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Woodspeen Training Group Plc (WSTP)

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Monday 22 December, 2014

Woodspeen Training Group Plc

Audited Financial Statements for the Year Ended...


                                                              22 December 2014

                                                                  GB00B2PKCW45

                         WOODSPEEN TRAINING GROUP PLC

                        (the "Company" or the "Group")

Woodspeen Training Group plc announces its audited results
for the year to 31 July 2014

WOODSPEEN TRAINING GROUP PLC

AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2014

(COMPANY NUMBER 6434555)

STRATEGIC REPORT

The directors present their strategic report on the Group
for the year ended 31 July 2014.

Developments

Funding and Government priorities

The Funding Statement for the period 2014-16 published early in 2014 by the
Department for Business, Innovation and Skills (BIS) for the period 2014-16
renewed the Government's commitment to funding apprenticeships whilst at the
same time confirming a 20% reduction in central funding, over the next 2
years. As reported at the half year, in a U-turn from its previously stated
policy BIS also announced that 24+ apprenticeships would again be centrally
funded which within the constraints of a reducing single central budget for
adult training, will place yet further funding pressure on providers in the
sector, particularly those delivering adult skills rather than
apprenticeships.

A number of important Government consultations are underway including those
around further funding reform which may have further, far reaching
implications for the sector. The election, which is now less than six months
away, may also have significant implications for the sector as funding
priorities and rates will depend upon which political party forms the next
Government.

Exit from government funded training market

The Board of Woodspeen Training Group plc announced on 28 November 2014 that
after much deliberation and following a strategic review, it had decided that
the Group should exit the training market through the sale of the Company's
principal subsidiary, Woodspeen Training Limited as the Board concluded that
there was no realistic prospect of the Company delivering value to
shareholders by continuing operations. The Group had also been unable to
execute its growth strategy of achieving scale through acquisition because of
continued uncertainty over the direction of future Government funding.

On 18 December 2014 the Group announced that contracts had been exchanged for
the sale of the Company's principal subsidiary, Woodspeen Training Limited,
for a consideration of GBP 400,000 payable in cash on completion which is
expected to take place on 5 January 2015.

Future of the Group

Following the disposal of Woodspeen Training Limited, surplus cash in the
Company will be returned to shareholders in the most tax efficient way, and
the Directors expect that more information on the process for the return of
cash to shareholders will be sent to shareholders in the coming weeks.

Following the disposal, the Company will no longer have an operating business.
Accordingly, the Board concluded that it is in the best interests of the
Company and its shareholders to seek a withdrawal from trading on the ISDX
Growth Market ("ISDX"). This will cut costs significantly and a resolution to
approve such withdrawal is included in the Notice of the Annual General
Meeting.

Review of the business

Prior to the announcement of the disposal of Woodspeen
Training Limited, the principal activity was Government funded vocational and
skills training, assessment and related services to employed and unemployed
learners.

The Group operated through two divisions:

Vocational Training: pre-apprenticeship and apprenticeship
programmes including delivery of both workplace assessment and off-the-job
training in core skills including Maths and English, predominantly to younger
learners (aged 16-18).

Skills Training: skills and employability training including
Maths, English and CV writing to unemployed adults.

The Group only operated within the United Kingdom.

Results and performance

The Group's pre-tax loss for the year before interest income
of GBP 13,979 (2013 - GBP 21,339); amortisation of acquired intangible assets
of GBP 52,000 (2013 - GBP 52,000); costs of exiting lease GBP 95,104 (2013 -
GBP nil); and impairment of goodwill of GBP 1,367,727 (2013 - GBP nil)
amounted to GBP 223,391 (2013 - GBP 397,362).

Reported pre-tax loss for the year amounted to GBP 1,724,243
(2013 - GBP 428,023) and reported loss after tax for the year was GBP
1,729,795 (2013 - GBP 414,887).

Segmental performance is as follows:

                                         Year ended              Year ended
                                       31 July 2014            31 July 2013
                                          Operating               Operating
                              Revenue Profit/(Loss)   Revenue Profit/(Loss)
                                  GBP           GBP       GBP           GBP
Vocational Training         2,567,688        37,394 2,682,393     (119,167)
Skills Training             1,283,619         (518) 1,330,940        60,083
Total for segments          3,851,307        36,876 4,013,333      (59,084)
Group items:
Corporate and central costs               (260,267)               (338,278)
                            3,851,307     (223,391) 4,013,333     (397,362)
Vocational Training

Revenue has declined due to the planned reduction in 24+ learner volumes as
the Group ceased recruitment of this age group in line with the then stated
Government policy to withdraw funding from Advanced and Higher apprenticeships
to this age group. Operating performance has improved as the Group has focused
on delivering higher value programmes and benefited from operating
efficiencies.

In the first half of 2012/13, the Group ceased recruitment of 24+
apprenticeship learners in line with the then stated Government policy to
withdraw funding from Advanced and Higher apprenticeships to this age group.
By 31 January 2014 the number of 24+ apprenticeship learners had fallen to 62
from 289 (25+ learners) as at 31 July 2012. As mentioned above, the Department
for Business, Innovation and Skills (BIS) in a U-turn from its previously
stated policy announced that 24+ apprenticeships would again be centrally
funded. In the second half year, the Group has successfully re-established
itself in the 24+ apprenticeship market and by the year end the number of 24+
learners had returned to volumes approaching 31 July 2012 levels.

Recruitment of learners in the key 16-18 age group has remained challenging as
the introduction a year ago of legislation requiring school children to
continue in education or training until the age to 17 has had a dampening
effect on learner supply and recruitment in the 2nd half year was
disappointing. Recruitment of 19-23 learners was in line with expectations.
16-23 learner volumes at the year-end were 525 compared to 633 at the half
year. At the year end, for the first time, 16-18 learners represented only
roughly half of the number of 16-23 learners.

Overall volumes have increased when compared to both last year and the interim
stage however the mix, because of the re-engagement with 24+ learners, changed
so that 16-18 learners - for whom the most funding is received - represents
only about a third of learner numbers. 24+ learners, for whom the lowest
funding is received, also represents about a third of learner volumes. This
change in mix will have a depressing effect on margins going forward.

Costs have been controlled tightly and operational efficiencies achieved
during the year so that the Vocational Division reported a small profit for
the year compared to the loss made last year on slightly lower turnover.

Skills Training

In the first half of the year growth in Skills delivery, funded through direct
contract supplemented by subcontracts, translated into increased turnover and
profit. The Group was unable to continue delivery at the same level, although
demand existed, in the second half year because of difficulties in obtaining
funding through additional subcontract arrangements. Revenue for the second
half year was therefore considerably lower which, given the short to medium
term fixed cost nature of the business, resulted in the Skills Division
breaking even for the year. The expected reductions in central funding will
make securing subcontracts increasingly challenging.

Exceptional item

The Group incurred an exceptional cost of GBP 95,104 in relation to the exit
of a lease during the period.

Impairment of Goodwill

The Group announced the sale of Woodspeen Training Limited,
the Group's principal trading subsidiary, on 18 December 2014 for GBP 400,000.
The expected net disposal proceeds of the sale of Woodspeen Training Limited
are GBP 350,000 giving rise to an impairment charge of GBP 1,367,727.

Key performance indicators

The Group has in place a number of key performance
indicators, both financial and non-financial, which aid the management of the
Group's business and allow the Board to review performance at both Group and
operating subsidiary level. The key financial performance indicators are:
revenue growth; gross profit margin; operating profit before amortisation of
intangibles acquired on business combinations and exceptional items; earnings
per share growth; and net cash generated by operating activities.

The financial key performance indicators that, in the
opinion of the Directors, provide meaningful information regarding performance
for 2013/14 are: gross profit margin and net cash generated by operating
activities.

Gross profit margin

The gross profit margin declined marginally to 23.2% for the
year to 31 July 2014 from 23.6% for the year to 31 July 2013. The continuing
decline in the gross profit margin reflects the difficult trading conditions
faced by the Group in the last two years. The gross margin within the
Vocational division improved as operational efficiencies have been achieved.
The gross margin in Skills fell sharply as subcontracts, on which a management
fee is levied, increased as a proportion of revenue.

Net cash generated by operating activities

The net cash absorbed by operations was GBP 368,817(2013 -
GBP 206,259 absorbed) on an operating loss, before amortisation of intangible
assets acquired on business combinations, an impairment of goodwill and the
cost of exiting a lease of GBP 95,104, of GBP 223,391 (2013 - GBP 397,362). In
2013/14, trade and other payables fell by GBP 140,489 compared to 2013/14
where trade and other payables were exceptionally high.

The key non-financial performance indicators relate to
quality and the Group has invested resources to improve quality metrics. The
Group is pleased to announce that in October 2014, the benefits of this
investment resulted in the Woodspeen Training Limited, the Group's principal
trading subsidiary, being awarded Grade 2 at Ofsted Inspection.

Principal risks and uncertainties

Prior to the disposal of Woodspeen Training Limited, the Group was dependent
on Government funding for substantially all of its programmes. Whilst it was
expected that the majority of the Group's programmes, especially those that
concentrate on helping young people obtain employment, would continue to be
supported by the Government the Group remained mindful that changes might be
made which could have adversely affected the Group.

Government policy or practice in providing funds for vocational and skills
training may change. The Group, as with other companies in the sector, was
affected, inter alia, by Government decisions regarding funding priorities and
rates for programmes.

The profitability of the Group was dependent upon the continuation of a
favourable regulatory climate with respect to its activities. Failing to
obtain or to continue to comply with all necessary legislation and regulations
could have adversely affected the Group's performance.

The Group maintained relationships with the relevant regulatory and
funding bodies on an ongoing basis to ensure maximum visibility regarding
developments and changes to the basis of Government funding and the regulatory
environment so that it was able to plan accordingly.

A fall in the standard of delivery, record keeping or reporting could have
adversely affected contracts held with funding bodies or the awarding bodies
which would have in turn directly impacted on the financial performance of the
Group. A fall in the standard of internal quality controls could have resulted
in an inadequate inspection grading and a clawback of funding.

The Group maintained strong internal processes and procedures to minimise
these risks.

By order of the Board

Lynn Chandler

Company Secretary

19 December 2014

DIRECTORS' REPORT

The Directors submit their annual report and the audited financial statements
of the Group and Company for the year ended 31 July 2014.

Results and dividends

The results of the Group for the year are set out in the Consolidated income
statement.

The Directors do not recommend the payment of a dividend for the year ended 31
July 2014.

Post balance sheet events

On 18 December 2014 the Group announced that contracts had been exchanged for
the sale of the Company's principal subsidiary, Woodspeen Training Limited,
for a consideration of GBP 400,000 payable in cash on completion which is
expected to take place on 5 January 2015. In addition, the amount of the
Inter-Company Loan Account owed to the Company by Woodspeen Training Limited
on completion, expected to amount to some GBP 300,000, will be paid to the
Company on 18 December 2015.

When the disposal is completed, the Directors intend that any surplus cash in
the Company will be returned to shareholders in the most tax efficient way.
The Notice of Annual General Meeting includes a resolution proposing that the
Company withdraws from ISDX Growth Market.

Share capital

Details of the authorised and issued share capital of the Company are set out
in note 17 to the financial statements.

Insurance

As permitted by the Companies Act 2006, the Company maintains insurance cover
for all Directors and Officers of the Company against liabilities which may be
incurred by them whilst acting in those capacities.

Political donations

During the year, the Group made no political donations.

Directors and directors' interests

The directors who served during the year and their beneficial interests in the
shares of the Company as recorded in the register of Directors' interests at
31 July 2014 are as follows:

                                              Ordinary Shares
                                                         %age
                                          Number shareholding
Executive
Lynn Chandler                            987,400         2.76
Si Hussain                               150,000         0.42
Non-Executive
Compton Hellyer                          306,456         0.86
Charles Prior                          5,000,000        13.97
Brief biographies of the directors are given after the Directors' Report.

At 31 July 2014 share options had been granted to the Directors over the
Company's shares as follows:

                                   Date from            Share price  Non-market
              Number of Exercise       which     Expiry performance performance
                options    Price exercisable       Date    criteria    criteria
Si Hussain    2,000,000      15p  23/08/2014 22/08/2020        None          No
              1,000,000      18p  09/08/2014 08/08/2021       27.5p         Yes
              1,500,000       6p  05/02/2016 04/02/2023         12p         Yes
 
Lynn Chandler   750,000       6p  05/02/2016 04/02/2023         12p         Yes
Substantial shareholdings

As at 17 December 2014, shareholdings of 3% or more of the shares in the
Company notified to the Company are as follows:

                                         Ordinary    %age
                                           Shares  share-
                                           Number holding
Directors (as stated above)             6,443,856   18.01
Evolve Capital LLP                      3,000,000    8.38
Octopus Investment Nominees             4,081,114   11.40
YFM Private Equity                      1,388,500    3.88
Corporate governance

The Board has given due regard to the principles laid down by the UK Corporate
Governance Code published by the Financial Reporting Council. Although as a
company listed on the ISDX Growth Market it is not required to comply with the
Code, the Board is committed to maintaining high standards of corporate
governance and has put in place a framework, set out in the statement below,
which it believes is appropriate given the size of the Company.

The Board

At 31 July 2014, the Board comprised two executive directors and two
non-executive directors. The two non-executive directors are the Chairman and
an independent non-executive director.

Directors not appointed or reappointed at one of the two preceding annual
general meetings must retire from office and their re-election is subject to
shareholder approval. Any directors appointed by the Directors since the last
Annual General Meeting must retire from office and their re-election is
subject to shareholder approval.

The Chairman and Finance Director have service contracts with the Company
which are terminable by either party on three months' notice. The Chief
Executive has a service contract with the Company which is terminable by
either party on six months notice. The independent non-executive director has
a service contract with the Company for a three year period commencing on 1
June 2012 which is subject to termination at any time by either party giving
not less than three months' notice. The Company may also terminate the service
contract immediately upon payment of a fee equivalent to three months' notice.

The Board meets regularly throughout the year to discuss issues including
strategy, annual budgets, the rolling financial forecast, general treasury and
risk management policies.

There is an established procedure whereby directors, in furtherance of their
duties, may take independent professional advice at the expense of the
Company.

The Audit Committee is chaired by the Chairman and comprises both
non-executive directors. The responsibilities of the Audit Committee include
review of the Interim and Annual Financial Statements; approval of significant
changes in accounting policies and monitoring the independence, objectivity
and effectiveness of the external auditor.

Internal Control

The Board acknowledges its ultimate responsibility for all aspects of the
system of internal control and risk management and for reviewing its
effectiveness. In establishing these systems, the directors have considered
the nature of the Group's business with regard to the risks to which the
business is exposed, the likelihood of such risks occurring and the costs of
protecting against them. The system is designed to manage rather than
eliminate the risk of failure to achieve business objectives and can only
provide reasonable and not absolute assurance against material misstatement or
loss. The primary responsibility for the day-to-day operation of the systems
of internal control and the identified primary risks facing the Group is
delegated to the Board of the Company.

The key features of the system of internal control and risk management are:

- management accounts considered by the Board on a monthly basis;

- annual budgeting with results considered regularly against budget;

- forecasts regularly updated and reported to the Board;

- cash flow forecasting on a rolling basis for up to two years in the future;

- physical and computer security issues and contingency planning;

- risk management review and monitoring of those risks; and

- regular review to confirm the on-going solvency of the Group.

Investor Relations

Any issues of concern can be addressed to the Board by any shareholder. All
shareholders are encouraged to attend the Annual General Meeting and any
Extraordinary General Meetings, where they are given an opportunity to
question the Chairman and the Board.

Corporate social responsibility

The Group aims to operate at all times in a socially responsible manner and is
committed to achieving high standards of corporate governance, integrity and
business ethics in all of its activities. The Group's former activities
focused on an important area of Corporate Social Responsibility, namely the
provision of high quality vocational and employability training designed to
improve the skills of the UK workforce with a particular emphasis on those
individuals with qualifications below National Vocational Qualifications Level
2.

The Group acknowledges the importance of environmental matters and where
possible, utilises environment friendly policies in its offices such as
recycling and energy efficient practices.

Employees

The Group recognises that people are its greatest asset. The Group has a
policy of keeping all employees informed about its plans and progress through
regular meetings and electronic communication. Participation by employees in
the progress and profitability of the Group is encouraged, where appropriate,
through annual bonus schemes.

The Group has established systems for employee development and engagement with
formal staff appraisals and training programmes.

The Group operates recruitment and selection procedures which consider all
applicants for employment on the basis of qualification for specific vacancies
without regard to race, colour, religion, sex, age, disability or national
origin.

Pensions

To encourage greater pension savings, the Government has introduced
auto-enrolment. This requires employers to enrol eligible employees into a
pension scheme automatically. The Group's former trading subsidiary -
Woodspeen Training Limited - had a staging date of 1 July 2014 however, in
line with permitted legislation Woodspeen Training Limited postponed
auto-enrolment until 1 August 2014 when eligible employees were enrolled into
the Woodspeen Training Auto-enrolment Pension Plan.

Employee Participation

The Group's employee share scheme allows the Board to enable employees of the
Group to participate in the success of the Group.

The Group has adopted an Enterprise Management Incentive (EMI) Scheme to allow
individuals to be granted the right to acquire Ordinary Shares in the Company
subject to the terms of the Income Tax (Earnings and Pensions) Act 2003 and
EMI Scheme. The price payable on the exercise of the options granted under the
EMI Scheme will not be less than the market value of the Ordinary Shares at
the date of grant as agreed with HMRC and not be less than the nominal value
of an Ordinary Share.

During the year options were granted over 375,000 Ordinary Share at 6p per
share under the Approved Scheme.

Financial instruments

Details of the Group's risk management objectives and policies and its
exposure to financial risk are set out in note 15 to the financial statements.

The purpose of the policies is to ensure that adequate cost-effective funding
is available to the Group and exposure to financial risk - interest rate,
liquidity and credit risk - is minimised.

Going concern

Following the completion of the disposal of Woodspeen Training Limited, it is
the directors' intention to cease trading activity and to return any surplus
cash to shareholders, subject to shareholder approval, and liquidate the
company in the foreseeable future. As a result, the directors have concluded
that it is not appropriate to adopt a going concern basis of preparation in
these financial statements. No material adjustments arose as a result of
ceasing to apply the going concern basis.

Audit Information

The Directors confirm, that, so far as each director is aware, there is no
relevant audit information of which the auditors are unaware and that each
director has taken all reasonable steps to make himself or herself aware of
any relevant audit information and to establish that the auditors are aware of
that information.

A statement by the Directors of their responsibilities for preparing the
financial statements of the Group and Company is given in the Statement of
directors' responsibilities in relation to the Group and Company financial
statements.

Auditors

BDO LLP have expressed their willingness to continue in office and a
resolution to re appoint them will be proposed at the Annual General Meeting.

Annual general meeting

The Parent Company's Annual General Meeting will be held on 30 January 2015 at
10.30am at the offices of Memery Crystal LLP, 44 Southampton Buildings, London
WC2A.

The resolutions to be proposed at the Annual General Meeting, together with
explanatory notes, are contained within the Notice of Annual General Meeting.

By Order of the Board

Lynn Chandler

Company Secretary

19 December 2014

BIOGRAPHICAL INFORMATION ON DIRECTORS

Lynn Chandler - Finance Director - Aged 53

Lynn is a chartered accountant and was the Finance Director of BPP Holdings
plc for 10 years until she retired from full-time employment in 2005.

Compton Hellyer - Non-Executive Director - Age 68

Compton worked in the City for over 20 years, first as a stockbroker and then
as a financial adviser on commodities and futures. In 1991 Compton founded
Sporting Index which soon became one of the world leaders in spread betting.
He left Sporting Index when it was bought by a private equity firm in 2003 and
now is chairman of six private companies.

Si Hussain - Chief Executive - Age 47

Si is a chartered accountant. Si was an executive director of the main board
of BPP Holdings plc ("BPP") and left in October 2009 when BPP was acquired by
the Apollo Group. Si was responsible for the examination training and
professional development division at BPP.

Charles Prior - Chairman - Aged 67

Charles is a chartered accountant and was one of the founder shareholders and
directors of BPP Holdings plc ("BPP"). Charles was its Chief Executive until
his retirement in August 2007. Under his leadership BPP grew into a
substantial training company with a market capitalisation of over GBP 250
million.

STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RELATION TO THE GROUP FINANCIAL
STATEMENTS

Directors' responsibilities

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

Company law requires the directors to prepare financial statements for each
financial year. Under that law the directors have elected to prepare the Group
financial statements in accordance with International Financial Reporting
Standards (IFRSs) as adopted by the European Union and the Parent Company
financial statements in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards and applicable law).
Under company law the directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of
affairs of the Group and Parent Company and of the profit or loss of the Group
for that year.

In preparing these financial statements, the directors are required to:

- select suitable accounting policies and then apply them consistently;

- make judgements and accounting estimates that are reasonable and prudent;

- in respect of the Group financial statements state that they have been
prepared in accordance with IFRSs as adopted by the European Union, subject to
any material departures disclosed and explained in the Group financial
statements;

- prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Company will continue in business. As
explained in note 1 to the financial statements, the directors do not believe
the going concern basis to be appropriate and, in consequence, these financial
statements have not been prepared on that basis.

The directors are responsible for keeping adequate accounting records which
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.

Financial statements are published on the Group's website in accordance with
legislation in the United Kingdom governing the preparation and dissemination
of financial statements, which may vary from legislation in other
jurisdictions. The maintenance and integrity of the Group's website is the
responsibility of the directors. The directors' responsibility also extends to
the ongoing integrity of the financial statements contained therein.

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF WOODSPEEN TRAINING GROUP PLC

We have audited the financial statements of Woodspeen Training Group plc for
the year ended 31 July 2014 which comprise the consolidated income statement,
the consolidated statement of comprehensive income, the consolidated statement
of financial position and company balance sheet, the consolidated statement of
cash flows, the consolidated statement of changes in equity and the related
notes. The financial reporting framework that has been applied in the
preparation of the group financial statements is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by the European
Union. The financial reporting framework that has been applied in preparation
of the parent company financial statements is applicable law and United
Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting
Practice).

This report is made solely to the company's members, as a body, in accordance
with sections Chapter 3 of Part 12 of the Companies Act 2006. Our audit work
has been undertaken so that we might state to the company's members those
matters we are required to state to them in an auditor's report and for no
other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company and the company's
members as a body, for our audit work, for this report, or for the opinions we
have formed.

Respective responsibilities of directors and auditors

As explained more fully in the statement of directors' responsibilities, the
directors are responsible for the preparation of the financial statements and
for being satisfied that they give a true and fair view. Our responsibility is
to audit and express an opinion on the financial statements in accordance with
applicable law and International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Financial Reporting Council's (FRC's)
Ethical Standards for Auditors.

Scope of the audit of the financial statements

A description of the scope of an audit of financial statements is provided on
the FRC's website at www.frc.org.uk/auditscopeukprivate.

Opinion on financial statements

In our opinion:

- the financial statements give a true and fair view of the state
of the group's and the parent company's affairs as at 31 July 2014 and of the
group's loss for the year then ended;

- the group financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union;

- the parent company's financial statements have been properly
prepared in accordance with United Kingdom Generally Accepted Accounting
Practice; and

- the financial statements have been prepared in accordance with
the requirements of the Companies Act 2006.

Emphasis of matter - Going concern

In forming our opinion on the financial statements, which is not modified, we
have considered the adequacy of the disclosure made in note 1 to the financial
statements concerning the company's intention not to continue as a going
concern and the basis on which the financial statements have been prepared. As
it is the directors intention to cease trading activity upon completion of the
disposal of Woodspeen Training Limited and to return any surplus cash to
shareholders and liquidate the company in the foreseeable future, the
financial statements have been not been prepared on a going concern basis.

Opinion on other matters prescribed by the Companies Act 2006

In our opinion the information given in the strategic report and directors'
report for the financial year for which the financial statements are prepared
is consistent with the financial statements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the
Companies Act 2006 requires us to report to you if, in our opinion:

- adequate accounting records have not been kept by the parent company, or
returns adequate for our audit have not been received from branches not
visited by us; or

- the parent company financial statements are not in agreement with the
accounting records and returns; or

- certain disclosures of directors' remuneration specified by law are not
made; or

- we have not received all the information and explanations we require for our
audit.

James Fearon (senior statutory auditor)

For and on behalf of BDO LLP, statutory auditor

Gatwick, West Sussex

United Kingdom

19 December 2014

BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127).

CONSOLIDATED INCOME STATEMENT

YEAR ENDED 31 JULY 2014

                                               Note        Year        Year
                                                          Ended       Ended
                                                        31 July     31 July
                                                           2014        2013
                                                            GBP         GBP
Revenue                                        2      3,851,307   4,013,333
Cost of sales                                  3    (2,957,033) (3,066,534)
Gross profit                                            894,274     946,799
Administrative expenses                        3    (2,632,496) (1,396,161)
Loss from operations                           2,3  (1,738,222)   (449,362)
 
Analysed as:
Loss from operations before amortisation
and impairment of intangible assets and costs         (223,391)   (397,362)
of exiting lease
Amortisation intangibles - customer contracts  3       (52,000)    (52,000)
acquired on acquisition
Costs of exiting lease                         6       (95,104)           -
Impairment of intangibles - goodwill           7    (1,367,727)           -
                                                    (1,738,222)   (449,362)
 
Finance revenue                                          13,979      21,339
Loss before taxation                                (1,724,243)   (428,023)
Tax (expense)/credit                           8        (5,552)      13,136
Loss for the year                                   (1,729,795)   (414,887)
 
All the results arise from activities which as
described in
note 1 will cease.
 
Earnings per share
 
Basic and diluted                              9        (4.83)p     (1.16)p

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

YEAR ENDED 31 JULY 2014

There is no difference between the loss for the year shown
and total comprehensive expense.

Reconciliation of movements in total equity are given in the
Consolidated Statement of Changes in Equity.

The accompanying Notes form an integral part of these Group
financial statements.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 JULY 2014

                                                           31 July      31 July
                                            Note              2014         2013
                                                               GBP          GBP
Assets
Non-current assets
Property, plant and equipment               10             193,036      252,994
Intangible assets                           11             211,528    1,633,948
Deferred tax assets                         16                   -       17,921
                                                           404,564    1,904,863
Current assets
Trade and other receivables                 12             577,486      544,389
Cash and short term deposits                             2,200,980    2,590,485
                                                         2,778,466    3,134,874
Total assets                                             3,183,030    5,039,737
 
Liabilities
Current liabilities
Trade and other payables                    13             508,568      649,057
Deferred revenue                                            13,367       12,080
                                                           521,935      661,137
Non-current liabilities
Provisions                                  14               3,500       21,360
Deferred tax liabilities                    16              17,680       30,049
                                                            21,180       51,409
Total liabilities                                          543,115      712,546
Net assets                                               2,639,915    4,327,191
 
Equity
Capital and reserves attributable to equity
holders of the Company
Issued share capital                        17             357,862      357,862
Merger reserve                                             376,000      376,000
Retained earnings                                        1,906,053    3,593,329
Total equity                                             2,639,915    4,327,191
 
The financial statements were approved and authorised for
issue by the Board of Directors on 19 December 2014 and were signed on its
behalf by:

Lynn A Chandler

Director

The accompanying Notes form an integral part of these Group
financial statements.

CONSOLIDATED STATEMENT OF CASH FLOWS

YEAR ENDED 31 JULY 2014

                                              Note        Year      Year
                                                         Ended     Ended
                                                       31 July   31 July
                                                          2014      2013
                                                           GBP       GBP
Cash flows from operating activities
Loss before taxation                               (1,724,243) (428,023)
Adjustments for:
Impairment goodwill                              7   1,367,727         -
Depreciation of property, plant and equipment   10      87,329    75,841
Leasehold dilapidations                         14       3,500    36,292
Amortisation of intangibles - customer
contracts
acquired on acquisition                         11      52,000    52,000
Amortisation of intangibles - software          11       6,698     6,158
Loss on disposal of intangibles - software               4,600         -
Share based payment expense                     18      42,519    61,628
Finance income                                        (13,979)  (21,339)
(Increase)/Decrease in trade and other                (32,215)   194,200
receivables
Decrease in trade and other payables                 (142,681)  (65,274)
Increase in deferred revenue                             1,288     2,557
Decrease in provisions                                (21,360) (120,299)
Cash (absorbed)/generated by operations              (368,817) (206,259)
Income taxes paid                                            -     (342)
Cash flows absorbed by operating activities          (368,817) (206,601)
Cash flows from investing activities
Purchase of plant and equipment                 10    (27,371) (149,867)
Purchase of intangibles - software              10     (8,605)   (2,287)
Interest received                                       15,288    22,184
Net cash used in investing activities                 (20,688) (129,970)
Decrease in cash and cash equivalents                (389,505) (336,571)
Cash and cash equivalents at start of year           2,590,485 2,927,056
Cash and cash equivalents at end of year             2,200,980 2,590,485
 
The accompanying Notes form an integral part of these Group
financial statements.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

AS AT 31 JULY 2014

                                                                             Total
                                Issued       Share                           Share
                                 Share     Premium  Merger    Retained     holders
                               Capital     Account Reserve    Earnings      Equity
                                   GBP         GBP     GBP         GBP         GBP
At 1 August 2012             3,578,620   2,997,637 376,000 (2,271,807)   4,680,450
 
Transactions with owners:
Reduction of capital and
cancellation               (3,220,758) (2,997,637)       -   6,218,395           -
of share premium account
Employee share option
schemes:
- Share based payments               -           -       -      61,628      61,628
 
Total comprehensive                  -           -       -   (414,887)   (414,887)
expense
At 31 July 2013                357,862           - 376,000   3,593,329   4,327,191
 
At 1 August 2013               357,862           - 376,000   3,593,329   4,327,191
 
Transactions with owners:
Employee share option
schemes:
- Share based payments               -           -       -      42,519      42,519
 
Total comprehensive                  -           -       - (1,729,795) (1,729,795)
expense
At 31 July 2014                357,862           - 376,000   1,906,053   2,639,915
 
The accompanying Notes form an integral part of these Group financial
statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS AT 31 JULY 2014

1. Accounting policies

(a) General information

The Group's principal activity is provision of vocational and skills training,
assessment and related services.

The Company's principal activity is that of a holding company.

(b) Basis of preparation

The Group's financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRSs) adopted for use in the
European Union (EU) as they apply to the financial statements of the Group for
the year ended 31 July 2014, and therefore comply with Article 4 of the EU IAS
Regulation, and with those parts of the Companies Act 2006 applicable to
groups preparing their accounts under IFRS.

The Group has applied all accounting standards and interpretations issued by
the International Accounting Standards Board and International Accounting
Interpretations Committee effective at the time of preparing the financial
statements.

Following the completion of the disposal of Woodspeen Training Limited, it is
the directors' intention to cease trading activity and to return any surplus
cash to shareholders, subject to shareholder approval, and liquidate the
company in the foreseeable future. As a result, the directors have concluded
that it is not appropriate to adopt a going concern basis of preparation in
these financial statements. No material adjustments arose as a result of
ceasing to apply the going concern basis.

(c) Basis of consolidation

The consolidated financial information includes the accounts of the Company
and its subsidiary undertakings at the balance sheet date using the
acquisition method.

Subsidiary undertakings are consolidated from the date on which control is
transferred to the Group. Control is achieved where the Company has the power
to govern the financial and operating policies of an investee entity so as to
obtain benefits from its activities.

Inter-company transactions and balances are eliminated on consolidation.

Where necessary, adjustments are made to the financial information of
subsidiaries to bring the accounting policies used into line with those
adopted by the Group.

The financial statements of all trading subsidiaries are prepared to the same
reporting date as the Parent Company.

On acquisition, the assets, liabilities and contingent liabilities of a
subsidiary undertaking are measured at their fair values at the date of
acquisition. Any excess of the cost of acquisition over the fair values of the
identifiable net assets acquired is recognised as goodwill. Any deficiency of
the cost of acquisition below the fair values of the identifiable net assets
acquired (i.e. discount on acquisition) is credited to the income statement in
the year of acquisition.

(d) Significant accounting estimates and judgements

The preparation of financial statements requires management to make judgments,
estimates and assumptions that affect the amounts reported for revenues,
expenses, assets, intangible assets (including goodwill), liabilities and
disclosures of contingent liabilities at the date of the financial statements.
However, the nature of estimation means that actual outcomes could differ from
those estimates.

The key sources of estimation uncertainty that have a significant risk of
causing material adjustment to the carrying amounts of assets and liabilities
in the next financial year are as follows:

- The measurement and impairment of goodwill, an intangible asset with an
indefinite life. The Group determines whether goodwill is impaired on an
annual basis requiring an estimation of the fair value less costs to sell of
the cash generating unit to which goodwill is allocated.

- The determination of the fair value of intangible assets on acquisition and
their useful lives;

- The estimation of dilapidation provisions; and

- The determination of the fair value of share options.

The principal accounting policies adopted by the Group are as follows:

(e) Intangible assets

Goodwill

Goodwill represents the excess of the fair value of the consideration over the
fair values of the identifiable net tangible and intangible assets acquired.

Under IFRS3 `Business Combinations' goodwill arising on acquisitions is not
subject to amortisation but is subject to annual impairment testing. Any
impairment is recognised immediately in the income statement and not
subsequently reversed.

Intangible assets acquired on acquisition of a subsidiary undertaking

Intangible assets that are acquired on acquisition of a subsidiary undertaking
are stated at fair value at date of acquisition and amortised over their
expected useful economic lives on a straight-line basis. The amortisation
charge is included in administrative expenses in the income statement.

Amortisation rates are as follows:

Customer contracts - between 27 and 60 months.

(f) Property, plant and equipment

Property, plant and equipment are shown at cost less subsequent depreciation
and impairment.

Depreciation on assets is calculated to allocate the cost of each asset less
its residual value (based on prices prevailing at the balance sheet date) over
its estimated useful life.

Depreciation rates are as follows:

Leasehold improvements - straight line over the shorter of the lease term or
expected useful life;

Fixtures - 25% per annum straight line or reducing balance; and

Equipment - 25% per annum straight line or reducing balance and 33% straight
line.

Depreciation methods, residual values and useful lives are reviewed, and
adjusted if appropriate, at each balance sheet date.

The carrying values of property, plant and equipment are reviewed for
impairment when events or changes in circumstances indicate the carrying value
may not be recoverable.

An asset's carrying amount is written down immediately to its recoverable
amount (the higher of an asset's fair value less costs to sell and its value
in use) if the asset's carrying amount is greater than its estimated
recoverable amount.

(g) Impairment of assets

Goodwill is tested at least annually, or whenever events or changes in
circumstances indicate that carrying value may be impaired, for impairment and
carried at cost less accumulated impairment losses. Gains and losses on the
disposal of an entity include the carrying amount of goodwill relating to the
entity sold.

Assets that are subject to amortisation (intangible assets) or depreciation
(tangible assets) are tested for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An
impairment loss is recognised in the income statement for the amount by which
the asset's carrying amount exceeds its recoverable amount.

The recoverable amount is the greater of an asset's fair value less costs to
sell and value in use. For the purposes of assessing impairment, assets are
grouped at the lowest levels for which there are separately identifiable cash
inflows (cash-generating units). In assessing value in use, the estimated
future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset.

(h) Financial instruments

Financial assets and financial liabilities are recognised on the Group balance
sheet when the Group becomes a party to the contractual provisions of the
instrument.

Financial Assets

The Group classifies its financial assets in the following categories: loans
and receivables. The classification depends on the purpose for which the
assets were acquired. Management determines the classification of its assets
at initial recognition and re-evaluates this designation at every reporting
date. Financial assets are initially recognised at fair value (the transaction
price plus directly attributable transaction costs).Loans and receivables are
non-derivative financial assets with fixed or determinable payments that are
not quoted in an active market, do not qualify as trading assets and have not
been designated as either fair value through profit and loss or available for
sale. Such assets are carried at amortised cost using the effective interest
method if the time value of money is significant. Gains and losses are
recognised in income when the loans and receivables are de-recognised or
impaired, as well as through the amortisation process.

Financial assets classified as loans and receivables comprise:

- Trade and other receivables - are measured initially at fair value and
subsequently at amortised cost. Appropriate allowances for estimated
irrecoverable amounts are recognised in profit or loss when there is objective
evidence that the asset is impaired.

- Cash and cash equivalents - comprise cash on hand and demand deposits, and
other short-term highly liquid investments with original maturities of three
months or less.

Financial liabilities

Financial liabilities classified as loans and borrowings comprise:

- Interest-bearing bank loans and overdrafts are recorded at the proceeds
received, net of direct issue costs. Finance charges, including premiums
payable on settlement or redemption and direct issue costs, are accounted for
on an accruals basis in the income statement using the effective interest rate
method and are added to the carrying amount of the instrument to the extent
that they are not settled in the year in which they arise.

- Other financial liabilities - Trade payables and other short-term monetary
liabilities are initially recognised at fair value and subsequently carried at
amortised cost using the effective interest method.

(i) Cash and cash equivalents

For the purpose of the consolidated cash flow statement, cash and cash
equivalents consist of cash and cash equivalents as defined above, net of
outstanding bank overdrafts.

(j) Equity instruments

Equity instruments issued by the Company are recorded the fair value of the
proceeds received, net of direct issue costs.

(k) Financial liabilities and equity instruments

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

(l) Provisions

Provisions are recognised when the Group has a present obligation (legal or
constructive) as a result of a past event, it is probable that there will be
an outflow of economic benefits to settle the obligation and a reliable
estimate can be made of the amount of the obligation. If the effect of the
time value of money is material, provisions are discounted using a current
pre-tax rate that reflects, where appropriate, the risks specific to the
liability. Where discounting is used, the increase in the provision due to the
passage of time is recognised as a finance cost.

A provision for the present value of future property reinstatement costs is
recognised where there is an obligation under the lease to return the leased
property to its original condition at the end of an operating lease.

(m) Revenue recognition

Revenue from trading activities

Revenue, which is stated net of value added tax, represents revenue earned in
respect of services provided in the year. Where amounts have been earned but
not invoiced during the year, the amount included in revenue is the proportion
of the anticipated net sales earned to date. A corresponding balance is
recognised in receivables as accrued revenue.

Where revenue is directly linked to specific achievements, such as payments in
respect of learner registration and assessment, this revenue is only
recognised when the specific achievement is met.

(n) Operating lease payments

Payments made under operating leases are recognised in the income statement on
a straight-line basis over the term of the lease. Lease incentives received
are recognised in the income statement as an integral part of the total lease
expense.

(o) Highlighted items

These are material items which derive from events or transactions that fall
within the ordinary activities of the Group and which individually or, if of a
similar type, in aggregate, need to be disclosed by virtue of their size or
incidence if the financial statements are to give a true and fair view.

(p) Retirement benefits: Defined contribution schemes

Contributions to defined contribution pension schemes are charged to the
income statement in the year to which they relate.

(q) Share based payments

The fair value of options granted is recognised as an employee expense, with a
corresponding increase in equity reserves. The fair value of the options is
determined at the date of grant and spread over the year the employees become
unconditionally entitled to the options. Non market vesting conditions are
taken into account in estimating the number of options likely to vest. In
determining the fair value, no account is taken of any vesting conditions,
other than conditions linked to the price of the shares in the Company (market
conditions). The fair value of the options is calculated using the
Black-Scholes pricing model or other appropriate pricing model dependent upon
the terms of the share options.

No expense is recognised for options that do not ultimately vest except for
options where the vesting is conditional upon a market condition, which are
treated as vesting irrespective of whether or not the market condition is
satisfied, provided that all other performance condition are satisfied.

The cumulative expense recognised for share option schemes at each reporting
date until the vesting date represents the extent to which the vesting year
has expired and the number of options that, in the opinion of the Directors
based upon information available at that date, will ultimately vest. The
income charge or credit for a year represents the movement in cumulative
expense recognised as at the beginning and end of that year.

Tax relief on share options is given when they are exercised; the relief given
is based on the difference between the exercise price and market price on the
day of exercise. A deferred asset is calculated for outstanding options based
on the current share price at the end of the reporting year and the related
exercise price and is recognised in line with the taxation policies below. The
movement in the associated deferred tax balance is recognised through the
income statement to the extent that it relates to the corresponding cumulative
share based payment charge recognised in the income statement. Additional
movements are taken directly to equity.

(r) Taxation

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

The tax currently payable is based on taxable profit for the year. Taxable
profit differs from profit before taxation as reported in the income statement
because it excludes items of income or expense that are taxable or deductible
in other years and it further excludes items that are never taxable or
deductible. The Group's liability for current tax is calculated using tax
rates that have been enacted or substantively enacted by the balance sheet
date.

Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit, and is accounted for using the balance sheet liability method.
Deferred tax liabilities are generally recognised for all taxable temporary
differences and deferred tax assets to the extent that it is probable that
taxable profits will be available against which deductible temporary
differences can be utilised. Such assets and liabilities are not recognised if
the temporary difference arises from the initial recognition of goodwill or
from the initial recognition (other than in a business combination) of other
assets and liabilities in a transaction that affects neither the tax profit
nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in subsidiaries and interests in joint ventures, except
where the company is able to control the reversal of the temporary difference
and it is probable that the temporary difference will not reverse in the
foreseeable future.

The carrying amount of deferred tax assets is reviewed at each balance sheet
date and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be
recovered.

Deferred tax is calculated, on an undiscounted basis, at the tax rates that
are expected to apply in the year when the liability is settled or the asset
is realised, provided they are enacted or substantively enacted at the balance
sheet date. Deferred tax is charged or credited in the income statement,
except when it relates to items charged or credited directly to equity, in
which case the deferred tax is also dealt with in equity.

Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax
liabilities and when they relate to income taxes levied by the same taxation
authority and the company intends to settle its current tax assets and
liabilities on a net basis.

(s) New standards and interpretations applied

New standards, amendments to standards and interpretations issued by the IASB
and IFRIC adopted for the Group for the first time from 1 August 2013 are
either not relevant to the Group or have not had a material effect on the
financial statements.

2 Segment information

The Chief Operating Decision Maker has been identified as the Chief Executive.
The Chief Executive reviews the Group's internal reporting in order to assess
performance and allocate resources. Management has determined the operating
segments based on reports used by the Chief Executive.

The Chief Executive assesses the performance of operating segments based on
operating profit before amortisation of acquired intangible assets, interest
and tax. Information presented to the Chief Executive is measured in a manner
consistent with that in the financial statements. The performance of operating
segments reviewed by the Chief Executive does not include corporate and
central costs. Corporate and central costs, although not an operating segment
as defined by IFRS8 are reviewed by the Chief Executive and shown as Group
items in the table below.

The principal activity of the Group is Government sponsored training,
assessment and related services. The

Chief Executive considers the Group's business through two reporting segments
based on principal activity:

- Vocational Training (Apprenticeships and other vocational training
programmes); and

- Skills Training (Skills for Life and other employability training
programmes).

                                             Year ended              Year ended
                                                                   31 July 2013
                                           31 July 2014
                                              Operating               Operating
                                          Profit/(Loss)   Revenue Profit/(Loss)
                                  Revenue
                                GBP                 GBP       GBP           GBP
Vocational Training             2,567,688        37,394 2,682,393     (119,167)
Skills Training                 1,283,619         (518) 1,330,940        60,083
Total for segments              3,851,307        36,876 4,013,333      (59,084)
Group items:
Corporate and central costs                   (260,267)               (338,278)
                                              (223,391)               (397,362)
Amortisation charge on acquired                (52,000)                (52,000)
intangible assets
Costs of exiting lease                         (95,104)                       -
Impairment of goodwill                      (1,367,727)                       -
Total for Group                 3,851,307   (1,738,222) 4,013,333     (449,362)

The Chief Operating Decision Maker has been identified as the Chief Executive.
The Chief Executive reviews the Group's internal reporting in order to assess
performance and allocate resources. Management has determined the operating
segments based on reports used by the Chief Executive.

Other profit and loss information included in
operating loss above:
                                          Year ended    Year ended
                                        31 July 2014  31 July 2013
                                                 GBP           GBP
Depreciation & amortisation
software:
Vocational Training                           62,037        53,392
Skills Training                               31,314        27,464
Total for segments                            93,351        80,856
Group items:
Corporate and central costs                      676         1,143
Total for Group                               94,027        81,999

The reconciliation, by operating segment of the profit
reported to the Chief Decision Maker to loss from operations shown in the
financial statements is as follows:

                                                          Year ended 31 July 2014
                           Reported Amortisati
                          Segmental      on on                          Segmental
                          Operating   Acquired Costs of  Impairment     Operating
                             Profit Intangible  exiting          of Profit/(Loss)
                                        Assets    lease    Goodwill
                                GBP        GBP      GBP         GBP           GBP
Vocational Training          37,394   (52,000) (95,104)   (554,749)     (664,459)
Skills Training               (518)          -        -   (812,978)     (813,496)
Total for segments           36,876   (52,000) (95,104) (1,367,727)   (1,477,955)
Group items:
Corporate and central                                                   (260,267)
costs
Total for Group                                                       (1,738,222)
 
                                                           Year ended 31 July 2013
                              Reported Amortisati
                             Segmental      on on                        Segmental
                             Operating   Acquired Costs of Impairmen     Operating
                         Profit/(Loss) Intangible  exiting      t of Profit/(Loss)
                                           Assets    lease  Goodwill
                                   GBP        GBP      GBP       GBP           GBP
Vocational Training          (119,167)   (52,000)        -         -     (171,167)
Skills Training                 60,083          -        -         -        60,083
Total for segments            (59,084)   (52,000)        -         -     (111,084)
Group items:
Corporate and central                                                    (338,278)
costs
Total for Group                                                          (449,362)
 
All income is derived from the United Kingdom.

The Government, through various funding agencies and bodies,
directly and through sub-contacting arrangements entered into by the Group, is
the Group's single largest customer and accounts for GBP 3,695,000 (96%) of
revenue spread across a number of contracts. The revenue is reported within
both Vocational and Skills Training operating segments.

No other single customer accounts for than 10% of Group
revenue.

Given the nature of the Group's business, the Chief Executive does not receive
or review balance sheet information for operating segments.

3 Expenses by nature

                                                         Year      Year
                                                        ended     ended
                                                      31 July   31 July
                                                         2014      2013
                                                          GBP       GBP
Staff costs                                         2,690,059 2,893,505
Direct training costs:
Licence & registration fees, sub-contractors &        397,557   454,965
trainee allowances etc
Staff travel & subsistence                            119,463   124,067
Depreciation, amortisation &
profit/loss on disposal
Deprecation of property, plant and    (note 10)        87,329    75,841
equipment
Leasehold dilapidations               (note 14)         3,500    36,292
Amortisation of intangibles -         (note 11)         6,698     6,158
software
Amortisation intangibles - customer   (note 11)        52,000    52,000
contracts
Loss on disposal of intangibles -                       4,600         -
software
Property costs:
Operating lease rentals - property                    103,742   154,663
Rates, service charges, utilities,                    149,517   209,603
repairs etc
Other costs                                           512,233   455,601
Exceptional items:
Costs of exiting lease                (note 6)         95,104         -
Impairment of goodwill                (note 7)      1,367,727         -
Total cost of sales and                             5,589,529 4,462,695
administrative expenses
 
Included in Other costs above are the following amounts relating to
fees paid to the auditors and their associates:
 
Auditors' remuneration
- Audit of financial statements                        16,800    16,800
Other fees paid to auditors and their
associates
- Statutory audit of subsidiaries                      11,950    12,900
- Other services                                        1,480     3,720
4 Staff costs

                                             Year      Year
                                            ended     ended
                                          31 July   31 July
                                             2014      2013
                                              GBP       GBP
Wages and salaries                      2,400,634 2,600,855
Share based payment expense                42,519    61,628
                                        2,443,153 2,662,483
Defined pension contribution costs         34,593    24,829
Short-term non-monetary benefits           10,889     2,948
Social security costs                     201,424   203,245
                                        2,690,059 2,893,505

The trading subsidiary company operates a defined contribution pension scheme
for certain employees to which the subsidiary company contributes if the
employee contributes.

The Group in accordance with auto-enrolment pension legislation set up a
defined contribution pension scheme for eligible employees. The Group's
trading subsidiary had a staging date of 1 July 2014 however, in line with
permitted legislation postponed auto-enrolment until 1 August 2014 when
eligible employees were automatically enrolled although one employee opted to
enrol on the staging date of 1 July 2014. The Group contributes the statutory
minimum employer contributions on behalf of eligible employees who do not opt
out of the auto-enrolment pension scheme.

The Group contributes to a personal pension scheme on behalf of one director
of the holding company and one director of a subsidiary company.

The average monthly number of employees during the year was made up as follows:
                                                                    Year       Year
                                                                   ended      ended
                                                                 31 July    31 July
                                                                    2014       2013
                                                                  Number     Number
Tutors, assessors and administrators                                  99        110
Other                                                                  -          9
Management                                                             8          8
                                                                     107        127
 
The number of employees at 31 July was made up as follows:
                                                                    Year       Year
                                                                   ended      ended
                                                                 31 July    31 July
                                                                    2014       2013
                                                                  Number     Number
Tutors, assessors and administrators                                  93         96
Management                                                             8          8
                                                                     101        104
The directors are included in the figures and numbers above.

5 Directors and key management personnel emoluments

The aggregate emoluments of the Directors who served during the year were:

                                   Year ended 31 July 2014
                                                     Share            Year
                                Pension              Based           Ended
                         Con-tributions            Payment         31 July
                  Salary                Benefits   Expense   Total    2013
                                                 (note 17)           Total
                     GBP            GBP      GBP       GBP     GBP     GBP
Executive
Directors
Lynn Chandler     25,000              -        -     5,516  30,516  27,575
Si Hussain        58,800         24,000    3,023    33,018 118,841 140,650
                  83,800         24,000    3,023    38,534 149,357 168,225
Non-Executive
Directors
Compton Hellyer   12,000              -        -         -  12,000  12,000
Charles Prior     18,000              -        -         -  18,000  18,000
                 113,800         24,000    3,023    38,534 179,357 198,225
 
Total 2013       124,374         12,000    2,948    58,903 198,225

The directors of the Company are the key management personnel as they are the
persons having authority and responsibility for planning, directing and
controlling the activities of the Group.

6 Costs of exiting lease

                                                    Year    Year
                                                   ended   ended
                                                 31 July 31 July
                                                    2014    2013
                                                     GBP     GBP
Recognised in arriving at Group operating loss
from continuing operations:
Costs of exiting lease                            95,104       -

During the year the Group incurred costs on the early exit from a property
lease.

7 Impairment of goodwill

                                                      Year    Year
                                                     ended   ended
                                                   31 July 31 July
                                                      2014    2013
                                                 GBP       GBP
Recognised in arriving at Group operating loss
from continuing operations:
Impairment of goodwill                           1,367,727 -
As a result of the annual review of the carrying value of goodwill as at 31
July 2014, the Group determined that an impairment charge of GBP 1,367,727 be
made against the carrying value of goodwill. Of this sum - GBP 812,978 is
attributable to Skills Training and GBP 554,749 is attributable to Vocational
Training.

8 Income tax expense

(a) Tax on loss for the year

Tax charged/(credited) in the income         Year ended Year ended
statement
                                                31 July    31 July
 
                                                   2014       2013
                                                    GBP        GBP
Current tax:
UK corporation tax on loss for the year               -          -
Adjustment for over provision in prior                -    (2,215)
years
Total current tax                                     -    (2,215)
Deferred tax (Note 16)
Origination and reversal of temporary             (511)    (8,444)
differences
Deferred tax charge/(income) resulting            6,063    (2,477)
from reduction in tax rate
Total deferred tax                                5,552   (10,921)
Tax expense/(credit) in the income                5,552   (13,136)
statement

(b) Reconciliation of the total tax expense/(credit)

The reasons for the difference between the actual tax charge/(credit) for the
year and the standard rate of corporation tax in the UK applied to profits for
the year are as follows:

                                                  Year ended Year ended
 
                                                     31 July    31 July
 
                                                        2014       2013
                                                         GBP        GBP
Accounting loss before tax                       (1,724,243)  (428,023)
Expected tax charge based on the standard
rate of
corporation tax in the UK for the year/year        (385,024)  (101,313)
of 22.33% (2013 - 23.67%)
Effects of:
Non-deductible expenses for tax purposes
Impairment of goodwill                               305,413          -
Other non- deductible expenses                           827      7,240
Share based payments                                   9,494     14,587
Tax losses for which no deferred tax asset is         74,462     59,575
recognised
Other items                                          (5,683)     11,467
Adjustment for over provision for current tax              -    (2,215)
in previous years
Reduction in opening deferred taxes resulting          6,063    (2,477)
from reduction in tax rate
Total tax expense/(credit) for the year                5,552   (13,136)
9 Earnings per share

Basic earnings per share are calculated by dividing the profit attributable to
ordinary shareholders by the weighted number of shares in issue during the
year.

Diluted earnings per share are calculated by adjusting the weighted average
number of ordinary shares for the conversion of all dilutive potential
ordinary shares.

For the better understanding of the underlying trading performance, the
directors feel it appropriate to disclose earnings per share before adjusting
items. Adjusting items are those items which, in the opinion of the directors,
should be excluded to provide a consistent and comparable view of the
underlying performance of the Group's business and include amortisation of
intangible assets acquired on acquisition of subsidiaries and material one-off
items such as impairment of goodwill and costs of exiting lease.

The Group reported a loss after tax both before and after adjusting items for
the year to 31 July 2014 and the year to 31 July 2013. Options granted under
Employee Share Schemes were anti-dilutive and basic and adjusted diluted
earnings per share are the same as basic and adjusted earnings per share.

                                                      Year ended Year ended
 
                                                         31 July    31 July
 
                                                            2014       2013
Earnings                                                     GBP        GBP
Earnings attributable to ordinary shareholders       (1,729,795)  (414,887)
Amortisation of acquired intangible assets                52,000     52,000
Taxation impact amortisation of acquired intangible     (12,369)   (13,804)
assets
Costs of exiting lease                                    95,104          -
Taxation impact costs of exiting lease                  (18,058)          -
Impairment of goodwill                                 1,367,727          -
Adjusted loss on ordinary activities after tax         (245,391)  (376,691)
 
Number of shares                                          Number     Number
Weighted average number of shares for basic and       35,786,204 35,786,204
diluted earnings per share
                                           Year ended Year ended
 
                                              31 July    31 July
 
                                                 2014       2013
                                                Pence      Pence
Earnings per share
Basic earnings per share                       (4.83)     (1.16)
Diluted earnings per share                     (4.83)     (1.16)
Adjusted earnings per share
Adjusted basic earnings per share              (0.69)     (1.05)
Adjusted diluted earnings per share            (0.69)     (1.05)

The calculation of adjusted basic earnings per share is set out below:

Earnings per share                               Pence  Pence
Basic earnings per share                        (4.83) (1.16)
Amortisation of acquired intangible               0.14   0.15
assets
Taxation impact amortisation of acquired        (0.04) (0.04)
intangible assets
Costs of exiting lease                            0.27      -
Taxation impact costs of exiting lease          (0.05)      -
Impairment of goodwill                            3.82      -
Adjusted basic earnings per share               (0.69) (1.05)
(pence)

10 Property, plant and equipment

                                 Leasehold
                              Improvements
                                           Fixtures Equipment    Total
                                       GBP      GBP       GBP      GBP
Cost
At 31 July 2012                     67,465   90,257   146,063  303,785
Additions                           92,665    9,606    47,596  149,867
Disposals                         (13,584)        -         - (13,584)
At 31 July 2013                    146,546   99,863   193,659  440,068
Additions                            8,466    1,140    17,765   27,371
At 31 July 2014                    155,012  101,003   211,424  467.439
 
Accumulated depreciation
At 31 July 2012                     15,409   43,407    66,001  124,817
Charge for the year                 29,348   14,695    31,798   75,841
Adjustment for disposals          (13,584)        -         - (13,584)
At 31 July 2013                     31,173   58,102    97,799  187,074
Charge for the year                 35,660   13,499    38,170   87,329
At 31 July 2014                     66,833   71,601   135,969  274,403
 
Net book value
At 31 July 2014                     88,179   29,402    75,455  193,036
At 31 July 2013                    115,373   41,761    95,860  252,994
At 31 July 2012                     52,056   46,850    80,062  178,968
 
11 Intangible assets

                                            Customer
 
                                  Goodwill Contracts Software     Total
                                       GBP       GBP      GBP       GBP
Cost
At 31 July 2012                  4,427,948   850,000   32,385 5,310,333
Additions                                -         -    2,287     2,287
At 31 July 2013                  4,427,948   850,000   34,672 5,312,620
Additions                                -         -    8,605     8,605
Adjustment for disposals                 -         - (10,607)  (10,607)
At 31 July 2014                  4,427,948   850,000   32,670 5,310,618
 
Amortisation and impairment
At 31 July 2012                  2,950,000   659,333   11,181 3,620,514
Amortisation charge for the year         -    52,000    6,158    58,158
At 31 July 2013                  2,950,000   711,333   17,339 3,678,672
Amortisation charge for the year         -    52,000    6,698    58,698
Impairment charge for the year   1,367,727         -        - 1,367,727
Adjustment for disposals                 -         -  (6,007)   (6,007)
At 31 July 2014                  4,317,727   763,333   18,030 5,099,090
 
Net book value
At 31 July 2014                    110,221    86,667   14,640   211,528
At 31 July 2013                  1,477,948   138,667   17,333 1,633,948
At 31 July 2012                  1,477,948   190,667   21,204 1,689,819

The carrying amount of goodwill is allocated to cash generating units (CGUs)
as follows:

                                        31 July   31 July
 
                                           2014      2013
                                            GBP       GBP
Vocational Training                     110,221   664,970
Skills Training                               -   812,978
                                        110,221 1,477,948

Impairment of goodwill and intangible assets

The total amount of goodwill acquired through business
combinations and recognised at 31 July 2014 is allocated for impairment
testing to two cash generating units which are also the operating and
reportable segments. This represents the lowest level within the Group at
which goodwill is monitored for internal management purposes.The Group
announced the sale of Woodspeen Training Limited, the Group's only trading
subsidiary, on 18 December 2014. For GBP 400,000. The carrying value of
goodwill as at 31 July 2014 was compared with the asset's recoverable amount
based on fair value less costs to sell to determine whether impairment exists.
The expected net disposal proceeds of the sale of Woodspeen Training Limited
are GBP 350,000, which is considered fair value less costs to sell, giving
rise to an impairment charge of GBP 1,367,727. The impairment charge was
allocated to cash generating units based upon pre-tax cash flow projections
based on financial plans approved by management.

12 Trade and other receivables

                                         31 July 31 July
 
                                            2014    2013
                                             GBP     GBP
Current
Trade receivables                        388,052 395,674
Other receivables                         40,458  10,170
Prepayments and accrued income           148,976 138,545
                                         577,486 544,389

The carrying amounts of trade and other receivables approximate to their fair
value. Trade and other receivables are non-interest bearing and generally on
30 - 60 days terms.

13 Trade and other payables

                                           31 July 31 July
 
                                              2014    2013
                                               GBP     GBP
Current
Trade payables                             173,386 286,256
Other taxes and social security taxes       69,184  63,318
Other payables                             102,080 192,078
Accruals                                   163,918 107,405
                                           508,568 649,057

Trade payables are non-interest bearing and normally settled on 30 - 45 day
terms.

14 Provisions

                                                    Leasehold
                                                Dilapidations
                                           31 July    31 July
 
                                              2014       2013
                                               GBP        GBP
At 1 August 2013                            21,360    105,367
Arising in year                              3,500     36,292
Utilised in year                                 -   (85,218)
Released in year                          (21,360)   (35,081)
As at 31 July 2014                           3,500     21,360
 
Shown as:
Non-Current                                  3,500     21,360

Leasehold dilapidations relate to the estimated cost of returning leasehold
properties to their original state at the end of the lease in accordance with
the lease terms. The cost is recognised as depreciation of leasehold
improvements over the remaining term of the lease. The main uncertainty
relates to estimating the cost that will be incurred at the end of the lease.

15 Financial instruments

The Group's activities expose it to a number of financial risks that include
credit risk, liquidity risk and cash flow interest rate risk. These risks, and
the Group's policies for managing them which have been applied consistently
throughout the year, are set out below.

Market Risk

Interest rate risk

The Group's interest rate risk arises from the variability of interest rates
on interest bearing assets and liabilities.

The Group has in place a policy of maximising finance income by placing
surplus funds on short term deposit to maximise income; offsetting, where
possible, cash balances and by forecasting and financing its working capital
requirements.

Non-market Risk

Liquidity Risk

Liquidity risk arises from the Group's management of working capital and
finance charges and repayments on its debt instruments.

The Group's working capital requirements are managed through regular
monitoring of the overall cash position and regularly updated cash flow
forecasts to ensure that there are sufficient funds available for its
operations.

Credit risk

Credit risk arises principally from the Group's trade receivables which
comprise amounts due from customers. Prior to accepting new customers a credit
check is obtained.

The Group has a significant concentration of credit risk, with a few customers
representing the majority of trade receivables. These customers are funded
directly or indirectly by the Government and are reliant on continued funding
for vocational and skills training. The Group enters into contracts, generally
on an annual basis, with these customers determining the level of approved
activity for the year.

At 31 July 2014 trade receivables of GBP 8,700 (2013 - GBP 10,250) were past
due date but not impaired. These debts relate to customers with no default
history. Payment of these debts, bar GBP 720, has been received since the year
end.

The credit risk on liquid funds is low because the counterparties are banks
with high credit ratings assigned by international credit rating agencies.

Loans and borrowings

The Group had undrawn committed overdraft facilities available at 31 July
2014. The overdraft facility is a multiple of book debts up to a maximum of
GBP 400,000, bears interest at 2½% above base rate; is secured by an omnibus
guarantee and debenture over the Group's assets; and is subject to annual
renewal. The overdraft facility was cancelled, by the Group, in November 2014.

The overdraft facility has not been drawn on during the year.

Analysis of financial assets and liabilities

The Group's financial instruments are categorised as follows:

Financial assets

                                                   Loans and
                                                 Receivables
                                          31 July    31 July
 
                                             2014       2013
                                              GBP        GBP
Trade receivables                         338,052    395,674
Cash and cash equivalents               2,200,980  2,590,485
                                        2,539,032  2,986,159

The carrying value of the Group's financial assets represents its maximum
credit risk exposure at the balance sheet date.

Financial liabilities

The contractual maturities (representing undiscounted contractual cash flows)
of financial liabilities are:

                                          Within 1 Year
                                        31 July 31 July
 
                                           2014    2013
                                            GBP     GBP
Non-interest bearing
Trade payables                          173,386 286,256
Accruals and other payables             265,998 299,483
                                        439,384 585,739
Fair value of financial instruments

The carrying amount of financial assets and financial liabilities recorded at
amortised cost in the financial statements approximate their fair values.

16 Deferred tax

Deferred tax is calculated in full on temporary differences under the
liability method using tax rates of 20% (2013 - 21% to 22.3%) that have been
substantively enacted at the balance sheet date. The tax rate used depends
upon the expected timing of the reversal of the timing difference.

The following are the major deferred tax liabilities/(assets) recognised by
the Group and the amounts charged/ (credited) to the income statement during
the current and prior reporting year.

                             Business
 
                         Combinations Accelerated       Other
 
                            (Customer     Capital      Timing
 
                           Contracts)  Allowances Differences Tax Losses    Total
                                  GBP         GBP         GBP        GBP      GBP
At 31 July 2012                43,853      21,062    (41,866)          -   23,049
Recognised in
comprehensive income
Tax charge/(credit) in
 
income statement             (13,804)       5,442      33,561   (36,120) (10,921)
At 31 July 2013                30,049      26,504     (8,305)   (36,120)   12,128
Recognised in
comprehensive income
Tax charge/(credit) in
 
income statement             (12,369)    (12,039)       4,305     25,655    5,552
At 31 July 2014                17,680      14,465     (4,000)   (10,465)   17,680

Deferred tax balances for financial reporting purposes are analysed as
follows:

                                         31 July  31 July
 
                                            2014     2013
                                             GBP      GBP
Deferred tax liabilities                  17,680   30,049
Deferred tax assets                            - (17,921)
                                          17,680   12,128

Deferred tax assets are recognised for timing differences and tax losses
carried forward to the extent that the realisation of the related benefit
through future taxable profits is probable. The Group did not recognise
deferred tax assets of GBP 40,000 (2013 - GBP 59,000) in respect of losses
amounting to GBP 210,000 (2013 - GBP 249,000) arising during the year in the
holding company as the Group does not expect to be able to offset these
losses, which have no set expiry date, against future taxable income. On the
grounds of prudence, as its trading subsidiary undertaking has made a loss for
the last two years, the Group has not recognised a deferred tax asset in
respect of GBP 125,000 of cumulative tax losses within the trading subsidiary
that are available to offset against future taxable profits of the subsidiary
undertaking.

17 Share capital

The Company has one class of Ordinary shares which carry equal voting rights
and no right to fixed income.

                                      Ordinary Shares      Deferred Shares
                                     Number       GBP     Number       GBP
Authorised
Ordinary & Deferred shares
At 31 July 2013 and 31 July     677,924,164 6,779,242 35,786,204 3,220,758
2014
 
                                      Ordinary Shares      Deferred Shares
                                     Number       GBP     Number       GBP
Allotted, called up and fully
paid
Ordinary & Deferred shares
At 31 July 2013 and 31 July      35,786,204   357,862          -         -
2014

18 Share based payments

Enterprise Management Incentive Scheme (EMI Scheme)

Under the EMI Scheme, options over shares in the Company are granted to senior
executives of the Group. The exercise price is equal to the market price, as
agreed with HMRC, of the underlying share on the date of grant.

The contractual term of each option granted is three years and there are no
cash settlement alternatives. The options lapse if not exercised within the
third and tenth anniversary of the date of grant although the rules of the EMI
Scheme permit early exercise in certain circumstances.

Vesting conditions attached to the share options granted during the year.
Share options granted in the year have both a market condition (based upon the
Company's share price) and a non-market condition (based on a non-financial
target for the Group) attached.

                                          Year ended          Year ended
 
                                        31 July 2014        31 July 2013
                                            Weighted            Weighted
 
                                             Average             Average
 
                                            Exercise            Exercise
 
                                    Number     Price    Number     Price
Outstanding as at 1 August       5,610,000     11.6p 3,195,000     16.0p
Granted                            375,000      6.0p 2,485,000      6.0p
Forfeited                        (100,000)     10.5p  (70,000)      6.0p
Outstanding as at 31 July        5,885,000     11.3p 5,610,000     11.6p
 
Exercisable as at 31 July        2,000,000       15p         -         -
 
Range of exercise prices for options        6p - 18p            6p - 18p
outstanding at 31 July
Weighted average remaining                 7.4 years           8.3 years
contractual life
Weighted average fair value of option           2.1p                2.1p
awarded in year/year
No options were exercised in the year.

The fair value of the share options is estimated at the grant date using the
Black-Scholes model or other appropriate pricing model taking into account the
terms and conditions upon which the share options were granted.

The following information was used in the determination of the value of
options granted during the year:

                                                 Year    Year
 
                                                ended   ended
 
                                              31 July 31 July
 
                                                 2014    2013
Equity-Settled
Fair value share price at date of grant Pence       6       6
Exercise price                          Pence       6       6
Contractual life                        Years      10      10
Expected volatility                     %         50%     50%
Expected life                           Years       3       3
Expected dividends                      Pence     Nil     Nil
Expected dividend growth rate           %          0%      0%
Risk free interest rate                 %        0.7%    0.7%
The volatility assumption, measured at the standard deviation of expected
share price returns is based on a statistical analysis of daily share prices
of a range of comparable listed companies.

The expense recognised for employee services received during the year is as
follows:

                                                     Year       Year
 
                                                    ended      ended
 
                                                  31 July    31 July
 
                                                     2014       2013
                                                      GBP        GBP
Equity-settled share based payment schemes         42,519     61,628
 
19 Obligations under leases

The terms of property leases vary but tend to be tenant repairing leases with
rent reviews every two to five years and many have break clauses.

The total value of future minimum lease payments, assuming lease break clauses
are not exercised, is as follows:

                                            31 July 31 July
 
                                               2014    2013
                                                GBP     GBP
Not later than one year                       8,958  22,250
After one year and not more than five years 187,511 379,937
                                            196,469 402,187

20 Capital commitments

At the year end the Group had capital commitments as follows:

                                          31 July 31 July
 
                                             2014    2013
                                              GBP     GBP
Authorised and contracted                       -   6,900
Authorised but not contracted                   -  16,800
                                                -  23,700

21 Reserves

The following describes the nature and purpose of each reserve within equity:

Share premium        Records the consideration premium for shares
account              issued at a value that exceeds the nominal value.
Merger reserve       The Company has applied the provisions of the
                     Companies Acts allocating the excess of the fair
                     value of the shares issued in the acquisitions
                     below over nominal value:
                     - the 800,000 ordinary shares issued with a fair
                     value of 52p per share, as part of the acquisition
                     of the entire share capital of Futures Training
                     Centres Limited on 8 May 2008; and
                     - the 500,000 ordinary shares issued with a fair
                     value of 18p per share, as part of the acquisition
                     of the entire share capital of BDTS Limited on 6
                     April 2011.
Retained earnings    Records cumulative gains and losses recognised in
                     the statement in consolidated statement of
                     comprehensive income.

22 Post balance sheet events

On 18 December 2014 the Group announced that contracts had been exchanged for
the sale of the Company's principal subsidiary, Woodspeen Training Limited,
for a consideration of GBP 400,000 payable in cash on completion which is
expected to take place on 5 January 2015.

When the disposal is completed, the Directors intend that any surplus cash in
the Company will be returned to shareholders in the most tax efficient way.
The Notice of Annual General Meeting includes a resolution proposing that the
Company withdraws from ISDX Growth Market.

The Financial Statements for the year to 31 July 2014 will be posted to
shareholders shortly.

Copies of the Financial Statements may be obtained from the Company Secretary,
Woodspeen Training Group plc, 32 Wingate Road, Hammersmith, London W6 0UR, the
Company's website or from the ISDX website.

The directors of Woodspeen Training Group plc take responsibility for this
announcement.

Contacts:

Woodspeen Training Group plc

Si Hussain 0786 283 7437

Lynn Chandler 07932 753 799

Corporate Advisor

Peterhouse Corporate Finance Ltd

Mark Anwyl 020 7469 0930

a d v e r t i s e m e n t