Welcome to my series covering Wey Education. My articles on the subject consist of:
- The article you are reading now covering the company’s history.
- Wey Education – Present and Future, which contains the core of my analysis.
- InterHigh – Market and Competitors. This goes into a lot of detail about their main division which I have kept out of the above article in order to retain focused.
In the beginning
Wey Education today consists of two divisions: InterHigh and Academy21.
InterHigh was founded in 2005 by Paul and Jacqueline Daniell as probably the first online secondary school in the UK with Paul acting as headmaster and Jacqueline working on the business side. Being online it falls outside the UK school framework and so from a government perspective InterHigh simply provides private education services to home-educated children – a largely unregulated activity.
Academy21 was co-founded in 2011 by Jacqueline Daniell to provide alternative online education provision for schools and local authorities. Jacqueline subsequently sold her shares in the business.
Wey Education plc itself has existed since at least 2012 “trading” on the ISDX market. Initially it provided consultation for prospective free schools. Later it attempted to develop an online free school (an “ecademy”) within the UK state funded school framework but was rebuffed by the Department for Education. In late 2012 their CEO was internally accused of misconduct, resigned, made accusations and took legal action for constructive dismissal. This led to David Massie becoming Executive Chairman. The legal case was resolved in 2016 with minor damages being awarded to Wey.
In February 2015 Wey agreed to buy the not-for-profit InterHigh for £1.1m (including deferred consideration) at which time InterHigh had revenues of £0.8m, an annual surplus of £0.1m, 42 staff and 414 students. The initial plan (soon dropped) was to use InterHigh’s proven model as a platform to again apply for state funded status, as well as expansion overseas. They raised money in couple of placings and moved to AIM.
Investor interest, especially private investor interest, began to mount with popular bloggers writing about the company, minute-by-minute updates being posted on advfn and private investor-friendly meetings being arranged. The share price rose from sub-4p in February 2017 to 35p in early November in three waves and little new news. Then on 15th November they announced an institutional placing of £5m at 22p, diluting private shareholders by 15% and pushing the share price down to 28p. Many private shareholders were disappointed (and some disgusted), yet the share price quickly recovered.
In December 2017 the completed the acquisition of Academy21 for £1.6m which at the time had a turnover of £1.0m and profits of £0.1m. There was no earnout and it appears the previous owners entirely left the business.
On 4th January 2018 the share price hit 41.5p. This was to prove a poor entry point.
During this time Wey Education embarked on a number of ventures including:
- InterHighExcel (2016) – Creating of a second, premium selective school alongside InterHigh. This was quickly rebranded Infinity Education.
- Infinity Education (2017) – Initially a premium selected school, but soon refocused for premium B2B, although a website describing it as a consumer selective school remained until quite recently.
- Wey ecademy (2017) – Before Academy21 was purchased they started their own B2B subsidiary offering broadly similar services. Note that the term “ecademy” was originally used by Wey to describe the concept of a UK state funded online school.
- Quoralexis – Teaching English as a foreign language.
- Increased spending on advertising for InterHigh, arguably in a somewhat scattergun nature, including a high profile display advertising at Waterloo station.
- Opened the London Learning Centre.
- Wey Education Nigeria Limited – agreement with Nigerian school (using David Massie’s contacts) to offer British curriculum under their education licence.
- Establishment of a Chinese subsidiary (with the assistance of a company wholly owned by David Massie), with the plan to form a joint-venture with a local company initially to front Quoralexis’ offering in the country.
It is fair to say that feedback at the private investor meetings was very negative towards entering the commodity market of English as a foreign language, but most of all about overseas expansion and in particular China. Many considered any involvement in China as a red flag for an AIM listed company with several warning about specific risks. On my part I questioned how they could be expecting imminent Chinese revenues with no contracts signed and made it clear to the finance director that I would consider any of Wey’s money transferred or held in China as unrecoverable.
Forecasts were repeatedly missed and forecasts downgraded for reasons including the following (InterHigh specific unless otherwise given):
- Online advertising being stopping for a number of weeks in early 2018 due to problems with their bank.
- Lack return from increased advertising.
- Some teaching quality issues.
- Disruption due to changes in teaching delivery.
- Generally over optimistic and behind-the-curve forecasting.
- Wildly optimistic forecasting around pre-contract overseas ventures.
- Probable management distraction from overseas (ad)ventures.
This led to a fairly steadily falling share price until finally in April / May an institution bailed out at around 5.2p. This was to prove a good entry point (so far).
The seeds of recovery
During this time of disappointment many things were going well and being sorted out behind the scenes, particularly in InterHigh.
Soon after acquisition the curriculum was expanded both for IGCSE and A Level, and the 6th form teaching hours changed to be more student friendly. While these changes would have increased costs in the short term, this made their offering much more competitive with mainstream education, in particular 6th form students rose from 10 to 45 within a year.
The challenges of the expanded GCSE / IGCSE curriculum were likely presenting a conundrum: Whether to extend teaching from two to three years like many state schools were doing, or whether to increase teaching time / effectiveness. Switching to three years would make it harder for pupils moving into the school and likely affect the schools average GCSE results. Increasing teaching time would be more expensive. Partly for this reason they came up with the Lead / Follow lesson structure which, while like any change was disruptive, is both cheaper to deliver and more effective. I will describe this in detail in part 2.
Over time a few issues with teaching quality had been building up and certainly by September 2018 in combination with the change to IGCSE delivery there were significant problems. But Wey were already on the case, having announced in August a new HR strategy, including a move from traditional teacher to a professional-style contracts and a board-level head of HR. This has led to both an improvement in the quality of teachers / teaching and higher productivity. They also developed a Teaching Online qualification which all their teachers will be required to take and which has just been accredited by Ofqual. More on this in part 2.
Meanwhile Academy21 was outperforming expectations and provided obvious cost savings opportunities by merging with Wey ecademy and closing offices.
The lack of progress overseas had translated into a cash underspend and so despite the lack of profits the company was looking cash-rich, especially compared to its reduced market capitalisation.
Death of David Massie
On the 23rd August 2018 I met David Massie for the last time and he was in his usual great form. On 21st November it was announced that he had stood down due to ill health following a period working part-time. I immediately emailed him my condolences and thanks, and (as it turned out, foolishly) wished him the best for his recovery. Shortly after I heard on the grapevine it was very serious and in early December that he had passed away. It was a shock and is an ongoing sadness to me that he is no longer with us.
As described earlier, the expansion into China and Nigeria were based on his contacts. The contract for China was never signed and so inevitably has not been pursued. I was more saddened that it was not practical to progress with the Nigerian deal as I have a soft spot for Africa and he spoke so enthusiastically about it.
All activities are now either under InterHigh (B2C) or Academy21 (B2B). Overseas joint ventures, Infinity Education and the London Learning Centre are being closed. Quoralexis still exists as a B2C offering, nominally a service from the language department InterHigh, but advertised separately and recently relaunched.
In many ways things have turned full cycle, with Jacqueline Daniell, the original co-founder of both InterHigh and Academy21 now back in charge of both as CEO.
Coming up soon…
An analysis of the situation as it stands now, including the business, its market place, competitive position, news over the past few weeks and likely future prospects and developments.
References and Further Reading
 https://www.weyeducation.com/ – “Our People”