Education Development International plc Background Brief, 2007 Results and Trading Update

1. Education Development International plc • Background Brief, 2007 Results and Trading Update 3 March 2008

2. Background Briefing Introduction Sector activities Market players Corporate development Organisation consolidation Organisation structure Business segments Revenue sources Financial trends 2007 Results (Page 11) Results highlights Organic growth and acquisitions Financial considerations Income and margins Cashflow Balance sheet Contents Trading Update (Page 18) • Post balance sheet activity • Trading update : 29 February 2008 • Future Developments (Page 22) • Drivers for growth • Operational priorities • Business development strategy • Acquisition targets • Shareholder support • Prospects

3. Introduction • EDI is accredited by the Government to award qualifications and is a leading provider of: • - UK vocational qualifications (Apprenticeships and NVQs) • - International business qualifications (branded London Chamber of Commerce and Industry) • - Specialist assessment and administration services • Extensive use is made of IT-based operating systems and online delivery platforms. • We are an educational quality assurance body.

4. Sector Activities • The Education Services Pyramid Assessment and Examinations Learning Materials Content Publishing Education and Training Programmes Delivery Specialist Administration, Platforms and Distribution Services

5. Market Players • Demand Side • Schools, further education colleges, private training companies, universities, professional bodies, employers, individuals and other awarding bodies. • Supply Side • Governments, public agencies, awarding bodies, professional bodies, universities, publishers, software companies and distribution/outsourcing companies. • Competitors • Edexcel (Pearson), OCR (Cambridge University), City and Guilds of London Institute, 100+ specialist awarding and professional bodies and unapproved bodies. Software and systems developers.

6. 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 • Organisation consolidation and ‘bolt-on’ acquisitions • - Operational integration and acquisition of four awarding bodies/product lines purchased and • integrated between October 2004 and October 2006 • eNVQ Limited • - Acquisition in May 2007 of innovative ‘e-portfolio’ system • Fusion Media Networks Limited • - Holding increased to 75% in July 2007 of internet service provider (ISP) (eNVQ owned 50% of FMN). • ‘Put and call’ contract in place over minority holding • ASET Group Limited • - Acquisition on 19 November 2007 of accredited UK vocational awarding body • Educational Resources Pte Limited, Singapore • - Disposal on 4 January 2008 of majority stake to long-term local partner. New long term agency • agreement completed

7. Organisation Consolidation • 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 surrendered, assigned or being actively marketed. • Head office is now a scaleable administrative ‘hub’ to support growth.

8. Organisation Structure

9. Business Segments • UK Qualifications and Assessment Services (48% of turnover) • 250 approved vocational qualifications. • 1,000+ registered customers. • 250,000+ candidates registrations per annum. • 12% market share for vocational qualifications. • 650+ school customers for online national curriculum tests system. • International Qualifications (34% of turnover) • 80 examinations branded London Chamber of Commerce and Industry. • 4,200 registered centres in 100+ countries. • 250,000+ entries per annum. • Support Services (16% of turnover) • Online testing platforms, qualifications and learner administration systems, printing, logistics and internet service provision. • 12 contracts including ACCA, CIMA, CIEH and OCR. • Fusion Media Networks (Recent acquisition) • Internet service provider – one-to-one contention. • Resaler contracts, main supplier Cable & Wireless.

10. Revenue Sources • Centre registration fees : £250 - £450 per annum. • Candidate registration : £25 - £85 per candidate. • Certification : £5 - £100 per candidate. • Accredited programmes : up to £5,000 initial/annual audit, plus up to £10 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 : up to £6,000, plus £2 - £8.50 per candidate. • Contract management fees : up to £30,000, plus % of contract value or per candidate charge. • Development projects : priced on one-off basis. • Monthly fixed rate supply contracts (Fusion ISP) : £3,000 - £5,500 per customer.

11. Financial Trends

12. 2007 Results

13. 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.

14. Organic Growth and Acquisitions • Growth in all business segments • UK qualifications and assessment services, up 15%. • International qualifications, up 5% (up 9% without US Dollar impact). • Support services, up 25%. • Revenue from acquisitions • eNVQ Limited, e-portfolio software, £185k in four months. • Fusion Media Networks Limited (75% holding), internet service provider,£213k in four months. • Total £398k (full year estimate, up to £1.5m).

15. Financial Considerations • Cash £3.1m (2006 : £2.3m). • Operating profit to cash conversion ratio 75% (2006 : 93%). • Cash inflow from operational activities of £1.88m (2006 : £1.53m). • Dollar weakness impact on revenue £220k. • Onerous lease provision of £758k. • Pension fund deficit £0.2m (2006 : £1.4m). • Shareholder funds up 67% at £7.4m.

16. Income and Margins

17. Cashflow

18. Balance Sheet

19. Trading Update

20. Post Year End Activity • Acquisition of ASET Limited • Accredited UK awarding body – sound strategic fit. • 2006/07 revenue £2.23m – mostly from further education colleges. • Consideration, up to £2.9m (£2.5m after £400k net assets underpin): • - £2.5m on completion including £800k in shares (2,125m – 3.86% dilution) • - Plus two, £200k performance payments – April 2008 and August 2008 • Disposal of majority stake in Educational Resources Pte Limited • Sale of 50.4% shareholding to long-term local partner, AEC Education plc. • Loss on disposal write off £500k. • Consideration, 2m AEC shares (market value £240k). • Payment for new open-ended agency, £450k over three years. • Management review underway. • Put and Call Option over minority holding in Fusion Media Networks • Contract in place for review in 2012 to purchase 25% minority holding based on an independent valuation.

21. Trading Update : 29 February 2008 • Trading • UK Services showing strongest growth – organic and acquisition. • International progress particularly in Germany and South East Asia – development of new agency arrangements. • Support Services development through new and repeat business for specialist software services. End of large contract worth £900k pa on 30 September 2008 after five years will enable focus on own business. • Acquisitions • eNVQ Limited and Fusion Media Networks Limited fully integrated: • - Investment in systems upgrade • - Focus on marketing and business development • ASET Group Limited trading in line with expectations: • - Transfer of administration to Head Office from York by 31 March 2008 and from Macclesfield by 31 July – no extra staff required • - Small team of expert staff to continue in Macclesfield • - Restructuring costs of less than £100k through P&L account. Dilapidations provision to goodwill

22. Trading Update : 29 February 2008 • People • Former ASET CEO to head up Sector Skills Councils and large employers team – Leitch review of skills. • Senior manager appointed from Cambridge International Examinations to head up international development and professional delivery team. • Financial Considerations • Significant reduction in cash to fund acquisitions. • £1m short-term overdraft facility in place. • Lease for Athena House, Sidcup surrendered with dilapidations settled at £325k. • Unlet space in Marlowe House, Sidcup under offer at a subsidised rent. • Surplus leases provision £320k (as at 1 March 2008). • Share Options • Grant of 1,275,000 options from Employee Benefit Trust to Chief Executive (1m), Director of Business Development (200k) and Financial Controller (75k). (Options at 15p cost to EBT). • Chief Executive now has interest in 3,059,237 (5.3%) ordinary shares and 3,000,000 options (5.0% fully diluted) – 350k already vested.

23. Future Developments

24. Drivers for Growth • Accredited awarding body status including for the new Diplomas. • Growing global investment by governments, businesses, families and individuals in personal, vocational and English language skills development. • Increasing acceptance of screen based/online education services. • Strength of the underlying EDI business, supported by positive investment strategy and acquisitions programme.

25. Operational Priorities • Lock in quality of service: • - ISO 9001/2000 and Investor in People accreditation • Profile raising: • - Appointment of marketing and communications agency • Building sales capacity: • - Investment in trade promotion and additional staff • Comprehensive product development pipeline: • - In-house programme, acquisitions and participants on Government programmes (new Diplomas) • Continuing organisation development programme: • - Integration of acquisitions, developing international agencies and optimising UK • associates network

26. Business Development Strategy

27. Acquisition Targets • Service and related sectors qualifications awarding and assessment services. • Publishing of related education and training support materials. • Software for related education and training administration applications. • Agencies and delivery networks in international markets. • ‘Bolt-on’ internet service providers. • Continuing professional development programme provision for vocational education and training practitioners.

28. Shareholder Support • Growing investment press coverage and active investor relations programme. • 12 month share price uplift 80% - market capitalisation £24m. • Total voting rights 57,512,291 at 31 January 2008. • Top 10 shareholders as at 29 February:

29. Prospects • Benefiting from infrastructure investment, organic growth and acquisitions. • Focused on continuous improvement of service levels, extending product range and strengthening business development and sales capabilities. • Constantly reviewing acquisition opportunities to broaden range and scope of services. • Committed and experienced Board and management team. • Continuing return to investors through share price growth and progressive dividend policy.