Wey Education : Final Results

29 October 2018

WEY EDUCATION PLC

('Wey', the 'Group' or the 'Company')

PRELIMINARY ANNOUNCEMENT OF RESULTS

FOR THE YEAR ENDED 31 AUGUST 2018

Wey Education plc (AIM: WEY) the educational services group announces the Group's results for the year to 31 August 2018.

HIGHLIGHTS:

· Turnover increased 72.6% to £4.2 million (2017: £2.4 million)

· Adjusted EBITDA up 162% at £452,569 (2017: £172,419)

· Adjusted EPS almost doubled to 0.33p (2017:0.17p)

· Academy 21 acquisition successfully integrated into group

· Turnover expected to grow significantly again in current year

· Encouraging start to current financial year

· At year end, cash balances totalled over £4.0m (2017: £1.0m)

Commenting on the results, David Massie (Executive Chairman) said:

'Wey had an excellent year in terms of turnover growth, technical implementation and the acquisition of Academy 21. With substantial cash resources of over £4 million we are well placed for further significant growth in the current year and beyond. In setting our budget for this year the Board has taken a prudent approach to the timing of overseas expansion and expects to hit its core targets primarily through organic growth. Any acceleration of overseas revenues will enhance the group's results'

Enquires:

Wey Education plc David L Massie (Executive Chairman)		[phone] [phone]
WH Ireland Limited (Nominated Adviser and Broker) Mike Coe / Chris Savidge (Corporate Finance)		[phone]

Certain information contained in this announcement would have constituted inside information (as defined by Article 7 of Regulation (EU) No 596/2014) ('MAR') prior to its release as part of this announcement and is disclosed in accordance with the Company's obligations under Article 17 of MAR.

Executive Chairman's Statement

I am very pleased to report to shareholders on a year of significant growth and achievement.

Financial Highlights

Group turnover of £4.2 million for the year to 31 August 2018 (2016/17 £2.4 million) represented growth of 72.6% year on year. It included partial contribution from Academy 21 which was acquired in December 2017. Underlying turnover grew by approximately 29.2%.

Much of this year has been spent on building the foundations for further growth and, in certain areas, spending was at higher than normal annual levels. In accordance with IFRS all this expenditure will be expensed in the Company's audited accounts for the year ending 31 August 2018. However, to provide shareholders with a more meaningful method of measuring the Group's progress, year on year, we have calculated our Adjusted EBITDA to reflect non-recurring costs as set out below.

	2017/18		2016/17
REVENUE
Existing activities	3,138,207		2,429,055
Acquisition	1,053,666		-
TOTAL	4,191,873		2,429,055
Cost of sales	(1,950,045)		(1,221,009)
GROSS PROFIT	2,241,828		1,208,046
Adjusted administrative expenses	(1,789,259)		(1,035,627)
Adjusted EBITDA	452,569		172,419
Adjusted EPS (p)	0.37		0.17
Adjusted Fully Diluted EPS (p)	0.33		0.15

This calculation includes a total of £238,466 of non-continuing marketing and international costs which have been added back to arrive at adjusted EBITDA.

The statutory loss was £196,381 (2017: profit £17,630) and the EPS loss was 0.16p (EPS 2017: 0.02p)

The Group remains well funded for future expansion with cash balances of over £4.2 million at year end which have increased since.

Operational Review

The Group undertook a number of significant initiatives during the year.

· The Group's new 'state of the art' online learning platform went live on 1 September 2017 and has performed extremely well and has attracted praise from both teachers and students. This new technology cements the Group's position as the leading online schools group in the UK. The Learning Platform combines a number of market leading software packages to produce a powerful, flexible IT system capable of delivering lessons to anywhere in the world with an internet connection. The Learning Platform has been designed to be scalable to almost any quantum of student use and is available to students in all our target geographic locations 24 hours a day, 7 days a week, 365 days a year.

· During the year a number of marketing initiatives were trialled including large scale brand awareness campaigns, but results suggest that in both student recruitment and overall spend these were not as effective as the Group's traditional online marketing and use of social media. Concentration of marketing efforts in the current year has reverted to our traditional channels and is showing a significant increase in opportunities already.

· The core Interhigh business grew turnover by 20% and it is expected that this will accelerate in the current year.

· In December 2017 the Company acquired Academy 21, a provider of online secondary teaching to pupils in the state school and other public-sector bodies. The acquisition has been successfully integrated and has performed very well with both sales growth and improved profitability post acquisition. The Group has created a unified B2B sales force, closed the Academy 21 local office and integrated all administrative and accounting systems. B2B revenues grew more than management anticipated and further expansion is expected in 2018/19.

· The group concluded a £5 million oversubscribed placing at 22p per share in November 2017 primarily with institutional investors. The funds were partly used for the acquisition of Academy 21 and to fund other initiatives. At the year end, the Group retains substantial cash resources of £4.2m.

· In addition to my own move from non-executive to Executive Chairman, two senior appointments were made in 2018. Barry Nichols-Grey was appointed Company Secretary and Finance Director (designate) in April 2018. Barry has now been promoted to Executive Director and joins the Plc board. Tony Knowles joined as Executive Director of Human Resources in May 2018, reflecting the importance of human resources in our otherwise online business where the majority of our staff work remotely from Head Office.

Geographic Analysis

The Group has an active export business served from the UK. An analysis of turnover for the year shows that 14.8% of 2018 turnover arose outside the UK (2017: 23.6%) which reflected growth in the UK business rather than a decline in export sales. At £620,259 (2017: £573,112) export sales were up 8.2%.

	UK	Europe	Middle East	Africa	Other countries	Total
2018	£	£	£	£	£	£
Online Education	3,553,063	275,949	183,715	29,531	132,064	4,174,322
Other	17,551	-	-	-	-	17,551
	3,570,614	275,949	183,715	29,531	132,064	4,191,873
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

The Group is making further efforts to expand its export and overseas business as detailed below.

Artificial Intelligence ('AI')

The Group has taken its first steps on AI introducing certain features into lessons. Further applications have been commissioned in areas such as 'induction of new pupils' to automate current manual processes. A longer-term plan for greater use of AI is under development and the Group is conducting further research in partnership with the University of South Wales.

Staffing and Premises

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 2018, analysis of the Group's staff was as follows: -

Age Bracket		Number of Staff
19-28	:	6
29-38	:	23
39-48	:	33
49-58	:	28
59-68	:	18
69-78	:	2
Total		110

As of 1 September 2018, most of our teaching staff moved to a new form of employment contract which provides for greater flexibility in teaching hours over that in a typical 'teaching' contract. This will assist us in broadening our time zone offering both in the UK and overseas.

Overseas Update

In addition to its traditional export businesses the Group is developing a number of overseas channels. Since year end we have reported on our new venture in Nigeria and the work necessary to both launch the traditional British curriculum and to teach the Nigerian curriculum online continues. We are pleased with progress to date.

We are progressing opportunities in Kenya and the Middle East to offer both our British Curriculum and English Language teaching.

Shareholders will be aware that the Group believes that expansion into China holds great potential for growth in both revenues and profitability. However, the company is only prepared to make the necessary investment when it is satisfied that on matters of transparency and compliance, the local systems adopted will be compatible with those required of an AIM listed company in London. At the current time, we continue to discuss how this will be achieved with our potential partners but continue preparatory works in the interim.

The Directors anticipate that overall revenues from overseas operations will be modest in 2018/19 and concentrated in the second half of the year.

Outlook

The Group remains in a dynamic phase of expansion offering a market leading product to a largely untapped sector. The year has started encouragingly and sales activity in the Interhigh and B2B divisions are materially ahead of the equivalent position at this time last year.

The Group's emphasis this year is to generate more sales utilising the new Learning Platform and in particular to grow its core InterHigh and B2B sales while nurturing its businesses in development stage including Quoralexis, our online English language school. 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.

The Board has recently reviewed its plans and budgets for the coming year and while setting challenging targets which will see the group expand significantly, has decided to be very prudent in relation to the pace at which it assumes its overseas sales will grow. Average growth of group turnover in the last three years has been 66% per annum. The Board's ambition is to maintain that trend in the current year and beyond and any acceleration in overseas development should enhance this figure further.

It is expected that the emphasis placed upon core Interhigh recruitment and B2B will influence results throughout the year while other initiatives will be concentrated in the second half.

Capital Reconstruction

The Capital Reconstruction approved by shareholders at the General Meeting on 24 September 2018 awaits a further court hearing for the High Court to sanction the proposals. Assuming such is granted, the effects will be reflected in the 2018/19 accounts. A further RNS will be made when the process is complete.

Shareholders

The prevalence of nominee holdings makes it difficult for listed companies to communicate directly with its shareholders. Therefore, the Directors were very pleased that a number of individual shareholders were able to attend its private investor shareholder evenings held in London during the year. The Company intends to repeat the event in the New Year, around the time of its Annual General Meeting. The Group's provisional reporting timetable for 2018/19 is as follows:

Date of AGM 25 February 2019

Publication of Interim Results 13 May 2019

Preliminary Announcement 11 November 2019

David L. Massie

Executive Chairman

WEY EDUCATION PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

YEAR ENDED 31 AUGUST 2018

	Year ended 31 August 2018		Year ended 31 August 2017
CONTINUING OPERATIONS	£		£
REVENUE	4,191,873		2,429,055
Cost of sales	(1,950,045)		(1,221,009)
GROSS PROFIT	2,241,828		1,208,046
Administrative expenses	(2,027,725)		(1,035,627)
EBITDA	214,103		172,419
Depreciation	(36,479)		(10,823)
Amortisation	(189,378)		(160,000)
Equity based share awards	(95,452)		(107,555)
Equity based share payments	-		(33,000)
Exceptional income	7,500		156,533
Exceptional items	(130,603)		-
Other operating income	400		-
OPERATING (LOSS)/PROFIT	(229,909)		17,574
Finance income	433		56
(LOSS)/PROFIT BEFORE TAXATION	(229,476)		17,630
Taxation	33,095		-
TOTAL COMPREHENSIVE INCOME FOR THE YEAR	(196,381)		17,630
Earnings per share
Basic Earnings per share	(0.16p)		0.02p
Diluted Earnings per share	(0.16p)		0.02p

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 2018

	31 August 2018		31 August 2017
	£		£
NON CURRENT ASSETS
Goodwill	1,630,939		201,217
Intangible assets	562,645		737,119
Tangible fixed assets	188,859		102,378
Total non current assets	2,382,443		1,040,714
CURRENT ASSETS
Trade and other receivables	732,234		266,246
Cash and cash equivalents	4,225,182		1,005,120
Total current assets	4,957,416		1,271,366
TOTAL ASSETS	7,339,859		2,312,080
EQUITY AND LIABILITIES
EQUITY AND RESERVES
Share capital	1,307,072		1,039,685
Share premium	7,515,023		2,868,263
Option reserve	110,323		77,288
Retained earnings	(2,498,969)		(2,323,251)
Total equity and reserves	6,433,449		1,661,985
CURRENT LIABILITIES
Trade and other payables	203,253		167,899
Accruals, deferred income, receipts in advance and refundable deposits	703,157		482,196
Total current liabilities	906,410		650,095
TOTAL EQUITY AND LIABILITIES	7,339,859		2,312,080

WEY EDUCATION PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

YEAR ENDED 31 AUGUST 2018

	Share Capital	Share Premium	Option Reserve	Retained Earnings	Total
	£	£	£	£	£
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 1 September 2017	1,039,685	2,868,263	77,288	(2,323,251)	1,661,985
Comprehensive Income
Loss for the year	-	-	-	(196,381)	(196,381)
Total Comprehensive Income	-	-	-	(196,381)	(196,381)
Transaction with owners
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
Total Transaction with owners	267,387	4,646,760	33,035	20,663	4,967,845
At 31 August 2018	1,307,072	7,515,023	110,323	(2,498,969)	6,433,449

WEY EDUCATION PLC

CONSOLIDATED STATEMENT OF CASH FLOWS

YEAR ENDED 31 AUGUST 2018

			GROUP
			31 August 2018		31 August 2017
			£		£
Cash flows from operating activities
Profit/(Loss) before taxation		(229,476)			17,630
Adjustments for:
Amortisation		189,378			160,000
Depreciation		36,479			10,823
Loss on disposal of fixed assets		-			544
Finance costs		(433)			(56)
Equity based share payments		-			33,000
Equity based share awards		53,698			107,555
Taxation		33,095			-
Changes in working capital:
Trade and other receivables		(206,494)			(49,142)
Trade and other payables		(64,626)			158,737
Accruals, deferred income, receipts in advance and refundable deposits		(50,480)			112,394
Net cash generated from/(used in) operating activities		(238,859)			439,091
Cash flow from financing activities
Issue of shares		4,914,147			109,738
Net cash (used in)/generated from financing activities		4,914,147			109,738
Cash flow from investing activities
Acquisition of business net of cash		(1,338,279)			(101,654)
Interest received/(paid)		433			56
Purchase of intangible assets		(14,904)			(267,388)
Proceeds from sale of assets		-			83
Purchase of fixed assets		(102,476)			(84,748)
Net cash (used in)/generated from investing activities			(1,455,226)		(453,651)
Net increase/(decrease) in cash and cash equivalents			3,220,062		95,178
Cash and cash equivalents brought forward			1,005,120		909,942
Cash and cash equivalents carried forward				4,225,182	1,005,120

WEY EDUCATION PLC

NOTES TO THE RESULTS

FOR THE YEAR ENDED 31 AUGUST 2018

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.

Note to editors

The Group

The Group is a provider of online educational services teaching both the British academic curriculum (Years 5 - 13) and also operates an online English language school. Founded in 2005, it is the market leader and has successfully educated thousands of students.

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 5 - 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 but now also includes the Academy 21business bought in December 2017. 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 a more comprehensive longer-term service depending on what is required.

The Group's developing businesses are: -

Infinity Education (www.infinityeducation.org.uk) addresses premium, fee paying students in 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 welcomes 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.