Latest Results

Financial Highlights

• Group revenue up to a record £7.1 million, increasing 27% from £5.6 million in FY22 driven by geographic expansion and entry into new disciplines
• Gross profit increasing 13% to £4.4 million (FY22: £3.9 million) with a gross profit margin of 63%
• Adjusted EBITDA of £0.1 million (FY22: £0.9 million), in line with market expectations, Loss after tax of £1.0 million (Profit after tax FY22: £0.4 million), following investment in infrastructure and nascent B2B training division
•  Cash balance as at 31 December 2023 of £1.6 million (FY22: £2.8 million)
• Net assets increased to £4.8 million (FY22: £4.6 million)

Operational Highlights

• Record growth in numbers of individuals trained, increasing to 2,852 (FY22: 1,685demonstrating Northcoders ability to rapidly scale its training services
• Focus on student outcomes leading to further growth in hiring partners with 465 (FY22: 407) partnered with in the Period
• Relationship with UK Government continues to strengthen, achieving a £4.5 million bid to fund students in H2-2023 and FY-2024, as announced in September 2023
  • Further £10 million bid win announced in January 2024
• B2C bootcamps now taught across the UK, including new regions such as Scotland – significant growth since IPO – and experiencing strong demand for new technology disciplines such as Cloud Engineering (DevOps)
• B2B Business Solutions began first central Government contract in Q4 2023 and continues to develop strong pipeline of corporate business opportunities
• Successful acquisition of Tech Returners in February 2023 to help further improve access to technology, strongly focussing on facilitating women’s return to the workplace following career breaks
• NCore learning platform ready for roll out in FY24 to companywide efficiencies and further margin growth

Current trading and outlook

• Both B2C and B2B divisions starting FY24 strongly, with record B2C applications and a growing pipeline for B2B contracts
• £10 million DfE contract announced in January 2024, giving further revenue visibility for FY-2024 and H1-2025 and underpinning an 18.6% increase in revenue per student
• Revenue access and contracted visibility already reaching £8.3 million for FY24
• Planned launch of flexible, part time courses announced on 4 April 2024, to increase access to training for individuals from a wider array of backgrounds
• As anticipated, positive Ofsted monitoring visit in February 2024, ensuring future funding safeguarded and credibility of Northcoders offering maintained
• Northcoders trading in line with market expectations for FY24

Chris Hill, CEO, commenting on the results said:

 “I am pleased to report another year of record revenue growth with further increasing demand for our high-quality training products. Despite the subdued technology hiring market making FY23 more challenging in certain areas of the business, we have continued to fulfil our ambitious growth strategy.

“We have continued to scale our B2C division using our growth levers of geographic expansion, increasing technology disciplines that we teach, and introducing new training formats. We have also further developed our nascent B2B division, using the Group’s strong reputation in technology training to build our pipeline of new business prospects. Our position is strong as the hiring market returns and look forward to providing more updates in due course.

“There’s no doubt that digital transformation continues to be at the forefront of business priorities, driving  individual and corporate training demand for our services. This, combined with the long term bi-party Government funding commitments to upskilling private and public sectors, leaves Northcoders well positioned to continue to scale the business and deliver value to our shareholders.”

Analyst meeting & Investor Meet Company Presentation

There will be a presentation for sell-side analysts at Buchanan Communications, 107 Cheapside, London EC2V 6DN, for any enquiries please contact Buchanan on [email protected] . A copy of the Final Results presentation will be available on the Group’s website later today: investors.northcodersgroup.com

Chair’s statement

Introduction

FY23 has seen Northcoders once again successfully grow revenue to record levels, achieve record student applications, invest into new training products and platforms, and grow headcount despite a period of great macro-economic uncertainty.  The technology market has been incredibly challenging with organisations experiencing headcount reductions, budget constraints and an uncertain economy. Despite these challenges, Northcoders has successfully grown its B2C and B2B bootcamps more efficiently, by maximizing the use of our new technology platform, whilst keeping our core values at the heart of everything we do.

We have experienced record demand for training courses and have helped to change the lives of over 3,000 people. We continue to scale geographically in many UK regions, including new areas such as Scotland.

Q1 FY23 saw the introduction of the new Cloud Engineering (‘DevOps’) programme which has gone from strength to strength throughout 2023. This was in line with our strategic plan and was supported by the delivery of our new NCore platform which is enabling us to scale efficiently and provide an excellent learning experience for all our customers.

Our mission remains sound, and our flexible product offering is ensuring we remain the solution for individuals and businesses regardless of the economic situation. Our team is well equipped, and our processes are refined and working effectively.

In February 2023 we acquired Tech Returners Limited (‘Tech Returners’), an award-winning company which helps individuals return to technology later in life. This provides us with the opportunity to develop and attract an even broader audience, including more women seeking a return to technology, thereby helping us ensure we are leading the way in driving diversity and opportunity for all across the technology sector. We are pleased to report that the integration of Tech Returners is complete and is working effectively as part of the Group, benefiting from shared service areas and efficiencies while also providing an opportunity to support corporates to deliver their Environmental, Social, and Governance (‘ESG’) and Equality, Diversity, and Inclusion (‘EDI’) ambitions.

Financial review

FY23 has seen a 27% growth in revenue to £7.1 million from £5.6 million in 2022, and profits have been invested into new courses and service offerings. This marks our highest ever revenue year and provides further evidence of Northcoders strong momentum, giving a positive indicator for future growth. We reported a 63% gross profit margin, which whilst lower than 2022, demonstrates that we have been able to navigate the cost increases generated by inflation and the cost of living crisis.

The Group’s adjusted EBITDA¹ was £0.1 million in line with market forecasts, down from £0.9 million in 2022. Whilst profitability has been impacted by the challenging market in 2023, our young entrepreneurial management team believe there have been numerous learnings from the Period. Helping us to focus on our core strengths, excellent products and services and fully maximise their potential. We are confident that with this more cautious, prudent approach we can continue to grow profit alongside our record revenues.

¹The Directors have used adjusted EBITDA as an Alternative Performance Measure (APM) in the preparation of these financial statements. EBITDA represents earnings before interest, tax, depreciation and amortisation. The adjusted element removes non-recurring items which are not relevant to the underlying performance and cash generation of the business; in 2023 this comprised of share‑based payment expenses, business restructuring costs and non‑recurring overstated accrual of revenue. In 2022 the adjusted element removed share-based payment expenses.

We have strong foundations in place, led by a group of inspirational entrepreneurs with a clear strategy and plan. We have great products and services all underpinned by the culture, values and behaviours of an ever-growing team of highly talented and committed experts. We are well positioned for further growth.

We are proud that we are making a genuine difference to individual learners and to our corporate customers who can grow their own talent, supported by, and in partnership with, Northcoders. This is where we add significant value to our business customers.

Strategy

Growth, resilience and quality profitable earnings are our ambition. 2023 has shown that we can achieve growth and develop new and exciting products to ensure that we remain in line with our mission. The growth that we strive for is growth in the number of lives that we change through our education, and increasingly the amount and range of companies and businesses that we provide solutions to. We now have the infrastructure in place to deliver this on a much larger scale, whilst creating efficiencies within our teaching model and therefore increasing profitability.

Once again, I want to acknowledge and thank our employees for all their efforts this year. They have continued to innovate and create great experiences, learning and partnerships that our customers appreciate, and consistently provide excellent feedback, whilst navigating ever‑changing economic and market conditions.

Outlook

Trading in the current year to date has started well. B2C bootcamp applications and registrations remain at record‑breaking levels, and we are seeing an increase in the Business Solutions’ pipeline. Winning another, even larger Government contract with the Department for Education, as outlined below by our CEO, reaffirms the ongoing quality and reputation of Northcoders training and gives us fantastic visibility for the year ahead. I am very much looking forward to continuing to work with the Board and the Northcoders team to progress the excellent momentum of the past twelve months, as we continue to implement our growth strategy.

It is a privilege to lead Northcoders as Chair and I am extremely proud of the whole Northcoders team who have grown the organisation to where it is today. We are set up for the next exciting phase of our development: to make a difference to the lives of learners across the UK and deliver growth for our shareholders, learners, the businesses we work with and the Northcoders team.

We are making a positive impact, and I am confident that together, as one Northcoders team, we will be able to deliver our strategy and plans and take advantage of the opportunities ahead – exciting times!

Angela Williams
Non-Executive Chair

29 April 2024

Chief Executive Officer’s review

Introduction

The financial year ended 31 December 2023 (‘FY23’ or the ‘period’) marked another successful milestone for Northcoders, showcasing the strength of our core business model in technology training bootcamps. Learner enrolment across our suite of B2C and B2B bootcamp courses experienced significant growth compared to previous years, reflecting the increasing demand for our high‑quality training products. Despite the commendable performance in our training bootcamps, FY23 presented challenges amidst the prevailing headwinds in the technology market.

Factors such as budget constraints, workforce reductions and recruitment freezes impacted corporate clients, leading to delays and deferrals in budget commitments to our B2B Corporate Solutions division, Your Return to Tech, and Consultancy programmes. The downturn in the technology jobs market also impacted graduates looking for jobs. Outcomes for our DfE students that are unsuccessful or slower than our agreed contractual time frame mean that we receive a lower than possible amount of revenue.

These challenges made FY23 our most demanding trading year yet; however, amidst these challenges, we maintained resilience and adaptability, as evidenced by our record revenues.

Financial review

Despite heavy investment into growth areas of the business, and a downturn in the tech economy, the Group delivered growth in revenue and has been able to keep gross profit margins above 60%. Underlying performance was in line with expectations, and student numbers were higher than ever. Revenue, made up of B2C training bootcamps and Business Solutions, increased by 27% to £7.1 million (FY22: £5.6m). Gross profit for the year was £4.4 million (FY22: £3.9m) with a reported gross profit margin (GPM) of 63% (FY22: 70%). EBITDA, adjusted for share-based payments and exceptional/ non-recurring items, was £0.1 million (FY22: £0.9m). The main reason for the drop in EBITDA in 2023 was investment made for growth, at a time that didn't allow immediate payback. This has however put us into a strong position moving into 2023. A tougher economic landscape also made growing revenues more expensive, and our cost of acquisition increased. We are now seeing this ease off and our pipelines are strong.

The loss for the year before tax was £1.2 million (FY22: Profit £0.3m). There was a small tax credit giving a loss for the year of £1.0 million (FY22: £13k profit). Basic earnings per share was loss 12.62p per share (FY22: 5.12p). Net assets as at 31 December 2023 were £4.8 million (FY22: £4.6m) of which cash was £1.6 million (FY22: £2.8m).

The cash balance at the year-end of £1.6 million will enable the Company to continue with its growth plans, whilst remaining prudent as appropriate with wider costs. Cash investment into internal infrastructure is expected to decrease in the year ahead and the new, extended contract with the Department for Education (DfE) won in January 2024 will enable cash generation to strengthen.

Operational review

In FY23, 1,167 Northcoders students started their life-changing journey on one of our training bootcamps. Our hybrid/online business model remains the delivery method of choice for these learners and continues to be the most efficient model for our teaching team to keep excellence at the heart of everything they do as our student numbers increase. Application numbers from potential students reached an all-time high of 13,878; the demand for our courses is not slowing down despite volatility in consumer confidence.

Northcoders ended 2023 with a permanent headcount of 128 staff members compared to the 101 staff members at the start of the year. The Group invested in our business and administration support team to ensure we have a strong backbone as we embark on further growth. Most of the headcount increase was in areas such as Finance, IT Support, HR, Marketing, Compliance, and Contract Management.

Alongside growth, our focus in FY23 extended to scrutinising costs to increase future profit margins within our established course offerings. Outside of the delivery of our core training bootcamp, the Group’s technical team have been focused on our end-to-end learner management and automation platform, NCore.  NCore is now being rolled out into early‑stage use and is expected to be fully operational before the end of 2024.

NCore’s main business benefit is the ability to substantially decrease our student-to-tutor ratio whilst improving excellence in our courses by increasing the contact time offered to current and potential bootcamp students.

In FY23, Northcoders introduced a new technical discipline to our course offering: Cloud engineering. Feedback from learners and hiring partners has been positive. Our Data Engineering bootcamps division has also gone from strength to strength with record applications.

Consumer training bootcamps

B2C training bootcamps stand as the cornerstone of the Group’s operations, representing 83% of our annual revenue. Our Consumer bootcamp courses cater to individuals of all ages and backgrounds aspiring to build careers in the technology sector, delivered over a 13‑week period to ensure comprehensive skill development.

The expansion of our hiring partners network has been a key focus, with over 465 partners now collaborating with us to provide life-changing opportunities for Northcoders’ graduates. This growth has contributed to an impressive rise in the average starting salary for our graduates, now reaching £29,303. Within three years, our graduates typically experience significant salary increases as they progress into more senior roles, reflecting the value of our training programmes.

Northcoders is on a mission to increase diversity within the technology industry; our statistics show 28% representation of women and 38% of non-university educated students within our cohorts.

Looking ahead to 2024 and beyond, our growth initiatives within the Consumer bootcamp division include the introduction of additional technical service lines and expanded coding languages and frameworks. Notably, Python, well suited for Data Engineering and AI projects, and Java, addressing an underserved sector in our industry, are among the focus areas. Additionally, we are set to launch a new consumer-oriented offering: a part-time ‘learn as you earn’ programme. Leveraging our influential brand power, we anticipate substantial demand and growth resulting from this initiative.

Skills bootcamps

Northcoders’ commitment to providing accessible and impactful training extends to skills bootcamps, tailored for adults aged 19 and over residing in England. These flexible courses, spanning over 13 weeks, offer participants the opportunity for a job interview upon completion. Moreover, corporate entities can leverage this scheme to either onboard new talent or enhance the skills of their existing workforce.

For over two years, Northcoders has been utilising Government skills bootcamp funding to offer scholarships, ensuring that individuals facing financial constraints can access our transformative training bootcamps and enhance their career prospects.

Business Solutions

Our Business Solutions division delivers a corporate-focused consultancy service by assembling teams of graduates, further honed in consultancy skills to become associate consultants. The associate consultants are paired with an experienced tech lead for deployment in businesses. Upon the completion of the engagement period, while the tech lead rejoins Northcoders, the associate consultants are offered the opportunity to transition into permanent roles within the client’s business at no extra cost.

This arrangement provides both immediate and long-term solutions for businesses, ensuring continuity and retention of expertise beyond the contract term. In a bid to diversify our service offerings, these teams are available both as autonomous ‘incubated’ groups and in collaboration with established consultancy firms. This strategy aims to enhance their service range while reducing dependency on higher-cost consulting services.

Additionally, the Business Solutions division also offers Academy programmes, designed for corporates looking to onboard emerging technologists or to re‑skill individuals from different sectors of their organisation, further contributing to a dynamic and innovative workforce.

As reported at our half-year results announcement in September 2023, FY23 presented the Business Solutions division with various market challenges. Notable among these were budgetary constraints, workforce reductions and recruitment freezes within the technology sector. These conditions resulted in a number of corporate clients delaying or pausing their participation in Northcoders’ Academy and Consultancy programmes. Pleasingly, we are now seeing improvement in conditions for our Business Solutions division.

Tech Returners

The Group acquired Tech Returners Limited in Q1 FY32 with the aim to further diversify Northcoders’ Business Solutions division and add a new income stream to the Group’s growing corporate‑focused business model. Founded in 2016, Tech Returners specialises in remote training and the placement of senior-level professionals looking to re-enter the technology sector of the workplace. The business uses its industry-leading knowledge and techniques to up-skill corporate-sponsored individuals or existing corporate teams for large corporate clients across several industries. Tech Returners runs a yearly conference named ‘Reframe Women In Tech’, it is a not for profit conference with a mission to make personal development accessible for all and to reframe the narrative around women in tech.

Tech Returners faced the same macroeconomic hurdles as our Business Solutions division. In response, management introduced a new lower commitment training model called TR4: The 4-Week Returner Launchpad. Our latest model provides businesses with quicker access to diverse talent through our bespoke programme for returners. Early adoption of TR4 is positive and the Board has been pleased to see two new corporate contracts signed in the first few weeks since launch.

Current Trading and Outlook

Towards the latter part of FY23 and continuing into Q1 FY24 we have witnessed a positive shift in Corporate engagement for our Business Solutions division. New contracts have been secured, and our business development pipeline is robust, providing us with confidence to further invest in the revenue growth of our Business Solutions division. This momentum aligns with our strategic focus on expanding our offerings, leveraging our expertise and fulfilling our purpose as a company committed to driving diversity and accessibility in the technology industry.

A significant milestone was achieved on 16 January 2024, as Northcoders announced the successful win of its largest-ever DfE Government funding round. This development provides an increase in funding revenue per student, bolstering the Group’s profitable growth trajectory and mitigating inflation‑linked costs.

Further to the new funding, on 15 February 2024, we received a monitoring visit from Ofsted, which yielded a positive result, comparable with a ‘Good in all areas’ result should Ofsted’s recent visit have been a full inspection. Satisfactory compliance with Ofsted’s rules and best practice guidance safeguards the delivery and funding of our skills bootcamp provision and ensures us that we are doing the best by our students. The full report is hosted online and can be found on Ofsted’s website. As a result of higher profit margins in Skills bootcamps and feedback of the course being more favourable amongst students we have decided to stop offering Apprenticeships as a learning mechanism for our courses. This has resulted in an impairment provision against the ESFA license in the accounts.

The UK Government’s significant investment in skills bootcamps presents a prime opportunity for the Group to make a meaningful impact. Positioned at the forefront of these funding initiatives, our aim is to meet the heightened demand, empowering corporates to achieve their objectives while simultaneously creating transformative opportunities for individuals across diverse backgrounds.

The Group’s Board is upbeat about the promising outlook for FY24, bolstered by record‑high revenue access and contracted visibility already reaching £8.3 million for FY24. This marks a substantial 40% increase compared to January 2023. Profit margins are growing as we experience efficiencies from NCore and an increase seat price per head from the DfE contract, instilling strong confidence in meeting market expectations for the year ahead. Looking beyond, revenue visibility for FY25 already stands at an impressive £3.6 million.

Chris Hill
Founder and Chief Executive Officer

29 April 2024

GROUP STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2023

Total comprehensive profit/(loss) for the year is all attributable to the owners of the parent company. All profit/(loss) after taxation arise from continuing operations.

GROUP STATEMENT OF COMPREHENSIVE INCOME (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2023

GROUP STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2023

COMPANY STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2023

As permitted by s408 Companies Act 2006, the company has not presented its own income statement and related notes. The company’s loss for the period was £87,306 (2022: £130,686 loss).

GROUP STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2023

GROUP STATEMENT OF CHANGES IN EQUITY (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2023

COMPANY STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2023

GROUP STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2023