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Education Development International plc Interim Results : March 2009 Nigel Snook, Chief Executive

Education Development International plc Interim Results : March 2009 Nigel Snook, Chief Executive Paul Bird, Finance Director. Background Brief Corporate history What we do Marketplace Business areas Revenue sources Management. Interim Results Financial headlines

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Education Development International plc Interim Results : March 2009 Nigel Snook, Chief Executive

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  1. Education Development International plc • Interim Results : March 2009 • Nigel Snook, Chief Executive • Paul Bird, Finance Director

  2. Background Brief Corporate history What we do Marketplace Business areas Revenue sources Management Interim Results Financial headlines Highlights Business performance Growth analysis Margins Tax Cashflow Balance sheet Contents Prospects • Strategy • Resilience • Financial trends • Dividend and share buy-back • Shareholders • Liquidity

  3. Interim Results : March 2009

  4. Revenue up by 33% to £12.78m (2008 : £9.61m). Operating profit £3.64m (2008 : £667,000). Adjusted operating profit* £3.95m (2008 : £924,000). Basic earnings per share 5.3p (2008 : 1.4p). Adjusted earnings per share+ 7.4p (2008 : 1.7p). Net cash generated from operations £2.87m (2008 : £1.16m). Net cash and gilts £5.80m (2008 : £1.13m). * Profit on ordinary activity before taxation adjusted for the amortisation charge on acquired intangible assets. + Adjusted earnings per share is based on adjusted operating profit. Financial Headlines

  5. 70% year-on-year growth in UK vocational qualifications sales. Launch of partnership with J Sainsbury plc to award National Vocational Qualifications as part of Sainsbury’s in-house training programme. Successfully tendered to provide vocational qualifications services to ESG Limited, one of the UK’s largest private training providers. Sales totalling £910,000 of a Road Passenger Transport qualification for taxi drivers. £430,000 revenue gain as a result of exchange rate movements. Successful appeal to the Pension Protection Fund for a recalculation of the 2007/08 levy – provision of £182,000 released. Interim dividend 0.4p per share (2008 : 0.12p). Highlights

  6. Business Performance • UK Qualifications and Assessment Services • 67% of turnover – some second half seasonality. • Sales up 59% to £8.56m: • - Vocational qualifications sales up 70% • - eNVQ sales up 34% • Full benefits of ASET acquisition. • Short-term peak in sales of a funded taxi driving qualification. • Major contract win – ESG Limited a large private training provider. • Corporate developments with Sainsbury’s, Dixon Stores Group, Lidl, One Stop Stores and Brantano. • GOAL online school assessments sales steady – repackaging schools range.

  7. Business Performance • International Qualifications • 21% of turnover – marked quarter three seasonality. • Sales up 25% to £2.7m - £430,000 currency exchange gain. • 50% of revenue billed in US Dollars/linked currencies and 30% in Euros. (Contracts to sell in place for around 80% of 2009/10 US Dollar and Euro revenue). • Volumes up 1.4% – Germany and Singapore growth offsets slower year-to-date in Hong Kong. • Strengthened management capability. • Support and Broadband Services • 12% of turnover – little seasonality. • Sales down 26% to £1.48m reflecting policy to withdraw from lower value contracts. • Sales volumes for i-assess software services up 15% with revenue up 3% to £654,000 reflecting pricing structure. • Broadband sales through Fusion Media Networks up 27% to £452,000.

  8. Growth Analysis Main revenue movements : £000s

  9. Margins

  10. Tax + + * + Brewin’s analyst forecast. Ø EPS is calculated on a fully diluted basis after a deduction has been made for 3,955,000 shares held by the Employee Benefit Trust. * Partially taxed – rate of 21.5% estimated after utilisation of tax losses.

  11. Cashflow

  12. Balance Sheet

  13. Prospects

  14. Strategy • UK Vocational Qualifications (Market size £300m+) • Grow revenues 20% year-on-year and become the clear number two to City and Guilds. • International Qualifications (Market size £1bn+) • Grow revenues 10% year-on-year and exploit the status of LCCI branded qualifications. • Support and Internet Services (Market size £500m+) • Consolidate to i-assess contracts and build margins in Fusion broadband business. • Operational Investment • Extended senior management structure. • International distribution channel development. • Marketing and sales capacity. • Operating systems upgrade. • Research and innovation unit set up. • Staff development.

  15. Business Resilience • Growing reputation and profile. • Government accredited – restricted, regulated market. • Visibility of revenue – annual education cycle and three year/open-ended contracts. • Cash reserves and cash generative – self funded acquisition and investment programmes. • Growing market share – still plenty to go for. • International spread – South East Asia a main market. • Positive exposure to Sterling weakness. • Significant and growing government funding for UK vocational education. • Corporate and individuals’ investment in skills development. • Consolidation after acquisitions and major organisational changes. • Current focus on organic growth with cautious approach to acquisition opportunities. • Very experienced non-executive and executive management team.

  16. Financial Trends

  17. Dividends and Share Buy-Back • Dividend Policy • Prudent baseline. • Increases to shadow profit growth. • Interim dividend 0.4p (2008 : 0.12p). • Share Buy-Back Policy • Current 85% cover for share options – 3,955,000 shares (6.9%) – held in Employee Benefit Trust. • Achieve 100% cover for share option contracts. • Further purchases of shares on an ‘as and when’ basis to be either held in Treasury or cancelled.

  18. Shareholders • Total number of shareholders 486. • Top ten holders/groups: • Key holdings below 3%:

  19. Liquidity • Total voting rights at 31 May 2009 – 57,585,304. • Strong share trading patterns in the six months from November 2008: • Recent peak market cap £55m at 95.5p per share.

  20. Background Brief

  21. Corporate History • Autumn 1999 : GOAL Limited formed. • April 2000 : IPO. • December 2002 : Merger with London Chamber of Commerce and Industry Examinations Board (founded 1887) to form Education Development International plc. • 2004 – 2007 : Seven bolt on company and product acquisitions, all fully integrated. • 2005 – 2006 : Relocation to single main site and launch of Campus, own build integrated operating system. • 2008 – 2009 : Continued investment in new services, sales capability and management capacity. • Today : A leading UK and international player in the educational qualifications and assessment services market.

  22. What we do • Provide certificated quality assurance for education and training programmes: • Government approved and regulated • UK and international reach • Expertise in IT-based product delivery and administration • Design and implement assessment strategies for vocational training programmes. • Endorse and certificate in-company training programmes. • Prepare syllabi and examination papers, and administer international business qualifications. • Design, build and operate sophisticated online assessment and testing services. • Design, build and operate sophisticated online administration systems. • Provide customised software and broadband services.

  23. Marketplace Illustrative ‘course’ costs The Players Awarding Bodies/Exam Boards Exams and Assessments. EDI, Edexcel, City and Guilds, OCR, AQA, professional bodies and 100’s of others £50 (High margin) Publishers Learning materials, books and online. £150 (Mid margin) Pearson, Nelson Thornes, Hodder and Stoughton and 1000’s of others Schools and Colleges Primary and secondary schools, FE colleges, private trainers – BPP, Melorio – and 10,000’s of others £800 (Low margin) Education and training programmes. £1000 In-house and/or outsourced Delivery and administration software. Logistics.

  24. Business Areas • UK Qualifications and Assessment Services • 307 accredited vocational qualifications (NVQs, Diplomas, Key Skills). • 279 specialist awards and approved programmes. • 1,409 registered centres. • 200,000 plus candidate registrations a year. • 12% share of programme funded vocational qualifications in target sectors. • 650 plus school customers for online assessment services. • International Qualifications • Branded London Chamber of Commerce and Industry under licence. • 65 business qualifications: • - Book-keeping, mainly South East Asia • - English for business, mainly Europe • 4,930 registered centres across 103 countries. • 275,000 plus examination entries a year. • Support and Internet Services • Six contracts for i-assess, secure online testing platform (ACCA, CIMA, OCR). • 502 customers for commercial quality broadband services. • One print and logistics contract (CIEH).

  25. Revenue Sources • UK government funded programmes: • - Centres’ annual registration fee : £500 • - Candidate registration and certification : £25 - £85 • - Candidate administration platform (eNVQ) : £25 - £50 • Company training programmes: • - Initial audit and annual review fee : typically £5,000 • - Candidate certification : £5 - £15 • International business qualifications: • - Candidate entry and certification : £25 - £85 • Schools’ assessment service: • - Subject £299 • - Full range upto £5,000 • Assessment software and broadband services: • - Software licence fees up to £5,000 plus £2 - £8.50 per test • - Broadband contracts : £250 to £5,000 per month

  26. Management

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