CODE Northcoders Group Plc

17 September 2024

Northcoders Group PLC

('Northcoders' or the 'Group' or 'Company')

Interim Results

Northcoders returns to profitability amid record demand, including momentum for new Corporate Solutions division, with tech investments driving efficiencies

Northcoders (AIM:CODE), a UK market leading technology training business, is pleased to announce its results for the six months ended 30 June 2024 ('H1 2024' or the 'Period').

Chris Hill, Chief Executive Officer of Northcoders, said: "We are delighted to report that Northcoders has continued to build on its reputation as one of the UK's leading technology training providers as we return to profitability. This highlights not only the momentum of our Training Bootcamps, reaching record registrations for yet another year, but also that the investments made in FY 2023 have successfully led to efficiencies throughout the business. The strength of Northcoders brand across the UK continues to grow, and as the breadth of our technology training continues to expand, such as our new Java and C# courses, we are confident in our ability to sustain this expansion. These courses are the languages usually adopted by large enterprises and are currently underserved or not serviced at all in our sector.

"I am really pleased to see the rebrand and relaunch of the Corporate Solutions division has started to bear fruit as we win our first pilot contracts, and the pipeline of Counter™ contracts is building well. I am deeply grateful for the hard work and dedication of all the Northcoders team to enable this significant progress to be made.

"As we move into the second half of the year, particularly as our revenue base begins to diversify, we are confident that we have built a solid platform to support further growth in the years ahead as we create life changing opportunities for individuals, help to close the UK's digital skills gap and deliver for our shareholders."

Financial Highlights

·       Revenue grew to £4.4 million (H1 2023: £3.5 million), an increase of 26%, slightly ahead of management expectations

·         Gross margin increased to 67% (H1 2023: 62%) following release of the NCore technology platform

·        Tenfold increase in underlying adjusted EBITDA of £0.4 million (H1 2023: £0.04 million) as the Group leverages the efficiencies of investments made in FY 2023

·         Return to profitability with adjusted EPS increasing to 2.58p (H1 2023: 2.07 loss)

·       Strong balance sheet with cash of £1.3 million (H1 2023: £2.0 million) following technology platform investments, delivering enhanced margins

Operating Highlights

·           Growth in demand with record Training Bootcamp registrations, reaching 4,703 in the Period (H1 2023: 3,590)

·           Q3 2024 has again seen record applications, with 3,313 registrations

·        Record visibility and profit per seat following successful Department for Education Skills Bootcamps bid for £10 million covering 18-month period to June 2025

·         Geographic expansion continues with over 62% of learners now based outside of Manchester and Leeds, and 34% based in London

·        Corporate Solutions division rebranded as Counter™ in May 2024 appointing Tom Walton as strategic advisor and starting three pilot contracts in the Period

·          Successfully selected a new Manchester office, negotiated at a significantly lower rent to the current premises, with a move in date during Q1 2025.  Based in the centre of the city's business district it will provide access to multiple new potential customers and hiring partners

·            New technology training courses continue to expand with Java and C# courses successfully added to learning suite

Current trading and outlook

·      The second half of FY 2024 started well and the Group is pleased to report trading has been slightly ahead of management expectations. As brand awareness and national expansion increases, Northcoders will look to provide remote learners outside of Manchester with more in-person networking opportunities and strengthening the Group's regional hiring partner base

·         Focus remains upon investing into new technology disciplines, expanding our Corporate Solutions division, Counter™, increasing brand awareness and leveraging the efficiencies of NCore, whilst delivering increased profitability

·         Looking ahead, the Board is confident in Northcoders' ability to deliver FY 2024 revenue and profits in line with market expectations.

Analyst meeting and Investor Meet Company presentation

There will be an in-person briefing for sell-side analysts at 9.30am (BST) today.  Please contact Buchanan via northcoders@buchanan.uk.com if you wish to join the meeting.

Northcoders will be also be presenting via the Investor Meet Company platform today at 6.00 p.m. (BST).  The meeting will be hosted by Chris Hill (CEO) and Charlotte Prior (CFO), and there will be an opportunity for Q&A at the end of the session.  Questions can be submitted pre-event via the Investor Meet Company dashboard up until 9.00 a.m. the day before the meeting or at any time during the live presentation.  To sign up to the Northcoders Group presentation via Investor Meet Company please click the following link:

https://www.investormeetcompany.com/northcoders-group-plc/register-investor.

This announcement contains inside information for the purposes of Article 7 of the UK version of Regulation (EU) No 596/2014 which is part of UK law by virtue of the European Union (Withdrawal) Act 2018, as amended ("MAR"). Upon the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

Notes to Editors

Northcoders is a market leading provider of technology training for businesses and individuals with courses in, Software Engineering, Data Engineering and Platform Engineering.  Founded in 2015, the Group's business model operates a hybrid structure with a flagship site in Manchester and another site in Leeds, supported by a proven digital offering to support its students across the UK.

Powered by IP rich technology, Northcoders offers boot camp courses to individuals from a range of backgrounds, delivered through virtual and physical learning.  The Group also works with blue chip corporates across multiple sectors to help them to achieve their digital requirements, with teams as a service and to supply innovative solutions for the upskilling and reskilling of employees. With a keen focus of inclusivity, diversity and quality at its core, Northcoders aims to address the digital skills gap in the UK to meet the increasing demand for digital specialists at all levels, from businesses and public agencies.

Northcoders was admitted to trading on AIM in July 2021 with the ticker CODE.L.  For additional information please visit investors.northcodersgroup.com.

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

Group Statement of Comprehensive Income

For the period ended 30 June 2024

Group Statement of Financial Position
As at 30 June 2024