Northcoders reports resilient year despite contraction in government market

(Sharecast News) - Northcoders Group reported a resilient 2025 performance on Tuesday, despite a sharp contraction in the UK government-funded training market, as disciplined cost control and growth in its B2B consultancy helped stabilise the business. In an unaudited trading update for the year ended 31 December, the AIM-traded consultancy and technology training group said revenue fell to £5m from £8.8m a year earlier, reflecting structural changes to the Department for Education's skills funding system that led to a significant decline in funded learners across the sector.

Despite the lower revenue base, Northcoders said it maintained strong gross margins through tighter delivery discipline, careful direct cost management and a deliberate move away from volume-led funding models.

The group generated around £0.4m of business-to-consumer revenue outside government-backed programmes, marking early progress in diversifying its income streams.

That included encouraging initial results from its newly introduced Next Gen Data and AI training, which management saw as aligned with long-term employer demand.

Government funding where the group had an established track record remained supportive, with contracts secured in Lancashire and with the Greater London Authority.

Northcoders said demand in London had been particularly strong, with more than 30 applications per available seat, resulting in additional funding awards that improve revenue visibility for training bootcamps in the first half of 2026.

Performance in the B2B division was a key offset to the funding headwinds.

Counter, the group's challenger consultancy brand, increased revenue by 67% to £1.5m, with total sales booked of around £2.5m during the year.

Approximately £1m of contracted revenue has rolled into 2026, most of which was expected to be delivered in the first half, while the pipeline continued to build through public-sector frameworks including G-Cloud.

Northcoders said it implemented restructuring and efficiency measures during the year that were expected to deliver annualised cost savings of around £1.1m compared with 2024.

The group ended December with cash of £1.6m and outstanding loans of around £1.2m, with no financial covenants attached.

Management said the balance sheet remained robust, although the group expected to report a statutory loss for 2025, largely due to the funding changes and asset impairments.

Chief executive Chris Hill said the group had responded decisively to a difficult year.

"Whilst 2025 was a challenging year for the group, our performance has been resilient and our focus on margin resolute," he said, adding that swift actions to resize the business and maintain strict cost discipline had protected gross margins.

Hill said the firm entered 2026 with improving revenue visibility, a simplified cost base and growing momentum in Counter, leaving it well positioned to build sustainably as market conditions stabilised.

At 1321 GMT, shares in Northcoders Group were flat at 31p.

Reporting by Josh White for Sharecast.com.