Wey Education forecasts FY21 as ‘significantly ahead’ of expectations
(WEY ) has outlined to investors in a trading update that the first four months of its financial year to 31st August 2021 have been ‘significantly ahead’ of budget and market expectations.
As a result, the AIM-listed UK online education company reported that it expects to exceed market forecasts in both turnover and profitability for FY21e.
Furthermore, following a group structure and tax review, Wey also reported that its InterHigh division will henceforth charge VAT to its UK clients to enable the Company to recover VAT on UK expenditure and ensure that future InterHigh profits are distributable.
It said the current strong trading environment will be used to ‘smooth the transition in these charges’ for existing clients while funding a further increase in marketing expenditure.
Despite the concessions to existing customers and increased marketing spend, the Company confirmed profit before tax for FY21 is expected to be ahead of market expectations.
Commenting on the positive forecast for FY21, Barrie Whipp, Chairman of WEY, said: "We are very pleased with the Company's performance in the early part of the financial year which we envisage continuing during the rest of the year. The Board intends to continue investing in growth; this is not the time to consolidate, but to continue to push forward."
In its FY20 results published in November 2020, Wey said turnover had risen by nearly 40% to £8.4m (FY19: £6m) after witnessing ‘significant growth’ in student enrolment across all year groups. To date, over 3,000 students receive an education from the group.
Wey’s cash position was also ‘very strong’ at year end at £6.5m (FY 19: £5.0m), which it said will enable a solid basis for future investment considerations in new materials and technology.
At the time, Barrie described its outlook as ‘unequivocally optimistic’ following its previous 1H20 market consolidation with a robust strategy for accelerated growth. He added that growth and subsequent changes in human behaviour have presented ‘yet further opportunities.’
Shares in Wey Education have increased by nearly 30% since the beginning of November 2020, to trade up a further 8% this morning following today's earnings upgrade. With a rapidly growing track record of success, it is increasingly becoming clear that Wey represents a true, and in many cases a preferred, alternative to traditional education in a bricks and mortar environment. For investors, WEY could not be positioned any better for the challenges faced by today’s educators, and will be looking forward to 2021 with significant confidence.
Reasons to Follow WEY
Wey Education operates two established divisions – InterHigh, a non-selective fee paying online secondary school, established in 2005 and Academy21, B2B division serving other educational providers, schools, local authorities and other public bodies.
Structural Change in the Education System
Due to a new reality of distance learning in the age of the COVID-19 pandemic, the edtech space has surged with analysts reporting an average increase in revenue of 335% according to an industry impact analysis by Rootstrap. And the market is set to grow even further.
According to market data published by MarketsandMarkets, the EdTech and Smart Classroom Market size is expected to grow globally from $85.8 billion in 2020 to $181.3 billion by 2025.
The online educational specialist previously told investors in July 2020 that group turnover was expected to be in excess of £8 million for the financial year ended 31 August 31 2020.
As part of the company’s wider business strategy adopted in November 2019, Dr Sara de Freitas was appointed in January 2020 in order to provide Leadership of the Education Strategy ‘to enhance quality, improve student engagement and scale for growth.’
Since 2019, Wey said its education provision has been restructured to ensure the best individual learning experience across the Wey group for an increasing number of students.
Currently, Wey said its technology architecture successfully delivers the needs of today's business, however it has been preparing to scale to the next level growth for its business.
With the appointment of a CTO, the company’s division has been planning the new technology strategy and investment into the target Wey technology architecture which has commenced with new platforms planned for delivery in 2021 and beyond.
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