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EDUCATION DEVELOPMENT INTERNATIONAL PLC

PRELIMINARY RESULTS

Education Development International plc ("EDI"), the leading provider of accredited qualifications and assessment services, announces Preliminary Results for the year ended 30 September 2009, another year of strong revenue and profit growth.

 

* Profit on ordinary activities before taxation adjusted for the amortisation charge on acquired intangible assets.

** Adjusted earnings per share is based on adjusted operating profit.

 

Commenting on EDI's prospects, Chief Executive Nigel Snook said:

"The Group's outstanding performance during 2008/09 reflects the successful integration of acquisitions coupled with our long-term investment in both organisation and business development projects."

"The key to our success has been and will continue to be the expansion of our range of services while providing industry leading levels of customer service, advice and support."

Contacts:

Education Development International plc	Walbrook PR Limited
Nigel Snook - Chief Executive	Paul McManus
Paul Bird - Finance Director	Tel: 020 7933 8787
Tel: 024 7651 6510	Mob: 07980 541 893
http://www.ediplc.com	paul.mcmanus@walbrookpr.com
Brewin Dolphin Limited
Matt Davis/Neil McDonald
Tel: 0845 213 4217

  CHAIRMAN'S STATEMENT

Results Overview

During the year to 30 September 2009, Education Development International (EDI) has become established as one of the main players in the UK vocational qualifications and assessment services market. The full benefits of the investment we have made over recent years in both organic developments and acquisitions are reflected in these results.

Total revenue has increased by 32% to £28.3m (2008: £21.5m). Operating profit for the year trebled to £8.1m from £2.7m. Adjusted operating profit increased by 161% to £8.6m (2008: £3.3m); this comprises profit on ordinary activities before taxation adjusted for the amortisation charge on acquired intangible assets. During the year the Group incurred corporation tax for the first time and profit after tax totalled £6.0m. 

Basic earnings per share were 11.3p (2008: 6.0p) and adjusted earnings per share were 16.2p (2008: 6.2p). The Group continued to generate strong cash flows and at the year end net cash stood at £9.5m (2008: £3.2m). 

Business Development

Despite wider economic uncertainties, EDI has continued to record particularly strong growth in sales of vocational qualifications and assessment services in the UK, with revenue up by 50%. This performance is due in part to increased government spending but is predominantly the result of further gains in market share.  

International sales were up by 29%, led by the important South East Asia and Germany markets. Excluding the positive impact of exchange rate gains of just over £1.1m, sales increased 10% on a like-for-like basis. 

Organisation Development

During the year the Board approved plans to invest in further organisation development projects. These commenced during the second half of the year and will continue through 2009/10. In addition to further strengthening the senior management team and our sales and marketing capacity, a major project to upgrade our already sophisticated IT-based administration platform has been started. These developments will provide the operational infrastructure to stimulate and to deliver the next phase of the Group's growth.

Environmental Policy

We have already introduced a number of practical measures to reduce waste and use energy more efficiently. We are now committed to a review of the environmental impact of our business with a view to adopting more sustainable approaches to our use of resources. We aim to reduce the organisation's carbon footprint and take action to offset the CO2 omissions generated by our activities.

Board and Staff

In addition to 27 new posts created during the year, we have continued to invest in the training and development of our staff and are committed to achieving Investors in People status.

The expertise and commitment of our managers and staff are central to the success of the business and the Board acknowledges their achievements over the past year. I must also thank my fellow directors for their contribution to guiding the Group through an important stage in its development.

Dividend

Reflecting the significant increase in EDI's profitability, the Board is recommending a final dividend of 1.2p (2008: 0.3p). This will bring the total dividend for the year to 1.6p (2008: 0.42p). This dividend will be payable on 29 January 2010 to shareholders who are on the register on 8 January 2010.  

Prospects

The Group's outstanding performance during 2008/09 reflects the successful integration of acquisitions coupled with our long-term investment in both organisation and business development projects.

As reported previously, despite the wider economic situation, the global market for vocational education and training services continues to reflect positively the ongoing investment of governments, employers and individuals in skills development.  

The key to our success has been and will continue to be the expansion of our range of services while providing industry leading levels of customer service, advice and support. Our ability to respond to market opportunities and to compete effectively for market share gives the Board every confidence that the Group is well positioned to deliver continuing growth.

Richard Price

Chairman

24 November 2009

  CHIEF EXECUTIVE'S REPORT

Introduction

EDI's philosophy is based on forming a strong relationship with each of our customers so that we can work in partnership to support them in growing their business and operating it in the most efficient way.

Our business has flourished over the past twelve months, despite the challenging economic environment, reflecting the resilience of the market for vocational education and training to the economic cycle. During a period of cyclical growth, investment by the private sector is to the fore while in a downturn, government funding is more pronounced to offset the effects of recessionary pressures on the labour market.

The business is now spread over a large number of customer organisations in the UK and overseas, and we offer a wide range of products and services. This and the fact we currently have a relatively small share of the overall market gives us confidence in our ability to maintain strong growth.

Operational gearing has enabled the Group to deliver significant growth in bottom line profitability through a capacity to integrate acquisitions and service increasing demand without the need to incur equivalent additional overhead costs. Strong cash generation has followed profitability given the focus on working capital management. The net cash position enables us to continue to invest in the business to support the next phase of EDI's growth.

Market Overview

Both main political parties have indicated their strong commitment to good quality vocational education and training. Indeed, this investment of public funds is seen as central to supporting individuals and companies through the economic downturn and to prepare industry and commerce for the recovery.

Over the past year a number of government initiatives to increase funding for existing programmes and bring in new ones aimed at supporting those who become unemployed have been announced or introduced. These include support for Apprenticeships, Train to Gain and for general employability programmes.

Although EDI does not receive any government funds directly, around 75% of our UK vocational qualifications revenue is linked to publicly funded work-based learning programmes. Of this total around 70% is connected with Apprenticeship programmes which require trainees to undertake a number of assessments over a period of time, covering a range of specialist and general skills and knowledge. The remaining 30% is through Train to Gain programmes which are much shorter and focus on the achievement of smaller, specialist qualifications.

In England the budgets for adult training and employer based schemes - published by the Department for Business, Innovation and Skills - administered by the Learning and Skills Council and from 1 April 2010, the new Skills Funding Agency, show:  

	2008/09		2009/10		2010/11
	Budget £m	Learners 1000's	Budget £m	Learners 1000's	Budget £m	Learners 1000's
Work-based learning	1,159	1,430	1,316	1,410	1,382	1,720
Other vocational learning	1,665	1,450	1,753	1,500	1,783	1,120
Total	2,824	2,880	3,069	2,910	3,165	2,840

Adult learners are those aged over 19. Work-based learning includes Apprenticeship and Train to Gain programmes. Other adult vocational learning includes employability and basic skills programmes

In addition, there are separate budgets for further education and Apprenticeship training for 16 to 19 year olds. The current year budget totals £7bn and includes £675m in respect of Apprenticeships for young people. Other expenditure is in respect of further academic and vocational education in sixth forms and colleges, and National Skills Academies.

There is likely to be pressure on the total level of funding for these programmes for some time. However, as EDI operates on a business-to-business basis, we rely only indirectly on public funds. Because of this the business is well placed to develop through growing market share by winning new customers and by expanding our reach into new sectors. Our best estimate is that EDI has some 10/12% of the market for vocational qualification services, up from less than 3% six years ago when we acquired the London Chamber of Commerce and Industry awarding body. The overall scale of the UK market provides significant headroom for our growth plans.

An area of growing demand is the corporate sector. This is as a result of the Leitch review of skills which recommended the introduction of arrangements for the accreditation of in-house programmes being run by major employers and support for them to introduce Apprenticeship programmes.  

The London Chamber of Commerce and Industry brand under which many of our international qualifications are marketed is well regarded overseas, especially in South East Asia and parts of Europe. This offers the opportunity to exploit our market position through new partnerships and invest in additional support for existing local agency arrangements. Our range of qualifications for business administration, mainly in the areas of accounting and English language skills, reflects areas of strong demand in a very large market which is serviced predominantly by UK and US education services suppliers.  

Operating Review

Revenue for the year to September 2009: 

	2009 £m	2008 £m	Change %
UK qualifications and assessment services	17.9	11.9	50
International qualifications	7.5	5.8	29
Support and broadband services	2.8	3.7	(24)
Other	0.1	0.1	-
Total	28.3	21.5	32

UK Qualifications and Assessment Services

Sales have increased by 50% to £17.9m and reflect the full benefits of the acquisition of ASET in November 2007 and strong organic growth.

Sales of vocational qualifications were up 55% at £16.4m. While this performance has benefited from some expansion in the overall size of the market, it is mostly accounted for by an increase in market share. This growth is being driven by additions to the product range and increased sales capacity, resulting in new customer wins and additional sales to existing customers.  

We have continued to compete successfully for opportunities to provide services to large training provider organisations and corporate clients. In January we were successful in a tender to provide vocational qualifications services to esg Group, one of the UK's largest private training providers and work to transfer this business commenced immediately and is now fully operational. Working with our training provider partners and the Learning and Skills Council's National Employer Service, we have secured agreements to provide services to a significant number of major employers. We have continued to develop our relationship with Sainsbury's and over recent months we have commenced working with Virgin Media, Qantas, Dunelm Mill and Cineworld. Initially, these arrangements are relatively small but offer the potential to establish long-term relationships.

Sales of our electronic portfolio for learner records - eNVQ - continue to grow and were up by 33% at £0.9m. For 2009/10 we have made changes to the pricing structure and sales methodology for this service which, we believe, will make it more attractive for our customers to purchase eNVQ as an integral part of our vocational qualifications service.

Our accreditation to award a number of the new Diplomas when taken with vocational qualifications which are used in schools and our existing range of GOAL assessments - used in over 650 schools - provides the basis for an extended range of services for schools. Recent changes in government strategy for 14 to 19 qualifications make this an area where we may benefit through increased business development efforts.

In June 2009 we introduced a new management structure for UK Services to create a single, integrated team of product development and sales staff. In view of the increasing headcount of sales staff, we have also introduced a middle management tier to lead the field sales teams and the head office teams with responsibility for sales planning and support, and product development.

International Qualifications

Sales of international qualifications increased by 29% to £7.5m, including a currency exchange gain of £1.1m. On a currency adjusted basis underlying revenue was up by 10%. We have hedged against movements in the current, more favourable exchange rates for the three year period to 30 September 2012. 

Growth was largely accounted for by further progress in the Germany and South East Asia markets. In Germany, currency adjusted sales revenue grew by 12% and we have recently concluded negotiations with the agent to extend the current agreement for a minimum of five years.  

In South East Asia sales were also up by 12% after adjusting for currency movements.  The new agency management arrangements in South East Asia have settled in. Key personnel from the UK and the regional operations centre in Kuala Lumpur, Malaysia, have made exchange visits to develop relationships and review working practices.

We have set up a single team - led at director level - to manage all aspects of business and product development for our international qualifications services. The field sales team has been strengthened and this is enabling us to focus on performance management and support for our network of local agents. The new structure is also allowing greater attention to be paid to the development of tutor and learner support materials which is a key area for the extension of the range of services we offer to our international customers.

We are pursuing a number of strategic market development opportunities. These include projects with government authorities in China, Hong Kong, Malaysia and Germany. In addition, we continue to explore potential agency arrangements in new markets. For example, a new arrangement in Greece set up during 2007 is showing promise with over 2,000 students registered this year for one of our English language assessments, generating revenue of £87,000.

Support and Broadband Services 

Sales were level at £2.8m on a like-for-like basis, after taking account of the ending of a back-office support contract in September 2008.

As previously indicated, we are seeking to exit arrangements to provide administrative support services for other organisations. We will, however, continue to market our secure online assessment platform i-assess. While the sales values of i-assess has remained level at £1.2m, usage has continued to grow and we are working with all of our long-term customers to develop the way in which they use this powerful software.

Sales of broadband services grew by 13% to £0.9m.

 

Organisation Development

Four years ago the Board made a significant investment in building EDI's operational capacity to support the growth plans of a business which at that time generated revenue of £14m. The growth in operating margins and profitability have been largely due to our ability to secure and administer much higher levels of business without the need for significant additional staff and other overhead resources.

With annual revenue for 2008/09 approaching £30m, the Board decided that the time was right to make a further investment in the organisation's operational capacity. The outcome of that decision is reflected in the management reorganisation, the appointment of new sales and marketing staff, the development of our operating systems and improvements to our head office facilities. We are in the process of gearing up for the next stage of our organisation's growth.

The majority of this investment will be expensed as staff and operating costs. Capital expenditure for 2009/10 is likely to be in the order of £1.0m. We believe that the management and systems infrastructure we are putting in place will be more than capable of operating a business with two or three times the current level of revenue.

Senior Management Team

In line with the growth in the scale of EDI's operations and our ambitions for the future, we have strengthened the senior management team to bring in new expertise and restructured functions to focus management attention across all of the key areas of the business.

One of the key appointments during the year was to the post of Head of HR Management and Staff Development to lead a small team to oversee all aspects of HR administration, performance management and staff development. While responsibility for the management of individual performance and development matters rests with line managers, our new HR team has enabled us to increase our level of professionalism in this important area. The team oversees our strategy for achieving Investors in People status.

Operational Management Teams

Staff levels increased during the second half of 2008/09 reflecting both the introduction of our new management structure and capacity building in a number of key areas of the business. In all, 27 new posts have been created and filled during the year and in the course of the reorganisation programme we were able to promote 16 staff to supervisory and management positions. At the year end, there were eight vacancies to be filled to complete the new organisation structure.

At 30 September 2009:

	2009	2008
Research, development and marketing	19	11
Product development and sales	69	55
Operations and IT development	67	62
Business support	27	23
Total	182	151

The number of our part-time associates who act as examiners and vocational qualification verifiers increased by six to 263.

Education Development and Innovation

A new education development and innovation team is undertaking specialist representation work with the various regulatory and governmental organisations with which we work. The team is also engaged in high level market research and testing out innovative approaches to both assessment strategies and the use of technology to administer qualifications. A particular aim is to offer increased flexibility in the delivery of assessments while at the same time reducing further the administrative burden.

Marketing and Communications

We have now established a dedicated team - led at director level - to drive and co-ordinate our marketing and communications efforts. Over the next few months, the main effort will be in the areas of corporate profile raising and web-based communications, particularly important for our international markets and to keep in touch with our network of associates and customers in the UK. 

Strategic Sales and Business Development 

We have set up a small, high level sales unit to focus on medium to long-term opportunities for working with corporate organisations, and larger training providers and further education colleges. As well as working to secure new customers, we link up with our existing training delivery partners to make joint approaches to target companies who require both training provision and quality assurance services.

Business Systems

We have embarked on a major IT project to enhance our in-house developed administration platform Campus which was launched in September 2006. This has made a major contribution to the expansion and efficiency of our business operation. Central to the Campus philosophy is to offer a distributed system to our UK customers and overseas agents enabling them to take control over the administration of candidates throughout the qualifications process. We believe this system gives us real intellectual property and our investment of up to £2.0m over the next two years will begin to deliver benefits from the second half of 2009/10. 

Outlook

Our reputation in the UK vocational qualifications market has been built on providing industry leading customer service, support and advice. The investment we are making in staff and operating systems will reinforce our capabilities and provide the capacity for us to operate on a much broader front and exploit the opportunities to make further progress in all of our markets.

Government regulators in the UK continue to introduce changes to the way in which vocational qualifications are to be accredited and administered. A number of our international partnerships also rely on working in a responsive way with government agencies. While meeting regulatory requirements can introduce complicated bureaucratic requirements behind the scenes, it also provides a competitive opportunity as EDI has professional resources and flexible operating systems which allow us to respond quickly to changing market requirements.

The growth in EDI's business over the past twelve months has provided us with the market position and resources to push on to the next phase of the Group's development. The vocational qualifications business in the UK will continue to be the main area of growth but, increasingly, we should be able to exploit opportunities in the international markets. We will continue to be alert to acquisition opportunities while continuing to consolidate earlier business purchases and fine-tune our systems and procedures.  

EDI is now established as a major player in the specialist markets in which we operate and we have assembled a dynamic and skilled management and staff team. This gives us the confidence that the Group is well positioned to grow and develop over the year ahead and beyond.

Nigel Snook

Chief Executive

24 November 2009

  FINANCE DIRECTOR'S REPORT

Results

Group revenues increased by 32% to £28.3m (2008: £21.5m), with profit before tax increasing by 186% to £8.0m (2008: £2.8m). Adjusted operating profit, calculated as profit before taxation adjusted for the £0.6m amortisation charge on acquired intangible assets, increased by 161% to £8.6m (2008: £3.3m). The operating profit margin improved significantly increasing from 13% to 29%, reflecting the Group's high level of operational gearing. The adjusted operating profit margin increased from 15% to 30%.  

The UK qualifications and assessment services business continues to be the major growth area, with revenue increasing by 50% to £17.9m (2008: £11.9m). This growth includes revenue from the now fully integrated ASET and eNVQ acquisitions.  

International revenue grew by 29% during the period to £7.5m (2008: £5.8m), as a result of volume growth in key territories and the positive impact of currency movements. Excluding foreign currency gains of £1.1m, underlying international revenue grew by 10% to £6.4m.

Support and broadband services revenue was down by 24% to £2.8m (2008: £3.7m). This reflects the ending of a contract in September 2008, in line with the Group's previously reported policy to phase out back-office services provision.

Taxation

During the year the Group has fully utilised brought forward tax losses of £4.3m and is now incurring corporation tax. The tax charge of £2.0m, representing an effective tax rate of 25%, is a combination of a corporation tax charge of £1.3m and a net deferred tax charge of £0.7m.

In future, we expect the Group will be subject to corporation tax at the full rate.

Earnings per Share

Basic earnings per share increased by 88% to 11.3p (2008: 6.0p). Based on adjusted operating profit earnings per share increased by 161% to 16.2p (2008: 6.2p). Fully diluted earnings per share increased by 86% to 10.6p (2008: 5.7p).

As the Group is now paying corporation tax, for comparative purposes we have calculated the fully diluted adjusted earnings per share after tax at the current year effective rate of 25%. On this basis earnings per share increased by 159% to 11.4p (2008: 4.4p).

On 2 June 2009 the Employee Benefit Trust purchased a further 678,000 shares in the Company, bringing its total holding to 4,633,000 shares representing 8% of issued share capital. This holding provides full cover for the current share option contracts and SAYE scheme, it is deducted from the weighted average number of shares in issue used in both the basic and diluted EPS calculation.

Dividends

An interim dividend of 0.4p (2008: 0.12p) per share was paid on 10 July 2009. A final dividend of 1.2p (2008: 0.30p) per share is proposed for approval at the Annual General Meeting on 21 January 2010. This would bring the total dividend for the year to 1.6p (2008: 0.42p), with a cover of seven times based on profit retained by shareholders divided by the total dividend payable for the year.

The final dividend will be paid on 29 January 2010 to shareholders who are on the register on 8 January 2010. The dividend is waived for the shares held in the Employee Benefit Trust. 

 

It is our policy to pay a dividend that grows in line with increases in the Group's profitability.  

Cash Flow and Treasury

The Group has no borrowings and deposits free cash in three major UK clearing banks utilising a range of short-term money market deposits and medium term deposit accounts.

Over the year net cash generated from operations increased by 89% to £8.5m (2008: £4.5m) representing a cash conversion ratio of 93%, measured as a percentage of EBITDA.

The working capital requirement has remained flat at £2.5m. Net free cash flows - from operations after interest, tax, capital expenditure, acquisition payments, and equity payments and issues - totalled £6.6m (2008: £400,000).

International sales at £7.5m represented 27% of revenue. Of this total, 54% is billed in US Dollar or linked currencies, and 34% in Euros.  

Forward sales contracts are in place for foreign currencies to take advantage of current favourable rates and give certainty over future cash flows. At the year end forward sales contracts for £2.4m were in place for the period to 30 September 2010; £1.5m in respect of US Dollar linked revenue and £0.9m in respect of Euro revenue.  

Since the year end additional forward sales contracts have been placed with a total value of £5.2m; £2.7m in respect of US Dollar linked revenue and £2.5m in respect of Euro revenue. These contracts run to 30 September 2012 and together with the existing contracts provide cover for a significant proportion of international cash flows.

Financial Administration

During the year we have strengthened the finance function through the appointment of additional staff and the introduction of a new accounts administration system. These developments will enable us to monitor business trends more closely and handle increasing numbers of financial transactions.

Paul Bird

Finance Director

24 November 2009

  CONSOLIDATED INCOME STATEMENT

for the year ended 30 September 2009

						Years ended
	Note	Before amortisation charge on acquired intangible assets		Amortisation charge on acquired intangible assets		30 Sept 2009 Total		30 Sept 2008 Total
		£'000		£'000		£'000		£'000
CONTINUING OPERATIONS
Revenue	2	28,348		-		28,348		21,500
Cost of sales		(7,111)		-		(7,111)		(5,953)
Gross profit		21,237		-		21,237		15,547
Administrative expenses		(12,566)		(619)		(13,185)		(12,846)
Operating profit	2	8,671		(619)		8,052		2,701
Finance income		77		-		77		91
Finance costs		(99)		-		(99)		(23)
Net finance (costs)/income		(22)		-		(22)		68
Profit on ordinary activities before taxation		8,649		(619)		8,030		2,769
Tax on profit on ordinary activities	3					(1,992)		417
Profit for the period from continuing operations						6,038		3,186
Loss attributable to discontinued operations						-		(459)
Profit for the period						6,038		2,727
Attributable to:
- Equity holders of the parent						6,046		2,775
- Minority interest						(8)		(48)
						6,038		2,727
Earnings per share	5
From continuing operations
- Basic						11.3p		6.0p
- Diluted						10.6p		5.7p
From continuing and discontinued operations
- Basic						11.3p		5.1p
- Diluted						10.6p		4.9p

  CONSOLIDATED BALANCE SHEET

At 30 September 2009

		Group
		30 Sept 2009		30 Sept 2008
	Note	£'000		£'000
Non-current assets
Goodwill	6	7,181		7,261
Other intangible assets		802		1,522
Property, plant and equipment		373		322
Investments		670		265
Deferred tax assets		1,207		1,238
		10,233		10,608
Current assets
Inventories		75		51
Trade and other receivables		3,187		2,800
Financial assets carried at fair value through profit and loss		22		-
Cash and cash equivalents		9,492		3,229
		12,776		6,080
Total assets		23,009		16,688
Current liabilities
Trade and other payables		(4,975)		(4,943)
Financial liabilities carried at fair value through profit and loss		(49)		-
Current tax liabilities		(724)		(91)
Provisions		(75)		(273)
		(5,823)		(5,307)
Non-current liabilities
Provisions		(29)		-
Retirement benefit obligations		(612)		(564)
Deferred tax liabilities		(166)		(339)
Other non-current liabilities		(104)		(185)
		(911)		(1,088)
Total liabilities		(6,734)		(6,395)
Net assets		16,275		10,293
Equity
Share capital		576		576
Share premium account		3,024		2,997
Own shares held		(1,534)		(840)
Merger reserve		994		994
Other reserves		212		212
Retained earnings		12,990		6,333
Total shareholders' equity		16,262		10,272
Minority interest in equity		13		21
Total equity		16,275		10,293

 

CONSOLIDATED CASH FLOW STATEMENT

for the year ended 30 September 2009

		Group
		30 Sept		30 Sept
		2009		2008
	Note	£'000		£'000
Cash flows from operating activities
Net cash generated from operations	7	8,463		4,457
Interest received		55		37
Tax paid - net		(631)		(35)
Net cash generated from operating activities		7,887		4,459
Cash flows from investing activities
Acquisitions of businesses:
- Consideration		-		(2,166)
- Cash acquired		-		283
Disposal of business:
- Cash disposed of		-		(807)
Payment of deferred consideration		(82)		(839)
Purchase of intangible assets		(101)		-
Purchase of property, plant and equipment		(264)		(198)
Proceeds from sale of property, plant and equipment		2		-
Purchase of investments		(120)		-
Net cash used in investing activities		(565)		(3,727)
Cash flows from financing activities
Proceeds from issuing ordinary share capital		-		45
Repurchase of own shares		(694)		(400)
Dividend paid		(403)		(201)
Net cash used in financing activities		(1,097)		(556)
Net increase in cash and cash equivalents		6,225		176
Cash and cash equivalents at beginning of period		3,229		3,053
Exchange gains on cash & cash equivalents		38		-
Cash and cash equivalents at end of period		9,492		3,229

  CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE

for the year ended 30 September 2009

		Group
		30 Sept		30 Sept
		2009		2008
		£'000		£'000
Net foreign exchange adjustments offset in reserves		(4)		16
Actuarial losses on defined benefit pension scheme		(230)		(599)
Deferred tax attributable to the actuarial losses		64		168
Gain on investments available for sale		285		30
Net income/(expense) recognised directly in equity		115		(385)
Profit for the period		6,038		2,727
Total recognised income and expense for the period		6,153		2,342
Attributable to:
- Equity holders of the parent		6,161		2,390
- Minority interest		(8)		(48)
		6,153		2,342

  NOTES TO THE FINANCIAL STATEMENTS

30 September 2009

     1.     ACCOUNTING POLICIES

Basis of preparation

The accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been applied consistently to all the periods presented, unless stated otherwise.

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and issued by the International Accounting Standards Board (IASB). The Group has applied all accounting standards and interpretations issued by the IASB and the International Accounting Standards Interpretation Committee effective at the time of preparing the financial statements.  

At the date of authorisation of these financial statements, the following Standards and Interpretations which have not yet been applied in these financial statements were in issue, but not yet effective:

• IFRS 8 Operating Segments

• IAS 1 Presentation of Financial Statements (Revised)

• IAS 27 Consolidated and Separate Financial Statements (Revised 2008)

• IFRS 3 Business Combinations (Revised 2008)

• Improvements to IFRSs (effective 1 January 2009 other than certain amendments)

• Group Cash-settled Cash Based Payment Transactions - Amendment to IFRS 2 (effective 1 January 2010)

The directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the financial statements of the Group except for IAS 1 (revised), IFRS 3 (revised), and IFRS 8. The amendment to IAS 1 affects the presentation of other changes in equity and introduces a statement of comprehensive income. The Group will have the option of presenting items of income and expense and components of other comprehensive income either in a single statement of comprehensive income with subtotals, or in two separate statements (a separate income statement followed by a statement of other comprehensive income). This amendment does not affect the financial position or results of the Group but will give rise to additional disclosures. Management is currently assessing the detailed impact of this amendment on the Group's financial statements. IFRS 3 Business Combinations (Revised 2008) will apply to any future business combinations that the Group may undertake once it is in force. The Group has no plans to adopt the revised standard in advance of its mandatory implementation date. IFRS 8 will require the preparer to give additional segment disclosures when it comes into effect for periods commencing on or after 1 January 2009.

The consolidated financial information has been prepared under the historical cost convention except for fair value adjustments to forward exchange contracts and available for sale investments.

Basis of consolidation

The consolidated financial information comprises a consolidation of the accounts of the Company and its subsidiary undertakings at the balance sheet date using the purchase accounting method. The results of subsidiary undertakings acquired during the financial year are included from the date of acquisition. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.

On acquisition, the assets and liabilities and contingent liabilities of a subsidiary undertaking are measured at their fair values at the date of acquisition. Any excess of the cost of acquisition over the fair values of the identifiable net assets acquired is recognised as goodwill. Any deficiency of the cost of acquisition below the fair values of the identifiable net assets acquired (i.e. discount on acquisition) is credited to the income statement in the period of acquisition. The interest of minority shareholders is stated at the minority's proportion of the fair values of the assets and liabilities recognised. Losses incurred are allocated to the minority interest in equity until this value is nil, at which point any subsequent losses are allocated against the interests of the parent.

The financial effects of discontinued operations are presented in the income statement when a component of the entity has been or will be disposed of which represents a separate major line of business or geographical area of operations. The gain or loss arising on the disposal of a business is determined as the difference between the disposal proceeds and the carrying amount of the business and is included within (loss)/profit attributable to discontinued operations.

Intangible assets

a) Goodwill

Goodwill is the excess of the cost of an acquired entity over the aggregate of the fair values of that entity's identifiable assets and liabilities. Goodwill is shown in the balance sheet as an intangible asset. 

On disposal of a subsidiary the attributable amount of goodwill is included in the determination of profit or loss on disposal.

Education Development International plc elected not to apply IFRS 3 'Business Combinations' retrospectively. Goodwill prior to 30 September 2004 was amortised in line with UK GAAP. Goodwill from 1 October 2004 is subject to annual impairment testing.  Any impairment is recognised immediately in the income statement and not subsequently reversed.

b)  Intangible assets acquired on acquisition of a subsidiary undertaking

Intangible assets that are acquired on acquisition of a subsidiary undertaking are stated at their fair value and are amortised over their expected useful economic lives on a straight line basis. The amortisation charge is included in administrative expenses in the income statement.

	Estimated useful life
Technology acquired	3 years
Company name	3 years
Training programmes	3 years

c) Computer software

Purchased computer software is amortised over its expected useful economic life on a straight line basis. The amortisation charge is included in administrative expenses in the income statement.

	Estimated useful life
Computer software	3 - 5 years

Property, plant and equipment and depreciation

Property, plant and equipment is stated at historical cost less accumulated depreciation. Depreciation is calculated on a straight-line basis to write property, plant and equipment down to their estimated residual values over their expected useful lives. Where there is evidence of impairment, property, plant and equipment are written down to their recoverable amount. Any such write-down would be charged to the operating result. 

	Estimated useful life
Motor vehicles	3 years
Computer equipment	1 - 3 years
Fixtures, fittings and equipment	3 - 5 years
Leasehold improvements	3 years

Investments in subsidiaries

Investments in subsidiary undertakings are recognised at cost less amounts written off. Where the trade of a subsidiary undertaking is hived up into the parent company accounts the net assets are transferred from the subsidiary undertaking at their carrying value. Where the remaining investments exceed the value of the underlying assets, the difference is reallocated to goodwill.

Available for sale financial assets

Listed shares held by the Group that are traded in an active market are classified as being available for sale and are stated at fair value. Gains and losses in fair value are recognised directly in equity in retained earnings, with the exception of impairment losses which are recognised immediately in the income statement.

Inventories

Inventories are valued at the lower of cost and estimated net realisable value. Cost is determined on a first-in first-out basis. Net realisable value is based on the estimated sales price after allowing for all further costs of completion and disposal.

Financial assets

Financial assets are classified into the following specified categories: available for sale financial assets, financial assets at fair value through profit and loss and loans and receivables. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

Financial assets carried at fair value through profit and loss comprise financial assets held for trading which have been acquired principally for the purposes of selling in the short term. Derivatives also fall within this category unless they are designated as hedges and the hedge is effective for accounting purposes. Assets in this category are classified as current.

Loans and other receivables

Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and other receivables.  Loans and receivables are measured at amortised cost using the effective interest rate method, less any impairment.  Interest income is recognised by applying the effective interest rate, except for short term receivables when the recognition of interest would be immaterial.

The effective interest rate method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period.  The effective interest rate method discounts estimated future cash receipts through the expected life of the financial asset, or where appropriate, a shorter period.

Provision against trade receivables is made when there is objective evidence that the Group will not be able to collect all amounts due to it in accordance with the original terms of those receivables.  The amount of the write down is determined as the difference between the asset's carrying amount and the present value of estimated future cash flows.

Cash and cash equivalents

Cash and short-term deposits in the balance sheet comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less.

Financial liabilities

All of the Group's financial liabilities are classified as other financial liabilities or financial liabilities at fair value through profit and loss.

Financial liabilities carried at fair value through profit and loss comprise financial liabilities held for trading which have been acquired principally for the purposes of selling in the short term. Derivatives also fall within this category unless they are designated as hedges and the hedge is effective for accounting purposes as part of finance income and finance costs.  

Other financial liabilities

Other financial liabilities, including borrowing, are initially measured at fair value, net of transaction costs.  Other financial liabilities are subsequently measured at amortised cost using the effective interest rate method.  The effective interest rate method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period.  The effective interest rate method discounts estimated future cash payments through the expected life of the financial liability, or where appropriate, a shorter period.

Derivative financial instruments

The Group uses derivative financial instruments to reduce exposure to foreign currency exchange risk. All derivatives are initially recognised at fair value, and are subsequently re-measured to fair value at the balance sheet date. Changes in the fair value of any derivative instrument are recognised immediately in the income statement.

Foreign currencies

Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currency are translated at the rates of exchange ruling at the balance sheet date. Exchange differences are taken to the income statement.

In the consolidated accounts, the assets and liabilities of foreign subsidiaries are translated into Sterling at the rates of exchange ruling at the balance sheet date. The trading results of foreign subsidiaries are translated into Sterling using an average exchange rate for the period of consolidation. Exchange differences arising, if any, are classified as equity and transferred to the Group's translation reserve. Such translation differences are recognised as income or as expenses in the period in which the operation is disposed of.

The Group has elected to treat goodwill and fair value adjustments arising on acquisitions before the date of transition to IFRSs as sterling denominated assets and liabilities.

Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts, value added tax and after eliminating sales within the Group. Revenue is recognised as follows:

Rendering of services

Sales of services are recognised in the accounting period in which the services are rendered, by reference to completion of the specific transaction assessed on the basis of the actual service provided as a proportion of the total services to be provided. Deferred revenue represents amounts invoiced for which the service will be provided in future periods.

Sale of goods

Sales of goods are recognised when the Group has delivered products to the customer, the customer has accepted the products and collectibility of the related receivables is reasonably assured.

Services provided under licence agreements

Services provided under annual licence agreements are credited to deferred income and released to the income statement on a straight-line basis over the duration of the agreements.

  Impairment of assets

The carrying amount of the Group's assets is reviewed at each balance sheet date to determine whether there is an indication of impairment. If such an indication exists, the asset is written down to its estimated recoverable amount.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised as income immediately.

Employee benefits

Retirement benefit obligations 

The Group operates a defined benefit pension scheme. The cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses are recognised in full in the period in which they occur. They are recognised outside the income statement and presented in the statement of recognised income and expense.  The service cost of the pension provision relating to the period, together with the cost of any benefits relating to past service, is charged to the income statement. A charge equal to the increase in the present value of the scheme liabilities (because the benefits are closer to settlement) and a credit equivalent to the Group's long-term expected return on assets (based on market value of the scheme assets at the start of the period), are included in the income statement under "finance costs".

The difference between the market value of the assets of the scheme and the present value of the accrued pension liabilities is shown as an asset or liability on the balance sheet. Deferred tax is recognised on retirement benefit obligations and disclosed under non-current assets. Any difference between the expected return on assets and that, which is actually achieved, is recognised in the statement of recognised income and expense along with differences arising from experience or assumption changes.

During the year the Group also operated defined contribution pension schemes for some staff members. The assets of the plans are held separately from those of the Group in independently managed funds. The amount charged during the year represents the contributions payable to the schemes in respect of the accounting year.

Share-based payments 

The fair value of shares/options granted are recognised as an employee expense, with a corresponding increase in equity reserves. The fair value of the shares/options is determined at the date of grant and spread over the period the employees become unconditionally entitled to the shares/options. Non-market vesting conditions are taken into account in estimating the number of awards likely to vest. The estimate of the number of awards likely to vest is reviewed regularly and the expense charged adjusted accordingly. The fair value of the shares/options is calculated using the Black Scholes pricing model or another appropriate option pricing model dependent upon the terms of the share options.

Deferred tax is recognised on unexercised share options in issue in line with the taxation policies below. The movement in the associated deferred tax balance is recognised through the income statement to the extent that it relates to the corresponding cumulative share based payment charge recognised in the income statement. Additional movements are taken directly to equity.

Taxation

Current tax is the tax payable based on taxable profit for the year.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. 

Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised, provided they are enacted or substantively enacted at the balance sheet date. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Research and development

Expenditure incurred in market research and product development and testing is charged to the income statement in the period in which it is incurred, unless the development expenditure meets the criteria for capitalisation.

Where the expenditure meets the criteria for capitalisation, development costs are capitalised and amortised over their useful economic lives.

Leased assets

Where the Group acts as a lessee in an operating lease arrangement, the costs of operating leases are charged to the income statement as incurred. Lease incentives received are recognised over the lease term on a straight-line basis.

Provisions

A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects the current market assessments of the time value of money and, when appropriate, the risks specific to the liability.

An onerous lease provision is recognised by the Group where a leased property is vacant or sub-leased to a third party at below market rent, to the extent that rental payments are not recoverable from sub-leasing the property. The provision is discounted and based on the best estimate of the expenditure required to settle the rental obligation at the balance sheet date and is based upon market conditions at that date.

Treasury shares

Shares in the Group held by the Employee Benefit Trust are treated as treasury shares, and are valued at cost and deducted from equity in the Group and Company balance sheets. No gain or loss is recognised on the purchase, sale, issue or cancellation of the entity's equity instruments.

2.  SEGMENTAL ANALYSIS

Analysis of revenue and result by business segment
	Years ended
	30 Sept 2009				30 Sept 2008
			Profit/				Profit/
	Revenue		(loss)		Revenue		(loss)
	£'000		£'000		£'000		£'000
UK qualifications and assessment services	17,916		6,663		11,881		1,816
International qualifications	7,550		1,126		5,810		519
Support and broadband services	2,792		450		3,714		622
Unallocated	90		(187)		95		(256)
	28,348		8,052		21,500		2,701
Finance income			77				91
Finance costs			(99)				(23)
Profit on ordinary activities before taxation			8,030				2,769
Tax on profit on ordinary activities			(1,992)				417
Discontinued operations			-				(459)
Profit for the period			6,038				2,727

  

Analysis of assets and liabilities by business segment
	Segment assets				Segment liabilities
	30 Sept		30 Sept		30 Sept		30 Sept
	2009		2008		2009		2008
	£'000		£'000		£'000		£'000
UK qualifications and assessment services	8,551		9,034		(3,524)		(4,072)
International qualifications	3,389		3,073		(1,534)		(1,265)
Support and broadband services	1,529		1,358		(881)		(903)
Operational assets/(liabilities)	13,469		13,465		(5,939)		(6,240)
Unallocated assets/(liabilities)	9,540		3,223		(795)		(155)
Total assets/(liabilities)	23,009		16,688		(6,734)		(6,395)

Unallocated assets/(liabilities) consists primarily of cash and cash equivalents and current tax liabilities that cannot be readily allocated to segments.

Other segmental information
	Capital additions				Depreciation and
					amortisation
	Years ended				Years ended
	30 Sept		30 Sept		30 Sept		30 Sept
	2009		2008		2009		2008
	£'000		£'000		£'000		£'000
UK qualifications and assessment services	270		1,183		935		663
International qualifications	39		99		49		213
Support and broadband services	54		72		47		83
	363		1,354		1,031		959
Unallocated	2		4		2		8
	365		1,358		1,033		967
There are no material non-cash expenses that can be allocated to operating segments.
Analysis of revenue by geographical location (by destination)
					Years ended
					30 Sept		30 Sept
					2009		2008
					£'000		£'000
United Kingdom					20,904		15,814
Rest of Europe					2,975		2,335
Far East & Asia					4,231		3,054
Rest of World					238		297
					28,348		21,500

Analysis of segment assets and capital additions by geographical location (by origin)
	Segment assets				Capital additions
					Years ended
	30 Sept		30 Sept		30 Sept		30 Sept
	2009		2008		2009		2008
	£'000		£'000		£'000		£'000
United Kingdom	22,820		16,569		364		1,355
Rest of Europe	189		119		1		3
	23,009		16,688		365		1,358

  

3.  TAXATION

The taxation charge/(credit) for the year is analysed below:

				Years ended
				30 Sept	30 Sept
			2009			2008
				£'000		£'000
Current year tax charge				1,269		80
Adjustments to tax charge in respect of prior years				(5)		-
Total current tax charge				1,264		80
Deferred tax charge/(credit): Origination and reversal of temporary differences				1,071		(497)
Deferred tax credit in respect of prior years				(343)		-
Total deferred tax charge/(credit)				728		(497)
Tax on profit on ordinary activities				1,992		(417)
				Years ended
				30 Sept	30 Sept
			2009			2008
				£'000		£'000
Tax reconciliation
Profit on ordinary activities before taxation				8,030		2,769
Theoretical tax charge at UK corporation tax rate of 28%				2,248		775
Effects of:
Changes in tax rates				-		2
Expenses not deductible for tax purposes				103		57
Deductible temporary differences				(15)		(44)
Utilisation of previously unrecognised tax losses				(5)		(1,208)
Tax losses arising where no deferred tax asset recognised				9		-
Other				-		1
Adjustments in respect of prior year				(348)		-
Actual tax on profit on ordinary activities				1,992		(417)

4.  DIVIDENDS

Amounts recognised as distributions to equity holders in the year:

					Years ended
					30 Sept		30 Sept
					2009		2008
					£'000		£'000
Final dividend for the year ended 30 September 2008 of 0.30p (2007: 0.23p) per share					173		132
Interim dividend for the year ended 30 September 2009 of 0.40p (2008: 0.12p) per share					230		69
					403		201
Proposed final dividend for the year ended 30 September 2009 of 1.2p (2008: 0.30p) per share					636		173

The proposed final dividend will be submitted for formal approval at the Annual General Meeting to be held on 21 January 2010. These financial statements do not reflect this dividend payable, which will be accounted for in shareholders' equity as an appropriation of retained earnings in the year ending 30 September 2010.

  

5.  EARNINGS PER SHARE

	Years ended
	30 Sept		30 Sept
	2009		2008
Number of shares (million)
Weighted average number of shares in issue	57.6		57.2
Weighted average number of shares held as own shares by Employee Benefit Trust	(4.2)		(3.0)
Adjusted weighted average number of shares used in basic EPS	53.4		54.2
Effect of dilutive securities:
- Share options	3.5		2.5
Weighted average number of shares used in diluted EPS	56.9		56.7
Earnings (£'000)
Profit for the year attributable to ordinary shareholders:
- From continuing and discontinued operations	6,046		2,775
- From discontinued operations	-		459
- From continuing operations	6,046		3,234
Amortisation charge on acquired intangible assets	619		570
Tax on profit on ordinary activities	1,992		(417)
Minority interest	(8)		(48)
Adjusted earnings:
- From continuing operations	8,649		3,339
Adjusted earnings from continuing operations is shown as:
Operating profit	8,052		2,701
Net finance (costs)/income	(22)		68
Amortisation charge on acquired intangible assets	619		570
	8,649		3,339
Earnings/(loss) per share (pence)
From continuing operations
Basic	11.3p		6.0p
Diluted	10.6p		5.7p
Adjusted EPS	16.2p		6.2p
Adjusted EPS - Diluted	15.2p		5.9p
From discontinued operations
Basic	-		(0.9)p
Diluted	-		(0.8)p
From continuing and discontinued operations
Basic	11.3p		5.1p
Diluted	10.6p		4.9p

The weighted average number of shares used in the basic EPS calculation has been adjusted for shares held by the Employee Benefit Trust, as cover for outstanding share options.  

  

6.  GOODWILL

			UK qualifications		International		Support and		Total
			& assessment		qualifications		broadband
			services				services
			£'000		£'000		£'000		£'000
Group
Cost
At 1 October 2007			3,124		2,482		685		6,291
Additions			1,612		-		8		1,620
Disposals			-		(437)		-		(437)
Adjustments			(213)		-		-		(213)
At 1 October 2008			4,523		2,045		693		7,261
Adjustments			(80)		-		-		(80)
At 30 September 2009			4,443		2,045		693		7,181
Provision for impairment in value
At 1 October 2007, 1 October 2008 and 30 September 2009			-		-		-		-
Net book value
At 30 September 2009			4,443		2,045		693		7,181
At 30 September 2008			4,523		2,045		693		7,261

Group

Goodwill is tested for impairment at least annually in accordance with IAS 36 'Impairment of assets'. The recoverable amount of goodwill is based upon the value in use as represented by the net present value of future cash flows for individual cash generating units. Cash generating units relate to the Group's operating segments.  

Following the impairment test during the year, no charge has been recognised in the income statement in respect of goodwill impairment.

Management's key assumptions are based on their past experience. The calculation of value in use is most sensitive to the following assumptions:

• Cash flows: Cash flows are projected forward for five years based on three year approved budgets and plans. The budgets have been based on past experience, from which the plans have been extrapolated assuming 3% inflationary growth.  

• Discount rate: Cash flows are discounted using a discount rate based on the Group's pre-tax nominal weighted average cost of capital of 11.5%, which has been adjusted for the specific risks associated with the assets' estimated cash flows.  

The same assumptions and approach for calculating the recoverable value of goodwill is used for all cash generating units.

Management are not aware of any other changes that would necessitate changes in its key estimates and sensitivities to revenue.

UK qualifications & assessment services

On 19 November 2007 the Group acquired the entire share capital of ASET Group Limited, for an initial consideration for the acquisition (before costs) of £2,500,000: £1,700,000 was paid from existing cash resources and 2,124,834 1p ordinary shares were issued with a fair value of 37.65p per share. Additional consideration of £190,000 was paid during the year ended 30 September 2008, reflecting a net asset value adjustment in accordance with the sale and purchase agreement. Further deferred consideration of £200,000 was paid in April 2008 following the successful transfer of administration functions. Under the terms of the sale and purchase agreement deferred consideration of £200,000 was payable in August 2008 on the achievement of a sales revenue target; the sales revenue target was not met and payment was not made.

On 31 May 2007 the Group acquired the entire share capital of eNVQ Limited, for an initial consideration (before costs) of £1,030,000 and deferred consideration of £1,191,000 payable over 4 years to 31 May 2011 and based on Directors' best estimate of revenue forecast at 30 September 2007. At 30 September 2009, the Directors have reviewed the latest revenue forecasts for this business and revised deferred consideration downwards by a further £80,000 (cumulative adjustment of £293,000). Deferred consideration of £302,000, £375,000, £94,000 and £109,000 was paid in November 2007, May 2008, July 2008 and July 2009 respectively. The deferred consideration of £94,000 paid in July 2008 was part settled by the issue of ordinary shares; 73,013 1p ordinary shares were issued with a fair value of 32.30p per share. The deferred consideration of £109,000 paid in July 2009 was part settled by the issue of ordinary shares; 24,343 1p ordinary shares were issued with a fair value of 112.40p per share.

International qualifications

On 4 January 2008 the Group disposed of its shareholding in Educational Resources Pte Limited.  

Support and broadband services

Goodwill arose in the year on an amendment to deferred consideration and an acquisition by the Group. On 1 October 2004 the Group acquired the entire share capital of EQL Assessment Limited, for an initial consideration of £153,000. Deferred consideration of £55,000, £41,000 and £91,000 was paid in January 2006, February 2007 and February 2008 respectively.

  7.  RECONCILIATION OF PROFIT BEFORE TAX TO NET CASH GENERATED FROM OPERATIONS

		Group
		Years ended
		30 Sept		30 Sept
		2009		2008
		£'000		£'000
Profit on ordinary activities before taxation
- From continuing operations		8,030		2,769
- From discontinued operations		-		(457)
		8,030		2,312
Adjustments for:
Depreciation of property, plant and equipment		212		251
Amortisation of intangible assets		821		716
Profit on the sale of property, plant and equipment		(1)		-
Share based payments		93		76
Net finance costs/(income)		22		(68)
		9,177		3,287
(Increase)/decrease in inventories		(24)		11
(Increase)/decrease in trade and other receivables		(409)		826
(Decrease)/increase in trade and other payables		(281)		333
Net cash generated from operations		8,463		4,457

8. NOTICE OF ANNUAL GENERAL MEETING

The Annual General Meeting of EDI will be held at International House, Siskin Parkway East, Middlemarch Business Park, Coventry, West Midlands, CV3 4PE on Thursday 21 January 2010 at 10.00 am.

9. PRELIMINARY STATEMENT

This preliminary statement, which has been agreed with the auditors, was approved by the Board on 24 November 2009. It is not the Company's statutory accounts. Statutory accounts will be sent to shareholders shortly.

The statutory accounts for the two years ended 30 September 2008 and 2007 received audit reports which were unqualified and did not contain statements under s237(2) or (3) of the Companies Act 1985. The statutory accounts for the year ended 30 September 2008 have been delivered to the Registrar of Companies but the 30 September 2009 accounts have not yet been filed.

ENDFR UOSNRKWRAUAA