors. 869 465 465 Other debtors 295 78 108 108 Amounts owing from subsidiary Prepayments and accrued income. 258 115 563 1,251 662 1,826 563 1,136 1,470 'Included within trade debtors, in 2023124, £582k relates to 2024125 (in 2022123, £407k related to 2023124). 14. Credltors: amounts falllng due wlthing one year Group Yearto Charity Yearto Group Year to Charity Year to 31 July 2024 £000 31 July 2024 £000 31 July 2023 £000 31 July 2023 £000 Trade creditors" Accruals Other creditors including taxation and social security Other creditors Staff annual leave entitlement Deferred income. Amounts owed to group undertakings 322 3,491 292 3,215 317 218 317 218 212 10 211 211 10 10 521 10 521 859 695 406 4,833 4,925 1,277 1,277 'In 2023124, £695k of deferred income relates to 2024125 fees, of which £582k had not been received by 31st July 2024 and is included in trade debtors lin 2022123, £521 k of deferred income related to 2022123 fees, of which £465k had not been received by 31st July 2023 and was included in trade debtors). Amounts owed to group undertakings are unsecured, interest free and repayable on demand.
Report and Consolidated Financial Statements for the year ended 31 July 2024 Notes to the financial statements (continued) 15. Statement of Reserves (Group and Charity) Group Year to31 July 2024 £'ooo Charity Year to31 July 2024 £'ooo Group Year to31 July 2023 £'ooo Charity Year to 31 July 2023 £'ooo At 1 August 2023 Surplus for the year At 31 July 2024 6,169 5,895 6,169 6,439 6,439 (270) 6,169 5,761 (270) 6,169 16. Statement of Restricted Income reserves (Group and Charity) At 1 August 2023 £000 (78) 68 At 31 Juty 2024 £000 (78) 192 Income £000 Expenditure £000 FE Learner Support Funds HE Bursaries Retailers Donations & Bursaries Student Funds Residential Housing Scheme Electra House refurbishment Totsl Funds 124 39 39 5,183 5,307 5,183 5,339 32 17. Analysls of chang85 in net funds (Group and Charity) At 1 August 2023 Cash flows £000 £000 4,848 4,059 4,848 4,059 Investments comprising cash deposits held on short term maturities have now been amalgamated with Cash at bank and in hand. At 31 July 2024 £000 8,907 8,907 Cash at bank and in hand Analysis of net assets between funds (Group) Fund balances at 31 July 2024 Unrestricted Restricted Total £000 £000 £000 Fixed assets 5,197 1,059 5,197 1,059 10,733 14,925 12,064 Intangible fixed assets Current assets 5,394 5,339 Creditors due within one year {4,925> 6,725 5,339 45
Report and Consolidatsd Financial Statements for the year ended 31 July 2024 Notss to the financial ststsments (continued) Analysis of net assets between funds {Charity) Fund balances at 31 July 2024 Unrestricted Restricted Total £000 £000 £000 Fixed assets 5,197 1,941 4,286 (4,833) 6,591 5,197 1,941 9,625 14,833 11,930 Investments Current assets 5,339 Creditors due within one year 5,339 18. Business combinations On 2 February 2024, the Company acquired London College of Beauty Therapy Limited for £1,941k, which was settled is made up of the below.. Initial consideration payable of £500k ', plus £225k of excess cash of actual working capitsl at completion which was greater than the target working capital,. plus Deferred consideration of 750/0 of the Government Funded Income in FY23124 that exceeds the government-funded income in FY22123. This amount will be capped at £385K, and any excess above this will be paid as follows.. 1. Any excess will go to the first earn-out payments,. plus 500/0 of the amount by which the Government Funded Income in FY24125 exceeds the Government Funded Income in FY23124. 2. £260K of deferred consideration has been included as at 31 July 2024. 3. The total of all contingent deferred consideration shall be capped at £510K. Capitalised transaction costs of £366k. The useful life of goodwill recognised in the business combination is 10 years. Book value £000 Falr value £000 Flxed Assets Tangible Current Assets Debtors Cash at bank and in hand 329 329 1,120 1,452 1,452 Total Assets Creditors Due within one year Total Identifiable net assets Goodwill Total purchase consideration 626 826 626 826 1,115 46
Report and Consolidated Financial Statements for the year ended 31 July 2024 Notes to the financial statements (continued) The results of London College of Beauty Therapy Limited since acquisition are as follows= Current period slnce acquisltion £000 Revenue Loss for the period since acquisltlon 371 LCBT is a vocational provider for beauty therapy, hair, media makeup, and related qualifications and holds a dominant position in Beauty Therapy registrations with potential for growth through diversification and efficient resource utilisation. 19. Related Party Transactions The Chair of Governors via Longman Consultancy was paid £32,400 during the year 2023124 (2022123.. £32,400) to oversee the relations with the sponsor organisations and other fashion retailers. Longman Consultancy is a related party as it employs the Chair of Governors. £2,923 of Governor's expenses were paid in the year. University of the Arts London are the awarding body for several of the Level 3 and Level 4 courses and EFI Group pay exam registration fees to UAL. For the Group 31 July 2024 31 July 2023 £000 £000 194 Total expenditure incurred with UAL for 12 months ending Creditors balance with UAL at 3110712024.. 11 Total expenditure incurred with Longman Consultsncy for 12 months ending Creditors balance with Longman Consultancy at 3110712024: 32 32 Two salary sacrifice arrangements exist. One staff member has an annual travel ticket and one staff member has a laptop. Both are being deducted on a monthly basis from their salary. 20. Operating lease commitments The company has on-going commitments under one operating propety lease signed 12 April 2024, and through a second operating propety lease under a subsidiary acquired during the period Break clauses ft)r tsvo further operating property leases were exercised prior to 31 July 2024 with commitments ending within 3 months. For the Group 31 July 2024 31 July 2023 £000 £000 Within one year fithin to fi've years After more than five years 1,031 146 6,959 31,269 3896 1,177 47
Report and Consolidated Financial Statements for the year ended 31 July 2024 Notes to the financial statsments (continued) 21. Learner Support Funds Yearto 31 July 2024 £000 Year to 31 July 2023 £000 Monies received in respect of each year EFA - carried over from previous year EFA- Student Financial Support Funding 169 75 144 353 219 Used as follows: Disbursed to students (15n (49> (49) Total disbursed 1157) Balance at 31 July 196 169 22. Contingent Assetl Liabilities The Charity is not aware of any contingent liabilities or assets. Capital commitnts in relation to the fit out of Electra House amounted to £1,365,000. 23. Share Capital No share capital (22123 no share capital). 24. Llmltatlon on governors, liability The Chanty has purchased an insurance to cover the governors, liability up to £2.5m. 25. Related party undertakings The following were subsidiary undertakings of the Company: Names Company Registered office or number rinci al lace of busines8 Prlncipal activlty Education for Industry Awards Limited 06793904 Electra House, 84 Moorgate, London, England, EC2M 6SE End point assessment or anisation FRA Enterprises 2020 12091668 Electra House, 84 Moorgate, London, England, EC2M 6SE Dormant The London college of beauty therapy Limited 03053799 Electra House, 84 Moorgate, London, England, EC2M 6SE Other education All Subsidiaries are 1000/0 owned and entirely formed by Ordinary share capital. 26. Post balance sheet events A 0-year lease has been agreed with Close Brothers for the leasing of IT, Audio Visual equipment and some furnishings in relation to the move to Electra House in August 2024. The total amount excluding nterest is £1.92m and monthly payment has commenced from October 2024. 48