Wey Education PLC (LON:WEY) Chairman David Massie caught up with DirectorsTalk for an exclusive interview to discuss the key points of their recent company update
Q1: I see that Wey Education made an announcement yesterday morning, can you tell me what were the key points?
A1: It was just a brief announcement, but we covered four matters. The first was confirming the appointment of our first full time Finance Director and Company Secretary who started yesterday, and we also gave the date upon which we will make our interim announcement. We gave an update on the acquisition of Academy 21 which was completed just before Christmas and we also gave notice that we’re going to hold another investor evening which are targeted at private shareholders.
Q2: Is the FD appointment important to the company?
A2: Yes, it is. Historically, we’ve had a part time accountant and it’s worked very well as the Board is strong on financial matters, however the company has reached a size where it’s appropriate to put things on a more professional footing and hence the full-time appointment. Barry also takes over as Company Secretary whereas I doubled up in that role before with both Chairman and Company Secretary, so it creates a better corporate governance and also frees up some of my time to deal with other matters.
Q3: Now, the announcement mentioned that you’re making good progress with the Academy 21 acquisition, what do you think are its prospects?
A3: We are feeling very positive about Academy 21 and very positive about the acquisition. As the announcement notes, we moved quickly after the acquisition to make it part of the group and share resources across all our companies. We’ve not yet moved Academy 21 students and teachers on to our Wey IT platform, our learning platform, that we will do over the summer because we don’t want to have any disruption to this teaching year.
We’re already realising benefits from reduction in overheads and there’ll be further benefits to come from September in our new financial year. Overall, forward sales are looking very encouraging.
Q4: How does Academy 21 differ from other group businesses?
A4: I think the primary difference is that its customers are overwhelmingly public sector and that means it’s a B2B sale rather than our traditional market where parents are our largest customers as is in the case of our biggest brand, InterHigh.
Secondly, the nature of the children we teach, they generally have an issue with traditional schooling for many reasons, it could be behavioural, it could be social, it could be any other emotional or mental issue, they therefore need what is called ‘alternative provision’.
Whereas at InterHigh we’re seeking to educate children throughout their school career; an ideal student is one who joins in year 7 and leaves in year 13 and of course many come for shorter than that, it’s fair to say that the objective in Academy 21 is different. Our mission for Academy 21 is to guide pupils back into traditional schooling, now that could be InterHigh but often it’s back into a state bricks and mortar school, as a consequence, the average duration of a pupil’s stay at Academy 21 is much shorter than InterHigh and we have a much higher turnover of pupils and they take fewer subjects.
Sadly, I suppose for society but good for us, there seems to be more and more troubled pupils and therefore we think there’s a great opportunity for us.
Q5: So, what’s the strategy for Academy 21 going forward?
A5: We have two strategies, in the short and medium term we think we can grow its revenue significantly and build profitability both through that growth and the efficiencies of organisation we bring. In the medium to long term, we believe that online education will become more mainstream and with all our brands, we want to showcase what Wey Group can do.
Our objective on this is that when the UK government finally embraces online, as we think it must do at some stage in the future, we want to be seen a clear choice as the leading private sector provider. Therefore, our strategy is to build confidence and build a track record in that area.
Q6: There seems to be some disappointment that Wey didn’t provide a full pre-close announcement this year, would you agree?
A6: Yes, I don’t know where this came from because we never said we’d make such an announcement, in fact we published our reporting schedule both at the time of the last annual results and again when we completed the successful £5 million fundraise last November.
In practice, because of the Academy 21 acquisition, which closed a little later than originally planned, we did give a mini update in January when we spoke of that.
I also think we need to be fair to the new FD, I know he was in the offices pretty early yesterday morning but our RNS went out at 7am, I think it’s only fair that we should give him a chance to get his feet under the table.
More seriously, when it comes to the interims, we have to include the Academy 21 results in the consolidated profit and loss account and also in the balance sheet so I think it’s fair that the FD should be given a short time to get up to speed and make sure that everything we say to the market is 100% spot on.
The executive team is pretty busy with our various initiatives and when we do make our interim announcement we want to make a comprehensive update rather than dribbling information into the market.
Q7: What might shareholders expect to hear in the interim announcement? Is it 8th of May?
A7: You’re correct, that’s our target date, 8th May and I expect that as well as the detailed financials of all our divisions, we’ll report on the various initiatives we’ve been talking about over the last few months including our progress overseas.
Q8: Now that the FD is on board, does that mean that your duties as Executive Chairman change?
A8: A little bit because it gives me more time to stay in touch with shareholders and that’s something we value greatly but over the last few months we’ve been a little pressed for time. It also enables me to concentrate on overseas business development which is one of my principal roles, in fact I’m giving this interview from Asia where I am today in meetings with potential customers.
Q9: When will Wey Education publish details of the next investor evening?
A9: I expect that’ll be in the next week or so. We will hold an event in London but we’re also looking at whether there is demand for another evening out of London and if we do that, where should it be. I’m sure that we will get something into the market in the next 7 days.