June 20091

Education Development International plcInterim Results : March 2009

Nigel Snook, Chief ExecutivePaul Bird, Finance Director

June 20092

Contents

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

Prospects

• Strategy

• Resilience

• Financial trends

• Dividend and share buy-back

• Shareholders

• Liquidity

June 20093

Interim Results : March 2009

June 20094

Financial Headlines

• 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.

June 20095

Highlights

• 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).

June 20096

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.

June 20097

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.

June 20098

Growth Analysis

1H 2008/09

1H 2007/08

Foreign currency gains 430 2

ASET revenue (acquired 19 November 2007) 1,156 890

Taxi driver qualification 910 140

eNVQ 410 307

Fusion 452 355

Underlying business 9,424 7,911

Total Revenue 12,782 9,605

Main revenue movements : £000s

June 20099

MarginsContinuing Operations : £000s UK International Support Other 1H 2009 1H 2008Revenue 8,559 2,699 1,478 46 12,782 9,605

Cost of Sales (948) (1,637) (507) - (3,092) (2,560)

Gross profit 7,611 1,062 971 46 9,690 7,045

Gross margin % 88.9 39.3 65.8 100.0 75.8 73.3Administration expenses: Product development

Business developmentIT developmentOperations AdministrationProperty and facilitiesOther overheadsTotal

8801,248

952789

1,153693

30(5,745)

7971,179

9771,0511,256

77384

(6,117)Net finance income/(costs) 4 (4)Adjusted operating profit 3,949 924

Adjusted operating margin % 30.9 9.6Amortisation charge on acquired intangible assets

Operating profit

(309)

3,640

(261)

663

June 200910

• Brought forward tax losses of £4.3m will be fully utilised during 2008/09.

2007 2008 2009 2010

Revenue 16,057 21,500 27,800 30,000

Adjusted operating profit 2,113 3,339 8,100 9,000

Adjusted fully diluted EPSØ:

- Taxed at 28% 2.9 4.2 10.2 11.4

- Actual/forecast 4.0 5.9 11.2 11.4

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.

+ +

*

June 200911

Cashflow

Summary statement : £000s 2009 2008

Profit before tax 3,640 206

Depreciation and amortisation 489 487

Share options 45 21

Working capital movement (1,226) 424

Interest and tax 11 29

Operating cash flow 2,959 1,167

Capital expenditure (93) (119)

Acquisitions and disposals (120) (2,882)

Purchase of gilts (984) -

Purchase of own shares net of issues - 45

Dividend paid (173) (132)

Net increase in cash 1,589 (1,921)

Opening cash 3,229 3,053Closing cash 4,818 1,132

June 200912

Balance Sheet

Summary : £000’s 2009 2008

Goodwill 7,234 7,528

Other intangible assets and equipment 1,448 2,245

Investments – AEC holding 555 235

Deferred tax 1,093 588

Non current assets 10,330 10,596

Cash and gilts 5,802 1,132

Net current liabilities (1,755) (2,250)

Pension liabilities (867) (168)

Other non-current liabilities (477) (864)

Net assets 13,033 8,446

June 200913

Prospects

June 200914

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.

June 200915

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.

June 200916

Financial Trends

June 200917

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.

June 200918

Shareholders• Total number of shareholders 486.• Top ten holders/groups:

• Key holdings below 3%:

Company, directors and employees: - Employee Benefit Trust - Chief Executive - Non-executive directors - Employees

3,955,0003,109,2372,756,2221,094,098

6.9%5.4%4.8%1.9%

9,820,459 19.0%

Hargreave Hale & Co: - Private Clients - Marlborough Funds

2,866,0003,310,000

5.0%5.7%

6,176,000 10.7%

Wynford Dore (Founder) 5,000,300 8.7%

Octopus Investments Limited 4,046,550 7.0%

J D Slater 3,500,000 6.1%

Slater Investments Limited 3,185,000 5.5%

Blackrock Investment Management 2,500,000 4.3%

Williams de Broe (Private Clients) 1,700,350 3.0%

Real Time Consultancy AXA Framlington/Investment Management Walker Crips

D G Newman (Founder) CFS Independent Close Investments

GAM Duncan Lawrie Asset Management City Asset Management

Investec Asset Management Hargreave Lansdown Invesco Aim Capital Management

Brewin Dolphin (Private Clients) Rathbone Investment Management Adam & Co

June 200919

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.

Volume ValueNovember 320,510 £102,520

December 1,221,388 £443,870

January 4,905,162 £2,122,514

February 13,263,690 £7,564,007

March 3,145,711 £2,012,709

April 4,661,573 £3,480,325

June 200920

Background Brief

June 200921

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.

June 200922

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.

June 200923

Marketplace

Illustrative ‘course’ costs

£50 (High margin)

£150 (Mid margin)

£800 (Low margin)

£1000

Awarding Bodies/Exam BoardsEDI, Edexcel, City and Guilds, OCR, AQA,

professional bodies and 100’s of others

Exams and

Assessments.

Learning materials,books and online.

Education and training programmes.

Delivery and administration software. Logistics.

PublishersPearson, Nelson Thornes, Hodder and Stoughton and 1000’s of others

Schools and CollegesPrimary and secondary schools, FE colleges, private trainers – BPP, Melorio – and 10,000’s of others

In-house and/or outsourced

The Players

June 200924

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).

June 200925

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

June 200926

Management

Non-Executives Richard Price+ (Chairman), Sir Bryan Nicholson+, Barrie Clark+

Strategy Directors Nigel Snook+ (CEO), Paul Bird+ (FD), Jenifer Moody+ (Development), Gareth Phillips (Sales), Stewart Jardine (Operations)

Function Directors Chris Bolton (Communications), Chris Daniel (UK Services), Tom Austin (International), Neil Martin (IT), Rachel Thomas (FC)

Staff Coventry Head Office 117, sub-offices 18, home-based 21

Associates 220 part-time examiners and verifiers

Agents 16 overseas representative agreements (covering 50 countries)

Registered Centres (Customers)+ Plc Board Directors

6,900+ schools, colleges, private trainers and corporates in the UK and worldwide registered to offer EDI qualifications