1. INTERNATIONAL OPPORTUNITIES FOR PUBLISHING COMPANIES Prepared by The Parthenon Group for the Content in Context Conference 2012, Washington

2. On-the-Ground Education Sector Projects Completed by Parthenon Parthenon Completes More Than 150 Assignments Each Year, In Over 60 Countries Globally

3. Legacy market Company-pay driven market Regulation- constrained market The profit pool is shifting to direct delivery. Regulations and affordability create distortions and opportunities in the market (eg., size of the UAE vs India) Some Context: Private International and Premium Bilingual Schools Market

4. Publishing Only one $B+ education company (Laureate) focuses on emerging markets $1B Direct delivery has grown to the extent that most $1B+ education companies are no longer publishers Of the ~20 Education Companies With More Than $1B in Annual Revenues, 7 Companies Are Publishers

5. International Opportunities for Publishers: Two Business Models Leveraging IP for Blended Learning $180M Acquisition for Direct Delivery

6. EMPGI/HMH Case Study: Leveraging Content, Technology And Pedagogical Expertise To Create Value $180M

7. Growing Affluence and the Enhanced Social Status Associated with Foreign Education Are Key Drivers Number of Chinese Households by Income Bracket, 2005-09 “Historically, very wealthy Chinese families have relied on cars and properties as status symbols … increasingly, foreign education for their children allows them to do this” –Counselor Leading Study Abroad Agent

8. Affluent Households in China Spend an Average ~9.5% of Their Tax Adjusted Disposable Income on Education The growing number of affluent households will result in increased education spend Average education spend per child 7%

9. China Leads on Household Income Spend on Education as Percent of HH Income by Country High propensity of a household to spend on education is a strong driver for growth of the private education market

10. Education Spend as Percent of HH Expenditure vs. GDP per Capita Growth, 1994-2007 Education is a highly defensive consumer spending item in China protecting the industry from potential downturns in the economy 20% 10% 0%

11. Study Abroad Market in China Has Grown at ~27% Historically—U.S. Has Shown the Highest Growth Among Destination Countries ~60% of students enrolling abroad do so in English language speaking countries driving demand for quality out-of-school ELT learning

12. Employees with Greater Proficiency in English Can Achieve Higher Income Levels in China and Progress to Senior Positions Estimated Average Salary Levels Achieved By Level of English Proficiency As employers become increasingly aware of the importance of graduates ‘working’ in English, providers such as RISE with an immersive approach from an early age will benefit

13. Chinese Public K12 Schools Provide Limited Number of Hours of English Compared to Other Countries in Asia Inadequate provision and quality of English in Chinese public and private schools has created opportunity for private out-of-school ELT providers like RISE

14. China’s Private Sector Education Market Is Forecast to Grow to an 8% CAGR by 2015 Chinese Private Education Market, 2007-15F HistoricalForecast

15. The Private Out-of-school Pre-K12 ELT Market Has Grown at 15% CAGR Since 2007 and Is Forecast to Grow at 12% CAGR by 2015 The private out-of-school Pre-K12 ELT market has historically gained share of the overall private education market and is forecast to continue doing so, making it one of the most attractive verticals to invest in

16. The Chinese Pre-K12 ELT Market Is Forecast to Grow at 12% by 2015—Branded Chinese Out-of-school ELT Market Will Continue to Gain Share

17. The RISE Value Proposition Provides a Perfect Synthesis of Consumer Needs and Desired Outcome, Educational Content and Delivery, and the Integration of Technology EducationTechnology Consumer

18. As a Leading Operator in the Fast Growing Chinese Education Sector There Are Substantial Opportunities to Expand in to Adjacent Segments Other Private K12 Schools After School Tutoring Private Sino-Foreign K12 Schools Overseas Agent Counseling Overseas Test Preparation Adult ELT Pre-K to 12 ELT Private Higher Education Chinese Private Education Market Size, 2011 Sustainable Growth Professionalization Profitability Regulatory Ease The Chinese private education market is large, fast growing and supported by a number of favorable underlying characteristics Chinese Education: Underlying Market Characteristics High Synerg y Low Synerg y

19. RISE Has an Extensive Network Across China, Serving Nearly 35,000 Students in 2011 Number of RISE Centres, August 2011 RISE currently has 20 self-owned centers and 82 partner/franchisee centers forecast to grow to 153 SOLC and partner/franchise centers by 2012

20. Strong Satisfaction Has Led to Parents Becoming Advocates of the RISE Product and Driving Enrolment Growth RISE Enrolment by Marketing Channel, 2008 - 10 Parent’s satisfaction with RISE product has translated in to ~40% of enrolments coming from word-of-mouth marketing

21. About The Parthenon Group’s Education Practice Parthenon has served as an advisor to the education sector since our inception in 1991. Our Education Practice – the first of its kind across management consulting firms – has an explicit mission and vision to be the leading strategy advisor to the global education industry. To achieve this, we invest significantly in dedicated management and team resources to ensure that our global expertise extends across public sector and non-profit education providers, foundations, for-profit companies and service providers, and investors. Parthenon has deep experience and a track record of consistent success in working closely with universities, colleges, states, districts, and leading educational reform and service organizations across the globe. Learn more about our Education practice at www.parthenon.com/industries/education Karan Khemka Partner karank@parthenon.com + 91-22-67442500 For regular updates on events, research, and reports @Parthenon_Group Follow Karan for thought-provoking observations and ideas on education @karan_khemka