3 March 20081

Education Development International plc

Background Brief, 2007 Results and Trading Update

3 March 2008

3 March 20082

Contents

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

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 March 20083

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.

3 March 20084

Sector Activities

Specialist Administration, Platforms and Distribution Services

Assessment and Examinations

Learning Materials Content Publishing

Education and Training Programmes Delivery

The Education Services Pyramid

3 March 20085

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.

3 March 20086

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

3 March 20087

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.

3 March 20088

Organisation Structure

Board Richard Price (Chairman), Sir Bryan Nicholson, Barrie Clark, Wynford Dore, Nigel Snook, Dr Jenifer Moody. FD vacancy.

Management 150 years of sector experience.

Staff 112 at Coventry Head Office, 17 in three sub-offices and 32 ASET staff.

Associates 220+ part-time associate examiners, verifiers and trainers.

Agents 33 international agency agreements.

Centres 1,000+ in the UK, 4,200 across 100+ countries.

3 March 20089

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.

3 March 200810

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.

3 March 200811

Financial Trends

13,18514,175

16,274

20,600

22,600

743 1,1642,158

2,900 3,3003,3554,712

7,738

10,000

12,500

2005 2006 2007 2008 2009

Turnover

Adjusted Operating Profit

Net Assets

£000s - IFRS Basis

Analyst's Forecast29 February 2008

Analyst's Forecast29 February 2008

3 March 200812

2007 Results

3 March 200813

Highlights

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

• Financial overview: Year ended 30/09/07

Year ended 30/09/06

Growth%

Revenue (£m) 16.27 14.18 14.7

Operating profit (£m) 2.08 1.36 52.9

Adjusted profit (£m)* 2.20 1.13 94.7

Earnings per share (p) 4.20 2.30 82.6

Adjusted earnings per share (p)* 4.10 2.20 86.4

Dividend 0.33 0.20 65.0

• 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.

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

3 March 200814

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).

3 March 200815

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.

3 March 200816

Income and Margins

UK International Support Fusion Other 2007 2006

Revenue 7,750 5,551 2,631 213 129 16,274 14,175

Cost of Sales (1,580) (2,285) (630) (133) - (4,628) (4,252)

Gross profit 6,170 3,266 2,001 80 129 11,646 9,923

% 79.6 58.8 76.1 37.6 100.0 71.6 70.0

Administration expenses (excluding amortisation charge on acquired intangible assets)

(9,488) (8,759)

Net finance income/(costs) 40 (32)

Adjusted operating profit 2,198 1,132

% 13.5 8.0

3 March 200817

Cashflow

£000’s 2007 2006

Profit before tax 2,120 1,330

Depreciation and amortisation 413 218

Share options 21 27

Profit on sale of assets (2) -

Working capital movement (644) (68)

Interest and tax (28) 18

Operating cash flow 1,880 1,525

Capital expenditure (163) (458)

Acquisitions (729) (313)

Purchase of own shares net of issues (95) (182)

Dividend paid (160) -

Exchange rate movements - (58)

Net increase in cash 733 514

Opening cash 2320 1806

Closing cash 3053 2320

3 March 200818

Balance Sheet

£000’s 2007 2006

Goodwill 6,291 4,390

Other intangible assets and equipment 1,401 921

Deferred tax 556 615

8,248 5,926

Working capital (2,116) (1,178)

Cash 3,053 2,320

Provisions (758) (971)

Deferred consideration > 1 year (326) (4)

Deferred tax liabilities (173) -

Pension liabilities (190) (1,381)

Net assets 7,738 4,712

Shareholders equity 7,437 4,443

Minority interests 301 269

Total equity 7,738 4,712

3 March 200819

Trading Update

3 March 200820

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.

3 March 200821

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

Trading Update : 29 February 2008

3 March 200822

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.

3 March 200823

Future Developments

3 March 200824

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.

3 March 200825

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

3 March 200826

Business Development Strategy

UK Qualifications & Assessment Services

Growth Target 15% pa

Total market size £750m+

• Become the clear number two in the funded vocational qualifications market• Sign-up new centres and increase average sales value of existing customers • Restructured schools’ assessment service to reflect market dynamics

International Qualifications Growth Target 10% pa Total market size £1bn+

• Exploit strength of the LCCI brand to improve penetration in established markets • Update existing product range and expanding English language suite • Co-ordinate management of product development and agencies

Service Contracts Growth Target 10% pa

Total market size £100m+

• Continue to develop customised systems to enhance EDI service levels and offer support services to similar organisations • Long-term development partnerships with existing customers• Targeted marketing

Fusion Media Networks

Growth Target 20% pa

Total market size £250m+

• Exploit technical superiority of one-to-one contention connectivity• Cross sell to group customers• Marketing investment

3 March 200827

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.

3 March 200828

Shareholder Support

Wynford Dore (GOAL plc founder) 9,000,300 15.7%

Goldman Sachs International 6,022,100 10.5%

HSBC Global Custody Nominees (UK) 5,046,000 8.8%

Gareth Newman (GOAL plc founder) 3,855,061 6.7%

Hargreave Hale Nominees 3,259,503 5.7%

Nigel Snook (Personal/SIPP) 3,059,237 5.3%

EDI Employee Benefit Trust 2,955,000 5.1%

Real Time Consultancy (Singapore) 2,000,000 3.5%

Barnard Nominees 1,925,000 3.4%

Giltspur Nominees/Brewins Nominees 1.672,876 2.9%

• 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:

3 March 200829

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.