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Education Development International plc
Annual Report and Accounts 2007
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Contents
1 Highlights
2 Chairman’s Statement
4 Chief Executive’s Report
10 Directors and Advisors
12 Corporate Governance
14 Remuneration Report
16 Directors’ Report
19 Statement of Directors’ Responsibilities
20 Independent Auditors’ Report
21 Consolidated Income Statement
22 Consolidated and Parent Company
Statement of Recognised Income
and Expense
23 Consolidated and Parent Company
Balance Sheets
24 Consolidated and Parent Company
Cash Flow Statements
25 Notes to the Financial Statements
59 Five Year Financial Review
60 Notice of Annual General Meeting
63 Form of Proxy
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Annual Report and Accounts
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Highlights
 Results in line with upgraded expectations reflecting the benefits of infrastructure
investments, organic growth and acquisitions.
 Financial overview:
Year ended Year ended
30 September 30 September Growth
2007 2006 %
Revenue (£m) 16.27 14.18 14.7
Operating profit (£m) 2.08 1.36 52.9
Adjusted profit (£m)* 2.20 1.13 94.7
Earnings per share (p) 4.2 2.3 82.6
Adjusted earnings per share (p)* 4.1 2.2 86.4
Dividend (p) 0.33 0.20 65.0
* Profit on ordinary activities before taxation adjusted for the movement in the onerous lease provision and amortisation charge on acquired intangible assets.
 Cash inflow from operating activities of £1.88m (2006: £1.53m).
 Final dividend of 0.23p per share recommended bringing total dividend for the year
to 0.33p.
 Results reflect acquisition of eNVQ Limited and 75% holding taken in Fusion Media
Networks Limited which together contributed £398,000 to revenue.
 Full implementation of bespoke Campus administration system completed.
 Approved by the Qualifications and Curriculum Authority to award the new Diploma
qualifications for 14–19 year olds.
 Acquisition of ASET Group on 19 November 2007.
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Chairman’s Statement
Review of Results
2006/07 has been an exciting year during which we have
completed our ambitious organisation development
programme and recorded growth in all of the main
areas of the business.We have also continued to build
our reputation as a leading provider of innovative
technology-based assessment services and vocational
qualifications.
These results reflect the acquisition of eNVQ Limited,
which incorporated a 50% holding in Fusion Media
Networks Limited (Fusion), with effect from June 2007.
The holding in Fusion was subsequently increased to
75% with effect from 27 July 2007.
Results for the year to 30 September 2007 show
revenue has increased by 14.7% to £16.27m (2006:
£14.18m), including a contribution of £398,000 from
acquisitions.The operating profit for the year was
£2.08m (2006: £1.36m).Adjusted profit for the year was
£2.20m (2006: £1.13m), an increase of 94.7%.This
comprises the profit before tax adjusted for the
movement in the onerous lease provision and
amortisation charge on acquired intangible assets.
This performance has benefited from the phasing of the
investment in our marketing and business development
activity. Some costs, planned to be incurred in 2006/07,
will now fall in 2007/08.We also experienced a stronger
than expected level of sales in the UK over the typically
quieter summer months.
Basic earnings per share were 4.2p (2006: 2.3p), and
adjusted earnings per share were 4.1p (2006: 2.2p).
Cash flow
The Group had an operating cash inflow of £1,880,000
(2006: £1,525,000).This performance reflects both the
growth in revenues and improved margins as a result
of the benefits of our organisation development
programme. Underlying operating cash flow conversion,
measured as a percentage of EBITDA (before onerous
lease provisions) was 75%.
In December 2006 1,080,000 shares were purchased by
the Employee Benefit Trust at a cost of £227,000. In
total, the Trust now holds 2,955,000 shares,
approximately 5.4% of the issued share capital, which
provide cover for all current share option contracts.
Net cash payments totalling £729,000 were made during
the year to fund acquisitions.
At 30 September 2007 net cash stood at £3.1m (2006:
£2.3m) which gives the Board flexibility in its funding
options for further acquisitions and adequate cash
resources to support organic growth and a progressive
dividend policy.
Dividend
The continued strong trading performance and cash
generation gave the Board the confidence to pay a
maiden interim dividend of 0.1p in July, and the Board is
pleased to announce that it has recommended the
payment of a final dividend of 0.23p.This brings the total
dividend for the year to 0.33p (2006: 0.2p).This dividend
will be payable on 4 January 2008 to shareholders who
were on the register on 30 November 2007.
Business Development
Strong sales growth has been achieved across our range
of UK vocational qualifications services, despite the
additional work needed to complete the introduction of
our bespoke Campus administration system into the UK
market during the first half of the year.
In the schools market, we are introducing the new range
of interactive assessments which have been developed in
response to the way in which schools use our current
system.We have also made changes to the way in which
we market our schools’ assessment services to reflect
the buying pattern of school managers, operating within
tight budgets.
In our international markets we have recorded growth
in sales for the third consecutive year, although the
weakness of the US dollar has held back the increase in
revenue value during 2006/07 by around £220,000.
Performance in the German market has remained
strong and the important Asian market has recorded
growth in the key markets of Hong Kong and Malaysia.
We are continuing to focus on developing local
representative arrangements in our main overseas
markets to ensure we can offer high quality and
consistent levels of customer service and fully exploit
business development opportunities. In particular,
working with our partners in Asia, we are currently
reviewing the future business strategy of Educational
Resources Pte Limited, in which we are the major
shareholder, and the terms of the agency agreement for
the marketing rights for the LCCI International
Qualificiations in the region.We are also pursuing the
appointment of new agents in the Eastern
Mediterranean and Middle East region.
Progress in the support services area has been
particularly strong this year.This reflects the work
undertaken to develop bespoke solutions for the
customers of the i-assess platform and which can form
the basis for long-term contracting and business growth.
We are also continuing to build on our partnership
relationship with our printing and logistics supplier to
further develop and refine our capability to produce and
distribute support materials.
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Our business development capability has been
strengthened during the course of the year with the
establishment of a business support administration team
at Head Office. In August we appointed a marketing and
communications agency, with considerable experience in
the education sector, to assist with our plans to promote
the EDI brand and our increasingly wide range of
services.We experienced some delays in putting these
new arrangements into place and, as mentioned earlier,
some costs which we had expected to incur during this
year have now been budgeted for in 2007/08.
Acquisitions
The acquisition of eNVQ Limited has extended our
capability so that we can now offer our customers,
particularly those operating in the UK vocational
qualifications market, a sophisticated online system for
the management of individuals’ learning programmes
and records. eNVQ has an established customer base
which offers the potential for cross-selling EDI
qualification services.
Fusion Media Networks Limited was already 50%
owned by eNVQ and we have now increased our
interest to 75%. Fusion is a specialist internet service
provider (ISP) which offers its customers high quality
bandwidth and connectivity at competitive rates.The
eNVQ service is delivered by Fusion and a number of
schools also use the service. However, this is a general
service and the customer base is not restricted to the
education sector.
With a significant proportion of EDI’s services now
delivered online, there are important benefits to having
‘in-house’ ISP capability including the ability to offer our
customers for qualifications and support services,
reliable high speed connectivity to ensure that they can
derive the full benefits of using EDI’s online services.
On 19 November 2007 we announced the acquisition
of ASET Group Limited, an accredited UK vocational
awarding body.This represents an important step in our
strategy to grow our presence in the UK vocational
qualifications market through earnings enhancing
acquisitions and strong organic growth.
Organisation Development
Our major organisation development programme was
finally completed during the first half of the year with
the successful roll-out of the Campus system into the
UK vocational qualifications market.As our customers
and staff have become more familiar with the system we
have seen considerable gains in the speed and quality of
administration, including in our international markets
where we have been able to localise some administration
which was previously undertaken in the UK.
Supporting our new structure and systems, we are
making good progress towards the achievement of ISO
9001/2000 accreditation and we have also committed to
achieving Investor in People status.
Board and Staff
The Board recognises that the progress made this year
is a reflection of the dedication and hard work of the
staff of EDI in implementing major organisational
changes while continuing to grow the business and
secure new customers.
In July 2007 Dr Jenifer Moody, Education and
Development Director, was appointed to the Board.
Jenifer has held senior management positions in the
organisation for over six years and brings a wealth of
experience and expertise to our deliberations.
Our Finance Director, Neal Gossage had previously
indicated his desire to move on at the end of the year
and will resign with effect from 31 December 2007.We
thank him for his valuable contribution over the past
2½ years and wish him well for the future.We have a
strong finance management team and arrangements for
the recruitment of a successor are being put in place.
As well as thanking the staff for their efforts, I would
like to take this opportunity to acknowledge the
significant contribution which has been made by my
colleague Directors over the course of the year.
Prospects
This year’s results reflect the full impact of our organisation
development programme, strong growth in sales and some
delays in business development and marketing costs which
will now be incurred during 2007/08.
The early benefit of the acquisitions made in the second
half of the year are reflected in these results and we
look forward to the contribution of a full year’s trading.
We continue to investigate acquisition opportunities,
especially in the UK vocational qualifications market, and
this is demonstrated by our recent acquisition of ASET
Group Limited.
The investment we have been making — and will
continue to make — in strengthening our marketing and
business development capabilities will support revenue
growth in the years ahead.
The Board is confident that the strong progress made
this year will be consolidated and built on over the next
12 months and reflected in the Group’s financial
performance.
Richard Price
Chairman
22 November 2007
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Chief Executive’s Report
Introduction
We have made further significant progress over the past
12 months and this is reflected in the level of sales
growth, an improvement in our operational efficiency
and the Company’s financial performance.The
organisation development work we have undertaken
over the past three years has transformed the business.
The underlying efficiency of our business systems and
the service levels we are able to achieve, when coupled
with the increasing proportion of our services which
are provided online, are generating significant new
demand for our services.This is particularly the case in
relation to our vocational qualifications services in the
UK.The sophistication of our systems and fulfilment
arrangements is also having a positive effect on the
development of our service contracts business which
has been a major growth area over the past 12 months.
In our international markets, despite the impact of the
weaker dollar, we are seeing broad-based growth and
the development of much closer working relationships
with our many and varied agents around the world.
T o reinforce this progress, our attention is increasingly
moving on to greater emphasis on promotional and
marketing activities, and strengthening our business
development team so that we can spend more time
working with existing and potential customers.
The turnover analysis set out below provides
comparative data for the main areas of business activity.
Year to 30 September
2007 2006
£m £m
UK qualifications and
assessment services 7.75 6.74
International qualifications 5.55 5.28
Service contracts 2.63 2.11
Internet service provision 0.21 –
Other 0.13 0.05
T otal 16.27 14.18
Market Background
As ever, education is a major social and economic issue
around the world and we work closely with government
departments and agencies concerned with education
provision in all of our main markets.
Over recent months there have been significant political
developments in education policy in the United
Kingdom and particularly England.The Department for
Education and Skills has been wound up and its work is
now divided between new departments for Children,
Schools and Families, and for Innovation, Universities
and Skills. In addition, proposals are being brought
forward for the splitting up of the Qualifications and
Curriculum Authority with the creation of a new
regulatory body to focus on the quality of general
academic and vocational qualifications and the
organisations which provide them.These changes are
significant in that they reflect the government’s priority
in relation to the quality of academic and vocational
education, and the significant investment of public funds
in these areas.
Particularly important in this connection is the increasing
prominence of plans to develop a range of new Diploma
qualifications to cover both vocational and academic
studies and, potentially, replace ‘A’ levels. I am pleased to
say that EDI is one of a small number of organisations
approved by the Qualifications and Curriculum Authority
to award the new Diploma qualifications.
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As an organisation primarily concerned with vocational
qualifications and assessments, EDI is well positioned to
benefit from the implementation of the Leitch review of
skills which envisages much closer engagement of
employers in training and qualifications matters. Much
of this work will be co-ordinated through a network
of strengthened Sector Skills Councils, organisations
with which EDI already has close links and working
relationships.
There is also the potential for employers and even
specialist training providers to link up with organisations
such as EDI and develop arrangements for the
accreditation of ‘in-company’ and specialist training
provision which is currently outside of the scope of
government-funded programmes.
We will work closely with the new government
departments, the appropriate agencies, our existing
customers and employers to contribute to and take
advantage of these important developments.
Services
UK Qualifications and Assessment Services
Sales of UK qualifications and assessment services for
the year rose by 15.0% to £7.75m.This includes revenue
from the acquisition of eNVQ which contributed
£185,000 during the second half of the year.
Vocational qualification sales, which account for over
85% of our UK services, grew by 14.6%.This reflects the
impact of our pipeline of new products which is
enabling existing customers to extend the range of
qualifications they source from EDI and the signing-up of
new customers — over 112 during the course of the
year — especially further education colleges.This
growth is also a reflection of the demand for our wide
range of online tests and the level of individual service
and support we provide to our customers.
The acquisition of eNVQ in May represented an
important step forward in our strategy to offer a range
of integrated support services to training providers and
colleges which covers qualifications, training
programmes and contract administration. Over 100
organisations currently use the eNVQ system. Most of
these are training organisations and further education
colleges but a number of corporations and public
authorities are using the system to assist with the
management of ‘in-company’ programmes.
The eNVQ system can make a major contribution to
both the quality and administrative efficiency of training
programmes.As an online system it allows for easy and
flexible communications between learners, employers,
training providers and qualifications’ assessors and their
verifiers. Learners can build up their training portfolio
and receive feedback over the Internet throughout their
programme and not just at formal reviews.We believe
there is good potential to offer eNVQ as part of a
packaged solution for existing customers of our
vocational qualifications services and for eNVQ
customers to either take up or extend their use of EDI
qualifications services.
During the second half of the year we have made good
progress in upgrading our schools’ assessments delivery
platform and introducing a range of new interactive
assessments for the core subject areas of maths, English,
science and ICT at key stages 2 and 3.The development
programme will be completed during the course of
2007/08 but early indications are that the new
assessments are being well received.We have also
developed the business model to simplify the purchasing
decision making process by offering schools the
opportunity to buy assessments for single subject areas,
without the need to commit to the full programme of
assessments.
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Chief Executive’s Report
Over the past 12 months we have signed up 195 new
schools and the total of active customers now stands at
529, all of whom will be given the opportunity to move
over to the new assessments and pricing structure
during the course of the current academic year.
International Qualifications
Sales of international qualifications for the year rose by
5.1% to £5.55m.The like-for-like increase in sales,
excluding the negative impact of the movement in the
US dollar exchange rate, amounting to £220,000, would
have been 9.3%.The greatest impact of the exchange
rate movement was in Asia where sales value is up by
23.3% on a local currency basis, but only up by 3.9% on
a sterling basis.
Outside of Asia, sales are up by 16.3% and this reflects a
strong performance in the German market this year and
better than expected sales in Zimbabwe, although these
have not reached the levels experienced before the
currency crisis there.We have also made good progress
in a number of the newer European markets as we
continue to focus our attention on more effectively
developing and supporting our agency arrangements in
local markets.
We will continue to review the nature of our agency
arrangements — particularly in the major markets in
Europe and Asia — to ensure that we have appropriate
arrangements in place to strengthen the long-term
operation and development of our business interests.
T o support this, we have recently appointed a senior
manager with extensive experience of international
qualifications delivery gained working in one of the
major international examinations bodies.
On the accreditation front we had good news in
September when we received official notification from
the Universities Clearing and Admissions Service
(UCAS) that our level three book-keeping qualification
had been approved as being the equivalent of a full ‘A’
level with the potential to score the maximum 120
points for university entry purposes.This will be a
particularly important consideration in the Cyprus
market where a number of students aspire to move on
to Higher Education in the UK.
We have continued to develop the Jetset (junior English
tests, senior English tests) range of English language
assessments which we acquired last year.These have
undergone major modernisation to make them more
attractive to users but also to align them to new UK
government standards for English language qualifications
which are overseen by the Qualifications and
Curriculum Authority.
We have also continued to make progress with our
Accredited International Qualifications model.This
enables organisations and training providers to seek
accreditation of training programmes, based on a quality
assurance framework which we have developed, to
provide independent verification of the quality of
programmes.This enables us to then issue certificates to
candidates who complete approved programmes.
Support Services
Sales of support services for the year rose by 24.6% to
£2.63m.This performance reflects strong growth in the
use of the i-assess system which provides our customers
in professional bodies, other awarding bodies and
universities with a secure platform over which to deliver
online their own educational assessments. In total,
430,000 online tests were administered over the
i-assess platform over the past year, 18% up on the same
period last year.At the present time we are engaged in
development activities with existing customers to either
enhance or expand their use of the system and this is
expected to lead to the renewal of a number of long-
term contracts.
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We continue to provide back-office administration and
logistic services for a number of organisations and we
are actively pursuing opportunities to provide these
services to other similar organisations. Securing new
business is important because it is inevitable that from
time to time existing customers may review their
outsourcing arrangements and could pursue other
options.
This segment of our business has become well
established.We have a number of high quality, long-term
customers and with the full benefit of our systems
development work now being realised and the close
partnership with our printing and logistics supplier to
call on, we believe there is the potential to make further
progress in this area.
Fusion Media Networks Limited (Fusion)
Fusion is a provider of high quality telecommunications
bandwidth to over 300 customers including a number in
the education and services sector.A 50% shareholding in
the company was secured with the acquisition of eNVQ
Limited in May and, subsequently, we have increased our
shareholding to 75%.
In the four months since the acquisition, Fusion has
generated revenues of £213,000.The founder of the
company, who continues as a full-time employee, has
retained a 25% shareholding.We are investing in the
business which offers good prospects for growth,
including the opportunity for EDI to package Fusion’s
services with its range of qualifications and learner
support services in the UK market.This is particularly
important as a greater proportion of our services are
provided online and there are occasions where our
customers do not derive the full benefit of our services
because their systems are operating with either
inadequate or inconsistent bandwidth.
The eNVQ system is delivered by Fusion and we have
already undertaken a review of EDI’s wider,‘in-house’
connectivity and telecommunications requirements as
we believe ownership of Fusion offers the opportunity
to reduce our existing cost structure for these services.
Organisation Development
The interim report summarised the extensive and far-
reaching organisation development programme which is
now completed.
The physical move to a main site operation in Coventry
was completed over two years ago. Having served
notice at a break clause in the lease of the former LCCI
Examinations Board office in Sidcup in December 2007,
we will hold only one surplus lease in respect of a
second office in Sidcup.The lease on these premises
runs until March 2011 and we are actively marketing the
space. Our balance sheet carries a full provision of
£758,000 in respect of all anticipated future costs in
relation to surplus property.
As reported elsewhere, our Campus administration
system has enabled us to transform our business
processes and deliver much higher levels of service in
respect of turn-around time and accuracy than was
possible with the previous legacy systems.The numbers
of staff required to operate our qualifications
administration has been reduced as we have provided
our UK customers and overseas agents with direct
access to the system enabling them to take control of
and execute the main administrative processes of
registering candidates and either claiming or printing
certificates.
The total cost of this modernisation programme has
been in the order of £1.75m — of which around
£700,000 represented a capital investment — and we
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are now benefiting from annual cost savings and
efficiency gains valued at around £500,000 per annum.
Staff
Staff numbers have increased by nine during the course
of the year reflecting the planned appointment of
additional people to strengthen our product
development capabilities and small increases in
operations and general administration staff.
Our planned appointment of additional field sales staff is
running a little behind schedule and, as a result, numbers
of staff in this area have remained static. However,
additional appointments have been made since the year
end and we have budgeted for the appointment of
further staff in this important area as we focus on
revenue growth for the year ahead.
Staff Levels at 30 September
2007 2006
Operations 58 56
Education Development 26 21
Business Development 43 43
Finance and Administration 24 22
T otal 151 142
The number of staff employed by Educational Resources
— included above — in its network of offices around
South East Asia has increased by 2 to 28.
The integration of the eNVQ operation was
straightforward, involving only the appointment of one
of the founders as a permanent member of staff.The
Fusion office is based in Southend-on-Sea and five staff
are employed in the business and are based at this
office.
T o give staff an opportunity to participate more fully in
the Company we launched a new round of our share
save scheme in June 2007.This will run for three years
and a total of 606,000 options have been taken up by
34 staff.
Associates
A priority during the second half of the year — and into
2007/08 — is strengthening the management and
support arrangements for the network of over 250
associates who work with us.These are individuals who
act as examiners, verifiers for vocational qualifications
and trainers for users of our schools’ assessment
service. Our aim is for all associates to feel fully engaged
and active advocates for EDI.
Quality Assurance
As our organisation matures and develops, the
management team believe it is essential to underpin our
extensive work on organisation and systems
development with recognised, independent accreditation
of the quality of our business processes.
We are already making good progress towards achieving
ISO 9001/2000 accreditation and have set a target date
for this of March 2008.A quality manual and detailed
work instructions have been produced by the
management team and staff, and 14 people have been
trained as internal auditors to support the internal
review process.As a significant proportion of our
business is concerned with software development and
online delivery of services, we also plan to adopt
ISO/IEC20000 which provides accreditation for IT
management and development work.
The Board and senior management team have also
committed to achieving Investor in People status and as
part of this process we are working with an
independent consultant to overhaul all aspects of our
HR administration and staff training and development
arrangements.
Chief Executive’s Report
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All of these initiatives are designed to improve our
levels of customer service and responsiveness by
empowering our staff and associates to fully contribute
to optimising all aspects of our business operation.
Looking Ahead
During the year ahead we look forward to building on
the considerable progress which EDI has made during
2006/07.
We have created strong foundations for our
organisation and we believe that we are now positioned
for a period of sustained growth as we exploit our
increasingly prominent position in the marketplace.We
will also benefit from the launch of new products
developed in-house and new services which we are able
to offer through the acquisitions we have made over the
past two years.
Our particular focus will be on promoting EDI more
effectively to raise the profile of the organisation and
achieve higher levels of recognition in the market as a
basis for supporting targeted sales campaigns.T o
support us in this important work, we have appointed a
marketing and communications agency with significant
experience in the education and IT sectors.
We continue to extend and develop our product range,
and we are actively involved in working with the
Qualifications and Curriculum Authority and National
Assessment Authority on a number of important pilot
projects, including work to develop the new Diplomas
and their delivery system.We believe we are well placed
to respond to the opportunities that are being
presented by the significant developments which will be
taking place in the UK’s qualifications framework over
the next decade.
T o support organic growth, we will continue to look for
appropriate acquisition opportunities in the UK and
abroad. In particular, we will seek to expand our
involvement in qualifications awarding, secure greater
capability in the area of learning support materials and
broaden the range of our specialist administration
systems. Our announcement on 19 November 2007
that we have acquired ASET Group Limited is a direct
result of this policy and will significantly strengthen our
position in the UK vocational qualifications market.
Finally, we will take the opportunity over the next
12 months to fine-tune our operating systems and
procedures, and provide increased levels of direct user
support for our customers.This will ensure they are
able to maximise the benefits offered by our highly
automated online assessment and administration
services.
EDI is now set for the next phase of the organisation’s
development.We have the products, systems, staff and
energy to make further advances in the specialist
education qualifications and assessment services market,
both at home and abroad. Our aim over the next three
years is to become recognised as the UK’s leading
provider of innovative, high quality assessment and
learner support services.
Nigel Snook
Chief Executive
22 November 2007
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Directors and Advisors
Executive Directors
Nigel Snook
Chief Executive
Nigel joined the Board of EDI plc in May 2001 and was
appointed Chief Executive later that year.
Nigel has over 30 years’ experience of working in and
leading both private and public sector organisations
which provide education and employment services.
Before joining EDI, he was Chief Executive of Lantra,
the Sector Skills Council for the land-based and
environmental sector.
He is actively involved in local vocational education,
training and guidance work through his Chairmanship of
the Coventry and Warwickshire Learning and Skills
Council and the Executive Board of the Coventry and
Warwickshire Connexions Service.
Neal Gossage
Finance Director and Company Secretary
After graduating in 1976, Neal joined Price Waterhouse
(now PricewaterhouseCoopers) and qualified as a
Chartered Accountant in 1979. He joined Lucas
Industries in 1980 and progressed through a number of
financial and management accounting roles with various
companies before becoming Financial Controller of
Argos plc. He has more recently been Group Finance
Director of Swallow Hotels Group plc (formerly Vaux
Group plc) and Specialist Computer Holdings plc. Neal
joined EDI in February 2005 and was appointed to the
Board in June 2005.
Jenifer Moody
Education and Development Director
Jenifer joined EDI in 2000 and was appointed to the
Board in July 2007. Jenifer is responsible for all aspects
of qualifications development and compliance, including
product development and quality assurance. Previously
she has taught and held senior positions in
examinations boards, including University of Cambridge
Local Examinations Syndicate. Jenifer’s PhD is in
assessment design and she is a fellow as well as founder
trustee and director of the Institute of Educational
Assessors.
Non-executive Directors
Richard Price
Independent Non-executive Director, Chairman
Richard was appointed Chairman of EDI plc in January
2005, having joined the Board in 2003. He is co-founder
and retired Chairman of BPP Holdings plc, the UK
leader in the field of postgraduate qualifications training
for accountants, lawyers, tax specialists, actuaries and
other financial professionals.A chartered accountant
and tax specialist by training, Richard is a Non-executive
Director of AIM-quoted Tikit Group plc, Chairman of
the British Association for Performing Arts Medicine
and is a council member of the Royal College of Music.
Sir Bryan Nicholson
Senior Independent Non-executive Director
Sir Bryan sits on two international financial reporting
regulatory bodies and advises several organisations.
He is the former Chairman of the Financial Reporting
Council, the Post Office, BUPA and other organisations.
Barrie Clark
Independent Non-executive Director
Barrie holds Non-executive directorships with a number
of public and private companies. He is Non-executive
Chairman of IS Solutions plc and chairs and sits on
numerous remuneration and audit committees. He was
the founder of Link Organisation plc which merged with
Spring Group plc. His various roles at Spring Group plc
included Non-executive Chairman and Senior
Independent Director. Barrie’s executive background
focused on financial and operational management in
small to medium sized businesses.
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Wynford Dore
Non-executive Director
Wynford was a founding shareholder of GOAL plc. In
1999 he founded the company DDAT, which pioneers
revolutionary, drug-free treatments for people with
learning difficulties including dyslexia, dyspraxia and
Aspergers Syndrome. Until 1998 he was Chairman of
Nullifire Limited, a company he established in 1973. He
began his career in 1967 as a computer systems analyst
at Jaguar Cars.
Advisors
Registered Office: International House,
Siskin Parkway East, Middlemarch Business Park,
Coventry, CV3 4PE
Registered No: 3914767
Web site: www.ediplc.com
Auditors: Grant Thornton UK LLP ,
Chartered Accountants, Centre City T ower,
7 Hill Street, Birmingham, B5 4UU
Bankers: Barclays Bank PLC,
Bromley Business Centre, PO Box 160, Donegal House,
73 T weedy Road, Bromley, Kent, BR1 1UE
Nominated Advisor and Broker:
Brewin Dolphin Securities Limited, Edmund House,
12–22 Newhall Street, Birmingham, B3 3DB
Registrars: Capita Registrars,The Registry,
34 Beckenham Road, Beckenham, Kent, BR3 4TU
Solicitors: Gateley Wareing LLP , One Eleven,
Edmund Street, Birmingham, B3 2HJ.
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Corporate Governance
General Principles
The Group is committed to high standards of
corporate governance.Although the Group is not
required to comply with the Combined Code, the
following discusses the structures and procedures
adopted by the Group as part of its corporate
governance practices.
The Board
During the year the Board consisted of:
Executive Directors
 Mr N M Snook (Chief Executive)
 Mr N T Gossage
 Ms J Moody (appointed 19 July 2007)
Non-executive Directors
 Mr R Price (Chair)
 Mr B A Clark
 Mr W N Dore
 Sir Bryan Nicholson
All of these Directors have access to the advice and
services of the Company Secretary.
There is a clear division of responsibilities between the
Chairman, who is responsible for running the Board,
and the Executive Directors who are responsible for
running the business.
The Board meets regularly and agrees the Group
business plan, determines overall Group strategy,
acquisition, investment, human resource and health and
safety policies and is responsible for the approval of
major items of capital expenditure and significant
financial matters.There is a written statement of items
reserved for consideration by the Board and an agreed
procedure for Directors to take independent
professional advice, if necessary, at the Company’s
expense. Newly appointed Directors receive
appropriate guidance as soon as practicable after
appointment should they lack previous experience as a
director of a listed company.
Sir Bryan Nicholson is the senior independent non-
executive Director, Mr B A Clark and Mr R Price are
independent non-executive Directors. Mr W N Dore is
a non-executive Director.
The independent non-executive Directors bring an
independent judgement to the management of the
Group.They are free from any business or other
relationships which could interfere with the exercise of
their judgement.
Details of Directors’ remuneration can be found in
note 9.
Committees of Board
The Remuneration Committee
During the year the members of the remuneration
committee were:
 Sir Bryan Nicholson (Chair)
 Mr B A Clark
 Mr W N Dore
 Mr R Price
The Audit Committee
During the year the members of the audit
committee were:
 Mr B A Clark (Chair)
 Sir Bryan Nicholson
 Mr R Price
The Nominations Committee
During the year the members of the nominations
committee were:
 Sir Bryan Nicholson (Chair)
 Mr B A Clark (appointed 19 July 2007)
 Mr N M Snook
The following documents are available for inspection by
the shareholders at the Company’s registered office:
 T erms of reference of the audit, remuneration and
nominations committees
 Directors’ service contracts
Accountability and Audit
The Audit Committee has written terms of reference
which require it to consider and report to the Board
on such issues as the Group’s annual accounts and
interim reports, major accounting issues and
developments, the appointment of the external auditors
and the audit fee, any question of the objectivity of the
auditors, the Company’s statement on internal control
systems and the scope and findings of the external
audit.At those meetings attended by the auditors there
is an opportunity for discussion between the non-
executive Directors and the auditors in the absence of
the executive Directors.
Internal Control
The Board is responsible for the Group’s systems of
internal controls, for reviewing its effectiveness and
recognises that these systems are designed to manage
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rather than eliminate the risk of failure to achieve
business objectives.
Within the UK business, the Board monitors risk
management through an ongoing process and provides
assurance that the significant risks faced by the Group
are being identified, evaluated and appropriately
managed.This process has been in place for the year
under review and up to the date of approval of the
annual report and financial statements.
The main elements of the internal control systems are:
 A formal management structure with a schedule of
matters specifically reserved for the Board’s
approval.The executive Directors and other senior
members of the Group meet regularly to control
and monitor the Group’s activities.
 A budget setting process with both annual and
longer-term forecasts reviewed and approved by the
Board.
 A comprehensive monthly financial reporting system
is in place and results are compared with budgets,
together with a written report detailing current
trading conditions, variations from budget and
updated forecasts.
 A report to the Audit Committee from the auditors
stating the material findings arising from the audit.
This report is also considered by the main Board
and action taken where appropriate.
 A framework for capital expenditure and controls
including authorisation procedures and rules relating
to the delegation of authority.
 Risk management policies to manage issues relating
to health & safety, the environment, legal
compliance, quality assurance, insurance and security.
The Directors have reviewed the effectiveness of these
procedures.An annual review of the procedures manual
and T urnbull Risk Analysis has been carried out during
the year.The Group does not have an internal audit
department, although the need for one is reviewed
from time to time.
Going Concern
The Directors, after having made appropriate enquiries,
including a review of the Group’s budget for 2007/8 and
indicative budgets for 2008/9 and 2009/10, have a
reasonable expectation that the Group has adequate
resources to continue in operational existence for the
foreseeable future. For this reason, they continue to
adopt the going concern basis in preparing the financial
statements.
Shareholder Communications
The Group places a high level of importance on
communicating with its shareholders and welcomes and
encourages such dialogue within the constraints of the
Stock Exchange guidelines.At the 2007 Annual General
Meeting proxy votes will be announced after the show
of hands on each occasion.
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Remuneration Report
The Directors present the remuneration report for the
year ended 30 September 2007.
This report has not been prepared in accordance with
the Directors Remuneration Report Regulations 2002
because as an AIM listed company Education
Development International plc does not fall within the
scope of the regulations.
Remuneration Committee
The Company’s Remuneration Committee comprises
Sir Bryan Nicholson (Chairman), Mr B A Clark,
Mr R Price and Mr W N Dore.The Remuneration
Committee recommends, within agreed terms of
reference, an overall remuneration package for the
executive Directors, non-executive Directors, senior
executives and the Group’s Chairman.
Remuneration Policy
The objectives of the Group’s remuneration policy are
to attract, retain and motivate high quality executives
capable of achieving the Group’s objectives and thereby
enhancing shareholder value.
The package for Directors consists of basic salary and
benefits, performance related bonuses and share
options.
A summary of each element of the remuneration
package is set out below.
(i) Basic salary and benefits
Basic salaries for executive Directors are determined
after taking account of each Director’s responsibilities,
performance and seniority, and of market salary levels
for similar jobs in comparable companies. Basic salaries
are reviewed annually taking into account both
Company and individual performance.
Benefits (normally car or car allowance, pension, life
insurance, permanent health insurance and medical
insurance) are set at a level comparable with those
granted to executives at a similar level in peer
companies.
The fees for non-executive Directors are determined
by the Board and reflect the time commitment and
responsibilities for each role and are reviewed
periodically.
(ii) Bonuses
Executive Directors are presently eligible to receive an
annual bonus based on the achievement of business and
individual performance targets.The precise form of the
annual bonus is reviewed each year. Bonuses are paid at
the discretion of the Remuneration Committee.
(iii) Share Options
The Company has an Unapproved Executive Share
Option Scheme and a Save As Y ou Earn (SAYE) scheme,
the details of which are shown in note 25 to the
accounts. Executive Directors are eligible to be granted
options under the unapproved scheme and two
executive Directors participate in the 2007 SAYE
scheme.
Performance criteria have until now been set for
executive share options on the basis of requiring the
increase in the Company’s share price to exceed RPI by
a fixed percentage over a fixed period of time.
The Remuneration Committee has now introduced an
equally challenging alternative performance target based
on the growth in the Group’s adjusted earnings per
share (EPS).This target requires adjusted EPS to grow
at 20% per annum each year.This alternative target has
been introduced because the increase in the Company’s
share price, which had been broadly expected to match
the increase in the adjusted EPS has failed to do so, thus
nullifying the intent of this incentive.Adjusted EPS for
the purposes of the scheme is based on adjusted profit.
Existing executive share options will vest if either of the
performance targets are achieved.
New share options were granted to Ms J Moody on
23 July 2007 following her appointment to the Board.
Mr N T Gossage and Ms J Moody both participate in
the 2007 SAYE Scheme.
(iv) Pensions
The Group makes contributions to personal pension
arrangements.
Directors’ Contracts
The Chairman and non-executive Directors have letters
of appointment setting out details of annual fees
payable. Non-executive Directors do not have specific
contracts but do offer themselves for re-election every
three years.
Mr N M Snook and Ms J Moody have service contracts
that allow for twelve months’ notice from the Company
and from the executive. Mr N T Gossage has a service
contract that allows for six months’ notice from the
Company and from the executive.
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Directors’ Emoluments
The aggregate emoluments, in respect of their roles as
Directors, of the Directors of the Company who
served during the year are shown in note 9 to the
accounts.
Directors’ Pension Schemes
Mr N M Snook was a member of the Company’s
defined contribution pension scheme until 6 April 2006
(‘A’ Day as defined in the Pensions Act 2004).After that
day, no further contributions were made to the scheme
and an equivalent adjustment was made to Mr N M
Snook’s salary.
Mr N T Gossage and Ms J Moody were members of the
Company’s defined contribution pension scheme
throughout the year.
Interests in Options
Details of share options granted to the Executive
Directors are provided in note 25 to the accounts.
Approved by the Board and signed on its behalf
Sir Bryan Nicholson
Chairman of the Remuneration Committee
22 November 2007
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Directors’ Report
The Directors present their report and the audited
financial statements for the year ended 30 September
2007.
Principal Activities
The Group’s activities include the supply of a wide
range of UK vocational qualifications and school
assessments, the provision of specialist assessment and
administrative services for other awarding and
professional bodies and the supply of international
qualifications.There have been no significant changes in
the Group’s principal activities in the year under review.
The Directors are not aware at the date of this report
of any likely major changes in the Group’s activities in
the next year.
Business Review
On 31 May 2007 the Group acquired the entire share
capital of eNVQ Limited, a company that provides a
web-based system for the management, assessment and
verification of competence-based qualifications and
corporate training programmes.The acquisition of
eNVQ Limited included a 50% shareholding in Fusion
Media Networks Limited, a company which is a
specialist internet service provider.The Group’s
shareholding was increased to 75% on 27 July 2007.
Overall Group revenue has increased by 14.8% to
£16,274,000 from £14,175,000 in 2006, of which 12.0%
was from like-for-like sales and 2.8% from acquisitions
during the year.The UK qualifications and assessment
services business continues to be the major growth
area, with revenue in total growing by 15.1% to
£7,750,000 from £6,731,000 in 2006, of which like-for-
like sales grew by 12.4%. Operating margin for the UK
qualifications and assessment services business
improved to 16.7% from 12.2% in 2006.The service
contracts business performed well during the year with
revenue increasing by 24.6% to £2,631,000 from
£2,112,000 in 2006.
The Group’s cash position increased to £3,053,000
from £2,320,000 in 2006, with the Group generating
cash of £1,880,000 from operating activities which was
used to fund acquisitions, investment in plant, property
and equipment and the payment of dividends.
Details of revenue and profit trends and the market and
competitive environment are provided in the Chief
Executive’s Report on page 4.
Post-balance sheet event
On 19 November 2007 the Group acquired the entire
share capital of ASET Group Limited, a company
providing accredited vocational qualifications.
Key Performance Indicators
During the year the Group has reviewed and refined
its’ key performance indicators; these are used to assist
the management of the business and measure the
achievement of its strategies.
Key Performance Indicator 2007 2006
Like-for-like sales growth 12.0% 6.6%
Adjusted profit growth* 94.2% 54.0%
Adjusted EPS† 4.1p 2.2p
Dividend cover 12.5 11.7
* Profit on ordinary activities before taxation adjusted
for the movement in the onerous lease provision and
amortisation charge on acquired intangible assets.
† Adjusted EPS is based on adjusted profit.
Principal risks and uncertainties facing
the Group
The markets for vocational and international
qualifications remain steady and customers are
increasingly taking advantage of ‘on-line’ tests and
assessments.The principal risks in the UK market
centre around the reliance on a small number of key
customers and a change in government policy towards
the funding or accreditation of vocational qualifications.
In international markets, the Group is exposed to
general economic conditions, exchange rate fluctuations
and changes in local government policies.
The Group manages these risks by working closely with
the UK and overseas authorities and has an active
account management plan for each of the major
customers in the UK.
Financial Instruments
The risks faced by the Group, including financial risk,
credit risk, liquidity risk and cash flow interest rate risk,
and the Group’s management of these risks are detailed
in note 24 to the accounts on page 46.
Environment
The Group’s policy with regard to the environment is
to ensure a full understanding of the environmental
effect of the Group’s activities.The Group is not
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involved in any activities which have a material adverse
impact on the environment and during the period
covered by this report, the Group has not incurred any
fines or penalties or been investigated for any breach of
environmental regulations.
Research and development
The Group continues to review and develop its
qualifications and products and considers this vital to
the Group’s success in the future. Research and
development expenditure of £247,000 (2006: £352,000)
was written off to the income statement during
the year.
Payment of Creditors
It is the Group’s policy that payments to suppliers are
made in accordance with the terms and conditions
agreed between the Group and its suppliers, provided
that all trading terms and conditions have been
complied with.The number of days trade creditors for
the Group was 35 at 30 September 2007 (2006: 26).
Dividends
The Directors recommend the payment of a final
dividend for the year ended 30 September 2007 of
0.23p per share.This, combined with the Group’s
interim dividend of 0.1p per share, brings the total for
the year to 0.33p per share (2006: 0.2p).
Employees
It is the policy of the Group to support the employment
of disabled persons where possible, both in recruitment
and by retention of employees who become disabled
whilst in the employment of the Group, as well as
generally through training and career development.
Employees are encouraged to discuss with management
any matters about which they are concerned. In
addition, the Board takes account of employees’
interests when making decisions and the employees are
informed of the Group’s performance on a regular
basis.
Suggestions from employees aimed at improving the
Group’s performance are welcomed.
Directors
The Directors serving during the year were as follows:
R Price*
B A Clark*
W N Dore†
N T Gossage
J Moody (appointed 19 July 2007)
Sir Bryan Nicholson*
N M Snook
* Independent non-executive Directors
† Non-executive Director
Those Directors serving at the end of the year had
interests in the share capital of the Company at
30 September 2007 as follows:
Ordinary shares
30 Sept 30 Sept
2007 2006
Number Number
B A Clark 752,222 752,222
W N Dore 8,958,333 10,000,000
N T Gossage 40,000 40,000
J Moody ––
Sir Bryan Nicholson 515,000 515,000
R Price 500,000 500,000
N M Snook 3,189,237 1,041,500
The shareholdings are all beneficial and have
not changed between 30 September 2007 and
22 November 2007. Directors’ share options are
shown in note 25 to the financial statements.
The Directors have no interest in the shares of any
other Group company.
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Directors’ Report
Substantial Share Interests
The Company has been notified of the following
shareholdings in more than 3% of the issued share
capital of the Company at 30 October 2007:
Mr W N Dore 16.3%
Mr N M Snook 5.8%
Mr D G Newman 5.6%
Education Development International plc
Employee Benefit Trust 5.4%
Marlborough UK Micro Cap Growth Fund 4.9%
Real Time Consultancy 3.6%
AGM resolutions
The resolutions to be proposed at the Annual General
Meeting to be held on 21 December 2007, together
with explanatory notes, are listed in the Notice of
Annual General Meeting on page 60.
Auditors
RSM Robson Rhodes LLP (“Robson Rhodes”) merged
its audit practice with that of Grant Thornton UK LLP
(“Grant Thornton”) with effect from 2 July 2007, with
the successor firm being Grant Thornton. Robson
Rhodes resigned as auditors on 1 July 2007, creating a
casual vacancy which the Directors have filled by
appointing Grant Thornton.A resolution to reappoint
Grant Thornton as auditors of the Group will be
proposed at the forthcoming Annual General Meeting.
By order of the Board
N T Gossage
Secretary
22 November 2007
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Statement of Directors’ Responsibilities
The Directors are responsible for preparing the Annual
Report and the financial statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare
financial statements for each financial year. Under that
law the Directors have elected to prepare financial
statements in accordance with International Financial
Reporting Standards as adopted by the European Union
(IFRSs).The financial statements are required by law to
give a true and fair view of the state of affairs of the
Company and of the profit or loss of the Group for
that period. In preparing these financial statements, the
Directors are required to:
 select suitable accounting policies and then apply
them consistently;
 make judgements and estimates that are reasonable
and prudent;
 state whether applicable IFRSs have been followed,
subject to any material departures disclosed and
explained in the financial statements;
 prepare the financial statements on the going
concern basis unless it is inappropriate to presume
that the Company will continue in business.
The Directors are responsible for keeping proper
accounting records that disclose with reasonable
accuracy at any time the financial position of the
Company and enable them to ensure that the financial
statements comply with the Companies Act 1985.They
are also responsible for safeguarding the assets of the
Company and hence for taking reasonable steps for the
prevention and detection of fraud and other
irregularities.
In so far as each of the Directors is aware:
 there is no relevant audit information of which the
Company’s auditors are unaware; and
 the Directors have taken all steps that they ought to
have taken to make themselves aware of any
relevant audit information and to establish that the
auditors are aware of that information.
The Directors are responsible for the maintenance and
integrity of the corporate and financial information
included on the Company’s web site. Legislation in the
United Kingdom governing the preparation and
dissemination of financial statements may differ from
legislation in other jurisdictions.
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Independent Auditors’ Report to the Shareholders
of Education Development International plc
We have audited the Group and Parent Company
financial statements (the “financial statements’’) of
Education Development International plc for the year
ended 30 September 2007 which comprise the principal
accounting policies, the Consolidated income statement,
the Consolidated and Parent Company balance sheets,
the Consolidated and Parent Company cash flow
statements, the Consolidated and Parent Company
statement of recognised income and expense and notes
2 to 32.These financial statements have been prepared
under the accounting policies set out therein.
This report is made solely to the Company’s members, as
a body, in accordance with Section 235 of the Companies
Act 1985. Our audit work has been undertaken so that
we might state to the Company’s members those
matters we are required to state to them in an auditor’s
report and for no other purpose.T o the fullest extent
permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the
Company’s members, as a body, for our audit work, for
this report, or for the opinions we have formed.
Respective responsibilities of Directors
and auditors
The Directors’ responsibilities for preparing the Annual
Report, the Directors’ Remuneration Report and the
financial statements in accordance with applicable law
and International Financial Reporting Standards (IFRSs)
as adopted by the European Union are set out in the
Statement of Directors’ Responsibilities.
Our responsibility is to audit the financial statements in
accordance with relevant legal and regulatory requirements
and International Standards on Auditing (UK and Ireland).
We report to you our opinion as to whether the
financial statements give a true and fair view and whether
the financial statements have been properly prepared in
accordance with the Companies Act 1985.We also
report to you whether in our opinion the information
given in the Directors’ Report is consistent with the
financial statements.The information given in the
Directors’ Report includes that specific information
presented in the Chief Executive’s Report that is cross-
referred from the Business Review section of the
Directors’ Report.
In addition we report to you if, in our opinion, the
Company has not kept proper accounting records, if we
have not received all the information and explanations
we require for our audit, or if information specified by
law regarding Directors’ remuneration and other
transactions is not disclosed.
We read other information contained in the Annual
Report and consider whether it is consistent with the
audited financial statements.The other information
comprises only the Highlights, the Chairman’s Statement,
the Chief Executive’s Report, the Corporate Governance
statement, the Remuneration Report and the FiveY ear
Financial Review.We consider the implications for our
report if we become aware of any apparent
misstatements or material inconsistencies with the
financial statements. Our responsibilities do not extend
to any other information.
Basis of audit opinion
We conducted our audit in accordance with International
Standards on Auditing (UK and Ireland) issued by the
Auditing Practices Board.An audit includes examination,
on a test basis, of evidence relevant to the amounts and
disclosures in the financial statements. It also includes an
assessment of the significant estimates and judgements
made by the Directors in the preparation of the financial
statements, and of whether the accounting policies are
appropriate to the Group’s and Company’s circumstances,
consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all
the information and explanations which we considered
necessary in order to provide us with sufficient evidence
to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by
fraud or other irregularity or error. In forming our
opinion we also evaluated the overall adequacy of the
presentation of information in the financial statements.
Opinion
In our opinion:
 the Group financial statements give a true and fair
view, in accordance with IFRSs as adopted by the
European Union, of the state of the Group’s affairs
as at 30 September 2007 and of its profit for the
year then ended;
 the Parent Company financial statements give a true
and fair view, in accordance with IFRSs as adopted
by the European Union as applied in accordance
with the provisions of the Companies Act 1985, of
the state of the Parent Company’s affairs as at
30 September 2007;
 the financial statements have been properly
prepared in accordance with the Companies Act
1985; and
 the information given in the Directors’ Report is
consistent with the financial statements.
As explained in Note 1 to the Group financial
statements, the Group in addition to complying with its
legal obligation to comply with IFRSs as adopted by the
European Union, has also complied with the IFRSs as
issued by the International Accounting Standards Board.
In our opinion the Group financial statements give a
true and fair view, in accordance with IFRSs, of the state
of the Group’s affairs as at 30 September 2007 and of
its profit for the year then ended.
Grant Thornton UK LLP
Chartered Accountants and Registered Auditors
Birmingham, England 22 November 2007
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Consolidated Income Statement
For the year ended 30 September 2007
Years ended
30 Sept 30 Sept
Continuing 2007 2006
operations Acquisitions T otal T otal
Note £’000 £’000 £’000 £’000
Revenue 3 15,876 398 16,274 14,175
Cost of sales (4,473) (155) (4,628) (4,252)
Gross profit 11,403 243 11,646 9,923
Administrative expenses (9,366) (200) (9,566) (8,759)
Operating profit before onerous lease provisions 2,037 43 2,080 1,164
Onerous lease provisions 4–– – 198
Operating profit 3 2,037 43 2,080 1,362
Finance income 5 66 31
Finance costs 6 (26) (63)
Net finance income/(costs) 40 (32)
Profit on ordinary activities before taxation 7 2,120 1,330
Tax on profit on ordinary activities 11 194 (57)
Profit for the period 2,314 1,273
Attributable to:
— Equity holders of the parent 26 2,282 1,225
— Minority interest 27 32 48
2,314 1,273
Earnings per share — T otal and continuing operations 13
Basic 4.2p 2.3p
Diluted 4.1p 2.3p
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Consolidated and Parent Company Statement of
Recognised Income and Expense For the year ended 30 September 2007
Group Company
30 Sept 30 Sept 30 Sept 30 Sept
2007 2006 2007 2006
£’000 £’000 £’000 £’000
Net foreign exchange adjustments offset in reserves (16) –––
Actuarial gains on defined benefit scheme 1,061 341 1,061 341
Deferred tax attributable to the actuarial gains (324) (102) (324) (102)
Net income recognised directly in equity 721 239 737 239
Profit for the period 2,314 1,273 2,261 1,140
T otal recognised income and expense for the period 3,035 1,512 2,998 1,379
Attributable to:
— Equity holders of the parent 3,003 1,464 2,998 1,379
— Minority interest 32 48 ––
3,035 1,512 2,998 1,379
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14426 22/11/2007 Proof 5
Consolidated and Parent Company
Balance Sheets At 30 September 2007
Group Company
30 Sept 30 Sept 30 Sept 30 Sept
2007 2006 2007 2006
Note £’000 £’000 £’000 £’000
Non-current assets
Goodwill 14 6,291 4,390 3,317 3,317
Other intangible assets 15 1,078 616 460 616
Property, plant and equipment 16 323 305 239 279
Investments 17 –– 3,851 1,425
Deferred tax assets 18 556 615 556 615
8,248 5,926 8,423 6,252
Current assets
Inventories 19 76 64 62 46
Trade and other receivables 20 3,153 2,387 3,037 2,336
Current tax assets –3– –
Cash and cash equivalents 3,053 2,320 2,021 1,660
6,282 4,774 5,120 4,042
T otal assets 14,530 10,700 13,543 10,294
Current liabilities
Trade and other payables 21 (5,280) (3,632) (4,887) (3,464)
Current tax liabilities (65) –––
Provisions 22 (235) (308) (235) (308)
(5,580) (3,940) (5,122) (3,772)
Non-current liabilities
Provisions 22 (523) (663) (523) (663)
Retirement benefit obligations 30 (190) (1,381) (190) (1,381)
Deferred tax liabilities 18 (173) –––
Other non-current liabilities 23 (326) (4) (486) (245)
(1,212) (2,048) (1,199) (2,289)
T otal liabilities (6,792) (5,988) (6,321) (6,061)
Net assets 7,738 4,712 7,222 4,233
Equity
Share capital 25 551 526 551 526
Share premium account 26 3,147 2,815 3,147 2,815
Own shares held 26 (440) (213) (440) (213)
Other reserves 26 212 212 212 212
Retained earnings 26 3,967 1,103 3,752 893
T otal shareholders’ equity 26 7,437 4,443 7,222 4,233
Minority interest in equity 27 301 269 ––
T otal equity 7,738 4,712 7,222 4,233
Nigel Snook Neal Gossage
Chief Executive Finance Director
22 November 2007
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Consolidated and Parent Company Cash Flow Statements
For the year ended 30 September 2007
Group Company
30 Sept 30 Sept 30 Sept 30 Sept
2007 2006 2007 2006
Note £’000 £’000 £’000 £’000
Cash flows from operating activities
Net cash generated from operations 32 1,868 1,539 1,650 1,580
Interest received 50 31 49 31
Tax paid — net (38) (45) ––
Net cash generated from operating activities 1,880 1,525 1,699 1,611
Cash flows from investing activities
Acquisitions of businesses:
— Consideration 14 (1,002) (436) (923) (448)
— Cash acquired 14 314 178 ––
Payment of deferred consideration 14 (41) (55) (41) (55)
Purchase of property, plant and equipment (155) (242) (110) (211)
Proceeds from sale of property, plant and equipment 232 2
Purchase of intangible assets (10) (219) (10) (219)
Net cash used in investing activities (892) (771) (1,082) (931)
Cash flows from financing activities
Proceeds from issuing ordinary share capital 132 18 132 18
Repurchase of own shares (227) (200) (227) (200)
Dividend paid (160) – (160) –
Net cash used from financing activities (255) (182) (255) (182)
Net increase in cash & cash equivalents 733 572 362 498
Cash & cash equivalents at beginning of period 2,320 1,806 1,660 1,220
Exchange losses on cash & cash equivalents – (58) (1) (58)
Cash & cash equivalents at end of period 3,053 2,320 2,021 1,660
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Notes to the Financial Statements
30 September 2007
1. ACCOUNTING POLICIES
Basis of preparation
The accounting policies applied in the preparation of this
consolidated financial information are set out below.
These policies have been applied consistently to all the
periods presented, unless stated otherwise.
The financial statements have been prepared in
accordance with International Financial Reporting
Standards (IFRSs) adopted for the use in the European
Union.The Group has applied all accounting standards
and interpretations by the International Accounting
Standards Board and International Accounting Standards
Interpretation Committee effective at the time of
preparing the financial statements.
At the date of authorisation of these financial statements,
the following Standards and Interpretations which have
not yet been applied in these financial statements were in
issue, but not yet effective:
• IFRS 7 – Financial Instruments: Disclosures; and the
related amendment to IAS 1 on capital disclosures
• IFRS 8 – Operating Segments
• IAS 1 – Presentation of Financial Statements (Revised)
The Directors anticipate that the adoption of these
Standards and Interpretations in future periods will have
no material impact on the financial statements of the
Group, except for the additional disclosures required by
IFRS 7 in respect of financial instruments, when the
relevant Standard comes into effect for periods
commencing on or after 1 October 2007.
The consolidated financial information has been prepared
under the historical cost convention with the exception
of forward exchange contracts, which are measured at
fair value.
Basis of consolidation
The consolidated financial information comprises a
consolidation of the accounts of the Company and its
subsidiary undertakings at the balance sheet date using
the purchase accounting method.The results of subsidiary
undertakings acquired during the financial year are
included from the date of acquisition. Control is achieved
where the Company has the power to govern the
financial and operating policies of an investee entity so as
to obtain benefits from its activities.
On acquisition, the assets and liabilities and contingent
liabilities of a subsidiary undertaking are measured at their
fair values at the date of acquisition.Any excess of the cost
of acquisition over the fair values of the identifiable net
assets acquired is recognised as goodwill.Any deficiency of
the cost of acquisition below the fair values of the
identifiable net assets acquired (i.e. discount on acquisition)
is credited to the income statement in the period of
acquisition.The interest of minority shareholders is stated
at the minority’s proportion of the fair values of the assets
and liabilities recognised. Subsequently, any losses applicable
to the minority interest in excess of the minority interest
are allocated against the interests of the parent.
Intangible assets
a) Goodwill
Goodwill is the excess of the cost of an acquired entity
over the aggregate of the fair values of that entity’s
identifiable assets and liabilities. Positive goodwill is
shown in the balance sheet as an intangible asset.
On disposal of a subsidiary the attributable amount of
goodwill is included in the determination of profit or loss
on disposal.
Education Development International plc elected not to
apply IFRS 3 ‘Business Combinations’ retrospectively.
Goodwill prior to 30 September 2004 was amortised in
line with UK GAAP . Goodwill from 1 October 2004 is
subject to annual impairment testing.Any impairment is
recognised immediately in the income statements and not
subsequently reversed.
b) Intangible assets acquired on acquisition of a
subsidiary undertaking
Intangible assets that are acquired on acquisition of a
subsidiary undertaking are stated at their fair value and
are amortised over their expected useful economic lives
on a straight-line basis.The amortisation charge is
included in administrative expenses in the income
statement.
Estimated useful life
T echnology acquired 3 years
Company name 3 years
c) Computer software
Purchased computer software is amortised over its
expected useful economic life on a straight-line basis.The
amortisation charge is included in administrative
expenses in the income statement.
Estimated useful life
Computer software 5 years
Property, plant and equipment and depreciation
Property, plant and equipment is stated at historic cost
less accumulated depreciation. Depreciation is calculated
on a straight-line basis to write property, plant and
equipment down to their estimated residual values over
their expected useful lives.Where there is evidence of
impairment, property, plant and equipment are written
down to their recoverable amount.Any such write-down
would be charged to the operating result.
Estimated useful life
Motor vehicles 3 years
Computer equipment 1–3 years
Fixtures, fittings and equipment 3–5 years
Leasehold improvements 3 years
Investments
Investments in subsidiary undertakings are recognised at
cost, being the fair value of the consideration given and
including acquisition charges associated with the
investment.
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Notes to the Financial Statements
30 September 2007
Inventories
Inventories are valued at the lower of cost and estimated
net realisable value. Cost is determined on a first-in, first-
out basis. Net realisable value is based on the estimated
sales price after allowing for all further costs of
completion and disposal.
Trade receivables
Trade receivables do not carry any interest and are
stated at their fair value plus transaction costs. Provision
against trade receivables is made when there is objective
evidence that the Group will not be able to collect all
amounts due to it in accordance with the original terms
of those receivables. The amount of the write-down is
determined as the difference between the asset’s carrying
amount and the present value of estimated future cash
flows.
Cash and cash equivalents
Cash and short-term deposits in the balance sheet
comprise cash at bank and in hand and short-term
deposits with an original maturity of three months
or less.
Trade payables
Trade payables are not interest bearing and are stated at
their fair value net of direct issue costs.
Derivative financial instruments
The Group uses derivative financial instruments to
reduce exposure to foreign currency exchange risk.All
derivatives are initially recognised at fair value, and are
subsequently remeasured to fair value at the balance
sheet date. Changes in the fair value of any derivative
instrument are recognised immediately in the income
statement.
Foreign currencies
Transactions in foreign currencies are translated at the
exchange rate ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign
currency are translated at the rates of exchange ruling at
the balance sheet date. Exchange differences are taken to
the income statement.
In the consolidated accounts, the assets and liabilities of
foreign subsidiaries are translated into sterling at the
rates of exchange ruling at the balance sheet date.The
trading results of foreign subsidiaries are translated into
sterling using an average exchange rate for the period of
consolidation. Exchange differences arising, if any, are
classified as equity and transferred to the Group’s
translation reserve. Such translation differences are
recognised as income or as expenses in the period in
which the operation is disposed of.
The Group has elected to treat goodwill and fair value
adjustments arising on acquisitions before the date of
transition to IFRSs as sterling denominated assets and
liabilities.
Revenue recognition
Revenue is measured at the fair value of the
consideration received or receivable and represents
amounts receivable for goods and services provided in
the normal course of business, net of discounts, value
added tax and after eliminating sales within the Group.
Revenue is recognised as follows:
Rendering of services
Sales of services are recognised in the accounting period
in which the services are rendered, by reference to
completion of the specific transaction assessed on the
basis of the actual service provided as a proportion of
the total services to be provided. Deferred revenue
represents amounts invoiced for which the service will
be provided in future periods.
Sale of goods
Sales of goods are recognised when the Group has
delivered products to the customer, the customer has
accepted the products and collectability of the related
receivables is reasonably assured.
Services provided under licence agreements
Services provided under annual licence agreements are
credited to deferred income and released to the income
statement on a straight-line basis over the duration of
the agreements.
Impairment of assets
The carrying amount of the Group’s assets is reviewed at
each balance sheet date to determine whether there is
an indication of impairment. If such an indication exists,
the asset is written down to its estimated recoverable
amount.
Recoverable amount is the higher of fair value less costs
to sell and value in use. In assessing value in use, the
estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects
current market assessments of the time value of money
and the risks specific to the asset for which the estimates
of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating
unit) is estimated to be less than its carrying amount, the
carrying amount of the asset (or cash-generating unit) is
reduced to its recoverable amount.An impairment loss is
recognised as an expense immediately.
Where an impairment loss subsequently reverses, the
carrying amount of the asset (or cash-generating unit) is
increased to the revised estimate of its recoverable
amount, but so that the increased carrying amount does
not exceed the carrying amount that would have been
determined had no impairment loss been recognised for
the asset (or cash-generating unit) in prior years.A
reversal of an impairment loss is recognised as income
immediately.
Employee benefits
Retirement benefit obligations
The Group operates a defined benefit pension scheme.
The cost of providing benefits is determined using the
Projected Unit Credit Method, with actuarial valuations
being carried out at each balance sheet date.Actuarial
gains and losses are recognised in full in the period in
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Annual Report and Accounts
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14426 22/11/2007 Proof 5
which they occur.They are recognised outside the
income statement and presented in the statement of
recognised income and expense.The service cost of the
pension provision relating to the period, together with
the cost of any benefits relating to past service, is
charged to the income statement.A charge equal to the
increase in the present value of the scheme liabilities
(because the benefits are closer to settlement) and a
credit equivalent to the Group’s long-term expected
return on assets (based on market value of the scheme
assets at the start of the period), are included in the
income statement under “finance costs”.
The difference between the market value of the assets of
the scheme and the present value of the accrued pension
liabilities is shown as an asset or liability on the balance
sheet. Deferred tax is recognised on retirement benefit
obligations and disclosed under non-current assets.Any
difference between the expected return on assets and
that which is actually achieved is recognised in the
statement of recognised income and expense along with
differences arising from experience or assumption
changes.
During the year the Group also operated defined
contribution pension schemes for some staff members.
The assets of the plans are held separately from those of
the Group in independently managed funds.The amount
charged during the year represents the contributions
payable to the schemes in respect of the accounting year.
Share-based payments
The fair value of shares/options granted are recognised as
an employee expense, with a corresponding increase in
equity reserves.The fair value of the shares/options is
determined at the date of grant and spread over the
period the employees become unconditionally entitled to
the shares/options. Non-market vesting conditions are
taken into account in estimating the number of awards
likely to vest.The estimate of the number of awards likely
to vest is reviewed regularly and the expense charged
adjusted accordingly.The fair value of the shares/options
is calculated using the Black-Scholes model.
T axation
Current tax is the tax payable on taxable profit for
the year.
Deferred tax is the tax expected to be payable or
recoverable on differences between the carrying amounts
of assets and liabilities in the financial statements and the
corresponding tax bases used in the computation of
taxable profit, and is accounted for using the balance
sheet liability method.
Deferred tax liabilities are generally recognised for all
taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable
profits will be available against which deductible
temporary differences can be utilised. Such assets and
liabilities are not recognised if the temporary difference
arises from goodwill or from the initial recognition (other
than in a business combination) of other assets and
liabilities in a transaction that affects neither the tax
profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable
temporary differences arising on investments in
subsidiaries and associates, and interests in joint ventures,
except where the Group is able to control the reversal
of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable
future.
The carrying amount of deferred tax assets is reviewed at
each balance sheet date and reduced to the extent that it
is no longer probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are
expected to apply in the period when the liability is
settled or the asset is realised, provided they are enacted
or substantively enacted at the balance sheet date.
Deferred tax is charged or credited in the income
statement, except when it relates to items charged or
credited directly to equity, in which case the deferred tax
is also dealt with in equity.
Research and development
Expenditure incurred in market research and product
development and testing is charged to the income
statement in the period in which it is incurred, unless the
development expenditure meets the criteria for
capitalisation.
Where the expenditure meets the criteria for
capitalisation, development costs are capitalised and
amortised over their useful economic lives.
Leased assets
Where the Group acts as a lessee in an operating lease
arrangement, the costs of operating leases are charged to
the income statement as incurred. Lease incentives
received are recognised over the lease term on a
straight-line basis.
Where the Group acts as lessor in an operating lease
arrangement, rental income from operating leases is
accounted for on a straight-line basis over the period of
the lease. Lease incentives provided are recognised over
the lease term on a straight-line basis.
Provisions
A provision is recognised in the balance sheet when the
Group has a present legal or constructive obligation as a
result of a past event and it is probable that an outflow of
economic benefits will be required to settle the
obligation. If the effect is material, provisions are
determined by discounting the expected future cash
flows at a pre-tax rate that reflects the current market
assessments of the time value of money and, when
appropriate, the risks specific to the liability.
An onerous lease provision is recognised by the Group
where a leased property is vacant or sub-leased to a
third party at below market rent, to the extent that
rental payments are not recoverable from sub-leasing the
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Notes to the Financial Statements
30 September 2007
property.The provision is discounted and based on the
best estimate of the expenditure required to settle the
rental obligation at the balance sheet date and is based
upon market conditions at that date.
Treasury shares
Shares repurchased are valued at cost and deducted from
equity. No gain or loss is recognised on the purchase,
sale, issue or cancellation of the entity’s equity
instruments.
2. ACCOUNTING ESTIMATES
AND JUDGEMENTS
The key estimates and judgements made by management
are detailed below:
Goodwill
In testing for impairment, management have made certain
assumptions concerning the future development of the
business that are consistent with its annual budget and
three-year plan. Should these assumptions regarding the
growth in profitability be unfounded then it is possible
that goodwill included in the balance sheet could be
impaired. Management are confident that this is not
the case.
Intangible assets acquired on acquisition of
a subsidiary undertaking
Details of the intangible assets acquired on the
acquisition of a subsidiary undertaking are set out in note
14 of the financial statements.The intangible assets
acquired have been accounted for in accordance with
IFRS 3 “Business combinations” and IAS 38 “Intangible
assets”.The main area of judgement is the valuation of
the separate identifiable intangible assets acquired.These
calculations have been performed by an external valuer,
with whom the Directors have agreed the underlying
assumptions to be applied.The key assumptions are the
identification of the material separate intangible assets
acquired, forecast future cash flows and the discount rate.
Onerous property leases
An onerous lease provision is recognised by the Group
where a leased property is vacant or sub-leased to a
third party at below market rent, to the extent that
rental payments are not recoverable from sub-leasing the
property. Management believe that their estimates, which
are based upon the current state of the UK property
market where the properties are located, are
appropriate. However, it is possible that there may be the
opportunity to dispose of leases sooner and as a result
the provisions may be overstated, but in the opinion of
the Directors this is unlikely to be material.
Defined benefit pension scheme
Details of the Group’s defined benefit pension scheme
are set out in notes 1 and 30 of the financial statements.
The scheme has been accounted for in accordance with
IAS 19 “Employee benefits”.The main area of judgement
is the valuation of the pension scheme liabilities, which
represent the net present value of projected future
pension payments.These calculations are performed by
the scheme actuary, with whom the Directors have
agreed the underlying assumptions to be applied.The key
assumptions are rates of increase in pension benefits,
mortality rates, inflation and the discount rate applied to
produce the net present value.The discount rate is
derived from market rates on AA corporate bonds at the
balance sheet date.
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3. SEGMENTAL ANALYSIS
Analysis of revenue and result by business segment
Years ended
30 Sept 2007 30 Sept 2006
Profit/ Profit/
Revenue (loss) Revenue (loss)
£’000 £’000 £’000 £’000
UK qualifications and assessment services 7,750 1,298 6,731 822
International qualifications 5,551 469 5,280 326
Service contracts 2,631 448 2,112 216
Internet service provision 213 17 ––
Unallocated 129 (152) 52 (200)
16,274 2,080 14,175 1,164
Onerous lease provisions – 198
Operating profit 2,080 1,362
Finance income 66 31
Finance costs (26) (63)
Profit on ordinary activities before taxation 2,120 1,330
Tax on profit on ordinary activities 194 (57)
Profit for the period 2,314 1,273
Analysis of assets and liabilities by business segment
Segment assets Segment liabilities
30 Sept 30 Sept 30 Sept 30 Sept
2007 2006 2007 2006
£’000 £’000 £’000 £’000
UK qualifications and assessment services 6,766 4,166 (3,956) (3,245)
International qualifications 3,235 3,283 (1,955) (2,298)
Service contracts 1,043 914 (604) (416)
Internet service provision 402 – (147) –
Operational assets/(liabilities) 11,446 8,363 (6,662) (5,959)
Unallocated assets/(liabilities) 3,084 2,337 (130) (29)
T otal assets/(liabilities) 14,530 10,700 (6,792) (5,988)
Unallocated assets/(liabilities) consists primarily of cash and cash equivalents and current tax assets/(liabilities) that cannot be
readily allocated to segments.
Other segmental information
Capital additions Depreciation and
amortisation
Years ended Years ended
30 Sept 30 Sept 30 Sept 30 Sept
2007 2006 2007 2006
£’000 £’000 £’000 £’000
UK qualifications and assessment services 720 86 133 41
International qualifications 85 293 203 136
Service contracts 25 76 65 37
Internet service provision 28 –2–
858 455 403 214
Unallocated 46 10 4
862 461 413 218
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Notes to the Financial Statements
30 September 2007
3. SEGMENTAL ANALYSIS (continued)
Analysis of revenue by geographical location (by destination)
Years ended
30 Sept 30 Sept
2007 2006
£’000 £’000
United Kingdom 10,980 9,304
Rest of Europe 2,067 1,682
Far East & Asia 2,697 2,595
Rest of World 530 594
16,274 14,175
Analysis of segment assets and capital additions by geographical location (by origin)
Segment assets Capital additions
Years ended Years ended
30 Sept 30 Sept 30 Sept 30 Sept
2007 2006 2007 2006
£’000 £’000 £’000 £’000
United Kingdom 12,699 9,135 850 431
Rest of Europe 81 39 5 17
Far East & Asia 1,750 1,526 7 13
14,530 10,700 862 461
4. ONEROUS LEASE PROVISIONS
The onerous lease provision movement during the year ended 30 September 2006 arose as a result of the assignment of the
Leamington Spa office and the sub-lease of further vacant space in the Sidcup office.These offices were permanently vacated
during the year ended 30 September 2005 and provision was made at the time to cover future obligations under the lease
contracts.At 30 September 2007, £758,000 remains provided in respect of other onerous leases.
5. FINANCE INCOME
Years ended
30 Sept 30 Sept
2007 2006
£’000 £’000
Bank interest receivable 50 31
Net finance income on pension schemes (see note 30) 16 –
66 31
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6. FINANCE COSTS
Years ended
30 Sept 30 Sept
2007 2006
£’000 £’000
Net finance charge on pension schemes (see note 30) – 14
Unwinding of discount on onerous lease provision (see note 22) 26 49
26 63
7. PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION
The profit on ordinary activities before taxation is arrived at after charging/(crediting):
Years ended
30 Sept 30 Sept
2007 2006
£’000 £’000
Amortisation of other intangible assets 244 99
Depreciation of property, plant and equipment 169 119
Research and development costs 247 352
Profit on disposal of property, plant and equipment 2–
Rent receivable under subleases (120) (51)
Rentals under operating leases
— land and buildings 391 325
— other 32
Foreign exchange losses 4 53
Share-based payments 21 27
Provision for impairment of receivables 67 95
Auditors’ remuneration:
Services to the Company and its subsidiaries
Fees payable to the Company’s auditor for the audit of the annual financial statements 25 23
Fees payable to the Company’s auditor for other services:
Audit of the financial statements of the Company’s subsidiaries pursuant to legislation 10 3
Other services supplied pursuant to legislation 7 10
Other services relating to taxation 12 7
Services relating to corporate finance transactions 8 16
Services to the Company’s associated pension scheme
Audit of the financial statements of the Scheme pursuant to legislation 33
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Notes to the Financial Statements
30 September 2007
8. EMPLOYEES
Average weekly number of employees, including Executive Directors:
Group Company
Years ended Years ended
30 Sept 30 Sept 30 Sept 30 Sept
2007 2006 2007 2006
Number Number Number Number
Operations 55 51 42 40
Education Development 25 20 25 21
Business Development 46 40 28 28
Finance and Administration 24 25 17 17
150 136 112 106
Group Company
Years ended Years ended
30 Sept 30 Sept 30 Sept 30 Sept
2007 2006 2007 2006
£’000 £’000 £’000 £’000
Wages and salaries 3,852 3,612 3,397 3,177
Social security costs 396 375 357 335
Other pension costs
Defined benefit scheme (see note 30) ––– –
Defined contribution scheme (see note 30) 180 173 180 173
180 173 180 173
4,428 4,160 3,934 3,685
9. DIRECTORS
Emoluments of the Company’s Directors:
Salary and Benefits T otal T otal
fees in kind Pensions 2006 2006
£’000 £’000 £’000 £’000 £’000
Non-executives
R Price 30 –– 30 30
B A Clark 20 –– 20 20
W N Dore 10 –– 10 10
Sir Bryan Nicholson 20 –– 20 20
Executives
N M Snook 235 10 – 245 229
N T Gossage 144 1 18 163 154
J Moody† 33 –3 36 –
Aggregate emoluments 492 11 21 524 463
† Appointed to the Board on 19 July 2007.
Pension costs represent Group contributions to the personal pension plans of the Directors.
Directors’ share options
Details of the share options currently held by the Directors are shown in note 25. Mr N M Snook exercised share options
during the year with an aggregate gain of £192,000.
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10. RELATED PARTY TRANSACTIONS
a) Trading transactions
Group and Company
Provision of Purchase of
goods services
Years ended Years ended
30 Sept 30 Sept 30 Sept 30 Sept
2007 2006 2007 2006
£’000 £’000 £’000 £’000
DDAT (UK) Limited 30 –––
HL Investments Limited ––– 66
HL Investments Limited is a related party of the Group because it is a company controlled by W N Dore, a Director of the
Company. HL Investments Limited provided leasehold premises during the previous year.
DDAT (UK) Limited is a related party of the Group because it is also a company controlled by W N Dore.The Group
provided leasehold premises to DDAT (UK) Limited during the year.
There are no amounts owed by or owed to related parties at 30 September 2007 (2006: £Nil).
Provision of goods to and the purchase of services from related parties were made at arm’s length prices.Any amounts
outstanding during the year are unsecured and are settled in cash. No guarantees have been given or received. No provisions
have been made for doubtful debts in respect of the amounts owed by related parties.
b) Company transactions with subsidiaries
Company
Provision of Purchase of
goods services
30 Sept 30 Sept 30 Sept 30 Sept
2007 2006 2007 2006
£’000 £’000 £’000 £’000
Sales to subsidiaries 1,346 1,217 ––
Purchases from subsidiaries ––1 –
Company
Amounts owed by Amounts owed to
subsidiaries subsidiaries
30 Sept 30 Sept 30 Sept 30 Sept
2007 2006 2007 2006
£’000 £’000 £’000 £’000
Receivables from subsidiaries 199 19 ––
Payables to subsidiaries –– (546) (361)
Provision of goods to and the purchase of services from subsidiaries were made at arm’s length prices.The amounts
outstanding are unsecured and will be settled in cash. No guarantees have been given or received. No provisions have been
made for doubtful debts in respect of the amounts owed by subsidiaries.
c) Key management compensation
The remuneration of the Directors, who are the key management personnel of the Group, is set out below in aggregate for
each of the categories specified in IAS 24 ‘Related Party Disclosures’.
Years ended
30 Sept 30 Sept
2007 2006
£’000 £’000
Short-term employee benefits 553 483
Post-employment benefits 21 30
Share-based payment 25 7
599 520
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Notes to the Financial Statements
30 September 2007
11. TAXATION
The taxation credit/(charge) for the year is analysed below:
Years ended
30 Sept 30 Sept
2007 2006
£’000 £’000
Current tax (93) (29)
Deferred taxation 287 (28)
T ax on profit on ordinary activities 194 (57)
Years ended
30 Sept 30 Sept
2007 2006
£’000 £’000
T ax reconciliation
Profit on ordinary activities before taxation 2,120 1,330
Theoretical tax credit/(charge) at UK corporation tax rate of 28% (2006: 30%) (594) (399)
Effects of:
Changes in tax rates (13) –
Expenses not deductible for tax purposes (8) (21)
Deductible temporary differences (8) (2)
Utilisation of previously unrecognised tax losses 861 345
Tax losses arising where no deferred tax asset has been recognised – (9)
Different tax rates for overseas subsidiaries (41) 9
Other (3) 20
Actual tax on profit on ordinary activities 194 (57)
12. DIVIDENDS
Amounts recognised as distributions to equity holders in the year:
2007 2006
£’000 £’000
Final dividend for the year ended 30 September 2006 of 0.2p (2005: £Nil) per share 105 –
Interim dividend for the year ended 30 September 2007 of 0.1p (2006: £Nil) per share 55 –
160 –
Proposed final dividend for the year ended 30 September 2007 of 0.23p (2006: 0.2p) per share 127 105
The proposed final dividend will be submitted for formal approval at the Annual General Meeting to be held on 21 December
2007.These financial statements do not reflect this dividend payable, which will be accounted for in shareholders’ equity as an
appropriation of retained earnings in the year ending 30 September 2008.
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13. EARNINGS PER SHARE
Years ended
30 Sept 30 Sept
2007 2006
Number of shares (million)
Weighted average number of shares used in basic EPS 54.1 52.5
Effect of dilutive securities:
— Share options 1.6 0.7
Weighted average number of shares used in diluted EPS 55.7 53.2
Earnings (£’000)
Profit for the year attributable to ordinary shareholders 2,282 1,225
Amortisation charge on acquired intangible assets 78 –
Onerous lease provision credit – (198)
Tax on profit on ordinary activities (194) 57
Minority interest 32 48
Adjusted earnings 2,198 1,132
Earnings per share (pence)
Basic 4.2 2.3
Diluted 4.1 2.3
Adjusted EPS 4.1 2.2
Adjusted EPS — Diluted 3.9 2.1
14. GOODWILL
UK
qualifications Internet
& assessment International Service service
services qualifications contracts provision T otal
£’000 £’000 £’000 £’000 £’000
Group
Cost
At 1 October 2005 1,359 2,427 223 – 4,009
Additions 346 – 35 – 381
At 1 October 2006 1,705 2,427 258 – 4,390
Additions 1,419 55 87 340 1,901
At 30 September 2007 3,124 2,482 345 340 6,291
Provision for impairment in value
At 1 October 2005, 1 October 2006
and 30 September 2007 –– – –
Net book value
At 30 September 2007 3,124 2,482 345 340 6,291
At 30 September 2006 1,705 2,427 258 – 4,390
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36
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Notes to the Financial Statements
30 September 2007
14. GOODWILL (continued)
UK
qualifications Internet
& assessment International Service service
services qualifications contracts provision T otal
£’000 £’000 £’000 £’000 £’000
Company
Cost
At 1 October 2005, 1 October 2006 and
30 September 2007 1,327 1,990 –– 3,317
Provision for impairment in value
At 1 October 2005, 1 October 2006 and
30 September 2007 – ––– –
Net book value
At 30 September 2007 1,327 1,990 –– 3,317
At 30 September 2006 1,327 1,990 –– 3,317
Company
Goodwill in the Company arose as a result of the purchase of the trade and assets of London Chamber of Commerce and
Industry Examinations Board on 20 December 2002.
Group
Goodwill is tested for impairment at least annually in accordance with IAS 36 ‘Impairment of assets’.The recoverable amount
of goodwill is based upon the on value in use as represented by the net present value of future cash flows. Cash flows are
projected forward for five years based on three year approved budgets and plans.The budgets have been based on past
experience, from which the plans have been extrapolated assuming 3% inflationary growth only.They are then discounted using
a discount rate based on the Group’s pre-tax nominal weighted average cost of capital of 11%, which has been adjusted for the
specific risks associated with the assets’ estimated cash flows.
Following the impairment test during the year, no charge has been recognised in the income statement in respect of goodwill
impairment.
UK qualifications & assessment services
On 31 May 2007 the Group acquired the entire share capital of eNVQ Limited, a company providing a web-based system for
the management, assessment and verification of competence-based qualifications and corporate training programmes.The initial
consideration for this acquisition (before costs) was £1,030,000: £805,000 was paid from existing cash resources and 971,924
1p ordinary shares were issued with a fair value of 23.15p per share.Additional deferred consideration of £1,191,000 is payable
over 4 years to 31 May 2011.The deferred consideration comprises a fixed cash amount of £734,000 and a variable amount of
£457,000 based on the Directors’ best estimate of eNVQ’s revenue forecasts at 30 September 2007.The variable element will
be satisfied by way of issue of shares and cash when due.
eNVQ Limited’s profit after tax for the period from 1 June 2007 to 30 September 2007 was £20,000.
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14. GOODWILL (continued)
Fair values
The book and provisional fair values of the assets and liabilities acquired were as follows:
Book value Accounting Fair value
of assets policy to the
acquired Revaluation alignment Group
£’000 £’000 £’000 £’000
Property, plant and equipment 25 –– 25
Investments – 150 – 150
Trade receivables 244 (31) – 213
Cash and cash equivalents 304 –– 304
Trade and other payables (128) – (200) (328)
Net assets acquired 445 119 (200) 364
Intangible assets acquired 696
Deferred tax on intangible assets (195)
Goodwill 1,419
2,284
Satisfied by
Cash consideration 805
Equity consideration 225
Deferred consideration 1,191
Costs of acquisition 63
2,284
Fair value adjustments include an accounting policy alignment relating to account for the deferral of revenue.
Goodwill recognised above includes items that cannot be individually separated and reliably measured due to their nature.
These include the expertise of staff and synergy benefits.
International qualifications
On 2 October 2006 the Group acquired the business and goodwill of Jetset, a business providing Junior English T est and Senior
English T est qualifications.The consideration for this acquisition (before costs) was £50,000 which was paid from existing cash
resources.
Fair values
The book and provisional fair values of the assets and liabilities acquired were as follows:
£’000
Book and fair value of assets acquired –
Goodwill 55
55
Satisfied by
Cash consideration 50
Costs of acquisition 5
55
Service contracts
Goodwill arose in the year on an amendment to deferred consideration and an acquisition by the Group. On 1 October 2004
the Group acquired the entire share capital of EQL Assessment Limited, for an initial consideration of £153,000 and deferred
consideration of £65,000, based on the Directors’ best estimate of revenue forecast at 30 September 2005.At 30 September
2007, the Directors’ have reviewed the latest revenue forecasts for this business and revised deferred consideration upwards by
£87,000. Deferred consideration of £55,000 and £41,000 was paid in January 2006 and February 2007 respectively.
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Notes to the Financial Statements
30 September 2007
14. GOODWILL (continued)
Internet service provision
The acquisition of eNVQ Limited included a 50% shareholding in Fusion Media Networks Limited, a company which is a
specialist Internet service provider.The Group’s shareholding was increased to 75% on 27 July 2007.The consideration for this
acquisition (before costs) was £75,000 which was paid from existing cash resources.
Fair values
The book and provisional fair values of the assets and liabilities acquired were as follows:
Book value Accounting Fair value
of assets policy to the
acquired Revaluation alignment Group
£’000 £’000 £’000 £’000
Property, plant and equipment 6–– 6
Trade receivables 35 (14) – 21
Other current assets 6–– 6
Cash and cash equivalents 10 –– 10
Trade and other payables (100) – (54) (154)
Net liabilities acquired (43) (14) (54) (111)
Goodwill 340
229
Satisfied by
Fair value of investment on acquisition of eNVQ 150
Cash consideration 75
Costs of acquisition 4
229
Goodwill recognised above includes items that cannot be individually separated and reliably measured due to their nature.
These include the expertise of staff and synergy benefits.
Fusion Media Networks Limited’s profit after tax for the period from 1 June 2007 to 30 September 2007 was £17,000.
The initial accounting for the acquisition of eNVQ Limited and Fusion Media Networks Limited has been determined
provisionally.Any adjustments to the accounting following the finalisation of the fair values to be assigned to the acquired assets
and liabilities will be recorded within 12 months of the acquisition date.
If the acquisition of eNVQ Limited and Fusion Media Networks Limited had been made at the beginning of the year then the
Group’s results would have been revenue of £16,752,000, profit before tax of £2,088,000 and profit after tax of £2,260,000.
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15. OTHER INTANGIBLE ASSETS
Acquired on acquisition T otal
intangible
T echnology Company assets on Computer
acquired name acquisition software T otal
£’000 £’000 £’000 £’000 £’000
Group
Cost
At 1 October 2005 ––– 517 517
Additions ––– 219 219
At 1 October 2006 ––– 736 736
Additions 583 113 696 10 706
At 30 September 2007 583 113 696 746 1,442
Amortisation
At 1 October 2005 ––– 21 21
Amortisation charge ––– 99 99
At 1 October 2006 ––– 120 120
Amortisation charge 65 13 78 166 244
At 30 September 2007 65 13 78 286 364
Net book value
At 30 September 2007 518 100 618 460 1,078
At 30 September 2006 ––– 616 616
Computer
software
£’000
Company
Cost
At 1 October 2005 517
Additions 219
At 1 October 2006 736
Additions 10
At 30 September 2007 746
Amortisation
At 1 October 2005 21
Amortisation charge 99
At 1 October 2006 120
Amortisation charge 166
At 30 September 2007 286
Net book value
At 30 September 2007 460
At 30 September 2006 616
Intangible assets recognised on acquisition represent non-monetary assets separately identifiable from goodwill and include
technology acquired and the company name.The remaining amortisation period for intangible assets acquired on acquisition is
2½ years.
The remaining amortisation period for computer software is 3½ years.
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Notes to the Financial Statements
30 September 2007
16. PROPERTY , PLANT AND EQUIPMENT
Fixtures, Leasehold
Motor Computer fittings and improve-
vehicles equipment equipment ments T otal
Group £’000 £’000 £’000 £’000 £’000
Cost
At 1 October 2005 25 379 55 48 507
Additions 48 94 49 51 242
Disposals – (11) (1) – (12)
Currency translation adjustment – (1) (1) – (2)
At 1 October 2006 73 461 102 99 735
Additions 38 86 14 18 156
Disposals (9) (1) –– (10)
Acquisition of subsidiaries –8 23 – 31
Currency translation adjustment – (1) (1) – (2)
At 30 September 2007 102 553 138 117 910
Depreciation
At 1 October 2005 15 267 30 10 322
Charge for year 5 70 21 23 119
Disposals – (8) (1) – (9)
Currency translation adjustment – (1) (1) – (2)
At 1 October 2006 20 328 49 33 430
Charge for year 23 88 27 31 169
Disposals (9) (1) –– (10)
Currency translation adjustment – (1) (1) – (2)
At 30 September 2007 34 414 75 64 587
Net book values
At 30 September 2007 68 139 63 53 323
At 30 September 2006 53 133 53 66 305
Included above is property, plant and equipment, with a gross value of £256,000, which has been fully written down.
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16. PROPERTY , PLANT AND EQUIPMENT (continued)
Fixtures, Leasehold
Motor Computer fittings and improve-
vehicles equipment equipment ments T otal
Company £’000 £’000 £’000 £’000 £’000
Cost
At 1 October 2005 25 328 24 42 419
Additions 48 83 39 41 211
Disposals – (5) –– (5)
Inter-company transfer –7– –7
At 1 October 2006 73 413 63 83 632
Additions 23 62 8 17 110
Disposals (9) ––– (9)
At 30 September 2007 87 475 71 100 733
Depreciation
At 1 October 2005 15 224 14 244
Charge for year 5 66 18 21 110
Disposals – (3) –– (3)
Inter-company transfer –2– –2
At 1 October 2006 20 289 19 25 353
Charge for year 22 79 21 28 150
Disposals (9) ––– (9)
At 30 September 2007 33 368 40 53 494
Net book values
At 30 September 2007 54 107 31 47 239
At 30 September 2006 53 124 44 58 279
Included above is property, plant and equipment, with a gross value of £256,000, which has been fully written down.
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Notes to the Financial Statements
30 September 2007
17. INVESTMENTS
Investments
in subsidiary
undertakings
Company £’000
Cost
At 1 October 2005 942
Additions 483
At 1 October 2006 1,425
Additions 2,426
At 30 September 2007 3,851
Provisions and amounts written off
At 1 October 2005, 1 October 2006 and at 30 September 2007 –
Net book value
At 30 September 2007 3,851
At 30 September 2006 1,425
The Company’s investments at 30 September 2007 are:
Country of incorporation
Company name Interest in ordinary shares and registration Principal activity
Subsidiary undertakings
Educational Resources Pte Limited 50.4% Singapore Examination services
Educational Development Pte Limited 100%† Singapore Dormant
LCCIEB Training Consultancy Co. 100%† People’s Republic of China Consultancy in education
and related services
LCCI International Qualifications (Malaysia) Sdn Bhd 100%† Malaysia Consultancy in education
and related services
Educational Resources (HK) Limited 100%† Hong Kong Consultancy in education
and related services
EQL Assessment Limited 100% England & Wales Dormant
Education Resources (Cyprus) Limited 100% Cyprus Examination services
Joint Examining Board Limited 100% England & Wales Vocational training services
eNVQ Limited 100% England & Wales Web-based vocational
training services
Fusion Media Networks Limited 75%* England & Wales Specialist Internet
service provider
GOAL Limited 100% England & Wales Dormant
† Indirect holding through Educational Resources Pte Limited.
* Indirect holding through eNVQ Limited.
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18. DEFERRED TAX
Group
The following are the major deferred tax assets/(liabilities) recognised by the Group and movements thereon during the
current and prior reporting period.
Retirement Business
benefit T ax combi-
obligations losses nations T otal
£’000 £’000 £’000 £’000
At 1 October 2005 545 200 – 745
Recognised in income (28) –– (28)
Recognised in equity (102) –– (102)
At 30 September 2006 415 200 – 615
Recognised in income (38) 316 22 300
Recognised in equity (296) –– (296)
Acquisition of subsidiary –– (195) (195)
Effect of change in tax rate:
– Income Statement – (13) – (13)
– Equity (28) –– (28)
At 30 September 2007 53 503 (173) 383
The following is the analysis of the deferred tax balances for financial reporting purposes:
30 Sept 30 Sept
2007 2006
£'000 £'000
Deferred tax assets 556 615
Deferred tax liabilities (173) –
383 615
Company
The following are the major deferred tax assets recognised by the Company and movements thereon during the current and
prior reporting period.
Retirement
benefit T ax
obligations losses T otal
£'000 £'000 £'000
At 1 October 2005 545 200 745
Recognised in income (28) – (28)
Recognised in equity (102) – (102)
At 30 September 2006 415 200 615
Recognised in income (38) 316 278
Recognised in equity (296) – (296)
Effect of change in tax rate:
– Income Statement – (13) (13)
– Equity (28) – (28)
At 30 September 2007 53 503 556
The Group has UK trading losses available to carry forward without expiry against future trading profits of approximately
£6.8 million at 30 September 2007 (2006: £8.5 million).
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Notes to the Financial Statements
30 September 2007
19. INVENTORIES
Group Company
30 Sept 30 Sept 30 Sept 30 Sept
2007 2006 2007 2006
£’000 £’000 £’000 £’000
Goods for resale 76 64 62 46
The replacement cost of the above inventory would not be significantly different from the values stated.
20. TRADE AND OTHER RECEIVABLES
Group Company
30 Sept 30 Sept 30 Sept 30 Sept
2007 2006 2007 2006
£’000 £’000 £’000 £’000
Current assets
Trade receivables 2,924 2,167 2,607 2,124
Less: Provision for impairment of receivables (384) (317) (343) (317)
Trade receivables — net 2,540 1,850 2,264 1,807
Amounts due from subsidiary undertakings –– 199 19
Other receivables 256 319 223 295
Prepayments and accrued income 357 218 351 215
3,153 2,387 3,037 2,336
21. TRADE AND OTHER PAYABLES
Group Company
30 Sept 30 Sept 30 Sept 30 Sept
2007 2006 2007 2006
£’000 £’000 £’000 £’000
Current liabilities
Trade payables 1,214 701 1,112 698
Amounts due to subsidiary undertakings –– 546 361
Other taxation and social security 337 266 266 264
Other creditors 59 53 148 51
Deferred consideration 956 41 865 41
Accruals and deferred income 2,714 2,571 1,950 2,049
5,280 3,632 4,887 3,464
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22. PROVISIONS
Group and Company
Restructuring Onerous Dilapi-
provision leases dations T otal
£’000 £’000 £’000 £’000
At 1 October 2006 30 901 40 971
Utilised in the year (30) (276) 67 (239)
Unwinding of discount on onerous lease provision – 26 – 26
At 30 September 2007 – 651 107 758
Current liabilities – 235 – 235
Non-current liabilities – 416 107 523
At 30 September 2007 – 651 107 758
Current liabilities 30 278 – 308
Non-current liabilities – 623 40 663
At 30 September 2006 30 901 40 971
On the acquisition of LCCIEB in 2002 the Group assumed obligations under various leases for office space with short-term
sub-leases. Provision has been made for the Directors’ estimate of the potential shortfall in rental income compared to lease
costs up to the termination of the Group’s commitment in respect of the leases.The terms of the leases have expiry dates
between December 2007 and March 2011.
The onerous leases provision has been discounted and is stated at net present value. Discounting has no material effect on
the other provisions.
23. OTHER NON-CURRENT LIABILITIES
Group Company
30 Sept 30 Sept 30 Sept 30 Sept
2007 2006 2007 2006
£’000 £’000 £’000 £’000
Deferred consideration 326 4 326 4
Deferred income –– 160 241
326 4 486 245
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Notes to the Financial Statements
30 September 2007
24. DERIVATIVES AND OTHER FINANCIAL INSTRUMENTS
Management of financial risk
The Group’s activities expose it to a variety of financial risks: currency risk, credit risk, liquidity risk and cash flow interest
rate risk.
The main risks managed by the Group, under policies approved by the Board are foreign currency risk, interest rate risk,
liquidity risk and credit risk.The Board periodically reviews treasury activities, policies and procedures.All treasury activity
takes place within a formal control framework.
Currency risk
Foreign currency risk arises from cash flows relating to commercial transactions, recognised assets and liabilities and net
investment in foreign operations.
Transaction exposure occurs when, as a result of trading activities, an entity receives or pays cash in a currency different from
its functional currency.A substantial portion of the Group’s revenue is receivable in foreign currencies.Approximately 30% of
the Group’s sales are to customers in continental Europe and the Far East.The Group enters into forward currency contracts
to reduce the effect of foreign exchange rate fluctuations where sales are invoiced in the currencies of the customers
involved.These forward exchange contracts are timed to mature at various dates in the financial year to coincide with the
major foreign currency receipts based on the annual income cycle.
The Group has certain investments in foreign operations, whose net assets and related goodwill are exposed to foreign
currency translation risk.The sterling Group balance sheet can be affected by movements in the exchange rates between
sterling and the Singapore Dollar, Hong Kong Dollar and Malaysian Ringgit because of the investments in the net assets of the
Educational Resources Group based in South East Asia.The Group does not hedge this balance sheet exposure; however, this
policy will be subject to regular review. Gains and losses arising on the net investment overseas are recognised in the
statement of recognised income and expense.
Credit risk
The Group’s credit risk is primarily attributable to its trade debtors. Credit risk is managed by monitoring the aggregate
amount and duration of exposure to any one customer depending upon their credit rating.The amounts presented in the
balance sheet are net of allowances for doubtful debts, estimated by the Group’s management based on prior experience and
their assessment of the current economic environment.
The credit risk on liquid funds is limited because counterparties are banks with high credit ratings assigned by international
credit rating agencies.
Liquidity risk
The Group has no net debt at 30 September 2007, however, short-term bank facilities exist should short-term flexibility be
required.
Interest rate risk
The Group’s interest rate risk arises from interest-bearing assets.The Group has no specific requirements on the exact
proportion of interest that should be fixed or floating.The position is reviewed periodically.
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24. DERIVATIVES AND OTHER FINANCIAL INSTRUMENTS (continued)
Derivative instruments
Forward exchange contracts
The Group did not enter into any forward exchange contracts during the year to hedge exposure to movements in
foreign currency rates on forecast sales.There were no outstanding forward exchange contracts at 30 September 2007.
The outstanding forward exchange contracts at 30 September 2006 were as follows, these contracts matured on
30 November 2006.
Notional contract
amount
£’000 US$’000
Sales:
US dollar 321 –
Hong Kong dollar – 225
Singapore dollar – 63
321 288
The fair value of forward foreign exchange contracts at 30 September 2007 was £Nil (2006: £2,000 asset).These amounts are
based on the market value of equivalent instruments at the balance sheet date.
Fair value of non-derivative financial instruments
The carrying amounts of the Group’s non-derivative financial instruments approximate to book value. Fair values of financial
assets and liabilities have been calculated by discounting expected future cash flows at prevailing interest rates and applying
year end exchange rates.
Undrawn committed borrowing facilities
At 30 September 2007 the Group had available £100,000 (2006: £100,000) of undrawn committed borrowing facilities.
Cash and cash equivalents
The effective interest rates for cash and cash equivalents is 2.2% (2006: 1.5%).
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Notes to the Financial Statements
30 September 2007
25. SHARE CAPITAL
Group and Company
Authorised Allotted and fully paid
Number £’000 Number £’000
Ordinary shares of 1p each
At 1 October 2005 70,000,000 700 52,355,616 524
Issued under share option schemes –– 241,565 2
At 30 September 2006 70,000,000 700 52,597,181 526
Issued under share option schemes –– 1,484,069 15
Issued on acquisition of subsidiary undertaking –– 971,924 10
At 30 September 2007 70,000,000 700 55,053,174 551
During the year the Company issued 1,484,069 ordinary shares when options under the Company’s share ownership scheme
were exercised by employees, these options were exercised at prices ranging from 7.2p to 9.25p.A further 971,924 ordinary
shares were issued on the acquisition of eNVQ Limited at 23.15p per share.
Options over ordinary shares have been granted under the Company’s share ownership scheme for staff. Options over
3,430,697 shares, exercisable at varying dates between October 2007 and July 2017, were outstanding at 30 September 2007.
The options are exercisable at prices ranging from 7.2p to 28.0p.
The movements in options over ordinary shares during the year are summarised below.
Number
At 1 October 2006 4,952,365
Options granted 684,827
Options exercised (1,484,069)
Options lapsed (722,426)
At 30 September 2007 3,430,697
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25. SHARE CAPITAL (continued)
At 30 September 2007 the following share options had been granted to Directors over the Company’s shares.
Number of
options at Date from
30 September Exercise which Expiry Share price or EPS
2007 price (p) exercisable date performance criteria
N M Snook
2000 Unapproved Executive Share Option Plan
150,000 9.25 12/1/08 11/1/14 13½p + RPI + 6% per annum
or adjusted EPS + 20% per annum
100,000 9.25 12/1/08 11/1/14 13½p + RPI + 20% per annum
or adjusted EPS + 20% per annum
100,000 9.25 12/1/08 11/1/14 13½p + RPI + 20% per annum
or adjusted EPS + 20% per annum
150,000 9.25 12/1/09 11/1/14 13½p + RPI + 6% per annum
or adjusted EPS + 20% per annum
100,000 12.50 30/9/08 29/9/15 12½p + RPI + 6% per annum
or adjusted EPS + 20% per annum
50,000 12.50 30/9/08 29/9/15 12½p + RPI + 20% per annum
or adjusted EPS + 20% per annum
250,000 12.50 30/9/09 29/9/15 12½p + RPI + 6% per annum
or adjusted EPS + 20% per annum
100,000 12.50 30/9/09 29/9/15 12½p + RPI + 20% per annum
or adjusted EPS + 20% per annum
250,000 12.50 30/9/10 29/9/15 12½p + RPI + 6% per annum
or adjusted EPS + 20% per annum
100,000 12.50 30/9/10 29/9/15 12½p + RPI + 20% per annum
or adjusted EPS + 20% per annum
100,000 12.50 30/9/11 29/9/15 12½p + RPI + 6% per annum
or adjusted EPS + 20% per annum
50,000 12.50 30/9/11 29/9/15 12½p + RPI + 20% per annum
or adjusted EPS + 20% per annum
350,000 12.50 30/9/12 29/9/15 12½p + RPI + 6% per annum
or adjusted EPS + 20% per annum
150,000 12.50 30/9/12 29/9/15 12½p + RPI + 20% per annum
or adjusted EPS + 20% per annum
N T Gossage
2000 Unapproved Share Option Plan
75,000 14.25 21/11/08 21/4/15 14¼p + RPI + 6% per annum
or adjusted EPS + 20% per annum
75,000 14.25 21/11/08 21/4/15 14¼p + RPI + 20% per annum
or adjusted EPS + 20% per annum
75,000 14.25 21/11/09 21/4/15 14¼p + RPI + 6% per annum
or adjusted EPS + 20% per annum
75,000 14.25 21/11/09 21/4/15 14¼p + RPI + 20% per annum
or adjusted EPS + 20% per annum
The GOAL 2007 Sharesave Scheme
38,571 19.60 1/8/10 31/3/11
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Notes to the Financial Statements
30 September 2007
25. SHARE CAPITAL (continued)
Number of
options at Date from
30 September Exercise which Expiry Share price or EPS
2007 price (p) exercisable date performance criteria
J Moody
2000 Unapproved Share Option Plan
12,000 9.25 20/12/05 19/12/08 13½p + RPI + 20% per annum
or adjusted EPS + 20% per annum
11,312 9.25 20/12/06 19/12/09 13½p + RPI + 6% per annum
or adjusted EPS + 20% per annum
56,000 9.25 20/12/06 19/12/09 13½p + RPI + 20% per annum
or adjusted EPS + 20% per annum
25,000 9.25 20/12/07 19/12/10 13½p + RPI + 6% per annum
or adjusted EPS + 20% per annum
7,000 9.25 20/12/07 19/12/10 13½p + RPI + 20% per annum
or adjusted EPS + 20% per annum
12,500 12.50 1/12/08 30/11/15 12½p + RPI + 6% per annum
or adjusted EPS + 20% per annum
12,500 12.50 1/12/08 30/11/15 12½p + RPI + 20% per annum
or adjusted EPS + 20% per annum
12,500 12.50 1/12/09 30/11/15 12½p + RPI + 6% per annum
or adjusted EPS + 20% per annum
12,500 12.50 1/12/09 30/11/15 12½p + RPI + 20% per annum
or adjusted EPS + 20% per annum
78,500 28.00 23/7/10 23/7/17 28p + RPI + 19.1% per annum
or adjusted EPS + 20% per annum
The GOAL 2007 Sharesave Scheme
48,214 19.60 1/8/10 31/3/11
The only Director share options exercised during the year were by N M Snook, 64,404 share options under the GOAL 2000
Sharesave Scheme at an exercise price of 7.2p and 2,083,333 under option with shares owned by W N Dore and
D G Newman at an exercise price of 9.25p.The gain on the exercise of these share options is disclosed as part of Directors’
Emoluments in note 9. No Director share options lapsed during the year.
N T Gossage will resign with effect from 31 December 2007.As part of the agreed compromise arrangements the Board has
approved the vesting of the 300,000 share options already allocated to N T Gossage under the terms of the Company’s
unauthorised share options scheme.These options have to be exercised within 40 days of leaving the Company to benefit
from tax treatment under the Enterprise Management Initiative scheme.
During 2006 the Remuneration Committee reviewed and amended the share option performance criteria, adding an earnings
per share performance criterion. For these purposes, adjusted earnings per share is based on operating profit before the
movement in the onerous lease provision adjusted for net finance costs for the year ended 30 September 2005. Adjusted
earnings per share for the year ended 30 September 2005 is 1.4p.
RPI is the Retail Price Index.
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26. STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
T otal
Own share-
Share Share shares Other Retained holders’
capital premium held reserves earnings equity
£’000 £’000 £’000 £’000 £’000 £’000
Group
At 1 October 2005 524 2,799 (13) 212 (388) 3,134
Profit for the year ––– – 1,225 1,225
Actuarial gain (net of deferred tax) ––– – 239 239
Share-based payments ––– – 27 27
Purchase of own shares –– (200) –– (200)
Net differences on exchange ––– –––
New shares issued 2 16 ––– 18
At 30 September 2006 526 2,815 (213) 212 1,103 4,443
Profit for the year ––– – 2,282 2,282
Actuarial gain (net of deferred tax) ––– – 737 737
Share-based payments ––– – 21 21
Dividend paid ––– – (160) (160)
Purchase of own shares –– (227) –– (227)
Net differences on exchange ––– – (16) (16)
New shares issued 25 332 ––– 357
At 30 September 2007 551 3,147 (440) 212 3,967 7,437
T otal
Own share-
Share Share shares Other Retained holders’
capital premium held reserves earnings equity
£’000 £’000 £’000 £’000 £’000 £’000
Company
At 1 October 2005 524 2,799 (13) 212 (513) 3,009
Profit for the year ––– – 1,140 1,140
Actuarial gain (net of deferred tax) ––– – 239 239
Share-based payments ––– – 27 27
Purchase of own shares –– (200) –– (200)
New shares issued 2 16 ––– 18
At 30 September 2006 526 2,815 (213) 212 893 4,233
Profit for the year ––– – 2,261 2,261
Actuarial gain (net of deferred tax) ––– – 737 737
Share-based payments ––– – 21 21
Dividend paid ––– – (160) (160)
Purchase of own shares –– (227) –– (227)
New shares issued 25 332 ––– 357
At 30 September 2007 551 3,147 (440) 212 3,752 7,222
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Notes to the Financial Statements
30 September 2007
26. STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (continued)
The profit attributable to the Company for the year was £2,261,000 after taxation (2006: £1,140,000).
In accordance with the exemption allowed by s230 of the Companies Act 1985, the Company has not presented its own
income statement.
Own shares held
The own shares held represents the cost of funding the purchase by the Trustees of the Company’s own shares in respect of
the Employee Benefit Trust. During the year 1,080,000 ordinary shares (2006: 1,775,000 ordinary shares) with a nominal value
of 1p each have been purchased in total on the open market at a cost of £226,800 (2006: £199,625).
Other reserves
On 11 March 2005 the Company received court approval to reduce its share premium account by £9,840,842.The court also
required the Company to create a non-distributable special reserve equal to the amount of profit made by the Company
during the period from 1 October 2004 to the date the court order became effective.
27. MINORITY INTEREST IN EQUITY
30 Sept 30 Sept
2007 2006
£’000 £’000
Opening minority interests 269 221
Profit on ordinary activities after taxation 32 48
Closing minority interests 301 269
28. OPERATING LEASE ARRANGEMENTS
The Group and the Company as lessee
The payments which the Group and Company is committed to make for future minimum payments under non-cancellable
operating leases fall due as follows:
Group Company
30 Sept 30 Sept 30 Sept 30 Sept
2007 2006 2007 2006
£’000 £’000 £’000 £’000
Land and buildings
Leases which expire
within one year 82 5 54 –
in two to five years 141 466 94 392
beyond five years 1,418 1,632 1,418 1,632
1,641 2,103 1,566 2,024
Other leases — which expire
within one year ––– –
in two to five years 22– –
1,643 2,105 1,566 2,024
The Group and the Company as lessor
At the year end, the Group and the Company had total future sublease payments receivable within one year, relating to the
above operating leases, amounting to £27,000 (2006: £130,000).
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29. CAPITAL COMMITMENTS
The Company and Group had no capital commitments at 30 September 2007 (2006: £nil).
30. RETIREMENT BENEFIT OBLIGATIONS
Background
In previous accounting periods the Group has operated a Group defined contribution personal pension plan and “the EDI plc
Pension Scheme” which comprises a defined benefit section and a defined contribution section.The defined benefit section of
this scheme is solely for the benefit of those employees of LCCIEB who had been members of the defined benefit section of
the London Chamber of Commerce and Industry scheme (in which LCCIEB participated) prior to acquisition in 2003.
In November 2003 the above schemes were closed and the Group introduced a new defined contribution scheme for all
UK employees.
The defined benefit section of the EDI plc Pension Scheme is funded through a legally separate trustee administered fund.
Although the scheme has closed to future accrual, the Group has an obligation to fund the ongoing scheme deficit.
Pension valuation
The most recent actuarial valuation of the Group’s defined benefit scheme was carried out at 30 September 2003.An updated
valuation was performed by independent actuaries as at 30 September 2007.The scheme assets are stated at their market
value at 30 September 2007.
Assumptions
The major assumptions used by the actuary in assessing scheme liabilities on an IAS 19 basis are set out below.
30 Sept 30 Sept
2007 2006
Rate of increase in salaries 0.00% 0.00%
Rate of increase in pensions payment
Pre-1 March 2001 service 5.00% 5.00%
Post-1 March 2001 service 3.25% 2.75%
Discount rate 5.75% 5.00%
Inflation assumption 3.25% 2.75%
Member age 65 (current life expectancy)
Male 21 years 19 years
Female 24 years 22 years
Member age 48 (life expectancy on reaching 65)
Male 22 years 20 years
Female 25 years 23 years
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Notes to the Financial Statements
30 September 2007
30. RETIREMENT BENEFIT OBLIGATIONS (continued)
The amounts recognised in the income statement are as follows:
Years ended
30 Sept 30 Sept
2007 2006
£’000 £’000
Administrative expenses
Current service cost ––
Finance income/(expense)
Interest cost (481) (468)
Expected return on assets 497 454
16 (14)
T otal credit/(charge) to income statement for defined benefit scheme 16 (14)
Charge for defined contribution scheme (180) (173)
T otal charge to income statement (164) (187)
Statement of recognised income and expense
(Loss)/gain on pension scheme assets (2) 411
Actuarial gain/(loss) 1,063 (70)
1,061 341
Deferred tax charged to equity (324) (102)
Actuarial gain net of deferred tax 737 239
The amount included in the balance sheet arising from the Group and Company’s obligations in respect of its defined
retirement benefit scheme is as follows:
30 Sept 30 Sept
2007 2006
£’000 £’000
Present value of defined benefit obligations (8,964) (9,728)
Fair value of scheme assets 8,774 8,347
(190) (1,381)
Movements in the present value of the defined benefit obligations are as follows:
Years ended
30 Sept 30 Sept
2007 2006
£’000 £’000
Defined benefit obligations at start of year 9,728 9,420
Interest cost 481 468
Actuarial (gain)/loss (1,063) 70
Benefit payments (182) (230)
Defined benefit obligations at end of year 8,964 9,728
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30. RETIREMENT BENEFIT OBLIGATIONS (continued)
Movements in the fair value of plan assets are as follows:
Years ended
30 Sept 30 Sept
2007 2006
£’000 £’000
Fair value of plan assets at start of year 8,347 7,606
Expected return on assets 497 454
Company contributions 114 106
Benefits paid (182) (230)
Actuarial (loss)/gain (2) 411
Fair value of plan assets at end of year 8,774 8,347
Movements in the retirement benefit liabilities are as follows:
Years ended
30 Sept 30 Sept
2007 2006
£’000 £’000
Retirement benefit liabilities at the start of year (1,381) (1,814)
Net finance income/(cost) 16 (14)
Company contributions 114 106
Actuarial gain 1,061 341
Retirement benefit liabilities at the end of year (190) (1,381)
Cumulative net actuarial gains recognised in equity are as follows:
Years ended
30 Sept 30 Sept
2007 2006
£’000 £’000
At start of year 1,069 728
Net actuarial gain recognised in the year 1,061 341
At end of year 2,130 1,069
The major categories of plan assets as a percentage of total plan assets are as follows:
30 Sept 2007 30 Sept 2006
% £’000 % £’000
Equities 57.7 5,063 52.7 4,402
Bonds 41.7 3,659 41.9 3,497
Cash 0.6 52 5.4 448
100.0 8,774 100.0 8,347
Actual returns on scheme assets 5.9 495 11.4 865
The plan assets do not include any of the Group’s own financial instruments or property occupied by the Group.
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Notes to the Financial Statements
30 September 2007
30. RETIREMENT BENEFIT OBLIGATIONS (continued)
The expected rates of return by major category of plan assets are as follows:
30 Sept 30 Sept
2007 2006
%%
Equities 7.00 7.00
Bonds 5.75 5.00
Cash 4.00 4.00
The expected return on plan assets is based on market expectation at the beginning of the period for returns over the entire
life of the benefit obligations.
The Group will pay pension contributions of £121,000 during the year ended 30 September 2008.Additionally, the Group paid
the scheme running expenses of £35,000 (2006: £37,000) during the year.
History of experience gains and losses are as follows:
30 Sept 30 Sept 30 Sept
2007 2006 2005
Present value of defined benefit obligations (8,964) (9,728) (9,420)
Fair value of scheme assets 8,774 8,347 7,606
(190) (1,381) (1,814)
Experience adjustments on scheme liabilities
Amount (£’000) 1,061 341 (86)
Percentage of scheme liabilities 11.8% 3.5% (0.9)%
Experience adjustments on scheme assets
Amount (£’000) (2) 411 797
Percentage of scheme assets 0.0% 4.9% 10.5%
31. SHARE-BASED PAYMENTS
During the year ended 30 September 2007, the Group had three share-based payment arrangements, which are described
below:
a) Unapproved Executive Share Option Plan (‘ESOP’)
The ESOP provides for a grant price equal to the closing quoted market price of the Company’s shares on the day before the
date of the grant.The vesting period is a minimum of three years and is dependent upon the real growth in the Company’s
share price or growth in the base EPS over the vesting period. If the options remain unexercised after a period of 10 years
from the date of grant, the options expire.
b) 2000 Save AsY ou Earn Scheme (‘SAYE’)
The 2000 SAYE Scheme was open to all UK employees at the date the scheme was set up.The scheme provides for an
exercise price equal to the closing quoted market price on the day before the date of the grant, less a discount.The options
can be exercised during a six month period following the completion of a three year savings period.
c) 2007 Save AsY ou Earn Scheme (‘SAYE’)
The 2007 SAYE Scheme was open to all UK employees at the date the scheme was set up.The scheme provides for an
exercise price equal to the closing quoted market price on the day before the date of the grant, less a discount.The options
can be exercised during a six month period following the completion of a three year savings period.
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31. SHARE-BASED PAYMENTS (continued)
ESOP 2000 SAYE Scheme 2007 SAYE Scheme
Weighted Weighted Weighted
average average average
exercise exercise exercise
Number price Number price Number price
2006
Outstanding at 1 October 2005 4,675,000 10.68p 747,711 7.20p ––
Granted 100,000 12.50p ––– –
Exercised –– (241,565) 7.20p ––
Lapsed (100,000) 10.25p (228,781) 7.20p ––
Outstanding at 30 September 2006 4,675,000 10.73p 277,365 7.20p ––
Exercisable at 30 September 2006 1,862,000 ––
The weighted average share price during the year ended 30 September 2006 was 11.56p.
Range of exercise prices for options
outstanding at 30 September 2006 9.25p–14.25p 7.20p –
Weighted average remaining
contractual life (years) 51 –
Weighted average fair value of option
awarded in 2006 7.51p ––
2007
Outstanding at 1 October 2006 4,675,000 10.73p 277,365 7.20p ––
Granted 78,500 28.00p –– 606,327 19.60p
Exercised (1,243,688) 9.25p (240,381) 7.20p ––
Lapsed (720,000) 9.25p (2,426) 7.20p ––
Outstanding at 30 September 2007 2,789,812 12.25p 34,558 7.20p 606,327 19.60p
Exercisable at 30 September 2007 79,312 34,558 –
The weighted average share price during the year ended 30 September 2007 was 18.35p.
Range of exercise prices for options
outstanding at 30 September 2007 9.25p–28.00p 7.20p 19.60p
Weighted average remaining
contractual life (years) 8– 5
Weighted average fair value of option
awarded in 2007 –– 20.00p
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31. SHARE-BASED PAYMENTS (continued)
On 5 July 2007 the Group issued 606,327 share options to employees under the 2007 Save As Y ou Earn Scheme. For the
purposes of arriving at the fair value of the awards a Black-Scholes option pricing model has been used.The assumptions used
in the model are as follows:
SAYE
Risk-free interest rate 5.0%
Expected dividends 0.0%
Expected volatility 50.6%
Share price at date of grant 27.90p
Option life 3 years
Expected exercise behaviour
— Awards 75%
Volatility was based on the share price history.The fair value of share plans involving performance criteria takes into account
market information.
32. RECONCILIATION OF PROFIT BEFORE TAX TO NET CASH GENERATED FROM OPERATIONS
Group Company
Years ended Years ended
30 Sept 30 Sept 30 Sept 30 Sept
2007 2006 2007 2006
£’000 £’000 £’000 £’000
Profit on ordinary activities before taxation 2,120 1,330 1,998 1,168
Adjustments for:
Depreciation of property, plant and equipment 169 119 150 110
Amortisation of intangible assets 244 99 166 99
Profit on the sale of property, plant and equipment (2) – (2) –
Share-based payments 21 27 21 27
Net finance (income)/costs (40) 32 (39) 32
2,512 1,607 2,294 1,436
(Increase)/decrease in inventories (12) 9 (16) (3)
Increase in trade and other receivables (526) (101) (701) (250)
(Decrease)/increase in trade and other payables (106) 24 73 397
Net cash generated from operations 1,868 1,539 1,650 1,580
33. POST -BALANCE SHEET EVENTS
On 19 November 2007 the Group acquired the entire share capital of ASET Group Limited, a company providing accredited
vocational qualifications.The initial consideration for this acquisition (before costs) was £2,500,000: £1,700,000 was paid from
existing cash resources and 2,124,834 1p ordinary shares were issued with a fair value of 37.65p.Additional fixed deferred
consideration of £400,000 is payable within one year, on the achievement of certain performance criteria. At the date of this
report, the completion accounts were not available to determine the fair value of assets and liabilities acquired.
Notes to the Financial Statements
30 September 2007
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14426 22/11/2007 Proof 5
Five Year Financial Review
Restated
IFRS IFRS IFRS IFRS UK GAAP
2007 2006 2005 2004 2003
(12 months) (12 months) (12 months) (12 months) (18 months)
£’000 £’000 £’000 £’000 £’000
Revenue 16,274 14,175 13,185 10,962 8,573
Operating profit/(loss)
Before amortisation and impairment of goodwill,
amortisation of intangible assets on acquisition,
onerous lease provisions and redundancy provisions 2,158 1,164 743 741 (1,424)
Amortisation and impairment of goodwill ––– (188) (2,759)
Amortisation of intangible assets on acquisition (78) ––– –
Onerous lease provisions – 198 (796) – (205)
Redundancy provisions ––– (430) (395)
Operating profit/(loss) 2,080 1,362 (53) 123 (4,783)
Profit/(loss) on ordinary activities after taxation 2,314 1,273 (81) 307 (4,473)
Earnings/(loss) per share
Basic 4.2p 2.3p (0.2)p 0.7p (12.1)p
Diluted 4.1p 2.3p (0.2)p 0.7p (12.1)p
Goodwill and intangible assets 7,369 5,006 4,505 3,754 3,500
Property, plant, equipment and investments 323 305 185 171 255
Deferred tax assets and liabilities 383 615 745 735 702
Net cash and cash equivalents 3,053 2,320 1,806 2,349 1,330
Inventories, receivables and payables (2,351) (1,486) (946) (1,235) 38
Non-current liabilities excluding retirement benefit obligations (849) (667) (1,126) (615) (1,295)
7,928 6,093 5,169 5,159 4,530
Retirement benefit obligations (190) (1,381) (1,814) (1,781) (2,340)
T otal net assets 7,738 4,712 3,355 3,378 2,190
Comparatives have been reformatted to present results in IFRS format. No adjustments have been made to reflect the differences
in accounting treatment under IFRS compared to UK GAAP .
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EXPLANATORY NOTES TO THE RESOLUTIONS TO
BE CONSIDERED AT THE ANNUAL GENERAL
MEETING
Notice is hereby given that the Annual General Meeting
of the Company will be held at International House, Siskin
Parkway East, Middlemarch Business Park, Coventry,West
Midlands, CV3 4PE on Friday 21 December 2007 at
10.00 a.m. for the following purposes:
Ordinary Business
1. T o receive the report of the Directors and the
audited accounts for the year ended 30 September
2007.
2. T o declare a final dividend of 0.23p per share to be
paid on 4 January 2008 to those shareholders on
the register at the close of business on
30 November 2007.
3. T o appoint Jenifer Moody as a Director of the
Company.
4. T o reappoint Sir Bryan Nicholson as a Director of
the Company, who shall retire in accordance with
the Company’s articles of association.
5. T o reappoint Nigel Snook as a Director of the
Company, who shall retire in accordance with the
Company’s articles of association.
6. T o reappoint Grant Thornton UK LLP (formerly
RSM Robson Rhodes LLP) as auditors and to
authorise the Directors to determine their
remuneration.
T o consider and, if thought fit, pass the following
resolution as an ordinary resolution of the Company:
7. THAT, in substitution for any previous authority, the
Directors be hereby generally and unconditionally
authorised pursuant to section 80 of the Companies
Act 1985 (the “Act”) to exercise all the powers of
the Company to allot relevant securities (within the
meaning of that section) up to an aggregate nominal
amount of £94,352 for a period expiring (unless
previously renewed, varied or revoked by the
Company in general meeting) 15 months after the
date of the passing of this resolution or at the
conclusion of the next annual general meeting of the
Company, following the passing of this resolution,
whichever first occurs, but the Company may before
such expiry make an offer or agreement which
would or might require relevant securities to be
allotted after expiry of this authority and the
Directors may allot relevant securities in pursuance
of that offer or agreement notwithstanding that the
authority conferred by this resolution has expired.
Special Business
T o consider and, if thought fit, pass Resolutions 8 and 9
as special resolutions of the Company.
8. THAT, subject to the passing of Resolution 7 in the
notice of the annual general meeting, the Directors
be generally empowered pursuant to section 95 of
the Act to allot equity securities (within the
meaning of section 94(2) of the Act) for cash
pursuant to the authority conferred by Resolution
6 as if section 89(1) of the Act did not apply to the
allotment and this power shall:
(a) expire 15 months after the date of the passing
of this resolution or at the conclusion of the
next annual general meeting of the Company
following the passing of this resolution,
whichever first occurs, but the Company may
before such expiry make an offer or agreement
which would or might require equity securities
to be allotted after expiry of this authority and
the Directors may allot equity securities in
pursuance of that offer or agreement
notwithstanding that the power conferred
hereby has expired; and
(b) be limited to:
(i) the allotment of equity securities where
such securities have been offered by way of
a rights issue, open offer or otherwise to
holders of the ordinary shares in the
capital of the Company in proportion (as
nearly as may be) to their existing holdings
of ordinary shares but subject to the
Directors having a right to make such
exclusions or other arrangements in
connection with the offering as they deem
necessary or expedient:
(1) to deal with equity securities
representing fractional entitlements;
and
(2) to deal with legal and practical
problems arising in any overseas
territory under the laws of any
territory or the requirements of a
regulatory body or stock exchange or
any other matters; and
Notice of Annual General Meeting
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(ii) allotments of equity securities for cash
otherwise than pursuant to paragraph
7(b)(i) above up to an aggregate nominal
amount of £26,873.
9. THAT the Company be and is hereby generally and
unconditionally authorised to make market
purchases (within the meaning of Section 163(3) of
the Companies Act 1985) of ordinary shares of
1 pence each in the capital of the Company
(“ordinary shares”) provided that:
9.1 the maximum aggregate number of ordinary shares
hereby authorised to be purchased is 5,721,256
which represents approximately 10 per cent of the
current issued share capital of the Company;
9.2 the minimum price which may be paid for an
ordinary share is one pence (exclusive of
expenses); and
9.3 the maximum price which may be paid for an
ordinary share shall not be more than 5 per cent
above the average of the middle market quotations
for a ordinary share as derived from the London
Stock Exchange Daily Official List for each of the
five dealing days immediately preceding the date on
which an ordinary share is purchased, and this
authority shall, unless it is (prior to its expiry) duly
revoked or is renewed, expire at the conclusion of
the next annual general meeting of the Company or
15 months from the date of passing of this
resolution (whichever shall occur first), save that
the Company may make a contract to purchase
ordinary shares under this authority before such
expiry which will or may be executed wholly or
partly after such expiry, and may make a purchase
of ordinary shares pursuant to any such contract as
if the authority hereby conferred had not expired.
Notes
1. A member is entitled to attend and vote at the
Meeting is also entitled to appoint one or more
proxies to attend and, on a poll, vote instead of
him.The proxy need not be a member of the
Company.
2. A form of proxy is enclosed with this notice.T o be
valid, the form must be deposited at the offices of
the Company’s Registrars, Capita IRG Plc, Proxy
Department, PO Box 25, Beckenham, Kent,
BR3 4BR not less than 48 hours before the time
fixed for holding the meeting or adjourned meeting.
Completion of the form of proxy will not preclude
a member from attending and voting in person.
3. Pursuant to Regulation 41 of the Uncertified
Securities Regulations 2001, the time by which a
person must be entered on the register of
members in order to have the right to attend and
vote at the Annual General Meeting is 10.00 a.m. on
Wednesday 19 December 2007 (being not more
than 48 hours prior to the time fixed for the
Meeting). Changes to entries on the register of
members after that time will be disregarded in
determining the right of any person to attend or
vote at the Meeting.
4. The register of Directors’ interests kept by the
Company in accordance with section 325 of the
Companies Act 1985 and copies of contracts of
service of Directors with the Company or any of
its subsidiaries will be available for inspection at the
annual general meeting.
Dated 22 November 2007
By order of the Board
Neal Gossage
Secretary
Registered Office:
International House
Siskin Parkway East
Middlemarch Business Park
Coventry
CV3 4PE
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Annual Report and Accounts
63
14426 22/11/2007 Proof 5
Form of Proxy for use by holders of ordinary shares at the
Annual General Meeting of the Company convened for 21 December 2007
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shareholder Name
If there is a mistake in the details above, do not change what is
printed. Please contact Neal Gossage at the registered office.
Please read the notes below before filling in this form. Fill in
this form using black ink.
By filling in and returning this form, I/we appoint (see note 3 below)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shareholder Account Number
Insert the proxy’s name in BLOCK CAPITALS or “Chairman” if you wish to
appoint the Chairman.
Do not insert your own name(s).
as my/our proxy to attend and vote on my/our behalf at the Annual
General Meeting (“AGM”) of the Company or any adjourned meeting.
The AGM will be held at International House, Siskin Parkway East,
Middlemarch Business Park, Coventry,West Midlands, CV3 4PE on
21 December 2007 at 10.00 a.m.Y our proxy will vote on your behalf
on the Ordinary Resolutions referred to in the Notice of Annual
General Meeting dated 22 November 2007 as indicated by you.
Notes on filling in your form of Proxy
1. As a shareholder of Education Development International plc, you have the right to go to, speak at
and vote at the Annual General Meeting. If you cannot or do not want to go to the meeting, but
still want to vote you can appoint someone to go to the meeting and vote instead of you.That
person is known as a “proxy”.Y ou can use this form to appoint the Chairman or someone else as
your proxy.
2. Y our proxy does not have to be a shareholder of Education Development International plc.
However, if your proxy is not a shareholder, he or she is not entitled to speak at the meeting,
unless the Chairman allows them to speak.
3. If you want to appoint the Chairman as your proxy, insert “Chairman” in the space above. If you
want to nominate someone other than the Chairman as your proxy, give that person’s name in the
space above.Y our proxy must then go to the meeting to vote on your behalf. However, if you do
this and you, or your proxy, do not go to the meeting, your vote cannot be counted.
4. In the case of joint holders, the vote of the senior shareholder who tenders a vote, whether in
person or by proxy, will be accepted to the exclusion of the votes of the other joint holders. For
this purpose, seniority is determined by the order in which the names appear in the register of
members in respect of the joint holding.
5. If someone signs this form for you, when you or that person sends the form to us, you or they
must enclose the authority under which the form is signed. If you are appointing the proxy for a
company, the form must show the company’s seal or be signed on its behalf by an officer, attorney
or other person authorised to sign for the company.Where an officer signs this form, the
signatory should state his or her office on the form.
6. For the proxy named in this form to act for you, your completed form must arrive at the
Company’s Registrars, Capita IRG Plc, Proxy Department, PO Box 25, Beckenham, Kent, BR3 4BR
by 10.00 a.m. on 19 December 2007 or at least 48 hours before any adjourned meeting.
Please do not enclose anything else with your form (except for the authority mentioned in note 5
above where appropriate).
If your form arrives late, it will not be valid and will not replace any earlier form of proxy we have
received.We cannot accept forms of proxy returned by fax.
7. Entitlement to attend and vote at the meeting or at any adjourned meeting and the number of
votes you can cast, will be determined by reference to the shareholder register at 10.00 a.m. on
19 December 2007 or, if the meeting is adjourned, 10.00 a.m. on the day two days before the date
fixed for such adjourned meeting.
8. If you send a form of proxy, you can still go to the meeting and vote.
9. If we receive more than one form of proxy from the same shareholder, we will accept the last one.
10. If you make any alterations on this form, you must put your initials next to them.
Please indicate your vote by marking the appropriate box in black ink like this: x For Against
1 T o receive the report of the Directors and the audited accounts for the year ended 30 September 2007.
2 T o declare a dividend of 0.23 pence per share to be paid on 4 January 2008 to those shareholders on the register at the
close of business on 30 November 2007.
3 T o appoint Jenifer Moody as a Director of the Company.
4 T o reappoint Sir Bryan Nicholson as a Director of the Company, who shall retire in accordance with
the Company's articles of association.
5 T o reappoint Nigel Snook as a Director of the Company, who shall retire in accordance with the Company's articles of association.
6 T o reappoint Grant Thornton UK LLP (formerly RSM Robson Rhodes LLP) as auditors and to authorise the Directors to
determine their remuneration.
7 T o authorise the Directors pursuant to section 80 of the Companies Act 1985 (the “Act”) to exercise all the powers of the
Company to allot relevant securities (within the meaning of that section) up to an aggregate nominal amount of £94,352 for a
period expiring (unless previously renewed, varied or revoked by the Company in general meeting) 15 months after the date of
the passing of this resolution.
8 THAT, subject to the passing of Resolution 7 in the notice of the annual general meeting, the Directors
be generally empowered pursuant to section 95 of the Act to allot equity securities (within the meaning of section 94(2) of the
Act) for cash pursuant to the authority conferred by Resolution 7 as if section 89(1) of the Act did not apply to the allotment
and this power shall:
(a) expire 15 months after the date of the passing of this resolution or at the conclusion of the next annual general meeting of
the Company following the passing of this resolution, whichever first occurs, but the Company may before such expiry
make an offer or agreement which would or might require equity securities to be allotted after expiry of this authority and
the Directors may allot equity securities in pursuance of that offer or agreement notwithstanding that the power conferred
hereby has expired; and
(b) be limited to:
(i) the allotment of equity securities where such securities have been offered by way of a rights issue, open offer or
otherwise to holders of the ordinary shares in the capital of the Company in proportion (as nearly as may be) to their
existing holdings of ordinary shares but subject to the Directors having a right to make such exclusions or other
arrangements in connection with the offering as they deem necessary or expedient:
(1) to deal with equity securities representing fractional entitlements; and
(2) to deal with legal and practical problems arising in any overseas territory or the requirements of a regulatory
body or stock exchange or any other matters; and
(ii) allotments of equity securities for cash otherwise than pursuant to paragraph (i) above up to an aggregate nominal
amount of £26,873.
9 THAT the Company be and is hereby generally and unconditionally authorised to make market purchases (within the meaning
of Section 163 (3) of the Companies Act 1985) of ordinary shares of 1 pence each in the capital of the Company (“ordinary
shares”) provided that:
(a) the maximum number of ordinary shares hereby authorised to be purchased is 5,721,256 which represents approximately
10 per cent of the current issued share capital of the Company;
(b) the minimum price which may be paid for an ordinary share is one pence (exclusive of expenses); and
(c) the maximum price which may be paid for an ordinary share shall not be more than 5 per cent above the average of the
middle market quotations for a ordinary share as derived from the London Stock Exchange Daily Official List for each of
the five dealing days immediately preceding the date on which an ordinary share is purchased,
and shall, unless it is (prior to its expiry) duly revoked or is renewed, expire at the conclusion of the next annual general
meeting of the Company or 15 months from the date of passing of this resolution (whichever shall occur first), save that the
Company may make a contract to purchase ordinary shares under this authority before such expiry which will or may be
executed wholly or partly after such expiry, and may make a purchase of ordinary shares pursuant to any such contract as if the
authority hereby conferred had not expired.
If you do not indicate how you would like your proxy to vote, he or she may vote or abstain from voting on the Resolutions as he or she sees fit.
Y our proxy may vote or abstain from voting as he or she sees fit in connection with any other business that may properly come before the AGM.
Signature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2007
Form of Proxy

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BUSINESS REPLY SERVICE
Licence No. MB 122
Capita Registrars (Proxies)
PO Box 25
BECKENHAM
Kent
BR3 4BR
Second fold
Third fold
and tuck in flap opposite
First fold
2 2
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Education Development International plc
International House
Siskin Parkway East
Middlemarch Business Park
Coventry
CV3 4PE
T el: +44 (0) 24 7651 6500
Fax: +44 (0) 24 7651 6505
Email: info@ediplc.com
Website: www.ediplc.com
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