Wey Education PLC (LON:WEY) Chairman David Massie caught up with DirectorsTalk for an exclusive interview to discuss their preliminary results
Q1: Preliminary results out this morning, can you summarise them for us?
A1: Yes, I think there were three main factors. Firstly, we had reported that turnover had grown 60% over the year to £2.4 million, second, we recorded our first ever profit before tax, a small profit of £17,630 but it compares with a loss of £800,000 last year, and third we announced that we had completed the development of our new learning platform which had been launched to a very positive reaction from teachers and students alike.
Q2: So, what would you say then were the highlights?
A2: Obviously those items that I’ve just mentioned are the obvious highlights but there were a lot of other good things that took place. Building on hard work done, we launched our B2B division which we’ve said is doing very well and we have created an Academic Advisory Board, headed up by 2 very experienced people from the education world, which monitors and controls standards for us. Basically, we put ourselves in a position to develop further growth, this year, next year and thereafter.
Q3: Now, I see that you say turnover has increased 40%, 50% and 60% in the last three years, what have been the key drivers for this growth?
A3: I think two things, one is quality and the other is marketing. People are seeing that online education works and gets results but also since we bought our first school, InterHigh, 2.5 years ago, we have increased marketing spend, I think in the first year I think there was about £20,000 spent, in the next year about £70,000 and last year about £150,000 and it seems perfectly clear that the more you make your product known to potential customers, the more you get.
So, I think the combination of trying to make people more aware of what we offer and then actually delivering quality when they buy the service has led to that turnover growth.
Q4: Do you think you can maintain that sort of momentum going forward?
A4: Well, we’re very positive, in my preliminary statement today I not only say that we hope to maintain that momentum for the current year but further out than that. We believe that we’re in a good place at the current time, we have a good team of people and the Learning Platform that we’ve brought into action this year is scalable to almost any size and so we’re looking to push more volume through that.
Q5: So, what do you hope for in the current year?
A5: Wey Education have two active divisions, InterHigh, our original school, and we hope to see further substantial organic growth there this year, our B2B business is developing very rapidly, I say in the announcement that we’re already ahead at the end of October where we hope to be at Christmas time so that’s very positive so those are our two big hopes.
The next two things are that we have two businesses in development, Infinity Education, our premium school and also Quoralexis, our new language school and we’re hoping to develop those this year, we don’t expect a big contribution from this year but to lay the ground work so that in future years we get very positive results from those.
Q6: You mentioned that following customer feedback you are redirecting your premium school Infinity to overseas markets, why is that?
A6: We had an interesting reaction from customers, we were positioning Infinity to be a selective school whereas InterHigh is a non-selective school. Customers came forward and were saying to us that they’re very satisfied with the academic results that InterHigh achieves, we’ve announced that from our reported results 96% of our students taking our IGSCE English got an A*-C this year so that’s extremely credible. Our brokers have analysed that if we were measured by every bricks and mortar school, we would be just outside of the top 100 of non-selective schools and given that we take students of all abilities, that is really an excellent result.
Customers basically said to us that they don’t need Infinity in the UK, InterHigh delivers what’s on the tin and so what we’ve decided to do is to direct Infinity towards the overseas markets where perhaps customers don’t understand our non-selective system and want to be in more of an academic school. So, that’s what lies behind the decision.
Q7: So, what are the prospects for your new language school Quoralexis?
A7: We are really excited about Quoralexis. We’re using the same Learning Platform that we’ve developed for the schools, so we have no additional costs that come from that, but we’re entering into an extremely large market. We’ve started teaching English as a foreign language although in due course we hope to add other language to it, but the English as a foreign language or EFL market is a global enormous market, there are 150 million in China currently trying to learn English alone and of course there are all other areas of the world as well.
We think that our product, which is English taught from the UK by native English speakers, will be very attractive to the premium end of the market. This year will be development for us, but we do expect revenues and then we expect it to take off towards the end of this current financial year and for the years after that, so everyone is very excited about that.
The other feature for us is that, for the first time, it takes Wey Education out of just teaching secondary children because we will teach English to somebody of 3 years old or somebody of 70 years old and this is part of a development of the business that will widen us out of just secondary school education.
Q8: You mentioned earlier increasing marketing this year, what kind of things can we expect to see?
A8: Earlier in the interview I mentioned the result of the increased marketing spend that we have undertaken over the last couple of years and how that’s come through in sales, we will maintain that, we will expand our online marketing, much of which is through Google, Facebook, Twitter and similar. As part of our search engine optimisation campaign, it’s becoming apparent that there is a role for complementary marketing to increase brand awareness, online advertising is fine, but somebody has to be looking for you they’ve got to be searching for an online school, what you need to do is to make them aware of the possibility that there are actually online schools that they can look at so that you’ll see in effect reinforcement marketing to get brand awareness. This may be digital name boards, it may be a little bit of print, we’re even thinking about whether there’s some targeted TV advertising that can achieve recruitment within our cost parameters.
Q9: In your statement you talked about adopting artificial intelligence, does AI have role in education?
A9: I think AI is going to have a dramatic role in education. The balance will be to maintain the personal contact between teacher and student but of course we’re already skilled at that because being online we have different challenges to those in a bricks and mortar school. The prospects of AI are absolutely staggeringly attractive to the student, the relationship that he will be able to have with his learning buddy or with a hidden teacher who he doesn’t even have to realise is AI and the feedback that it could give him and the encouragement that it could give him is enormous.
We’re looking at all sorts of development in this area, we don’t quite know which way the market is going to go, we’re not intending to invest a lot of money in development ourselves, but billions of dollars are being spent by other companies in developing AI products and we’re looking to be an early adopter. We think that we can both improve the product by the use of artificial intelligence and at the same time we should get some cost advantages because we’ll be able to substitute a machine in some places where we have a human cost at the moment.
So, nobody quite knows how it’s going to unfold but I think looking at a 3/5/10 year horizon, AI has a tremendous role in education.
Q10: Finally, are there any updates from your broker, W H Ireland, as to the likely results going forward?
A10: Yes, I believe they’ve published a new research note today, I suspect it’s probably available via their website or any of your listeners and readers’ brokers, in which they have analysed where the Wey Education PLC stands today and the prospects for the next 3 years and have given some updated forecasts to the market of what they expect to happen.