TIDMWEY
RNS Number : 8515S
Wey Education PLC
11 November 2019
WEY EDUCATION PLC
("Wey", the "Group" or the "Company")
PRELIMINARY ANNOUNCEMENT OF RESULTS
FOR THE YEARED 31 AUGUST 2019
FINANCIAL HIGHLIGHTS:
-- Turnover increased by 44.3% to GBP6.0m (2018: GBP4.2m)
-- Adjusted PBT from continuing operations more than doubled to
GBP322k (2018: GBP148k), ahead of market expectations
-- Statutory loss before tax of GBP685k (2018: GBP302k),
impacted by exceptional items of GBP436k (2018: GBP54k) and loss
from discontinued operations of GBP312k (2018: GBP174k)
-- Operating profit of GBP53k (2018: operating loss of GBP107k)
-- Adjusted EPS 0.25p (2018: 0.12p), statutory LPS 0.52p (2018: 0.25p)
-- Cash balances at year end of GBP5.0m (2018: GBP4.2m)
OPERATIONAL HIGHLIGHTS:
-- Significant growth in student enrolment, including Sixth Form expansion
-- Successfully established Interhigh Juniors for primary age children
-- Teaching Online course introduced and accredited by ATHE level 4
-- Key appointments to Wey management team
-- Introduction of vocational City & Guilds Assured Courses
-- Developments to Wey's learning platform
-- Company stabilized into two main brands, InterHigh and Academy 21
Commenting on the results, Barrie Whipp (Chairman) said:
"These results represent a pleasing outcome in a year where Wey
underwent significant change. We have increased turnover, delivered
profitability at the operational level and hold significant cash
resources allowing us to continue our growth journey. The Board
plans to not simply consolidate but accelerate growth in our core
businesses"
Enquiries:
Wey Education Plc
Barrie Whipp (Chairman) +44 (0) 7778 367 999
Barry Nichols-Grey (Executive Director
- Finance) +44 (0) 1873 813 900
WH Ireland Limited
(Nominated Advisor and Broker)
James Joyce (Corporate Finance) +44 (0) 20 7220 1666
Chairman's Statement
The financial year which ended on August 31, 2019 was an
extraordinary period for Wey Education Plc. The sad death of our
Chairman shook the Board to the core, however there was only one
course of action to take; implement a plan that would take the
Group forward and execute it to the best of our ability.
Jacqueline Daniell was appointed Chief Executive Officer to lead
the operations of the business. Jacqui founded both InterHigh and
Academy 21, so was the ideal candidate to step into this role. I
had been a Non-Executive Director since 2015 and David Massie was
my friend for over 30 years, I believed that, along with the other
members of the Board, we could settle the Group and then drive it
forward.
The Board decided that executing Joint Ventures in Africa and
China was a strategy that did not fit with the focus that the Board
wished to implement in InterHigh and Academy 21 and we decided to
terminate our physical operations in these areas. We also took the
decision to close executive offices in London and the associated
London Learning Centre. Finally, we decided to cease specific
activities in some of the new, minor brands in English as a foreign
language and other services. These decisions had a short-term cost
and I do not shy away from the fact that these resulted in the
Group making a statutory Loss before Tax for the year. The
financial benefits, however, are substantial on an ongoing
basis.
After a short period of stabilization, the Group was able to
focus clearly on its two core businesses, InterHigh and Academy 21.
Stakeholders can now see clearly how Wey's accounts reflect the
income from supplying our services of online education, less the
cost of teaching and overhead. This demonstrates how well
capitalized, funded and operationally geared the Group is.
InterHigh is a Business to Consumer Company selling directly to
parents, and is, in the opinion of the Directors, the UK's leading
online secondary school. In fact, InterHigh now offers online
education to students from late Primary School age to Sixth Form
and our student numbers are growing.
Academy 21 is a Business to business Company which supplies
education services including alternative provision to education
providers such as schools and other institutions.
The Board's aim, in its short to medium term plan, is for the
combined Wey business to become the largest secondary school in the
UK by number of students.
Educationally, we aim to provide the very best experience we can
for our students. We have increased our teaching staff and have
completed development of the Teaching Online qualification,
available on the OFQUAL register. Going forward, all of our
teaching staff and new recruits will be required to take the course
and pass the related examination. We have continued to regularly
engage with the Department for Education to assist in their desire
to implement voluntary registration of online education provision.
Our Non-Executive Director, Dame Erica Pienaar is an invaluable
resource in leading our Academic Advisory Board and furthering our
policies and procedures to ensure that we lead the way in
compliance and safeguarding.
Our commitment to enhancing the Wey learning platform continues
and we are experiencing some successes with delivering projects
that will enable further development in automated learning. The
ongoing partnership with the University of South Wales allows us to
embed the latest research into our technology strategy. We aim for
Wey to be at the very forefront of technical developments in online
education and will continue to invest in these areas
appropriately.
It is pleasing to be able to report that the Group's revenues
were in excess of GBP6m for the financial year. Our growth has been
achieved consistently and we believe that we have the platform to
become, in terms of student numbers, the size of a multi-academy
trust. It should not be underestimated that Wey provides online
education to students overseas as well as the UK, nor that our
corporate sales department is still in a fledgling stage.
After adding back the costs of exceptional items and
discontinued businesses the core of the business produced a pre-tax
operating profit.
Our capital reconstruction was finalized during the year and we
are well funded with cash balances in the region of GBP5m.
The operational success of Wey is very much due to the efforts
of Jacqueline and our committed, enthusiastic and loyal team, not
only in our Head Office but our teaching staff who are based
remotely. I am grateful to them for their commitment and support. I
am also grateful for the support of our Board, advisers and a
number of significant shareholders who agreed with our new strategy
and vision for Wey going forward.
Barrie RJ Whipp
Chairman
11 November 2019
Operational Review
I am pleased to be able to report on a year where Wey Education
went through a significant strategic review and implemented a clear
plan for the future.
The core business grew turnover by 44% and we are optimistic
that our marketing and recruitment strategy will ensure that growth
will continue on an upward path. We have reached levels of
operational gearing across the group which will allow us to deliver
improved profitability as we grow.
For clarity I describe our operating businesses as follows:
InterHigh (www.interhigh.co.uk), delivers live, interactive
teaching of the British Curriculum to year groups 4 through to 13,
including teaching both IGCSE and A levels and with some City and
Guilds and other vocational courses. It is a complete school with a
broad academic, pastoral and enrichment programme ensuring that
young people who join the school study successfully for their
future career and life choices. InterHigh continues to expand and
pupil numbers are at an all-time high.
Academy 21 (www.academy21.co.uk) is an online educational
business that provides a range of Key Stage 3 and GCSE programmes
to pupils who have been referred by local authorities and schools
across the UK. It delivers alternative education provision to
schools, local authorities and other education providers. The group
has successfully grown the business since acquisition, and the
brand now leads the B2B division. Revenue and profitability in
Academy21 has exceeded the group's targets this year.
Education and learning
Education and learning have been extended in InterHigh to
include a Junior school division delivering Key Stage 2 (Primary)
curriculum, initially to years 5 and 6 and more recently to year 4.
The primary division of InterHigh delivers an inclusive curriculum
which includes core subjects as well as communication and creative
pursuits subjects. In the secondary school division, InterHigh has
extended its available subjects to include 9 core and 4 additional
subjects at Key stage 3. At Key stage 4, InterHigh has grown its
range of additional subjects and 6 vocational City and Guilds
Assured Courses. In the Sixth Form, pupils can choose from a range
of 20 A level subjects.
Academic Results overall have improved on last year and were
once again outstanding in English.
Staffing
Following the closure of our London Learning Centre, the
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. Separate
exam centre/meeting facilities accommodation is located in
Abergavenny.
Staffing structures have been rationalized and made highly
scalable. Some key positions have been identified and new
recruitment mechanisms have meant relevant appointments have been
made swiftly. Executive Head Teacher, Head of Business Information
and Head of Educational Partnerships have added capacity to Wey's
management team.
Technology
As well as continuous planned enhancements and releases, further
developments have been built on the Wey learning platform and
software integrations enhanced. The continued partnership with the
University of South Wales means that progress has been made in the
technology roadmap towards the vision for an AI enabled school.
Jacqueline K Daniell
CEO
11 November 2019
Financial Highlights
I am pleased to report that we have delivered continued growth
in revenues alongside improvements in gross profit margins.
Group turnover of GBP6.0m for the year ended 31 August 2019
(2018: GBP4.2m) represents year on year growth of 44%. The prior
year included partial contribution from Academy 21 which was
acquired in December 2017 - if it had been included for the
entirety of the comparative period the underlying revenue growth
would have been 36%.
The Group improved gross profit margins from 53.4% to 59.5%
between 2018 and 2019, as a result of the increase in Academy 21
revenues as a proportion of group revenues, as well as better
teacher utilization and changes to our teaching model.
Administrative expenses increased from GBP2.2m in 2018 to
GBP3.4m in 2019. A number of expenditure items related to
investment in growth, particularly in marketing, did not occur
until the second half of FY18 following the share placing in
November 2017. Therefore, we have only seen the full cost of these
investments in FY19. We expect the growth in costs to stabilize as
we exploit operational gearing over the coming years to deliver
improved profitability as we grow revenues.
The overperformance in terms of 2019 revenues allowed the group
to accelerate marketing activity in the second half of the year to
secure business for FY20 and beyond.
Overall, we have made a statutory loss before tax of GBP685k for
the year, however the group incurred costs of GBP312k in respect of
its discontinued overseas operations during the year. In addition,
the group incurred exceptional costs of GBP436k in respect of
termination and restructuring costs and the costs of closing the
London Learning Centre.
The group maintains a very strong cash position with GBP5.0m of
cash balances held at the year end.
To reconcile the headline figures to adjusted profit, being loss
before tax from continuing operations adjusted for exceptional
items, amortization of acquired intangibles and share based
payments, we have more than doubled the adjusted PBT year on
year.
Year ended Year ended
31 August 31 August
2019 GBP'000 2018 GBP'000
(restated*)
Loss before tax from continuing operations (380,691) (160,491)
Add back:
Finance costs (2,063) (432)
Exceptional costs 435,755 61,313
Exceptional income - (7,500)
Operating profit/(loss) 53,001 (107,110)
Amortisation of acquired intangibles 160,000 160,000
Equity based share awards 109,060 95,452
-------------- --------------
Adjusted PBT from continuing operations 322,061 148,342
-------------- --------------
Adjusted EPS 0.25 0.12
Adjusted Diluted EPS 0.23 0.11
*Note - The prior year comparatives have been restated as a
result of the implementation of IFRS 9 and the restatement of
certain costs which relate to our discontinued operations in Kenya,
Nigeria and China. See note 3 for further details.
Barry Nichols-Grey
Finance Director
11 November 2019
Outlook and Summary
The group marketing strategy is designed to concentrate
resources on the best possible opportunities to increase sales in
its Business to Consumer market, whilst also developing and growing
educational partnerships, both domestic and overseas. The Board is
committed to be ambitious in accelerating growth in its core
businesses.
Wey has continued to be viewed as a leader in online education
delivery in the UK as evidenced by the Department for Education's
invitation to assist in a small working party to help implement the
voluntary registration of online providers. The DfE has now
launched a public consultation with the first registrations planned
for January 2020.
Financial resources and technical expertise are aligned to
ensure Wey can maintain the quality in education delivery on a
scale that represents further significant growth, through the
deployment of emerging technologies and machine learning. With cash
resources and a stable core business the Board looks to the future
with confidence.
Annual General Meeting and Other Dates
The Group's provisional reporting timetable for 2019/20 is as
follows:
Date of AGM 28 January 2020
Publication of Interim Results 11 May 2020
Preliminary Announcement 9 November 2020
WEY EDUCATION PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
YEARED 31 AUGUST 2019
Year Year ended
ended 31 August
2018
31 August (restated)
2019 GBP
Note GBP
Revenue 6,049,370 4,191,873
Cost of Sales (2,447,538) (1,950,045)
------------ ------------
Gross profit 3,601,832 2,241,828
Other income 5,668 402
Expenses
Administrative expenses (3,445,439) (2,253,888)
Equity based share awards (109,060) (95,452)
Operating profit/(loss) 53,001 (107,110)
Finance costs 2,063 432
Exceptional costs 4 (435,755) (61,313)
Exceptional income 4 - 7,500
Loss before income tax benefit from
continuing operations (380,691) (160,491)
Income tax benefit 7,804 33,095
Loss after income tax from continuing
operations (372,887) (127,396)
Loss after income tax expense from
discontinued operations 3 (312,530) (174,472)
Loss after income tax benefit for
the year attributable to the owners
of Wey Education plc (685,417) (301,868)
------------ ------------
Earnings per share from continuing
operations
Basic earnings per share 6 (0.29) (0.10)
Diluted earnings per share 6 (0.29) (0.10)
Earnings per share from discontinued
operations
Basic earnings per share 6 (0.24) (0.14)
Diluted earnings per share 6 (0.24) (0.14)
Total earnings per share
Basic earnings per share 6 (0.52) (0.25)
Diluted earnings per share 6 (0.52) (0.25)
There is no recognised income or expense for the year other that
the loss shown above and therefore no separate statement of other
comprehensive income has been presented.
Please refer to note 3 for details of restatement of prior
period comparatives.
WEY EDUCATION PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AT 31 AUGUST 2019
At At
31 August 31 August
2018
2019 (restated)
GBP
GBP
Note
Assets
Current assets
Trade and other receivables 3 735,334 626,749
Cash and cash equivalents 4,961,371 4,225,182
----------- ------------
Total current assets 5,696,705 4,851,931
Non-current assets
Goodwill 1,630,939 1,630,939
Investment in subsidiaries - -
Intangibles 449,628 562,645
Property, Plant and Equipment 170,990 188,859
Total non-current assets 2,251,557 2,382,443
----------- ------------
Total assets 7,948,262 7,234,374
Liabilities
Current liabilities
Trade and other payables 323,904 203,253
Other 1,865,067 703,157
----------- ------------
Total current liabilities 2,188,971 906,410
----------- ------------
Total liabilities 2,188,971 906,410
Net assets 5,759,291 6,327,964
----------- ------------
Equity
Issued capital 1,312,072 1,307,072
Reserves 5 1,730,692 7,625,346
Retained profits/ (accumulated losses) 5 2,716,527 (2,604,454)
----------- ------------
Total equity 5,759,291 6,327,964
----------- ------------
WEY EDUCATION PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
AT 31 AUGUST 2019
Issued Share Option Retained Total
Capital Premium reserve profits equity
GBP GBP GBP GBP GBP
Balance at 1 September
2017 1,039,685 2,868,263 77,288 (2,323,251) 1,661,985
Total comprehensive
loss after income
tax for the year - - - (301,868) (301,868)
Issue of shares
for cash 227,273 4,772,727 - - 5,000,000
Exercise of share
options and warrants 40,114 157,954 (20,663) 20,663 198,068
Expenses associated
with share issue - (283,921) - - (283,921)
Equity based share
awards - - 53,698 - 53,698
Balance at 31 August
2018 1,307,072 7,515,023 110,323 (2,604,456) 6,327,962
---------- ------------ --------- ------------ ----------
Balance at 1 September
2018 1,307,072 7,515,023 110,323 (2,604,456) 6,327,962
Total comprehensive
loss after income
tax for the year - - - (685,417) (685,417)
Exercise of share
options and warrants 5,000 15,000 (6,400) 6,400 20,000
Equity based share
awards - - 96,746 - 96,746
Capital reorganisation - (6,000,000) - 6,000,000 -
Balance at 31 August
2019 1,312,072 1,530,023 200,669 2,716,527 5,759,291
---------- ------------ --------- ------------ ----------
WEY EDUCATION PLC
CONSOLIDATED STATEMENT OF CASHFLOWS
AT 31 AUGUST 2019
Year Year
ended ended
31 August 31 August
2019 2018
GBP GBP
Cash flows from operating activities
Loss before income tax benefit for
the year (693,221) (334,963)
Adjustments for:
Depreciation and amortisation 192,173 225,857
Impairment 8,468 -
Share-based payments 96,746 53,698
Interest and other finance costs (2,063) (433)
----------- ------------
(397,897) (55,841)
Change in operating assets and liabilities:
Decrease/(increase) in trade and other
receivables (108,585) (101,009)
Decrease in other operating assets 64,190 -
Increase/(decrease) in trade and other
payables 120,651 (64,626)
Increase/(decrease) in other operating
liabilities 1,161,910 (50,480)
840,269 (271,956)
Income taxes refunded 7,804 33,095
----------- ------------
Net cash from operating activities 848,073 (238,861)
Cash flows from investing activities
Payment for purchase of business,
net of cash acquired - (1,338,279)
Payments for property, plant and equipment (46,324) (102,476)
Payments for intangibles (87,621) (14,904)
Interest received 2,063 433
Net cash used in investing activities (131,882) (1,455,226)
----------- ------------
Cash flows from financing activities
Proceeds from issue of shares 20,000 4,914,147
Net cash from financing activities 20,000 4,914,147
----------- ------------
Net increase/(decrease) in cash and
cash equivalents 736,191 3,220,060
Cash and cash equivalents at the beginning
of the financial year 4,225,182 1,005,120
Cash and cash equivalents at the end
of the financial year 4,961,373 4,225,180
----------- ------------
WEY EDUCATION PLC
NOTES TO THE RESULTS
FOR THE YEARED 31 AUGUST 2019
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.
3. Restatement of comparatives
The group restated its results for the comparative period as a
result of:
(a) Implementation of IFRS 9
IFRS9 - Financial Instruments was adopted by the group from 1
September 2019.
The Group applies the IFRS 9 simplified approach to measuring
expected credit losses using a lifetime expected credit loss
provision for trade receivables. To measure expected credit losses
on a collective basis, trade receivables are grouped based on
similar credit risk and aging. The contract assets have similar
risk characteristics to the trade receivables for similar types of
contracts.
The group has restated the comparative trade receivable
balances. The impact of the change in accounting policy amounts to
an increase in bad debt provision of GBP105,485 at 31 August
2018.
(b) Discontinued operations
During the year, the Group took the decision to cease operations
in its overseas entities. Therefore, the results of the following
entities have been reclassified as discontinued operations in
accordance with IFRS5:
Wey Education Nigeria Limited;
Wey Education Limited; and
Wey Education Consulting (Beijing) Limited
In addition, various expenses incurred by the parent entity in
relation to the discontinued operations have been classified within
discontinued operations.
The impact of the reclassification for the prior period
consolidated statement of profit or loss and other comprehensive
income is a reduction in administrative expenses of GBP105,182 and
a reduction in exceptional costs of GBP69,290, which have both been
reclassified to loss from discontinued operations.
Consolidated
2018 2018
GBP GBP GBP
Extract Reported Adjustment Restated
Expenses
Administrative expenses (2,253,585) (303) (2,253,888)
Operating loss (106,375) (303) (106,678)
Exceptional Costs (130,603) 69,290 (61,313)
Loss before income tax benefit from continuing operations (229,478) 68,987 (160,491)
Income tax benefit 33,095 - 33,095
Loss after income tax benefit from continuing operations (196,383) 68,987 (127,396)
Loss after income tax expense from discontinued operations - (174,472) (174,472)
Loss after income tax benefit for the year attributable to the owners of
Wey Education plc (196,383) (105,485) (301,868)
Other comprehensive income for the year, net of tax - - -
Total comprehensive income for the year attributable to the owners of Wey
Education plc (196,383) (105,485) (301,868)
Total comprehensive income for the year is attributable to:
Continuing operations (196,383) 68,987 (127,396)
Discontinued operations - (174,472) (174,472)
----------- ---------- -----------
(196,383) (105,485) (301,868)
=========== ========== ===========
4. Exceptional costs
The group has incurred exceptional costs in the current and
prior years in respect of:
Year ended Year ended
31 August 31 August
2019 2018
(restated)
GBP GBP
Termination and restructuring costs 252,205 -
Onerous lease costs 174,627 -
Legal costs 8,787 18,343
Acquisition costs - 42,970
Litigation receipts - (7,500)
----------- ------------
435,619 53,813
----------- ------------
5. Capital reorganisation
On 24 September 2018 at a General Meeting, to allow the Company
to create distributable reserves, shareholders approved a
resolution to effect a capital reduction, transferring GBP6,000,000
from share premium to retained earnings. The transfer became
effective on 21 December 2018 following Court approval.
6. Weighted average number of shares
The calculation of the basic earnings per share is based on the
profit attributable to ordinary shareholders and the weighted
average number of ordinary shares in issue during the period.
The calculation of the diluted earnings per share is based on
the profit per share attributable to ordinary shareholders and the
weighted average number of ordinary shares that would be in issue,
assuming conversion of all dilutive potential ordinary shares into
ordinary shares using the treasury share method.
Reconciliations of weighted average number of ordinary shares
used in the calculation are set out below:
Year Year
ended ended
31 August 31 August
2019 2018
GBP GBP
Weighted average number of ordinary shares
Shares in issue at beginning of period 130,707,120 103,968,491
Impact of share issues in period 73,973 18,965,689
------------ ------------
Weighted average number of ordinary shares
for Basic EPS 130,781,093 122,934,180
Effect of share options outstanding 6,607,840 7,740,572
------------ ------------
Weighted average number of ordinary shares
for Diluted EPS 137,388,933 130,674,752
------------ ------------
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END
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