Education Development International 

Against strong comparatives, qualifications star Education Development International (EDI) still grew sales and profits in the half to March.

Adjusted pre-tax profits at EDI, which provides an array of vocational qualifications to professions ranging from door supervisors to taxi drivers and care workers, increased from £4m to £4.3m on turnover lifted 5.2% to £13.4m. Net cash at period-end stood at £7.4m, even after acquisitions, share purchases and dividends.

Nigel Snook, CEO, was ‘pleased with our results following a challenging period’ and though substantial cutbacks are expected across the public sector, he emphasises that ‘in the area of vocational qualifications, the government is actually looking to invest more money.’ He draws attention to the fact both the Conservatives and the Liberal Democrats support the idea of widening vocational qualifications and apprenticeships in order to reduce unemployment.

Some 25% of EDI’s revenue is derived from its international arm, LCCI, with the biggest territories being Malaysia, Hong Kong and Burma. Snook points out EDI, which also provides qualifications in Zimbabwe, does ‘not make moral judgements on the countries we operate in’ and that LCCI, which mainly provides accounting and bookkeeping qualifications in these regions, enjoys ‘religious support’ in parts of Asia. Meanwhile in the UK, EDI, still interested in ‘good value acquisitions’, plans to increase its share of the security training provision market and make inroads into niche areas including hairdressing qualifications.

For September 2010, broker Brewin Dolphin forecasts growth in pre-tax profits from £8.6m to £9.9m and 12.6p of earnings, leaving the shares selling for less than nine times earnings. We still consider EDI a highly compelling investment and strongly urge further buying on recent weakness.