31 Oct 2017 07:00
31 October 2017
WEY EDUCATION PLC
("Wey", the "Group" or the "Company")
PRELIMINARY ANNOUNCEMENT OF RESULTS
FOR THE YEAR ENDED 31 AUGUST 2017
Wey Education plc (AIM: WEY) the education group operating the UK's only online fee paying secondary school, announces the Group's results for the year to 31 August 2017.
HIGHLIGHTS:
· Turnover increased 60% to £2.4 million (2016: £1.5 million)
· Maiden Profit before tax of £17,630 (2016: loss £0.8 million)
· New Learning Platform developed and launched
· Continued growth at InterHigh - Wey's independent online secondary school
· The Wey ecademy - the Group's B2B division - experiencing significant growth
· Turnover expected to grow significantly again in current year
Commenting on the results, David Massie (Executive Chairman) said:
"It is extremely pleasing to report the Group's first profit before tax but it is more important to note the positive trends in development of the Group's business. Turnover is growing strongly year on year (up 60% in the year to 31 August 2017), and the Board expects further significant growth in the current year across all our divisions. Since the beginning of this financial year, we have seen our B2B business expand rapidly (albeit from a modest base) and it has already exceeded the target number of pupils planned to have on the student roll at the end of the Autumn term.
"This growth is possible because of the flexibility and scalability of growth on the Learning Platform.
"In the current year, management is focussed on delivering further volume growth on the Learning Platform, both in the UK and our export markets while developing our new divisions, Infinity and Quoralexis into full operation. We are taking our first steps into the use of Artificial Intelligence in our business and believe that in due course, it will have dramatic impact on the world of education."
Enquires:
Wey Education plc David L Massie (Executive Chairman)
| +44 (0) 207 518 9700 +44 (0) 7785 957 958 | |
WH Ireland Limited (Nominated Adviser and Broker) Mike Coe / Ed Allsopp (Corporate Finance) | +44 (0) 117 945 3470 |
This announcement includes inside information as defined in Article 7 of the Market Abuse Regulation No. 596/2014 and is disclosed in accordance with the Company's obligations under Article 17 of those Regulations.
Chairman's Statement
In view of the growth of the Group, David Massie has agreed to change his role from Chairman to Executive Chairman with effect from today's date and devote as much of his time to Group matters as is required.
This was the Group's first full year of trading since the Company's Admission to AIM in December 2015 and it is pleasing that it has recorded its first profit before tax for a financial year. However, there were many other achievements during the year, some of which are detailed below.
Financial Highlights
The profit recorded is modest but nevertheless is an indication of progress. It is calculated after a non-cash charge of £160,000 (2016: £160,000) reflecting the amortisation of the acquisition cost of the InterHigh business acquired in 2015 and a non-cash charge of £107,555 (2016: £11,489) for equity based share awards. Without those charges profit before tax would have been £285,185 (2016: loss £635,148).
Underlying annual turnover has now grown 40%, 50% and 60% in the last three years and this enabled the Group to fund significant investment in a number of initiatives during the year. It is expected that turnover will continue to grow materially both organically in the Group's established businesses and from the businesses currently in development phase as they mature.
Notwithstanding increased marketing costs, and the costs of establishing the new Learning Platform, the Group's cash position remained healthy at £1.0 million (2016: £0.9 million).
Geographic Analysis
The Group has an active export business served from the UK. An analysis of turnover shows that 24% of 2017 turnover arose outside the UK (2016 - 27%) which reflected growth in the UK business rather than a decline in export sales. At £573,112 (2016: £416,247) export sales were up 38%.
UK | Europe | Middle East | Africa | Other countries | Total | |
2017 | £ | £ | £ | £ | £ | £ |
Online Education | 1,830,809 | 246,493 | 165,777 | 54,123 | 106,719 | 2,403,921 |
Other | 25,134 | - | - | - | - | 25,134 |
Total | 1,855,943 | 246,493 | 165,777 | 54,123 | 106,719 | 2,429,055 |
2016 | £ | £ | £ | £ | £ | £ |
Online Education | 1,072,613 | 188,329 | 130,342 | 31,338 | 66,238 | 1,488,860 |
Other | 26,965 | - | - | - | - | 26,965 |
Total | 1,099,578 | 188,329 | 130,342 | 31,338 | 66,238 | 1,515,825 |
The Group will be making a further effort to expand its export business during 2017/18. Although the Group has taught pupils on all six continents of the world, its current main export markets are Europe and the Middle East.
The Group continues to actively research the Chinese market where there are various regulatory barriers to overcome but it has conducted a technical trial with a Chinese international school during the year which showed there are no technical barriers in China to our online product offering.
The Group
When Wey was first admitted to AIM in December 2015, it consisted of one online school and a very small consultancy business. The consulting business was discontinued in 2015/16 to pursue other areas with more growth potential. Today there are two main divisions with a further two in the development stage.
The main operating divisions are: -
InterHigh (www.interhigh.com), a non selective fee paying secondary school, established in 2005 and a pioneer in online education. It provides live, interactive teaching of the British curriculum for years 7 - 13 including teaching both iGCSE and A levels and with some vocational courses, particularly in computer gaming. It is a complete school with full academic, pastoral and enrichment programmes ensuring that the young people who join the school study successfully for their future career choices. InterHigh continues to expand and pupil numbers are at an all time high.
Wey ecademy (www.weyecademy.com) was established in 2016/17. Wey ecademy is the Group's B2B division. It provides services and tuition to and for other education providers and schools both in the UK and overseas across a broad range of subjects and curricula. This can be teaching of individual subjects or a wider range of subjects including iGCSE and A levels or specialist vocational courses. The Wey ecademy can offer short term support for a young person with the aim of re-engaging them in their education or we can offer a more comprehensive longer-term service depending on what is required. From a modest base, pupil numbers already exceed the target planned to have on the student roll at the end of the Autumn term.
The Group's developing businesses are:-
Infinity Education (www.infinityeducation.org.uk) which was established to be a selective premium fee paying online school. However, following customer feedback which indicated continuing support for InterHigh's academic achievements, we have now decided to realign Infinity to primarily address overseas markets. Pupils will be those aiming to achieve top grades at both iGCSE and A Level and to move on to study at leading universities in the UK and overseas.
Quoralexis, (www.quoralexis.com) established in September 2017, is an online live interactive language school that will welcome students from all parts of the world, who wish to learn English and improve their language skills. Quoralexis offers an extensive range of courses in English as a Foreign Language ("EFL"), for individuals and the corporate sector, across all age groups and all language ability levels.
The Group has taught EFL within InterHigh for some years to assist certain of its overseas students and has now created a separate business unit to address this very large international, but fragmented market. The Board believes that the Group's offering of "English taught by native English teachers" from the UK delivered via its sophisticated Learning Platform will prove attractive to customers at the quality end of the market. Quoralexis will expand the Group's offering from just children of secondary education age to all age groups, whether students be 3 years or 70 years old.
Learning Platform
A major achievement during the year was the completion of the Group's new cloud based Learning Platform. It combines a number of market leading software packages to produce a powerful, flexible IT system capable of delivering lessons on almost any subject to anywhere in the world. The Learning Platform has been designed to be scalable to almost any quantum of student use.
The Learning Platform went live from the start of the 2017/18 academic year. Reaction from pupils and staff alike has been positive and this new technology cements the Group's position as the leading online secondary schools group in the UK.
The overall development cost of the new Learning Platform from February 2016 was significantly less than originally estimated. Expenditure of £293,786 has been capitalised over the life of the project and this will be amortised commencing in the 2017/18 year over 10 years. By the adoption of leading third-party software packages blended to our own requirements, our Learning Platform costs are now variable and save for the amortisation charge are directly linked to the number of pupils being educated. This means we can price new initiatives and special offerings accurately.
The Learning Platform can be utilised for many forms of teaching and hence our expansion through Quoralexis into online teaching of EFL.
Academic Standards
The Group strives to achieve outstanding progress and outstanding results for its pupils and to that end, it established during the year an Academic Advisory Board ("AAB"). Chair, Dame Erica Pienaar was joined by Dr Liz Sidwell, CBE, the former Schools Commissioner for England, as the core members of the AAB. The AAB is charged with setting and monitoring academic standards across the Group and all aspects of academic compliance including teacher standards and training.
InterHigh is a non-selective school and accepts students of all abilities. In that context, the 96% pass rate at A* - C, achieved in 2017 by InterHigh iGCSE English students (from reported results) is highly credible. Other subject results can be found on the school's website.
Examination Centre
InterHigh was approved as an examination centre for iGCSEs and A levels by the major examination boards in the UK during the year and welcomed its first students this Summer.
Artificial Intelligence ("AI")
There are very significant sums being spent on research and development of AI around the world and it is likely that developments in this field will have a significant impact on education. Wey intends to be a leader rather than a follower in AI by being a user of third party developed and funded AI rather than a developer.
The Group is actively exploring all methods of using AI in education. As a first step, InterHigh will introduce "mastery pathways" into its mathematics teaching from January 2018. Wey has also joined a project within University College London's Knowledge Lab, targeted at those in the education sector. The EDUCATE Project is focused on AI and brings together educators, researchers and the EdTech industry with the aim of development and transition to market of the best research informed EdTech. Further collaboration with other universities is expected to occur in 2017/18.
Wey's expectation is that without destroying the interactive, community based spirit of Wey's teaching, AI will in due course, enhance the learning experience for students and provide significant cost savings to the Group.
Staffing
Management functions, administrative staff and senior teaching personnel are based at the Group's administrative headquarters in Crickhowell, Wales while teaching staff are home based. At 1 September 2017, analysis of the Group's staff was as follows: -
Age Bracket | Number of Staff | |
19-28 | : | 6 |
29-38 | : | 19 |
39-48 | : | 23 |
49-58 | : | 24 |
59-68 | : | 17 |
69-78 | : | 3 |
Total | 92 | |
The Group's highest paid member of staff is a woman and its pay scales are gender neutral.
The Group is proud that its Human Resources policy allows many qualified teachers to work from home and balance the need to pursue a career with their own caring responsibilities whether they be in respect of children or aged parents. Wey allows such employees to choose to work a full week or a percentage of such and be paid pro rata. Their pay is based on national school rates for teachers in England.
Marketing
The Group actively advertises online but intends to increase its marketing efforts considerably this year, both in terms of personnel and overall spend. At the current time, most advertising is online and through social media but consideration is being given to expanding into other areas of targeted advertising to raise the Group's profile and increase target customer awareness of the Group's products. An example of such is a new initiative that has just been agreed with the well-known website "Mumsnet" (www.mumsnet.com). Wey has entered into an affiliate partnership of Mumsnet which will create and post on the Mumsnet website informative content about home schooling and be promoted to Mumsnet 195,000 subscribers through its daily newsletter with links to Wey's services and websites.
The Group also intends to recruit additional personnel in its B2B division, and for "Corporate Sales". A refreshed Group website (www.weyeducation.com) has recently been launched and the operating divisions' websites, as detailed above, contain information on the Group's products.
The Group's emphasis this year is to generate more sales utilising the new Learning Platform and in particular to grow our core InterHigh and B2B sales while nurturing its businesses in development stage. The Group has a number of other initiatives under consideration but will be careful to balance the time, commitment and expense of these with building on the excellent progress made in its core divisions over the last two years.
Outlook
The Group's turnover grew 60% this year and the Board's ambition is to at least maintain that rate of growth in the current year and beyond.
InterHigh and the Wey ecademy recruit pupils throughout the year. Pupil numbers on the roll are ahead of 2016/17 and currently growing steadily towards our target for the year.
The B2B division, from a modest base is expanding rapidly and as at today's date it has already exceeded the target for pupil numbers planned for it to have on the student roll at the end of the Autumn term.
Infinity is about establishing a track record of academic excellence in order to prove to prospective customers it is the pathway to the best universities in the world. We are planning to recruit very modest student numbers in Infinity for this year.
Quoralexis has just been launched and it will take time to develop revenues and profit. The Board is very excited about its prospects and will report on developments further at the interim stage.
Shareholders
In these days of nominee holdings, it is difficult for companies to communicate directly with its shareholders. Therefore, the Group was very pleased that a number of individual shareholders were able to attend its first private investor shareholder evening on 19 July 2017. The Company intends to repeat the event in the New Year, around the time of its Annual General Meeting. Details of the Annual General Meeting will be notified to shareholders at the time when the Group's Annual Report for the year is published.
David L. Massie
Executive Chairman
WEY EDUCATION PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
YEAR ENDED 31 AUGUST 2017
Year ended 31 August 2017 | Year ended 31 August 2016 | ||
CONTINUING OPERATIONS | £ | £ | |
REVENUE | 2,429,055 | 1,515,825 | |
Cost of sales | (1,221,009) | (799,909) | |
|
|
| |
GROSS PROFIT | 1,208,046 | 715,916 | |
Administrative expenses | (1,206,450) | (1,108,973) | |
Equity based share awards | (107,555) | (11,489) | |
Equity based share payments | (33,000) | - | |
Exceptional items | 156,533 | (397,791) | |
|
|
| |
OPERATING PROFIT/(LOSS) | 17,574 | (802,337) | |
Finance costs | 56 | (4,300) | |
|
|
| |
PROFIT/(LOSS) BEFORE TAXATION | 17,630 | (806,637) | |
Taxation | - | - | |
|
|
| |
TOTAL COMPREHENSIVE INCOME FOR THE YEAR FROM CONTINUING OPERATIONS | 17,630 | (806,637) | |
Profit/(Loss) from discontinued operations | - | (19,120) | |
TOTAL COMPREHENSIVE INCOME FOR THE YEAR | 17,630 |
| (825,757) |
Earnings per share | |||
Basic Earnings per share | 0.02p | (1.01)p | |
Diluted Earnings per share | 0.02p | (1.01)p | |
Earnings per share - Continuing operations | |||
Basic Earnings per share | 0.02p | (0.99)p | |
Diluted Earnings per share | 0.02p | (0.99)p | |
The Group has no recognised gains or losses other than the results for the year as set out above.
WEY EDUCATION PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 AUGUST 2017
31 August 2017 | 31 August 2016 | |
£ | £ | |
NON CURRENT ASSETS | ||
Goodwill | 201,217 | 201,217 |
Intangible assets | 737,119 | 629,731 |
Tangible fixed assets | 102,378 | 29,079 |
Total non current assets | 1,040,714 | 860,027 |
CURRENT ASSETS | ||
Trade and other receivables | 266,246 | 217,108 |
Cash and cash equivalents | 1,005,120 | 909,942 |
Total current assets | 1,271,366 | 1,127,050 |
TOTAL ASSETS | 2,312,080 | 1,987,077 |
EQUITY AND LIABILITIES | ||
EQUITY AND RESERVES | ||
Share capital | 1,039,685 | 957,712 |
Share premium | 2,868,263 | 2,695,844 |
Option reserve | 77,288 | 48,135 |
Retained earnings | (2,323,251) | (2,409,283) |
Total equity and reserves | 1,661,985 | 1,292,408 |
CURRENT LIABILITIES | ||
Trade and other payables | 650,095 | 694,669 |
Total current liabilities | 650,095 | 694,669 |
TOTAL EQUITY AND LIABILITIES | 2,312,080 | 1,987,077 |
WEY EDUCATION PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
YEAR ENDED 31 AUGUST 2017
Share Capital | Share Premium | Option Reserve | Retained Earnings | Total | |
£ | £ | £ | £ | £ | |
At 1 September 2015 | 439,711 | 1,474,839 | 51,739 | (1,598,619) | 367,670 |
Comprehensive Income | |||||
Loss for the year | - | - | - | (825,757) | (825,757) |
Total Comprehensive Income | - | - | - | (825,757) | (825,757) |
Transaction with owners | |||||
Issue of shares for cash | 500,000 | 1,250,000 | - | - | 1,750,000 |
Issue of shares for deferred consideration | 18,001 | 58,505 | - | - | 76,506 |
Expenses associated with share issue | - | (87,500) | - | - | (87,500) |
Transfer on lapsing of share options | - | - | (15,093) | 15,093 | - |
Equity based share awards | - | - | 11,489 | - | 11,489 |
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|
|
|
| |
Total Transaction with owners | 518,001 | 1,221,005 | (3,604) | 15,093 | 1,750,495 |
At 1 September 2016 | 957,712 | 2,695,844 | 48,135 | (2,409,283) | 1,292,408 |
Comprehensive Income | |||||
Profit for the year | - | - | - | 17,630 | 17,630 |
Total Comprehensive Income | - | - | - | 17,630 | 17,630 |
Transaction with owners | |||||
Issue of shares for cash | - | - | - | - | - |
Issue of shares for deferred consideration | 26,404 | 75,250 | - | - | 101,654 |
Equity based share payments | 8,505 | 24,495 | - | - | 33,000 |
Exercise of share options | 47,064 | 72,674 | (77,182) | 67,182 | 109,738 |
Transfer on lapsing of share options | - | - | (1,220) | 1,220 | - |
Equity based share awards | - | - | 107,555 | - | 107,555 |
|
|
|
|
| |
Total Transaction with owners | 81,973 | 172,419 | 29,153 | 68,402 | 351,947 |
At 31 August 2017 | 1,039,685 | 2,868,263 | 77,288 | (2,323,251) | 1,661,985 |
WEY EDUCATION PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED 31 AUGUST 2017
GROUP |
| |||
31 August 2017 | 31 August 2016 | |||
£ | £ | |||
Cash flows from operating activities | ||||
Profit/(Loss) before taxation of: | ||||
- continuing operations | 17,630 | (806,637) | ||
- discontinued operations | - | (19,120) | ||
Adjustments for: | ||||
Amortisation | 160,000 | 160,000 | ||
Depreciation | 10,823 | 5,042 | ||
Loss on disposal of fixed assets | 544 | 373 | ||
Finance costs | (56) | 4,300 | ||
Equity based share payments | 33,000 | - | ||
Equity based share awards | 107,555 | 11,489 | ||
Changes in working capital: | ||||
Trade and other receivables | (49,142) | 2,213 | ||
Trade and other payables | 158,737 | 216,339 | ||
|
| |||
Net cash generated from/(used in) operating activities | 439,091 | (426,001) | ||
Cash flow from financing activities | ||||
Repayment of funds to related parties | - | (266,750) | ||
Issue of shares | 109,738 | 1,662,500 | ||
Net cash (used in)/generated from financing activities | 109,738 | 1,395,750 | ||
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| |||
Cash flow from investing activities | ||||
Investment in subsidiary | - | - | ||
Acquisition of business net of cash | (101,654) | (76,506) | ||
Interest received/(paid) | 56 | (37,996) | ||
Development costs | (267,388) | (26,398) | ||
Proceeds from sale of assets | 83 | - | ||
Purchase of fixed assets | (84,748) | (16,341) | ||
Net cash (used in)/generated from investing activities | (453,651) | (157,241) | ||
|
| |||
Net increase/(decrease) in cash and cash equivalents | 95,178 | 812,508 | ||
Cash and cash equivalents brought forward | 909,942 | 97,434 | ||
Cash and cash equivalents carried forward | 1,005,120 | 909,942 | ||
WEY EDUCATION PLC
NOTES TO THE RESULTS
FOR THE YEAR ENDED 31 AUGUST 2017
1. The financial information set out above does not constitute statutory accounts for the purposes of the Companies Act 2006. These financial statements have not been reviewed or approved by the Group's auditors.
2. Wey Education Plc has adopted International Financial Reporting Standards ("IFRS"), IFRIC interpretations and the Companies Act 2006 as applicable to companies reporting under IFRS.