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Education Development International plc Background Brief and 2007 Annual Results Richard Price, Chairman Nigel Snook, Chief Executive PowerPoint PPT Presentation


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Education Development International plc Background Brief and 2007 Annual Results Richard Price, Chairman Nigel Snook, Chief Executive. 22 November 2007. Background Briefing Introduction Corporate development Our market place Financial trends Business segments

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Education Development International plc Background Brief and 2007 Annual Results Richard Price, Chairman Nigel Snook, Chief Executive

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  • Education Development International plc

  • Background Brief and 2007 Annual Results

  • Richard Price, Chairman

  • Nigel Snook, Chief Executive

22 November 2007


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Background Briefing

Introduction

Corporate development

Our market place

Financial trends

Business segments

Revenue generation

Organisation structure

2007 Annual Results (Page 11)

Highlights

Organisation development programme

Business segments performance

Acquisitions impact

Financial overview

Income and margins

Cashflow

Balance sheet

Latest acquisition

Shareholder profile

Business development strategy

Prospects

Contents


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Introduction

  • EDI is a leading provider of accredited qualifications and assessment services, and IT-based back office

  • administration support services. The business operates across three broad areas:

  • UK Qualifications and Assessment Services (2007 sales £7.75m : 48% of total)

  • Accredited by the UK government qualifications regulators

  • Second largest provider of apprenticeship programme vocational qualifications

  • Only provider of a comprehensive online school performance and pupil assessment service

  • International Qualifications (2007 sales £5.55m : 34% of total)

  • ‘Exporter’ of qualifications for over 100 years – London Chamber of Commerce and Industry branded

  • Operating in 103 countries.

  • Business and English language qualifications

  • Support Services (2007 sales £2.63m : 16% of total)

  • Pioneer in online assessments design and delivery platforms

  • Provider of specialist administrative services to similar organisations

  • Printing, storage and distribution partnership


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Corporate Development

  • GOAL plc

  • - AIM float in April 2000

  • EDI formed

  • - Merger in December 2002 of GOAL plc and the London Chamber of Commerce and Industry Examinations Board

  • Educational Resources Pte Limited, Singapore

  • - Majority stake (50.4%) taken in June 2004 of South East Asia agency operation

  • Small ‘bolt-ons’

  • - Four awarding bodies/product lines purchased and integrated between October 2004 and October 2006

  • eNVQ Limited

  • - Acquisition in May 2007 of innovative ‘e-portfolio’ business

  • Fusion Media Networks Limited

  • - Holding increased to 75% in July 2007 of internet service provider (ISP) (eNVQ owned 50% of FMN)

  • ASET Group Limited

  • - Acquisition on 19 November 2007 of accredited UK vocational awarding body


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Our Market Place

  • The Education Services Pyramid

Assessment and Examinations

Customers

Students Schools Colleges Training companies Universities Professional bodies Employers Other awarding bodies

Suppliers

Government agencies Awarding bodies Professional bodies Universities Publishers Software companies Distribution/outsourcing companies

Learning Materials Content Publishing

Education and Training Programmes Delivery

Specialist Administration, Platforms and Distribution Services


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Financial Trends


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Business Segments

  • UK Qualifications and Assessment Services

  • 250 approved vocational qualifications covering retail, hospitality, administration, care, customer service, financial services, key skills. (NVQ’s, Apprenticeships)

  • 1,013 registered centres. Private training companies, further education colleges, corporates.

  • 260,000 candidates and 210,000 certificates processed per annum plus 190,000 online tests.

  • 12% market share of programme funded qualifications: - City and Guilds 42%, Edexcel and OCR 8% each

  • Specialist schools assessment service:

  • - 650 customer schools

  • - Range of 800 tests, Key Stage 1 to AS Level

  • - Mapped to national curriculum and fully online

  • - 600,000+ online assessments

  • 62 associate VQ verifiers and 15 school trainers.


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Business Segments

  • International Qualifications

  • 80 vocational examination subjects in book-keeping, business management and English language.

  • 4,200 registered centres. Secondary schools, private schools and colleges, universities and business schools, companies.

  • Operating in 103 countries, mainly South East Asia and Europe

  • Exclusive licence to use LCCI brand.

  • 240,000 candidates per annum.

  • Network of 32 agents and management control of South East Asia agent, Educational Resources Pte Limited.

  • 150 associate examiners.


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Business Segments

  • Support Services

  • 12 customers including awarding and professional bodies, and one university.

  • Online testing, learning materials logistics, full back office qualifications administration and software development.

  • i-assess customisable assessment platform.

  • Campus online qualifications and assessments administration system.

  • eNVQ online learning and assessment management system.

  • Fusion internet service provider.

  • Logistics partner RR Donnelly – printing, storage and distribution.


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Revenue Generation

  • Centre registration fees : £250 - £450 per annum.

  • Candidate registration : £25 - £85 per candidate.

  • Certification : £5 - £100 per candidate.

  • Learner administration (eNVQ) : £25 - £100 per candidate.

  • Support materials : £10 - £25 per book.

  • Schools’ assessment packages £299 - £5,000 per school per annum.

  • Software licence fees : upto £6,000, plus £2 - £8.50 per candidate.

  • Contract management fees : £30,000 - £300,000, plus £5 per candidate.

  • Development projects : priced as one-off tasks.


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Organisation Structure


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2007 Annual Results


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Highlights

  • Results in line with upgraded expectations reflecting the benefits of infrastructure investments, organic growth and acquisitions.

  • Financial overview:

* Profit on ordinary activities before taxation adjusted for movement in the onerous lease provision and amortisation charge on acquired intangible assets

  • Cash inflow from operating activities of £1.88m (2006 : £1.53m).

  • Final dividend of 0.23p per share recommended bringing total dividend for the year to 0.33p.

  • Results reflect the acquisition of eNVQ Limited and a 75% holding taken in Fusion Media Networks Limited which together contributed £398,000 to revenue.

  • Full implementation of bespoke Campus administration system completed.

  • Approved by the Qualifications and Curriculum Authority to award the new Diploma qualifications for 14-19 year olds.

  • Acquisition of ASET Group Limited on 19 November 2007.


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Organisation Development Programme

  • Commenced July 2004:

  • - Move to single site in Coventry – closure of Sidcup and Leamington Spa offices

  • - Major staff re-organisation

  • - Modernisation and automation of business systems

  • Programme fully completed March 2007.

  • Total cost £1.75m - £700k capitalised.

  • Cost saving and efficiency gains of £500k per annum.

  • Surplus leases either assigned, under notice or being actively marketed.

  • Current organisation development focus on international agents and UK associates networks.


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UK Qualifications and Assessment Services

Sales up 15% at £7.75m

Vocational qualifications sales up 15% during period of system transition

112 new customers and increasing penetration in the FE college market

Diploma awarding body status

195 new schools signed up but renewal rate below expectations at 70% – service re-launched in September 2007

eNVQ contribution, £185k in four months since acquisition

International Qualifications

Sales up 5% at £5.55m (up 9.3% excluding Dollar impact)

Impact of US Dollar weakness on sales of £220k

Local sales performance:

- up 27% in Germany

- Up 23% on a local currency basis in Asia, but only up by 4% on a Sterling basis

Accredited programmes in Kuwait and South Africa

Support Services

Sales up 25% at £2.63m

Strong growth in i-assess revenues – up 25%

588,000 online tests administered – up 36%

681,000 candidates and 241,800 certificates administered

Astron acquired by RR Donnelly

Fusion Media Networks

Revenue contribution £213k in four months since acquisition

300 plus customers

Investment in equipment and marketing

Business Segments Performance


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Acquisitions Impact

  • eNVQ Limited

  • - ‘e-portfolio’/learning programme management software

  • - Acquired 31 May 2007

  • - Fully integrated

  • - £185k revenue contribution in four months since acquisition

  • - Estimated 2007/08 revenue : £750k

  • Fusion Media Networks Limited

  • - Internet service provider

  • - 50% holding through eNVQ acquisition on 31 May 2007

  • - Holding increased to 75% 27 July 2007

  • - Technical and sales operation based in Southend-on-Sea with 5 staff

  • - Business administration transferring to Coventry Head Office

  • - £213k revenue contribution in four months since acquisition

  • - Estimated 2007/08 revenue £750k


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Financial Overview

  • Operating profit to cash conversion ratio 75% (2006 : 93%).

  • Cash inflow from operational activities of £1.88m (2006 : £1.53m).

  • Cash £3.1m (2006 : £2.3m).

  • Dollar weakness impact on revenue £220k.

  • Onerous lease provision of £758k providing full cover to 2011.

  • Pension fund deficit £0.2m (2006 : £1.4m).

  • Shareholder funds up 67% at £7.4m.


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Income and Margins


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Cashflow


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Balance Sheet


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Latest Acquisition

  • ASET Group Limited

  • Accredited UK vocational awarding body.

  • Sound strategic fit with EDI qualifications range.

  • Customer base in further education sector.

  • 2006/07 : revenue £2.23m, operating profit £70k after directors remuneration.

  • Potential for immediate savings and significant medium-term synergies.

  • Consideration:

  • - Up to £2.9m with £2.5m paid on completion:

  • - £1.7m in cash

  • - £800k in EDI shares – 2,124,834 (3.86% dilution)

  • - £200k after 90 days on successful transfer of certain administration functions

  • - £200k on achievement of sales targets for year to 31 July 2008

  • - Net assets mechanism to provide value of £400k against completion accounts

  • Moratorium on shares disposal for 12 months, plus 6 months orderly market


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Shareholder Profile


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Business Development Strategy


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Prospects

  • Strong global market for education services - investment by UK and foreign governments, individuals and families in academic education and vocational skills.

  • Benefits of infrastructure investment, organic growth and acquisitions.

  • Focused on continuous improvement of service levels, extending product range and strengthening business development and sales capabilities.

  • Constant review of acquisition opportunities to broaden range and scope of services.

  • Progressive dividend policy.


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