AUS
NZ
UK
CA
USA
IND
Summary
- The education sector in the UK has been hit due to the pandemic fluctuations, as the number of new admissions both international and domestic fell drastically.
- At the same time, the pandemic brought fortunes for online education companies, which saw a massive uptick in their user base over the last few months.
The Covid-19 changed the basics of the education system across the world. In a few months, the learning process saw a major overhaul not only for the students, teachers, schools, universities, but also for investors and edtech startups.
The government’s directive to delay opening of schools and other educational institutions even after the lockdown was relaxed further complicated matters for the students who lost more than half a year of their classes because of the ordeal. An Institute of Fiscal Studies report (IFS) published on the education sector in the UK has highlighted the immediate impact of the pandemic on this sector, which is around £3 billion, while in the long term the sector could register a loss of £19 billion.
While the universities and other educational institutions continue to reel under the adverse impacts of the pandemic, companies working in the educational sector have seen a mixed bag of fortunes. While some companies who are purely into paper publications have witnessed a fall in their revenues, others who have successfully transitioned into delivery of online educational content and associated services like online testing.
The impact
The education system in the UK is currently experiencing a transformation of sorts. While traditional universities and institutions, providing traditional classroom type education, were closed for obvious reasons, a significant number of students switched to online learning modules. Virtual classrooms are now the reality and are quite popular.
Over the past few months, an uptick in the online training courses have also been noticed. Not just students, working professionals are upgrading their skillsets. Several universities and institutes have increased their online offerings. International students have also been provided with online support so that they do not miss out on their classes due to lockdown.
The period has also seen massive growth in business of educational technology (edtech) companies, who are assisting online learners. Their services range from providing online tutorials to online testing services, to counselling and online personal assistance.
Let’s take a look at some of the companies in this sector and their stock market performance.
Pearson plc
Pearson plc (LON:PSON) is one of the largest education publishing and testing companies in the world. The company has a significant role in online educational services which has seen a major uptick in the last few hours. Though the company has seen some of its divisions underperform, the management is hopeful of delivering full year results as per market expectations.
Source- Thomson Reuters (One- months performance)
As on 3 November, the shares of Pearson plc have been trading at GBX 533.60 per share (12.22 PM GMT+1) gaining 3.89 per cent over the previous day’s close.
Malvern International plc
Malvern International plc (LON: MLVN) is another major educational publishing company in the United Kingdom. The company, which does not have a significant online educational product offering, registered a massive loss before tax from continuing operations amounting to £0.44 million for the H1 of 2020 compared to a profit before tax from continuing operations amounting to £0.03 million for H1 2019. The company has accelerated the development of its online academy following the pandemic outbreak, but it will be a while before it is able to see any benefits coming out of it.
Source- Thomson Reuters (One- months performance)
As on 3 November, the shares of Malvern International plc have been trading at GBX 0.12 per share (8.23 AM GMT+1) losing 9.14 per cent over the previous day’s close.
The second lockdown
The second lockdown may not have a very significant effect on the education sector as compared to the first lockdown. During the first lockdown, the government had ordered a complete suspension of all classes in schools, colleges and other educational institutions. However, this time around no such directives have been issued. Thus, the educational sector would continue to witness the pent-up demand boom from students who had restarted their curriculum after the restart of their educational institutions.
The second lockdown would also mean that demand for skill-based learning would continue to boom in the country, and online education providers would see their revenues swelling. Education material developers like Malvern International plc which only had a small online presence would also accelerate the development of their digital product segments. There are also several small start- ups in the edtech sector, who would try to make as profit as they in the second lockdown.
The accelerated transition taking place in the British education industry will bring both qualitative and quantitative improvements. These changes will not only be improving the quality of education but will also enhance the UK’s standing internationally as a promising educational destination.
