Education Development International plc

1

• Education Development International plc
• Background Brief, 2008 Interim Results and Future
  Developments
• Nigel Snook, Chief Executive
• Paul Bird, Finance Director

5 June 2008
2
Contents

• Background Brief
• Introduction
• Sector activities
• Market players
• Corporate development
• Organisation structure
• Business segments
• Revenue sources
• Financial trends

• 2008 Interims (Page 11)
• Highlights
• Acquisitions and disposals
• Segmental performance
• Surplus leases
• Income and margins
• Cashflow
• Balance sheet

• Future Developments (Page 19)
• Drivers for growth
• Operational investment
• Business development strategy
• Acquisition targets
• Prospects
• Shareholder support

3

• Background Brief

4
Introduction

• We are an educational quality assurance body.
• EDI is accredited by the Government to award
  qualifications and is a leading provider of
• - UK vocational qualifications and assessments
  (Apprenticeships, Diplomas, accredited
  employers programmes and national curriculum
  based tests)
• - International business and English language
  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.

5
Sector Activities

• The Education Services Pyramid

Assessment and
Examinations
Learning Materials Content Publishing
Education and Training Programmes
Delivery
Specialist Administration, Platforms and
Distribution
Services
6
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.
• Competition
• In the UK Edexcel (Pearson), OCR (Cambridge
  University), AQA, City and Guilds of London
  Institute, 100 specialist awarding and
  professional bodies, and unapproved bodies.
• In overseas markets national qualifications and
  UK/US/Australian service providers.
• Software and systems development companies.

7
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.
• Bolt-on acquisitions Acquisition of four
  smaller awarding bodies/product lines between
  October 2004 and October 2006.
• Organisation consolidation Move to single main
  site and systems modernisation programme during
  2005/06 at cost of 1.75m.
• eNVQ Limited Acquisition in May 2007 of
  innovative e-portfolio system for training
  programme administration.
• 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.
  Main integration programme completed 31 March
  2008.
• Educational Resources Pte Limited, Singapore
  Disposal on 4 January 2008 of majority stake to
  long-term local partner, AEC Education plc. New
  long-term agency agreement completed.

8
Organisation Structure
9
Business Segments

• UK Qualifications and Assessment Services (56 of
  turnover)
• 350 nationally accredited vocational
  qualifications.
• 600 specialist awards for employers and training
  providers.
• 1,000 registered centres.
• 140,000 candidate certifications per annum.
• 12 market share for programme funded vocational
  qualifications in key sectors.
• 625 school customers for online national
  curriculum tests system.
• International Qualifications (22 of turnover)
• 90 examinations branded London Chamber of
  Commerce and Industry.
• 4,900 registered centres in 120 countries.
• 250,000 entries per annum.
• Support and Internet Services (22 of turnover)
• Online testing platforms, qualifications and
  learner administration systems, printing,
  logistics and internet service provision
  (Fusion).
• 12 contracts including ACCA, CIMA, CIEH, OCR and
  RHS.

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 on-line assessments from 299 per
  subject to 5,000 per school per annum.
• Software licence fees up to 6,000 per annum,
  plus 2 - 8.50 per candidate.
• Contract management fees up to 30,000, plus
  of contract value or per candidate charge.
• Fusion ISP supply contracts monthly fixed rate,
  250 - 500 per customer.
• Development projects priced on one-off basis.

11
Financial Trends
12
Interim Results 31 March 2008
13
Highlights

• Results reflect the positive impact of 17
  organic growth, a revenue contribution of 1.55m
  from the acquisitions made over the past year and
  continued improvements in operational efficiency.

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
  1.16m (2007 0.48m).
• Acquisition of ASET Group Limited on 19
  November 2007 and successful integration of ASET
  operations completed
• by 31 March 2008.
• Disposal of 50.4 shareholding in Educational
  Resources Pte Ltd on 4 January 2008.
• Management and staff re-organisation to
  reflect the impact of acquisitions and disposals.
• Appointment of new Finance Director.
• Achievement of ISO 9001/2000 accreditation on
  12 March 2008.
• Interim dividend of 0.12p per share declared
  (2007 0.1p).

14
Acquisitions and Disposals

• Acquisition of ASET Limited 19 November 2007
• Accredited UK awarding body sound strategic
  fit.
• 2006/07 revenue 2.23m mostly from further
  education colleges.
• Consideration, up to 2.9m
• - 2.5m on completion including 800k in
  shares (2,125m 3.86 dilution)
• - 400k of net assets acquired
• - 200k payment in April 2008 on completion
  of administration handover
• - Further payment of 200k in August 2008 if
  sales target of 2.65m achieved
• - Reorganisation costs of 88k through
  income statement (17 redundancies).
• Disposal of majority stake in Educational
  Resources Pte Limited 4 January 2008
• Sale of 50.4 shareholding to long-term local
  partner, AEC Education plc.
• Loss on disposal write off 490k after
  consideration of 2m AEC shares (current market
  value 270k).
• Payment for new open-ended agency agreement,
  450k over three years.
• Agency manager appointed in Kuala Lumpur.
• Put and Call Option over minority holding in
  Fusion Media Networks 14 December 2007
• Contract in place for review in 2012 to purchase
  25 minority holding based on an independent
  valuation.

15
Segmental Performance

• UK Qualifications and Assessment Services
• Sales up 51 to 5.39m
• - ASET contributes 890k and eNVQ 307k
• - Like for like sales growth 17
• Extended products range, new customers, average
  value per customer.
• Positive response to schools services
  re-packaging and range.
• 350k NVQ certification levy collected for QCA
  drops out next year, no bottom line impact.
• International Qualifications
• Sales up 11 to 2.16m. (Dollar/Euro exchange
  rate movements net off to 10k gain).
• Strong trading in South East Asia (Hong Kong) and
  Germany.
• Strengthened management capacity and focus on
  agent co-ordination.
• Sales biased to second half, positive
  indications.
• Support and Internet Services
• Sales up 53 to 1.31m
• - Fusion contributes 355k
• - Like for like sales growth of 26
• Long-term contract worth 900k ends in September
  after five years (mid margin administration).

16
Surplus Leases

• Athena House, Sidcup (former LCCI Head Office).
  Break clause exercised with effect from 31
  December 2007 and dilapidations settled.
• Marlowe House, Sidcup (former LCCI offices).
  Arrangements made on behalf of LCCI Trust to
  re-let vacant space to end of lease as EDI acted
  as guarantor.
• ASET office, York. Surrender negotiated with
  effect from 31 March 2008.
• ASET office, Macclesfield. Lease expires
  November 2009.
• Livingston (i-assess) and Southend-on-Sea
  (Fusion) offices are on short-term managed
  facility contracts.
• Surplus leases provision will be fully utilised
  on completion of Marlowe House arrangement.

17
Income and Margins
18
Cashflow
19
Balance Sheet
20

• Future Developments

21
Drivers for Growth

• Strength of the underlying EDI business,
  supported by positive investment strategy and
  acquisitions programme.
• Growing global investment by governments,
  businesses, families and individuals in personal,
  vocational and English language skills
  development.
• Accredited awarding body status, including for
  the new Diplomas.
• Winning market share with UK further education
  colleges offers significant opportunities.
• Partnerships to accredit employer training
  programmes.
• Increasing acceptance of screen based/online
  education services.

22
Operational Investment

• Lock in quality of service
• - ISO 9001/2000 accreditation achieved in
  March 2008
• - Committed to Investor in People
  accreditation
• Profile raising
• - Appointment of marketing consultant and
  communications agency
• - Re-branding to emphasise scale of EDI
  operations
• Building sales capacity
• - Strengthen sales management and appointment
  of further sales staff
• - Investment in trade promotion
• Comprehensive product development pipeline
• - In-house programme, acquisitions and
  participant in Government programmes (new
  Diplomas)
• Continuing organisation development programme
• - Staff training and development,
  international agent support and optimising UK
• associates network
• - Ongoing investment in operating systems

23
Business Development Strategy
24
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.
• Continuing professional development programme
  provision for vocational education and training
  practitioners.
• Bolt-on internet service providers.

25
Prospects

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

26
Shareholder Support

• 12 month share price uplift 75 at 4 June -
  market capitalisation 24.5m.
• Total voting rights 57,512,291 at 31 January
  2008.

• Total share options under contract 4,411,355
  (including SAYE options).