Education Development International plc
Annual Report and Accounts 2004 Contents
1 Highlights  
2 Chairman’s Statement
4 Chief Executive’s Report
8 Directors and Advisors
10 Corporate Governance
12 Directors’ Report
14 Independent Auditors’ Report
15 Group Profit and Loss Account
16 Group Statement of Total 
Recognised Gains and Losses
17 Group and Company Balance Sheets
18 Group Cash Flow Statement
19 Notes to the Financial Statements
42 Four Year Financial Review
43 Notice of Annual General Meeting
45 Letter from the Chairman of Education
Development International plc
47 Form of Proxy Education Development International plc
Annual Report and Accounts
1
Highlights
 The Group has moved into profitability
 Operating profit before goodwill amortisation and exceptional costs of £0.7 million (2003:
loss of £1.4 million — as restated)
 Adjusted basic earnings per share (excluding goodwill amortisation and impairment,
exceptional costs and deferred tax) of 1.5p (2003: adjusted loss per share of 3.1p)
 Net cash of £2.3 million (2003: £1.3 million)
 Increase during the year in shareholding in Educational Resources Pte Limited to 50.38% to
strengthen the Group’s position in its Far Eastern markets 
 Acquisition on 1 October 2004 of EQL which specialises in providing e-assessment services
to professional bodies 
 Defined benefit pension fund liabilities addressed; scheme closed to future accrual and future
annual contributions negotiated at approximately £120,000 per annum for ten years
 Proposed reduction in share premium account to eliminate deficit on profit and loss
account and create distributable reserves 2
Chairman’s Statement
Review of Results 
At the half-year I reported that the Group had moved
into profitability and this position has been reinforced
over the past six months.
The benefits of the acquisition of the London Chamber
of Commerce and Industry Examinations Board
(LCCIEB) are being realised and, coupled with strict
cost control and improving market conditions, this has
provided a sound financial base for our development
plans.The progress of the past year has been achieved
despite the anticipated impact of a weaker US Dollar on
revenues from South East Asia.
The business of the LCCIEB was acquired in December
2002, and the comparative figures in the Group profit
and loss account include its results for the period from
the date of the acquisition.A controlling interest in
Educational Resources Pte Limited (ER) was acquired on
24 June 2004 and trading is included in these results
from that date.
Audited accounts for the year to 30 September 2004
show a turnover of £11.0m (2003: £8.6m — 18 months
for GOAL assessment services and nine months for the
LCCIEB).The operating profit for the period before
amortisation of goodwill and exceptional costs was
£0.7m (2003: loss of £1.4m — as restated).
Basic earnings per share — adjusted to exclude
amortisation and impairment of goodwill, deferred
taxation and exceptional items — amounted to 1.5p
(2003: loss per share of 3.1p).
At 30 September 2004 net cash stood at £2.3m (2003:
£1.3m).The seasonality of examination revenues means
that the cash balance at 30 September includes £0.5m
(2003: £0.1m) of sales income received in advance.
Business Development
The Group has taken a number of strategic steps to
strengthen its position in the marketplace. In the
important South East Asia market, we have increased
our shareholding in Educational Resources Pte Limited
(ER) from 19.79% to 50.38%, enabling EDI to take
management control of this important agency operation.
On 1 October 2004, we acquired EQL Assessment
Limited (EQL) which specialises in providing e-
assessment services to professional bodies — mainly in
the financial services sector — using its innovative i-
assess technology platform.
To consolidate these developments and move the
Group on to the next stage of its evolution, at its July
2004 meeting, the Board approved a comprehensive
plan to invest in the further automation of our
administrative and service delivery systems and to move
to a single site operation.
Despite moving into profitability, the profit and loss
account shows the Company is carrying a comparatively
large deficit, which will take a significant number of years
of consistent, profitable trading to eliminate. In the light
of this, the Board will seek shareholder approval at the
AGM for a reduction of the share premium account to
eliminate this deficit and thus enable the Company to
pay dividends out of profits sooner than it would
otherwise be able.
Over the past year the Group has addressed, in
consultation with the Trustees of the Scheme, the
liabilities of the LCCIEB final salary pension fund which Education Development International plc
Annual Report and Accounts
3
were taken on at the time of the acquisition.The
Scheme was closed to further accrual in November
2003 and an agreement has now been reached with the
Trustees for EDI to contribute at the rate of
approximately £120,000 per annum over the next 10
years starting on 1 October 2004.
Board
As already announced, I shall be standing down as
Chairman at the AGM in January 2005 but will continue
to serve as the senior independent non-executive
Director and Chairman of the Remuneration
Committee.
Richard Price, who joined the Board in March 2003 and
is currently Chairman of the Audit Committee, will take
over chairmanship of the Board. Richard brings a wealth
of relevant experience to the chairmanship. Barrie Clark
will chair the Audit Committee.
Staff
I would like to pay particular tribute to the contribution
of the staff of EDI. In a period of significant and
continuing change, their performance has been
exemplary.
Prospects
EDI has made significant progress over the past year.We
have created a distinctive organisation through the
acquisition of the LCCIEB operation and its integration
with the GOAL technology capability. Securing
management control of ER and the acquisition of EQL
have strengthened our market position and broadened
our range of services.
EDI is now profitable and has established a sound
financial base for future development, in particular in 
the short term in investment in organisation
restructuring and strengthening our sales operation, in
optimising our service development capability and
modernising administration systems.While the Board is
mindful of the impact of the costs associated with this
investment programme, we expect the positive
performance of the second half of 2003/04 to flow
through to the current year.
There is the prospect of progressive growth in the
second half of 2004/05 flowing through into 2005/06
when we should benefit from the investments we are
making.
Sir Bryan Nicholson
Chairman
22 November 2004 4
Chief Executive’s Report
Introduction
The focus of the past year has been on maintaining and
developing EDI’s position in its various markets while
managing the organisational implications of integrating
the former GOAL and LCCIEB operations.
Our marketing, sales and service development plans for
the current year have all benefited from the experience
of the first full year of the EDI operation.This means we
are able to deploy our resources more effectively and
focus on those areas of activity which offer the greatest
potential for growth.Working with customers, we have
also been able to identify areas where we need to
either improve or develop our systems and procedures
with a view to achieving the highest possible levels of
customer service.
Drawing these strands together, we are now actively
planning for the final stages of the reorganisation, taking
into account the impact of further automation of
service delivery and administration.
The pro forma turnover analysis set out below provides
broadly comparative data for the main areas of business
activity after adjusting the 2003 figures to include the
pre-acquisition results of LCCIEB.
Year to 30 September 
2004 2003
£ million £ million
Examinations 5.6 5.7
Vocational qualifications 4.3 3.2
Assessment services:
— SCI Programme 1.0 0.9
— Consultancy projects 0.1 0.4
1.1 1.3
11.0 10.2
Services
Examinations
The pro forma sales value of LCCI branded examination
services has decreased marginally by £0.1m (2%) as a
direct result of fluctuations in currency exchange rates.
Our business in South East Asia is conducted in local
currencies aligned to the US Dollar and the total impact
of currency movements has been to reduce Sterling
revenues by approximately £0.2m.
Sales in Europe continue to expand as a result of
growth in our successful agency operation in Germany
and the development of a number of new agency
arrangements, particularly in EU accession states.
Probably the biggest area of potential sales growth in
this region is in relation to English language
qualifications.Work to develop existing examinations
and introduce a new range of qualifications to meet this
demand is well under way.
Particular emphasis has been placed on appointing new
agents as well as strengthening relationships with our
existing partners in international markets. New or
developing arrangements are now in place in Poland,
Hungary, Italy, Greece, the Middle East and South Africa.
A number of related market initiatives — including an
agents conference — have been well received and
indicate the potential which exists to increase sales by
opening up new markets for our existing range of
services and the introduction of IT -based variants.
In South East Asia, while sales volumes are stable in
Hong Kong and Singapore, there was a decline in
Malaysia.Through ER, we are engaged in discussions with
the Malaysian Government which, we hope, will
strengthen our position in this important market. ER has
reviewed its business model for the China market with
a view to the consolidation of what has been achieved
over recent years while working out the best long-term
approach to this complex market.
With EDI taking management control of ER, the new
arrangements have already led to a more focused
approach to business development and the planned
developments in systems and administration for the
delivery of LCCI services will now be more Education Development International plc
Annual Report and Accounts
5
straightforward to implement. However, these are
challenging markets — compounded by the current
depreciation of the US Dollar — and we face vigorous
competition, particularly in accountancy-related subjects,
which represent the largest proportion of our sales in
South East Asia.A concerted effort is being made to
capitalise on the strengths of the LCCI brand in South
East Asia and all of our international markets.
The acquisition of EQL has strengthened our links with
the main professional accountancy bodies and provides
the opportunity to review and develop our bookkeeping
and accountancy exams — particularly with computer-
based delivery in mind.
Vocational Qualifications
The pro forma sales value of vocational qualification
services has increased by £1.1m (34%) compared with
last year.
This strong performance has come through a balanced
mix of general sales growth, securing a number of new
customers and the introduction of new services.All of
our vocational qualification services are specific to the
UK market where government investment in vocational
education and plans for consolidation in the
qualifications supply side present opportunities for
continued growth in this area.
We have reorganised our sales effort to provide a more
focused approach to servicing our existing customers
— mostly private training companies — and increasing
sales to further education colleges which dominate the
delivery of government funded training programmes.
We continue to build our relationships with a number
of specialist awarding bodies with a view to
collaborative working and the provision of back-office
administration and IT development services.The
relationship with EMTA Awards Limited (EAL) — the
specialist awarding body for the engineering sector —
continues to strengthen and we hope to conclude
preliminary discussions with similar organisations over
the months ahead, although bringing these to a
contractual relationship will still take some time.
Since 1 September 2004, all of our UK vocational
qualification services have been presented under the
GOAL brand.This provides for a more integrated
marketing strategy as the link with our school
assessment service means we are able to present GOAL
as representing a lifelong learning range of services —
extending from Key Stage 1 in primary schools through
to adult education.Another benefit of this change is to
reduce the 2.5% annual royalty payment to the London
Chamber of Commerce and Industry for the use of its
name as, in future, we will only be using LCCI as our
international qualifications brand.This royalty is likely to
total around £150,000, which is payable by EDI for the
first time during 2004/05.
Assessment Services
The pro forma sales value of assessment services —
excluding one-off consultancy contracts — has
increased by £0.1m (11%) compared with last year.
During the course of the year we have built up our sales
effort in relation to the School Continuous Improvement
(SCI) Programme and maintained our position in the
market.This effort has shown through in a strong renewal
rate for the Programme from existing customers and a
steady flow of new sales.
As anticipated, sales peaked in the May-July period as
schools spent their allocations under the e-Learning
Credits scheme.This high degree of seasonality has been
taken into account as we continue to strengthen our
sales effort in this market which continues to
demonstrate potential for long-term growth.At the
same time, we are continuing to refine the SCI
Programme and package popular features so they can be
sold separately either online or in CD-ROM format. 6
Chief Executive’s Report
Continuing development work with the Connexions
Service and Learndirect has seen a version of our
innovative Decision Making Readiness Audit go live on
the Learndirect website.
In future, we will only pursue development contracts and
one- off consultancy work where these are likely to lead
to a long-term relationship with the commissioning
organisation. However, the acquisition of EQL means we
have taken on a number of service and development
contracts with professional bodies and examination
boards — using the i-assess platform — so activity in this
area is now likely to grow again.
Service Delivery
Currently we employ 106 staff (2003: 83) including 12
who are temporary. In addition, over 350 people are
members of our Professional Register working for EDI
as required on a consultancy basis, providing a wide
range of specialist skills, covering question writing,
examination marking, verification of vocational
qualifications and running training events for schools
using the SCI Programme.
The Board has approved plans for a major systems
development project and work is already well under way
on this with the aim of automating many more of our
administrative processes and enabling customers direct
access to both place and monitor orders.The estimated
cost of the systems development project is £0.7m, which
we expect to fall evenly over this year and next.
As part of this exercise, we are working with ER and
our agents in the German market to plan and test how
we can delegate more of the local administrative
processes to them.This should have a further positive
impact on both service levels and costs, as well as the
possibility of introducing similar arrangements in to
other markets.
Engaging representatives of the Professional Register in
our systems development project and providing training
and support in new and automated procedures is a
priority for the year ahead. Similar considerations apply
to our UK and international network of over 5,000
education and training organisations which are
registered with EDI as approved contacts for the
delivery of our services.
Printing, storage and distribution of examination and
qualification papers and support materials is a critical
aspect of our ‘supply chain’ and this work is contracted
out.We are working closely with our subcontractor on
the development of a fully automated ordering and
tracking system for our vocational qualifications materials
as this is a critical service area for our customers.
Despite the growing demand for computer-based
assessment services, there will continue to be significant
demand for paper-based services into the future which
means the main opportunities in this area will be in
relation to administrative efficiency.
Use of computer-based systems was central to the
philosophy of the original GOAL concept.The
innovative use of technology is still at the heart of our
strategy.The GOAL assessment system provides a
reliable means of delivering online assessment and
testing services to schools, colleges and the workplace.
The acquisition of EQL gives us access to the i-assess
platform which has been developed with the
requirements of delivering and administering ‘high
stakes’ professional qualifications in mind.Taken
together, the GOAL and i-assess platforms and the skills
of the staff who have developed them put EDI in a very
strong position to exploit the global trend towards
computer-based assessments.This capability also
provides the opportunity to further simplify
administration and deliver a wider range of learner
support materials in integrated, customised packages. Education Development International plc
Annual Report and Accounts
7
These considerations are at the heart of our systems
development project and also form the basis for a
careful review of our long-term software development
and maintenance requirements.
Organisation Development
The most significant development on the organisation
front is the Board’s decision to wind down the
operation of the administration centre in Sidcup and
transfer all of EDI’s activities to a single site near to the
current Head Office location in Leamington Spa.
The estimated cost of setting up a single site operation
and closing our existing facilities, including redundancy
and recruitment costs, is £0.75m, of which £0.43m has
been provided for in these accounts.The majority of
these costs are expected to be incurred during 2004/05.
While a number of functions have already been
transferred from Sidcup to Leamington, particular care
will be taken to transfer examinations and qualifications
administration over a period of up to 12 months to
ensure there is no disruption to these critical aspects of
EDI’s services.
To support our system development work and
organisational restructuring, we have strengthened the
management team through the appointment of Stewart
Jardine as Operations Director. He has extensive
experience of both the development and delivery of
education and assessment services working with public
and private sector organisations.
The Board of ER has been restructured to reflect EDI’s
controlling interest.Three EDI Nominees have been
appointed to the Board, including myself as Executive
Chairman.All day-to-day operations are now managed
from Singapore by an experienced manager — who
used to work for LCCIEB in the UK — reporting direct
to me.
Following the acquisition of EQL, the EDI Finance
Director and I have been appointed as the two
Directors of the subsidiary.The existing management
continues to have day-to-day responsibility for this
specialist operation which employs 9 staff based in
Livingston, Scotland.
During this period of significant change within the
organisation, HR management, staff development and
systems accreditation are of particular importance. In
recognition of this, we are in the final stages of
appointing a professional personnel and quality manager
to provide a focus for this work.
Looking Ahead
The EDI organisation is going through a period of
significant change and development.
A tremendous amount has been achieved over the past
year but the Board’s decision to invest in major systems
development and move to a single site will transform
the organisation over the next two years.We have the
opportunity to create a world-class organisation,
committed to its many partners and customers.
Both in the UK and internationally, governments and
individuals continue to invest heavily in education and
vocational training programmes as a critical factor for
economic growth and personal development.
Assessment and qualification services are an essential
element for both the design and quality assurance of
learning programmes, and this is leading to increased
demand for reliable, professional services.
EDI is already well placed to respond to these
opportunities and implementation of the plans set out
in this Annual Report can only strengthen our position.
Nigel Snook
Chief Executive
22 November 2004 8
Directors and Advisors
Executive Directors
Nigel Snook – MBA, FCIPD, MCMI, FRSA
Chief Executive
Nigel joined the Board of EDI plc in May 2001 and was
appointed Chief Executive later that year. Following the
acquisition of LCCIEB, he continued as Chief Executive
of the enlarged Group.
Nigel has over 25 years’ experience of the education
and employment sector working in government
agencies and training organisations. He was previously
Chief Executive of Lantra, the Sector Skills Council for
the land-based and environmental sector, which
provides a wide range of research, standard setting,
qualifications and training services.
He is actively involved in local vocational education,
training and guidance work through his membership of
the Coventry and Warwickshire Learning and Skills
Council and the Executive Board of the Coventry and
Warwickshire Connexions Service.
William J Swords
Executive Chairman LCCIEB, Executive Director 
After a period as an accountant in the Letts Group,
Liam progressed from Finance Director to Managing
Director of its manufacturing subsidiary, to Group
Managing Director. His career at Letts was followed by
a period as a consultant working mainly on international
marketing and company doctor briefs. It was in this
capacity that he first came to the London Chamber of
Commerce and Industry Examinations Board in late
1991 and, after successfully reversing its fortunes, joined
as Chief Executive in 1993. Following the acquisition of
LCCIEB by EDI in December 2002, he became
Executive Chairman, LCCIEB and an Executive Director
of EDI. He is also a director of Educational Resources
Pte Limited and of the Society of International
Accounting T echnicians.
Kumaresan Padmanathan – BSc Hon,AIB (South
Africa),ACA 
Finance Director & Company Secretary
Kumaresan started his professional career in 1981 with
Arthur Young, Chartered Accountants (now Ernst and
Young). In 1988 he joined Grattan plc, subsidiary of
Next plc as their Financial Accountant. In 1990 he
joined Deloitte & Touche, Management Consultants and
worked in their South African office. In 1992 he
returned to the UK and joined LCCIEB as Finance
Manager and was shortly thereafter appointed as the
Director of Corporate Services. In December 2002 he
was appointed Finance Director of EDI.
Non-Executive Directors
Sir Bryan Nicholson 
Senior Independent Non-executive Director, Chairman
Sir Bryan was appointed Chairman of EDI in January
2004 having previously served as Chairman in 2001/2. He
is Chairman of the Financial Reporting Council, chairs the
Council of the Open University, and is a Director of
Equitas. He was previously Chairman of the Post Office,
BUPA,The Manpower Services Commission and
Cookson Group plc, and Chancellor of Sheffield Hallam
University. Sir Bryan has also served on the Boards of
Rank Xerox, Lucas Varity plc and GKN plc.
Barrie Clark – FCCA, FRSA 
Independent Non-executive Director
Barrie has financial directorships in a number of private
and public companies. He has held various positions at
Spring Group plc, including Group Finance Director,
Chief Operating Officer and non-executive Chairman.
He is also non-executive Chairman of IS Solutions plc
and a non-executive Director of a number of private
companies.
Wynford Dore – OPM (Harvard) 
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. Education Development International plc
Annual Report and Accounts
9
Brian Harris
Non-executive Director
Brian was appointed Chairman of EDI in December
2002 following its acquisition of LCCIEB and stepped
down from this role in January 2004. His other business
interests include Chairman of Trustees of the LCCI
Commercial Education Trust and a Consultant to the
firm CB Richard Ellis, the international property
consultants.
He was Chairman of Priority Sites Land and
Development Company owned jointly by the Royal Bank
of Scotland and English Partnerships until June 2003, was
elected President of the London Chamber of Commerce
and Industry in 1992 and served for 2 years — he
remains a Vice-President of the Chamber. He has also
served as Deputy President of the British Chamber of
Commerce and on the Board of London First.
Brian served as a member of the Court of the
Common Council of the Corporation of London from
1996 until 2004 and was Sheriff of the City in 1998/9.
His other City involvement is as Past Master of the
Worshipful Company of Glaziers and as a Liveryman of
the Worshipful Company of World Traders. He is also a
fellow of the Royal Society of Arts
Richard Price – BSc (Econ), FCA, FCCA, CTA
Independent Non-executive Director
Richard is co-founder and recently retired Chairman of
BPP Holdings plc, the UK leader in the field of post
graduate qualifications training for accountants, lawyers,
tax specialists, actuaries and other financial
professionals.A chartered accountant and tax specialist
by training, Richard was appointed non-executive
Director of EDI in March 2003. His is a non-executive
Director of AIM-quoted Tikit Group plc, Chairman of
The Bach Choir and is a Council Member of the Royal
College of Music.
Advisors
Registered Office: The Old School, Holly Walk,
Leamington Spa,Warwickshire, CV32 4GL
Registered No: 3914767
Web site: www.ediplc.com
Auditors: RSM Robson Rhodes LLP, Chartered
Accountants, Centre City Tower, 7 Hill Street,
Birmingham, B5 4UU
Bankers: Barclays Bank PLC, Bromley Business Centre,
PO Box 160, Donegal House, 73 Tweedy Road, Bromley,
Kent, BR1 1UE
Nominated Adviser and Broker: Williams de Broë
Plc, Innovation Court, 121 Edmund Street, Birmingham,
B3 2HJ
Registrars: Capita IRG Plc, Bourne House, 34
Beckenham Road, Beckenham, Kent, BR3 4TU
Solicitors: Gateley Wareing LLP, One Eleven, Edmund
Street, Birmingham B3 2HJ. 10
Corporate Governance
General Principles
The Group is committed to high standards of corporate
governance.The Board has considered the Combined
Code and, having regard to the size of the Group, 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
 Mr W J Swords 
 Mr K Padmanathan 
Non-executive Directors
 Sir Bryan Nicholson (appointed Chair 22 January
2004 until the next AGM) 
 Mr B N Harris (stepped down as Chair 22 January
2004)
 Mr P L Morley (retired 22 January 2004)
 Mr W N Dore
 Mr B A Clark
 Mr R Price (takes over the Chair at the next AGM)
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 Chief Executive, who is 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 non-executive
Director and Mr B A Clark and Mr R Price are
independent non-executive Directors. Mr B N Harris
and Mr W N Dore are non-executive Directors.
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 7.
Committees of Board
The Remuneration Committee 
During the year the members of the remuneration
committee were:
 Mr B A Clark (appointed Chair 22 January 2004
until the next AGM)
 Mr P L Morley (retired as Chair 22 January 2004)
 Mr W N Dore (appointed 22 January 2004)
 Sir Bryan Nicholson (takes over Chair at next AGM)
 Mr R Price 
The Audit Committee
During the year the members of the audit committee
were:
 Mr R Price (appointed Chair 22 January 2004 until
the next AGM)
 Mr B A Clark (stepped down as Chair 22 January
2004; to be reappointed Chair at next AGM)
 Sir Bryan Nicholson (resigned 22 January 2004)
 Mr B N Harris 
The Nominations Committee 
During the year the members of the nominations
committee were:
 Mr B N Harris (Chair)
 Sir Bryan Nicholson
 Mr N M Snook
 Mr W J Swords
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 Education Development International plc
Annual Report and Accounts
11
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 control and recognises that these systems can
provide only reasonable and not absolute assurance
against material misstatement or loss.
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. Following the acquisition of ER during the
year, it is the intention of the Board to review ER’s
internal controls during the forthcoming year.
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 is 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.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 2004/5 and
an indicative budget for 2005/6, 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 2005 Annual General
Meeting, proxy votes will be announced after the show
of hands on each occasion. 12
Directors’ Report
The Directors present their report and the audited
financial statements for the 12 month period ended 30
September 2004.The comparatives are for the 18
month period to 30 September 2003.
Principal Activities
Throughout the reporting period, the Group’s activities
included the development and supply of a school
improvement system with wide applicability and ease of
delivery over the internet and the provision of
qualifications both in the UK and overseas. Products
include paper-based examinations sold into overseas
markets, together with National Vocational
Qualifications (‘NVQs’) and related qualifications sold
into the UK market.
On 24 June 2004 the Group increased its shareholding
in Educational Resources Pte Limited (ER) from 19.79%
to 50.38% and, with the agreement of all shareholders
of ER, took management and operational control of the
business. ER, a company incorporated in Singapore,
holds an exclusive licence from EDI to promote and
organise the Group’s LCCI branded examinations in the
Far Eastern and Asian territories and in China.
On 1 October 2004 the Group acquired the whole of
the share capital of EQL Assessment Limited, a company
which has developed and supplies i-assess branded
electronic assessment services.
Business Review and Future Developments
A review of the period’s operations and future prospects
is given in the Chairman’s Statement and the Chief
Executive’s Report.
Payment of Creditors
It is the Company’s policy that payments to suppliers
are made in accordance with the terms and conditions
agreed between the Company and its suppliers,
provided that all trading terms and conditions have
been complied with.The number of days trade creditors
for the Company was 28 at 30 September 2004 
(2003: 28).
Dividends
The Directors do not recommend the payment of a
dividend for the year ended 30 September 2004 (2003:
£nil).
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 affecting
the Group. 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 period were as
follows:
Sir Bryan Nicholson*
B A Clark*
W N Dore*
B N Harris* 
P L Morley* (resigned 22 January 2004)
K Padmanathan 
R Price* 
N M Snook
W J Swords 
* Non-executive Directors Education Development International plc
Annual Report and Accounts
13
Those Directors serving at the end of the period had
interests in the share capital of the Company at 30
September 2004 as follows:
Ordinary shares
30 Sept 30 Sept
2004 2003*
(Number) (Number)
Sir Bryan Nicholson 15,000 15,000
B A Clark 2,222 2,222
W N Dore 10,000,000 10,000,000
B Harris – –
K Padmanathan 40,000 –
R Price – –
N M Snook 41,500 1,500
W J Swords 115,000 –
* Or date of appointment if later
The shareholdings are all beneficial and have not changed
between 30 September 2004 and 22 November 2004.
Directors’ share options are shown in note 21 to the
financial statements.
The Directors have no interest in the shares of any
other Group company.
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 22 November 2004:
London Chamber of Commerce and
Industry Commercial Education Trust 45.5%
Mr W N Dore 19.3%
Mr D G Newman 19.3%
Real Time Consultancy Limited 3.9%
Statement of Directors’ Responsibilities for the
Annual Report
Company law in the United Kingdom requires the
Directors to prepare financial statements for each
financial year which give a true and fair view of the state
of affairs of the Company and the Group 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 apply them
consistently;
 make judgements and estimates that are reasonable
and prudent;
 state whether applicable United Kingdom accounting
standards have been followed, subject to any
material departures disclosed and explained in the
financial statements; and
 prepare the financial statements on the going
concern basis, unless it is inappropriate to presume
that the Group will continue in business.
The Directors are responsible for keeping proper
accounting records which disclose with reasonable
accuracy at any time the financial position of the Group
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 Group
and hence for taking reasonable steps for the
prevention and detection of fraud and other
irregularities.
AGM resolutions
The resolutions to be proposed at the Annual General
Meeting to be held on 20 January 2005, together with
explanatory notes, are listed in the Notice of Annual
General Meeting on page 43.
Auditors
A resolution to reappoint RSM Robson Rhodes LLP will
be proposed at the forthcoming Annual General
Meeting.
By order of the Board
K Padmanathan
Secretary
22 November 2004 14
Independent Auditors’ Report to the Shareholders
of Education Development International plc
We have audited the financial statements on pages 15
to 41.
This report is made solely to the Company’s
shareholders, 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
shareholders those matters we are required to state to
them in an auditors’ report and for no other purpose.
To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the
Company and the Company’s shareholders, 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 and the financial statements in accordance with
applicable law and United Kingdom Accounting
Standards 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 United Kingdom Auditing Standards.
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 if, in our opinion, the Directors’
Report is not consistent with the financial statements, if
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 or the AIM rules regarding Directors’
remuneration and transactions with the Company and
other members of the Group is not disclosed.
We read the other information contained in the Annual
Report and consider whether it is consistent with the
audited financial statements.The other information
comprises only the Chairman’s Statement, the Chief
Executive’s Report, the Schedule of Directors and
Advisers, the Corporate Governance Statement, the
Directors’ Report, the Four Year Summary, Notice of
the Annual General Meeting, Form of Proxy and the
letter from the Chairman regarding the Reduction of
the Share Premium Account.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 United
Kingdom Auditing Standards 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 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 financial statements give a true and
fair view of the state of affairs of the Company and the
Group as at 30 September 2004 and of the Group’s
profit for the year then ended and the financial
statements have been properly prepared in accordance
with the Companies Act 1985.
RSM Robson Rhodes LLP
Chartered Accountants and Registered Auditors
Birmingham, England
22 November 2004 Education Development International plc
Annual Report and Accounts
15
Group Profit and Loss Account
For the year ended 30 September 2004
Periods ended
30 Sept 30 Sept
2004 2003
(12 months) (18 months)
T otal Continuing
Existing Continuing Operations
Operations Acquisitions Operations As restated
Note £’000 £’000 £’000 £’000
Turnover 2 10,856 106 10,962 8,573 
Cost of sales (4,001) (57) (4,058) (3,115)
Gross profit 6,855 49 6,904 5,458
Administrative costs
Non-exceptional administrative costs 
before impairment and amortisation
of goodwill (6,012) (151) (6,163) (6,882)
Impairment and amortisation of goodwill 11 (183) (5) (188) (2,759)
Exceptional administrative costs 3 (430) – (430) (600)
(6,625) (156) (6,781) (10,241)
Operating profit/(loss)
Before exceptional operating items,
impairment and amortisation of goodwill 843 (102) 741 (1,424)
Impairment and amortisation of goodwill 11 (183) (5) (188) (2,759)
Exceptional operating items 3 (430) – (430) (600)
T otal operating profit/(loss) 2 230 (107) 123 (4,783)
Interest 4 (31) 79
Profit/(loss) on ordinary activities
before taxation 5 92 (4,704)
Tax on profit/(loss) on ordinary activities 9 215 231
Profit/(loss) on ordinary activities
after taxation 307 (4,473)
Minority interests — equity 24 53 –
Retained profit/(loss) for the year 22 360 (4,473)
Earnings/(loss) per share 10
Basic and diluted 0.7p (12.1)p
Basic adjusted for exceptional operating items,
impairment and amortisation of goodwill and
deferred taxation 1.5p (3.1)p 16
Group Statement of Total Recognised 
Gains and Losses For the year ended 30 September 2004
Periods ended
30 Sept 30 Sept
2004 2003
(12 months) (18 months)
As restated
Note £’000 £’000
Profit/(loss) attributable to shareholders 360 (4,473)
Actuarial gain relating to pension scheme 27 609 63
UK deferred tax attributable to the actuarial gain (203) (21)
Currency translation differences 1–
T otal recognised gain/(loss) for the financial period 23 767 (4,431)
Prior year adjustment for FRS 17 (see note 27) 205
T otal recognised gains and losses since the last annual report 972 Education Development International plc
Annual Report and Accounts
17
Group and Company Balance Sheets
At 30 September 2004
Group Company
2004 2003 2004 2003
As restated As restated
Note £’000 £’000 £’000 £’000
Fixed assets
Intangible assets — goodwill 11 3,754 3,500 3,317 3,500 
Tangible assets 12 171 225 152 225 
Investments 13 – 30 687 30
3,925 3,755 4,156 3,755
Current assets
Stocks 14 47 40 25 40 
Debtors 15 1,697 1,370 1,859 1,370 
Cash at bank and in hand 2,349 1,330 1,724 1,330
4,093 2,740 3,608 2,740 
Creditors: Amounts falling due within one year 16 (2,342) (1,372) (1,837) (1,372)
Net current assets 1,751 1,368 1,771 1,368
T otal assets less current liabilities 5,676 5,123 5,927 5,123 
Creditors: Amounts falling due after one year 17 – (567) (403) (567)
Provisions for liabilities and charges 18 (1,011) (728) (1,011) (728)
Net assets excluding pension liabilities 4,665 3,828 4,513 3,828
Defined benefit pension liabilities net of deferred taxation 27 (1,246) (1,638) (1,246) (1,638)
T otal net assets 2 3,419 2,190 3,267 2,190 
Capital and reserves
Called up share capital 21 517 485 517 485
Share premium account 22 12,591 12,351 12,591 12,351 
Profit and loss account 22 (9,879) (10,646) (9,841) (10,646)
Equity shareholders’ funds 23 3,229 2,190 3,267 2,190
Equity minority interests 24 190–––
3,419 2,190 3,267 2,190
Nigel Snook Kumaresan Padmanathan
Chief Executive Finance Director
22 November 2004 18
Group Cash Flow Statement
For the year ended 30 September 2004
Periods ended
30 Sept 30 Sept
2004 2003
(12 months) (18 months)
As restated
Note £’000 £’000
Net cash inflow/(outflow) from operating activities 28 1,192 (1,706)
Returns on investment and servicing of finance
Interest received 29 47 110
Taxation received 9 – 224
Capital expenditure and financial investment
Payment for tangible fixed assets (74) (73)
Receipts from the sale of tangible fixed assets 46 25
Acquisitions and disposals
Purchase of subsidiary undertaking 11 (385) –
Cash acquired with subsidiary undertaking 11 190 –
Costs on purchase of trade of LCCIEB – (653)
Increase/(decrease) in cash 30 1,016 (2,073) Education Development International plc
Annual Report and Accounts
19
Notes to the Financial Statements
30 September 2004
1. ACCOUNTING POLICIES
Basis of accounting
The Group financial statements are prepared under the
historical cost convention and in accordance with
applicable accounting standards. Financial Reporting
Standard (FRS) 17 “Retirement benefits” has been adopted
with effect from 1 October 2003 and prior year results
have been restated accordingly.
If FRS 17 had not been adopted for the period ended
30 September 2004, the operating profit would have been
£986,000 (2003: loss of £4,842,000); this would have
included a net release from the pension provision of
£820,000.The interest credited would have been £18,000
(£110,000), the profit on ordinary activities before taxation
would have been £1,004,000 (2003: loss of £4,732,000) and
profit on ordinary activities after taxation would have been
£1,184,000 (2003: loss of £4,508,000).The corresponding
net assets would have been £3,685,000 (2003: £1,985,000).
Basis of consolidation
The Group accounts comprise a consolidation of the
accounts of the Company and its subsidiary undertakings
at 30 September using acquisition accounting.The results
of subsidiary undertakings acquired during the financial
year are included from the date of acquisition.
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 and amortised
evenly over its estimated useful economic life, which will
not exceed 20 years. In addition to systematic
amortisation, the book value of goodwill is written down
to its recoverable amount when any impairment is
identified.
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
30 September. Exchange differences are taken to the profit
and loss account.
In the consolidated accounts, the assets and liabilities of
foreign subsidiaries are translated into Sterling at the rates
of exchange ruling at 30 September.The trading results of
foreign subsidiaries are translated into Sterling using an
average exchange rate for the period of consolidation, and
the difference in relation to closing rates is taken to
reserves.
Turnover
Turnover, excluding amounts receivable under annual
licence agreements, represents amounts invoiced by the
Group in respect of services provided during the period,
excluding value added tax.Amounts receivable under
annual licence agreements are credited to deferred income
and released to the profit and loss account on a straight-
line basis over the duration of the agreements.
Pensions 
The Group operates a defined benefit pension scheme. In
accordance with FRS 17 “retirements benefits”, 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 profit and loss account.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 the market value of the scheme
assets at the start of the period), are included in the profit
and loss account under “interest”.
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 net of deferred tax.Any difference between the
expected return on assets and that actually achieved is
recognised in the statement of total recognised gains and
losses 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 period represents the contributions
payable to the schemes in respect of the accounting
period.
Further information on pension arrangements is set out in
note 27 to the accounts.
T axation
The payment of taxation is deferred or accelerated
because of timing differences between the treatment of
certain items for accounting and taxation purposes. Full
provision for deferred taxation is made under the liability
method, without discounting, on all timing differences that
have arisen, but have not reversed by the balance sheet
date, unless such provision is not permitted by FRS 19.
Deferred tax assets are recognised to the extent that it is
regarded as more likely than not that they will be
recovered. 20
Notes to the Financial Statements
30 September 2004
Research and development
Expenditure incurred in market research and product
development and testing is written off in the year in which
it is incurred.
Onerous leases
Where a leased property is vacant or sub-leased to a
third party at below market rent, a provision is recognised
to the extent that rental payments are not recoverable
from sub-leasing the property.The provision is 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.
Tangible fixed assets and depreciation
Depreciation is calculated on the straight-line basis to
write tangible fixed assets down to their estimated
residual values over their expected useful lives.Where
there is evidence of impairment, fixed assets 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
Leased assets
Rentals payable under operating leases are charged to the
profit and loss account on a straight-line basis over the
period of the leases.
Stocks
Stocks 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.
2. SEGMENT AL ANAL YSIS
Analysis by area of geographical operations
The Group operates from the UK and from South East Asia through Educational Resources Pte Limited, the subsidiary it
acquired during the year.
Periods ended
30 Sept 30 Sept
2004 2003
(12 months) (18 months)
As restated
£’000 £’000
Turnover
United Kingdom 10,856 8,573
South East Asia 106 –
10,962 8,573
Operating profit/(loss)
United Kingdom 230 (4,783)
South East Asia (107) –
123 (4,783)
Net assets
United Kingdom 2,827 2,190
South East Asia 592 –
3,419 2,190
\ Education Development International plc
Annual Report and Accounts
21
2. SEGMENT AL ANAL YSIS (continued)
Turnover by geographical market (by destination):
Periods ended
30 Sept 30 Sept
2004 2003
(12 months) (18 months)
£’000 £’000
Existing operations
United Kingdom 6,073 5,064
Rest of Europe 1,802 1,087
Far East and Asia 2,683 2,262
Rest of World 298 160
10,856 8,573
Acquisitions
Far East and Asia 106 –
106 –
T otal continuing operations
United Kingdom 6,073 5,064
Rest of Europe 1,802 1,087
Far East and Asia 2,789 2,262
Rest of World 298 160
10,962 8,573
Turnover by business type:
Existing operations
Examinations 5,446 3,890
Vocational qualifications 4,226 2,249
Assessment services 1,018 2,059
Other 166 375
10,856 8,573
Acquisitions
Examinations 106 –
106 –
T otal continuing operations
Examinations 5,552 3,890
Vocational qualifications 4,226 2,249
Assessment services 1,018 2,059
Other 166 375
10,962 8,573
Due to the similarities of the income streams shown above, costs are incurred on a centralised basis and therefore no analysis
of operating profit/(loss) by business type or geographical market by destination is given. 22
Notes to the Financial Statements
30 September 2004
3. EXCEPTIONAL OPERATING ITEMS
Periods ended
30 Sept 30 Sept
2004 2003
(12 months) (18 months)
£’000 £’000
Recognised in arriving at operating profit/(loss)
Redundancy costs as a result of the acquisition of LCCIEB – 395
Provision for restructuring costs 430 –
Onerous lease provisions – 205
430 600
As explained more fully in note 18, the restructuring costs relate to redundancy costs and related expenses following the
decision to close one of the Group’s trading premises.The onerous lease provisions relates to future obligations under lease
contracts in respect of office spaces vacated following the acquisition in the period ended 30 September 2003 of the trade
and certain of the assets and liabilities of LCCIEB.
4. INTEREST
Periods ended
30 Sept 30 Sept
2004 2003
(12 months) (18 months)
As restated
£’000 £’000
Net finance charge on pension schemes (see note 27) (49) (31)
Bank interest receivable 47 110
Unwinding of discount on onerous lease provision (29) –
(31) 79
\ Education Development International plc
Annual Report and Accounts
23
5. PROFIT/(LOSS) ON ORDINARY ACTIVITIES BEFORE TAXATION
The profit/(loss) on ordinary activities before taxation is arrived at after charging/(crediting):
Periods ended
30 Sept 30 Sept
2004 2003
(12 months) (18 months)
£’000 £’000
Research and development expenditure – 185
Depreciation of tangible fixed assets 113 235
Amortisation of goodwill 188 235
Impairment of goodwill – 2,524
Auditors’ remuneration (audit services)* 48 37
(Profit)/loss on disposal of fixed assets (9) 61
Rentals under operating leases
— land and buildings 354 285
— other 3–
* Includes remuneration paid to the auditors of the Company for audit services of £32,000 (2003: £37,000).
During the period the Group’s auditors were paid £42,000 (2003: £196,000) including payments to the Company’s auditors
of £15,000 (2003: £196,000) in respect of non-audit services.The fees paid in the accounting period to 30 September 2004
include £23,000 in relation to the acquisition of Educational Resources Pte Limited which has been capitalised. (The fees in
the period to September 2003 mainly relate to services provided during the acquisition of LCCIEB and £181,000 of this
amount has been capitalised within the costs of acquisition of LCCIEB.)
6. EMPLOYEES
Average weekly number of employees, including Executive Directors:
Periods ended
30 Sept 30 Sept
2004 2003
(12 months) (18 months)
Number Number
Sales and marketing 25 19
Operations and product development 40 20
Administration and finance 28 29
93 68
Periods ended
30 Sept 30 Sept
2004 2003
(12 months) (18 months)
As restated
£000 £000
Wages and salaries 2,851 3,763
Social security costs 288 340
Other pension costs
Defined benefit scheme (see note 27) 40 198
Defined contribution schemes 155 127
195 325
3,334 4,428 24
Notes to the Financial Statements
30 September 2004
7. DIRECTORS
Emoluments of the Company’s Directors:
Salary and Benefits T otal T otal Pensions Pensions
fees in kind 2004 2003 2004 2003
(12 months) (12 months) (12 months) (18 months) (12 months) (18 months)
£’000 £’000 £’000 £’000 £’000 £’000
Non-executives
Sir Bryan Nicholson 18 – 18 36 – – 
B A Clark 10 – 10 18 – – 
W N Dore 10 – 10 18 – – 
B Harris – – – – – – 
P L Morley* 3 – 3 18 – – 
D G Newman† – – – 15 – – 
R Price 10 – 10 6 – – 
Prof D Reynolds† – – – 15 – – 
Executives
N M Snook 131 8 139 237 22 32 
A J P Clayton† – – – 161 – 8 
M L Giddings† – – – 108 – 4 
K Padmanathan 90 8 98 73 14 12 
W J Swords 125 12 137 102 20 18
Aggregate emoluments 397 28 425 807 56 74
* Resigned from the Board on 22 January 2004. Remuneration up until that date is shown above.
† Resigned from the Board during the period ended 30 September 2003.
Pension costs represent Group contributions to the personal pension plans of the Directors.
Directors’ share options
No Directors exercised any share options during the year or previous period. Details of the share options currently held by
the Directors are shown in note 21.
8. RELATED PARTY TRANSACTIONS
A summary of the related party transactions undertaken during the period, all of which have been completed on an arm’s
length basis, is as follows:
Value of transactions
30 Sept 30 Sept Balance at
2004 2003 30 Sept 30 Sept
(12 months) (18 months) 2004 2003
Related party Description £’000 £’000 £’000 £’000
H L Investments Limited
1
Provision of premises and 84 128 – –
leasehold improvements
Spring Group plc
2
Provision of programmers 14–4–
1
Company controlled by W N Dore, a Director of the Company.
2
Company for which B A Clark, a Director of the Company, acts as a director.
In addition,W J Swords was a Director of Educational Resources Pte Limited throughout the year.The value of sales of
examination services provided by EDI to ER for the period prior to acquisition was £2,580,000 (2003: £1,950,000) and the
value of commissions paid by EDI to ER for the same period was £1,039,000 (2003: £668,000).The balance due to EDI from ER
at the date of acquisition was £39,000 (30 September 2003: £19,000).
\
\ Education Development International plc
Annual Report and Accounts
25
9. TAXATION
The taxation charge/(credit) for the period is analysed below:
Periods ended
30 Sept 30 Sept
2004 2003
(12 months) (18 months)
As restated
£’000 £’000
Current tax
United Kingdom corporation tax
Tax credit in respect of research and development costs – (224)
Foreign tax
Current tax on income for the year 17 –
Adjustments in respect of prior periods (12) –
Total foreign tax charge 5–
T otal current tax charge/(credit) 5 (224)
Deferred taxation
United Kingdom
Net origination and reversal of timing differences (235) (7)
Foreign tax
Net origination and reversal of timing differences 15 –
T otal deferred taxation (credit)/charge (220) (7)
Tax on profit/(loss) on ordinary activities (215) (231)
There is no liability to UK corporation tax at 30 September 2004 owing to trading losses brought forward from previous
accounting periods.
The Group has trading losses available to carry forward against future trading profits of approximately £9.0 million at
30 September 2004 (2003: £10.0 million).
Periods ended
30 Sept 30 Sept
2004 2003
(12 months) (18 months)
As restated
£’000 £’000
Current tax reconciliation
Profit/(loss) on ordinary activities before taxation 92 (4,704)
Theoretical tax charge/(credit) at UK corporation tax rate of 30% (2003: 30%) 28 (1,411)
Effects of:
Permanent differences 11 133
Goodwill impairment — not tax deductible – 379
Unprovided movement in accelerated capital allowances 4 9
Unprovided short-term timing differences (12) 551
Tax credit in respect of research and development costs – (224)
Fair value adjustments – (940)
Unprovided movement in losses (31) 1,279
Foreign tax rate difference 5–
Actual current tax charge/(credit) 5 (224) 26
Notes to the Financial Statements
30 September 2004
10. EARNINGS/(LOSS) PER SHARE
The basic earnings/(loss) per ordinary share is calculated on the profit in the year of £360,000 (2003: loss of £4,473,000 as
restated), divided by 49.4 million (2003: 36.9 million) ordinary shares, being the weighted average number of shares in issue
during the period. Diluted earnings per share is calculated after allowing for the dilutive effect of the conversion into ordinary
shares of the weighted average number of share options outstanding during the period.
Effect of goodwill impairment and amortisation, deferred taxation and exceptional operating items on basic
earnings/(loss) per ordinary share
Period ended Period ended
30 September 2004 30 September 2003
(12 months) (18 months)
As restated
Earnings/ Earnings/
(loss) (loss) 
£’000 per share £’000 per share
Profit/(loss) for the period 360 0.7p (4,473) (12.1)p 
Adjustments
Impairment of goodwill – – 2,524 6.8p 
Amortisation of goodwill 188 0.4p 235 0.6p 
Exceptional operating items 430 0.9p 600 1.6p 
Deferred taxation credit (220) (0.5)p (7) (0.0)p
Adjusted profit/(loss) after taxation 758 1.5p (1,121) (3.1)p
An adjusted earnings/(loss) per share has been presented to show the underlying performance of the Group, including the
reversal of the deferred tax asset which will be utilised in future periods.
11. INT ANGIBLE ASSETS
Positive goodwill
Group Company
£’000 £’000
Cost
At 1 October 2003 6,259 6,259
Arising in the period 442 –
At 30 September 2004 6,701 6,259
Amortisation and impairment
At 1 October 2003 2,759 2,759
Amortisation charged in the period 188 183
At 30 September 2004 2,947 2,942
Net book value
At 30 September 2004 3,754 3,317
At 30 September 2003 3,500 3,500 Education Development International plc
Annual Report and Accounts
27
11. INT ANGIBLE ASSETS (continued)
Goodwill arose in the period on the acquisition by the Group of Educational Resources Pte Limited (ER).At 1 October 2003
the Group owned 19.79% of the issued share capital of ER with a carrying value of £30,000. On 24 June the Group increased
its holding to 50.38% for a consideration (before costs) of £560,000.This was satisfied by a cash payment of £288,000 and the
issue of 3,200,000 new 1p ordinary shares at a premium of 7
1
/2p.
Fair values
The book values and 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
Tangible fixed assets 21 – – 21
Goodwill 29 (29) – –
Licence fees 1,065 – (560) 505
Debtors 121 – – 121
Cash at bank and in hand 190 – – 190
Creditors (349) – – (349)
Net assets/(liabilities) 1,077 (29) (560) 488
Minority interest (243)
Net assets acquired 245
Goodwill 442
687
Satisfied by
Value of initial investment 30
Shares issued 272
Cash consideration 288
Costs of acquisition 97
687
The fair value adjustments include the following items:
 The book value of goodwill acquired in ER is not believed to have a fair value to the group and has been written off.
 The accounting policy alignment relates to a licence agreement between EDI and ER which was entered into in October
2000.The consideration for the agreement was £810,000 which EDI has previously recognised as deferred income over
the period of the licence.At 24 June 2004 the unamortised portion of the licence income in the books of EDI was
£505,000.
Since the acquisition, ER has contributed £440,000 to the Group’s operating cash flow. 28
Notes to the Financial Statements
30 September 2004
11. INT ANGIBLE ASSETS (continued)
Pre-acquisition performance of Educational Resources Pte Limited
Period from 1 July 2003 to 23 June 2004
£’000
T urnover 921
Operating costs (974)
Operating loss and retained loss for the financial period (53)
Year ended 30 June 2003
Loss for the year (172)
Impairment of goodwill
At 30 September 2003 the Directors performed an FRS11 impairment review of goodwill by estimating its value in use based
on the Board approved budgets for 2004 and 2005.A discount rate of 13.75% was applied to the budgeted cash flows to derive
their net present values. Following this review an impairment provision was made to reduce the carrying value to £3,500,000.
The Directors believe that this value properly reflects the value in use of the goodwill arising following the LCCIEB acquisition
and is consistent with the value of that business established prior to the acquisition date, before the unexplained and short-
lived increase in the share price distorted the calculation of goodwill for accounting purposes.
12 T ANGIBLE ASSETS
Fixtures, Leasehold
Motor Computer fittings and improve-
vehicles equipment equipment ments T otal
Group £’000 £’000 £’000 £’000 £’000
Cost
At 1 October 2003 86 290 212 87 675
Currency translation adjustment –1––1
Additions – 70 4 – 74
Subsidiary acquisition – 54 29 9 92
Disposals (72) – – – (72)
At 30 September 2004 14 415 245 96 770
Depreciation
At 1 October 2003 39 147 177 87 450
Currency translation adjustment –––––
Charge for period 5 86 21 1 113
Subsidiary acquisition – 37 26 8 71
Disposals (32) – (2) (1) (35)
At 30 September 2004 12 270 222 95 599
Net book values
At 30 September 2004 2145 23 1171
At 30 September 2003 47 143 35 – 225 Education Development International plc
Annual Report and Accounts
29
12 T ANGIBLE ASSETS (continued)
Fixtures, Leasehold
Motor Computer fittings and improve-
vehicles equipment equipment ments T otal
Company £’000 £’000 £’000 £’000 £’000
Cost
At 1 October 2003 86 290 212 87 675
Additions – 70 3 – 73
Disposals (72) – – – (72)
At 30 September 2004 14 360 215 87 676
Depreciation
At 1 October 2003 39 147 177 87 450
Charge for period 5 83 18 – 106
Disposals (32) – – – (32)
At 30 September 2004 12 230 195 87 524
Net book values
At 30 September 2004 2 130 20 – 152
At 30 September 2003 47 143 35 – 225
13. INVESTMENTS
Unlisted trade
investments
Group £’000
Cost
At 1 October 2003 55
Reclassification: part of consideration for acquisition of ER (see note 11) (30)
Disposal (25)
At 30 September 2004 –
Provisions and amounts written off
At 1 October 2003 25
Disposal (25)
At 30 September 2004 –
Net book values
At 30 September 2004 —
At 30 September 2003 30 30
Notes to the Financial Statements
30 September 2004
13. INVESTMENTS (continued)
Investments Unlisted
in subsidiary trade
undertakings investments T otal
Company £’000 £’000 £’000
Cost 
At 1 October 2003 – 55 55
Additions 657 – 657
Reclassifications 30 (30) –
Disposals – (25) (25)
At 30 September 2004 687 – 687
Provisions and amounts written off
At 1 October 2003 – 25 25
Disposals – (25) (25)
At 30 September 2004 – – –
Net book values
At 30 September 2004 687 – 687
At 30 September 2003 – 30 30
The trade investment disposed of during the year in the books of the Group and Company was Smart-Skills (Europe) Limited,
a company incorporated in England and Wales which provides on-line training services.The Group disposed of the whole of
its 33.3% interest in the ordinary shares of the company on 13 May 2004 for a consideration of £1.
The Company’s investments in subsidiary undertakings at 30 September 2004 are:
Country of incorporation
Company name Interest in ordinary shares and registration Principal activity
Educational Resources Pte Limited 50.4% Singapore Examination services
Educational Development Pte Limited 100%* Singapore Consultancy in education
and related services
E-Learning corporation Limited 100%* Mauritius Dormant
LCCIEB Training consultancy Co. 100%* People’s Republic of China Consultancy in education
and related services
Kris Marketing Sdn Bhd 100%* Malaysia Consultancy in education
and related services
Educational Resources (HK) Limited 100%* Hong Kong Consultancy in education
and related services
GOAL Limited 100% England & Wales Dormant
* Indirect holding through Educational Resources Pte Limited. Education Development International plc
Annual Report and Accounts
31
14. STOCKS
Group Company
30 Sept 30 Sept 30 Sept 30 Sept
2004 2003 2004 2003
£’000 £’000 £’000 £’000
Goods for resale 47 40 25 40
The replacement cost of the above stocks would not be significantly different from the values stated.
15. DEBTORS
Group Company
30 Sept 30 Sept 30 Sept 30 Sept
2004 2003 2004 2003
£’000 £’000 £’000 £’000
Due within one year
Trade debtors 1,135 973 1,106 973 
Deferred tax asset 200 – 200 –
Amounts owed by Group undertaking – – 213 – 
Other debtors 62 104 40 104 
Prepayments and accrued income 300 293 300 293 
1,697 1,370 1,859 1,370
Deferred tax asset 
The deferred tax asset, together with amounts unprovided, comprises the following:
Provided Unprovided
30 Sept 30 Sept 30 Sept 30 Sept
2004 2003 2004 2003
£’000 £’000 £’000 £’000
Accelerated capital allowances – – 27 23
Short-term timing differences – – 6 554
Losses 200 – 2,695 2,770
200 – 2,728 3,347
The movement in the year:
2004 2003
£’000 £’000
Opening deferred tax asset ––
Net origination 200 –
Closing deferred tax asset 200 – 32
Notes to the Financial Statements
30 September 2004
16. CREDITORS:AMOUNTS FALLING DUE WITHIN ONE YEAR
Group Company
30 Sept 30 Sept
30 Sept 2003 30 Sept 2003
2004 As restated 2004 As restated
£’000 £’000 £’000 £’000
Trade creditors 443 318 342 318 
Other taxation and social security 249 243 229 243 
Other creditors 84 121 165 121 
Accruals and deferred income 1,566 690 1,101 690
2,342 1,372 1,837 1,372
17. CREDITORS:AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
Group Company
30 Sept 30 Sept 30 Sept 30 Sept
2004 2003 2004 2003
£’000 £’000 £’000 £’000
Deferred income – 567 403 567
18. PROVISIONS FOR LIABILITIES AND CHARGES
Group and Company
Restructuring Onerous Pension
provision leases provision Dilapidations T otal
£’000 £’000 £’000 £’000 £’000
At 1 October 2003 as previously stated – 728 1,800 – 2,528
Prior year adjustment for FRS 17 – – (1,800) – (1,800)
At 1 October 2003 as restated – 728 – – 728 
Amount charged to profit and loss account 430 (43) – 40 427
Utilised in the period – (115) – – (115)
Discount rate adjustment – (29) – – (29)
At 30 September 2004 430 541 – 40 1,011
On the acquisition of the LCCIEB 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
March 2011 and December 2017.
Additionally, as a result of the reorganisation following the acquisition of the LCCIEB, the Group permanently vacated one
floor of its Sidcup offices with a view to subletting it. Part of this space was let during the year and the provision has been
adjusted to reflect the expected leasehold costs of the remaining vacant area.
In September 2004 the Group formally made the decision to restructure its UK operations so that it trades from a single site.
A provision has been introduced to reflect the estimated costs of staff redundancy during the next 12 months.A further
provision has been introduced for the cost of making good dilapidations in accordance with the lease agreements for both
properties that the company currently occupies.
The onerous leases provision has been discounted and is stated at net present value. Discounting has no material effect on
the other provisions. Education Development International plc
Annual Report and Accounts
33
19. FINANCIAL ASSETS AND LIABILITIES
The Group’s financial instruments comprise cash at bank, forward exchange contracts and various other items such as trade
debtors and trade creditors that arise directly from operations.The main purpose of these instruments is to provide finance
for operations.
The Group has not entered into derivative transactions, with the exception of forward foreign exchange contracts in the
normal course of trade, nor does it trade in financial instruments as a matter of policy.
The main risks arising from the Group’s financial instruments are interest risk, foreign currency exchange risk and liquidity
risk.
The Group enters into forward exchange contracts to reduce the currency exchange risk of sales transactions denominated
in foreign currencies. Such contracts are generally entered into at the close of the financial year based on forecast foreign
currency earnings in the next 12 months.
Operations are currently funded through the Group’s cash balances arising from the flotation in April 2000 and operating cash
generated in the year.The Board’s policy is to hold positive cash balances on short-term deposit.
The Group has taken advantage of the exemption in FRS 13 in respect of short-term debtors and creditors.
Financial assets
The only financial assets (other than short-term debtors) are cash at bank and in hand.
2004 2003
£’000 £’000
At fixed interest rates
Sterling 350 –
At floating interest rates
Sterling 1,315 1,172
Zimbabwe Dollar 18 6
Total at floating interest rates 1,333 1,178
On which no interest is earned
Euro 34 81
US Dollar 21 –
Hong Kong Dollar 346 23
Malaysian Ringgit 162 20
Singapore Dollar 101 6
Chinese Rinminbi 2–
South African Rand –22
Total on which no interest is earned 666 152
T otal financial assets 2,349 1,330
The weighted average interest rate of the of the fixed interest rate financial assets is 4.065% and the weighted average period
for which these are fixed is 3 months.
Financial liabilities
Other than short-term creditors, the restructuring provision and onerous leases provision, the Group has no short-term
liabilities.The onerous lease liability of £541,000 is non-interest bearing and is denominated in Sterling.The weighted average
term until maturity is 48 months.
There is no material difference between the book value and the fair value of the financial assets and liabilities above. 34
Notes to the Financial Statements
30 September 2004
20. CURRENCY RISK AND EXPOSURE
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 total recognised
gains and losses.
Approximately 42% 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. Such sales are recorded in the books of the Group at the contracted forward exchange rate.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.Any gains or losses arising on the close of the forward contract are
recognised in the period in which they crystallise.
The forward contracts existing at the year end amounted to £347,000 (2003: £1,309,000) which results in an unrecognised
exchange loss of £8,000 (2003: profit of £27,000) when compared to the year end exchange rate.This loss is expected to be
recognised in the year to 30 September 2005.
All other sales of the Group are denominated in the currency of the operating unit involved.
21. SHARE CAPITAL
2004 2003
£’000 £’000
Authorised
70,000,000 ordinary shares of 1p each 700 700
Allotted and fully paid
51,714,851 (48,514,851) ordinary shares of 1p each 517 485
On 24 June 2004 3,200,000 ordinary shares of 1p each were issued and placed at a value of 8
1
/2p per share, generating a
premium of £240,000.
Options over ordinary shares have been granted under the Company’s share ownership scheme for staff. Options over
4,593,784 shares, exercisable at varying dates between October 2004 and January 2014 were outstanding at 30 September
2004.The options are exercisable at prices ranging from 7.2p to 352.5p. Education Development International plc
Annual Report and Accounts
35
21. SHARE CAPITAL (continued)
At 30 September 2004 the following share options had been granted to Directors over the Company’s shares:
Number of 
options at Date from Date of issue
30 Sept Exercise which Expiry Share price (if issued
2004 price (p) exercisable date performance criteria in the year)
N M Snook
2000 Unapproved Share Option Scheme
196,078 255.00 25/7/03 24/7/11 225p + RPI + 5% per annum
150,000 9.25 12/1/08 11/1/14 13
1
/2p + RPI + 6% per annum 12/1/04
100,000 9.25 12/1/08 11/1/14 13
1
/2p + RPI + 20% per annum 12/1/04
100,000 9.25 12/1/08 11/1/14 13
1
/2p + RPI + 20% per annum 12/1/04
150,000 9.25 12/1/09 11/1/14 13
1
/2p + RPI + 6% per annum 12/1/04
The GOAL 2000 Sharesave Scheme
64,404 7.20 1/4/07 30/09/07 3/3/04
W J Swords
2000 Unapproved Share Option Scheme
1,080,000 9.25 20/12/05 19/12/12 13
1
/2p + RPI + 6% per annum
1
360,000 9.25 20/12/05 19/12/12 13
1
/2p+ RPI + 20% per annum
1
360,000 9.25 20/12/05 19/12/12 200p
1
K Padmanathan
2000 Unapproved Share Option Scheme
100,000 9.25 20/12/05 19/12/12 13
1
/2p + RPI + 6% per annum
1
250,000 9.25 20/12/06 19/12/12 13
1
/2p + RPI + 6% per annum
2
50,000 9.25 20/12/07 19/12/12 13
1
/2p + RPI + 6% per annum
3
25,000 9.25 20/12/05 19/12/12 13
1
/2p + RPI + 20% per annum
1
62,000 9.25 20/12/06 19/12/12 13
1
/2p + RPI + 20% per annum
2
13,000 9.25 20/12/07 19/12/12 13
1
/2p + RPI + 20% per annum
3
The GOAL 2000 Sharesave Scheme
64,404 7.20 1/4/07 30/09/07 3/3/04
In addition to the above options over the Company’s shares,W N Dore and D G Newman have granted options over a
number of their ordinary shares in the Company to N M Snook.The options have an exercise price of 9.25p and expire on
18 December 2012.They are exercisable as follows:
Number of options Earliest exercise date Share price performance criteria
250,000 20 December 2005 13
1
/2p + RPI + 6% per annum
1
100,000 20 December 2005 13
1
/2p + RPI + 20% per annum
1
350,000 20 December 2005 200p
1
400,000 20 December 2006 13
1
/2p + RPI + 6% per annum
2
150,000 20 December 2006 13
1
/2p + RPI + 20% per annum
2
433,333 20 December 2007 13
1
/2p + RPI + 6% per annum
3
200,000 20 December 2007 13
1
/2p + RPI + 15% per annum
3
200,000 20 December 2007 400p
3
1
during the period 20 December 2002 to 19 December 2006
2
during the period 20 December 2002 to 19 December 2007
3
during the period 20 December 2002 to 19 December 2008
RPI is the Retail Price Index.
No Directors’ share options have lapsed during the year. 36
Notes to the Financial Statements
30 September 2004
22. RESERVES
Share Profit
premium and loss
account account
£’000 £’000
Group
At 1 October 2003 as previously stated 12,351 (10,851)
Prior year adjustment for FRS 17 – 205
At 1 October 2003 as restated 12,351 (10,646)
Profit for the period – 360
Currency translation differences – 1
Premium arising on issue of share capital on 24 June 2004 240 –
Reserves excluding current period pension deficit 12,591 (10,285)
Current period net pension deficit adjustment – 406
At 30 September 2004 12,591 (9,879)
Company
At 1 October 2003 as previously stated 12,351 (10,851)
Prior year adjustment for FRS 17 – 205
At 1 October 2003 as restated 12,351 (10,646)
Profit for the period – 399
Premium arising on issue of share capital on 24 June 2004 240 –
Reserves excluding current period pension deficit 12,591 (10,247)
Current period net pension deficit adjustment – 406
At 30 September 2004 12,591 (9,841)
The profit attributable to the Company for the period was £399,000 (2003: loss (as restated) of £4,473,000).
In accordance with the exemption allowed by s230 of the Companies Act 1985, the Company has not presented its own profit
and loss account. Education Development International plc
Annual Report and Accounts
37
23. RECONCILIATION OF MOVEMENT IN SHAREHOLDERS’ FUNDS
2003
2004 As restated
£’000 £’000
Group
Opening equity shareholders’ funds as previously stated 1,985 3,251
Prior year adjustment for FRS 17 205 128
Opening equity shareholders’ funds as restated 2,190 3,379
Total recognised gains and losses for the period 767 (4,431)
Shares issued during the year 272 3,242
Closing equity shareholders’ funds 3,229 2,190
Company
Opening equity shareholders’ funds as previously stated 1,985 3,496
Prior year adjustment for FRS 17 205 128
Opening equity shareholders’ funds as restated 2,190 3,624
Total recognised gains and losses for the period 805 (4,676)
Shares issued during the year 272 3,242
Closing equity shareholders’ funds 3,267 2,190
24. MINORITY INTERESTS
2004 2003
£’000 £’000
Arising on acquisition of subsidiary undertaking 243 –
Loss on ordinary activities after taxation (53) –
Closing minority interests 190 –
25. FINANCIAL COMMITMENTS
Capital commitments
The Company and Group had no capital commitments at 30 September 2004 (2003: £nil).
Operating lease commitments
The payments which the Group and Company is committed to make in the next year under operating leases are as follows:
Group Company
30 Sept 30 Sept 30 Sept 30 Sept
2004 2003 2004 2003
£’000 £’000 £’000 £’000
Land and buildings
Leases which expire
within one year 10–––
in two to five years 53–––
beyond five years 298 298 298 298
361 298 298 298
Other leases – which expire within one year 8–––
369 298 298 298
The Group entered into a number of forward exchange contracts during the period.At the balance sheet date the value of
such contracts still outstanding amounted to £347,000 (2003: £1,309,000). 38
Notes to the Financial Statements
30 September 2004
26. POST -BALANCE SHEET EVENT
On 1 October 2004 the Group acquired the whole of the share capital of EQL Assessment Limited, a company specialising in
electronic assessment activities.The initial consideration for this acquisition is £153,000 payable in cash from existing cash resources.
Additionally, EDI has agreed to pay further consideration of up to £850,000 in cash over a period of three years dependent on the
achievement of predetermined targets for turnover growth in each of the three financial years following the acquisition.
27. PENSION SCHEMES
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 the LCCIEB who had been members of the defined benefit section
of the London Chamber of Commerce and Industry scheme (in which the LCCIEB participated) prior to acquisition.
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.
The profit and loss charge relating to the defined contribution schemes (2004: £155,000; 2003: £127,000) represents the
contributions paid by the Company based on a fixed percentage of employees’ pay.
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 2004.The scheme assets are stated at their market
value at 30 September 2004.
Assumptions
The major assumptions used by the actuary in assessing scheme liabilities on a FRS 17 basis are set out below. (The
assumptions at 20 December 2002 are given here as this is the date that the EDI pension scheme was established.)
30 Sept 30 Sept 20 Dec
2004 2003 2002
% pa % pa % pa
Rate of increase in salaries 3.25 3.75 3.75
Rate of increase in pensions payment
Pre-1 March 2001 service 5.00 5.00 5.00
Post-1 March 2001 service 3.00 2.75 2.50
Discount rate 5.50 5.25 5.50
Inflation assumption 3.00 2.75 2.50
The assets in the scheme and the expected rate of return were:
30 Sept 30 Sept 20 Dec
2004 2003 2002
Long-term Long-term Long-term
rate of rate of rate of
return £’000 return £’000 return £’000
Equities 7.00% 3,291 6.75% 4,989 7.00% 4,530
Bonds 5.50% 3,252 5.25% 685 5.50% 570
Current assets 7.00% – 6.75% 179 7.00% 150
Cash 4.00% – 4.00% 306 4.00% 162
T otal fair value of invested assets 6,543 6,159 5,412
Present value of scheme liabilities (8,324) (8,499) (7,800)
Deficit in the scheme (1,781) (2,340) (2,388)
Related deferred tax asset 535 702 716
Net pension liability (1,246) (1,638) (1,672) Education Development International plc
Annual Report and Accounts
39
27. PENSION SCHEMES (continued)
Analysis of the amount charged to operating profit/(loss)
Periods ended
30 Sept 30 Sept 
2004 2003
(12 months) (9 months)
£’000 £’000
Current service cost 40 198
Past service cost ––
T otal operating cost 40 198
Analysis of the amount charged to interest
Periods ended
30 Sept 30 Sept 
2004 2003
(12 months) (9 months)
£’000 £’000
Interest cost 443 311
Less expected return on assets (394) (280)
T otal financing charges 49 31
Analysis of the amount recognised in the statement of total recognised gains and losses
Periods ended
30 Sept 30 Sept 
2004 2003
(12 months) (9 months)
£’000 £’000
Actual return less expected return on pension scheme assets 89 629
Experience gains and losses arising on the scheme liabilities – (22)
Changes in assumptions underlying the present value of the scheme liabilities 520 (544)
Actuarial gain recognised in statement of total recognised gains and losses 609 63
Movement in scheme deficit during the year
Periods ended
30 Sept 30 Sept 
2004 2003
(12 months) (9 months)
£’000 £’000
Deficit in scheme at start of year (2,340) (2,388)
Movement in year
Current service cost (40) (198)
Contributions 39 214
Past service costs ––
Other finance income (49) (31)
Actuarial gain 609 63
Deficit in scheme at end of year (1,781) (2,340)
The current service cost of the defined benefit scheme will increase in future years as the members of the scheme approach
retirement.This is because the defined benefit scheme is closed and the projected unit method is used to value the scheme
liabilities.
The Board has negotiated with the Trustees of the scheme for the Group to pay contributions of £100,000 per annum
(increasing annually by 6.5%) for the next 10 years.Additionally, the Group will pay the scheme running expenses of
approximately £20,000 per annum during this period. 40
Notes to the Financial Statements
30 September 2004
27. PENSION SCHEMES (continued)
Historical gains and losses
Periods ended
30 Sept 30 Sept 
2004 2003
(12 months) (9 months)
Difference between expected and actual return on scheme assets
Amount (£’000) 88 629
Percentage of scheme assets 1.35% 10.21%
Experience gains and losses on scheme liabilities
Amount (£’000) – (22)
Percentage of present value of scheme liabilities 0% 0.26%
T otal amount recognised in statement of total recognised gains and losses
Amount (£’000) 609 63
Percentage of present value of scheme liabilities 7.31% 0.74%
28. RECONCILIATION OF OPERATING PROFIT/(LOSS) TO NET CASH INFLOW/(OUTFLOW) FROM
OPERA TING ACTIVITIES
Periods ended
30 Sept 30 Sept 
2004 2003
(12 months) (18 months)
As restated
£’000 £’000
Operating profit/(loss) 123 (4,783)
Depreciation of tangible fixed assets 113 235 
(Profit)/loss on the sale of tangible fixed assets (9) 61 
Impairment of goodwill – 2,524 
Amortisation of goodwill 188 235 
Release of deferred licence income (61) (61)
Amounts written off fixed asset investments – 25
Working capital movements
Stocks 17 (40)
Debtors (258) (516)
Creditors 1,079 614
Net cash inflow/(outflow) from operating activities 1,192 (1,706) Education Development International plc
Annual Report and Accounts
41
29. RETURNS ON INVESTMENT AND SERVICING OF FINANCE
Periods ended
30 Sept 30 Sept 
2004 2003
(12 months) (18 months)
£’000 £’000
Interest received 47 110
30. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
Periods ended
30 Sept 30 Sept 
2004 2003
(12 months) (18 months)
£’000 £’000
Increase/(decrease) in cash 1,016 (2,073)
Exchange rate effects 3–
Opening net funds 1,330 3,403
Closing net funds 2,349 1,330 42
Four Year Financial Review
2004 2003 2002 2001
(12 months) (18 months) (12 months) (14 months)
As restated
£’000 £’000 £’000 £’000
Turnover 10,962 8,573 589 97
Operating profit/(loss)
Before exceptional operating costs, impairment 
and amortisation of goodwill 741 (1,424) (2,271) (4,507)
Impairment and amortisation of goodwill (188) (2,759) – (150) 
Exceptional operating costs (430) (600) – –
Operating profit/(loss) 123 (4,783) (2,271) (4,657)
Profit/(loss) on ordinary activities after taxation 307 (4,473) (2,072) (4,271)
Earnings per share
Basic and diluted 0.7p (12.1)p (8.5)p (20.7)p
Excluding impairment and amortisation of goodwill,
exceptional operating costs and deferred taxation 1.5p (3.1)p (8.5)p (20.0)p
Intangible assets 3,754 3,500 – –
Tangible assets and investments 171 255 194 338
Net cash 2,349 1,330 3,403 5,745
Stocks, debtors less creditors (598) (529) (346) (760)
Provisions (1,011) (728) – – 
Net assets excluding pension liabilities 4,665 3,828 3,251 5,323
FRS 17 was adopted during the year to 30 September 2004; this required the results for 2003 to be restated. Education Development International plc
Annual Report and Accounts
43
Notice of Annual General Meeting
Notice is hereby given that the Annual General Meeting of the
Company will be held at The Farmers Club, 3 Whitehall
Court, London, SW1A 2EL on Thursday 20 January 2005 at
10.30 a.m. for the following purposes:
Ordinary Business
1. To receive the report of the Directors and the audited
accounts for the year ended 30 September 2004.
2. To reappoint Sir Bryan Nicholson as a Director of the
Company who shall retire in accordance with the
Company’s articles of association.
3. To reappoint Nigel Snook as a Director of the Company
who shall retire in accordance with the Company’s
articles of association.
4. To reappoint RSM Robson Rhodes LLP as auditors and to
authorise the Directors to determine their remuneration.
To consider and, if thought fit, pass the following resolution as
an ordinary resolution of the Company:
5. 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
£218,382 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
To consider and, if thought fit, pass Resolution 6 as a special
resolution of the Company provided that Resolution 5 has
been approved and pass resolution 7 as a Special Resolution
of the Company.
6. THAT, subject to the passing of the resolution proposed
at item 5 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 the resolution referred to at
item 5 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
(ii) allotments of equity securities for cash
otherwise than pursuant to paragraph (i) above
up to an aggregate nominal amount of £25,866.
7. That the amount standing to the credit of the Share
Premium Account of the Company be and the same is
hereby reduced by the sum of £9,840,842.
Dated 16 December 2004
By order of the Board
Kumaresan Padmanathan
Secretary
Registered Office:
The Old School
Holly Walk
Leamington Spa
Warwickshire
CV32 4GL
Registered no: 3914767 44
Notes
1. A member 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.To be valid,
the form must be deposited at the offices of the
Company’s Registrars, Capita Registrars, 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
10.30 a.m. on 18 January 2005 (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.
EXPLANA TOR Y NOTES TO THE RESOLUTIONS 
TO BE CONSIDERED AT THE ANNUAL GENERAL
MEETING
Explanation of Resolution 5
Resolution 5 will be proposed as an ordinary resolution. This
resolution (which the Company seeks on an annual basis)
would give the Directors authority to allot shares up to a
maximum nominal amount of £218,382 being approximately
one-third of the Company’s current issued share capital. The
existing authority would be revoked and this authority would
expire on the date of the 2006 Annual General Meeting or 
19 April 2006, whichever is the earlier.
Explanation of Resolution 6
Resolution 6 will be proposed as a special resolution. This
resolution (which is subject to Resolution 5 being passed)
would renew the power of  the Directors to allot shares for
cash as though the rights of pre-emption conferred by section
89(1) of the Companies Act 1985 did not apply:
1. in respect of an allotment of shares in connection with an
offer to existing shareholders in proportion (as nearly as
may be) to their existing holdings of shares (and to allow
the Directors to take action to overcome certain
practical difficulties which could arise in the case of such
an offer); and
2. up to a nominal amount of £25,866, being approximately
5% of the current issued share capital of the Company.
This resolution (which is also sought on an annual basis) will
give the Directors some flexibility in financing business
opportunities as they arise.
This authority would expire on the date of the 2006 Annual
General Meeting or 19 April 2006, whichever is the earlier.
Explanation of Resolution 7
A separate letter from the Chairman explains the background
to Resolution 7.
Notice of Annual General Meeting Education Development International plc
Annual Report and Accounts
45
Dear Shareholder
REDUCTION OF THE COMPANY’S SHARE
PREMIUM ACCOUNT 
1. Introduction
The preliminary announcement of the Company’s results
for the year ended 30 September 2004 was released on
22 November 2004. I am pleased to report that these
results show a retained profit in the last financial year of
£399,000.This result follows several years of trading
losses arising from the start up costs incurred since
incorporation in 2000 and costs associated with the
acquisition of the trade and certain of the assets and
liabilities of the London Chamber of Commerce and
Industry Examination Board (“LCCIEB”) in December
2002.
However, the profit and loss account still shows the
Company with a comparatively large accumulated deficit.
Your Directors consider that whilst the Company is now
making a profit it is likely to take several years of
consistent, good profitability to eliminate this deficit.The
Company will be unable to make a distribution to
shareholders out of its profits in the meantime.
Your Directors consider that the losses incurred to date
are permanent and therefore, seek shareholder approval
for a reduction of the share premium account to
eliminate the losses on the profit and loss account.
The purpose of this letter is to set out the proposals for
the reduction of the Company’s share premium account
and to explain the resolution to be proposed at the
annual general meeting to enable shareholders to vote on
those proposals.
2. Reduction of Share Premium Account
2.1 Summary
As a result of shares issued at a premium, a credit of
£12,590,434 has arisen on the share premium account.
As at 30 September 2004 the debit balance on the profit
and loss account on the Company amounted to
£9,840,842.The proposed reduction of the share premium
account by the amount of £9,840,842 will create a
reserve which may be applied in eliminating that deficit.
The proposed reduction of the share premium account
requires the approval of ordinary shareholders by a
Special Resolution and the approval of the Court.The
resolution to approve these proposals is set out in the
notice of annual general meeting accompanying this
circular.Assuming that shareholders approve the
proposals, it is expected that an application will be made
to Court in January 2005 for the Order confirming the
proposals.
The proposals will not change the number of ordinary
shares in issue and held by shareholders or the rights
attaching to those shares.The shares will continue to be
traded on the Alternative Investment Market of the
London Stock Exchange.
Additionally, the proposals will not affect the future
trading prospects of the Company and its net assets will
not be reduced as a consequence of the exercise.
2.2 Deficit on Profit and Loss Account
As stated above, as at 30 September 2004, the Company
had an accumulated deficit on its profit and loss account
of £9,840,842. By law, the Company is unable to make
distributions to shareholders or purchase its own shares
because it does not have any distributable profits and the
Company will continue to be unable to do so unless the
deficit on its profit and loss account is eliminated or until
the Company has generated distributable profits in
excess of the deficit. Under the Companies Act 1985, the
Company can, with the approval of the ordinary
shareholders given by a Special Resolution and with the
confirmation of the Court, reduce its share capital or
share premium account. Such a reduction creates a
special reserve which can be used, inter alia, to eliminate
the deficit on the Company’s profit and loss account.The
Company intends to seek the confirmation of the Court
that the special reserve can be used in this way.
2.3 Court Approval
Subject to the passing of the resolution in the notice of
annual general meeting, the Company intends to apply to
the Court to seek an order confirming the reduction of
the share premium account.The Court will require to be
satisfied that the interests of the Company’s creditors will
not be prejudiced as a result of the reduction of share
capital. It is for the Court, finally, to determine the precise
nature of the protection required for the Company’s
creditors and the Directors will give such undertakings
or other protection as the Court requires and the
Directors are advised is appropriate.
If the requisite approval is given by the ordinary
shareholders, the Directors will arrange for an
Letter from the Chairman of Education
Development International plc 46
appropriate petition to be presented to the Court
seeking its confirmation. It is expected that confirmation
will be forthcoming and the reduction of the share
premium account will take place by the end of March
2005.An announcement will be made upon the Court
Order being made.
2.4 Effect of Reduction of Share Premium Account
The proposed reduction of the share premium account
will not involve any distribution or repayment of capital
or amounts standing to the credit of the share premium
account by the Company.The reduction will not
materially reduce the underlying net assets of the
Company.The principal effect of the reduction of the
share premium account will be to enable the Company
to be put into a position where it can purchase its own
shares and/or pay dividends out of distributable profits
sooner than it would otherwise be able to do so.The
Directors will determine the question of future
distributions to shareholders in accordance with the best
interests of the Company.
3. Action to be taken
You will find enclosed with the notice of annual general
meeting a form of proxy for use by each ordinary
shareholder.Whether or not you intend to be present at
the meeting and/or to vote in person on the resolution,
you are requested to complete and sign the form of
proxy in accordance with instructions thereon, and to
return it as soon as possible to Capita Registrars, PO
Box 25, Beckenham, Kent, BR3 4BR but in any event it is
to arrive as per the proxy form by no later than 10.30
a.m. on 18 January 2005.The completion and return of
the form of proxy will not preclude you from attending
the annual general meeting and voting in person on the
resolution should you so wish.
4. Recommendation
Your Directors consider that the proposals outlined
above are in the best interests of the Company and the
shareholders as a whole.Accordingly, your Directors
unanimously recommend that you vote in favour of the
resolution to be proposed at the annual general meeting.
Your Directors intend to vote in favour of the resolution
in respect of their own beneficial holdings totalling
10,213,722 shares representing 19.8% per cent. of the
issued share capital of the Company.
Yours faithfully
Sir Bryan Nicholson
Chairman
16 December 2004
Letter from the Chairman of Education
Development International plc Education Development International plc
Annual Report and Accounts
47
For use at the Annual General Meeting of Education Development International plc to be held on 
20 January 2005 at 10.30 a.m.
I/We  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
of  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
a member/members of the Company, hereby appoint the chairman of the Meeting or  . . . . . . . . . . . . . . .
of  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
and/or  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
of  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(Note 1)
as my/our proxy to vote for me/us on my/our behalf at the Annual General Meeting of the Company to
be held at The Farmers Club, 3 Whitehall Court, London, SW1A 2EL on 20 January 2005 at 10.30 a.m. and
at any adjournment thereof.
If you wish to instruct your proxy as to how to vote on your behalf please indicate by putting an “X” in
the appropriate box below. Unless so instructed, your proxy will vote or abstain at his or her discretion.
This proxy will be used only in the event that a poll be directed or demanded.
FOR AGAINST
Ordinary Business
Resolution 1
Resolution 2
Resolution 3
Resolution 4
Resolution 5
Special Business
Resolution 6
Resolution 7
Signed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Date . . . . . . . . . . . . . . . . . . . .
Notes
1. You may appoint a proxy of your own choice by deleting the words “the chairman of the Meeting” and inserting the name and
address of your proxy in the space provided.You may appoint more than one proxy and if more than one proxy is appointed, you
must specify on the proxy form the number of shares held by you in respect of which each proxy is authorised to vote, provided
that you may not appoint more than one proxy (save in the alternative) to vote in respect of any one share held by you.
Completion of this form of proxy will not preclude a member from attending and voting in person.
2. A proxy need not be a member of the Company.
3. If the appointer is a corporation, this form must be under the hand of a duly authorised officer or attorney.
4. Any one of two or more joint holders may sign, or vote in person or by proxy but if more than one holder is present at the
Meeting or represented by proxy, only the holder whose name stands first in the register of members shall be entitled to vote.
5. To be valid, this form must be completed, signed and deposited at the offices of the Company’s Registrars, Capita Registrars, PO
Box 25, Beckenham, Kent, BR3 4BR not less than 48 hours before the time fixed for holding the Meeting or adjourned Meeting.
✄ Form of Proxy 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  Education Development International plc
The Old School
Holly Walk
Leamington Spa
Warwickshire
CV32 4GL
Tel: +44 (0) 1926 458644
Fax: +44 (0) 1926 887676
Email: info@ediplc.com
Website: www.ediplc.com