The benefits of restructure, redundancy and relaunch are beginning to deliver some impressive numbers at TSL Education, owner of the Times Educational Supplement (TES). In accounts recently filed, TSL Education, owned by Charterhouse Capital Partners, has reported an operating profit before exceptional costs of £25.8m on revenues of £62.1m for the 12 months to 31 August 2007 – that’s an OP of 41.5%! This compares to an OP of £16.1m (27.8%) on sales of £57.9m in the 14 months to 31 August 2006.
Following £3.5m redundancy costs in 2006 – mainly at the paper end of the business – TSL Education incurred further costs of £1.7m for restructuring in 2007, split between back-office and operational activities. The relaunch of the Times Higher Educational Supplement cost TSL Education £381k in 2007 compared to the £661k relaunch cost of the TES in 2006. The launch of the TES’s new search and selection service cost £335k in 2007. A further £160k was spent on relaunching the TES website. Overall, exceptional costs in 2007 totalled £3.5m.
In June 2007, TSL Education sold its loss-making Nursery World magazine and website to Haymarket for £1.6m. For the period from 1 July 2006 to disposal on 12 June 2007, Nursery World recorded an operating loss of £400k on sales of £1.75m.
After net interest payments of £4.3m, TSL Education reported a 2007 pre-tax profit of £18.3m (£5.4m in 2006).
TSL Education is clearly streets ahead of the competition in school teacher recruitment. In the annual accounts the company’s directors state that the ‘titles have a sufficiently well established position in the market place to be defended against threats arising from current competitors, potential new entrants and potential technological changes in the industry.’
One of TSL’s closest competitors in the schools market is Eteach, set up by Paul Howells in 2005 – although the distance between the two can still be measured in light years. Coincidentally Eteach has also just filed its accounts, for the year ending 31 July 2007, which reveal that sales increased 4% to £3.8m with an operating profit of £156k before reorganisational costs of £128k. Revenues growth is expected to be higher in 2008.
Eteach is a purely online enterprise (£1.27m so far spent on web development). The company offers schools a fixed annual subscription for unlimited advertising of vacancies, as well as a per job rate. The company reports that its website traffic grew to 55.7m page views in its last financial year and it expects further growth in 2008.
However, to add just 10% of the TES’s revenues to Eteach’s current business will require further investment and although over £3m has already been invested in the venture we suspect that deeper pockets will be needed. Perhaps an opportunity for a media group or a related private equity backed player?
But future competition to the TES may come from another source – government. Last month saw the launch of myjobscotland, a website portal for local government and education recruitment funded by the Convention of Scottish Local Authorities. The portal is an attempt to reduce local councils' expenditure on recruitment advertising, particularly in the Scottish regional press. All Scottish local authorities are expected to use the portal from autumn 2008, although at this stage it is difficult to estimate its impact on the TES in Scotland. Scotland accounts for 10% of the total UK teacher population of 500,000, but a smaller proportion of teacher recruitment.
In England there are no plans as yet to copy Scotland’s web portal. However, the Educational Procurement Centre (EPC), set up within the DCSF to deliver the Department’s Gershon savings and the promoter of OPEN, could address teacher recruitment expenditure in the future.
The EPC is already engaged in a supply teacher project with accredited agencies to cut costs. The project is designed to provide primary and secondary state schools across London with an electronic one-stop shop for their temporary staffing requirements. If successful the project will be rolled out to other parts of England.
With 55% of state school headteachers due to retire in the next four years and teacher turnover at around 13%, the future looks good for TSL Education and its backers Charterhouse. Having disposed of or closed down most of its peripheral activities with the exception of exhibitions, it will be interesting to see what other revenue streams TSL Education develops organically and/or via acquisitions.
www.tes.co.uk
www.eteach.com
www.charterhouse.co.uk
