Latest Results

Chief Executive Officer’s review

Introduction

The Board is pleased to present the Group’s results for the six months ended 30 June 2024 ('H1 2024').  First and foremost, it is pleasing to report a return to profitability driven by an increase in demand for the Training Bootcamp courses and efficiencies enabled by our core learning platform, NCore.  The number of registrations increased to 4,703 and 566 students were able to move through application pathways to commence courses.  This growth further underscores Northcoders’ reputation for delivering high-quality technology education whilst the strengthening of internal learning platforms enables the Group to do this with less staff cost.

The Group continues to benefit from the financial support delivered by the Government's technology Skills Bootcamps initiative.  This is exemplified by its success in securing a new funding bid with the Department for Education worth £10 million to deliver into 2025.  It is another demonstration of Northcoders’ reputation as a top tier training provider and outcomes on the programme remain excellent with 99% of the students completing the course, receiving an interview with a future employer. Communication is strong between Northcoders and the UK Government and we are currently awaiting news on the next stage of bidding following the recent change of government. The Labour Party has already pledged to establish ‘Skills England’ to strengthen Further Education, and we see this as a positive step. Whilst we are confident in the future provision of funding to bridge the significant digital skills gap, particularly with the advent of AI and Smart Technologies, it has been part of our strategy to diversify the Group’s revenues since IPO, for example through our Corporate Solutions, and this strategy is proceeding well.

Operational review

Northcoders’ strategy of geographical expansion beyond Manchester and Leeds has yielded significant results through increased marketing spend and brand awareness.  Over 62% of Training Bootcamp learners now reside outside of these cities, with 34% studying in London and the surrounding areas. This expansion signifies Northcoders’ growing national presence and capabilities of its remote learning platform.

Since IPO, and following investment made into the Group’s learning platform, it has become clear that virtual learning is a far more scalable, profitable model, which generates equally high quality outcomes for students as demonstrated by feedback from employers and repeat hiring from corporates. As a result, the Group has closed two of its hubs in Birmingham and Newcastle and moved its HQ in Manchester to a smaller space. The new office in Manchester is located at the heart of the business district, and it is anticipated that Northcoders will not only benefit from the reduced rental terms, but also

Northcoders’ course catalogue is being well-utilised across the suite of training programmes, with JavaScript (the original software development course) and Data Engineering, operating at full efficient capacity. Cloud Engineering, Java and the newest course C# are developing well with positive feedback from students and employers.

Northcoders remains confident in its commitment to a thoughtful, strategic approach to product development and in the Training Bootcamp division this has paid off.  This high standard training programs continue to earn the strongest reputation amongst corporate hiring partners.  The Group is utilising this reputation to replicate its success in the Corporate technology consultancy market with its Counter™   brand poised to become a recognised name in the field.

The Counter™ business is gaining momentum with great feedback on the teams we have currently on pilot contracts. The Group is providing blended teams of Northcoders trained individuals (junior and senior) to corporate partners. The teams are provided as consultants on day rates and contracts have spanned six months at this early stage. Going forwards Northcoders is looking to build on this with contracts of 9 to12 months, with larger blended teams.

As previously announced, Counter™ was contracted to three pilot schemes in the Period; a UK high street building society, a UK investment administrator listed on the Main Market of the London Stock Exchange, as well as a global banking firm. These contracts are small but on successful completion could provide larger renewals and positive testimonials for the brand.  The Group is now in the final stages of negotiating a larger, full contract and a contract renewal for one of the pilots. The Group is working with these customers to develop marketing materials on the back of their contracts to further grow the reputation of the brand and therefore the sales pipeline. The pipeline for contracts starting in FY 2025 is strong and more material revenue is anticipated in the medium term.

Financial Review

Northcoders delivered a strong performance in the Period, generating adjusted EBITDA of £0.4 million in H1 2024 (H1 2023: £0.04 million), a tenfold increase on H1 2023 and a 464% increase on FY 2023 as the Group leverages the efficiencies of investments made into the core learning platform NCore in FY 2023.

Revenue for the Period was £4.4 million (H1 2023: £3.5 million), up 26% on the equivalent period last year. Training division again grew revenues driven by increased brand awareness and entry into new technology disciplines.   

Gross profit for the Period was £2.5 million (H1 2023: £2.2 million) at a gross margin of 67%. EBITDA, adjusted for share based payments, was £0.4 million (H1 2023: £0.04 million) and profit after tax was £0.1 million (H1 2023: loss of £0.3 million).  Profits for the year are anticipated to be H2 weighted following further investment in H1 2024.

Basic earnings per share was +1.35 pence per share (H1 2023: loss of 3.16 pence).  Basic adjusted earnings per share was +2.58 pence per share (H1 2023: loss of 2.07 pence).  Net assets at the Period end were £5.0 million (H1 2023: £5.5 million) of which cash was £1.3 million (H1 2023: £2.0 million).

Outlook

After a more challenging year in 2023, the Group is pleased with the efficiencies and profitability of the core business achieved in the first half of the year.  The hiring landscape is progressing, and we are ensuring that we remain the best placed for Corporates to recruit junior technology specialists.  

The recently piloted flexi course remains a strong potential growth driver for us as we test and learn from the first cohort which is now in progress, we will ensure that we retain our thoughtful strategic approach with this new learning style and are looking forwards to this growing in 2025.

Counter™ growth and investment remains a focus and we are pleased to be able to continue this whilst returning profits as a Group, as contracts progress and pipeline is converted into 2025, we hope to see profits from this area of the business come through.

With a strong balance sheet and cash position, the board remains confident in Northcoders’ ability to deliver growth, whilst investing in key areas, and delivering value for its shareholders. Improving the UK’s technology skills gap, whilst creating life changing opportunities for individuals remains Northcoders’ priority.

Chris Hill
Chief Executive Officer
17 September 2024