TIDMWEY
RNS Number : 2620N
Wey Education PLC
08 May 2018
8 May 2018
WEY EDUCATION PLC
("Wey" or "the Company" or "the Group")
Unaudited Interim Results for the six months ended 28 February
2018
Wey Education plc (AIM:WEY) today publishes its interim results
for the six months to 28 February 2018 and reports on a number of
important developments within the business.
HIGHLIGHTS:
-- Academy 21 acquisition outperforming expectations
-- Establishment of Chinese subsidiary and agreement to
establish a Joint Venture in China to
progress English language teaching
-- Infinity Education starts delivering first courses
-- Agreement reached for Joint Venture in Nigeria to teach both
English and Nigerian curriculum online
-- Launch of primary curriculum
-- Appointment of Executive Director of Human Resources
-- Turnover up 44% at GBP1.74m (2017 - GBP1.21m) including
contribution of GBP249,000 from Academy 21
-- Adjusted profit before tax of GBP145,000 (2017 - GBP75,000)
-- Adjusted basic EPS 0.12p (2017:0.08p)
-- Cash balances healthy at GBP4.3m
Commenting on the results, David Massie (Executive Chairman)
said: "This was an exciting period in the Company's development.
Last November's oversubscribed GBP5m placing gave the Company the
financial resources to implement its medium-term strategy. The
results of that process are already beginning to bear fruit. The
completion of the Academy 21 acquisition accelerates the Company's
growth in the B2B market and we are very pleased with its
development so far. The announcements regarding the joint ventures
in China and Nigeria is very significant for the group's growth as
they have the potential to be transformational. Naturally, there is
some cost involved in developing these initiatives, but the Company
has the necessary financial resources for such, and the Board
considers the potential is so great, that the price is one worth
paying."
This announcement contains information which, prior to its
disclosure by this announcement, was inside information for the
purposes of the Market Abuse Regulation
Enquiries:
Wey Education plc
David Massie (Executive Chairman) +44 (0) 20 7518 9700
+44 (0) 7785 957 958
WH Ireland Limited
(Nominated Adviser and Broker)
Mike Coe / Ed Allsopp (Corporate Finance) +44 (0) 117 945 3470
Academy 21 ("A21")
The A21 acquisition has to date exceeded management
expectations. Turnover for the period 22 December 2017 to 28
February 2018 consolidated into the interim accounts was
GBP249,000. Forward sales indicate that last year's A21 sales
figure for the full year of GBP1.03m is likely to be exceeded.
This promising start has given management the confidence to
commit to further expansion in the division and the Company is now
planning to recruit further sales personnel and commission an
improved automated administration system for Academy 21.
Establishment of Chinese subsidiary
Proposed Joint Venture in China
Initial supplies by Infinity Education in China
After the interim accounts date the company received approval
from the relevant authorities in China for the establishment of its
wholly owned subsidiary - referred to in China as a Wholly Foreign
Owned Enterprise ("WFOE"), domiciled in Beijing. This was an
important step in the Group being regulatory compliant and able to
do business in China.
The Group has entered into a Memorandum of Understanding ("MOU")
with a listed Chinese company Beijing Star Cube Science Development
Co. Ltd ("Starcube") to establish a Joint venture to market and
sell English language courses in China. Negotiations are
progressing well and it is anticipated that a formal JV will be
agreed in the next few months.
Starcube is a Chinese company, specialising in education
software development and education content. Starcube was founded in
January 2010. It was registered with the National Equities Exchange
and Quotations ("NEEQ") in January 2014 - Stock name: StarCube and
Ticker symbol: 430375. NEEQ was founded in 2012 and is under the
supervision of the China Securities Regulatory Commission. The NEEQ
is an over-the-counter (OTC) national securities trading market,
providing an alternative finance method to list for Chinese small
and medium size enterprises. On June 2016, Starcube's stock was
transferred to NEEQ Market Making Component Index.
The MOU contemplates that Wey and Starcube will establish a
joint venture, to be incorporated as a Chinese limited liability
company, which will be 50% owned by each of the shareholders. It is
intended that it will initially offer English language lessons to
Chinese state schools and expand into the provision of privately
funded top up tuition to pupils in due course.
Wey will provide the English language tuition online from the
UK, supplemented by some local teaching which may be online or off
line.
Modest targets are being agreed with Starcube for 2018/19 but in
the medium term, this is potentially a very material development
and gives the Group the opportunity to establish credibility both
in the market generally and with the Chinese state authorities in a
market of some 200m students learning English day to day. Wey has
agreed to provide pilot and training courses in the current
financial year at no cost to the joint venture and will also
contribute its share of initial infrastructure costs.
Infinity Education Limited ("Infinity")
The Group's premium brand has now opened its doors and has
secured its first contract, also in China. Of modest size, the
contract has Infinity provide top up A level tuition and Oxbridge
preparation to a group of students attending an international
school in China. It is noteworthy that the Chinese school which
already has high academic achievements has asked the Company to
provide this service which underlines the overall quality of the
Group's offerings.
Agreement for New Venture in Nigeria to teach both British and
Nigerian Curriculum
The Group has reached agreement with an independent school in
Nigeria to launch and offer Wey's services within the Nigerian
market. The new venture will offer both Wey's traditional
curriculum of year 7 to year 13 British curriculum secondary
courses but will also use the Wey platform to offer teaching in the
Nigerian curriculum.
The current population of Nigeria is approximately 186 million
and the children within such are the initial target market but it
is considered that the offering of the Nigerian curriculum may also
attract interest amongst the significant Nigeria diaspora living
overseas.
Wey will provide the British curriculum teaching online from the
UK and the Nigerian curriculum will be provided locally but
utilising the Wey online learning platform. Wey will be paid a fee
for every student utilising the platform for the Nigerian
curriculum. It is hoped that the venture will admit its first
students in the next financial year.
Launch of Primary Curriculum
Wey's academic teaching is currently focussed on the secondary
school curriculum (Years 7 - 13) i.e. Key stages 3, 4 and 5 broadly
speaking for those aged 11 - 19. Wey has decided to extend its
provision of online teaching into the Primary curriculum in terms
of Key Stage 2, initially beginning with Years 5 and 6, typically
for children aged 9 and 10.
It is intended to provide a curriculum of 6 core subjects from
September 2018.
Appointment of Executive Director of Human Resources
The Company is pleased to announce the appointment of Tony
Knowles as Executive Director responsible for Human Resources in
the Group. Tony is an experienced HR professional who has worked in
a range of industries. Most recently he was Human Resources
Director for Veezu Holdings Limited, a gig economy based company
operating in the private hire industry. Tony is expected to take up
his position on 13 May 2018 and will be based at the Group's
administrative headquarters in Crickhowell.
Financial review
Turnover of GBP1.74m included a first time contribution of
GBP249,000 from A21 for the period 22 December 2017 to 28 February
2018. This represented an increase of 44% on the 2017 turnover
figure of GBP1.2m or 23% ignoring the Academy 21 contribution.
6 months to 6 months to Full year to
28.2.2018 28.2.2017 31.08.2017
GBP'000 GBP'000 GBP'000
Sales: 1,494 1,211 2,429
Core 249 - -
Acquisition
------------ ------------ -------------
Total 1,743 1,211 2,429
Cost of sales (838) (575) (1,221)
------------ ------------ -------------
Gross profit 905 636 1,208
Admin Expenses (745) (557) (1,036)
------------ ------------ -------------
EBITDA 160 79 172
------------ ------------ -------------
Depreciation (15) (4) (11)
------------ ------------ -------------
Adjusted Profit 145 75 161
------------ ------------ -------------
Adjusted profits were GBP145,000 (2017: GBP75,000) in line with
our expectations for the first half. The figure represents profit
before tax adjusted for share based payments (GBP18,000),
amortisation of intangibles (GBP95,000), acquisition costs
(GBP43,000) and the higher than trend expenditure on marketing and
other matters flagged up at the time of the November placing to
substantially boost group revenues and underlying profits over the
next three years (GBP143,000).
Adjusted EPS for the period was 0.12p (2017:0.08p)
Group cash at 28 February 2018 remained healthy at GBP4.3
million reflecting the balance of the funds raised in the November
placing yet unspent and the inherent cash generative nature of the
Group's operations.
Marketing
The Company allocated a portion of the funds raised in its
November 2017 placing to increasing and enhancing marketing across
the group. The results of this direct marketing are already
apparent in the agreements reached in China and Nigeria and further
developments are expected shortly.
The group is active online and continues to explore how best to
enhance this with complementary advertising. Other initiatives
include a campaign with Mumsnet and through Disability Rights UK as
well as upgraded websites for overseas advertising.
Other UK B2B
B2B marketing (non-Interhigh) in the UK increased sales
significantly over 2016/17 with most of the growth occurring in the
first few months of the period. This contrasts well with the
business profile of A21 whose sales are weighted towards the second
half. As previously announced, the Wey B2B marketing team has been
amalgamated with that of A21.
Management
With the appointment of a Finance Director and a new Human
Resources director, senior management now consists of three
executive directors and an executive chairman. The group considers
itself well place for future development.
Outlook
The Company is pleased with the progress in the first half.
In accordance with the strategy adopted at the time of the
Company's GBP5 million placing in November 2017, emphasis has been
put on development of the Company's business for the medium term at
some short-term cost. The results of this strategy to date are
reflected in the positive announcements made herein regarding A21,
the Chinese joint venture and international expansion
generally.
Turnover in the Group's core businesses increased 23% over the
equivalent period in 2016/17 although in terms of profitability
margin growth compensated for the sales shortfall. Overall for the
full year, and notwithstanding the additional costs flagged above,
we remain on track to meet our expectations for adjusted
profitability for the year although this is likely to be achieved
on lower than previously planned revenues.
The JV in Nigeria will be used to open up English speaking
markets for the group's academic products in Commonwealth
countries. The use of the Company's learning platform for teaching
courses other than the British curriculum will open up a new
revenue stream with attractive margins.
The JV in China is potentially very exciting. The Company will
benefit both from the export sales made to the JV and from its
share of underlying profitability of the JV. Delivery of the
Group's services to China has been tested thoroughly and as noted
above, revenue operations have commenced. The Group is developing
the business in expectation of significant export sales from the UK
from 2019/20 onwards. Management believes that the medium-term
potential of this venture is so large that it justifies the
commitment made.
The Company continues to explore additional marketing channels
in China for its core academic products.
Consolidated Statement of Comprehensive Income
For the six months ended 28 February 2018
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
28 February 28 February 31 August
2018 2017 2017
GBP'000 GBP'000 GBP'000
Total revenue 1,743 1,211 2,429
Cost of sales (838) (575) (1,221)
---------- ------------ ----------
Gross profit 905 636 1,208
Administrative expenses (997) (641) (1,206)
Equity share based awards - - (33)
Equity based share payments (18) (43) (108)
Exceptional items (43) 59 156
---------- ------------ ----------
Operating profit/(loss)
for the period before
taxation (153) 11 17
Finance costs - - -
---------- ------------ ----------
Profit/(loss) before
tax (153) 11 17
Taxation - - -
---------- ------------ ----------
Total comprehensive loss
for the period from continuing
activities (153) 11 17
Retained profit/(loss)
for period (153) 11 17
========== ============ ==========
Total comprehensive profit/(loss)
for the period (153) 11 17
========== ============ ==========
Profit/(loss) from continuing
activities (153) 11 17
========== ============ ==========
Basic (loss)/earnings
per share (p) (0.13) 0.01 0.02
Basic adjusted earnings
per share (p) 0.12 0.08 0.16
Unaudited Consolidated Statement of Financial Position
As at 28 February 2018
Unaudited Unaudited Audited
As at As at As at
28 February 28 February 31 August
2018 2017 2017
GBP'000 GBP'000 GBP'000
NON CURRENT ASSETS
Goodwill 1,643 201 201
Intangible assets 642 736 737
Tangible assets 126 49 102
Total non current assets 2,411 986 1,040
------- ----------- ---------
CURRENT ASSETS
Trade and other receivables 1,126 287 266
Cash and cash equivalents 4,346 1,030 1,005
Total current assets 5,472 1,317 1,271
------- ----------- ---------
TOTAL ASSETS 7,883 2,303 2,311
======= =========== =========
EQUITY AND LIABILITIES
EQUITY AND RESERVES
Issued share capital 1,267 988 1,039
Share premium 7,352 2,783 2,868
Share option reserve 95 91 77
Profit and loss account (2,478) (2,398) (2,323)
Total equity and reserves 6,236 1,464 1,661
------- ----------- ---------
CURRENT LIABILITIES
Trade and other payables 336 102 168
Accruals, deferred income,
receipts in advance and refundable
deposits 1,311 737 482
------- ----------- ---------
Total current liabilities 1,647 839 650
------- ----------- ---------
TOTAL EQUITY AND LIABILITIES 7,883 2,303 2,311
======= =========== =========
Unaudited Consolidated Cash Flow Statement
For the six months ended 28 February 2018
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
28 February 28 February 31 August
2018 2017 2017
GBP'000 GBP'000 GBP'000
Cash flows from operating
activities
Profit/(loss) before
taxation (153) 11 18
Adjustments for:
Amortisation 95 80 160
Depreciation 15 4 11
Equity based share payments 18 43 33
Equity based share awards - - 108
Changes in working capital:
Trade and other
receivables (614) (70) (49)
Trade and other payables 69 (105) 46
Accruals, deferred income,
receipts in advance and
refundable deposits 558 368 112
Net cash generated from/(used
in) operating activities (12) 331 439
---------------------- --------------------- -----------------------
Cash flow from financing
activities
Issue of shares 4,711 - 110
---------------------- --------------------- -----------------------
Net cash generated from
financing activities 4,711 - 110
---------------------- --------------------- -----------------------
Cash flow from investing
activities
Acquisition of business
net of cash (1,338) - (102)
Development costs - (187) (267)
Purchase of fixed assets (20) (24) (85)
---------------------- --------------------- -----------------------
Net cash (used in) investing
activities (1,358) (211) (454)
---------------------- --------------------- -----------------------
Net increase in cash and
cash equivalents 3,341 120 95
---------------------- --------------------- -----------------------
Cash and cash equivalents
brought forward 1,005 910 910
Cash and cash equivalents
carried forward 4,346 1,030 1,005
---------------------- ===================== =======================
Notes to the Interim Results
For the six months ended 28 February 2018
1. The interim results (approved by the Board of Directors and
authorised for issue on 8 May 2018 are neither audited nor reviewed
and do not constitute statutory accounts within the meaning of
Section 434 of the Companies Act 2006. The financial information
for the preceding period is extracted from the statutory accounts
for the financial year ended 31 August 2017. The audited accounts
for the year ended 31 August 2017, upon which the auditors issued
an unqualified opinion, and which did not contain a statement under
Section 498 (2) and (3) of the Companies Act 2006, have been
delivered to the Registrar of Companies. As permitted, this interim
report has been prepared in accordance with UK AIM Rules and not in
accordance with IAS 34 'Interim Financial Reporting', therefore it
is not fully in compliance with IFRS.
2. Wey Education plc is a public limited company incorporated in
the United Kingdom. The Company is domiciled in the United Kingdom
and its ordinary shares are traded on the AIM market of the London
Stock Exchange plc.
3. The consolidated interim results have been prepared in
accordance with the recognition and measurement principles of IFRS
including standards and interpretations issued by the International
Accounting Standards Board, as adopted by the European Union. They
have been prepared using the historical cost convention.
4. The preparation of the interim results requires management to
make estimates and assumptions that affect the reported amounts of
revenues, expenses, assets and liabilities, and the disclosure of
contingent liabilities at the reporting date. If in the future such
estimates and assumptions, which are based on management's best
judgement at the reporting date, deviate from the actual
circumstances, the original estimates and assumptions will be
modified as appropriate in the year in which the circumstances
change. The interim results are presented in sterling and all
values are rounded to the nearest thousand pounds (GBP'000) except
where otherwise indicated.
5. The interim results of the Group for the period ended 28
February 2018 have been prepared in accordance with the accounting
policies expected to apply in respect of the financial statements
for the year ending 31 August 2018.
6. There is no tax charge for the period due to the availability
of tax losses brought forward.
7. The basic earnings per share is calculated on the weighted
average number of shares in issue during the period. The weighted
average number of ordinary shares in issue for the six months to 28
February 2018 was 116,650,560 shares (28 February 2017: 96,446,001
shares and 31 August 2017: 98,904,014 shares).
8. Copies of this report will be available to download from the
investor relations section of the Company's website
www.weyeducation.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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