Good morning, it's Paul here with the last SCVR for this week.

Estimated timings - should be well before 1pm official finish time, as it's quiet for news today.
Update at 11:15 - today's report is now finished.

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Wey Education (LON:WEY)

Share price: 25.5p (up 10%)
No. shares: 138.5m
Market cap: £35.3m

Trading Update

Wey Education plc (AIM: WEY), the online educational services group is pleased to update the market on current trading for the year ending 31 August 2020.

Unsurprisingly, this online education group has been a beneficiary of the covid crisis, and is trading well;

Trading has continued to be very positive since the publication of the group's interim announcement in May and is in excess of expectations. Group turnover is expected to be in excess of £8m for the financial year ending on August 31, 2020, an anticipated growth of in excess of 30% from the previous year.

Group Profit Before Tax (after adjusting for share based payments and amortisation of acquired intangibles) is expected to exceed market expectations of £0.5m (2019:(£0.6m Loss)).

Profits would have risen more, but it has spent more on marketing. That's not a very convincing argument to me, because the nature of this business is that heavy marketing spend is vital, as that drives growth.

My other reservation about this business model, is that it's not like selling software, where growth drops straight through to profits. Wey has to provide a complex & expensive education service, employing teachers, and making sure everything is well organised & executed. I think that limits growth to some extent, and that costs rise as it expands. Hence I'm not as excited about this share as I used to be when first researching it.

T o my mind the valuation looks a bit toppy. After all, if this was a mature business, we would probably only value it (making just over £0.5m profit p.a.) at maybe £3-5m? Hence the additional c.£30m premium in the current valuation is investor expectations for growth.

As you can see, growth has been steady, but it's only just breaking into profit;

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My opinion - it's clearly operating in a good sector, benefiting from covid. I think we should do far more teaching online - it's obviously better than getting 30 bored teenagers into a…

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