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2020-12-31-accounts

International House London pi

Trustees’ Report and Financial Statements 31 December 2020

International House Trust Ltd A company limited by guarantee (01239120) Registered Charity (270860)

International House Trust Ltd Trustees’ report and financial statements Year to 31 December 2020

Contents

1 Reference Information

2 Chair’s Report

Introduction

Strategic Report Structure, Governance and Management

Statement of Trustees’ Responsibilities

23 Independent Auditor’s report

26 Statement of Financial Activities

Incorporating an income and expenditure account

International House Trust Ltd Annual Report and Accounts year to 31 December 2020 Company 1239120

Reference Information

Board of Trustees Phil Huggon (Chair since July 2021)
Angela Dean (Chair till July 2021)
Adrian Underhill (Vice Chair)
Elizabeth McGlynn
Keith Davies
Maxwell Nye
Monica Green
Norman Renshaw
Ricard Alonso Ferre
Tita Beaven
Tomasz Mazgaj
Senior Management Team Mark Rendell (Chief Executive)
Karen Smith-Watson (Interim Finance Director till April 2021)
Vimala Jayaraman (Finance Director since April 2021)
Eleanor Maly (Director of Education)
Lawrence Jackson (Sales and Marketing Director)
Eve Truszkowska (Director of Assessment)
Alex Cann (Director of Young Learner Programmes)
Registered office 16 Stukeley Street, Covent Garden
London, WC2B 5LQ
Website www.ihlondon.com
Company registration number 01239120, incorporated on 2 January 1976
(England and Wales)
Charity registration number 270860
VAT registration GB 1061 801 56
Auditors Haysmacintyre LLP, 10 Queen Street Place, London EC4R 1AG
Bankers Lloyds Bank, 39 Threadneedle Street, London
EC2R 8AU
Allied Irish Bank (UK) PLC, 10 Berkeley Square,
London W1J 6AA
Solicitors Russell-Cooke, 2 Putney Hill, London SW15 6AB

Page 1

International House Trust Ltd

Annual Report and Accounts year to 31 December 2020 Company 1239120

Chair’s Report

International House London continued to see the strength of the turnaround achieved in 2019 into the start of 2020, prior to Coronavirus being declared as a pandemic. Jan and Feb 2020 saw a total YoY revenue growth of 19%, despite some slackening in the global markets in these months.

The organisation relies on international students travelling to the UK. The global markets signalled a weakening due to COVID earlier in March, which was exacerbated when World Health Organisation declared COVID as a pandemic and London went into lockdown. March and the subsequent months in 2020 saw the significant adverse impact of Coronavirus declared as a pandemic.

The senior leadership team and staff rapidly pivoted to an online delivery model and remote working to limit disruption to operations. The testament of the agility and successfully switching to a digital offering is evident in the 2020 revenue of £9.1m and in retaining 55% of 2019 pre-pandemic turnover.

Additionally, we delivered across the board in terms of industry rankings including International House London being in the top 1% of all UK Language Schools in British Council UK Accreditation inspection. The joint EAQUALS and IHWO inspection also provided many compliments on our work.

Financially, to address the challenges posed by the pandemic, we rapidly took action to limit losses by utilising the furlough scheme and secured a CBILS loan to support working capital and cash flow requirements. Regular trading and cash updates with the Trustees ensured that the Committees and the Board were appraised of the trading and the liquidity position to enable the organisation to take necessary and timely actions.

Whilst 2021 continues to be challenging, the strength of the operating model of International House London combined with the excellence of course content and delivery resulted in sustained demand for our courses and assessments, both in face-to-face and digital platforms.

We have taken the opportunity of the slack trading to lay strong foundations to drive efficiencies, achieve turnover growth, and sustain the quality of delivery in the post-pandemic era. Although 2021 continues to be riddled with changing travel restrictions and regulations, the organisation is well placed to remain sustainable growth and YoY financial improvements.

I would like to thank the board of trustees for their time and support to IH during this unprecedented year. Mark as CEO, the Senior Management Team and all the staff have worked tirelessly through the pandemic so thank you to all of them. Lastly, an enormous thankyou on behalf of IH and the board to Angela Dean the outgoing chair who served IH for 12 years. She has been a great support to me as incoming chair and to the organisation as a whole and we will miss her energy and wise counsel.

Philip Huggon Chair 24 September 2021

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International House Trust Ltd

Annual Report and Accounts year to 31 December 2020 Company 1239120

Chief Executive’s Report

Our Brave New World

It was Friday, 20 March 2020, the global Covid-19 pandemic (known as coronavirus at the time) was spreading at an alarming rate in the UK and we had just sent all our students and staff home following the Government-mandated suspension of face-to-face teaching. We anxiously looked around at each other for the final time for what was to be almost half a year and wondered what the future held in store.

Our teams rolled up their sleeves and on Monday, 23rd March 2020 a new online version of International House London was launched. Soon, every teaching and training programme had been adapted to be delivered expertly online. All of our staff were forced to come to terms with working virtually from their homes.

The response from our staff was incredible. Our teams ensured that students could almost seamlessly continue their language and teacher training education online. New skills were acquired by staff at breath-taking speed.

Our teams were determined to demonstrate that their collective expertise could make the transition to online a success and the majority of our students were surprised at how good the online learning experience could be for them.

A Positive Q1 2020

IH London had performed well in the first quarter of 2020 continuing the positive growth trend observed in the previous two years. The school was ahead of budget with strong future bookings particularly in the young learner segment.

IH London Outperforms the Market

The school remained closed to face-to-face teaching and training from March to September. Our exams business managed to resume testing in London in June with a phased resumption in other parts of the country.

Mark Rendell Chief Executive Officer

“The pandemic may have been the worst crisis that we have faced in a generation, but it has also provided our organisation with the greatest opportunity in a generation to modernise, innovate, and to transform our operating model.”

With the ELT industry in state of near collapse, IH London managed to generate 55.5% of the revenue that it generated in 2019. A diversified portfolio of products paid dividends and two product divisions unbelievably exceeded the revenue figures produced in 2019.

Our Modern Languages department made a smooth transition to online learning and interest in our courses remained very high as Londoners stayed home. For many, our courses provided a valuable social and intellectual connection with the world during a time of severe restrictions on the movement of people.

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International House Trust Ltd

Annual Report and Accounts year to 31 December 2020 Company 1239120

Chief Executive’s Report

Our teacher training department worked closely with Cambridge English to adapt the CELTA to an online format and there was strong interest in the product as local people looked to reskill and overseas markets, particularly China, took advantage of the availability of the qualification without the need to travel to the UK.

The hardest hit product was general English but despite some initial market reticence the online programme has remained viable for the duration of the crisis. We saw a 51.2% drop in revenue, but this compares very favourably to the average drop of 85% in student numbers as recorded by English UK member schools in the private sector. The wider market also saw a 75% reduction in student weeks.

The sudden and drastic drop in the market has devastated the ELT sector with around 50 centres already closing and many more struggling to survive.

Gross Profit Margin

----- Start of picture text -----
£20 100%
Revenue Gross Profit Margin
80%
£15
60%
£10
40%
£5
20%
£0 0%
2013 2014 2015 2016 2017 2018 2019 2020
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As depicted above the school continued to maintain a very competitive gross profit margin on the language products that it produced. This is despite the effect of social distancing which necessitated a reduction in class size and the shift to online learning which had to be slightly discounted to meet public perceptions of online learning and also had smaller class sizes than the face-to-face alternative.

At a Glance: 2020 in Numbers

Turnover £9,120k
YoY Turnover Retained in Pandemic Year 55.5%
Deficit (£1,899k)
Consecutive years in operation 63

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International House Trust Ltd Annual Report and Accounts year to 31 December 2020 Company 1239120

Chief Executive’s Report

A turnover of £9,120k (2019: £16,438k) was very strong given the trading conditions, however, the organisation posted a deficit of (£1,899k).

----- Start of picture text -----
£500
£150
£153 £116
£14
£0
2013 2014 2015 2016 2017 2018 2019 2020
(£500)
(£369)
(£522)
(£680)
(£1,000)
(£1,500)
(£2,000)
(£1,899)
Surplus/Deficit (£k)
(£2,500)
----- End of picture text -----

In addition to the plunge in revenue, the main contributing factors to the loss were the liabilities that could not be discharged. This included a contract for residential accommodation with Greystar and a rental agreement for office space at Shaftsbury Avenue.

The school had a commitment for 50 beds with Greystar which remained valid to September 2021. Residential accommodation is the most popular accommodation category and without control over a stock of rooms the school would find it difficult to trade. The school incurred a loss of (£879k) on its accommodation services. The residential provider offered limited relief during a specific three-month lockdown period.

IH London has a 10-year rental agreement for office space at Shaftesbury Avenue. The office was sublet to the British Council, but this agreement expired in April 2020 leaving the offices unused. The contract expires in February 2022. The school incurred a loss of (£266k) on this contract.

The combined losses from these two contracts (£1,145k) matches the EBIDTA loss of (£1,149k). This demonstrates how well operationally the school managed to navigate the pandemic period.

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International House Trust Ltd

Annual Report and Accounts year to 31 December 2020 Company 1239120

Chief Executive’s Report

----- Start of picture text -----
1,500
EBITDA
1,000
500
-
2015 2016 2017 2018 2019 2020
(500)
(1,000)
(1,500)
(2,000)
General fund Interest Depreciation EBITDA
£k
----- End of picture text -----

Government Support

The school availed itself of some of the government support that was available during the pandemic. The school secured a CBILS loan of £2.3m in July 2020. The fact that IH London managed to secure the loan was testament to the confidence that the bank had in the viability of IH London. Many in the sector were unsuccessful in the utilisation of this source of funding.

The school was also forced to furlough some staff although many departments remained very active through the duration of the pandemic.

The ELT sector was largely excluded from local government support in the form of business rates relief and Additional Restrictions Grants (ARG) support which was unfortunate as the disruption for many businesses proved to be on a par with the hospitality and retail sectors.

Coming Through the Storm Together

Our Staff

The staff of IH London have proven to be tremendously flexible and determined acquiring a new way of working almost overnight. Many have been busier than ever with programmes in high demand from students while other departments have had to operate on reduced capacity meaning furlough had to be utilised.

All staff members took a wage reduction for several months and these actions plus furlough have saved many jobs and livelihoods. I am proud that IH London has not had to make the large-scale redundancies that many other organisations in the sector have had to undertake. We were determined to come through this crisis together and the staff have really pulled together and shown tremendous resilience and belief in IH London.

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International House Trust Ltd Annual Report and Accounts year to 31 December 2020 Company 1239120

Chief Executive’s Report

The Management Team

The management team have been a significant asset to the organisation during the pandemic period and deserve special thanks. The talented team is comprised of a lot of industry knowledge and experience and each member has played an invaluable role in helping the organisation to survive. I should start by mentioning our interim finance director, Karen Smith-Watson, who came in at the start of the crisis and helped the organisation to obtain the CBILS loan. Karen proved a very steady hand delivering accurate financial forecasting during the first stage of the pandemic.

Whilst the young learner department was unable to contribute very much revenue in 2020, Alex Cann, the Director of Young Learners, worked closely with our summer organisations to ensure that our organisation did not have to bear the cost of the cancellation of the summer programme. Our thanks to our summer partner institutions for being so understanding.

Eleanor Maly, our Director of Education, was well prepared for the switch to online and the transition was very effectively managed. We have further strengthened our General English project with a partnership with the online content platform, Guided E-Learning.

Our exams team is led by Eve Truszkowska, and Eve had the job of managing one of the UK’s largest examination centres under Covid-safe social distancing restrictions. The customer journey was planned in meticulous detail to ensure that test candidates stayed safe.

Finally, our new Director of Sales and Marketing, worked closely with our partners in order to persuade students to defer their courses to a future date. This provided valuable breathing space during the early stages of the pandemic. The team has reoriented the marketing and sales effort to focus on direct marketing and the UK market especially for modern languages and teacher training.

Our Students and Agents

I’d like to thank our students and partner organisations for their understanding, patience, and flexibility during this crisis. The vast majority of our students switched to online learning reluctantly at first but with an open mind. Many now prefer the format and the freedom that this form of interaction brings.

The students that we have had in the school have been really keen to make the most of the opportunity and have been fantastic to teach and train.

Our partners overseas have been very supportive, and I am delighted that we have managed to retain a lot of their student referrals in the form of course deferrals as well as helping to facilitate any refunds that were needed in cases where students were reluctant to come to the UK or were not permitted to travel overseas.

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International House Trust Ltd Annual Report and Accounts year to 31 December 2020 Company 1239120

Chief Executive’s Report

The Board

I would also like to thank our board and especially the outgoing Chair, Angela Dean. Angela has served IH London for twelve years and her experience and supportive ear proved incredibly helpful especially during some very challenging periods. The Board have also been very understanding and have worked diligently with the responsibility of protecting the Trust and from the increased workload of attending the additional extraordinary meetings that were called throughout the year.

Angela is succeeded in the role of Chair by Phil Huggon and I’m looking forward to working with Phil in the future.

Mark Rendell, Chief Executive Officer Date: 24 September 2021

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International House Trust Ltd Annual Report and Accounts year to 31 December 2020 Company 1239120

Chief Executive’s Report

Introduction

International House (IH) was founded in 1953 in Cordoba, Spain by John and Brita Haycraft and is now one of the world’s largest and best-known groups of language schools. IH schools teach over 200,000 students every year and employ over 5,800 teachers.

The London school opened in 1957 in Covent Garden and became an Educational Trust in 1974. IH London is also known as International House Trust Ltd. IH London has a major share in the Londonbased International House World Organisation (IHWO) which is the body that was established to oversee the network of globally affiliated language schools located in 48 countries spanning every continent and to manage the IH brand.

Founders, John and Brita, had the goal of using language learning as a tool to help bring the world back together following the ravages of the second world war. They were also committed to raising the standards of English language teaching and training worldwide and created the forerunner of the industry-leading CELTA teacher training qualification.

Schools in the network teach English, Spanish, German, French, Japanese, Arabic, and a wide variety of other languages to adults and young learners. Across the network, IH schools train about half of all CELTA graduates in the world. IH London also specialises in the delivery of examinations including IELTS.

Our Areas of Expertise

International House London is a world leader in language teaching, training, and testing. Our activity in the UK is primarily in the field of educational tourism.

We believe that by delivering quality language and communication training, we act as a force for change, bringing people together, enhancing mutual understanding and tolerance, and unlocking human potential.

Our educational portfolio of face-to-face and online learning includes:

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International House Trust Ltd Annual Report and Accounts year to 31 December 2020 Company 1239120

Trustees’ Report

Our Covent Garden School

Our large adult school is located in the popular Covent Garden area in central London. Our modern air-conditioned school has nine floors with a large library, café, computer centre, comfortable social spaces, reception, and fully equipped large bright classrooms.

What makes International House London stand out?

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International House Trust Ltd Annual Report and Accounts year to 31 December 2020 Company 1239120

Trustees’ Report

Strategic Report

Strategic Goals

International House London developed a new three-year strategy in 2019 with the five key goals outlined below:

Strategic Goals
International House London
outlined below:		 developed a new three-year strategy in 2019 with the five key goals
1. Become a
sustainable
organisation		 To generate a sustainable surplus to allow the School to continue to invest
in and fulfil its charitable purpose. To ensure this we will grow a
differentiated but focused product portfolio and reduce our dependency
on single sales channels, geographical location, markets, and product. We
will encourage innovation, address the needs of our students, focus on
organic and inorganic salesgrowth,and improve margins.
2. To be the
employer of
choice		 We have a loyal and committed staff who are leaders within the industry.
We will strive to attract and retain the most talented personnel in the
industry.
3. Deliver
outstanding
service and
performance		 We recognise that we are a service industry operating in the educational
tourism sector. Customer service and the student experience are key
differentiators, and we will focus on the outputs of our learners.
4. Innovate and
offer new
benefits		 Since IH London’s launch of the forerunner to the CELTA qualification we
have been innovators and we will continue to innovate and embrace new
ideas and technologies.
5. Widen our
accessibility and
reach		 We are confident in the quality of our language services. We want to break
barriers and open up new frontiers to bring our services to more people
around the world. This will be achieved through technological advances
and deliveringourproducts in new markets.

Senior Management Changes:

CEO, Mark Rendell joined International House London in January 2019. Mark is currently Chair of English UK, he is a member of the Accreditation UK Executive Board, a member of the Cambridge Assessment Standards Committee and a director on the IHWO Board.

Eleanor Maly returned from maternity leave as Director of Education in March 2020. Lawrence Jackson was promoted to the position of Director of Sales and Marketing in December 2020. Alex Cann was appointed as Director of Young Learner Programmes (SMT level) in August 2020. Joseph Lowe, Finance Director, resigned in July 2020 and was replaced by Karen Smith-Watson, an experienced Interim Finance Director with the FD Centre.

Eve Truszkowska continued to be Director of Exams in 2020.

Achievements and Performance

Sales and Marketing

Our sales led organisation successfully pivoted to pursue a more direct sales strategy with a focus on products that were attractive to the UK market. A stable, experienced, and talented sales team successfully delivered strong sales retention in the turbulent times and continue to target growth for 2021.

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International House Trust Ltd

Annual Report and Accounts year to 31 December 2020 Company 1239120

Trustees’ Report

International House Trust Assessment (Exams)

We are a leading international language exams centre with IELTS and OET being delivered in multiple locations around the UK, Ireland, Israel, and Nigeria. Our exams provision was halted during the first lockdown in 2020 but remained open for other periods as our exams performed a national service in servicing the healthcare sector and immigration. 2020 saw a fundamental shift away from paperbased testing to computer-based testing especially with IELTS. We have become the third biggest provider of the new OET exam in the world.

Young Learners

Prior to the pandemic, young learners was a growth sector in UK ELT. The department went to market in 2020 with five seasonal locations. These included: Oxford, Ellesemere, Moulton, Newbattle (Edinburgh) and a new campus at Frensham.

Unfortunately, due to the pandemic no face-to-face teaching took place. An online product replaced the face-to-face product in the summer but there was little interest in this type of delivery for this age group.

However, we continue to see this as an area of growth and the recent announcement limiting the amount of extra-curricular study in China may stimulate additional long-term interest in study abroad in this key market.

General English and Executive Programmes

General English was badly affected by the pandemic, but we developed a sustainable online presence which was augmented by an excellent online learning portal. Our more popular courses were courses with intrinsic value such as IELTS or professional English.

Our one-to-one executive programme proved quite successful through 2020 and this form of online learning seems to offer busy executives the opportunity to continue to balance, home, study, and work in a more effective manner.

Teacher Training

International House London enjoyed a very strong year for teacher training. We successfully won a number of British Council tenders which saw us delivering insightful and projects in Africa and other locations.

In March 2020 following the outbreak of the Covid-19 pandemic, Cambridge announced that the CELTA qualification could be delivered fully online. IH London worked in partnership with Cambridge to quickly adapted its programmes to online and capitalised on huge previously untapped demand.

Foreign Languages (Modern Languages)

Our foreign languages provision was another success story in 2020. The switch to online proved very popular and continues to outstrip the demand for face-to-face learning. A large section of the commuter workforce continues to work from home and online learning is convenient, just as interactive as face-to-face learning and more time efficient.

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International House Trust Ltd Annual Report and Accounts year to 31 December 2020 Company 1239120

Trustees’ Report

Systems

In order to improve the reliability and resilience of the organisation we have migrated our information systems to Office 365 and the Cloud. This proved invaluable when the workforce needed to work remotely at the start of the Covid-19 pandemic.

We have augmented our online learning with an excellent off the peg learning platform called Guide E-Learning. We have significantly upgraded our level of financial management in the past twelve months to increase the level of management data and information available.

Future Outlook

Winston Churchill said, “ Never let a good crisis go to waste”.

The trading outlook is expected to remain challenging until well into 2022 but our market intelligence suggests that there remains significant pent-up demand for travel and for language learning in the UK.

The pandemic may have been the worst crisis that we have faced in a generation, but it has also provided our organisation with the greatest opportunity in a generation to modernise, innovate, and to transform our operating model.

At the time of writing the vaccine appears to have successfully reduced the risks of significant illness and the restrictions in the UK have been entirely lifted. Large parts of the economy are returning to normal, but the international travel sector is expected to lag behind and be among the last to recover until restrictions overseas are lifted and confidence rises.

There is the lack of certainty about the ability to travel because of the changing traffic light system of controls. Travel is also a little more complex with less choice of flights and routes and costly and inconvenient Covid testing requirements. There is also the danger of new variants and strains of the virus. We also expect China, our biggest market, to remain inactive until the second half of 2022.

Due to the pandemic, we have not been able to measure the full effect of Brexit on the industry. The short-stay European market almost completely collapsed during the period of the pandemic. EU nationals will not be able to enter the UK using their national ID card from October 2021 and this might have a disruptive effect for the young learner market especially.

Despite the uncertain market outlook for the ELT sector, International House London stands in a solid position to be able to meet those challenges and to trade successfully. A large number of schools have either closed or suspended operations, so the UK market has shrunk. There will be new entrants to the industry, but it will take time for them to build or rebuild their levels of expertise and their networks.

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International House Trust Ltd Annual Report and Accounts year to 31 December 2020 Company 1239120

Trustees’ Report

Sales remain comparatively strong in all activities except young learners, and we have retained the vast majority of our in-house expertise and capability. We have further improved our reputation for reliability by remaining very active during the pandemic and by working constructively with our overseas partners when refunds have been required by students. Our key relationships remain strong.

Digitalisation has opened up exciting new opportunities for us in terms of new products, how we work together and how we do our jobs more effectively. We believe our online offer will continue to flourish particularly with academic and specialist courses and with modern languages. Our exam business has heavily pivoted towards computer-based testing.

We will continue to work flexibly into the future, and we understand the need to continue to improve our central support functions in finance and human resources. We expect the job market to become more competitive as a result of Brexit and we need to ensure that we remain an employer of choice in our sector.

The pandemic period has allowed International House London to closely interrogate its cost base to find savings across the board. We will continue to develop our digital systems and processes to allow our staff to focus on more creative processes, service, and income generation.

We are still standing (shoulder-to-shoulder), and although we must proceed with caution we can look to the gradual recovery of the sector with some sense of optimism.

Financial Review

The significant progress made in 2019 which enabled the Trust to deliver a strong EBITDA continued into the first quarter of 2020, before the pandemic severely disrupted trading in March 2020.

Despite the non-existent trading conditions, the Trust retained a little more than half of its normal year revenue and finished 2020 operating revenue at £8,126k, excluding other income. Underlying trading revenue for all products saw a YoY reduction with the exception of Teacher’s Training and Modern Languages Public, both of which saw an increase against the buoyant prior year trading.

Young Learners trading in 2020 was a nominal due to cancellation of all face-to-face courses. The rest of the divisions retained some proportion of the revenue from the Trust rapidly switching to online course delivery.

Despite the challenging trading conditions, absence of revenue in Young Learners division and slack trading conditions in the Accommodation division, the Trust finished the year with a total revenue of £9,120k. The Trust is well placed to continue its revenue retention into 2021.

In addition to the revenue actions, numerous management actions were implemented to reduce the expenditure base and maximise margins. This combined with swift management actions to

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International House Trust Ltd

Annual Report and Accounts year to 31 December 2020 Company 1239120

Trustees’ Report

rapidly pivot to an online delivery model resulted in retaining gross profit at 34% (2019: 40%). This (6%) slippage of margin against 2019 was predominantly attributed to lack of revenue in Accommodation and Young Learners resulting in both divisions finishing the year generating losses due to insufficient revenue to cover fixed costs. Excluding this, gross margin would have been at 43%, a 3% improvement against 2019.

Operational overheads were reduced by £1,316k to mitigate the impact of reduced revenue to generate a surplus.

Expenditure for the year on charitable activities was £11,019k (2019: £6,279k). Net expenditure was (£1,899k) (2019: £160k), a slippage of (£2,059k), equivalent to (20.8%) of income.

The Trust availed £2,350k against the Coronavirus Business Interruption Loan Scheme (CBILS) in July 2020 which did not have a repayment or an interest in 2020. The secured debt was reduced by £470k (2019: reduced £283k), reducing the loan to £2,042k as at 31 December 2020 (2019: £2,512). The loan is secured on the property at 16 Stukeley Street and is repayable over the next 12 years (2019: 13 years).

Including the CBILS loan, the Trust finished the year with cash of £2,130k (2019: £1,658k) without a recourse to an overdraft and considerable fixed asset.

Public Benefit

In reviewing the charity’s aims, and putting them into action, the trustees have taken account of the Charity Commission’s guidance on public benefit.

The Trust provides services for the advancement of education, a charitable purpose recognised by the Charity Commission. Whilst the Trust is required to charge for its services in order to fund their provision, it also offers programmes at low cost. In addition, the Trust also delivers professional development of language teachers so as to raise language teaching standards worldwide.

We provide a substantial programme of lessons at a nominal cost both in English as a Foreign Language and in Modern Languages to disadvantaged people in London, widening access to those who might not be able to afford the full cost of such courses. These courses are accessible to all citizens.

These courses are provided by supervised trainee teachers on initial teacher training courses or by experienced teachers taking a more advanced training course, usually the Cambridge DELTA. Those benefiting include unemployed people, recent migrants, refugees, and others who can demonstrate their need.

We also continue to support Refuaid, an organisation that helps refugees and Crisis, an organisation that helps the homeless. Support includes free general English, exam preparation and subsidised teacher training programmes.

The Trust continues to operate in alignment with the objects in its Memorandum and providing courses in English and other languages, teacher training and professional development programmes, and language testing services.

In 2020, the Trust delivered 3,844 weeks of free English language courses.

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International House Trust Ltd

Annual Report and Accounts year to 31 December 2020 Company 1239120

Trustees’ Report

During 2020, we were unable to run face to face events. We will continue to host the annual teacher training conference on which attracts an international audience focussing on professional development for teacher trainers and the improvement of language teaching standards.

Our face-to-face language programmes include access to a social programme that is based on activities and engagement in the local community and culture. Our online social activities have more of a cultural focus and many of the activities help promote awareness and mutual respect.

At the start of the Covid-19 pandemic our programmes shifted online. During lockdown periods our programmes provided a vital social outlet for those feeling isolated at home and offered active mental stimulus during a psychologically demanding time.

International House London is also very actively engaged in helping to raise standards within the English Language teaching industry (ELT). Several teachers have been published and our teachers regularly deliver free workshops at leading industry events. Our CEO is Chair of the national trade association (English UK) that represents ELT in the UK and is a member of the Accreditation UK inspection scheme board. Other members of the SMT are involved on an unpaid basis with the finance panel, special interest groups and local associations.

Our exams were permitted to continue for most of the period of pandemic because they performed an important national service by providing credentials for prospective front line health professionals to be able to join the NHS, by supporting the UK’s visa system and by underpinning access to the UK’s higher education system.

The school has reformed its Public Benefit Committee under the new guise of the Social Value Committee. The new committee which reports to the Board has been tasked with providing oversight of the activities and initiatives of the organisation that bring public benefit and monitors social and environmental impact.

International House World Organisation

International House Trust Ltd holds 50% of the authorised share capital (plus one affiliate share) of International House World Organisation Limited (IHWO), a company serving the international affiliate network of over 137 permanent school sites in 48 countries. IHWO sets quality standards for its affiliates, currently branded as the ‘IH Charter’ and regularly inspects the Trust to monitor the School’s compliance. Further details about the IHWO network is provided on their website, www.ihworld.com.

Accreditations and Professional Memberships

IH London places great importance on the quality of the teaching, training and other related services that are provided through its schools. As a result, it has a number of accreditations and memberships that help ensure quality is maintained and, where possible, improved. The Trust’s key accreditations and memberships are:

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International House Trust Ltd

Annual Report and Accounts year to 31 December 2020 Company 1239120

Trustees’ Report

Risk Management

The Trust has a comprehensive risk management policy. The Audit Committee regularly scrutinises the risk register and risk mitigations, prepared by the senior management team, before recommending it to the Board. The primary risks identified by the Board are:

Primary Risks Mitigations
Covid-19 Global Pandemic
•
A huge and dramatic
reduction in international
travel
•
Forced closure of the building
•
Staff shortages due to illness		 •
A quality online alternative developed for each
product. A learning portal has also been launched for
adult learners.
•
The building has been converted so that it meets
Covid secure guidelines.
•
A CBILS loan has been secured to provide ongoing
liquidity.
•
A cost reduction programme initiated.
•
Enhanced marketing and social media presence and
regular comms with partners
•
The sales team has been retained to manage our
stakeholder relations and a significant portion of
business has been retained.
•
We have migrated all of our information systems to
the Cloud to facilitate home working.
Brexit
•
Reputational
damage
in
Europe.
•
Loss of work rights for EU
nationals (students and staff)		 •
Membership and representation through English UK
to champion UK ELT.
•
Sales focus on new markets in diverse locations
around the world.
•
From January 2021, students will no longer require a
study visa to learn English for up to six months. A
standard tourist visa will be sufficient.

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International House Trust Ltd

Annual Report and Accounts year to 31 December 2020 Company 1239120

Trustees’ Report

Trustees’ Report
China
•
Geopolitical
tensions
over
Hong Kong		 •
Retain a sales office in Shanghai and maintain
visibility and good communication.
•
Ensure that the school is not over-dependent on any
single nation or region.
Global warming
•
Concerns about carbon
footprint		 •
Emphasise the positive aspects of international travel
and cooperation.
•
Ensure the School reduced its carbon footprint.
•
Carbon offsetting is included in the price for all young
learner programmes. Make available to adult
students.
•
Developmore in countrydelivery.
Loss of accreditation
•
Loss of ISI would mean School
cannot issue Tier 4 visas.
•
Loss of Accreditation UK status
would mean the school could
not trade.		 •
Ensure staffing levels and resourcing is always
sufficient to maintain a high level of quality.
•
Regularly review the accreditation criteria and
conduct mock inspections.
Loss of relevance
•
Offering products that are no
longer relevant to students		 •
Focus on language products that have intrinsic value
for students and help them to secure their life
objectives.
•
Ensure that we continue to innovative and have a
growth mindset.
Loss of key staff •
Succession planning in all divisions.
•
Ensure all new staff receive a suitable induction and
are a good fit for the organisation.
•
The selection procedure must be robust and
thorough and lead to the best selection for the role.

As laid out above and through careful planning, the Board is mitigating these risks, which could collectively depress demand for the Trust’s core services if not managed. Management have implemented several initiatives to sustain ongoing revenue conversion whilst managing the cost base. A profit improvement program was launched in 2021 which includes enhanced procurement, streamlining processes and cost base, the positive impact of which is visible in the trading results in 2021.

The Trust secured a CBILS loan in July 2020 for which repayments and interest commitments commenced in 2021. Management have taken several actions to improve working capital and liquidity including renegotiating contracts. These are presented to the Trustees on a monthly basis with the trading update.

The Trustees have reviewed the Trust’s expected future cash flows through to December 2022 and have a reasonable expectation that the charity has adequate resources to continue its activities for the foreseeable future and consider that there are no material uncertainties over the charity's financial viability. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.

Page 18

International House Trust Ltd

Annual Report and Accounts year to 31 December 2020 Company 1239120

Trustees’ Report

Reserves

Cash generated which is surplus to reserve requirements will be applied to making improvements to the Trust’s facilities and investing in further charitable activities.

The Trust’s reserves are constituted wholly by unrestricted funds. As at 31 December 2020 the reserves stood at £8,276k (2019: £10,175k); a decrease of (£1,899k) resulting from the year’s trading deficit driven by the pandemic. The Trust pursues a policy of maintaining and where possible increasing the reserves in order to support the Trust’s ongoing activities. The Trust is due to review its reserves policy and set targets in 2022, aligned with the budget planning process.

The Trustees maintain a planned level of cash and short-term deposits, taking account of:

The underlying free reserves of the company stood at £nil at 31 December 2020 (2019: £nil).

The Trustees consider that the current levels of free reserves and cash are adequate, given that:

The Trust maintains its short-term deposits divided between banks in order to obtain the best riskfree market return.

Structure, Governance and Management

The company is governed by its Memorandum and Articles of Association adopted on 2 January 1976 and last amended on 28 September 2009.

International House Trust Limited (the ‘Trust’), trades as ‘IH London’ (IHL) and also at five residential Young Learner Centres, which trade as ‘IH Edinburgh’, ‘IH Ellesmere’, ‘IH Frensham,’ ’IH Oxford’, and ‘IH Moulton’.

There must be at least seven but no more than 15 Trustees. All Trustees are also the members of the company; the guarantee of each member is limited to £1. Trustees serve for a term of four years and may be appointed to serve for one further term (or in the case of a Chair or former Chair two further terms).

Trustees are recruited by advertisement and by the personal recommendation of existing Trustees and are interviewed by the Nominations Committee. Candidates are appointed by a resolution passed by the Board. New Trustees are provided with an induction programme and ongoing training is arranged as needed for all Trustees.

The Board of Trustees met seven times in 2020: four Board Meetings, two extra ordinary meetings and an Away-Day. Major strategic decisions are reserved for the Board, including approval of the budget, capital programmes and senior appointments.

The Board of Trustees delegates day-to-day responsibilities for management to the senior management team, led by the Chief Executive. The Board oversees how this delegation is being

Page 19

International House Trust Ltd

Annual Report and Accounts year to 31 December 2020 Company 1239120

Trustees’ Report

managed by the reporting of financial, sales and key management activities to Board Committees, and, where appropriate, to the Board.

Trustees

The Trust benefits from a highly experienced and engaged Board:

Name Experience Committee Membership
Philip Huggon Over 20 years’ experience in marketing, customer
service and transformation, and led Shell UK’s biggest
ever change programme. He now has a portfolio of non-
executive and trustee roles, including chairing a Further
Education consultancy and an NHS consultancy, and he
is Vice-Chair of Healthwatch England.		 Chair (July 2021)
Finance and General
Purpose
Audit and Risk
Ricard Alonso Over 30 years’ international experience across business
operations in Sales, Customer Service and IT with
Fortune 500 companies including General Electric and
Ingersoll Rand.		 Finance and General
Purpose
Tita Beaven Almost 30 years’ experience of language teaching, most
recently as a Head of the Department of Languages at
the Open University. A Doctorate in educational
technology and a Senior Fellow of the Higher Education
Academy.		 Nominations (Chair)
Public Benefit &
Partnerships
Keith Davies Chief Risk and Compliance for Hermes Fund Manager
having undertaken a similar role at M&G Prudential and
role of Global Head of Internal Audit for Prudential
Group. Keith has been in financial services for over 25
years and is also currently a NED within the Admiral
Insurance Group.		 -
Monica Green Managing Director of IH Torres Vedras and its new IH
Teacher Training Centre in Lisbon. Executive Director of
the International House World Organisation.		 Finance and General
Purpose
Audit and Risk
Elizabeth
McGlynn		 Qualified accountant, who has worked across a
spectrum of industries for various companies, including
PWC, Sir William Halcrow and Partners and Lidl. As
Financial Controller and then Head of Tax at Lidl, she
was responsible for complex tax and property issues as
well as running the UK finance department.		 Audit and Risk (Chair)
Finance and General
Purpose
Norman
Renshaw		 Experienced in business strategy and marking, with a
degree in Economics from the University of Warwick
and is a member of the Chartered Institute of
Marketing. After a career in marketing, he set up IH
InTuition. He was on the Board of the International
World Organisation from 2014 to 2020.		 Finance and General
Purpose
Audit and Risk
Remuneration
Tomasz
Mazgaj		 Currently working in LEGO Education, he is a project
lead who specialises in running global strategicprojects		 -

Page 20

International House Trust Ltd

Annual Report and Accounts year to 31 December 2020 Company 1239120

Trustees’ Report

in the educational sector. He is an Economics graduate,
and certified Project Manager.
Max Nye As a Global Investment Director, he oversees advertising
investment globally for some of the world’s best-known
brands. He is passionate about language learning; he
studied English and Modern Languages at Oxford and
taught English abroad with the British Council.		 Public Benefit &
Partnerships
Adrian
Underhill		 A DELTA qualified English language teacher, consultant,
speaker, trainer and author in organisational learning
and teacher training. Former director at International
House Hastings, past president of IATEFL and series
editor of Macmillan Books for Teachers.		 Vice Chair
Public Benefit &
Partnerships (Chair)
Remuneration
Nominations

Angela Dean, a long-standing Chair served the maximum of three terms with International House over 12 years. Angela resigned in July 2021 and Philip Huggon replaced Angela Dean as the Chair.

Additionally, the below Trustees served during the year: Fintan Somers (resigned March 2020), Paul Mason (resigned September 2020), Alan Barlow (August 2020 to October 2020), and William Wellesley (resigned November 2020).

Board Committees

The Audit Committee (which met three times in 2020) is responsible for monitoring the management of the risks facing the Trust and reviewing the annual financial statements.

The Nominations Committee (which met once in 2020) is responsible for reviewing the composition and governance of the Board, recruiting, and recommending prospective Trustees to the Board for appointment, and for developing policies for managing trustee rotation.

The Finance and General Purposes Committee (which met three times in 2020) is responsible for advising the Board on matters such as the school’s business and financial performance, loan servicing, capital expenditure and issues relating to property as well as a general remit to prepare issues for presentation to the Board.

The Public Benefit and Partnerships Committee (which did not meet in 2020) is responsible for developing the company’s wider access agenda. This Committee was superseded with Social Value Committee in May 2021.

The Remuneration Committee (which met twice in 2020) is responsible for reviewing and agreeing remuneration policies for senior management, the Trust’s ‘key management personnel’, for which it has been given delegated authority, as well as reviewing the remuneration policies for all staff.

The emolument for key management personnel is generally benchmarked and based on remuneration to attract the relevant seniority and skills and/or comparable remuneration in the sector. During the year, all key management had seen a reduction on their total emoluments as a number of benefits were curtailed due to the pandemic.

Page 21

International House Trust Ltd

Annual Report and Accounts year to 31 December 2020 Company 1239120

Trustees’ Report

Statement of Trustees' Responsibilities

The Trustees (who are the directors of the company for the purposes of company law) are responsible for preparing the Trustees’ report and the financial statements in accordance with applicable law and regulations. Company law requires the Trustees to prepare financial statements for each financial year in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards) and applicable law.

Under company law the Trustees must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of its net incoming resources for that period. In preparing these financial statements, the Trustees are required to:

The Trustees are responsible for keeping proper accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

In so far as each of the Trustees is aware:

The Trustees’ Report was approved by the Board of Trustees on 24 September 2021 and signed on their behalf by:

Philip Huggon Chair

Page 22

International House Trust Ltd

Annual Report and Accounts year to 31 December 2020 Company 1239120

Independent auditor’s report to the members of International House Trust

Year ended 31 December 2020

Opinion

We have audited the financial statements of International House Trust for the year ended 31 December 2020 which comprise the Statement of Financial Activities, the Balance Sheet, Statement of Cash Flows, and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including 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:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the charity 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.

Responsibilities of Trustees for the financial statements

As explained more fully in the Trustees’ responsibilities statement set out on page 14, the Trustees (who are also the directors of the charitable company for the purposes of company law) 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 Trustees 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 Trustees are responsible for assessing the charitable company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Trustees either intend to liquidate the charitable company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect

Page 23

International House Trust Ltd

Annual Report and Accounts year to 31 December 2020 Company 1239120

Independent auditor’s report to the members of International House Trust

Year ended 31 December 2020

a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Conclusions relating to going concern

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

Other information

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

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and parent charitable company and its environment obtained in the course of the audit, we have not identified material

Page 24

International House Trust Ltd

Annual Report and Accounts year to 31 December 2020 Company 1239120

Independent auditor’s report to the members of International House Trust

Year ended 31 December 2020

misstatements in the Trustees’ Report (which incorporates the Strategic Report and the Directors’ 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:

Use of our report

This report is made solely to the charitable company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the charitable company's members those matters we are required to state to them in an Auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the charitable company and the charitable company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Tracey Young (Senior Statutory Auditor) For and on behalf of Haysmacintyre LLP, Statutory Auditors 10 Queen Street Place EC4R 1AG London Date: 24 September 2021

Page 25

International House Trust Ltd Annual Report and Accounts year to 31 December 2020 Company 1239120

Statement of financial activities

incorporating an income and expenditure account

Year ended 31 December 2020

Income from:
Charitable activities
Teaching and learning
Investments
Other
Total
Expenditure on:
Charitable activities
Total
Net (expenditure)/income
Net movement in funds
Reconciliation of funds:
Funds brought forward
Total funds carried forward		 Note
2
2
3
14		 2020
£’000

8,126
1
993
9,120
11,019
11,019
(1,899)
(1,899)
10,175
8,276		 2019
£’000
16,088
2
349
16,439
16,279
16,279
160
160
10,015
10,175

All the above results relate to unrestricted funds.

The notes on pages 29 to 39 form part of these financial statements.

Page 26

International House Trust Ltd

Annual Report and Accounts year to 31 December 2020 Company 1239120

Balance Sheet

As at 31 December 2020

Fixed assets
Tangible fixed assets
Intangible fixed assets
Investments
Current assets
Debtors
Short term deposits
Cash at bank and in hand
Creditors:amounts falling due within one year
Net current liabilities
Net assets less current liabilities
Creditors:Amounts falling due after more than
one year
Total net assets
The funds of the charity:
Unrestricted funds
Total charity funds		 Note
8
9
10
11
12
13		 2020
£’000
12,166
221
1
12,388
1,586
-
2,130
3,716
(3,819)
(103)		 2019
£’000
12,649
360
1
13,010
2,401
702
956
4,059
(4,679)
(620)
12,285
(4,009)
8,276
8,276
8,276		 12,390
(2,215)
10,175
10,175
10,175

The notes on pages 29 to 39 form part of these financial statements.

The financial statements were approved and authorised for issue by the Board of Trustees on 24 September 2021 and signed on their behalf by:

Philip Huggon Trustee and Chair

Page 27

International House Trust Ltd

Annual Report and Accounts year to 31 December 2020 Company 1239120

Cash Flow Statement

Year ended 31 December 2020

Note
2020
£’000
2019
£’000
Cash flows from operating activities:
Net cash provided by operating activities
i
(1,347)
1,260
Cash flows from investing activities:
Interest received
1
2
Purchase of tangible fixed assets
(49)
(79)
Purchase of intangible fixed assets
(13)
(114)
Net cash (used in) investing activities
(61)
(191)
Cash flows from financing activities:
New Loans and Borrowings
Repayment of borrowings
2,350
(470)
(283)
Net cash provided by/(used in) financing activities
1,880
(283)
Changes in cash and cash equivalents in the year
472
786
Cash and cash equivalents at 1 January 2019
1,658
872
Cash and cash equivalents at 31 December 2020
ii
2,130
1,658
Note i) Reconciliation of net (expenditure)/income to net cash (outflow)/inflow from
operating activities
2020
£’000
2019
£’000
Net (expenditure)/income for the year (as per the Statement of
financial activities)
(1,899)
160
Depreciation charges
684
647
Interest receivable
(1)
(2)
Decrease/(increase) in debtors
815
(30)
Increase / (decrease) in creditors(excluding the bank loan)
(946)
485
Net cash (outflow)/inflow from operating activities
(1,347)
1,260
Note ii) Analysis of cash and cash equivalents
1 January
2020
£’000
Cash
flow
£’000
31 December
2020
£’000
Cash at bank and in hand
956
1,174
2,130
Short term deposits
702
(702)
-
Total cash and cash equivalents
1,658
472
2,130		 Note
2020
£’000
2019
£’000
Cash flows from operating activities:
Net cash provided by operating activities
i
(1,347)
1,260
Cash flows from investing activities:
Interest received
1
2
Purchase of tangible fixed assets
(49)
(79)
Purchase of intangible fixed assets
(13)
(114)
Net cash (used in) investing activities
(61)
(191)
Cash flows from financing activities:
New Loans and Borrowings
Repayment of borrowings
2,350
(470)
(283)
Net cash provided by/(used in) financing activities
1,880
(283)
Changes in cash and cash equivalents in the year
472
786
Cash and cash equivalents at 1 January 2019
1,658
872
Cash and cash equivalents at 31 December 2020
ii
2,130
1,658
Note i) Reconciliation of net (expenditure)/income to net cash (outflow)/inflow from
operating activities
2020
£’000
2019
£’000
Net (expenditure)/income for the year (as per the Statement of
financial activities)
(1,899)
160
Depreciation charges
684
647
Interest receivable
(1)
(2)
Decrease/(increase) in debtors
815
(30)
Increase / (decrease) in creditors(excluding the bank loan)
(946)
485
Net cash (outflow)/inflow from operating activities
(1,347)
1,260
Note ii) Analysis of cash and cash equivalents
1 January
2020
£’000
Cash
flow
£’000
31 December
2020
£’000
Cash at bank and in hand
956
1,174
2,130
Short term deposits
702
(702)
-
Total cash and cash equivalents
1,658
472
2,130		 Note
2020
£’000
2019
£’000
Cash flows from operating activities:
Net cash provided by operating activities
i
(1,347)
1,260
Cash flows from investing activities:
Interest received
1
2
Purchase of tangible fixed assets
(49)
(79)
Purchase of intangible fixed assets
(13)
(114)
Net cash (used in) investing activities
(61)
(191)
Cash flows from financing activities:
New Loans and Borrowings
Repayment of borrowings
2,350
(470)
(283)
Net cash provided by/(used in) financing activities
1,880
(283)
Changes in cash and cash equivalents in the year
472
786
Cash and cash equivalents at 1 January 2019
1,658
872
Cash and cash equivalents at 31 December 2020
ii
2,130
1,658
Note i) Reconciliation of net (expenditure)/income to net cash (outflow)/inflow from
operating activities
2020
£’000
2019
£’000
Net (expenditure)/income for the year (as per the Statement of
financial activities)
(1,899)
160
Depreciation charges
684
647
Interest receivable
(1)
(2)
Decrease/(increase) in debtors
815
(30)
Increase / (decrease) in creditors(excluding the bank loan)
(946)
485
Net cash (outflow)/inflow from operating activities
(1,347)
1,260
Note ii) Analysis of cash and cash equivalents
1 January
2020
£’000
Cash
flow
£’000
31 December
2020
£’000
Cash at bank and in hand
956
1,174
2,130
Short term deposits
702
(702)
-
Total cash and cash equivalents
1,658
472
2,130		 Note
2020
£’000
2019
£’000
Cash flows from operating activities:
Net cash provided by operating activities
i
(1,347)
1,260
Cash flows from investing activities:
Interest received
1
2
Purchase of tangible fixed assets
(49)
(79)
Purchase of intangible fixed assets
(13)
(114)
Net cash (used in) investing activities
(61)
(191)
Cash flows from financing activities:
New Loans and Borrowings
Repayment of borrowings
2,350
(470)
(283)
Net cash provided by/(used in) financing activities
1,880
(283)
Changes in cash and cash equivalents in the year
472
786
Cash and cash equivalents at 1 January 2019
1,658
872
Cash and cash equivalents at 31 December 2020
ii
2,130
1,658
Note i) Reconciliation of net (expenditure)/income to net cash (outflow)/inflow from
operating activities
2020
£’000
2019
£’000
Net (expenditure)/income for the year (as per the Statement of
financial activities)
(1,899)
160
Depreciation charges
684
647
Interest receivable
(1)
(2)
Decrease/(increase) in debtors
815
(30)
Increase / (decrease) in creditors(excluding the bank loan)
(946)
485
Net cash (outflow)/inflow from operating activities
(1,347)
1,260
Note ii) Analysis of cash and cash equivalents
1 January
2020
£’000
Cash
flow
£’000
31 December
2020
£’000
Cash at bank and in hand
956
1,174
2,130
Short term deposits
702
(702)
-
Total cash and cash equivalents
1,658
472
2,130		 2019
£’000
1,260
2
(79)
(114)
(191)
(283)
(283)
786
872
1,658
Cash
flow
£’000
1,174
(702)
472
2,130
-
2,130

Page 28

International House Trust Ltd Company 1239120 Year to 31 December 2020

Notes to the accounts

1 Accounting policies

The principal accounting policies adopted, judgements and key sources of estimation uncertainty in the preparation of the financial statements are as follows:

a. Company Information

International House Trust Ltd is a private company, limited by guarantee, domiciled in England and Wales (registration number 01239120) and is a charity registered with the Charity Commission in England and Wales (registration number 270860). The registered office is 16 Stukeley Street, Covent Garden, London WC2B 5LQ.

b. Basis of financial statements

The financial statements have been prepared in accordance with the Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS102) (Second edition effective 1 Jan 2019) – (Charies SORP (FRS102), the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102)) and the Charities Act 2011.

Although 2020 saw unprecedented deficit, the Chairty rapidly pivoted its operations and delivery to online courses. This combined with steps taken to control costs, CBILS loan and liquidity planning has resulted in revenue retention and sustainable cash flow position for the foreseeable future.

The Trustees have a reasonable expectation that the charity has adequate resources to continue its activities for the foreseeable future and consider that there are no material uncertainties over the charity's financial viability. On that basis they believe the going concern basis of accounting is appropriate for these annual financial statements.

c. Income

Income is recognised when the charity has entitlement to the funds, any performance conditions attached to the item(s) of income have been met, it is probable that the income will be received, and the amount can be measured reliably. Income received in advance of the provision of a service is deferred until the criteria for income recognition are met. Specifically:

Grants under Coronavirus Job Retention Scheme(CJRS): During the year, the charity utilised CJRS for staff on furlough leave. Government grant income represents the total amount claimed from HMRC under the CJRS. The income is accounted for in the period in which the associated salary payments are made to furloughed staff.

Page 29

International House Trust Ltd Company 1239120 Year to 31 December 2020

Notes to the accounts

The Trust had no unfulfilled conditions or contingencies attached to the grant income recognised in the year. The Trust did not benefit from any other grants during 2020.

d. Expenditure

Charitable activities result in expenditure related to the direct furtherance of the company’s charitable objectives. All expenditure is accounted for on the accruals basis. Liabilities are recognised as expenditure as soon as there is a legal or constructive obligation committing the company to the expenditure. The cost headings comprise expenditure directly attributable to the activity.

Direct costs comprise accommodation, teaching salaries and payments, examinations department costs, agents’ commissions, student social programme, teaching materials, student insurance and activities to widen access amongst disadvantaged groups.

Support costs are those functions that assist the work of the charity but do not directly undertake charitable activities. They are allocated directly to the company’s charitable activities following categorisation in accordance with the following table:

Category Definition
Support staff All non-direct employee costs, including employees
managing teaching staff, including any bonus,
redundancy and terminations payments,
recruitment, training, and welfare costs.
Marketing and
communications		 Marketing and communications costs, excluding
employee costs.
Establishment and Office Facility expenditure (including rent, rates, and
utilities), and stationery, phone, postage, and IT
costs, excluding staff costs.
Finance, legal and
professional		 Finance costs including bank charges, merchant fees
and VAT payable on agent commissions, current
gains and losses, legal, surveyor and other
professional fees. Employee costs are excluded.
Other expenses Other costs including travel, hospitality, and
subsistence, product development, subscriptions and
any other costs not falling within another category.

Governance costs, included within support costs, relate to compliance with constitutional and statutory requirements and include an apportionment of the CEO’s and Finance Director’s employee costs, Trustees’ expenses, and audit fees.

e. Interest receivable

Interest on funds held on deposit is included when receivable and the amount can be measured reliably; this is normally upon notification of the interest paid or payable by the Bank.

Page 30

International House Trust Ltd Company 1239120 Year to 31 December 2020

Notes to the accounts

f. Operating leases

Where title to the equipment remains with the lessor, rental charges are charged on a straight-line basis over the term of the lease.

g. Fund accounting

Unrestricted funds are available for use at the discretion of the Trustees in furtherance of the charitable objectives of the company. There are no restricted funds in the current or prior year.

h. Tangible fixed assets

Tangible fixed assets costing more than £1,000 used by the company over a period of one year or more are capitalised:

i. Intangible fixed assets

Intangible fixed assets costing more than £1,000 used by the company over a period of one year or more are capitalised:

j. Cash at bank and in hand and short-term deposits

Cash at bank and cash in hand are funds available to the Charity. Other cash is categorised as short-term deposits.

k. Debtors

Trade debtors are amounts invoiced and unpaid. Trade and other debtors are recognised at the settlement amount due after any trade discount offered. Prepayments are valued at the amount prepaid net of any trade discounts due. Amounts invoiced but not yet due for payment are recognised as debtors.

l. Creditors

Creditors are recognised when there is an obligation at the balance sheet as a result of a past event, it is probable that a transfer of economic benefit will be required in settlement, and the amount of the settlement can be estimated reliably. Creditors are recognised at the amount the Trust anticipates it will pay to settle the debt. They have been discounted to the

Page 31

International House Trust Ltd Company 1239120 Year to 31 December 2020

Notes to the accounts

present value of the future cash payments where such discounting is material. Course fees in advance are treated as deferred income and are for amounts received, or due for receipt, but where all or part of the course has not yet been provided.

m. Taxation

The company is a registered charity. It is not liable to income tax or corporation tax on income derived from its charitable activities.

As an educational body the company is exempt from charging value added tax (VAT) on its educational services. Where appropriate, expenditure is recorded inclusive of irrecoverable VAT.

n. Estimation uncertainty

In the application of the Charity’s accounting policies Trustees are required to make judgements, estimates, and assumptions about the carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and underlying assumptions are based on historical experience and other factors that are considered relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects the current and future periods.

In the view of the Trustees, no assumptions concerning the future or estimation uncertainty affecting assets and liabilities at the balance sheet date are likely to result in a material adjustment to their carrying amounts in the next financial year.

o. Financial instruments

The Trust only has financial assets and financial liabilities of a kind that qualify as basic financial instruments. Basic financial instruments are initially recognised at transaction value and subsequently measured at their settlement value with the exception of bank loans that are subsequently measured at amortised cost using the effective interest method.

Financial assets comprise debtors less prepayments. Financial liabilities comprise creditors.

p. Pensions

A defined contribution group personal pension (GPP) scheme operated through Scottish Widows is available to all permanent employees with three months’ service. The employer’s contribution is equal to 3% of basic salary and the employee determines their contribution, subject to the minimum specified by auto-enrolment legislation. The Trust offers a salary sacrifice option and these contributions are included within the employer’s pension scheme contributions. Employees who are not eligible for the GPP scheme are auto enrolled into ‘The People Pension’ in accordance with current employment legislation.

Page 32

International House Trust Ltd Company 1239120 Year to 31 December 2020

Notes to the accounts

2 Income from charitable activities

come from charitable activities
Adult Language courses
Young Learners
Teacher training courses
Examination fees
Accommodation		 2020
£’000
2,942
30
2,052
2,529
573
8,126		 2019
£’000
5,245
2,576
2,003
4,357
1,907
16,088

Other income of £993k predominantly comprises of grant from Coronavirus Job Retention Scheme. Total furlough claim in the year was £899.95k.

3 Expenditure on charitable activities

Direct costs of teaching and examinations
Adult Language courses
Young Learners
Teacher training courses
Examinations
Accommodation
Other direct costs
Support costs (note 4)		 2020
£’000
1,824
52
1,073
2,203
792
33
5,977
5,042
11,019		 2019
£’000
2,035
2,197
1,039
3,029
1,671
(50)
9,921
6,358
16,279

4 Expenditure on support costs and governance

Staff
Marketing and communications
Establishment and office
Finance, legal and professional
Write offs and provisions
Depreciation
Interest payable
Other expenditure		 General
Support
£’000
Governance
£’000
2020
£’000
2,640
41
2,681
361
-
361
1,029
-
1,029
55
25
80
41
41
684
-
684
67
-
67
99
-
99
4,976
66
5,042

Page 33

International House Trust Ltd Company 1239120 Year to 31 December 2020

Notes to the accounts

Notes to the accounts
Staff
Marketing and communications
Establishment and office
Finance, legal and professional
Depreciation
Interest payable
Other expenditure
5
Staff costs
Gross salaries
Social security costs
Employer’s pension scheme contributions
Self-employed and agency staff		 General
Support
£’000		 Governance
£’000		 2019
£’000
2,848
671
1,193
138
647
86
696		 40
-
-
39
-
-
-		 2,888
671
1,193
177
647
86
696
6,279 79 6,358
2020
£’000
5,236
428
292
5,956
435
6,391		 2019
£’000
5,735
474
299
6,508
429
6,937

The number of employees whose emoluments for the year (including taxable benefits but not employer’s pension scheme contributions or national insurance) exceeded £60,000 was:

Employees earning between:
£110,001 and £120,000
£100,001 and £110,000
£90,001 and £100,000
£80,001 and £90,000
£70,001 and £80,000
£60,001 and £70,000		 2020
Number
-
1
1
-
1
3
6		 2019
Number
1
1
-
1
2
-
5

Employer’s pension contributions totalling £12,446 (2019: £10,070) were made for the above employees. The aggregate remuneration, including any applicable employer’s national insurance, severance payments and employers pension scheme contributions for 'key management personnel', referred to as the Senior Management Team on page 1, was £484,348 (2019: £398,740).

Page 34

International House Trust Ltd Company 1239120 Year to 31 December 2020

Notes to the accounts

The average headcount of employees analysed by function was:

Examinations
Teaching
Support		 2020
Headcount
183
148
68
399		 2019
Headcount
208
168
65
441

During the year redundancy and termination payments of £12,296 (2019: £18,924) were paid.

6 Trustees’ remuneration

The trustees neither received nor waived any emoluments during the year (2019: £nil). One trustee (2019: 5 trustees) were reimbursed travelling expenses of £124 (2019: £2,878) during the year.

One trustee (2019: one) was engaged in a teaching capacity with a total remuneration of £1,000 (2019: £1,294).

Ricard Alonso is a director of International House World Organisation Ltd (IHWO), a company which is 50% owned by International House Trust Ltd.

Monica Green holds a controlling interest in IH Torres Vedras language schools, which traded with IH London on standard commercial terms. Monica Green is Executive Director of IHWO and in this capacity is paid by IHWO.

7 Operating leases

The charity has the following future minimum lease payments under non-cancellable operating leases for each of the following years:

Within one year
Between one year and five years		 31 December 2020
£’000
22
32
54		 31 December 2019
£’000
22
54
76

Page 35

International House Trust Ltd Company 1239120 Year to 31 December 2020

Notes to the accounts

8 Tangible fixed assets

ngible fixed assets
Cost
1 January 2020
Additions
31 December 2020
Depreciation
1 January 2020
Charge
31 December 2020
Net book value
31 December 2020
1 January 2020		 Freehold land
and buildings
£’000
Leasehold
Properties
£’000
Fittings, furniture
and Equipment
£’000
15,700
913
2,512
-
-
49
15,700
913
2,561
4,114
385
1,977
321
66
145
4,435
451
2,122
11,265
462
439
11,586
528
535		 Total
£’000
19,125
49
19,174
6,476
532
7,008
12,166
12,649

The leasehold properties are an extension to the freehold building at 16 Stukeley Street and office accommodation at Shaftesbury Avenue. ‘Freehold land and buildings’ includes £3m of non-depreciating freehold land. Trustees are aware of the potential impact of the COVID-19 pandemic on property values. The intention is to hold the property for the long term. No adjustment has therefore been made to valuations as a result of the crisis.

9 Intangible fixed assets

tangible fixed assets
Cost
1 January 2020
Additions
31 December 2020
Depreciation
1 January 2020
Charge
31 December 2020
Net book value
31 December 2020
1 January 2020		 SchoolWorks
£’000
Website
£’000
On-line
Education
£’000
Software
Licences
£’000

571
227
89
13
-
-
-
13
571
227
89
26
375
76
89
-
83
65
-
4		 Total
£’000

900
13
913
540
152
458
141
89
4
113
86
-
22
196
151
-
13		 692
221
360

10 Investments

International House World Organisation Ltd (at cost) 2020
£’000
1		 2019
£’000
1

Page 36

International House Trust Ltd Company 1239120 Year to 31 December 2020

Notes to the accounts

The company owns the Trust Share representing 50% of the issued share capital with a book value of £500 and 1 Affiliate Share in International House World Organisation Ltd (IHWO). Decisions by IHWO in general meetings can only be made with the agreement of both classes of shareholder and consequently the Trustees do not consider that International House Trust exercises control over IHWO.

A summary of the results of IHWO are given below:

Profit and loss account - IHWO Limited 2020
£’000
704
(175)
529
(543)
20
(7)
(1)
(17)
(18)		 2019
£’000
Turnover
Cost of sales
Gross profit
Administrative expenses
Other income and expenditure
Tax on profit
Profit for the year
Revaluation of tangible fixed assets, less tax
Total comprehensive (expenditure)/income for the year		 838
(146)
692
(689)
2
(1)
4
72
76
Balance Sheet - IHWO Limited 2020
£’000
553
348
(217)
684
(48)
636
318		 2019
£’000
Fixed assets
Current assets
Creditors: amounts falling due within one year
Net current assets
Provisions for liabilities
Net assets
International House Trust Ltd: 50% of shareholders’ equity		 571
294
(168)
697
(43)
654
327

During the year the Trust made payments to IHWO of £21,921 (2019: £27,544) on normal commercial terms. No payments (2019: £Nil) were made by IHWO to the Trust.

11 Debtors

Trade debtors
Other debtors
Prepayments
Staff loans and advances		 2020
£’000
1,053
291
241
1
1,586		 2019
£’000
1,920
85
392
4
2,401

Page 37

International House Trust Ltd Company 1239120 Year to 31 December 2020

Notes to the accounts

12 Creditors: amounts falling due within one year

Loans repayable within one year
Trade creditors
Accruals
Taxation and social security
Deferred income: Course fees in advance
Other creditors		 2020
£’000
383
659
702
103
1,944
28
3,819		 2019
£’000
297
658
437
155
3,102
30
4,679

Deferred income has seen a significant year-on-year reduction attributed to the reduction inf forward bookings and the overall decline in revenue due to the pandemic.

13 Creditors: amounts falling due after more than one year

Loan repayable within two to five years
Loan repayable in more than five years
Creditors: amounts falling due after more than one year
Loan repayable within one year
Secured loan total		 2020
£’000
2,556
1,453
4,009
383
4,392		 2019
£’000
831
1,384
2,215
297
2,512

In February 2018 the Trust took out a loan, over 15 years, with Lloyds Bank PLC. This loan is secured by a fixed charge on the freehold land and building at 16 Stukeley Street. The interest rate is Base Rate plus 2.50%. Repayments of £470,034 (2019: £283,419) were made during the year. A CBILS loan of £2,350,000 was availed from Lloyds in July 2020 at an interest rate of 1.92% plus base rate against Stukeley Street premises. There were no repayments in the first year and the interest was met by the government.

14 Net (expenditure)/income for the year

This is stated after charging:

Depreciation
Auditor’s remuneration:
Audit fees
Leasehold property rent
Operating leases equipment
Interest payable		 2020
£’000
684
25
345
22
67		 2019
£’000
647
36
284
22
84

Page 38

International House Trust Ltd Company 1239120 Year to 31 December 2020

Notes to the accounts

15 Analysis of net borrowing

Loans falling due within one year
Loans falling due after one year
Cash at bank and in hand
Short term deposits

Loans falling due within one year
Loans falling due after one year
Cash at bank and in hand
Short term deposits		 1 Jan
Cashflow Non-cash 31 Dec
2020
changes
2020
£’000
£’000
£’000
£’000
(297) 72
(158)
(383)
(2,215) (1,952)
158
(4,009)
(2,512) (1,880)
-
(4,392)
956 1,174
-
2,130
702 (702)
-
- .
(854) (1,408)
- (2,262)
============================================
1 Jan
Cashflow Non-cash 31 Dec
2019
changes 2019
£’000
£’000
£’000
£’000
(293) 283
(287)
(297)
(2,502)-
287
(2,215)
(2,795) 283
-
(2,512)
872 84
-
956
-702
-
702
(1,923) 1,069
-
(854)
=============================================

16 Share capital

The company is limited by guarantee and does not have share capital. Members are not entitled to any dividends or to a share in the assets on dissolution. Each member undertakes to contribute up to a maximum sum of £1 on winding up. Each member has one vote. There were 11 members as at 31 December 2020 (2019: 12).

18 Ultimate controlling party

The charitable company is under the ultimate control of the board of Trustees.

Page 39