US$165000000 Nord Anglia Education

OFFERING MEMORANDUM CONFIDENTIAL US$165,000,000

Nord Anglia Education (UK) Holdings plc 10.25% Senior Secured Notes due 2017

Nord Anglia Education (UK) Holdings plc, a public limited company organised under the laws of England and Wales (the “Issuer”), is offering US$165,000,000 aggregate principal amount of its 10.25% Senior Secured Notes due 2017 (the “Additional Notes”, and such offering, the “Offering”).

The Additional Notes offered hereby will be issued under the indenture, dated as at 28 March 2012 (the “Indenture”), pursuant to which the Issuer issued US$325,000,000 aggregate principal amount of 10.25% Senior Secured Notes due 2017 (the “Original Notes” and together with the Additional Notes, the “Notes”). The Additional Notes will be issued on the same terms and conditions (other than the issue date), and as the same series as, the Original Notes and will vote on any matter submitted to noteholders with holders of the Original Notes. The Additional Notes will share CUSIP numbers, ISIN numbers and Common Codes and be fungible with the Original Notes.

The Notes bear interest at the rate of 10.25% per annum. Interest on the Notes is payable on 1 April and 1 October of each year. The Notes will mature on 1 April 2017. Prior to 1 April 2015, the Issuer may redeem up to 35% of the aggregate principal amount of the Notes, subject to certain conditions, at a redemption price of 110.25% of their principal amount, plus accrued and unpaid interest and additional amounts, if any, with the net proceeds from certain equity offerings. The Issuer may at its option redeem the Notes, in whole or in part, prior to 1 April 2015, at a redemption price equal to 100% of the principal amount of the Notes, plus accrued and unpaid interest and additional amounts, if any, to the redemption date and the Applicable Redemption Premium (as defined herein). The Issuer may at its option redeem the Notes, in whole or in part, on or after 1 April 2015, at the redemption prices set forth herein, plus accrued and unpaid interest and additional amounts, if any, to the redemption date. Additionally, the Issuer may redeem all, but not less than all, of the Notes upon the occurrence of certain changes in applicable tax laws. For a more detailed description of the redemption of the Notes, see “Description of the Notes—Optional Redemption”. Upon the occurrence of a Change of Control (as defined herein), the Issuer must make an offer to repurchase all Notes outstanding at a purchase price equal to 101% of their principal amount, plus accrued and unpaid interest and additional amounts, if any, to the redemption date. The Notes are senior obligations of the Issuer that are guaranteed by Nord Anglia Education Limited (UK) and certain of its Subsidiaries (such Subsidiaries guaranteeing the Notes are referred to as the “Guarantors” and the guarantees of such Guarantors are referred to herein as the “Guarantees”). None of the Restricted Subsidiaries organised under the laws of the PRC will guarantee the Notes. The Notes and the Guarantees are secured on a first-ranking basis (together with the Issuer’s and the Guarantors’ obligations under the Senior Secured Revolving Credit Facility (as defined herein)) by share pledges and other security interests as more specifically described under “Description of the Notes—Security”. The Notes (1) rank equally in right of payment with all of the Issuer’s existing and future debt that is not subordinated in right of payment to the Notes (subject to any priority rights of such debt pursuant to applicable law), (2) rank senior in right of payment to any existing and future debt of the Issuer expressly subordinated in right of payment to the Notes, (3) are structurally subordinated to all existing and future debt of Subsidiaries (as defined herein) of the Issuer that do not provide Guarantees (collectively, the “Non-Guarantor Subsidiaries”) and (4) are effectively subordinatedto the Issuer’s existing and future secured debt that is secured by assets that do not secure the Notes, to the extent of the value of the assets securing such debt. However, applicable laws may limit the enforceability of the Guarantees and the pledge of any collateral. See “Limitations on Validity and Enforceability of the Guarantees and Security Interests and Certain Insolvency Law Considerations”. The Collateral (as defined herein) pledged for the benefit of the holders of the Notes may be shared with certain other creditors of the Issuer. Pursuant to the terms of the Intercreditor Agreement (as defined herein), obligations under the Senior Secured Revolving Credit Facility and certain hedging obligations that we may enter into will receive priority with respect to any proceeds received upon any enforcement action over any Collateral. See “Description of the Notes—Security” and “Risk Factors—Risks Relating to the Guarantees and the Collateral”. For a more detailed description of the Notes, see “Description of the Notes” beginning on page 164. Investment in the Additional Notes involves risks. See “Risk Factors” beginning on page 40 of this offering memorandum for a discussion of certain risks that you should consider in connection with an investment in the Additional Notes.

Offering Price: 106.5% plus accrued interest from 1 April 2013 to, but not including, the issue date of the Additional Notes.

Approval in principle has been received for the listing and quotation of the Additional Notes on the Official List of the Singapore Exchange Securities Trading Limited (the “SGX-ST”). The SGX-ST assumes no responsibility for the correctness of any of the statements made or opinions expressed or information contained in this offering memorandum. Admission of the Additional Notes to and quotation of the Additional Notes on the Official List of the SGX-ST are not to be taken as an indication of the merits of the offering, the Issuer, the Guarantors, their respective subsidiaries or associated companies (if any), the Guarantees or the Additional Notes.

The Notes and the Guarantees have not been and will not be registered under the United States Securities Act of 1933, as amended (the “Securities Act”) or other securities laws and may not be offered or sold within the United States, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Accordingly, the Additional Notes are being offered and sold by the Initial Purchasers only (1) to qualified institutional buyers in reliance on the exemption from the registration requirements of the Securities Act provided by Rule 144A under the Securities Act and (2) outside the United States in compliance with Regulation S under the Securities Act. For a description of certain restrictions on resale or transfer, see “Transfer Restrictions” beginning on page 254.

The Additional Notes will be issued only in registered form in minimum denominations of US$200,000 and integral multiples of US$1,000 in excess thereof. It is expected that delivery of the Additional Notes will be made through the facilities of The Depository Trust Company (“DTC”) for the accounts of its participants, including Euroclear Bank S.A./N.V (“Euroclear”) and Clearstream Banking, société anonyme (“Clearstream”), on or about 3 July 2013 in New York, New York against payment therefor in immediately available funds, being the fourth business day following the date of the pricing of the Additional Notes (“T+4”).

The Notes have been rated B by S&P and B3 by Moody’s. The ratings do not constitute a recommendation to purchase, hold or sell the Notes. There can be no assurance that the ratings will remain in effect for any given period or that the ratings will not be revised by such rating agencies in the future if in their judgement circumstances so warrant. Joint Bookrunners and Lead Managers Goldman, Sachs & Co. Credit Suisse HSBC

The date of this offering memorandum is 27 June 2013 TABLE OF CONTENTS

SUMMARY ...... 1 RISKFACTORS...... 40 USE OF PROCEEDS ...... 71 CAPITALISATION AND INDEBTEDNESS ...... 72 SELECTED CONSOLIDATED FINANCIAL DATA ...... 73 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDRESULTSOFOPERATIONS ...... 80 INDUSTRYOVERVIEW...... 98 CORPORATE STRUCTURE ...... 105 BUSINESS...... 108 REGULATION ...... 137 MANAGEMENT ...... 145 PRINCIPAL SHAREHOLDERS ...... 148 CERTAINRELATIONSHIPSANDRELATEDPARTYTRANSACTIONS ...... 149 DESCRIPTION OF OTHER MATERIAL INDEBTEDNESS AND CERTAIN FINANCING ARRANGEMENTS ...... 152 DESCRIPTION OF THE NOTES ...... 164 TAXATION ...... 238 PLAN OF DISTRIBUTION ...... 246 TRANSFER RESTRICTIONS ...... 254 LIMITATIONS ON VALIDITY AND ENFORCEABILITY OF THE GUARANTEES AND SECURITY INTERESTS AND CERTAIN INSOLVENCY LAW CONSIDERATIONS ..... 257 RATINGS...... 264 LEGAL MATTERS ...... 264 INDEPENDENT AUDITORS ...... 264

This offering memorandum does not constitute an offer to sell or a solicitation of an offer to buy in any jurisdiction to any person to whom it is unlawful to make such an offer or solicitation in such jurisdiction. Neither the delivery of this offering memorandum nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the Issuer’s or WCL’s affairs since the date of this offering memorandum or that the information contained in this offering memorandum is correct as at any time after that date.

i IN CONNECTION WITH THIS OFFERING, TO THE EXTENT PERMITTED BY APPLICABLE LAWS AND REGULATIONS, THE INITIAL PURCHASERS OR THEIR AFFILIATES OR ANY PERSON ACTING ON THEIR BEHALF MAY, FOR A LIMITED PERIOD AFTER THE ISSUE DATE, OVER-ALLOT THE NOTES OR EFFECT TRANSACTIONS WITH A VIEW TO SUPPORTING THE MARKET PRICE OF THE NOTES AT A LEVEL HIGHER THAN THAT WHICH MIGHT OTHERWISE PREVAIL. HOWEVER, NEITHER THE INITIAL PURCHASERS NOR ANY PERSON ACTING ON THEIR BEHALF IS OBLIGATED TO UNDERTAKE SUCH STABILISING ACTIONS. SUCH ACTIVITIES WILL BE UNDERTAKEN SOLELY FOR THE ACCOUNT OF THE INITIAL PURCHASERS AND NOT FOR OR ON BEHALF OF THE ISSUER. The information appearing in this offering memorandum is accurate only as at the date on the front cover of this offering memorandum or otherwise as at any date to which specific reference is made in connection with such information. Our business, financial results, financial condition, cash flows and results of operations may have changed since that date. This offering memorandum is highly confidential. The Issuer is providing it solely for the purpose of enabling you to consider a purchase of the Additional Notes and for the listing of the Additional Notes on the SGX-ST. You should read this offering memorandum before making a decision whether to purchase the Additional Notes. You must not use this offering memorandum for any other purpose or disclose any information in this offering memorandum to any other person. The Issuer has prepared this offering memorandum and provided the information contained herein, except for such information as is identified herein as having been derived from other sources. The Issuer is solely responsible for the contents of this offering memorandum. You are responsible for making your own examination of our business and your own assessment of the merits and risks of investing in the Additional Notes. By purchasing the Additional Notes, you will be deemed to have acknowledged that you have made certain acknowledgements, representations and agreements as set forth under the section headed “Transfer Restrictions”. No representation or warranty, express or implied, is made by the Initial Purchasers, the Trustee or the Principal Paying Agent and Transfer Agent and Registrar (together, “Agents”) as to the accuracy or completeness of the information set forth herein, and nothing contained in this offering memorandum is, or shall be relied upon as, a promise or representation, whether as to the past or the future. Each person receiving this offering memorandum acknowledges that: (i) such person has been afforded an opportunity to request from the Issuer and the Group (as defined herein) and to review, and has received, all additional information considered by such person to be necessary to verify the accuracy of, or to supplement, the information contained herein; (ii) such person has not relied on any of the Initial Purchasers or any person affiliated with any of the Initial Purchasers, Trustee or any Agent in connection with any investigation of the accuracy of such information or its investment decision; and (iii) no person has been authorised to give any information or to make any representation concerning the Issuer, the Group and their respective subsidiaries and affiliates or the Additional Notes (other than as contained herein and information given by our duly authorised officers and employees in connection with investors’ examination of our company and the terms of the offering) and, if given or made, any such other information or representation should not be relied upon as having been authorised by the Issuer or the Initial Purchasers, Trustee or any Agent. THE NOTES AND THE GUARANTEES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE U.S. SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION IN THE UNITED STATES OR ANY OTHER U.S. REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THE OFFERING OR THE ACCURACY OR ADEQUACY OF THIS OFFERING MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE IN THE UNITED STATES.

ii Prospective purchasers are hereby notified that sellers of the Additional Notes may be relying on the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A. Neither the Issuer nor any of the Initial Purchasers is making an offer to sell the Additional Notes in any jurisdiction except where such an offer or sale is permitted. The distribution of this offering memorandum and the offering itself may in certain jurisdictions be restricted by law. Persons into whose possession this offering memorandum comes are required by the Issuer and the Initial Purchasers to inform themselves about and to observe any such restrictions. For a description of the restrictions on offers, sales and resales of the Additional Notes and distribution of this offering memorandum, see the sections headed “Transfer Restrictions” and “Plan of Distribution”. This offering memorandum summarises certain material documents and other information, and the Issuer refers you to these for a more complete understanding of the contents of this offering memorandum. In making an investment decision, you must rely on your own examination of our business and the terms of the offering, including the merits and risks involved. The Issuer is not making any representation to you regarding the legality of an investment in the Additional Notes under any legal, investment or similar laws or regulations. You should not consider any information in this offering memorandum to be legal, business or tax advice. You should consult your own attorney, business advisor and tax advisor for legal, business and tax advice regarding an investment in the Additional Notes.

The Issuer reserves the right to withdraw the offering at any time, and the Initial Purchasers reserve the right to reject any commitment to subscribe for the Additional Notes in whole or in part and to allot to any prospective purchaser less than the full amount of the Additional Notes sought by such purchaser. The Initial Purchasers and certain related entities may acquire for their own account a portion of the Additional Notes. This offering memorandum contains statistical and financial data from industry publications and other third party sources. Although the Issuer believes the information to be correct, it has not independently verified such data, and therefore it cannot assure you that such data are complete or reliable. Such data may also be produced on different bases in different countries. Therefore, discussions of matters relating to China, the Middle East, South East Asia, Europe, the United States or other regions and markets within which the Group or its subsidiaries operate, their respective economies and the relevant industries in this offering memorandum are subject to the caveat that the statistical and other data upon which such discussions are based may be incomplete or unreliable.

iii NOTICE TO NEW HAMPSHIRE RESIDENTS NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENCE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES ANNOTATED 1955, AS AMENDED, WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE OF NEW HAMPSHIRE THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT, NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION, MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY, OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.

NOTICETOUSINVESTORS

EACH PURCHASER OF THE ADDITIONAL NOTES WILL BE DEEMED TO HAVE MADE THE REPRESENTATIONS, WARRANTIES AND ACKNOWLEDGEMENTS DESCRIBED IN THIS OFFERING MEMORANDUM UNDER “TRANSFER RESTRICTIONS”. THE ADDITIONAL NOTES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES UNLESS THE NOTES ARE REGISTERED UNDER THE SECURITIES ACT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT IS AVAILABLE. SEE “PLAN OF DISTRIBUTION” AND “TRANSFER RESTRICTIONS”. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF ANY INVESTMENT IN THE ADDITIONAL NOTES FOR AN INDEFINITE PERIOD OF TIME. PROSPECTIVE PURCHASERS ARE HEREBY NOTIFIED THAT THE SELLER OF ANY SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A. THE ADDITIONAL NOTES MAY NOT BE OFFERED TO THE PUBLIC WITHIN ANY JURISDICTION, BY ACCEPTING DELIVERY OF THIS OFFERING MEMORANDUM, YOU AGREE NOT TO OFFER, SELL, RESELL, TRANSFER OR DELIVER, DIRECTLY OR INDIRECTLY, ANY ADDITIONAL NOTE TO THE PUBLIC.

THIS OFFERING MEMORANDUM CONTAINS IMPORTANT INFORMATION THAT YOU SHOULD READ BEFORE MAKING ANY DECISION WITH RESPECT TO AN INVESTMENT IN THE ADDITIONAL NOTES.

NOTICE TO CAYMAN ISLANDS INVESTORS NO OFFER OR INVITATION TO SUBSCRIBE FOR THE ADDITIONAL NOTES MAY BE MADE TO THE PUBLIC IN THE CAYMAN ISLANDS.

CERTAIN DEFINITIONS, CONVENTIONS AND CURRENCY PRESENTATION This offering memorandum has been prepared using a number of conventions, which you should consider when reading the information contained herein. The term “Issuer” refers to Nord Anglia Education (UK) Holdings plc and the terms “we”, “us”, “our”, the “Company”, the “Group”, “Nord Anglia Education”, and words of similar import refer to the Issuer and its consolidated subsidiaries, excluding WCL Group Limited and its subsidiaries (“WCL Group” or “WCL”), which we acquired on 22 May 2013, unless otherwise specified or the context requires otherwise. All references in this offering memorandum to the “Initial Purchasers” refer to Goldman, Sachs & Co., Credit Suisse Securities (Europe) Limited and HSBC Securities (USA) Inc. “PRC” and “China” refer to the People’s Republic of China excluding the Hong Kong Special Administrative Region, the Macau Special Administrative Region and Taiwan.

iv “U.S. dollar”, “US$” and “$” refer to United States dollars; “GBP”, “pound” and “£” refer to the official currency of the United Kingdom; “euro”, “EUR” and “C= ” refer to the single unified currency of the European Monetary Union; “RMB” and “renminbi” refer to the currency of China; “Thai baht” refers to the official currency of the Kingdom of Thailand; “Czech crown” refers to the official currency of the Czech Republic: “Hungarian forint” refers to the official currency of Hungary; “Polish zloty” refers to the official currency of the Republic of Poland; “Swiss franc” refers to the official currency of the Swiss Confederation; “Qatari riyal” refers to the official currency of the State of Qatar; “Bahrain dinar” refers to the official currency of the Kingdom of Bahrain; “Saudi Arabian riyal” refers to the official currency of the Kingdom of Saudi Arabia; and “UAE dirham” refers to the official currency of the United Arab Emirates.

FORWARD-LOOKING STATEMENTS

Many statements made in this offering memorandum are forward-looking statements that reflect our current expectations and views of future events. All statements other than statements of historical facts are forward-looking statements. The forward-looking statements are contained principally in the sections entitled “Summary”, “Risk Factors”, “Summary—Our Recent Developments”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business”. These forward-looking statements can be identified by words or phrases such as “may”, “will”, “expect”, “anticipate”, “aim”, “estimate”, “intend”, “plan”, believe”, “is/are likely to” or other similar expressions. We have based these forward-looking statements largely on current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements include, among other things, statements relating to: • our market opportunities; • our goals and strategies; • our competitive strengths; • expectations and targets for our results of operations and financial condition; • our future business developments; and • our acquisition and expansion strategy. The forward-looking statements included in this offering memorandum are subject to risks, uncertainties and assumptions about our Group and WCL. Our actual results of operations may differ materially from the forward-looking statements as a result of the risk factors described under “Risk Factors” and elsewhere in this offering memorandum. In particular, our business could be adversely affected if: • we fail to recruit new students and retain existing students; • we fail to increase the profitability of our schools by continuing to increase our premium tuition fees; • we experience adverse changes in the key industry drivers for our premium schools business; • we experience adverse changes in general economic, political and social conditions in the markets in which we operate; • uncertainties regarding the regulatory and legal environment, particularly in China and the Middle East, adversely affect our business and ability to implement our growth strategies; • we suffer damage to the reputation of our Premium Schools and Learning Services businesses;

v • increased competition in the international education market, especially in the premium schools market, decreases our market share, increases our cost of recruiting and retaining students and teachers or puts downward pressure on our tuition rates and profitability; or • we are unable to successfully manage our growth and integrate our acquisitions, including our acquisition of WCL Group. These risks, which are described in “Risk Factors”, are not exhaustive. Other sections of this offering memorandum include additional factors that could materially and adversely impact our business and financial performance. Moreover, we operate in an evolving environment, and new risk factors emerge from time to time. It is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause our actual results to differ materially from those contained in any forward-looking statement. You should not rely upon forward-looking statements as predictions of future events. The forward-looking statements made in this offering memorandum are based only on events or information as at the date on which the statements are made in this offering memorandum. Except as required by law, we undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

AVAILABLE INFORMATION To permit compliance with Rule 144A in connection with resales of the Notes, for as long as the Notes are “restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act, the Issuer is required to furnish upon request of a holder of the Notes and a prospective purchaser designated by such holder the information required to be delivered under Rule 144A(d)(4) if, at the time of such request, the Issuer is neither a reporting company under Section 13 or Section 15(d) of the Exchange Act, nor exempt from reporting pursuant to Rule 12g3-2(b) thereunder. So long as the Notes remain outstanding, the Issuer will provide to the Trustee (as defined herein) certain financial and other information as set forth in “Description of the Notes—Certain Covenants—Reports to Holders”.

INDUSTRY AND OTHER MARKET DATA Information contained in this offering memorandum regarding markets, market size, market position, market share, growth rates and other industry data pertaining to our business consists of estimates and data taken or derived from various public and private sources, including market research, publicly available information and industry publications, as well as our knowledge of our industry and markets. In certain cases, there is no readily available external information to validate market-related analyses and estimates, necessitating reliance on internally developed estimates. While the Issuer has compiled, extracted, reproduced or incorporated by reference market or other industry data from external sources, including third parties, analysts or industry or general publications, the Issuer and the Initial Purchasers have not independently verified that data. Subject to the foregoing, neither the Issuer nor the Initial Purchasers can assure investors of the accuracy and completeness of, or take any responsibility for, such data. The source of such third party information is cited whenever such information is used in this offering memorandum. While the Issuer believes that its internal estimates are reasonable, such estimates have not been verified by any independent sources, and the Issuer cannot assure potential investors as to the accuracy of such estimates or that a third party using different methods to assemble, analyse or compute market data would obtain the same result. The Issuer does not intend to, and does not, assume any obligations to update any data, including industry or market data, set forth in this offering memorandum. As a result, investors should be aware that such data in this offering memorandum and estimates based on such data may not be reliable indicators of future results.

vi ENFORCEMENT OF CIVIL LIABILITIES The Issuer is a public limited company under the laws of England and Wales. Most of the Issuer’s directors and officers and certain other persons named in this offering memorandum reside outside the United States, and all or a significant portion of the assets of the directors and officers and such other persons, and a significant portion of our assets, are located outside the United States. Similarly, most of the Guarantors are organised under the laws of various jurisdictions outside of the United States. As a result, it may not be possible for you to effect service of process within the United States upon the Issuer, any member of the Group, certain of the Guarantors or any of the aforesaid persons with respect to matters arising under the U.S. federal securities laws or to enforce against the Issuer, any member of the Group or any such persons judgements obtained in U.S. courts, including judgements predicated upon civil liability under U.S. federal securities laws. We and each of the Guarantors organised outside of the United States expect to appoint Law Debenture Corporation as our and their respective agent to receive service of process with respect to any action brought against us or the Guarantors in the United States federal courts located in the Borough of Manhattan, The City of New York under the federal securities laws of the United States or of any state of the United States or any action brought against us, the Guarantors in the courts of the State of New York in the Borough of Manhattan, The City of New York under the securities laws of the State of New York. We have also been advised by our PRC legal advisor, Han Kun Law Offices, that there is uncertainty as to whether the courts of China would (i) enforce judgements of U.S. courts obtained against us, our directors or officers or the Guarantors or their directors or officers predicated upon the civil liability provisions of the U.S. federal or state securities laws or (ii) entertain original actions brought in China against us, our directors or officers or the Guarantors or their directors or officers predicated upon the U.S. federal or state securities laws. In addition, there may be limitations on the enforcement of guarantees and security interests in the jurisdictions in which certain of our Guarantors are incorporated. See “Limitations on Validity and Enforceability of the Guarantees and Security Interests and Certain Insolvency Law Considerations”.

PRESENTATION OF FINANCIAL STATEMENTS Nord Anglia Education’s consolidated financial statements for the years ended 31 August 2011 and 2012, and its unaudited consolidated interim financial statements as at and for the six months ended 29 February 2012 and 28 February 2013, were prepared in accordance with International Financial Reporting Standards as adopted by the European Union (“IFRS”) and using U.S. dollar presentational currency. Nord Anglia Education’s consolidated financial statements for the year ended 31 August 2010 were prepared in accordance with generally accepted accounting principles in the United Kingdom (“UK GAAP”) and using GBP presentational currency. WCL Group’s consolidated financial statements for fiscal 2011 and fiscal 2012, and its unaudited consolidated interim financial statements as at and for the 26 weeks ended 29 February 2012 and 28 February 2013, were prepared in accordance with UK GAAP and using GBP presentational currency. We have not identified the differences between IFRS or UK GAAP and generally accepted accounting principles in other countries, nor have we quantified the effect of applying those generally accepted accounting principles to our annual or interim financial statements or those of WCL Group. In making an investment decision, investors must make their own judgement in assessing our annual or interim financial statements and those of WCL Group. You should consult your own professional advisors for an understanding of the differences between IFRS and generally accepted accounting principles in other countries and how such differences might affect our financial statements and your investment in the Additional Notes.

vii PRO FORMA FINANCIAL DATA We present in this offering memorandum certain financial data on an as adjusted basis to give pro forma effect to the acquisition of WCL Group and related financings. See “Summary—Summary Consolidated Financial and Operating Data—Summary Combined Pro Forma Financial Data”, “Capitalisation and Indebtedness” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. See “Summary—Acquisition of WCL Group” for a description of our recent acquisition of WCL Group and its business. The summary combined pro forma financial data is for informational purposes only and is not intended to represent or to be indicative of our future results following consummation of the acquisition of WCL Group. The unaudited pro forma financial data have not been prepared in accordance with the requirements of Regulation S-X of the U.S. Securities Act, Directive 2003/71/EC, including Directive 2010/73/EU (together, the “Prospectus Directive”), or any generally accepted accounting standards. Neither the assumptions underlying the pro forma adjustments nor the resulting pro forma financial data have been audited or reviewed in accordance with generally accepted auditing standards in any jurisdiction.

EXCHANGE RATE INFORMATION The following table sets forth the exchange rate of the pound against the U.S. dollar. For all dates through 31 December 2008, exchange rates between GBP and U.S. dollars are presented at the noon buying rate in the City of New York for cable transfers using U.S. dollar per GBP as certified for customs purposes by The Federal Reserve Bank of New York. For 1 January 2009 and all later dates and periods, the exchange rate refers to the noon buying rate as set forth in the weekly H.10 statistical release of the U.S. Federal Reserve Board (the “Noon Buying Rate”). The rates may differ from the actual rates used in the preparation of the consolidated financial statements and other financial information appearing in this offering memorandum. None of Nord Anglia Education, WCL Group or the Initial Purchasers represents that the U.S. dollar amounts referred to below could be or could have been converted into GBP at any particular rate indicated or any other rate. Convenience translations into U.S. dollars are provided for certain GBP amounts of WCL for the twelve months ended 28 February 2013. Unless otherwise noted, all convenience translations from GBP to U.S. dollars were made at a rate of US$1.5192 per GBP1.00, the Noon Buying Rate in effect as of 28 February 2013. The Noon Buying Rate of the GBP on 14 June 2013 was US$1.5686 per GBP1.00.

US$ per GBP1.00 High Low Average(1) Period End Year 2008 ...... 2.0311 1.4395 1.8424 1.4619 2009 ...... 1.6977 1.3658 1.5707 1.6167 2010 ...... 1.6370 1.4344 1.5498 1.5392 2011...... 1.6691 1.5358 1.6105 1.5537 2012 ...... 1.6275 1.5301 1.5924 1.6262

High Low Average(2) Period End Month January 2013 ...... 1.6255 1.5686 1.5965 1.5856 February 2013...... 1.5112 1.5814 1.5474 1.5192 March 2013 ...... 1.5239 1.4877 1.5080 1.5193 April 2013 ...... 1.5539 1.5113 1.5311 1.5539 May 2013 ...... 1.5578 1.5038 1.5297 1.5185 June 2013 (through 14 June 2013) ...... 1.5698 1.5304 1.5543 1.5686

(1) The average of the exchange rates on the last business day of each month during the relevant period. (2) The average of the exchange rates for each business day during the relevant period.

viii GLOSSARY

This glossary contains certain terms and abbreviations used in this offering memorandum in connection with our business and industry. Such terms and meanings may not correspond to standard industry definitions or usage.

“BISAD” The British International School Abu Dhabi

“BISS” The British International School Shanghai

“BSB” The British School of Beijing

“CAGR” Compound Annual Growth Rate

“CPI” Consumer Price Index

“French Bac” French Baccalaureate

“FTEs” Full time equivalent students

“IBC” International Baccalaureate Curriculum

“IBD” International Baccalaureate Diploma

“ICT” Information and communication technology

“IGCSE” International General Certificate of Secondary Education

“KPI” Key Performance Indicator

“K-12” Kindergarten to the end of secondary school

“LTM” Last Twelve Months

“ME” Middle East

“National Curriculum” National Curriculum of England

“PGCE” Post Graduate Certification in Education

“SEA” Southeast Asia

“Swiss Bac” Swiss Baccalaureate

ix SUMMARY

Unless otherwise specified or the context requires otherwise, the terms “Issuer” “us”, “our”, the “Company”, the “Group”, “Nord Anglia Education” and “Nord Anglia Education (UK) Holdings plc” refer to Nord Anglia Education (UK) Holdings plc and its consolidated subsidiaries, excluding WCL Group Limited.

This summary highlights selected information from this offering memorandum. It is not complete and does not contain all the information that may be important to you in deciding whether to invest in the Additional Notes. You should read the entire offering memorandum, including the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, as well as our and WCL’s financial statements and related notes thereto, before making an investment decision.

Overview of Nord Anglia Education Nord Anglia Education is a leading global operator of premium schools in China, Europe and the Middle East and South East Asia (“ME/SEA”) through our Premium Schools (“Premium Schools”). Our schools educate students in kindergarten to the end of secondary school (“K-12”). In addition, we provide educational services to governments in the Middle East, the United Kingdom and Asia through our Learning Services (“Learning Services”). We operate in high-growth markets characterised by strong wealth creation, significant foreign direct investment (“FDI”) and economic growth. The two main drivers of our business are increasing globalisation and a growing emphasis by parents on high quality education for their children. For the twelve months ended 28 February 2013, our Premium Schools accounted for 88.4% and 90.4% of our Adjusted Revenues and Adjusted EBITDA before central and regional expenses, respectively. Learning Services accounted for 11.6% and 9.6% of our Adjusted Revenues and Adjusted EBITDA before central and regional expenses, respectively. For the twelve months ended 28 February 2013, we generated Adjusted Revenue of US$288.0 million and Adjusted EBITDA of US$81.2 million. See “Summary Consolidated Financial and Operating Data—Nord Anglia Education’s Key Performance Indicators—Nord Anglia Education’s Segment Analysis”, “—Calculation of Nord Anglia Education’s Adjusted Revenue”, “—Calculation of Nord Anglia Education’s Adjusted EBITDA” and “—Calculation of Nord Anglia Education’s Last Twelve Months Financial Information”.

Nord Anglia Education’s Premium Schools We operate fourteen premium schools in twelve locations in China, Europe and ME/SEA. For the six months ended 28 February 2013, our schools in China, Europe and ME/SEA contributed approximately 67.7%, 27.2% and 5.1% of our Premium Schools’ Adjusted EBITDA, respectively. Our schools in China primarily serve expatriates and our schools in Europe and ME/SEA serve both expatriates and affluent local families. Our overall student mix is 78% expatriates and 22% local students. Our Premium Schools are not directly exposed to government funding risk as all of their revenues are sourced from private sources, of which employers contribute approximately 60%. Since our going-private transaction in 2008, we have significantly increased both capacity and enrolments. We have increased our student capacity from approximately 5,400 places at the end of FY2008 to approximately 12,524 as at 26 May 2013. As at 26 May 2013, our enrolment was 9,991, representing a utilisation rate of 80% and a compound annual growth rate (“CAGR”) of 21% over our year end full time equivalent students (“FTEs”) of 4,010 at the end of FY2008. This growth in capacity and enrolment was achieved through expansion at our existing schools and strategic acquisitions of new schools.

1 Nord Anglia Education’s Learning Services We provide targeted education-related services to governments, government agencies, regulatory bodies and related educational authorities in the Middle East, the United Kingdom, and Asia. Our services typically involve various aspects of the management and operation of public-sector schools. In FY2012, we decided to de-emphasise our Learning Services operations and are therefore no longer bidding on new contracts and intend to gradually phase out our existing contracts.

Acquisition of WCL Group On 22 May 2013, we completed the acquisition of 100% of the share capital of WCL Group for net consideration of GBP143.0 million (approximately US$222.2 million). We financed the acquisition and related fees and expenses through a capital contribution of US$133.4 million of ordinary equity by our parent, Nord Anglia Education, Inc., and borrowings of approximately US$113.9 million under a bridge loan agreement, dated 15 April 2013, among Nord Anglia Education (UK) Holdings plc, Goldman Sachs Bank USA, Credit Suisse Securities (USA) LLC, HSBC Securities (USA) Inc. and others (the “Bridge Loan Agreement”). We intend to repay our borrowings under the Bridge Loan Agreement in full with the proceeds of this Offering. See “—Our Recent Developments”, “Certain Relationships and Related Party Transactions”, “Description of Other Material Indebtedness and Certain Financing Arrangements” and “Use of Proceeds”. As part of the due diligence process for the acquisition of WCL, we developed a comprehensive integration plan and nominated senior executives from within the Nord Anglia Education leadership team to drive the key integration initiatives. WCL’s complementary curriculum, focus on premium quality education, teacher recruitment strategy and on-going professional development, as well as its asset-light approach to operations, are in line with the overall strategy of Nord Anglia Education. We expect our acquisition of WCL to generate significant benefits for the combined group, including significant cost savings as we integrate WCL’s operations into our platform and streamline the duplication of certain central cost functions. We expect to improve the financial performance of WCL by applying our proven operating model to WCL and improving WCL’s academic standards and the infrastructure of its schools in order to drive student achievement and increase enrolment.

Overview of WCL Group WCL founded its first school in Washington D.C. in 1998 and now delivers premium K-12 education through its eleven international schools in North America, the Middle East and Europe (“WCL’s Premium Schools”). In addition, WCL offers leading-edge educational products and services to schools worldwide (“WCL’s Learning Services”). For the twelve months ended 28 February 2013, WCL’s Premium Schools accounted for 91.6% and 92.1% of WCL’s Adjusted Revenue and Adjusted EBITDA before central and regional expenses, respectively. For the twelve months ended 28 February 2013, WCL generated Adjusted Revenue of US$88.6 million and Adjusted EBITDA of US$19.9 million. See “Summary Consolidated Financial and Operating Data—WCL’s Operating Data and Non-GAAP Financial Information—Calculation of WCL’s Adjusted Revenue”, “—Calculation of WCL’s Adjusted EBITDA” and “—Calculation of WCL’s Last Twelve Months Financial Information”.

WCL’s Premium Schools WCL operates eleven schools with combined enrolment as at 26 May 2013 of 4,547 students in nine locations, with six schools in North America, four schools in the Middle East and one school in Europe. WCL’s schools in the Middle East primarily serve expatriates and its schools in North America and Europe serve both expatriates and affluent local families. WCL’s overall student mix is 65% expatriates and 35% local students. WCL’s schools are not directly exposed to government funding risk as all of their revenues are sourced from private sources.

WCL’s Learning Services WCL develops and markets international curriculum products for the education of three to 14 year-olds. In the 2012/2013 academic year, these products are used by approximately 500,000 students in approximately 1,500 schools in over 80 countries.

2 Our Strengths

Diversified Platform with Benefits of Scale

Nord Anglia Education is one of the world’s largest K-12 premium school operators, operating fourteen schools in twelve locations and eight countries across China, Europe and ME/SEA. No single school in our geographically diverse network accounted for more than 15% of total Adjusted Revenues in FY2012.

Our platform allows us to leverage expertise and resources across our entire network to enhance the quality of education and create significant operating benefits, including:

• strong brand equity supported by a reputation for quality, which enables us to drive enrolment growth and set tuition fees at the higher end of the market;

• credibility with our stakeholders, including educational authorities, teachers, parents, developers, landlords and sellers of premium schools;

• implementation of best practices, including cost management and control through benchmarking;

• creating global citizens of students through initiatives such as the Global Classroom, which enhances the value proposition of our schools to parents and prospective students. See “Business—Our Approach to Academic Quality”; and • training and development of principals and teachers through initiatives such as Nord Anglia University. The acquisition of WCL Group significantly increases the diversity of our platform and strengthens Nord Anglia Education’s position as one of the world’s leading premium schools organisations. WCL’s six schools in North America provide a solid foundation in the important North America market, and its four schools in the Middle East and one school in Europe strengthen our presence in those regions. The addition of WCL’s schools also diversifies our geographic distribution as shown in the following table, which presents regional enrolments for Nord Anglia Education as at 27 May 2012 and 26 May 2013 and for the combined group as at 26 May 2013.

Nord Anglia Nord Anglia Nord Anglia Education and Education Education WCL combined as at 27 May %of as at 26 May %of as at 26 May %of 2012 Total 2013 Total 2013 Total

Full time equivalent students China...... 3,749 49.9 4,156 41.6 4,156 28.6 Europe...... 3,771 50.1 3,790 37.9 4,470 30.7 ME/SEA...... — — 2,045 20.5 3,368 23.2 NorthAmerica...... — — — — 2,544 17.5

Total ...... 7,520 100.0 9,991 100.0 14,538 100.0

3 The following tables show segment analysis for the last twelve months of Nord Anglia Education and WCL Group on a pro forma combined basis. See “—Summary Combined Pro Forma Financial Data”. Pro Forma Combined Last Twelve Months Segment Analysis

For the twelve months ended 28 February 2013

Combined Nord Nord Anglia Anglia Education (US$ millions) Education WCL and WCL

(unaudited) Adjusted Revenue(1)(2) Premium Schools China...... 125.8 — 125.8 Europe ...... 112.7 13.2 125.9 ME/SEA...... 16.1 17.9 34.0 North America ...... — 50.1 50.1 Total ...... 254.6 81.2 335.8 Learning Services ...... 33.4 7.4 40.8 LTM Adjusted Revenue ...... 288.0 88.6 376.6

For the twelve months ended 28 February 2013

Combined Nord Nord Anglia Anglia Education (US$ millions) Education WCL and WCL

(unaudited) Adjusted EBITDA(1)(2) Premium Schools China...... 61.4 — 61.4 Europe ...... 23.0 2.9 25.9 ME/SEA...... 4.5 4.5 9.0 North America ...... — 17.0 17.0 Total ...... 88.9 24.4 113.3 Learning Services ...... 9.4 2.1 11.5 Central and regional expenses ...... (17.1) (6.6) (23.7) Full year impact of cost savings(3) ...... — — 3.2 LTM Adjusted EBITDA ...... 81.2 19.9 104.3

(1) Derived from Nord Anglia Education’s financial information prepared in accordance with IFRS and WCL’s financial information prepared in accordance with U.K. GAAP. (2) See “—Summary Consolidated Financial and Operating Data—Nord Anglia Education’s Key Performance Indicators—Calculation of Nord Anglia Education’s Adjusted Revenue”, “—Calculation of Nord Anglia Education’s Adjusted EBITDA”, “—Summary Consolidated Financial and Operating Data—WCL’s Operating Data and Non-GAAP Financial Information—Calculation of WCL’s Adjusted Revenue” and “—Calculation of WCL’s Adjusted EBITDA”. (3) Budgeted cost savings relating to the acquisition of WCL currently being implemented arising from the ongoing elimination of duplicative head-office functions. There can be no assurance that such cost savings can be achieved.

4 Robust and Highly Attractive Business Model

Resilient Performance Across Economic Cycles Total enrolment in our schools has grown at a CAGR of 21% from the end of FY2008 through 26 May 2013. Of this increase in enrolment, 2,700 new student enrolments were through strategic acquisitions and 3,281 through organic growth. We are well positioned to deal with negative national or regional trends due to our geographically diverse operations across key education markets. Expatriate families often move from country to country for their employer. We refer to this movement as expatriate churn. As one of the top school operators in each of our markets, we believe that we are able to gain a disproportionate share of new enrolments among expatriate families. As a result, we have consistently been able to secure more new starters than leavers. The average student tenure across our network over the last three fiscal years is 3.4 years, which provides stability in our student enrolment levels. Over the last three fiscal years, our student persistence rate, defined as the percentage of students re-enrolling in our schools, excluding those that leave for reasons outside our control (for example, expatriate churn and graduation), has averaged 98%. WCL has also shown strong growth across economic cycles. WCL’s enrolment increased by 100.9% between September 2004 and September 2008 and by 99.7% between September 2008 and September 2012. Between September 2004 and September 2012, WCL’s enrolment (excluding the impact of the acquisition of its school in Spain in 2011) grew at a CAGR of 16.4%. Over the last three fiscal years, the average student tenure across WCL’s schools is 4.9 years and WCL’s persistence rate has averaged 93%.

Price Inelasticity The private-pay nature of our model helps ensure that our schools are not directly exposed to any government funding risk and are insulated from any volatility in such funding as a result of changing economic or political conditions. Approximately 60% of our tuition fees are paid by expatriate employers, who are less sensitive to moderate pricing increases as education allowances typically represent only a small percentage of an expatriate’s total compensation. In addition, we believe self-funding expatriates and affluent local families, are also able to afford moderate price increases. As a result, we have been able to increase our tuition fees across our markets at an average of 4-6% per annum over the last four years (in excess of the median rate of inflation in the markets where our schools are located), while continuing to generate organic enrolment growth. WCL’s schools also follow the private-pay model, and WCL has increased its tuition fees across its markets at an average of 2.2% over the last three years. Approximately 61% of WCL’s students’ tuition fees are paid by corporates.

Strong Business Visibility with Predictable Revenue Streams We have good visibility on future enrolments through our high persistence rates and average student tenure of 3.4 years. Further, our policy to require a full term’s notice for any potential leavers enhances in-year visibility as we are entitled to receive a full-year of tuition if we are notified of a student’s intention to leave after the start of Term 2, beginning in January. In addition, we have had few instances of bad debt. Our ability to measure student re-enrolment rates among existing students and to estimate new enrolments for subsequent periods provides revenue predictability and enables us to plan student capacity. WCL’s student body is relatively young, with 70% of students under the age of 13 as at September 2012. This makes WCL Group well placed to benefit from strong re-enrolments, which support expansion and revenue visibility. Over the last three fiscal years, WCL’s average student tenure was 4.9 years and its persistence rate averaged 93%.

5 Favourable Working Capital Dynamics and a Capital Efficient Approach to Growth We receive approximately 57% of our annual tuition fees in advance of the school year, which starts in late August/early September. We have generally received an additional 20% of our tuition fees prior to the start of Term 2, beginning in January, and the remainder prior to Term 3, beginning in April. In FY2012, approximately half of our students paid the full annual tuition fees in advance of the school year in exchange for a small average discount. As a result, our working capital needs are principally sourced from pre-paid tuition fees. In addition, our expansion strategy is based on an “asset-light” model and is focused on securing high quality purpose-built facilities through long-term leases. Accordingly, we are able to expand capacity at our existing schools and secure capacity at new schools without incurring major capital expenditure. For example, in China, developers of high-end residential communities paid for the construction of our school facilities within their developments, and our recently announced new school in Dubai is being built to our specifications by our landlord. As a result, our capital expenditure associated with these schools is generally limited to furniture, equipment and other materials for classroom, sports and extra-curricular activities. Further, the majority of our schools in China are newly built, which we would expect to result in low maintenance costs and capital expenditure in the near future. The capital expenditure for capacity expansion at our existing, new and acquired schools has been primarily funded by the owners of the real estate. As a result, we have relatively low capital expenditure requirements associated with our expansion. In the case of our acquired schools, we have structured these transactions so that we acquire the operating businesses and typically negotiate long-term leases from the sellers who retain ownership of the real estate. WCL also has a favourable working capital cycle. WCL receives approximately 56% of its annual tuition fees in advance of the school year, approximately 30% prior to January and the remainder by May. As a result, WCL’s working capital needs are principally sourced from pre-paid tuition fees. In addition, the timing differences between the receipt of tuition fees by Nord Anglia Education’s schools and WCL’s schools will complement our working capital cycle, as cash receipts by WCL’s schools in April and May each year spread our cash flow over a greater number of months. WCL also operates on an “asset-light” model, with all of its schools subject to long-term leases, with the exception of its school in Houston, which WCL owns.

Premium Quality Education and Leading Reputation Our commitment to quality drives the strong operating performance of our Premium Schools as evidenced by overall enrolment growth and high levels of re-enrolment. We focus on the needs of individual students and offer high quality education across multiple curricula. Our proprietary IT platform supports this by tracking each student’s performance against personalised targets and drawing our attention to the requirements of individual students. Through this highly individualised system we are better able to maximise each student’s academic achievement. In addition, the platform allows us to set clear expectations of learning objectives for a classroom, class year or entire school and intervene as required. We believe our schools are among the most respected providers of premium quality K-12 education in each of our markets. This supports high referral rates, and more than 90% of parents surveyed in the academic year 2012/2013 would recommend our schools. Moreover, our reputation and attention to individual student needs are key determinants of parental choice when choosing our schools over the schools of our competitors. Our principals and teaching staff are highly-qualified and experienced, having been through a rigorous recruitment process. We are able to attract highly-qualified staff due to our international scale, long track record and competitive compensation packages. Further, we have an organisation-wide emphasis on the retention of teachers through on-going professional

6 development initiatives and a policy to promote from within wherever suitably capable candidates are identified. Initiatives such as Nord Anglia University, which provides comprehensive professional training programmes for teachers and principals, underscore our commitment to professional development. We believe the foundation for the high quality education we provide is built upon the quality and motivation of our teachers. Our students consistently outperform their peers in standardised examinations. In the last five academic years, our students’ average examination results were higher than the average in the United Kingdom for the International General Certificate of Secondary Education (“IGCSE”), which students take at the age of 16, and globally for the International Baccalaureate Diploma (“IBD”), which students take at the age of 18. For the 2012 academic year, 86.2% of our students gained 5 A* to C grades compared to 84.7% in the 2011 academic year and the UK average for 2012 of 81.8%. In the same year, the average IBD score achieved by our students was 33.3 points compared to 32.6 points in the 2011 academic year and a global average score in 2012 of 29.8 points. In addition, 17% of our graduates in 2012 went to the world’s top 30 universities and 75% went to the world’s top 600 universities, as ranked by www.topuniversities.com as at 20 January 2013. Given that our admissions approach is not based upon academic ability, and that English is the second language for a large number of our students, we believe our students’ examination results and university destinations demonstrate the quality and effectiveness of our approach to education. WCL has a strong commitment to education, focusing on academic rigour, student engagement and a high quality international learning experience. Like Nord Anglia Education, WCL follows a largely non-selective admissions policy. The aim of each school is to maximise outcomes for students of all abilities.

Superior Operational Capabilities We strongly emphasise operational efficiency and adopt a data-driven approach to manage our business. Our global, regional and school teams track and analyse KPIs on a weekly basis and refine our operating strategy accordingly. We focus on the following key areas of our operations: • Student recruitment: We have a systematic approach to student recruitment. Our comprehensive recruitment strategies are adapted to each of our specific markets and executed by each school’s principal, admissions team and marketing manager. We use a relationship management system that enables us to monitor an applicant’s file at every stage, from initial enquiry through enrolment. • Pricing: We monitor market trends, taking into consideration historic and regional economic trends and supply and demand dynamics, to set our tuition fee levels. • Cost management: We use metrics-based management throughout our school operations to enhance efficiencies. We achieve operational efficiencies through various means, including efficient class scheduling and optimising our teaching resources. We optimise our teaching resources by minimising the amount of administrative responsibilities allocated to our teachers to ensure that each teacher spends more time focused on teaching. • Capacity planning: We have developed expertise in planning and adding capacity to meet demand. This enables us to manage growth by efficiently utilising capacity at existing schools and expanding as necessary. We also work with architectural consultants who specialise in optimising school configurations. Our approach to growing our network of schools is highly analytical and includes the use of demographic and economic models, when identifying opportunities for expansion. • Cash and financial management: We have a centralised finance team that enables us to monitor and manage our business effectively. We have a track record of robust cash management and have historically had few instances of bad debt.

7 We plan to integrate WCL into our operational platform and apply the same metrics and analytical tools to WCL’s schools that we use for our existing schools. Having successfully integrated eight new schools since 2009, we believe our experience in managing acquisitions and greenfield projects provides us with the resources and expertise required to successfully manage the integration of WCL into our portfolio.

We use a “balanced scorecard” of key performance indicators which provides measures of performance relevant to all stakeholders including parents, students, teaching staff and investors. We believe this comprehensive and proven method of monitoring a school’s performance will help us effectively integrate and improve the desired outcomes where necessary in the WCL schools.

Partner of Choice

Our scale and reputation make us a desirable partner for sellers, developers and landlords. We believe that sellers of schools are often focused on the operating track record, financial stability and the reputation of potential buyers. We also believe that sellers are eager to secure a sale of their school to partners who will operate the school to high standards. Our acquisitions of schools in China, Switzerland and Thailand resulted from exclusive discussions with sellers who were primarily concerned with these matters.

Similarly, developers and landlords seek to attract a recognised operator of schools with a reputation for quality in order to enhance the value of their adjacent residential real estate. Our school in Puxi, Shanghai is an example of our collaboration with a developer and the local government who were eager to develop Puxi into an attractive location for expatriates. We started the school in 2005 with a capacity of 500 places and since then we have increased capacity to 2,000 places, with all the expansion being funded by the developer.

Experienced Management Team Our senior management team combines seasoned executives with experience in running publicly-listed companies and strong operational expertise as well as leading academic thinkers. Andrew Fitzmaurice has been with the Company for more than ten years and was CEO when Nord Anglia Education was a publicly-listed company in the United Kingdom. Since going private in 2008, we have further invested in building a highly qualified management team, including our CFO and our COO, both of whom have prior public company experience, in addition to various other senior positions.

8 Our Strategies We focus on the strategic initiatives described below to strengthen our position as one of the world’s leading premium schools organisations, and we intend to apply these initiatives to WCL’s schools.

Continue to increase student enrolments at our existing schools We have been successful at driving enrolment growth and aim to continue this growth by applying our systematic processes for enquiry generation, converting enquiries to enrolment and retention of existing students. Our school principals lead the recruitment effort with dedicated admissions and marketing teams. We generate enquiries and visits through referrals, web-based strategies and other marketing activities.

Maintain price leadership at our existing schools We have made significant investments in our schools which enable us to consistently provide high-quality premium education. We intend to leverage our superior quality and reputation to maintain price leadership in each of our markets and realise pricing growth in excess of inflation. WCL has also successfully driven enrolment growth through a rigorous approach to student enrolment.

Improve the efficiency and enhance quality and consistency of our teaching resources Our teaching costs are the largest component of our cost structure and therefore a key driver of margins. We focus on driving teaching efficiencies through class scheduling and effective deployment of our teaching resources. We optimise our teaching resources by minimising the amount of administrative responsibilities allocated to our teachers to ensure that each teacher spends more time focused on teaching.

Capacity addition Where opportunities arise, we may increase capacity by expanding our current schools, opening new school campuses or acquiring schools. In addition, we may opportunistically enter new markets, primarily in China, North America, Europe and ME/SEA where we believe there is or could be strong demand and subsequent expansion opportunities for premium schools. WCL has adopted a similar approach to increasing capacity and entering new markets.

Our Approach to Academic Quality Our philosophy is to help all our students to be the best that they can be. Our schools are inclusive in that they accept students with a wide range of academic ability. Through our “High Performance” approach we ensure that high academic performance is the goal for all students. As with our previous acquisitions, we plan to apply our approach to academic quality to WCL’s schools to ensure consistent academic standards. The key elements that we focus on to promote a high level of academic quality are:

9 student and faculty an accurate gauge of individual progress. In addition, this platform allows us to set clear expectations of learning objectives at a classroom, class year or school level and intervene as required. Further, our IT platform creates accountability among faculty members and drives consistency in instruction by applying comparable metrics across our network.

In addition to our rigorous approach to classroom-based learning, we have a supplementary informal online learning environment which operates across all our schools that we call the Global Classroom. The Global Classroom is an internet-based system which allows our students to learn with other students in our schools throughout the world. This innovative and distinctive learning environment introduces students to a new learning style, which creates independent learners, preparing them well for future university study and turning them into global citizens.

Like Nord Anglia Education’s schools, all of WCL’s schools use a British style of education and teach using the National Curriculum or the IBC.

Highly qualified principals, teachers and administrative staff

We demonstrate our commitment to premium quality education by hiring and retaining highly qualified principals, teachers and administrative staff. We require all our teachers to be fully qualified and have significant teaching experience in national or international schools. The minimum credentials we require include formal teacher qualifications, such as a Post Graduate Certification in Education (“PGCE”) or its equivalent and at least two years of teaching experience. Our principals and teachers also benefit from the centralised support and experience of our educational team, led by Professor Deborah Eyre. In addition, we have in place various continuing professional development initiatives, including Nord Anglia University, which is designed to prepare some of our best teachers for career progression and help continuously improve all of our teaching staff. We regularly and rigorously review the performance of our principals and teaching staff to ensure that their performance meets our high standards. As with Nord Anglia Education, the majority of WCL’s teachers are qualified in the UK who are familiar with the National Curriculum and a British style of education.

Class sizes Both Nord Anglia Education and WCL restrict classes to a maximum of 22 students, with a few exceptions, in order to provide each student with close teacher interaction and individual attention and support. This benefits students, and provides a rewarding environment for our teachers and promotes staff retention.

High quality school facilities

Our school facilities, such as science laboratories, music and theatre resources, swimming pools and other high quality sports facilities enhance the educational experience of our students. In addition, the majority of classrooms utilise interactive computerised white boards that facilitate students’ participation in learning. We use internationally-recognised architectural consultants specialised in school design to direct the development of new facilities and the expansion or refurbishment of our existing schools in order to promote the efficient use of our facilities by staff and students.

10 Our Recent Developments

On 22 May 2013, we completed the acquisition of 100% of the share capital of WCL Group for net consideration of GBP143.0 million (approximately US$222.2 million). We financed the acquisition and related fees and expenses through a capital contribution of US$133.4 million by our parent, Nord Anglia Education, Inc., and borrowings of US$113.9 million under the Bridge Loan Agreement. Our total borrowings under the Bridge Loan Agreement equalled US$125.0 million. We used the excess borrowings under the Bridge Loan Agreement to fully repay $11.1 million outstanding under our term loan facility with HSBC (the “HSBC Facility”), which we had entered into in December 2012 in connection with the acquisition of our school in Thailand. See “Certain Relationships and Related Party Transactions” and “Description of Other Material Indebtedness and Certain Financing Arrangements”. We intend to repay our borrowings under the Bridge Loan Agreement in full with the proceeds of this Offering.

On 15 April 2013, La Côte International School SA entered into a definitive agreement for the development of a new state-of-the-art K-12 campus in Aubonne, Switzerland with an expected opening in September 2014. It will accommodate the students from the existing campus of the La Cote International School and will provide total capacity of approximately 840 places. On 11 April 2013, following an extensive tender process, the Hong Kong Education Bureau awarded us a vacant school in Kowloon, Hong Kong. We intend to open the school in September 2014, following a comprehensive renovation. We expect the school to serve primary and lower secondary students, grades one to eight, with a capacity of over 660 places. On 1 April 2013, we began consolidating the results of BISAD under IFRS, as we obtained effective control of BISAD from that date. We entered into a definitive agreement to acquire the 49% equity interest in BISAD owned by an affiliate of our parent in September 2012. We continue to work with the local education authority to effect the transfer of the shareholding. See “Certain Relationships and Related Party Transactions”. On 28 March 2013, Barclays Bank PLC increased its commitment under our Senior Secured Revolving Credit Facility from $30 million to $40 million. See “Description of Other Material Indebtedness and Certain Financing Arrangements”. In addition to the above recent developments, in line with Nord Anglia Education’s acquisition strategy, we are in advanced discussions for the acquisition of a limited number of single-site schools.

11 Our Corporate Structure

The following chart shows a simplified summary of our corporate structure. See “Corporate Structure” and “Corporate Structure—Subsidiaries”.

US$150 million1 Guarantors2 PIK Toggle Notes Nord Anglia Education, Inc.

US$325 million Original Notes and Nord Anglia Education (UK) Holdings plc US$165 million (the “Issuer”) Additional Notes

US$40 million Senior Secured Revolving Nord Anglia Education Limited Credit Facility (UK)

Learning NA Schools Poland Switzerland China Slovakia Thailand WCL Group Services Ltd (UK) Limited

Czech UK Hungary Hong Kong Republic

Bahrain

Saudi Learning Malaysia UAE U.S. Qatar Spain Arabia Services

1 Nord Anglia Education, Inc.’s US$150 million 8.50%/9.50% Senior PIK Toggle Notes due 2018 (the “PIK Toggle Notes”). The PIK Toggle Notes are unguaranteed and unsecured. 2 For a complete list of subsidiaries, including unrestricted subsidiaries, see “Corporate Structure—Subsidiaries”. For a complete list of guarantors, see “Description of the Notes—Brief Description of the Structure and Ranking of the Notes, the Guarantees and the Security—The Guarantees”.

Our Ultimate Controlling Shareholder The Baring Asia Private Equity Fund IV (“Baring Asia Fund IV” and collectively with The Baring Asia Private Equity Fund III and controlled coinvestment vehicles “Baring Private Equity Asia”) is our controlling shareholder. Baring Asia Fund IV is an Asian regional private equity fund with $1.5 billion of commitments under management. Baring Private Equity Asia and affiliates (collectively “Baring Asia”) is one of the largest and most established independent private equity firms in Asia with more than $5 billion of commitments under management. Baring Asia runs a pan-Asian investment programme, specialising in mid-market companies requiring capital for expansion, recapitalisation or acquisitions. The firm has been investing in Asia since its formation in 1997 and has more than 90 employees located in offices in Hong Kong, Shanghai, Beijing, Mumbai, Singapore, Tokyo and Jakarta. Baring Asia currently has more than 30 portfolio companies across Asia with more than 80,000 employees and revenues of more than $16 billion in 2012. The firm was previously part of Dutch insurer ING but became independent through a management-led buyout in 2000 and is currently 100% owned by its partners.

12 THE OFFERING

The following summary of the offering contains basic information about the Notes, the Guarantees and the Collateral. It is not intended to be complete and is subject to important limitations and exceptions. Terms used in this summary and not otherwise defined shall have the meanings given to them in “Description of the Notes”. For a more complete understanding of the Notes, the Guarantees and the Collateral, please refer to “Description of the Notes” herein.

Issuer ...... Nord Anglia Education (UK) Holdings plc.

Additional Notes Offered...... $165 million aggregate principal amount of 10.25% Senior Secured Notes due 2017.

Offering Price ...... 106.5% of the principal amount of the Additional Notes plus accrued interest from 1 April 2013 to, but not including, the issue date of the Additional Notes.

Maturity Date ...... 1 April 2017.

Interest ...... The Additional Notes will bear interest from 1 April 2013 at the rate of 10.25% per annum, payable semi-annually in arrears.

Yield to Maturity...... 8.191%.

Interest Payment Dates ...... 1 April and 1 October of each year.

Ranking of the Notes...... The Notes:

• are the Issuer’s general obligations, secured as described below under “—Security”; • rank equally in right of payment with all of the Issuer’s existing and future debt that is not subordinated in right of payment to the Notes; • rank senior in right of payment to any existing and future debt of the Issuer expressly subordinated in right of payment to the Notes; • are structurally subordinated to all existing and future debt of Subsidiaries of the Issuer that do not provide Guarantees; • are guaranteed on a senior basis by the Guarantors, subject to limitations described under the caption “Limitations on Validity and Enforceability of the Guarantees and Security Interests and Certain Insolvency Law Considerations” and in “Risk Factors—Risks Relating to the Guarantees and the Collateral”; and • are effectively subordinated to the Issuer’s existing and future secured debt that is secured by assets that do not secure the Notes, to the extent of the value of the assets securing such debt.

13 Guarantees...... The Issuer’s obligations under the Notes are guaranteed by the Guarantors. The obligations of each Guarantor under its Guarantee are limited to an amount not to exceed the maximum amount that can be guaranteed by each such Guarantor by law. By virtue of this limitation, a Guarantor’s obligations under its Guarantee could be significantly less than amounts payable with respect to the Notes, or a Guarantor may effectively have no obligation under its Guarantee. See “Risk Factors—Risks Relating to the Guarantees and the Collateral—The Guarantees may be challenged under applicable insolvency or fraudulent transfer laws, which could impair the enforceability of the Guarantees. In addition, the pledge of certain Collateral may in some circumstances be voidable”, “Risk Factors—Risks Relating to the Guarantees and the Collateral—Corporate benefit and capital maintenance laws and other limitations on the Guarantees and the security interests may adversely affect the validity and enforceability of the Guarantees and the security interests” and “Limitations on Validity and Enforceability of the Guarantees and Security Interests and Certain Insolvency Law Considerations”.

Ranking of the Guarantees...... Each Guarantee:

• is a general obligation of the Guarantor that granted such Guarantee, secured as described below under “—Security”; • ranks equally in right of payment with all of such Guarantor’s existing and future debt that is not subordinated in right of payment to such Guarantee; • is effectively subordinated to all such Guarantor’s existing and future secured debt that is secured by assets not securing the Notes, to the extent of the value of the assets securing such debt; and • ranks senior in right of payment to such Guarantor’s existing and future debt that is expressly subordinated in right of payment to its Guarantee.

See “Risk Factors—Risks Relating to the Guarantees and the Collateral” and “Limitations on Validity and Enforceability of the Guarantees and Security Interests and Certain Insolvency Law Considerations”.

14 Security ...... The obligations of the Issuer and the Guarantors under the Notes and the Indenture are secured on a first-ranking basis (subject to certain agreed security principles and the Perfection Requirements) by: • a pledge over all present and future shares of capital stock of the Issuer; NA Schools Limited; NA Educational Services Limited; Nord Anglia Education Limited; Nord Anglia Vocational Education and Training Services Limited; Nord Anglia Education Development Services Limited; Nord Anglia Middle East Holding S.P.C.; Nord International Schools Limited; the British School Sp. z o.o.; Collège Champittet SA; Collège Alpin Beau-Soleil SA; La Côte International School SA; Brighton Education Services Sdn. Bhd.; the English International School Prague s.r.o.; British International School Bratislava s.r.o.; NAE Hong Kong Limited; Rice Education Hong Kong Limited and EEE Enterprise Limited; • security in respect of certain shareholder loans made by Nord Anglia Education, Inc. to the Issuer (if and to the extent outstanding on the Closing Date); • fixed and floating charges over the business assets of certain Guarantors; • assignments in respect of certain insurance policies, contracts or claims of certain Guarantors; and • pledges over the bank accounts of certain Guarantors.

We have also agreed to pledge shares of capital stock of certain future Guarantors to secure the Notes and the Guarantees (other than of any Immaterial Subsidiary or a Restricted Subsidiary incorporated in or organised under the laws of the PRC, the Czech Republic or Slovakia or any jurisdiction that prohibits such Restricted Subsidiary from guaranteeing the payment of the Notes).

15 By 21 July 2013, which is the date 60 days after the acquisition of WCL Group, the Collateral will include pledges of the capital stock of all members of WCL Group, other than those designated as Unrestricted Subsidiaries, certain Spanish subsidiaries and its subsidiary organised in Qatar.

Security granted by the Issuer and the Guarantors will be limited by applicable law and certain agreed security principles as described under “Limitations on Validity and Enforceability of the Guarantees and Security Interests and Certain Insolvency Law Considerations” and “Risk Factors—Risks Relating to the Guarantees and the Collateral”.

The assets securing the Notes also secure the Senior Secured Revolving Credit Facility and may secure certain hedging obligations and Pari Passu Debt on an equal and ratable basis and may be released under certain circumstances. See “Risk Factors—Risks Relating to the Guarantees and the Collateral—There are circumstances other than repayment or discharge of the Notes under which the Collateral securing the Notes and Guarantees will be released automatically, without your consent or the consent of the Trustee”, “Description of Other Material Indebtedness and Certain Financing Arrangements—Intercreditor Agreement” and “Description of the Notes—Security”.

Intercreditor Agreement ...... The Intercreditor Agreement governs the relationships and relative priorities among: (i) the lenders under the Senior Secured Revolving Credit Facility; (ii) any persons that accede to the Intercreditor Agreement as counterparties to certain hedging agreements; (iii) the Trustee, on its behalf and on behalf of the Noteholders; (iv) intragroup creditors and debtors; and (v) the direct or indirect shareholders of the Issuer in respect of certain structural debt that the Issuer has or may incur in the future (including any subordinated shareholder loans). In addition, the Intercreditor Agreement regulates the relationship between the Issuer and its Restricted Subsidiaries, on the one hand, and the shareholders of the Issuer and related parties, on the other hand. See “Description of the Notes” and “Description of Other Material Indebtedness and Certain Financing Arrangements—Intercreditor Agreement”.

16 Use of Proceeds...... Of the net proceeds from the Offering, we intend to use: (i) US$125 million to repay in full our borrowings under the Bridge Loan Agreement; and (ii) US$50.6 million for general corporate purposes, including to fund the acquisition of additional schools or to repay borrowings under our Senior Secured Revolving Credit Facility, see “Use of Proceeds”.

Optional Redemption ...... At any time prior to 1 April 2015, the Issuer may, subject to certain exceptions, on any one or more occasions, redeem up to 35% of the aggregate principal amount of the Notes at a redemption price of 110.25% of their principal amount, plus accrued and unpaid interest and Additional Amounts, if any, to the redemption date, with the net proceeds of certain equity offerings.

At any time prior to 1 April 2015, the Issuer may, on any one or more occasions, at its option redeem all or part of the Notes, at a redemption price equal to 100% of the principal amount of the Notes, plus the Applicable Redemption Premium and accrued and unpaid interest and Additional Amounts, if any, to the redemption date.

At any time on or after 1 April 2015 and prior to maturity, the Issuer may, on any one or more occasions, at its option redeem all or part of the Notes, subject to certain conditions set forth under the caption “Description of the Notes—Optional Redemption”, at the redemption prices set forth therein, plus accrued and unpaid interest and Additional Amounts, if any, to the redemption date.

See “Description of the Notes—Optional Redemption”.

Change of Control ...... Upon the occurrence of a Change of Control, the Issuer must make an offer to repurchase all Notes outstanding at a purchase price equal to 101% of their principal amount, plus accrued and unpaid interest and Additional Amounts, if any, to the date of purchase.

See “Description of the Notes—Certain Covenants— Change of Control”.

Redemption upon Changes in Withholding Taxes ...... The Issuer may redeem all, but not less than all, of the Notes at a redemption price equal to 100% of the principal amount of the Notes outstanding plus accrued and unpaid interest and Additional Amounts, if any, upon the occurrence of certain changes in applicable tax law. See “Description of the Notes—Optional Redemption—Redemption upon Changes in Withholding Taxes”.

17 Covenants ...... The Notes, the Indenture and the Guarantees limit the Issuer’s ability and the ability of its Restricted Subsidiaries to, among other things: • incur or guarantee debt and issue redeemable or preferred stock; • declare dividends on its capital stock or purchase or redeem capital stock or subordinated debt; • make investments or other specified restricted payments; • issue or sell capital stock of Restricted Subsidiaries; • guarantee indebtedness of Restricted Subsidiaries; • sell assets; • create liens;

• enter into sale and leaseback transactions; • enter into agreements that restrict the Restricted Subsidiaries’ ability to pay dividends, transfer assets or make intercompany loans; • enter into transactions with shareholders or affiliates; and • effect a consolidation or merger.

These covenants are subject to a number of important qualifications and exceptions described in “Description of the Notes—Certain Covenants”.

Transfer Restrictions...... The Additional Notes and the Guarantees will not be registered under the Securities Act or under any state securities laws of the United States and will be subject to customary restrictions on transfer and resale. See “Transfer Restrictions”.

Events of Default...... Events of default with respect to the Notes include, among others, failure to pay principal, interest or additional amounts, cross-defaults under the terms of other debt of the Issuer or its Restricted Subsidiaries and failure to comply with the Change of Control provisions described in “Description of the Notes— Certain Covenants—Change of Control”. See “Description of the Notes—Events of Default”.

Form, Denomination and Registration...... The Additional Notes will be issued in fully registered form, without interest coupons, only in denominations of US$200,000 and integral multiples of US$1,000 in excess thereof and will be initially represented by one or more global notes registered in the name of a nominee of DTC.

18 Book-Entry...... The Additional Notes sold within the United States in reliance on Rule 144A and outside the United States in reliance on Regulation S will be issued in book-entry form through the facilities of DTC for the accounts of its participants, including Euroclear and Clearstream. For a description of certain factors relating to clearance and settlement, see “Description of the Notes—Book-Entry; Delivery and Form”.

Delivery of the Notes...... The Issuer expects to make delivery of the Additional Notes, against payment in same-day funds on or about 3 July 2013, which will be the fourth business day following the date of this offering memorandum. See “Plan of Distribution”.

Ratings ...... The Notes have been rated B by S&P and B3 by Moody’s. There can be no assurance that the ratings will remain in effect for any given period or that the ratings will not be revised by such rating agencies in the future if their judgement circumstances so warrant.

Trustee ...... Citicorp International Limited.

Principal Paying Agent and Transfer Agent...... Citibank, N.A., London Branch.

Registrar...... Citigroup Global Markets Deutschland AG.

Security Agent ...... Citicorp International Limited.

Listing and Trading ...... Approval in principle has been received for the listing and quotation of the Additional Notes on the Official List of the SGX-ST. The Additional Notes will be traded on the SGX-ST in a minimum board lot size of not less than S$200,000 (or its equivalent in other currencies) so long as any of the Notes remain listed on the SGX-ST and the rules of the SGX-ST so require.

Governing Law for the Notes, the Guarantees and the Indenture ..... New York law.

Governing Law for the Intercreditor Agreement...... English law.

19 Governing Law for the Security Documents ...... The jurisdictions in which secured assets are located. Common Security Codes ...... Security Codes CUSIP ISIN Code

Rule 144A Global Notes ...... 65557XAA5 US65557XAA54 076001120 Regulation S Global Notes... G65760AA1 USG65760AA11 076001723

Risk Factors ...... Investing in the Additional Notes involves substantial risks. For a discussion of certain factors that should be considered in evaluating an investment in the Additional Notes, see “Risk Factors”.

20 SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA

Summary Consolidated Financial and Operating Data of Nord Anglia Education

The tables below set out the summary consolidated financial information of Nord Anglia Education as at and for the years ended 31 August 2010, 2011 and 2012 and as at and for the six months ended 29 February 2012 and 28 February 2013.

The consolidated financial statements of Nord Anglia Education as at and for the years ended 31 August 2011 and 2012 have been prepared under IFRS and using U.S. dollar presentational currency. The consolidated financial statements of Nord Anglia Education as at and for the year ended 31 August 2010 have been prepared under UK GAAP and using GBP presentational currency.

The unaudited interim consolidated financial statements of Nord Anglia Education as at and for the six months ended 29 February 2012 and 28 February 2013 have been prepared in accordance with International Accounting Standard 34 “Interim Financial Reporting” (“IAS 34”) and using U.S. dollar presentational currency. Results of operations for any interim period are not necessarily indicative of results to be expected in any full fiscal year.

You should read the whole of this offering memorandum, including the information included under the heading “Risk Factors”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the historical financial information included elsewhere in this offering memorandum, and not rely on this summary financial information only. Nord Anglia Education’s audited financial statements prepared in accordance with UK GAAP for the year ended 31 August 2010 and IFRS for the years ended 31 August 2011 and 2012 and unaudited financial statements as at and for the six months ended 28 February 2012 and 29 February 2013 are reproduced in the F-pages of this offering memorandum. We have re-presented Nord Anglia Education’s IFRS income statements for the years ended 31 August 2010 and 2011 in this section below in order to more adequately reflect the way management views the results of the business. Consequently, Nord Anglia Education’s income statement is presented on a function of expenses basis. However, the information has been derived from Nord Anglia Education’s income statement within our consolidated audited financial statements which are presented on a nature of expenses basis and are reproduced within the F-pages of this offering memorandum. Specifically, we have allocated (i) “direct educational costs” and “consultancy costs”, as presented in our IFRS financial statements, to “cost of sales”, and (ii) “management, administrative and support staff expenses” and “other expenses”, as presented in our IFRS financial statements, to “selling, general and administrative expenses”. A number of further reclassification adjustments have been made to more adequately represent our view of direct and indirect costs, although we have not adjusted for all items that could have been re-categorised. All the information shown is extracted or derived from our audited financial statements and this exercise has had no impact on our operating results or net income.

21 Nord Anglia Education’s Summary Consolidated Income Statement

For the year ended 31 August For the six months ended

29 February 28 February 2010 2011 2012 2012 2013

(US$ millions) IFRS IFRS IFRS IFRS IFRS

(unaudited) (unaudited) Revenue ...... 185.9 219.3 264.6 151.5 170.3 Cost of sales ...... (86.1) (99.8) (118.4) (68.6) (77.3) Gross Profit ...... 99.7 119.5 146.2 82.9 93.0

Selling, general and administrative expenses...... (63.4) (71.8) (79.1) (41.0) (42.6) Depreciation ...... (7.9) (5.8) (8.0) (4.2) (4.2) Amortisation ...... (0.8) (2.8) (3.4) (1.7) (1.9) Impairment of goodwill ...... (41.3) (16.7) (10.7) — — Exceptional (expenses)/income . . (40.5) (9.4) 1.4 6.1 (2.4) Total expenses...... (153.9) (106.5) (99.8) (40.8) (51.1) Operating (loss)/profit ...... (54.2) 13.0 46.4 42.1 41.9 Finance income ...... 0.7 10.1 103.0 102.6 1.2 Finance expense Shareholder loan notes accrued interest...... (24.7) (35.5) (22.1) (21.1) — Bank loans and overdrafts...... (16.8) (13.0) (22.9) (6.6) (19.2) Other finance expenses...... (14.3) (3.2) (4.7) (0.8) (0.2) Total finance expense ...... (55.8) (51.7) (49.7) (28.5) (19.4) Net finance (expense)/income . (55.1) (41.6) 53.3 74.1 (18.2) Share of profit in joint venture . . . 0.1 ———— (Loss)/Profit before income tax . . (109.1) (28.6) 99.7 116.2 23.7 Income tax expense ...... (6.7) (12.5) (16.4) (11.5) (12.3) (Loss)/Profit after income tax. . (115.7) (41.1) 83.3 104.7 11.4

22 Nord Anglia Education’s Summary Consolidated Balance Sheet

As at 31 August As at

29 February 28 February 2010 2011 2012 2012 2013

(US$ millions) IFRS IFRS IFRS IFRS IFRS

(unaudited) (unaudited) Property, plant and equipment. . . 18.6 28.4 30.3 29.8 33.1 Intangible assets ...... 314.7 458.8 454.9 448.1 462.4 Deferred income tax assets..... 4.1 5.6 6.1 4.0 6.5 Derivative financial instruments . . 0.4 0.2 — 0.1 0.0 Trade and other receivables .... 0.5 12.1 11.3 16.3 3.0 Total non-current assets ...... 338.3 505.1 502.6 498.3 505.0

Inventories...... 0.1 ———— Trade and other receivables .... 35.5 47.1 47.0 33.0 50.9 Current income tax receivable. . . — — 0.3 — 0.3 Cash and cash equivalents ..... 81.8 88.0 108.2 40.4 67.9 Current assets ...... 117.4 135.1 155.5 73.4 119.1

Total assets ...... 455.7 640.2 658.1 571.7 624.1

Share capital ...... 1.6 67.5 67.5 67.5 67.5 Share premium ...... 0.2 0.1 131.1 0.1 131.1 Other reserves ...... 19.1 27.5 6.8 19.1 17.3 Retained earnings ...... (179.0) (219.9) (152.3) (128.2) (140.8) Total equity ...... (158.1) (124.8) 53.1 (41.5) 75.1

Other interest-bearing loans and borrowings ...... 31.4 13.0 21.8 16.8 29.9 Shareholder loans ...... — 16.4 — 17.1 — Trade and other payables ...... 146.1 178.7 206.8 119.2 140.9 Provisions for other liabilities and charges ...... 1.7 3.1 3.1 2.6 0.9 Current tax liabilities ...... 3.1 3.3 5.0 5.9 7.4 Current liabilities...... 182.3 214.5 236.7 161.6 179.1

Other interest bearing loans and borrowings ...... 187.5 179.1 318.9 171.3 322.3 Shareholder loan notes ...... 225.0 328.7 — 232.9 — Other non-current liabilities ..... 19.0 42.7 49.4 47.4 47.6 Total non-current liabilities.... 431.5 550.5 368.3 451.6 369.9

Total liabilities ...... 613.8 765.0 605.0 613.2 549.0

Total equity and liabilities..... 455.7 640.2 658.1 571.7 624.1

23 Nord Anglia Education’s Summary Consolidated Statement of Cash Flows

For the year ended 31 August For the six months ended

29 February 28 February 2010 2011 2012 2012 2013

(US$ millions) IFRS IFRS IFRS IFRS IFRS

(unaudited) (unaudited) Cash generated from/(used in) operations ...... 62.0 56.8 74.5 (23.4) (22.0) Interest paid ...... (15.4) (10.9) (6.8) (5.0) (17.9) Tax paid ...... (7.9) (13.9) (15.9) (7.8) (10.6) Net cash from/(used in) operating activities ...... 38.7 32.0 51.8 (36.2) (50.5) Net cash used in investing activities ...... (11.4) (11.6) (27.1) (5.2) (4.5) Net cash (used in)/from financing activities...... (10.5) (20.4) (2.2) (5.2) 10.2 Net increase/(decrease) in cash and cash equivalents . . 16.8 — 22.5 (46.6) (44.8) Cash and cash equivalents at beginning of period ...... 66.5 81.8 88.0 88.0 108.2 Exchange (losses)/gains on cash and cash equivalent ...... (1.5) 6.2 (2.3) (1.0) 4.5 Cash and cash equivalents at end of period ...... 81.8 88.0 108.2 40.4 67.9

24 Nord Anglia Education’s Operating Data and Non-GAAP Financial Information The following tables show certain non-GAAP financial and operating information of Nord Anglia Education for FY2010, FY2011, FY2012, H1 FY2012 and H1 FY2013. Revenue and EBITDA data have been adjusted in these tables for the impact of acquisitions and dispositions. In addition, EBITDA data have been further adjusted to exclude certain items that we believe are not related to our normal operations. Adjusted EBITDA and Adjusted Revenue also reflect the impact of recognising the results of our acquired schools in Switzerland that were purchased in FY2011 as if they had been owned from 1 September 2010, and removing the impact of loss making schools that have been subsequently disposed or closed and have no impact on our on-going results. See “—Calculation of Nord Anglia Education’s Adjusted Revenue”, “—Calculation of Nord Anglia Education’s Adjusted EBITDA” and “—Calculation of Nord Anglia Education’s Last Twelve Months Financial Information”. The impact of the acquisition of WCL is not reflected in the following tables.

Supplementary Financial Information

For the year ended 31 August For the six months ended

29 February 28 February (US$ millions) 2010 2011 2012 2012 2013

(unaudited) (unaudited) Revenue ...... 185.9 219.3 264.6 151.5 170.3 Adjusted Revenues ...... 179.6 247.0 262.8 150.6 169.4 Adjusted EBITDA ...... 45.1 59.9 74.0 46.7 52.4 Adjusted EBITDA margin...... 25.1% 24.3% 28.2% 31.0% 30.9% Capital expenditures - Capacity related(1)...... 6.3 6.8 4.6 1.2 2.1 - Non-capacity related(2) ...... 3.7 5.0 6.1 3.3 3.6 Total capital expenditures...... 10.0 11.8 10.7 4.5 5.7 Adjusted EBITDA after non-capacity related capital expenditure ...... 41.4 54.9 67.9 43.4 48.8 Adjusted EBITDA after non-capacity related capital expenditure margin ...... 23.0% 22.2% 25.8% 28.8% 28.8% Free cash flow(3) ...... 50.4 37.9 52.5 (34.5) (36.2) Cash conversion rate(4) ...... 112% 63% 71% NA NA

(1) Capacity related capital expenditure means expenditures related to the expansion of student capacity at our existing schools such as fixtures, equipment and related expenses. (2) Non-capacity related capital expenditures means total capital expenditures less capacity related capital expenditures. (3) We define free cash flow as cash generated from operations less tax paid and non-capacity related capital expenditures. Typically the bulk of annual operating cash inflow occurs in the fourth financial quarter (June to August) as pre-paid tuition fees in advance of the academic year (September to June). When this cash is received, a corresponding deferred income liability is recognised on the balance sheet. As the academic year progresses, the deferred income liability is reduced and recognised as revenue in our income statement which results in a change in working capital. This favourable cash flow dynamic results in an increase in cash through a reduction in working capital as the business grows. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Cash flows—Cash flows from/(used in) operating activities”. (4) Cash conversion rate is defined as the ratio of free cash flow to Adjusted EBITDA.

25 Nord Anglia Education’s Key Performance Indicators

For the year ended 31 August For the six months ended

29 February 28 February 2010 2011 2012 2012 2013

(unaudited) (unaudited) Full time equivalent students (average for the period)(1) China...... 2,700 3,070 3,622 3,517 4,040 Europe ...... 2,135 3,412 3,775 3,784 3,764 ME/SEA...... ————944 Total ...... 4,835 6,482 7,397 7,301 8,748 Capacity (average for the period)(2) China...... 4,800 4,860 5,360 5,360 5,370 Europe ...... 2,678 4,052 4,342 4,342 4,417 ME/SEA...... ————1,200 Total ...... 7,478 8,912 9,702 9,702 10,987 Utilisation (average for the period)(3) China...... 56% 63% 68% 66% 75% Europe ...... 80% 84% 87% 87% 85% ME/SEA...... ————79% Average...... 65% 73% 76% 75% 80% Adjusted Revenue per full time equivalent student (in US$ thousands)(4) China...... 26.2 27.9 30.8 18.2 19.4 Europe ...... 18.5 29.6 29.5 17.4 17.9 ME/SEA...... ————10.2 Average...... 22.8 28.8 30.1 17.8 17.8

(1) We calculate average full time equivalent students (“FTEs”) for a period by dividing the total number of FTEs at each calendar month end in such period by the number of calendar months in such period. (2) We measure average capacity at the measurement date as the total number of FTEs that can be accommodated in a school based on its existing classrooms at each calendar month divided by the number of months in such period. (3) We measure utilisation during a period as a percentage equal to the ratio of average FTEs for the period enrolled at that school divided by average capacity. (4) We calculate Adjusted Revenue per student by dividing our total Adjusted Revenue from our Premium Schools for a relevant period by the average FTEs for such period. See “—Calculation of Nord Anglia Education’s Adjusted Revenue”.

26 Nord Anglia Education’s Segment Analysis

For the year ended 31 August For the six months ended

29 February 28 February (US$ millions) 2010 2011 2012 2012 2013

(unaudited) (unaudited) Adjusted Revenue(1) Premium Schools China...... 70.9 85.6 111.5 63.9 78.2 Europe ...... 39.6 100.9 111.2 65.9 67.4 ME/SEA...... ————9.7 Discontinuing(2) ...... 1.4 ———— Total ...... 111.9 186.5 222.7 129.8 155.3 Learning Services ...... 67.3 59.9 40.1 20.8 14.1 Other...... 0.4 0.6 — 0.0 0.0 Adjusted Revenue ...... 179.6 247.0 262.8 150.6 169.4

For the year ended 31 August For the six months ended

29 February 28 February (US$ millions) 2010 2011 2012 2012 2013

(unaudited) (unaudited) Adjusted EBITDA(1) Premium Schools China...... 33.1 40.8 53.8 31.6 39.2 Europe ...... 12.4 22.7 25.6 18.4 15.8 ME/SEA...... ————3.0 Discontinuing(2) ...... (0.6) (0.4) — — — Total ...... 44.9 63.1 79.4 50.0 58.0 Learning Services ...... 15.8 13.7 10.2 4.5 3.7 Central and regional expenses . . (15.6) (16.9) (15.6) (7.8) (9.3) Adjusted EBITDA...... 45.1 59.9 74.0 46.7 52.4

(1) See “—Calculation of Nord Anglia Education’s Adjusted Revenue” and “—Calculation of Nord Anglia Education’s Adjusted EBITDA”. (2) Discontinuing revenues relate to the results of schools that have subsequently been closed.

27 Calculation of Nord Anglia Education’s Adjusted Revenue

For the year ended 31 August For the six months ended

29 February 28 February (US$ millions) 2010 2011 2012 2012 2013

(unaudited) (unaudited) Revenue ...... 185.9 219.3 264.6 151.5 170.3 Disclosure adjustments(2) ...... 0.4 ———— Full year impact of acquisitions(3).... — 29.5 — — — Disposal of BISAD(4) ...... (4.7) ———— Other(5) ...... (2.0) (1.8) (1.8) (0.9) (0.9) Adjusted Revenue(1)...... 179.6 247.0 262.8 150.6 169.4

Calculation of Nord Anglia Education’s Adjusted EBITDA

For the year ended 31 August For the six months ended

29 February 28 February (US$ millions) 2010 2011 2012 2012 2013

(unaudited) (unaudited) Operating (loss)/profit ...... (54.2) 13.0 46.4 42.1 41.9 Add back: Exceptional expenses/(income)(6).... 40.5 9.4 (1.4) (6.1) 2.4 Impairment of goodwill(7) ...... 41.3 16.7 10.7 — — Amortisation...... 0.8 2.8 3.4 1.7 1.9 Depreciation...... 7.9 5.8 8.0 4.2 4.2 EBITDA(1) ...... 36.3 47.7 67.1 41.9 50.4 Loss on disposal of property, plant and equipment(8)...... 0.1 1.0 0.3 0.1 0.1 FX (gain)/loss(9) ...... (0.5) (3.5) 4.6 3.9 (0.4) Full year impact of acquisitions(3).... — 6.4 — — — Pre-acquisition and business integration costs(10)...... — 3.2 0.6 — — Reduction in management charges to a related party(11) ...... — 1.8 — — — School start-up costs and disposal of BISAD(4) ...... 4.8 ———— Start-up costs Beijing school(12) ..... 1.1 ———— School and contract closure costs(13) . 2.1 1.8 — — — Share based payments(14) ...... 0.5 0.3 0.6 0.3 — Management fees(15) ...... ————2.3 Others(16) ...... 0.7 1.2 0.8 0.5 0.0 Adjusted EBITDA(1) ...... 45.1 59.9 74.0 46.7 52.4

28 (1) EBITDA is a widely used financial indicator of a company’s ability to incur and service debt. We use EBITDA, Adjusted EBITDA and Adjusted Revenues as supplemental financial measures of our operating performance. EBITDA, Adjusted EBITDA and Adjusted Revenues are not defined measures under IFRS or UK GAAP. EBITDA, Adjusted EBITDA and Adjusted Revenues should not be considered in isolation or construed as an alternative to cash flows, net income or any other measure of financial performance or as an indicator of our operating performance, liquidity, profitability or cash flows generated by operating, investing or financing activities. We may incur expenses similar to the adjustments in this presentation in the future and certain of these items could be recurring in nature. EBITDA, Adjusted EBITDA and Adjusted Revenues presented herein may not be comparable to similarly titled measures presented by other companies. Our definition and measure of “Adjusted EBITDA” within this offering memorandum differs from the definition and measure of “Adjusted EBITDA” used within the segmental notes to our financial statements. The adjustments to EBITDA within our financial statements are also consistently applied to EBITDA within this document, however further adjustments have also been made to adjust EBITDA within this document, largely in relation to the impact of acquisitions, disposals, foreign exchange gains and losses and management charges. Investors should also note that EBITDA and Adjusted EBITDA as presented above are calculated differently from “Consolidated EBITDA” as defined and used in the indenture governing the Notes. See “Description of the Notes—Certain Definitions” for a definition of “Consolidated EBITDA” in the indenture governing the Notes. (2) Disclosure adjustments relate to the treatment of our share of revenue from our joint venture which are excluded as revenue in our financial statements but are internally included. (3) Incorporates the full fiscal period historical financial results of the schools we acquired during the relevant fiscal period as if those acquisitions had been completed as at the first day of such period. We acquired College Alpin Beau Soleil SA on 14 January 2011 and College Champittet Lausanne and College Champittet Nyon on 25 February 2011. No adjustment has been made in the twelve months ended 31 August 2012 for the acquisition of our school in Thailand because, even though it was acquired on 1 August 2012, no revenue or costs were recognised during the twelve months ended 31 August 2012. (4) FY2010 represented revenue and operating losses associated with BISAD, which was disposed of in August 2010. (5) Represents revenue earned from managing BISAD and College Champittet schools on behalf of a related party which are included as revenue in our financial statements but are internally excluded. (6) In FY2010, exceptional expenses included the cost of buying out a profit share agreement over our schools in Shanghai from a related party and professional fees relating to our proposed public fund-raising efforts and the financing of the acquisition of our schools in Switzerland. In FY2011, exceptional expenses included expenses related to the relocation of our central services function to Hong Kong. In FY2012, exceptional expenses comprise costs incurred in connection with the issuance of the Original Notes and the acquisition of schools. In the six months ended 28 February 2013, exceptional expenses included costs in connection with the acquisition and development of new schools. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Nord Anglia Education Results of Operations”. (7) FY2011 comprises the non-cash impairment charge on the goodwill associated with the UK Learning Services business. FY2012 comprises the non-cash impairment charge on the remaining balance of the goodwill relating to Learning Services in the Middle East. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. (8) In FY2010 and FY2011, amounts represent losses associated with the closure of our school in Nanxiang, Shanghai. (9) Represents foreign currency translational gains/losses primarily associated with our inter-company loan balances. (10) Represents costs associated with legal, tax and accounting advice in relation to the conversion of our U.S. dollar shareholder loans from pound sterling, as well as costs associated with changes to our corporate structure and lending arrangements to enable us to acquire our schools in Switzerland. (11) For FY2010, we earned a management fee for operating College Champittet Lausanne and College Champittet Nyon on behalf of a related party. These fees were subsequently reduced in FY2011. (12) Represents the fees and expenses associated with the acquisition of our schools in Beijing. (13) Represents the costs associated with the closure of our schools in Nanxiang. We incurred certain costs associated with the completion of certain of our Learning Services contracts during FY2010. (14) These non-cash charges are associated with the equity investments in our Company by members of our management. (15) Represent management fees paid to Premier Education Holdings Limited. (16) Various fees and expenses and redundancy costs relating to the switch in the mix of business from Learning Services to Premium Schools that are one-off in nature and non-recurring.

29 Calculation of Nord Anglia Education’s Last Twelve Months Financial Information

For the year For the twelve ended months ended 31 August For the six months ended 28 February

29 February 28 February (US$ millions) 2012 2012 2013 2013

(unaudited) (unaudited) (unaudited) Adjusted Revenue(1) ...... 262.8 150.6 169.4 281.6 Full year impact of acquisitions(2) ...... 6.4 LTM Adjusted Revenue ...... 288.0 Adjusted EBITDA(3) ...... 74.0 46.7 52.4 79.7 Full year impact of acquisitions(2) ...... 1.5 LTM Adjusted EBITDA ...... 81.2

For the year For the twelve ended months ended 31 August For the six months ended 29 February

28 February 29 February (US$ millions) 2011 2011 2012 2012

(unaudited) (unaudited) (unaudited) Adjusted Revenue(1) ...... 247.0 135.8 150.6 261.8 Full year impact of acquisitions(4) ...... 1.9 LTM Adjusted Revenue ...... 263.7 Adjusted EBITDA(3) ...... 59.9 37.4 46.7 69.2 Full year impact of acquisitions(4) ...... 0.2 LTM Adjusted EBITDA ...... 69.4

(1) For the calculation of Adjusted Revenue for the year ended 31 August 2012 and the six months ended 29 February 2012 and 28 February 2013, see “—Calculation of Nord Anglia Education’s Adjusted Revenue”. (2) Adjusts for the pro forma financial information used in connection with the acquisition of The Regent’s School, Chonburi, Thailand which we acquired during the relevant period as if the acquisition had been completed as at 1 March 2012. (3) For the calculation of Adjusted EBITDA for the year ended 31 August 2012 and the six months ended 29 February 2012 and 28 February 2013, see “—Calculation of Nord Anglia Education’s Adjusted EBITDA”. (4) Adjusts for the pro forma financial information used in connection with the acquisition of La Cote International, Gland, Switzerland which we acquired during the relevant period as if the acquisition had been completed as at 1 March 2011.

30 Summary Financial and Operating Data of WCL Group Limited WCL’s fiscal year ends on the last Friday of August. The tables below set out the summary consolidated financial information of WCL Group for fiscal 2011 and fiscal 2012 and as at and for the 26 weeks ended 29 February 2012 and 28 February 2013. The consolidated financial statements of WCL Group for fiscal 2011 and fiscal 2012 have been prepared under UK GAAP and using GBP presentational currency. The consolidated unaudited financial statements of WCL Group as at and for the 26 weeks ended 29 February 2012 and 28 February 2013 have been prepared in accordance with UK GAAP and using GBP presentational currency. Results of operations for any interim period are not necessarily indicative of results to be expected in any full fiscal year. You should read the whole of this offering memorandum, including the information included under the heading “Risk Factors”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the historical financial information included elsewhere in this offering memorandum, and not rely on this summary financial information only. WCL Group’s audited financial statements prepared in accordance with UK GAAP for fiscal 2011 and fiscal 2012 and unaudited interim financial statements for the 26 weeks ended and as at 29 February 2012 and 28 February 2013 are reproduced in the F-pages of this offering memorandum.

WCL’s Summary Consolidated Income Statement

For the 26 weeks ended

29 February 28 February Fiscal 2011 Fiscal 2012 2012 2013

(GBP millions) UK GAAP UK GAAP UK GAAP UK GAAP

(unaudited) Turnover...... 41.7 57.5 28.7 32.2 Cost of sales(1)...... (33.1) (43.4) (21.4) (23.2) Gross profit ...... 8.6 14.1 7.3 9.0 Selling, general and administrative expenses(2) . (2.4) (5.4) (3.5) (3.3) Depreciation(1) ...... (2.3) (3.4) (1.6) (1.8) Amortisation(2) ...... (1.8) (2.4) (1.2) (1.2) Exceptional expenses ...... — 1.2 1.2 — Total expenses ...... (6.5) (10.0) (5.1) (6.3) Operating profit ...... 2.1 4.1 2.2 2.7 Finance income ...... 0.0 0.0 0.0 0.0 Finance expense Bank loans and overdrafts ...... (5.9) (7.7) (3.8) (3.8) Other finance expenses ...... (0.3) (0.6) (0.3) (0.3) Total finance expenses ...... (6.2) (8.3) (4.1) (4.1) Net finance expenses ...... (6.2) (8.3) (4.1) (4.1) Loss before income tax ...... (4.1) (4.2) (1.9) (1.4) Income tax expense...... (0.3) (0.8) (1.1) (0.9) Loss after income tax ...... (4.4) (5.0) (3.0) (2.3)

(1) Cost of sales has been restated from the financial statements of WCL included elsewhere in this offering memorandum to show depreciation as a separate line item. (2) Selling, general and administrative expenses have been restated from the financial statements of WCL included elsewhere in this offering memorandum to show amortisation as a separate line item.

31 WCL’s Summary Consolidated Balance Sheet

As at

As at 26 As at 31 29 February 28 February August 2011 August 2012 2012 2013

(GBP millions) UK GAAP UK GAAP UK GAAP UK GAAP

(unaudited) Fixed assets Goodwill ...... 41.8 39.2 40.6 38.0 Tangible assets ...... 20.7 23.2 21.7 24.4 62.5 62.4 62.3 62.4

Current assets Debtors ...... 9.2 10.8 7.8 8.0 Cash at bank and in hand ...... 12.3 13.2 8.5 12.5 21.5 24.0 16.3 20.5 Creditors: amounts falling due within one year...... (47.0) (51.6) (41.4) (50.2) Net current liabilities ...... (25.5) (27.6) (25.1) (29.7) Total assets less current liabilities ...... 37.0 34.8 37.2 32.7 Creditors: amounts falling due after more than one year...... (52.7) (53.6) (54.6) (54.0) Provisions for liabilities ...... — (0.4) (0.6) (0.6) Net liabilities ...... (15.7) (19.2) (18.0) (21.9)

Capital and reserves Called-up equity share capital ...... 0.0 0.0 0.0 0.0 Share premium account ...... 0.4 0.4 0.4 0.4 Other reserves ...... (0.3) (0.3) (0.3) (0.1) Profit and loss account ...... (15.8) (19.3) (18.1) (22.2) Shareholders’ deficit ...... (15.7) (19.2) (18.0) (21.9)

32 WCL’s Summary Consolidated Statement of Cash Flows

For the 26 weeks ended

29 February 28 February Fiscal 2011 Fiscal 2012 2012 2013

(GBP millions) UK GAAP UK GAAP UK GAAP UK GAAP

(unaudited) Net cash inflow from operating activities ..... 8.0 15.8 1.2 2.4

Returns on investments and servicing of finance Interest received ...... 0.0 0.0 0.0 0.0 Other financing credit/(costs)...... (0.3) 0.0 — (0.1) Interest paid ...... (8.7) (4.0) (0.9) (0.1) Net cash (outflow) from returns on investments and servicing of finance.... (9.0) (4.0) (0.9) (0.2) Taxation ...... 0.1 (1.5) (0.4) (0.0)_ Capital expenditure and financial investment Proceeds from the sale of tangible fixed assets ...... — 2.4 2.4 — Purchase of tangible fixed assets ...... (3.9) (6.9) (3.3) (2.2) Net cash (outflow) from capital expenditure and financial investment.... (3.9) (4.5) (0.9) (2.2)

Acquisitions and disposals Payment of deferred consideration ...... (0.3) (0.9) — — Acquisition of subsidiary ...... (10.1) — — — Net cash (outflow) from acquisitions and disposals ...... (10.4) (0.9) — —

Financing Repayment of finance ...... (2.4) (4.5) (2.8) (0.4) Proceeds from loan finance...... 22.4 — — — Issue/(repurchase of shares) ...... (0.3) 0.0 — 0.2 Net cash (outflow)/inflow from financing. . . 19.7 (4.5) (2.8) (0.2) (Decrease)/increase in cash ...... 4.5 0.4 (3.8) (0.2)

33 WCL’s Operating Data and Non-GAAP Financial Information

The following tables show certain non-GAAP financial and operating information of WCL for fiscal 2011, fiscal 2012, the 26 weeks ended 29 February 2012 and the 26 weeks ended 28 February 2013.

Supplementary Financial Information

For the 26 weeks ended

29 February 28 February (GBP millions) Fiscal 2011 Fiscal 2012 2012 2013

(unaudited) (unaudited) Revenue ...... 41.7 57.5 28.7 32.2 Adjusted Revenues ...... 40.2 55.1 27.5 30.7 Adjusted EBITDA ...... 7.5 11.6 6.1 7.6 Adjusted EBITDA margin...... 18.6% 21.1% 22.2% 24.8% Capital Expenditures - Capacity related(1)...... 0.5 2.0 0.6 0.6 - Non-capacity related(2) ...... 1.8 3.8 1.9 1.3 Total capital expenditures ...... 2.3 5.8 2.5 1.9

(1) Capacity related capital expenditure means expenditures related to the expansion of student capacity at existing schools such as fixtures, equipment and related expenses. (2) Non-capacity related capital expenditures means total capital expenditures less capacity related capital expenditures.

34 WCL’s Segment Analysis

For the 26 weeks ended

29 February 28 February Fiscal 2011 Fiscal 2012 2012 2013

(GBP millions) (unaudited) (unaudited) Adjusted Revenue(1) Premium Schools Europe ...... 0.6 8.8 4.5 4.4 ME/SEA ...... 7.3 9.4 4.7 7.1 North America ...... 27.3 31.3 15.9 17.5 Total ...... 35.2 49.5 25.1 29.0 Learning Services ...... 5.0 5.6 2.4 1.7 Adjusted Revenue ...... 40.2 55.1 27.5 30.7

For the 26 weeks ended

29 February 28 February Fiscal 2011 Fiscal 2012 2012 2013

(GBP millions) (unaudited) (unaudited) Adjusted EBITDA(1) Premium Schools Europe ...... 0.1 1.7 0.9 1.1 ME/SEA ...... 1.3 1.6 0.8 2.2 North America ...... 8.1 10.6 5.7 6.3 Total ...... 9.5 13.9 7.4 9.6 Learning Services ...... 1.4 1.9 0.6 0.1 Central and regional expenses ...... (3.4) (4.2) (1.9) (2.1) Adjusted EBITDA...... 7.5 11.6 6.1 7.6

(1) See “—Calculation of WCL’s Adjusted Revenue” and “—Calculation of WCL’s Adjusted EBITDA”.

35 Calculation of WCL’s Adjusted Revenue

For the 26 weeks ended

29 February 28 February Fiscal 2011 Fiscal 2012 2012 2013

(GBP millions) UK GAAP UK GAAP UK GAAP UK GAAP

(unaudited) Revenue ...... 41.7 57.5 28.7 32.2 Unrestricted subsidiaries(1) ...... (1.5) (2.4) (1.2) (1.5) Adjusted Revenue ...... 40.2 55.1 27.5 30.7

Calculation of WCL’s Adjusted EBITDA

For the 26 weeks ended

29 February 28 February (GBP millions) Fiscal 2011 Fiscal 2012 2012 2013

(unaudited) Operating profit ...... 2.1 4.1 2.2 2.7 Exceptionals ...... — (1.2) (1.2) — Amortisation ...... 1.8 2.4 1.2 1.2 Depreciation ...... 2.3 3.4 1.6 1.8 EBITDA...... 6.2 8.7 3.8 5.7 FX (gain)/loss ...... (1.1) 0.8 1.1 1.2 Add back: Losses on unrestricted subsidiaries(1)...... 2.1 1.4 0.6 0.4 Restructuring ...... 0.0 0.2 0.1 0.1 School acquisition costs ...... 0.3 0.3 0.2 0.0 Other ...... 0.0 0.2 0.3 0.2 Adjusted EBITDA...... 7.5 11.6 6.1 7.6

Calculation of WCL’s Last Twelve Months Financial Information

For the 26 weeks ended

29 February 28 February For the twelve months ended Fiscal 2012 2012 2013 28 February 2013

(GBP millions) (GBP millions) (GBP millions) (GBP millions) US$

(unaudited) (unaudited) (unaudited) (unaudited) (unaudited) Adjusted Revenue ...... 55.1 27.5 30.7 58.3 88.6 LTM Adjusted Revenue . . 58.3 88.6 Adjusted EBITDA...... 11.6 6.1 7.6 13.1 19.9 LTM Adjusted EDITDA . . . 13.1 19.9

(1) WCL’s schools in New York, New York and Charlotte, North Carolina.

36 Summary Combined Pro Forma Financial Data The tables below set out the selected unaudited pro forma Adjusted Revenue and Adjusted EBITDA of Nord Anglia Education as at and for the twelve months ended 28 February 2013, after giving effect to the acquisition of WCL Group and related financings. The historical results of Nord Anglia Education and its subsidiaries may not be indicative of our future results following consummation of the acquisition of WCL Group. The unaudited pro forma financial data has not been prepared in accordance with the requirements of Regulation S-X of the U.S. Securities Act, the Prospectus Directive or any generally accepted accounting standards. Neither the assumptions underlying the pro forma adjustments nor the resulting pro forma financial information have been audited or reviewed in accordance with any generally accepted auditing standards.

Calculation of Pro Forma Twelve Months Financial Information

For the twelve For the year months ended ended 31 August For the six months ended 28 February

29 February 28 February (US$ millions) 2012 2012 2013 2013

(unaudited) Adjusted Revenue Nord Anglia Education(1) . . 262.8 150.6 169.4 281.6 Full year impact of acquisitions(2) ...... 6.4 LTM Adjusted Revenue of Nord Anglia Education ...... 288.0 LTM Adjusted Revenue WCL Group(1) ...... 83.7 41.7 46.6 88.6 Pro Forma Combined Adjusted Revenue of Nord Anglia Education and WCL ...... 376.6 Adjusted EBITDA Nord Anglia Education(3) . . . 74.0 46.7 52.4 79.7 Full year impact of acquisitions(2) ...... 1.5 LTM Adjusted EBITDA of Nord Anglia Education ...... 81.2 LTM Adjusted EBITDA WCL Group(3) ...... 17.6 9.3 11.6 19.9 Full year impact of cost savings(4) ...... 3.2 Pro Forma Combined Adjusted EBITDA of Nord Anglia Education and WCL ...... 104.3

(1) For the calculation of Adjusted Revenue of Nord Anglia Education for the year ended 31 August 2012 and the six months ended 29 February 2012 and 28 February 2013 and of WCL for fiscal 2011 and 2012 and the 26 weeks ended 29 February 2012 and 28 February 2013, see “—Nord Anglia Education’s Key Performance Indicators—Calculation of Nord Anglia Education’s Adjusted Revenue” and “—WCL’s Operating Data and Non-GAAP Financial Information—Calculation of WCL’s Adjusted Revenue”. (2) Adjusts for the pro forma financial information used in connection with the acquisition of The Regent’s School, Chonburi Thailand which we acquired during the relevant period as if the acquisition had been completed as at 1 March 2012. (3) For the calculation of Adjusted EBITDA of Nord Anglia Education for the year ended 31 August 2012 and the six months ended 29 February 2012 and 28 February 2013 and of WCL for fiscal 2011 and 2012 and the 26 weeks

37 ended 29 February 2012 and 28 February 2013, see “—Nord Anglia Education’s Key Performance Indicators—Calculation of Nord Anglia Education’s Adjusted EBITDA” and “—WCL’s Operating Data and Non-GAAP Financial Information—Calculation of WCL’s Adjusted EBITDA”. (4) Budgeted cost savings relating to the acquisition of WCL currently being implemented arising from the ongoing elimination of duplicative head-office functions. There can be no assurance that such cost savings can be achieved.

Pro Forma Combined Last Twelve Months Segment Analysis

For the twelve months ended 28 February 2013

Combined Nord Nord Anglia Anglia Education (US$ millions) Education WCL and WCL

For the twelve months ended 28 February 2013

Combined Nord Nord Anglia Anglia Education (US$ millions) Education WCL and WCL

(1) Derived from Nord Anglia Education’s financial information prepared in accordance with IFRS and WCL’s financial information prepared in accordance with U.K. GAAP. (2) See “—Nord Anglia Education’s Key Performance Indicators—Calculation of Nord Anglia Education’s Adjusted Revenue” and “—Calculation of Nord Anglia Education’s Adjusted EBITDA”, and “—WCL’s Operating Data and Non-GAAP Financial Information—Calculation of WCL’s Adjusted Revenue” and “—Calculation of WCL’s Adjusted EBITDA”. (3) Budgeted cost savings relating to the acquisition of WCL currently being implemented arising from the ongoing elimination of duplicative head-office functions. There can be no assurance that such cost savings can be achieved.

38 Pro Forma Data Giving Effect to the Additional Notes of the Issuer

The following data give pro forma effect to the acquisition of WCL Group and related financings, the repayment of the HSBC Facility, the issuance of the Additional Notes and the partial application of the proceeds therefrom to repay borrowings under the Bridge Loan Agreement in full, as if such transactions took place on 28 February 2013. See “Use of Proceeds” and “Capitalisation and Indebtedness”.

(US$ in millions) As at 28 February 2013

Issuer (unaudited) Pro forma cash(1) ...... 135.1 Pro forma total debt(2) ...... 490.0 Pro forma net debt ...... 354.9 Pro forma LTM Adjusted EBITDA(3) ...... 104.3 Pro forma total debt/LTM Adjusted EBITDA...... 4.7x Pro forma net debt/LTM Adjusted EBITDA...... 3.4x

Nord Anglia Education, Inc.(4) Pro forma net debt of Nord Anglia Education, Inc.(1)(2) ...... 504.9 Pro forma net debt/LTM Adjusted EBITDA of Nord Anglia Education, Inc...... 4.8x

(1) Excludes US$14.5 million cash used as collateral to secure our RMB-denominated working capital facilities. This cash is included in trade and other receivables in non-current assets on our balance sheet. Pro forma cash includes (i) US$16.6 million of net cash over funding of the WCL acquisition and cash on the balance sheet as though the acquisition had closed on 28 February 2013 and (ii) US$50.6 million of net proceeds of the Additional Notes (total proceeds including bond issuance premium and accrued interest, following the repayment of the borrowings under the Bridge Loan Agreement in full and after deducting expected fees and expenses of US$4.4 million), pending the application of those proceeds towards general corporate purposes. See “Use of Proceeds”. (2) Includes the face value of the Original Notes and the Additional Notes. Excludes US$14.5 million of RMB-denominated working capital facilities which are collateralised with existing cash deposits. These working capital facilities are included in other interest bearing loans and borrowings on our balance sheet. All debt owed by WCL Group was repaid at the completion of the acquisition. (3) See “—Calculation of Pro Forma Twelve Months Financial Information”. (4) For reference only. Nord Anglia Education, Inc.’s PIK Toggle Notes are unguaranteed and unsecured. See “—Our Corporate Structure”.

39 RISK FACTORS

You should carefully consider the risks and uncertainties described below and the other information contained within this offering memorandum prior to making an investment decision. If any of the events described below were to occur, or if other risks or uncertainties of which we are unaware or that we believe to be immaterial were to occur, our business, financial results, financial condition, cash flows and results of operations could be materially and adversely affected. In such a case, the Issuer might not be able to satisfy its obligations under the Notes, and you could lose all or a part of your investment. Prospective investors should note that the risks described below are not the only risks we face. We have described only those risks relating to our operations of which we are aware and that we believe to be material. There may be additional risks that we currently consider not to be material or of which we are unaware.

Unless the context requires otherwise, in this Risk Factors section, the terms “Issuer” “us”, “our”, the “Company”, the “Group”, “Nord Anglia Education” and “Nord Anglia Education (UK) Holdings plc” refer to Nord Anglia Education (UK) Holdings plc and its consolidated subsidiaries, including WCL Group Limited.

Risks Relating to Our Business

We may experience adverse changes in the key industry drivers for our Premium Schools. We believe that the key industry drivers for our Premium Schools include: • globalisation and increasing FDI; and • a growing emphasis by parents on high quality education for their children. Changes in our key industry drivers may have a material adverse effect on our business, prospects, results of operations and financial condition. For example, if FDI growth slows in one of the countries in which we operate, the number of expatriate families in that country may decrease leading to a decreased demand for our premium schools. During the 2009/2010 academic year, we experienced more difficulties in attracting new students than in previous academic years, particularly in Shanghai, which we believe was due in part to the 2008 global crisis. Furthermore, as some of the emerging markets in which we operate reach a higher level of economic development and this results in a more skilled local workforce, companies could increase their reliance on such local workforce and their demand for expatriates may decrease. In addition, we believe that growth of GDP and individual disposable income in emerging markets also tends to produce increasing demand by local families as they increase their focus and spending on premium quality education. Accordingly, a decrease or limited growth in GDP or disposable income may have a material adverse effect on the demand for our premium schools from local families and on our ability to recruit and retain local students in our schools.

Our financial performance depends on our ability to enrol new students and re-enrol existing students. Increasing enrolments and utilisation rates in our premium schools are critical to our financial performance. In our experience, approximately 30% of Nord Anglia Education’s students leave our schools and approximately 26% of WCL’s students leave its schools in each academic year, primarily due to expatriate relocations and graduation. We may be unsuccessful in maintaining and increasing enrolment rates in our schools if we are unable to secure new students through our recruitment efforts. In addition, if we fail to maintain our education quality, parents may choose not to re-enrol or to remove their children from our schools. If we are unable to recruit and retain students in our premium schools, our business, prospects, results of operations and financial condition (including working capital and cashflow) could be materially and adversely affected.

40 Our financial performance depends in part on our ability to increase the profitability of our schools.

The tuition fee levels at each of our schools are among the highest in their respective markets. The factors that could have an adverse impact on our ability to maintain or increase our premium tuition fees include:

• negative perceptions of the quality of our education;

• resistance to tuition increases by tuition payers (parents and expatriates’ employers) for reasons such as difficult economic conditions or previous fee increases in recent academic years;

• reductions or discounts of tuition by other premium schools that seek to compete in our markets; and

• imposition of limitations by educational authorities on our ability to aggregate or increase tuition.

In addition, changes in expatriates’ compensation and benefits packages that alter the way in which employers pay for tuition may negatively affect our ability to maintain or increase our tuition fees. A change from direct payment from the employer to a cost of living adjustment in the form of a lump sum payment in cash to expatriate parents may cause such parents to become more price sensitive in respect of the tuition they are willing to pay. Our inability to maintain or increase our tuition could have a material and adverse effect on our business, prospects, financial conditions and results of operations.

Increased competition in the international premium schools market could reduce enrolments, increase our cost of recruiting and retaining students and teachers and put downward pressure on our tuition fees and profitability. We face competition from numerous sources, including from other schools in the locations in which we operate that target the children of expatriate and affluent local families. Some of our existing and potential competitors may be able to devote greater resources than we can to the development and construction of schools offering premium quality education and respond more quickly to changes in parents’ demands, admissions standards, market needs or new technologies. If we are unable to differentiate our schools from those of our competitors and successfully market our schools to parents and students, we could face competitive pressures that may result in a decrease in enrolments. In addition, our school enrolment may decrease and we may be required to reduce our tuition rates or increase spending in order to retain or to attract students. This could materially and adversely affect our business, prospects, results of operations and financial condition.

We may lose accreditations or permissions that we currently use to operate our schools. In order to operate our schools, we have received and maintain various accreditations from curriculum providers and permissions from examination bodies, such as the International Baccalaureate Organisation. To maintain these accreditations and permissions, we must meet standards relating to, among other things, performance, governance, institutional integrity, educational quality, staff, administrative capability, resources and financial stability. If any of our schools fail to satisfy such standards, it could lose its accreditations or permissions, which could materially and adversely affect our business, prospects, results of operations and financial condition.

41 We may suffer damage to the reputation of our Premium Schools.

Our reputation could be adversely affected under many circumstances, including the following:

• members of our staff behave or are perceived to behave inappropriately or illegally;

• members of our staff fail to appropriately supervise children under their care;

• we fail to conduct proper checks on our staff who come into contact with children or vulnerable adults;

• there are accidents, epidemics or other events that adversely affect students in our schools;

• we lose a licence, permit, accreditation or other authorisation to operate a school;

• poor quality operators use names that create confusion with our schools;

• we do not maintain consistent quality in teaching in our premium schools;

• the curricula in our schools are not perceived as being sufficiently high quality;

• our school facilities do not meet the standards expected by parents and students of a premium schools operator; • we close one or more of our schools; • we are the victim of fraudulent use of our brand/school name which damages our reputation; and • we become subject to litigation or other legal proceedings relating to any of the above or other matters. The occurrence of one or more of the above events could result in a material adverse effect and could be more broadly associated with our brand and influence the way our schools are viewed not only by our customers, but also by other constituencies in the education sector and the general public. In addition, under certain circumstances damage to the reputation of one of our business divisions could also adversely affect the reputation and operations of the other business. If our reputation is adversely affected, our overall business, prospects, results of operations and financial condition could be harmed.

We may be unable to recruit, train and retain qualified and experienced principals and teaching staff. The process of hiring employees with the combination of skills and attributes required to implement our business strategy can be difficult and time-consuming. We face competition in attracting and retaining staff who possess the necessary experience and accreditation to teach at our schools. We could experience particular difficulty in recruiting principals and teachers who are willing to relocate from their home country to some of our international locations and we must provide competitive compensation packages to attract and retain qualified individuals to join our schools. In addition, some of our teachers could choose to remain at the school only for a limited period of time, which could affect our reputation in the market because of insufficient continuity. As we continue to expand and add personnel, we may face additional difficulty in maintaining consistency in the quality of the teaching staff that we recruit. If we are unable to, or are perceived to be unable to, attract and retain experienced and qualified principals and teaching staff at our schools, our business, prospects, results of operations and financial condition may be materially and adversely affected.

42 We may lose the services of members of our senior management team.

Our success depends in part on the continued skills, efforts and motivation of our officers and senior management team. We have in the past, and may in the future, experience changes in our senior management for a variety of reasons, including restructuring, medical problems, retirement and resignations. In addition, key personnel could leave us to join our competitors. Loss of the services of key members of senior management or experienced personnel may be disruptive and cause uncertainty. We depend upon the services of our executive committee members and other members of our management team who have significant experience with our company and within the education industry. If one or more members of our senior management team or key personnel are unable or unwilling to continue in their present positions, including for health, family or other personal reasons, we may not be able to replace them easily or at all. An inability to attract and retain qualified senior managers or key personnel in a timely manner could have a material and adverse effect on our business, prospects, results of operations and financial condition.

We may be unable to successfully manage our current operations and growth.

We operate a geographically diverse business, the management and growth of which involves significant risks. Such risks involve uncertainty regarding commercial terms of our leases, management of financial resources, maintenance of our operational, management and IT systems and implementation of uniform policies and standards. In addition to our recent acquisition of WCL Group, we may seek to enter new markets, either through the development of new schools or the acquisition of existing schools as part of our continuing growth strategy. Entering new markets poses challenges including cultural factors affecting that market, relationships with educational authorities, generating and applying our data analytics and metrics-based management techniques, marketing and adapting our educational approach to the demands of the local market. Further, we may have difficulty identifying, or be unable to identify, suitable sites on which to develop and open new schools. We may also be unable to obtain the required regulatory and licence approvals, secure sufficient financing or negotiate acceptable commercial terms. If any of these situations occurs, we may be unable to successfully implement our growth strategy and our business, prospects, results of operations and financial condition may be materially and adversely affected. For instance, in 2008 we opened a school in Nanxiang, a residential area in Shanghai. As part of our on-going strategic review efforts on our operations in Asia, we closed this school at the end of the 2010/2011 academic year. Where suitable, the pupils were transferred to another of our school campuses in Shanghai. While this closure did not have a material adverse impact on our business, prospects, results of operations and financial condition, we cannot be certain that any future new school developments will be successful. One of our growth strategies is to acquire existing schools and integrate them into our school network, as with our recent acquisition of WCL Group. This strategy entails significant risks, including the unavailability of suitable schools for purchase, defects in existing licences, permits or authorisations and insufficient financial or operational resources. As a result of our acquisition of WCL Group or any other schools, we may become subject to regulatory, licensing, litigation and other risks that arose prior to our acquisition. The acquisition of new schools involves other significant risks and uncertainties including, incorrect evaluation of financial performance of the school, reluctance or resistance from parents, teachers or administrators to approve of an acquisition and inability to obtain the required regulatory or licence approvals. Accordingly, there can be no assurance that any acquired school, including those of WCL Group, will be successful or profitable.

43 If we are unable to manage our current operations, our growth strategy or the risks that we may encounter in expanding our operations into new markets, our business, prospects, results of operations and financial condition may be materially and adversely affected.

If we are unable to upgrade or expand the facilities of our existing schools, they may be less attractive to students.

When seeking to upgrade or expand the facilities of our existing schools, we could experience certain difficulties, including the following:

• our properties may not have the capacity to accommodate the necessary or desired changes;

• our existing facilities may not be configured to provide for such renovations;

• the costs of renovations and expansions may be uneconomic and we may not realise the anticipated benefits of the new facilities;

• we may not be able to negotiate reasonable terms with our landlord or developer and make such changes within acceptable timeframes; and

• we may not be able to secure any amendments to the terms of the lease from our landlord that would permit us to make the investments necessary to upgrade or expand our schools.

Our inability or failure to upgrade or expand the facilities of our existing schools could prevent us from successfully implementing our growth strategy and may materially and adversely affect our business, prospects, results of operations and financial condition.

We may face termination of our leases or be unable to renew them on acceptable terms and, if we wish to relocate, may incur additional costs if we terminate a lease. In many cases, the buildings our schools occupy have undergone renovations or been custom-built to meet our requirements. If we are unable to renew our leases for our school facilities on acceptable terms or if our leases are terminated by the landlord: • we may be unable to find a new property with the amenities and in the location we require, which may lead to closure of the school; • we may have to relocate to a school in a less desirable location; • we may have to relocate to a school with facilities that do not meet our requirements; • we may incur significant costs in connection with identifying, securing and relocating to the replacement location; and • our schools may experience significant disruption in operations and, as a result, we may be unable to collect tuition fees for the period of disruption or retain students at that school. If we are unable to renew any of our leases for our school facilities on acceptable terms or if these leases are terminated, this may materially and adversely affect our business, prospects, results of operations and financial condition. In addition, terminating any of the leases for the properties in which our schools operate could be costly. Many of our leases, including leases of WCL Group, do not contain break provisions that permit us to terminate the lease prior to the expiration of the contractual term and if we wished to do so, we could be liable for the costs of

44 defaulting under the lease. In the past, we have experienced difficulty in obtaining early termination of some of our leases. If we are not able to negotiate satisfactory termination arrangements, we may not be able to relocate a school to a more desirable location within the scheduled timeframe or we may incur significant costs in doing so, which could materially and adversely affect our business, prospects, results of operations and financial condition.

If one or more of the landlords of our school properties do not perform their obligations under the terms of the lease or the landlord changes in the course of the lease, we could suffer disruptions in the operations of our schools and our costs could increase.

A good working relationship with the landlords of our school properties is fundamental to the successful operation of our schools and can also generate additional property development opportunities that support our growth. In many cases, our landlords are responsible for the maintenance of all or part of the facilities we lease. If our landlords do not maintain all or part of these facilities to the required standards, we may have to increase our expenditures to maintain the quality of the school premises. In addition, during the course of our lease, the landlord of one or more of our schools could change, for example due to its insolvency or the sale of the underlying property, and we may need to develop and establish a relationship with a new contracting party. The new landlord may have interests that conflict with ours, may be less willing to expand the school’s capacity or improve its facilities or be a less reliable counterparty in fulfilling its obligations under the terms of the lease. If an existing landlord or a new landlord does not comply with the terms of our leases for any reason, we could suffer disruptions in the operations of our schools and our costs could increase which could materially and adversely affect our business, prospects, results of operations and financial condition.

If we dispose of or close a school we could continue to suffer from problems with respect to that disposal. After we dispose of or close a school, we may fail to achieve the cost savings or other benefits that we anticipate. We could be subject to claims by the new owner, parents and educational authorities for financial liabilities related to our previous operation of the school and could also be subject to unforeseen liabilities. Our reputation may also suffer in the event we close one of our schools and parents react negatively to such closure. In addition, if a new owner does not operate the school in a way that is up to our established standard, our reputation could suffer by association, even though we no longer have any control over the operations of the institution. If this were to occur, the attitude of parents or actual and potential students of our other schools could be adversely impacted, which may damage our reputation. It may be costly for us to respond to such disputes and any liabilities that emerge or continue after the closure of a school or the termination of a contract could materially and adversely affect our current business, prospects, results of operations and financial condition.

If the pattern of payment of fees in our Premium Schools changes, this could create cash flow issues for us. Historically, the majority of our tuition fees are collected before the beginning of the first term of the academic year and the remainder is collected before the beginning of the second and third terms of the academic year. The timing of our expenses, however, may not necessarily correspond to this pattern. If we were required by regulation or as a result of market conditions to collect our fees more evenly over the course of the academic year, this would have a negative effect on our cash flow and we may require additional working capital or third party funding to finance our operations.

45 We may not have adequate protection for our intellectual property and we may infringe the intellectual property of others. We rely on trademark protection in selected foreign jurisdictions to protect our rights to the mark “Nord Anglia” and our distinctive logos and other marks associated with our services. We cannot assure you that these measures will be adequate, that we have secured, or will be able to secure, appropriate protections for all of our proprietary rights in selected foreign jurisdictions or that third parties will not infringe upon or misappropriate our trade mark and brand name. Policing the unauthorised use of our trade mark and brand name can be difficult and expensive and litigation may be necessary to enforce or protect our brand name or determine the validity and scope of the proprietary rights of others. The outcome of such potential litigation may not be in our favour and any success in litigation may not be able to adequately protect our rights. Such litigation may also be costly and divert management’s attention away from our business. In our Learning Services contracts we rely on provisions under which we assert our rights to our previously developed intellectual property and obtain rights to use intellectual property created or held by other parties within the scope of our services. In some cases, it may be difficult to distinguish between intellectual property that we had prior to the provision of services under a new contract and intellectual property developed by us during the course of providing services under that contract. We may be involved in disputes from time to time over rights and obligations concerning intellectual property, and we may not prevail in these disputes. In certain instances, we may not have obtained sufficient rights to some intellectual property we use. Third parties may raise claims against us alleging infringement or violation of their intellectual property. Some third party intellectual property rights may be extremely broad and it may not be possible for us to conduct our operations in such a way so as to avoid infringement of those intellectual property rights.

Our insurance may be inadequate or premiums may increase substantially. Our business involves an inherent risk of liability. The activities in which we engage pose risks related to the health and safety of our students and other beneficiaries of our services. We currently maintain liability insurance, which we believe is adequate and consistent with industry practice. However, claims in excess of our insurance coverage or claims not covered by our insurance could arise. Furthermore, there can be no assurance that we will be able to obtain liability insurance coverage in the future on acceptable terms or at all. A successful claim against us which is not covered by or is in excess of our insurance coverage could have a material adverse effect on our business, prospects, results of operations and financial condition. Claims against us, regardless of their merit or eventual outcome, may also have a material adverse effect upon our reputation and our ability to attract or retain students. See “—We may be liable for accidents or other events that affect students in our schools and the beneficiaries of our Learning Services. Events of this kind may harm our reputation among parents and government bodies”. Any such claims may also increase the premiums payable by us for our insurance coverage.

We may be liable for accidents or other events that affect students in our schools and the beneficiaries of our Learning Services. Events of this kind may harm our reputation among parents and government bodies. The activities in which we engage pose risks related to the health and safety of our students and other beneficiaries of our services. In the event of personal injuries or accidents, we may face claims from parents, government officials or other parties alleging that we were negligent, provided inadequate supervision or were otherwise responsible for causing injury. We may also face allegations that teachers or other personnel committed unlawful acts. The occurrence, actual or alleged, of these events and others that may impact our students could expose us to financial liability or diminished reputation, even if we are not at fault. This would be especially true if the potential liability exceeded our insurance coverage.

46 A successful liability claim against us due to injuries or other harm suffered by students, employees or other people could materially and adversely affect our reputation and results of operation. Even if such a claim is unsuccessful or unwarranted, it could divert management attention from our operations, cause us to incur substantial costs in connection with defending the claim and suffer reputational harm, all of which could materially and adversely affect our business, prospects, results of operations and financial condition.

We collect and retain personal data and unauthorised disclosure of this personal data due to a systems failure or otherwise could have a damaging effect on our business. We maintain records which include personal data, such as academic and medical records, addresses, family information and other information. If the security measures we use to protect personal data are ineffective due to a systems failure or other reasons, we could be subject to liability, including for claims of invasion of privacy, impersonation, unauthorised purchases or other claims. In addition, one of our employees, independent consultants or third party contractors could, fraudulently or otherwise, misuse personal data and we could be liable for such misuse. We could incur significant expenses in connection with remedying any such security breaches, settling any resulting claims against us and providing additional protection from the threat of these breaches. In addition, any failure to protect personal information may adversely impact our ability to attract and retain students, cause our reputation to deteriorate and materially and adversely affect our business, prospects, results of operations and financial condition.

Since we operate various information technology systems in different jurisdictions, incompatibility or failure of these systems could have an adverse effect on our business. We do not have a universal information technology system in place across all the jurisdictions in which we operate. As a result, schools may have difficulty sharing information and curricula and we may have difficulties taking advantage of synergies among our different schools. These difficulties and related risks are heightened by the growth of our business, including as a result of our recent acquisition of WCL Group. We may incur greater costs and achieve fewer savings as a result of maintaining multiple information technology systems than we would if there were one information technology system operating across all our jurisdictions. These increased costs and lost opportunities for savings and synergies could have an adverse effect on our business, prospects, results of operations and financial condition.

We could incur significant defence costs and losses in connection with our involvement in litigation or other legal proceedings and may potentially become liable for the legal costs of the adverse party. From time to time, we are party to litigation proceedings in the various jurisdictions in which we operate. Litigation can be costly and time consuming and divert management resources from our operations. In the event of an adverse outcome, we could incur significant defence costs, be required to pay damages and interest to the prevailing party and, depending on the jurisdiction of the litigation, be held responsible for paying the costs of the prevailing party. See “Business— Litigation”.

We may not be able to comply with the terms and covenants under our Senior Secured Revolving Credit Facility. From time to time we have substantial outstanding indebtedness under our Senior Secured Revolving Credit Facility. See “Description of Other Material Indebtedness and Certain Financing Arrangements”.

47 If our operations deteriorate, we may not have sufficient cash flow to service borrowings under the Senior Secured Revolving Credit Facility. In addition, if our results of operations deteriorate, we may not be able to comply with certain of the terms or financial covenants included in the Senior Secured Revolving Credit Facility, which would result in a default under our existing financial indebtedness. If we are not able to make interest or principal payments on our debt, we might have to refinance our indebtedness or issue additional equity or other securities and may not be successful in those efforts or may not obtain new financing on favourable terms. In addition, our indebtedness may have adverse consequences for our business, including: • restricting our ability to make acquisitions; • causing us to make divestitures; or • preventing us from taking actions that we believe are desirable to grow our business. We may also be limited in our ability to adjust to changing market conditions and be placed at a competitive disadvantage compared to our competitors.

Exchange rate fluctuations may have a material adverse effect on our results of operations and profitability. It is our general practice to collect revenues and pay expenses in the local currency of each country in which we operate. The Chinese renminbi has an exchange rate pegged to a basket of foreign currencies primarily tied to the U.S. dollar, euro, Japanese yen and South Korean won and is allowed to float within a narrow band around the central parity managed by the People’s Bank of China. In the Middle East, substantially all of our operations have been conducted in currencies that are currently pegged (i.e., held at a fixed exchange rate) to the U.S. dollar (the Qatari riyal, Bahrain dinar, the Saudi Arabian riyal and the UAE dirham). Our operations in the United Kingdom are conducted in sterling. Elsewhere in Europe, our operations are conducted in local currencies, including the euro, the Czech crown, the Hungarian forint and the Polish zloty. The operations of our schools in Switzerland are conducted in Swiss francs. Our operations in Thailand are conducted in Thai baht. Conducting business across multiple currencies subjects us to currency fluctuation risks. In particular, fluctuations in currency exchange rates can have an impact on the translation of foreign currency-denominated amounts into U.S. dollars, which is our functional currency. In addition, fluctuations in currency exchanges could have an impact on our results of operations when we transact between foreign currencies. Conducting business in multiple currencies subjects us to exchange rate and currency risk and this could have a material adverse effect on our business and reported results.

We may become subject to taxes, penalties or additional liabilities in relation to our current and past use of independent consultants and the payment of some of our teachers. If our independent consultants are deemed to be, or deemed to have been, our employees, we could be subject to penalties and be liable for unpaid taxes, as well as unpaid employment benefits, and we would have to incur the cost of providing these consultants with such benefits going forward. In addition, in some of our European schools we make payments to teachers through an off-shore entity. We have set aside a reserve of $1.9 million in our consolidated financial statements for FY2012 in relation to this offshore payment arrangement. If the local authorities were to successfully challenge the nature of such arrangements, we could be held liable for the payment of additional taxes, social security contributions, interest and penalties, and any such payment may have a material adverse effect on our business, results of operations and financial condition.

48 The occurrence of epidemics or other adverse public heath developments, natural disasters or unanticipated catastrophic events could have an adverse material effect on our business, prospects, results of operations and financial condition.

If an epidemic or other outbreak of disease occurs, parents may withdraw their children from school to protect them from the possibility of infection, faculty and staff may become ill or avoid coming to work in order to protect themselves from the outbreak or the government may order schools to close in order to contain the epidemic or outbreak. In particular, certain Asian countries, have encountered epidemics, such as SARS, the avian flu and other influenza strains. Past epidemic outbreaks, depending on their scale, have caused different degrees of damage to the national and local economies throughout the world. Since the beginning of 2012, there have been reports of the outbreak of the viral hand, foot and mouth disease in Thailand and other neighbouring countries, including several confirmed human cases and deaths, particularly among children. A recurrence of the H1N1 flu, SARS or an outbreak of bird flu or any other epidemic in any region in which we operate or an increase in the severity or geographical spread of the viral hand, foot and mouth disease in Thailand, could have a material adverse effect on our business operations, including temporary closures of our schools. Similarly, the occurrence of natural disasters or unanticipated catastrophic events could result in material disruptions to our businesses. To the extent that any such interruption is not covered by our insurance, our business and results of operation could suffer and it may take a significant amount of time for our business to recover to pre-epidemic levels of student enrolment and revenues.

Certain facts and statistics are derived from third party sources and publications not independently verified by us, the Initial Purchasers or our respective advisors. Facts and statistics in this offering memorandum relating to macroeconomic data, market data, growth rates and other industry data are derived from private and public sources. While we have taken reasonable care to ensure that the facts and statistics presented are accurately reproduced from such sources, they have not been independently verified by us, the Initial Purchasers or our or their respective advisors and, therefore, we make no representation as to the accuracy of such facts and statistics. Due to possibly flawed or ineffective calculation and collection methods and other problems, the facts and statistics herein may be inaccurate or may not be comparable to facts and statistics produced for other purposes and should not be relied upon. Furthermore, we cannot assure you that they are stated or compiled on the same basis or with the same degree of accuracy as may be the case elsewhere. See “Industry and Other Market Data” and “Industry Overview”.

Risks Relating to the Acquisition of WCL Group

We will assume liabilities in connection with the acquisition of WCL Group and we may face significant exposure from unknown liabilities as a result of limited indemnification from the sellers. We will assume certain liabilities and obligations in connection with our purchase of WCL Group. These assumed liabilities include all obligations and liabilities under any laws caused by, arising from, incurred in connection with or relating in any way to the ownership of WCL Group. The warranties and covenants of the parties survive only for a limited period. Certain sellers will indemnify us for losses arising from their breaches of warranties and failure to perform covenants, but their liability is subject to a cap. We cannot assure you that any unknown liabilities will be discovered before the warranties or that the amount of indemnification we receive will be sufficient to cover the liabilities we assume or other losses incurred in connection with our purchase of WCL Group.

49 We may not realise the benefits we expect from our acquisition of WCL Group because of integration difficulties and other challenges. The success of our acquisition of WCL will depend in large part on our management’s ability to integrate the operations, strategies, technologies and personnel of WCL into our operations. We may fail to realise some or all of the anticipated benefits of the acquisition if integration takes longer or is more costly than expected. Our failure to meet the challenges involved in successfully integrating the operations of WCL or to otherwise realise any of the anticipated benefits of the acquisition, including additional revenue opportunities and cost synergies, could impair our operations. Other challenges may include operating in new jurisdictions and under new regulatory regimes with which we are not yet familiar.

Schools operated by WCL Group in Qatar have experienced delays in obtaining certain local licences and may face penalties, potential closure and other enforcement actions in the future. WCL Group operates four schools in Qatar, each of which is required to maintain three principal licenses: (i) a Trade License issued by the Ministry of Business and Trade, (ii) a Civil Defence Certification issued by the Civil Defence Department and (iii) an Education License issued by the Supreme Education Council. The Ministry of Business and Trade will not issue a Trade License and the Supreme Education Council will not issue an Education License to a school until it has obtained a Civil Defence Certification. The Civil Defence Department has recently increased its focus on fire safety following a major fire at a shopping centre in Doha in May 2012, which resulted in a number of fatalities, and as a result a number of schools across Qatar have had difficulty obtaining a Civil Defence Certification. As a result, three of WCL’s schools in Qatar lack the required licenses. Penalties for failing to obtain the required licenses may include civil or criminal actions, school closure and other enforcement actions. The authorities have not taken any action against WCL’s schools, and the three unlicensed schools have been working closely with the Civil Defence Department to obtain certification. Having made building modifications to improve fire safety at the request of the Civil Defence Department, we believe that all of the schools comply with applicable fire safety and other regulations. However, we cannot assure you that WCL Group will be able to obtain the required licences in Qatar in a timely manner or at all or that the authorities will not commence enforcement actions. Any enforcement actions could have a material and adverse effect on our reputation, business, prospects, results of operations and financial condition.

Risks Relating to the Jurisdictions in which We Operate

We may experience adverse changes in general economic, political and social conditions in the markets in which we operate. We conduct our business operations in China, Europe and ME/SEA where many local communities, economies and legal and administrative structures are undergoing rapid evolution. As a result, our success depends in part upon our ability to adapt to and succeed in differing economic, legal, social and political conditions. In particular, financial risks associated with our operations include risks of liquidity, inflation, devaluation, price volatility, currency convertibility and exchange rates and actual or perceived risk of country default resulting from significant deficits. Government interference in the economy in certain countries and changes in economic, political and social conditions (including, for example, significant changes to policies such as foreign exchange control and wage controls) could materially and adversely affect our business, prospects, results of operations and financial condition.

50 Uncertainties regarding the general regulatory and legal environment, particularly in China and the Middle East, could adversely affect our business. Our international operations are governed by local laws and regulations applicable to foreign investments and to foreign-owned enterprises. Our business could be adversely affected by the interpretation and enforcement of and changes in these laws and regulations. These laws and regulations often lack transparency, can be difficult to interpret and may be enforced inconsistently. China and the Middle East have not developed integrated legal systems that cover all aspects of our activities. The Chinese legal system is based in part on government policies and internal rules that may have retroactive effects and, in some cases, are not published at all. As a result, we may not be aware of any alleged violation of these policies and rules until after the alleged violation has occurred. The laws and regulations of these countries are often unclear and subject to differing regulatory interpretation. National, regional, local and other governmental bodies may issue inconsistent decisions and opinions. In particular, the laws and regulations applicable to the establishment and operation of international schools can be vague and uncertain. Regulatory agencies in China have substantial discretionary authority to implement and enforce regulations. Such implementation and enforcement is not always consistent or predictable. We cannot assure you that we will not be found to be in violation of any current or future laws and regulations in these countries, including laws and regulations relating to the ownership of our schools. Potential consequences could include the revocation of a school’s education licence, or the ownership of a school could be challenged which would cause such school to cease operations. Exposure to regulatory uncertainty could limit our legal protection and ability to comply with regulations applicable to us, which could materially and adversely affect our business, prospects, results of operations and financial condition.

Policies, laws and regulations of foreign governments, including those relating to education, could adversely affect our existing business and our potential growth. Our business is subject to the policies, laws and regulations of each jurisdiction in which we operate. These policies and regulations apply to many aspects of our business, including: • applying for, obtaining and maintaining necessary licences, permits, visas, accreditations and other authorisations for operating our schools and employing our teachers; • our ability to recruit expatriate and local students; • pricing and mechanisms for receipt of tuition fees; • employment conditions, including taxation rates and other factors related to both foreign and local staff; • the development of curricula that meet the requirements of local educational authorities; and • ownership structure, in particular policies and regulations that relate to foreign ownership. We may not be able, in part or at all, to comply with such policies, laws and regulations in each of the jurisdictions in which we operate or would like to expand our operations, or we may incur significant costs to do so. Our failure to comply or the imposition of significant compliance costs on us could materially and adversely affect our business, prospects, results of operations and financial condition.

51 BISS has not registered with the Shanghai Civil Affairs Bureau, which could subject the school to enforcement action resulting in sanctions including a suspension of our operations. Under PRC laws and regulations, civil non-enterprise entities generally are required to register with the competent Civil Affairs Bureau. Failure to do so may give rise to various types of sanctions such as warning, order for rectification and/or suspension of operations. In the past the Shanghai Education Commission has advised us not to register with the Shanghai Civil Affairs Bureau until the completion of a pilot programme under which a few international schools registered. Previously, we obtained a certificate of approval from the Shanghai Foreign Economic and Trade Commission. The Shanghai Education Commission is now satisfied with the success of the pilot programme and has asked BISS (among other international schools) to register with the Shanghai Civil Affairs Bureau. Based on this advice, BISS has now: (i) submitted the necessary papers to the Shanghai Education Commission to enable us to begin the registration process with the Shanghai Civil Affairs Bureau as a civil non-enterprise entity (which would involve filing its articles of association with the Shanghai Civil Affairs Bureau) and (ii) not applied to renew its certificate of approval from the Shanghai Foreign Economic and Trade Commission which it had previously held. We have worked under the regulatory oversight of the Shanghai Education Commission since the inception of BISS and the Shanghai Education Commission has renewed BISS’ education licence each year after completing its annual inspections including most recently in November 2012. Given the uncertainties of interpretation and implementation of relevant regulations by different authorities, we cannot assure you that BISS will be successful with its application to the Shanghai Civil Affairs Bureau. This could have a material and adverse effect on our reputation, business, prospects, results of operations and financial condition.

We may face restrictions on our ability to transfer and distribute funds. We currently transfer and distribute funds between the jurisdictions in which we operate and we expect to continue to do so in order to fund our groupwide cash and financing requirements, including servicing the Notes and other debt. To transfer funds between jurisdictions, we rely principally on cash-pooling arrangements, dividends and other distributions, inter-company loans, and the payment of administrative and management fees, royalties and licensing fees. BISS has made substantial distributions through dividends and our Beijing schools have transferred cash through consultancy services fees paid to one of our subsidiaries. In addition, we have been able to repatriate cash from China through intercompany transfers of interests in subsidiaries. Similarly, the Regent’s School in Thailand currently makes distributions through quarterly dividends. If any of the transfers or arrangements described above were found to be invalid by the relevant authorities, distributions from these schools could be discontinued and we may be required to repay amounts previously transferred.

If the PRC government finds that the structures of our schools in China do not comply with applicable PRC laws and regulations or we failed to obtain required permits or approvals, we may be unable to operate one or more of our schools in that country and may be subject to penalties. In China, the Ministry of Education regulates the education industry, and the local education commissions in the Chinese cities in which we operate have responsibility for local enforcement and oversight with respect to matters under their jurisdiction. These authorities have broad discretion in dealing with any violation of PRC laws or regulations, including any failure to obtain, maintain or comply with any required permit or approval, by our schools in China. Under the Interim Regulations Concerning the Establishment of Schools for the Children of Expatriates (the “Interim Regulations”), only foreign individuals with lawful residence in China, wholly foreign-owned enterprises and certain foreign entities duly registered or established in China may apply to establish an international school, subject to the approval of the Ministry of Education. The approval authority has been delegated to the MOE’s local counterpart at the

52 provincial level pursuant to the Decision of the State Council on the Sixth Batch of Cancelled and Amended Administrative Examination and Approval Items issued by the State Council of the PRC on 23 September 2012. An employee of Nord Anglia Education, who had lawful residence in China at the time, applied to the Ministry of Education for the establishment of BISS in 2002 as its sponsor. Since 2005, documents that we have submitted to the Shanghai Education Commission have identified as sponsor one of our wholly owned subsidiaries that does not fall within one of the categories of permitted sponsors in the Interim Regulations. To date, no challenges in this respect have been brought against the operations of BISS by local or national educational authorities. We have not directly approached the Ministry of Education on this matter and do not anticipate doing so. Pursuant to the Interim Measures for the Administration of Examination and Approval of Overseas Investment Projects, the National Development and Reform Commission (“NDRC”) requires approvals for overseas investment projects made by PRC entities. We obtained approvals from the Ministry of Commerce of the PRC and the PRC State Administration of Foreign Exchange for the intra-group transfer of our schools in Beijing to our PRC subsidiaries and were advised by our PRC counsel on such transfer that local NDRC approval was not required. If the Ministry of Education, the NDRC or other applicable PRC regulatory agencies were to find that the ownership structures of our schools do not comply with applicable PRC laws and regulations or we failed to obtain required permits or approvals, we may be unable to operate one or more of our schools in China and may be subject to penalties.

The offshore fee collection arrangements used in the past by our schools in China may have contravened PRC laws and regulations and may be subject to penalties and fines. Until the practice was discontinued in 2010, we allowed payment arrangements involving the use of offshore affiliates in order to make it easier for expatriate families to settle tuition statements in the currency of their home country. In the aggregate, these payments were less than $2 million. An additional objective was to enable BISS and BSB to participate in cash pooling arrangements comparable to those adopted elsewhere in the Company’s operations as part of the corporate treasury function. Due to the ambiguity of the applicable rules and the uncertainty of their interpretation, there is a risk that such agreements and arrangements for the collection of tuition fees offshore may have contravened certain PRC foreign exchange regulations. Sanctions could include conversion of funds back into the original currency and a fine of up to the amount transferred. If the payments and related arrangements described above are challenged by the relevant PRC authorities, we may be subject to significant penalties that could have a material and adverse impact on our business, prospects results of operations and financial condition.

If our landlords’ title to the properties and/or other legal status of the facilities we lease for our schools in China were challenged, our operations in China could be disrupted. In China, we lease school facilities for both BSB and BISS. Our landlords should have valid land use and property ownership rights with respect to such school facilities and associated land. If our landlords are not the holders of land use rights or lessees of such holders, they are required to receive full authorisation to sub-lease the relevant properties. In addition, in order to build new facilities or expand existing facilities our landlords are also required to obtain all necessary planning, building and other regulatory approvals. For three of our four schools in China there is some uncertainty as to the landlords’ land use and property ownership rights or the receipt by such landlords of all necessary regulatory approvals. For the BISS Puxi campus, although the landlord has confirmed to us that the formal lease agreements and ownership certificates have been granted, it is unclear that the respective owners have obtained all of the requisite approvals from the competent land and building administrative authority to lease these facilities to BISS. Also for the BISS Puxi campus, the landlord is in the process of obtaining the land use right associated with a grass sports field for

53 the secondary school. In Beijing, we have been advised by the landlord of BSB’s Shunyi facility that it has requested from the competent land and building administrative authority the certificate confirming its valid property ownership needed to lease that facility. With respect to BSB’s Sanlitun facility, the landlord has not provided us with a valid land use right certificate. Although we have been advised by the landlord that it is in the process of obtaining such certificate and other requisite approvals, they have not yet been obtained. The landlord has advised that the facility was built more than 30 years ago and to the knowledge of our management no enforcement action has been taken by the relevant Beijing governmental authorities with respect to the allocation of the land to the landlord, the educational use of the land and the construction approvals held by the landlord. In each of these situations, the Company has no knowledge of any sanction, claim, or investigation being contemplated by the competent authorities. However, due to the discretionary nature of regulatory enforcement in China, we cannot be certain that such action could not and will not be taken. We cannot assure you that if title to and/or other legal status of the facilities leased by BSB or BISS were challenged by the competent regulatory authorities or any third party, our landlords’ ability to perform their obligations under their leases with us would not be materially and adversely affected and our operations in China would not be disrupted. In addition, such uncertainty as to the landlords’ title to the properties may limit our ability to seek and obtain specific performance of such landlords’ obligations under their leases with us in the event of a dispute. In addition, the lease contract shall be registered with the competent construction (real estate) administrative department of the PRC within 30 days after the execution of the lease contract would violate the Administrative Measures for the Commodity House Leasing, and if not, the use of our leased properties may be challenged by third parties and the party responsible for the non-registration may be subject to make corrections within a prescribed time limit, and otherwise to a fine.

We operate three defined benefit pension schemes in the United Kingdom, that are currently in deficit. We operate three defined benefits plans in the United Kingdom: the Lifetime Pension Scheme, the Wyburn School Limited Pension & Life Assurance Scheme (1985) and the Nord Anglia Joint Pension Scheme (the “UK Defined Benefit Plans”). The Lifetime Pension Scheme is closed to future accrual, meaning new members cannot join the plan and existing members cannot build up additional entitlements within it. The other two UK Defined Benefit Plans have no active members, meaning that no employees are currently accruing benefits in those plans in respect of their on-going employment. In their place, we offer a defined contribution pension plan to our UK employees. While this closure to future accrual will reduce any future service deficit, the past service deficit in respect of benefits already accrued will not be reduced by this change. We are obliged to include reference to our defined benefit pension liability in our consolidated financial statements. As at 28 February 2013 the aggregate deficit for the UK Defined Benefit Plans was $23.8 million on an IFRS accounting basis. The last agreed actuarial valuation of the Lifetime Pension Scheme was carried out as at 31 August 2011, resulting in a deficit of £14.6 million on the scheme-specific basis. Should a wind-up trigger occur in relation to this plan, the buy-out deficit will become due and payable by the employers with a liability to the plan, and the deficit of the Lifetime Pension Scheme on a buy-out basis was £29.6 million as at 31 August 2011. The last actuarial valuation of each of the Wyburn School Limited Pension & Life Assurance Scheme (1985) and the Nord Anglia Joint Pension Scheme was carried out as at September 2010. The aggregate of the scheme-specific deficits of these plans was £0.4 million, and the aggregate of their buy-out deficits was £0.6 million.

54 As a result of these valuations, we are required to make on-going cash contributions in order to reduce the funding deficits. We have agreed with the trustees to a schedule of payments until September 2020 for the Lifetime Pension Scheme based on the 2011 valuation. This schedule begins with a payment of £1.8 million by 30 September 2013 increasing each year by 3.1% per annum until 2020, when the payment is £2.2 million. We have also agreed on a funding recovery plan with the trustees of the Wyburn School Limited Pension & Life Assurance Scheme (1985) and the Nord Anglia Joint Pension Scheme of aggregate payments of £48,300 per annum until May 2020.

A number of our subsidiary companies also participate in the Lifetime Pension Scheme, making it a multi-employer pension plan. Due to a number of these participating employers ceasing to employ any active members in the pension plan, statutory debts have become due from them to the plan. These statutory debts represent a proportion of the plan’s overall liabilities, based on the amount which would be needed to secure annuities for members, calculated with reference to the number of members each participating employer is liable for. As part of the 2011 valuation, these statutory debts have been allocated to the continuing employers in the Lifetime Pension Scheme. In addition, Nord Anglia Education Limited has provided a guarantee in respect of the obligations of the participating companies in the plan.

The ownership structure of our school in Thailand may be challenged.

Thai law requires that all school permit holders must be at minimum majority owned by Thai persons, which would include Thai corporations. The permit holder of our school in Thailand is Regent Pattaya Campus Management Co., Ltd (“RPCM”). This entity has five shareholders. Two of these shareholders are our indirect wholly owned subsidiaries holding 49% of the total shares of RPCM. The remaining three shareholders are a Thai private company and two Thai individuals holding a total of 51% of the total shares of RPCM. There can be no assurance that the interpretation of the relevant legislation by the Thai regulator will not find that the ownership structure does not comply with current legislation or that the Thai regulations governing foreign ownership of schools will not change in the future. If the ownership structure of our school in Thailand is found to be non-compliant with Thai regulations, we may be unable to operate our school in Thailand, which could materially and adversely affect our business, prospects, results of operations and financial condition.

Risks relating to insolvency in Qatar and the Qatari legal system in general. The Issuer has significant operations in the form of schools situated in Qatar, which are operated by Education Overseas Qatar LLC, which is a joint venture between Education Overseas Limited, an indirect subsidiary of the Issuer incorporated in England and Wales, and a Qatari national shareholder. Accordingly, we have significant assets situated in Qatar, which are subject to Qatari law and the jurisdiction of the Qatari courts. Qatar is a small country and has only been an independent state since 1971. Its legal system and courts are considerably less developed than in more established jurisdictions in the United States or Western Europe.

No system of binding precedent. There is no doctrine of binding precedent and decisions of the Qatari courts are not published in a systematic manner. As a result, any experience with and knowledge of prior rulings of the Qatari courts may not be a reliable basis from which to predict decisions that Qatari courts may adopt in the future. The outcome of any legal disputes remains uncertain and it is very difficult to predict with any certainty the approach that a Qatari court would be likely to take if faced with complex corporate law litigation or a question relating to the Notes.

55 The future attitude of Qatari courts regarding interest cannot be predicted. Although, under the laws of Qatar, contractual provisions for the charging and payment of interest are permissible and have been routinely enforced under Qatari law, a court applying Qatari law may not enforce such a provision either to pay interest on interest or to the extent that, on a given date, accrued but unpaid interest exceeded outstanding principal. The future attitude of Qatari courts and Qatari law regarding the payment of interest cannot be predicted. Qatari courts tend to distinguish between two different types of interest, namely (a) interest applying on loans; and (b) default interest applying in the case of a late payment. In relation to the interest payable on a loan, Qatari law does not regulate such interest expressly and the general approach of the Qatari courts is that, where an agreement between the parties provides for the payment of interest on a loan, this will be enforceable in the Qatari courts as a contractual obligation noting that, with respect to bank loans, such interest should be in compliance with applicable QCB regulations. Regarding default interest payable on a late payment, the Qatari courts generally construe such a provision to be a penalty governed by Qatari law No. 22 of 2004 (the “Civil Law”). According to the provisions of the said law, the court is entitled to decrease the amount of such interest or to decide not to apply it in the event that the courts considers that (i) the amount of such penalty is excessive; (ii) no loss has been incurred by the creditor as a result of the delay; or (iii) the creditor participated in the occurrence of the loss or in increasing it. Despite the above, the approach taken by Qatari courts toward interest in the future is subject to change.

The current insolvency regime in Qatar has not been tested by the Qatari courts. Investors should be aware that the Commercial Law No. (27) of 2006 (the “Commercial Law”) came into force in 2006 and addresses commercial affairs and entities, competition, commercial obligations and contracts, and commercial paper. The Commercial Law also provides comprehensive provisions addressing bankruptcy matters, permitting creditors to file claims against any corporate entity, except for certain professional companies and other companies that are at least majority owned by the Qatari state. To the knowledge of the Issuer, this new insolvency regime remains untested to date, and it is uncertain how it would be implemented by the courts of Qatar. There can also be no assurance that a Qatari court would compel a bankruptcy administrator to perform any of the Issuer’s obligations under the Notes or any contractual documents to which it is a party during an administration period. The Commercial Law also enables Qatari courts to defer adjudication of a company’s bankruptcy if the court decides that it is possible to improve that company’s financial position during a period (such period to be specified by the court) or if judged to be in the interest of the national economy. In the event of an insolvency situation to be determined under Qatari law, the noteholders and other security holders generally rank last behind other creditors of the company concerned.

Qatari law relating to the enforcement of arbitral awards and foreign judgments is relatively undeveloped and investors in the Notes may be unable to recover in civil proceedings for US securities laws violations. Qatar is a party to the United Nations (New York) Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (the “New York Convention”). The New York Convention was ratified by Qatar on 30 December 2002 pursuant to Decree No. 29 of 2003, with a reservation that the state will apply the Convention only to recognition and enforcement of awards made in the territory of another contracting state. The Convention entered into force in Qatar on 30 March 2003. Each of the United States and the United Kingdom is also a party to the New York Convention and therefore an arbitration award made in the United States or in any part of the United Kingdom should be enforceable in Qatar in accordance with the terms of the New York Convention. Furthermore, according to article 381 of the Civil and Commercial Procedure Law of Qatar, the provisions of the above-mentioned articles 379 and 380 shall apply

56 to the enforcement of an arbitration award issued in a foreign country and the award should be issued with respect to a matter where arbitration is allowed according to Qatari law. However, neither the United States and Qatar nor the United Kingdom and Qatar have any treaty providing for reciprocal recognition and enforcement of judgments in civil and commercial matters. Qatari legal counsel has advised that, as a matter of Qatari law, Qatari courts will enforce a judgment or arbitral award upon the same conditions as would be determined in the foreign jurisdiction for the enforcements of Qatari judgments and arbitral awards as long as (a) the subject matter was not reserved for the exclusive jurisdiction of the Qatari courts and the foreign judgment or arbitral award has been handed down by a court of competent jurisdiction or a duly constituted arbitral panel, (b) the parties to the proceedings in which the judgment or award was rendered were properly served with notice of proceedings and properly represented, (c) the judgment or award is res judicata pursuant to the law of the court which rendered the judgment or the arbitration panel which rendered the award, and (d) the foreign judgment or arbitral award does not contradict a decision or order rendered by a court in Qatar and does not violate the public policy or morals of the State. Notwithstanding the above, there can be no assurance that arbitration in connection with the Offering would protect the interests of investors to the same extent as would the United States or Qatari courts in original proceedings. In addition, many of the Issuer’s assets are located outside the United States. As a result, it may not be possible for investors to effect service of process within the United States upon the Issuer or to enforce in US courts judgments or arbitral awards against the Issuer or to enforce in Qatari courts judgments obtained in US courts or arbitral awards obtained in the United States, including judgments predicated upon the civil liability provisions of US federal securities laws. Articles 379 and 380 of the Civil and Commercial Procedure Law of Qatar set out certain conditions that must be met before a foreign court judgment may be enforced in Qatar. It may not be possible to enforce, in original actions in Qatari courts, liabilities predicated solely on US federal securities laws. These factors create greater judicial uncertainty than would be expected in certain other jurisdictions. A judgment obtained from a court in the United States or the United Kingdom will be enforceable in Qatar subject to the provisions of Article 379 and 380 of the Civil and Commercial Procedure Law of Qatar, which provides (i) in the case of Article 379, that judgments and orders pronounced in a foreign country may be ordered to be executed in Qatar upon the conditions determined in that country for the execution of Qatari judgments and orders, and (ii) in the case of Article 380, that an order for execution of a foreign judgment or order will not be made unless and until the following have been ascertained, namely that (a) the judgment or order was delivered by a competent court of the foreign jurisdiction in question; (b) the parties to the action were properly served with notice of proceedings and properly represented; (c) the judgment or order is one that is capable of being executed by the successful party to the proceedings in conformity with the laws of the foreign jurisdiction in question; and (d) the foreign judgment or order does not conflict with a previous judgment or order of a competent Qatari court and is not contrary to public policy or morality in Qatar. A Qatari court would be entitled to call for textual evidence on the laws of the relevant jurisdiction of the United States or the United Kingdom concerning the conditions that would be applicable for the execution of the judgment of a Qatari court in that jurisdiction and the Qatari courts would then be entitled to execute the judgment of the US or UK court upon those conditions. Accordingly, although a judgment obtained in the United States or the United Kingdom would be admissible as evidence in any proceedings brought in Qatar to enforce such judgment, it would still be necessary to initiate proceedings in Qatar. The possible need to re-litigate in Qatar a judgment obtained in a foreign court on the merits and the risk that the Qatari court may seek to apply Qatari law to the subject matter of such litigation may also significantly delay the enforcement of such judgment. It may not be possible to enforce, in original actions in Qatari courts, liabilities predicated solely on US federal securities laws. These factors create greater judicial uncertainty than would be expected in certain other jurisdictions.

57 The Qatari courts may not award judgment in a currency other than Qatari Riyals.

There is no certainty that a judgment in a foreign currency would be awarded by the Qatari courts in relation to a claim under the Notes or whether any judgment obtained in another jurisdiction in a foreign currency would be enforced by the Qatari courts in relation to that currency. In the event that the Qatari courts were to make an award in Qatari Riyals, the courts would not necessarily calculate the award on the basis of any conversion provisions contractually agreed between the parties. The basis of the calculation of any such award would be at the discretion of the court. Accordingly, an investor or other party involved in litigation in relation to the Notes before the Qatari court is exposed to the risk that any award or cost allocation granted by the Qatari court may, due to reasons of currency fluctuation or the methodology utilised by the court to calculate the exchange rate, be left in an inferior financial position to that in which he would have been had the Qatari court made the award or cost allocation in the relevant foreign currency.

Risks Relating to the Notes The interests of our controlling shareholder may be inconsistent with the interests of the holders of the Notes. The interests of our controlling shareholder could conflict with the interests of investors in the Notes, particularly if we encounter financial difficulties or are unable to pay our debts when due. Our controlling shareholder could cause us to pursue acquisitions or divestitures and other transactions or to make dividend payments (subject to limitations in the Indenture) or other distributions or payments, even though such transactions may involve increased risk for the holders of the Notes. Furthermore, no assurance can be given that our controlling shareholder will not sell all or any part of its shareholding at any time nor that it will not look to reduce its holdings by means of a sale to a strategic investor, an equity offering or otherwise. Certain equity offerings could lead to the exercise of our right to redeem up to 35% of the Notes. See “Description of the Notes—Optional Redemption”.

The Issuer is a holding company, and payments with respect to the Notes are structurally subordinated to liabilities, contingent liabilities and obligations of our Subsidiaries. The Issuer is a holding company with no material operations. It conducts its operations through its subsidiaries. The Notes will not be guaranteed by any of the Non-Guarantor Subsidiaries, including any current or future PRC subsidiaries. See “Description of the Notes—Brief Description of the Structure and Ranking of the Notes, the Guarantees and the Security—The Guarantees” for a list of the Non-Guarantor Subsidiaries. In addition, certain of our subsidiaries will not pledge their shares for the benefit of the holders of the Notes. Accordingly, the Issuer’s ability to pay principal and interest on the Notes and the ability of certain Guarantors to satisfy their obligations under the Guarantees will depend upon the receipt of principal and interest payments on intercompany loans and distributions of dividends from operating subsidiaries. The Issuer cannot assure you that the initial Guarantors or any subsidiaries that may become Guarantors in the future will have the funds necessary to satisfy our financial obligations under the Notes if we are unable to do so. Claims against Non-Guarantor Subsidiaries for payment under the Notes will be effectively subordinated to all existing and future obligations of the Non-Guarantor Subsidiaries (including obligations of our Non-Guarantor Subsidiaries under guarantees issued in connection with our business, contingent obligations and trade payables), and all claims of creditors of our Non-Guarantor Subsidiaries will have priority as to the assets of such entities over our claims and those of our creditors, including holders of the Notes. Our Non-Guarantor Subsidiaries generated 75.7% of our Consolidated EBITDA for the year ended 31 August 2012.

58 The Notes and the Indenture do not restrict the ability of our subsidiaries to issue certain categories of guarantees. While our subsidiaries are subject to covenants that may restrict their ability to incur additional debt, there are also a number of exceptions. In addition, certain of our secured creditors or those of any Guarantor would have priority as to our assets or the assets of such Guarantor securing the related obligations over claims of holders of the Notes. See “—Risks Relating to the Guarantees and the Collateral”.

We will have substantial indebtedness and may incur substantial additional indebtedness in the future, which could adversely affect our financial health and our ability to generate sufficient cash to satisfy our outstanding and future obligations.

After the application of the proceeds of the Additional Notes as described in this offering memorandum, we will have $490.0 million of term debt outstanding. See “Description of Other Material Indebtedness and Certain Financing Arrangements”.

Our substantial indebtedness could have important consequences to you. For example, it could:

• limit our ability to satisfy our obligations under the Notes and other debt;

• increase our vulnerability to adverse economic and industry conditions;

• restrict us from making strategic acquisitions or cause us to make nonstrategic divestitures; • expose us to the risk of increased interest rates; • require us to dedicate a substantial portion of our cash flow from operations to servicing and repaying our indebtedness, thereby reducing the availability of our cash to fund working capital, capital expenditures and other general corporate purposes; • limit our flexibility in planning for or reacting to changes in our businesses and the industry in which we operate; • place us at a competitive disadvantage compared to our competitors that have less debt; • limit our ability to borrow additional funds; and • increase the cost of additional financing. In the future, we may from time to time incur substantial additional indebtedness and contingent liabilities. Although the Indenture governing the Notes restricts us and our Restricted Subsidiaries from incurring additional debt and contingent liabilities, these restrictions are subject to important exceptions and qualifications. If we or our subsidiaries incur additional debt, the risks that we face as a result of our already substantial indebtedness and leverage could intensify. Our ability to generate sufficient cash to satisfy our outstanding and future debt obligations will depend upon our future operating performance, which will be affected by prevailing economic conditions and financial, business and other factors, many of which are beyond our control. We anticipate that our operating cash flow will be sufficient to meet our anticipated operating expenses and to service our debt obligations as they become due. However, we may not generate sufficient cash flow for these purposes. If we are unable to service our indebtedness, including the Notes, we will be forced to adopt an alternative strategy that may include reducing or delaying capital expenditures, selling assets, restructuring or refinancing our indebtedness or seeking equity capital. These strategies may not be instituted on satisfactory terms, if at all.

59 In addition, the terms of the Indenture prohibit the Issuer and its Restricted Subsidiaries from incurring additional indebtedness except in certain circumstances. The Issuer’s Restricted Subsidiaries are permitted to incur additional indebtedness if they are able to satisfy a consolidated fixed charge coverage ratio, and the Issuer and Restricted Subsidiaries are able to incur additional indebtedness pursuant to any of the exceptions to the financial ratio requirement if they meet other applicable restrictions. Our ability to incur additional indebtedness may be affected by events beyond our control. Certain of our other financing arrangements also impose operating and financial restrictions on our business. See “Description of Other Material Indebtedness and Certain Financing Arrangements”. Such restrictions in the Notes and our other financing arrangements may negatively affect our ability to react to changes in market conditions, take advantage of business opportunities, obtain future financing, fund required capital expenditures, or withstand a downturn in our business. Any of these factors could materially and adversely affect our ability to satisfy our obligations under the Notes and other debt.

The terms of the Notes permit us to make investments in Unrestricted Subsidiaries and minority owned entities. Although the Indenture governing the Notes restricts us and our Restricted Subsidiaries from making investments in Unrestricted Subsidiaries or minority joint ventures, these restrictions are subject to important exceptions and qualifications.

The Issuer may not be able to repurchase the Notes upon a Change of Control. Upon the occurrence of certain events constituting a Change of Control (as defined in the Indenture), the Issuer is required to offer to repurchase all outstanding Notes at a purchase price in cash equal to 101% of the principal amount thereof on the date of purchase plus accrued and unpaid interest to the date of purchase. See “Description of the Notes—Certain Covenants— Change of Control”. If a Change of Control were to occur, we cannot assure you that we would have sufficient funds available at such time to pay the purchase price of the outstanding Notes, as the source of funds for any such purchase would be our available cash or third party financing. In addition, under the Senior Secured Revolving Credit Facility, our obligation to make a prepayment, purchase, defeasance, redemption, acquisition or retirement of the Notes following the occurrence of a Change of Control is conditioned on our compliance with our obligations under the Senior Secured Revolving Credit Facility to offer to cancel the commitments and repay the participations of the lenders under the Senior Secured Revolving Credit Facility following the occurrence of a Change of Control (as defined in the Senior Secured Revolving Credit Facility) and to cancel the commitments and repay the participations of those lenders who have accepted such offer within 30 days of the occurrence of a Change of Control (as defined in the Senior Secured Revolving Credit Facility). Therefore, if a Change of Control were to occur, we cannot assure you that the restrictions in the Senior Secured Revolving Credit Facility or other then-existing contractual obligations would allow us to make such required repurchases. Under circumstances where a Change of Control would require us to offer to cancel the commitments and repay the participations of the lenders under the Senior Secured Revolving Credit Facility as described above, if we fail to comply with such obligations, such Change of Control may result in an event of default under, or acceleration of, the Senior Secured Revolving Credit Facility. In addition, under the Senior Secured Revolving Credit Facility, any voluntary prepayment, purchase, defeasance, redemption, acquisition or retirement of the Notes by us will be restricted if any event of default under the Senior Secured Revolving Credit Facility is continuing or would result from such prepayment, purchase, defeasance, redemption, acquisition or retirement. If an event constituting a Change of Control occurs at a time when we are prohibited from repurchasing Notes, we may seek the consent of the lenders under such indebtedness to the

60 repurchase of Notes or may attempt to refinance the borrowings that contain such prohibition. If we do not obtain such a consent or repay such borrowings, we will remain prohibited from repurchasing any tendered Notes. Any failure by us to offer to repurchase Notes would constitute a default under the Indenture, which would, in turn, constitute a default under the Senior Secured Revolving Credit Facility.

Finally, the definition of “Change of Control” for purposes of the Indenture does not necessarily afford protection for the holders of the Notes in the event of certain highly leveraged transactions, including certain acquisitions, mergers, refinancings, restructurings or other recapitalisations, although these types of transactions could increase our indebtedness or otherwise affect our capital structure or credit ratings. The definition of “Change of Control” for purposes of the Indenture includes a disposition of “all or substantially all” of our assets.

Although there is a limited body of case law interpreting the phrase “all or substantially all”, there is no precise established definition under applicable law. Accordingly, in certain circumstances there may be a degree of uncertainty as to whether a particular transaction would involve a disposition of “all or substantially all” of our assets. As a result, it may be unclear as to whether a change of control has occurred and whether we are required to make an offer to repurchase the Notes.

Certain jurisdictions may impose withholding taxes on payments under the Guarantees or security documents or impose foreign exchange restrictions that may reduce the amount recoverable by holders of the Notes. Payments made by certain Guarantors under the Guarantees may be subject to withholding tax, the amount of which, and whether imposed at all, depends on the residency of the recipient, the location of any paying agent, the availability of double-tax treaty relief and other factors. Investors should rely on their own tax advisor’s advice with respect to the acquisition, holding, sale and redemption of the Notes. Only such advisors are in a position to consider the specific situation of the potential investor.

If we are unable to comply with the restrictions and covenants in our debt agreements or the Indenture, there could be a default under the terms of these agreements or the Indenture, which could cause repayment of our debt to be accelerated. If we are unable to comply with the restrictions and covenants in the Indenture governing the Notes, or our current or future debt obligations and other agreements, including the terms of the Senior Secured Revolving Credit Facility, there could be a default under the terms of these agreements. In the event of such a default, the holders of the relevant debt could terminate their commitments to lend to us, accelerate repayment of the debt and declare all amounts borrowed due and payable or terminate the agreements, as the case may be. Furthermore, some of our debt agreements, including the Notes and the Senior Secured Revolving Credit Facility, contain cross-acceleration or cross-default provisions. As a result, a default under one debt agreement may cause the acceleration of repayment of debt, including the Notes, or result in a default under our other debt agreements, including the Indenture. If any of these events were to occur, we cannot assure you that our assets and cash flow would be sufficient to repay in full all of our indebtedness, or that we would be able to find alternative financing. Even if we could obtain alternative financing, we cannot assure you that it would be on terms that are favourable or acceptable to us.

61 Our operations are restricted by the terms of the Notes and other debt agreements, which could limit our ability to plan for or to react to market conditions or meet our capital needs.

The Indenture and other debt agreements include a number of significant restrictive covenants. These covenants restrict, among other things, our ability, and the ability of our Restricted Subsidiaries, to:

• incur or guarantee additional indebtedness and issue disqualified or preferred stock;

• declare dividends on their capital stock or purchase or redeem capital stock;

• make investments or other specified restricted payments;

• issue or sell capital stock of Restricted Subsidiaries to third parties;

• guarantee indebtedness of Restricted Subsidiaries;

• sell assets;

• create liens;

• enter into sale and leaseback transactions;

• enter into agreements that restrict the Restricted Subsidiaries’ ability to pay dividends, transfer assets or make intercompany loans; • enter into transactions with shareholders or affiliates; and • effect a consolidation or merger. These covenants could limit our ability to plan for or react to market conditions or to meet our capital needs. Our ability to comply with these covenants may be affected by events beyond our control, and we may have to curtail some of our operations and growth plans to maintain compliance.

A trading market for the Additional Notes may not develop, and there are restrictions on resale of the Additional Notes. Although approval in-principle has been received for the listing and quotation of the Additional Notes on the Official List of the SGX-ST, we cannot assure you that we will obtain or be able to maintain a listing and quotation of the Additional Notes on the Official List of the SGX-ST, or that, if listed, a liquid trading market will develop. We have been advised that the Initial Purchasers intend to make a market in the Additional Notes, but the Initial Purchasers are not obligated to do so and may discontinue such market making activity at any time without notice. In addition, the Additional Notes are being offered pursuant to exemptions from registration under the Securities Act and, as a result, you will only be able to resell your Additional Notes in transactions that have been registered under the Securities Act or in transactions not subject to or exempt from registration under the Securities Act, which could affect the liquidity of the Additional Notes and their selling price. See “Transfer Restrictions”. We cannot predict whether an active trading market for the Additional Notes will develop or be sustained.

62 The price and trading volume of the Additional Notes may be highly volatile. Factors such as variations in our revenues, earnings and cash flows and proposals for new investments, strategic alliances or acquisitions, interest rates, fluctuations in the trading price of securities of comparable companies, government regulations and changes thereof applicable to our industry and general economic conditions could cause the price of the Additional Notes to change. Any such developments may result in large and sudden changes in the trading volume and price of the Notes. We cannot assure you that these developments will not occur in the future.

The ratings assigned to the Notes may be lowered or withdrawn in the future.

The Notes have been rated B by S&P and B3 by Moody’s. The ratings address our ability to perform our obligations under the terms of the Notes and credit risks in determining the likelihood that payments will be made when due under the Notes. A rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension or withdrawal at any time. We cannot assure you that the ratings will be confirmed or they will remain for any given period of time or that a rating will not be lowered or withdrawn entirely by the relevant rating agency if in its judgement circumstances in the future so warrant. We have no obligation to inform holders of the Notes of any such revision, downgrade or withdrawal. A suspension, reduction or withdrawal at any time of a rating assigned to the Notes may adversely affect the market price of the Notes.

Because our principal assets and the majority of our officers and directors are located outside the United States, you may have difficulties enforcing judgements obtained in the United States in the event of a default under the Notes. You may also be unable to enforce your rights under U.S. bankruptcy law. The Issuer is incorporated in England, and certain Guarantors are incorporated under the laws of the United Kingdom, Poland, Switzerland, Bahrain, Hungary, Hong Kong, Qatar and Spain. A majority of our assets are located outside the United States, and most of our officers and directors reside outside the United States. For this reason, you may encounter difficulties collecting in the United States on a judgement obtained in the United States against us or our directors or officers, including with respect to payments or defaults on the Notes. Furthermore, the enforcement outside the United States of a judgement obtained in the United States would entail additional costs and could afford us or any of our directors and officers with additional grounds for defence. This could delay enforcement of such a judgement and could prevent its enforcement altogether. Under bankruptcy laws in the United States, courts typically have jurisdiction over a debtor’s property, wherever located, including property situated in other countries. However, courts outside of the United States may not recognise a United States bankruptcy court’s jurisdiction. Accordingly, difficulties may arise in administering a United States bankruptcy case involving property located outside of the United States, and any orders or judgements of a bankruptcy court in the United States may not be enforceable outside of the United States.

The Issuer would have the option to redeem the Notes, in whole but not in part, upon certain changes in the tax laws. The Notes may be redeemed at the option of the Issuer, in whole but not in part, at a redemption price equal to 100% of their principal amount, together with accrued and unpaid interest if, subject to certain conditions, as a result of a change in tax law, the Issuer is, or on the next date on which any amount would be payable with respect to the Notes would be, required to pay Additional Amounts (as defined in the Indenture). See “Description of the Notes—Optional Redemption—Redemption upon Changes in Withholding Taxes”.

63 We will follow the applicable corporate disclosure standards for debt securities listed on the SGX-ST, which may be different from those applicable to debt securities listed on other exchanges. We will be subject to SGX-ST reporting obligations with respect to the Notes. The disclosure standards imposed by the SGX-ST may be different than those imposed by securities exchanges in other countries or regions such as the United States. As a result, the level of information that is available may not correspond to the level to which investors in the Notes are accustomed.

Risks Relating to the Guarantees and the Collateral

The Intercreditor Agreement may limit the rights of the holders of the Notes to the Collateral. The Security Agent is required to take action to enforce the Collateral in accordance with the instructions of the secured creditors given under the Intercreditor Agreement. Any enforcement action taken by the Security Agent may adversely affect our entitlement to receive proceeds from the Collateral, which will, in turn, have an adverse impact on the Issuer’s ability to fulfil its payment obligations under the Notes. Further, the Guarantor’s ability to pay under the Guarantees will be adversely affected. The ability of the holders of the Notes to enforce the Collateral is restricted under the Intercreditor Agreement, as only the Security Agent is permitted to take enforcement actions. In addition, by virtue of the instructions given to the Security Agent described above, actions may be taken with respect to the Collateral that may be adverse to you. In such event, the only remedy available to the holders of the Notes would be to sue for payment on the Notes, the Guarantees and the Collateral. For a description on the Intercreditor Agreement, see “Description of the Notes—Intercreditor Agreement”. Security over the Collateral will not be granted directly to the holders of the Notes, and the Collateral will generally be shared with creditors under certain other financings. In addition, the lenders under the Senior Secured Revolving Credit Facility and certain hedging counterparties will have priority over the holders of the Notes with respect to proceeds from the Collateral. Security over the Collateral for the obligations of the Issuer under the Notes and the Indenture will not be granted directly to the holders of the Notes but will be granted only in favour of the Security Agent on behalf of the Trustee of the holders of the Notes and the Security Agent. As a consequence, holders of the Notes will not have direct security and will not be entitled to take enforcement action with respect to the security for the Notes, except through the Security Agent, which has agreed to apply any proceeds of enforcement on such security towards such obligations. See “Limitations on Validity and Enforceability of the Guarantees and Security Interests and Certain Insolvency Law Considerations”. Pursuant to the terms of the Intercreditor Agreement, the lenders under the Senior Secured Revolving Credit Facility, certain hedge counterparties, the Trustee, the Security Trustee and the agent under the Senior Secured Revolving Credit Facility have a prior claim to the proceeds of the Collateral, and therefore none of the value of the Collateral may be available to satisfy the claims of holders of the Notes. See “Description of Other Material Indebtedness and Certain Financing Arrangements—Intercreditor Agreement”. The Indenture also permits us to enter into certain future financings, and creditors under those future financings may share the Collateral pari passu with the holders of the Notes. See “Description of the Notes—Certain Covenants—Additional Intercreditor Agreement” for a further discussion of the sharing of the Collateral with future financings. If creditors under future financings opt to share the Collateral under the Intercreditor Agreement, a smaller portion of the proceeds from the Collateral will be available to satisfy the claims of the holders of the Notes, which could have a material adverse effect on the ability of the holders of the Notes to recover sufficient proceeds to satisfy their claims under the Notes.

64 The Guarantees may be challenged under applicable insolvency or fraudulent transfer laws, which could impair the enforceability of the Guarantees. In addition, the pledge of certain Collateral may in some circumstances be voidable.

Under bankruptcy laws, fraudulent transfer laws, insolvency or unfair preference or similar laws in Central Europe and other jurisdictions where future Guarantors may be established or where insolvency proceedings may be commenced with respect to any Guarantor, a Guarantee could be voided, or claims with respect to a Guarantee could be subordinated to all other debts of that Guarantor if, among other things, the Guarantor, at the time it incurred the indebtedness evidenced by, or when it gives, its guarantee:

• incurred the debt with the intent to hinder, delay or defraud creditors or was influenced by a desire to put the beneficiary of the Guarantee in a position which, in the event of the Guarantor’s insolvency, would be better than the position the beneficiary would have been in had the Guarantee not been given; • received less than reasonably equivalent value or fair consideration for the incurrence of such Guarantee; • was made within two years preceding the declaration of bankruptcy, if the value of the obligation performed or entered into by the debtor exceeds by more than one-quarter of the value of what has been given or promised in exchange to it; • was aimed to satisfy the requests of payment of creditors, made by the debtor within one year preceding the declaration of bankruptcy, by non-ordinary means of payment; • was insolvent or rendered insolvent by reason of such incurrence; • was engaged in a business or transaction for which the Guarantor’s remaining assets constituted unreasonably small capital; or • intended to incur, or believed that it would incur, debts beyond its ability to pay such debts as they mature. The measure of insolvency for purposes of the foregoing will vary depending on the laws of the jurisdiction which are being applied. Generally, a Guarantor would be considered insolvent at a particular time if it were unable to pay its debts as they fell due or if the sum of its debts was then greater than all of its property at a fair valuation or if the present fair saleable value of its assets was then less than the amount that would be required to pay its probable liabilities with respect to its existing debt as it became absolute and matured. We cannot assure you that such limitation will be effective in preserving the enforceability of any of the Guarantees. In addition, a Guarantee may be subject to review under applicable insolvency or fraudulent transfer laws in certain jurisdictions or subject to a lawsuit by or on behalf of creditors of the Guarantors. In such case, the analysis set forth above would generally apply, except that the Guarantee could also be subject to the claim that, since the Guarantee was not incurred for the benefit of the Guarantor, the obligations of the Guarantor thereunder were incurred for less than reasonably equivalent value or fair consideration, and, as a result, such Guarantee would be rendered void. In an attempt to limit the applicability of insolvency and fraudulent transfer laws in certain jurisdictions, the obligations of the Guarantors under the Guarantees will be limited to the maximum amount that can be guaranteed by the applicable Guarantor without rendering the Guarantee, as it relates to such Guarantor, voidable under such applicable insolvency or fraudulent transfer laws. See “Limitations on Validity and Enforceability of the Guarantees and Security Interests and Certain Insolvency Law Considerations”. In addition, certain claims would rank above the Guarantee in case of bankruptcy of the Guarantor, such as labour and other preferential claims.

65 If a court voided a Guarantee, subordinated such Guarantee to other indebtedness of the Guarantor, or held the Guarantee unenforceable for any other reason, holders of the Notes would cease to have a claim against that Guarantor based upon such guarantee, would be subject to the prior payment of all liabilities (including trade payables) of such Guarantor, would solely be creditors of us and any Guarantor whose guarantee was not voided or held unenforceable and, had payments under the voided Guarantee already been made, would be required to repay such amounts. We cannot assure you that, in such an event, after providing for all prior claims, there would be sufficient assets to satisfy the claims of the holders of the Notes.

In addition, the pledge of the Collateral may be voidable as a preference under insolvency or fraudulent transfer or similar laws of Switzerland, Poland and Hong Kong within certain period of the creation of the pledge. Pledges of capital stock shares or quotas at future Guarantors may also be voidable as a preference under relevant insolvency or fraudulent transfer or similar laws. In addition, the pledge of certain Collateral may be voided based on the analysis set forth above.

Corporate benefit and capital maintenance laws and other limitations on the Guarantees and the security interests may adversely affect the validity and enforceability of the Guarantees and the security interests.

The laws of certain of the jurisdictions in which the Guarantors are incorporated, such as Poland, Switzerland, Hungary and Malaysia, limit the ability of the Guarantors to guarantee debt of a related company or grant security on account of a related company’s debts. These limitations arise under various provisions or principles of corporate law (and in the case of Hungary, civil law and the laws applicable to foundations) which include rules governing capital maintenance (under which the risks associated with a guarantee or grant of security on account of a parent company’s debt need to be reasonably, economically and operationally justified from the guarantor’s or grantor’s perspective), restrictions on activities undertaken, as well as financial assistance, thin capitalisation and fraudulent transfer principles. If these limitations are not observed, the Guarantees and the grant of security interests by the Guarantors could be subject to legal challenge and ultimately declared invalid. In these jurisdictions, the Guarantees will contain language limiting the amount of debt that can be guaranteed by the relevant Guarantor so that applicable local law restrictions will not be violated or to mitigate the risk of legal challenge, which could cause the Guarantee to be voidable or otherwise ineffective under applicable laws or certain of the security documents. Accordingly, enforcement of the Guarantee by a Guarantor in one of these jurisdictions or a security interest in collateral granted by a Guarantor in one of these jurisdictions is likely to be limited. In some cases, where the amount that can be guaranteed or secured is limited by reference to the net assets and legal capital of the Guarantor or by reference to the outstanding debt owed by the relevant Guarantor to an issuer under intercompany loans, that amount might have become nil or close to being nil at the time of any insolvency or enforcement. In certain jurisdictions, enforcement of a Guarantee may be subject, under certain circumstances, to defences generally available to the Guarantor. Such laws and defences may include those relating to fraudulent conveyance or transfer, voidable preference, financial assistance, corporate purpose or benefit, preservation of share capital, thin capitalisation and regulations or defences affecting the rights of creditors generally. If one or more of these laws and defences are applicable, a Guarantor may have no liability or decreased liability under its Guarantee or the collateral documents to which it is a party. There can be no assurance that the Guarantees and the security interests will not be successfully challenged, thereby affecting their validity and enforceability. See “Limitations on Validity and Enforceability of the Guarantees and Security Interests and Certain Insolvency Law Considerations”.

66 The Intercreditor Agreement may impact our ability and the ability of the Guarantors to pay amounts due under the Notes and the Guarantees and the Intercreditor Agreement may limit the rights of holders of the Notes to the Collateral.

Provided the Security Agent is indemnified and/or prefunded and/or secured to its satisfaction, it may be required to take action to enforce the Collateral in accordance with the instructions of holders of the Notes given under and in accordance with the Intercreditor Agreement. Any enforcement action taken by the Security Agent will adversely affect our entitlement to receive distributions from the Collateral, which will, in turn, have an adverse impact on our ability to fulfil our payment obligations under the Notes. Further, the Guarantors’ ability to pay under the Guarantees, will be adversely affected. The ability of holders of the Notes to enforce the Collateral is restricted under the Intercreditor Agreement, as only the Security Agent is permitted to take enforcement actions. If an Event of Default occurs under the Notes, the holders of the Notes must decide whether to take any enforcement action and thereafter, through their respective trustee or agent, subject to the satisfaction of the conditions under the Intercreditor Agreement, may instruct the Security Agent to take such enforcement action. By virtue of the instructions given to the Security Agent described above, actions may be taken in respect of the Collateral that may be adverse to holders of the Notes.

The Security Agent, acting in its capacity as such, will have such duties with respect to the Collateral pledged, charged, assigned or granted pursuant to the Intercreditor Agreement and the Security Documents. Under certain circumstances, the Security Agent may have obligations under the Security Documents the Secured Debt Documents or the Intercreditor Agreement that are in conflict with the interests of the holders of the Notes. The Security Agent will not be under any obligation to exercise any rights or powers conferred under the Intercreditor Agreement or any of the Security Documents for the benefit of the holders of the Notes, unless such holders have offered to the Security Agent indemnity or security reasonably satisfactory to the Security Agent against any loss, liability, cost or expense.

The value of the Collateral will likely not be sufficient to satisfy our obligations under the Notes and other pari passu secured indebtedness. The Collateral will consist only of the capital stock of the Guarantors and the Issuer, security in respect of certain shareholder loans made by Nord Anglia Education, Inc. to the Issuer (if and to the extent outstanding on the Closing Date), fixed and floating charges over the business assets of certain of the Guarantors, assignments in respect of certain insurance policies, contracts or claims of certain of the Guarantors and pledges over the bank accounts of certain of the Guarantors as more fully disclosed under the caption “Description of the Notes—Security”. The security interest with respect to certain Collateral will be released upon the disposition of such Collateral and any proceeds from such disposition may be applied, prior to repaying any amounts due under the Notes to make investments in properties and assets that may be required to be pledged as additional Collateral or, if such reinvestment is not made, to repay other debt, including under the Senior Secured Revolving Credit Facility, the Notes or any Pari Passu Debt (as defined in “Description of the Notes”). See “—The Intercreditor Agreement may limit the rights of the holders of the Notes to the Collateral”. The ability of the Security Agent, on behalf of the Trustee, to foreclose on the Collateral upon the occurrence of an Event of Default or otherwise, will be subject in certain instances to perfection and priority issues. Although procedures will be undertaken to support the validity and enforceability of the security interests, we cannot assure you that the Security Agent, the Trustee or holders of the Notes will be able to enforce the security interest.

67 The value of the Collateral in the event of a liquidation will depend upon market and economic conditions, the availability of buyers and similar factors. No independent appraisals of any of the Collateral have been prepared by or on behalf of us in connection with this Offering. Accordingly, we cannot assure you that the proceeds of any sale of the Collateral following an acceleration of the Notes would be sufficient to satisfy, or would not be substantially less than, amounts due and payable on the Notes. By their nature, some or all of the Collateral, in particular, the capital stock of the existing or any future Guarantors may be illiquid and may have no readily ascertainable market value. Likewise, we cannot assure you that the Collateral will be saleable or, if saleable, that there will not be substantial delays in its liquidation. Transfers, such as, without limitation, sales of, or pledges over, shares in the Swiss subsidiaries that own College Alpin Beau-Soleil and College Champittet are subject to a pre-emption right granted to the prior owner of those shares. Pursuant to the pre-emption right, the prior owner has a right of last offer upon the sale of the shares, or the sale of a holding company that holds the shares in the relevant Swiss subsidiary, which allows the prior owner to purchase the shares in the subsidiary owning the relevant school at the price (i) in case of a sale, obtained in good faith from a third party buyer, or (ii) in case of a pledge, as agreed with the prior owner of the shares (in the latter case, subject to a mechanism for independent arbitration in the case of disagreement on such price). The above right of the prior owner does not apply upon an indirect sale of the shares in such subsidiaries (e.g. upon the sale of a holding company of that subsidiary) if the sale does not concern exclusively (or materially exclusively) the exploitation of the relevant school. If the shares are pledged in connection with a third party financing, the pre-emption right is not triggered (but postponed until the realisation of the pledge), provided that (i) the prior owner is granted a pre-emption right on the same terms and triggered by the realisation of the pledge, and (ii) the price to be paid by the prior owner when exercising its pre-emptive right in the context of such realisation is either (a) the price obtained through a public auction or (b) in the absence of an auction, the price applying for the purposes of such realisation, in which case the prior owner of the shares may request the price to be determined by way of an independent arbitration. Any sale of the shares, or relevant holding company shares, must comply with these requirements, including in connection with enforcement of security over such shares. Accordingly, the right of last offer may affect the terms of any sale of the shares, including an enforcement sale in respect of this collateral. In addition, the prior owner of the shares has a right for a period of ten years from the date we acquired the Collège Alpin Beau-Soleil S.A. shares to purchase, and require us to sell, all assets and liabilities associated with the operation of Collège Alpin Beau-Soleil in the ordinary course of business, at fair market value as determined by an independent accounting firm selected by the parties, and to terminate the lease for school building of Collège Champittet, inter alia, if (i) we do not pay rent under our lease for the Collège Alpin Beau-Soleil main school building for three months or (ii) the prior owner terminates our lease of such main school building for cause, provided (amongst other things) the prior owner remains the direct or indirect owner of such main school building. The Collateral will be shared on a pari passu basis by the holders of the Notes and the lenders under the Senior Secured Revolving Credit Facility and any other creditors with respect to Pari Passu Debt (as defined in “Description of the Notes”). Accordingly, in a foreclosure on the Collateral, any foreclosure proceeds would be shared by the foregoing holders of secured indebtedness in accordance with the distribution waterfall set forth in the Intercreditor Agreement. The value of the Collateral securing the Notes and the Guarantees is unlikely to be sufficient to satisfy the Issuer’s and each of the Guarantor’s obligations under the Notes and the Guarantees,

68 and the Collateral securing the Notes and such Guarantees may be reduced or diluted under certain circumstances, including the issuance of Additional Notes and the disposition of assets comprising the Collateral, subject to the terms of the Indenture. See “—The Intercreditor Agreement may limit the rights of the holders of the Notes to the Collateral”.

Enforcing your rights as a holder of the Notes or under the Guarantees or the Collateral across multiple jurisdictions may be difficult. The Notes will be issued by the Issuer, which is incorporated under English law, and guaranteed by the initial Guarantors, which are incorporated under the laws of various jurisdictions. In the event of bankruptcy, insolvency or a similar event, proceedings could be initiated in any of these jurisdictions and in the jurisdiction of organisation of any future Guarantor of the Notes. Your rights under the Notes, the Guarantees and the Collateral granted will thus be subject to the laws of several jurisdictions, and you may not be able to enforce your rights effectively in multiple bankruptcy, insolvency and other similar proceedings. Moreover, such proceedings are typically complex and costly for creditors and often result in substantial uncertainty and delay in the enforcement of creditors’ rights. In addition, the bankruptcy, insolvency, administrative and other laws of the respective Guarantors’ jurisdictions of incorporation may be materially different from, or in conflict with, one another and those of the United States in certain areas, including creditors’ rights, priority of creditors, the ability to obtain post-petition interest and the duration of the insolvency proceeding. The application of these various laws in multiple jurisdictions could trigger disputes over which jurisdictions’ law should apply and could adversely affect your ability to enforce your rights and to collect payment in full under the Notes, the Guarantees and the Collateral.

The granting of the security interests in connection with the issuance of the Notes may create hardening periods for such security interests in accordance with the laws applicable in certain jurisdictions. The granting of security interests to secure the Notes and the Guarantees may create hardening periods for such security interests in certain jurisdictions. The applicable hardening period for these new security interests will run from the moment each new security interest has been granted or perfected. At each time, if the security interest granted or recreated were to be enforced before the end of the respective hardening period applicable in such jurisdiction, it may be declared void or ineffective and/or it may not be possible to enforce it. The same rights also apply following the issuance of the Notes in connection with the accession of further subsidiaries as additional Guarantors and the granting of security interest over their relevant assets and equity interests for the benefit of holders of the Notes. See “Limitations on Validity and Enforceability of the Guarantees and Security Interests and Certain Insolvency Law Considerations”.

There are circumstances other than repayment or discharge of the Notes under which the Collateral securing the Notes and Guarantees will be released automatically, without your consent or the consent of the Trustee. Under various circumstances, all or a portion of the Collateral may be released, including: • to enable the disposition of such Collateral to the extent not prohibited under the Indenture; • with respect to Collateral held by a Guarantor, upon the release of such Guarantor from its respective Guarantee; and • in connection with an amendment to the Indenture or the related security documents that has received the required consent.

69 In addition, the Guarantee of a Guarantor will be released in connection with a sale of such Guarantor in a transaction not prohibited by the Indenture.

Investors in the Notes may have limited recourse against the independent auditors.

See “Independent Auditors” for a description of the reports of the independent auditor of Nord Anglia Education (UK) Holdings plc, formerly Premier Education (UK) Holdco Limited, PricewaterhouseCoopers LLP, on the consolidated financial statements of Nord Anglia Education (UK) Holdings plc, formerly Premier Education (UK) Holdco Limited, for the years ended 31 August 2012, 2011 and 2010 and the reports of the independent auditor of WCL Group Limited, Grant Thornton UK LLP, on the consolidated financial statements of WCL Group Limited for the periods from 28 August 2010 to 26 August 2011 and 27 August 2011 to 31 August 2012.

In accordance with guidance issued by The Institute of Chartered Accountants in England and Wales, the reports of PricewaterhouseCoopers LLP state that: they were made solely to the members of Nord Anglia Education (UK) Holdings plc, formerly Premier Education (UK) Holdco Limited, as a body in accordance with Chapter 3 of Part 16 of the U.K. Companies Act 2006; the independent auditor’s work was undertaken so that the independent auditor might state to the members of Nord Anglia Education (UK) Holdings plc, formerly Premier Education (UK) Holdco Limited, those matters that were required to be stated to them in an auditor’s report and for no other purpose; and, to the fullest extent permitted by law, the independent auditor does not accept or assume responsibility to anyone other than Nord Anglia Education (UK) Holdings plc, formerly Premier Education (UK) Holdco Limited and its members as a body, for its audit work or the opinions it has formed. PricewaterhouseCoopers LLP’s reports were unqualified. Similarly, the reports of Grant Thornton UK LLP state that: they were made solely to the members of WCL Group Limited as a body in accordance with Chapter 3 of Part 16 of the U.K. Companies Act 2006; the independent auditor’s work was undertaken so that the independent auditor might state to the members of WCL Group Limited those matters that were required to be stated to them in an auditor’s report and for no other purpose; and, to the fullest extent permitted by law, the independent auditor does not accept or assume responsibility to anyone other than WCL Group Limited and its members as a body, for its audit work or the opinions it has formed. Grant Thornton UK LLP’s reports were unqualified. Investors in the Notes should understand these statements are intended to disclaim any liability to parties (such as the purchasers of the Additional Notes) other than Nord Anglia Education (UK) Holdings plc, formerly Premier Education (UK) Holdco Limited and its shareholders, in the case of PricewaterhouseCoopers LLP, and WCL Group Limited and its shareholders, in the case of Grant Thornton UK LLP, with respect to those reports. In the context of the offering of the Additional Notes, PricewaterhouseCoopers LLP and Grant Thornton UK LLP have reconfirmed to us that they do not intend their duty of care to extend to any party other than those to whom their reports were originally addressed. The United States Securities and Exchange Commission (the “SEC”) would not permit the language quoted in the above paragraphs to be included in a registration statement or a prospectus used in connection with an offering of securities registered under the Securities Act or in any report filed under the Exchange Act. The effect of such language is untested by a U.S. court (or any other court) and thus may or may not be effective to limit the direct liability of the auditors under U.S. Law or under any other laws to persons such as investors in the Notes.

70 USE OF PROCEEDS

We expect the net proceeds from the issue of the Additional Notes to be approximately US$175.6 million, including issuance premium of US$10.7 million and after deducting discounts, commissions and estimated expenses of US$4.4 million related to this Offering.

Of the net proceeds from the offering, we intend to use:

• US$125.0 million to repay in full our borrowings under the Bridge Loan Agreement (see “Description Of Other Material Indebtedness and Certain Financing Arrangements”); and

• US$50.6 million for general corporate purposes, including to pay for acquisitions of additional schools or to repay borrowings under our Senior Secured Revolving Credit Facility.

Pending application of the net proceeds of this Offering, we may invest a portion of such net proceeds in Cash Equivalents as defined under “Description of the Notes”.

71 CAPITALISATION AND INDEBTEDNESS The following table sets forth our consolidated borrowings and capitalisation as at 28 February 2013 on the basis stated, and adjusted to give effect to (A) the acquisition of WCL and related financings (the capital contribution and borrowings under the Bridge Loan Agreement) and the repayment of the HSBC Facility, (B) the issuance of the Additional Notes and (C) the repayment of borrowings under the Bridge Loan Agreement in full with a portion of the proceeds of this Offering. The following table should be read in conjunction with the “Use of Proceeds” section and the unaudited consolidated interim financial statements and related notes as at and for the six months ended 28 February 2013 reproduced in this offering memorandum.

As at 28 February 2013

Pro forma Actual as adjusted

(in US$ millions) (unaudited) Cash and cash equivalents(1) ...... 67.9 135.1(2)

Debt(3) Senior Secured Revolving Credit Facility ...... 0.0 0.0 Original Notes outstanding(4) ...... 325.0 325.0 Additional Notes to be issued(5) ...... — 165.0 Other loans and finance leases ...... 11.5 0.0 Total Indebtedness ...... 336.5 490.0

Equity Share capital and share premium ...... 198.6 332.0 Other reserves and retained earnings ...... (123.5) (135.3) Total equity ...... 75.1 196.7 Total capitalisation ...... 411.6 686.7

Notes (1) Excludes US$14.5 million of cash used as collateral to secure our RMB-denominated working capital facilities. This cash is included in trade and other receivables in non-current assets on our balance sheet. Pro forma cash includes (i) US$16.6 million net cash over funding of the WCL acquisition and cash on balance sheet as though the acquisition had closed on 28 February 2013 and (ii) US$50.6 million of net proceeds of the Additional Notes (total proceeds including bond issuance premium and accrued interest, following the repayment of the borrowings under the Bridge Loan Agreement in full and after deducting expected fees and expenses of US$4.4 million), pending the application of those proceeds for general corporate purposes. (2) Does not include the premium of the offering price of the Additional Notes over face value. (3) Excludes US$14.5 million of RMB-denominated working capital facilities which are collateralised with existing cash deposits. These working capital facilities are included in other interest bearing loans and borrowings on our balance sheet. Pro forma total debt includes the face value of the Original Notes and the Additional Notes. All debt owed by WCL Group was repaid at the completion of the acquisition. (4) Reflects the face value of the Original Notes. (5) Represents the face value of the Additional Notes to be issued.

72 SELECTED CONSOLIDATED FINANCIAL DATA The tables below set out the selected consolidated financial information of: • Nord Anglia Education as at and for the years ended 31 August 2010, 2011 and 2012 and as at and for the six months ended 29 February 2012 and 28 February 2013; and • WCL Group for fiscal 2011 and fiscal 2012, and as at and for the 26 weeks ended 29 February 2012 and 28 February 2013. The consolidated financial statements of Nord Anglia Education as at and for the years ended 31 August 2011 and 2012 have been prepared under IFRS and using U.S. dollar presentational currency. The consolidated financial statements of Nord Anglia Education as at and for the year ended 31 August 2010 have been prepared under UK GAAP and using GBP presentational currency. The consolidated financial statements of WCL Group for fiscal 2011 and fiscal 2012 have been prepared under UK GAAP using GBP presentational currency. The consolidated interim financial statements of Nord Anglia Education as at and for the six months ended 29 February 2012 and 28 February 2013 have been prepared in accordance with IAS 34 and using U.S. dollar presentational currency. The interim financial information has been prepared on the same basis as the consolidated historical financial information for Nord Anglia Education for the year ended 31 August 2012 and, in the opinion of management, reflects all adjustments, including recurring accruals and adjustments, necessary for a fair presentation of our financial condition and results of operations for such periods. The consolidated interim financial statements of WCL Group as at and for the 26 weeks ended 29 February 2012 and 28 February 2013 have been prepared in accordance with UK GAAP and using GBP presentational currency. The interim financial information has been prepared on the same basis as the consolidated historical financial information for WCL Group for fiscal 2012 and, in the opinion of WCL Group’s management, reflects all adjustments, including recurring accruals and adjustments, necessary for a fair presentation of its financial condition and results of operations for such periods. Results of operations for any interim period are not necessarily indicative of results to be expected in any full fiscal year. You should read the whole of this offering memorandum, including the information included under the heading “Risk Factors”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the historical financial information included elsewhere in this offering memorandum, and not rely on this selected financial information only. Nord Anglia Education’s audited financial statements prepared in accordance with UK GAAP for the year ended 31 August 2010 and IFRS for the years ended 31 August 2011 and 2012 and unaudited financial statements as at and for the six months ended 28 February 2012 and 29 February 2013 and WCL Group’s audited financial statements prepared in accordance with UK GAAP for fiscal 2011 and fiscal 2012 and unaudited financial statements as at and for the 26 weeks ended 29 February 2012 and 28 February 2013 are reproduced in the F-pages of this offering memorandum. We have re-presented Nord Anglia Education’s IFRS income statements for the years ended 31 August 2010 and 2011 in this section below in order to more adequately reflect the way management views the results of the business. Consequently, Nord Anglia Education’s income statement is presented on a function of expenses basis. However, the information has been derived from Nord Anglia Education’s income statement within our consolidated audited financial statements which is presented on a nature of expenses basis and is reproduced within the F-pages of the offering memorandum. Specifically, we have allocated (i) “direct educational costs” and “consultancy costs”, as presented in our IFRS financial statements, to “cost of sales”, and (ii) “management, administrative and support staff expenses” and “other expenses”, as presented in our IFRS financial statements, to “selling, general and administrative expenses”. A number of further reclassification adjustments have been made to more adequately represent our view of direct and indirect costs, although we have not adjusted for all items that could have been re-categorised. All the information shown is extracted from our audited financial statements and this exercise has had no impact on our operating results or net income.

73 Selected Consolidated Financial Data of Nord Anglia Education

Nord Anglia Education’s Selected Consolidated Income Statement

For the year ended 31 August For the six months ended

29 February 28 February 2010 2011 2012 2012 2013

(US$ millions) IFRS IFRS IFRS IFRS IFRS

(unaudited) (unaudited) Revenue ...... 185.9 219.3 264.6 151.5 170.3 Cost of sales ...... (86.1) (99.8) (118.4) (68.6) (77.3) Gross Profit...... 99.7 119.5 146.2 82.9 93.0

Selling, general and administrative expenses ...... (63.4) (71.8) (79.1) (41.0) (42.6) Depreciation ...... (7.9) (5.8) (8.0) (4.2) (4.2) Amortisation ...... (0.8) (2.8) (3.4) (1.7) (1.9) Impairment of goodwill ...... (41.3) (16.7) (10.7) — — Exceptional (expenses)/income . . (40.5) (9.4) 1.4 6.1 (2.4) Total expenses ...... (153.9) (106.5) (99.8) (40.8) (51.1) Operating (loss)/profit ...... (54.2) 13.0 46.4 42.1 41.9 Finance income ...... 0.7 10.1 103.0 102.6 1.2 Finance expense Shareholder loan notes accrued interest ...... (24.7) (35.5) (22.1) (21.1) — Bank loans and overdrafts ...... (16.8) (13.0) (22.9) (6.6) (19.2) Other finance expenses ...... (14.3) (3.2) (4.7) (0.8) (0.2) Total finance expense...... (55.8) (51.7) (49.7) (28.5) (19.4) Net finance (expense)/income . . (55.1) (41.6) 53.3 74.1 (18.2) Share of profit in joint venture . . . 0.1 ———— (Loss)/Profit before income tax. . . (109.1) (28.6) 99.7 116.2 23.7 Income tax expense ...... (6.7) (12.5) (16.4) (11.5) (12.3) (Loss)/Profit after income tax . . (115.7) (41.1) 83.3 104.7 11.4

74 Nord Anglia Education’s Selected Consolidated Balance Sheet

As at 31 August As at

29 February 28 February 2010 2011 2012 2012 2013

(US$ millions) IFRS IFRS IFRS IFRS IFRS

(unaudited) (unaudited) Property, plant and equipment . . . 18.6 28.4 30.3 29.8 33.1 Intangible assets...... 314.7 458.8 454.9 448.1 462.4 Deferred income tax assets ..... 4.1 5.6 6.1 4.0 6.5 Derivative financial instruments . . 0.4 0.2 — 0.1 0.0 Trade and other receivables ..... 0.5 12.1 11.3 16.3 3.0 Total non-current assets ...... 338.3 505.1 502.6 498.3 505.0

Inventories ...... 0.1 ———— Trade and other receivables ..... 35.5 47.1 47.0 33.0 50.9 Current income tax receivable . . . — — 0.3 — 0.3 Cash and cash equivalents...... 81.8 88.0 108.2 40.4 67.9 Current assets ...... 117.4 135.1 155.5 73.4 119.1

Total assets...... 455.7 640.2 658.1 571.7 624.1

Other interest-bearing loans and borrowings...... 31.4 13.0 21.8 16.8 29.9 Shareholder loans ...... — 16.4 — 17.1 — Trade and other payables...... 146.1 178.7 206.8 119.2 140.9 Provisions for other liabilities and charges ...... 1.7 3.1 3.1 2.6 0.9 Current tax liabilities ...... 3.1 3.3 5.0 5.9 7.4 Current liabilities ...... 182.3 214.5 236.7 161.6 179.1

Other interest bearing loans and borrowings...... 187.5 179.1 318.9 171.3 322.3 Shareholder loan notes...... 225.0 328.7 — 232.9 — Other non-current liabilities...... 19.0 42.7 49.4 47.4 47.6 Total non-current liabilities .... 431.5 550.5 368.3 451.6 369.9

Total liabilities...... 613.8 765.0 605.0 613.2 549.0

Total equity and liabilities ..... 455.7 640.2 658.1 571.7 624.1

75 Nord Anglia Education’s Selected Consolidated Statement of Cash Flows

For the year ended 31 August For the six months ended

29 February 28 February 2010 2011 2012 2012 2013

(US$ millions) IFRS IFRS IFRS IFRS IFRS

(unaudited) (unaudited) Cash generated from/(used in) operations ...... 62.0 56.8 74.5 (23.4) (22.0) Interest paid ...... (15.4) (10.9) (6.8) (5.0) (17.9) Tax paid ...... (7.9) (13.9) (15.9) (7.8) (10.6) Net cash from/(used in) operating activities ...... 38.7 32.0 51.8 (36.2) (50.5) Net cash used in investing activities...... (11.4) (11.6) (27.1) (5.2) (4.5) Net cash (used in)/ from financing activities ...... (10.5) (20.4) (2.2) (5.2) 10.2 Net increase/(decrease) in cash and cash equivalents ...... 16.8 — 22.5 (46.6) (44.8) Cash and cash equivalents at beginning of period ...... 66.5 81.8 88.0 88.0 108.2 Exchange (losses)/gains on cash and cash equivalent ...... (1.5) 6.2 (2.3) (1.0) 4.5 Cash and cash equivalents at end of period ...... 81.8 88.0 108.2 40.4 67.9

76 Selected Consolidated Financial Data of WCL Group

WCL’s Selected Consolidated Income Statement

For the 26 weeks ended

29 February 28 February Fiscal 2011 Fiscal 2012 2012 2013

(GBP millions) UK GAAP UK GAAP UK GAAP UK GAAP

(unaudited) Turnover ...... 41.7 57.5 28.7 32.2 Cost of sales(1) ...... (33.1) (43.4) (21.4) (23.2) Gross profit ...... 8.6 14.1 7.3 9.0 Selling, general and administrative expenses(2) ...... (2.4) (5.4) (3.5) (3.3) Depreciation(1)...... (2.3) (3.4) (1.6) (1.8) Amortisation(2)...... (1.8) (2.4) (1.2) (1.2) Impairment of goodwill ...... — — — Exceptional expenses ...... — 1.2 1.2 — Total expenses ...... (6.5) (10.0) (5.1) (6.3) Operating profit...... 2.1 4.1 2.2 2.7 Finance income...... 0.0 0.0 0.0 0.0 Finance expense Bank loans and overdrafts ...... (5.9) (7.7) (3.8) (3.8) Other finance expenses ...... (0.3) (0.6) (0.3) (0.3) Total finance expenses ...... (6.2) (8.3) (4.1) (4.1) Net finance expenses ...... (6.2) (8.3) (4.1) (4.1) Loss before income tax...... (4.1) (4.2) (1.9) (1.4) Income tax expense ...... (0.3) (0.8) (1.1) (0.9) Loss after income tax ...... (4.4) (5.0) (3.0) (2.3)

77 WCL’s Selected Consolidated Balance Sheet

As at

As at 26 As at 31 29 February 28 February August 2011 August 2012 2012 2013

(GBP millions) UK GAAP UK GAAP UK GAAP UK GAAP

(unaudited) Fixed assets Goodwill ...... 41.8 39.2 40.6 38.0 Tangible assets ...... 20.7 23.2 21.7 24.4 62.5 62.4 62.3 62.4

Current assets Debtors ...... 9.2 10.8 7.8 8.0 Cash at bank and in hand...... 12.3 13.2 8.5 12.5 21.5 24.0 16.3 20.5 Creditors: amounts falling due within one year ...... (47.0) (51.6) (41.4) (50.2) Net current liabilities ...... (25.5) (27.6) (25.1) (29.7) Total assets less current liabilities..... 37.0 34.8 37.2 32.7 Creditors: amounts falling due after more than one year ...... (52.7) (53.6) (54.6) (54.0) Provisions for liabilities ...... — (0.4) (0.6) (0.6) Net liabilities ...... (15.7) (19.2) (18.0) (21.9)

Capital and reserves Called-up equity share capital...... 0.0 0.0 0.0 0.0 Share premium account ...... 0.4 0.4 0.4 0.4 Other reserves ...... (0.3) (0.3) (0.3) (0.1) Profit and loss account...... (15.8) (19.3) (18.1) (22.2) Shareholders’ deficit ...... (15.7) (19.2) (18.0) (21.9)

78 WCL’s Selected Consolidated Statement of Cash Flows

For the 26 weeks ended

29 February 28 February Fiscal 2011 Fiscal 2012 2012 2013

(GBP millions) UK GAAP UK GAAP UK GAAP UK GAAP

(unaudited) Net cash inflow from operating activities...... 8.0 15.8 1.2 2.4

Returns on investments and servicing of finance Interest received ...... 0.0 0.0 0.0 0.0 Other financing credit / (costs) ...... (0.3) 0.0 — (0.1) Interest paid ...... (8.7) (4.0) (0.9) (0.1) Net cash (outflow) from returns on investments and servicing of finance . (9.0) (4.0) (0.9) (0.2) Taxation ...... 0.1 (1.5) (0.4) (0.0) Capital expenditure and financial investment ...... Proceeds from the sale of tangible fixed assets ...... — 2.4 2.4 — Purchase of tangible fixed assets ..... (3.9) (6.9) (3.3) (2.2) Net cash (outflow) from capital expenditure and financial investment . (3.9) (4.5) (0.9) (2.2)

Acquisitions and disposals Payment of deferred consideration .... (0.3) (0.9) — — Acquisition of subsidiary ...... (10.1) — — — Net cash (outflow) from acquisitions and disposals...... (10.4) (0.9) — —

Financing Repayment of finance ...... (2.4) (4.5) (2.8) (0.4) Proceeds from loan finance ...... 22.4 — — — Issue / (repurchase of shares) ...... (0.3) (0.0) — 0.2 Net cash (outflow)/inflow from financing ...... 19.7 (4.5) (2.8) (0.2) Increase in cash ...... 4.5 0.4 (3.8) (0.2)

79 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion in conjunction with (i) Nord Anglia Education (UK) Holdings plc’s audited consolidated financial statements as at and for the years ended 31 August 2010, 2011 and 2012 and unaudited consolidated interim financial statements as at and for the six months ended 29 February 2012 and 28 February 2013 and (ii) WCL Group’s audited consolidated financial statements for fiscal 2011 and fiscal 2012 and unaudited consolidated interim financial statements as at and for the 26 weeks ended 29 February 2012 and 28 February 2013, and in each case, the related notes thereto reproduced elsewhere in this offering memorandum.

Unless otherwise specified, the discussion below excludes the impact of the acquisition of WCL Group. The statements in this discussion regarding industry outlook, our expectations regarding our future performance, liquidity and capital resources and other non-historical statements in this discussion are forward looking statements. These forward looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in the “Risk Factors” and “Forward-Looking Statements” sections of this offering memorandum. Our actual results may differ materially from those contained in, or implied by, any forward-looking statements. For purposes of the discussion below, references to “FY2010”, “FY2011” and “FY2012” refer to the years ended 31 August 2010, 2011 and 2012, respectively. References to “H1 FY2012” and “H1 FY2013” refer to the six months ended 29 February 2012 and 28 February 2013, respectively.

Overview and History We are a leading global operator of premium schools in China, Europe and ME/SEA through our Premium Schools. Our schools educate students in kindergarten to the end of secondary school. In addition, we provide educational services to governments in the Middle East, the United Kingdom and Asia through our Learning Services. We operate in high-growth markets characterised by strong wealth creation, significant FDI and economic growth. The two main drivers of our business are increasing globalisation and a growing emphasis by parents on high quality education for their children. For the twelve months ended 28 February 2013, our Premium Schools accounted for 88.4% and 90.4% of our Adjusted Revenues and Adjusted EBITDA before central and regional expenses, respectively. Learning Services accounted for 11.6% and 9.6% of our Adjusted Revenues and Adjusted EBITDA before central and regional expenses, respectively. For the twelve months ended 28 February 2013, we generated Adjusted Revenue of US$288.0 million and Adjusted EBITDA of US$81.2 million. See “Summary—Summary Consolidated Financial and Operating Data—Nord Anglia Education’s Key Performance Indicators—Nord Anglia Education’s Segment Analysis”, “—Calculation of Nord Anglia Education’s Adjusted Revenue”, “—Calculation of Nord Anglia Education’s Adjusted EBITDA” and “—Calculation of Nord Anglia Education’s Last Twelve Months Financial Information”. In August 2008, Nord Anglia Education was acquired in a going-private transaction led by Baring Private Equity Asia. As a result of this transaction, goodwill of $332.0 million was created, arising under UK GAAP. Since our going-private transaction, we have recognised non-cash expenses associated with subsequent impairments of goodwill, in relation to the sale of our school in Abu Dhabi and reduction in value of our UK Learning Services. These impairments have been separately disclosed in our income statement.

80 The going-private transaction was funded with a combination of equity, shareholder loan notes and third-party loans. These shareholder loan notes were partly repaid using a portion of the proceeds of the Original Notes in March 2012 and the remainder of the shareholder loan notes held by Premier Education Holdings Limited were converted into ordinary equity.

Our Recent Developments

On 22 May 2013, we completed the acquisition of 100% of the share capital of WCL Group for net consideration of GBP143.0 million (US$222.2 million). We financed the acquisition and related fees and expenses through a capital contribution of US$133.4 million by our parent, Nord Anglia Education, Inc., and borrowings of US$113.9 million under the Bridge Loan Agreement. Our total borrowings under the Bridge Loan Agreement equalled US$125.0 million. We used the excess over the amount used to acquire WCL to fully repay $11.1 million outstanding under the HSBC Facility, which we had entered into in December 2012 in connection with the acquisition of our school in Thailand. See “Certain Relationships and Related Party Transactions” and “Description of Other Material Indebtedness and Certain Financing Arrangements”. We intend to repay our borrowings under the Bridge Loan Agreement in full with the proceeds of this Offering.

In connection with our acquisition of WCL, we will recognise intangible assets that may need to be amortised. See “—Critical Accounting Policies—Goodwill and Intangible Assets”. Amortisation of intangible assets will reduce our net income, but will not affect our cash flows or EBITDA.

On 21 April 2013, we entered into a definitive agreement for the development of a new purpose-built K-12 school in Dubai in the United Arab Emirates. The owner of the rights to the land will build the school to our specifications and, on completion, we will lease the school. The target date for the school opening is September 2014. We expect the school to provide capacity of approximately 1,500 places. On 15 April 2013, La Côte International School SA entered into a definitive agreement for the development of a new state-of-the-art K-12 campus in Aubonne, Switzerland. It will accommodate the students from the existing campus of the La Cote International School and will provide total capacity of approximately 840 places. On 11 April 2013, following an extensive tender process, the Hong Kong Education Bureau awarded us a vacant school in Kowloon, Hong Kong. We intend to open the school in September 2014, following a comprehensive renovation. We expect the school to serve primary and lower secondary students, grades one to eight, with a capacity of over 660 places. On 1 April 2013, we began consolidating the results of BISAD under IFRS, as we obtained effective control of BISAD from that date. We entered into a definitive agreement to acquire the 49% equity interest in BISAD owned by an affiliate of our parent in September 2012. We continue to work with the local education authority to effect the transfer of the shareholding. See “Certain Relationships and Related Party Transactions”. On 28 March 2013, Barclays Bank PLC increased its commitment under our Senior Secured Revolving Credit Facility from $30 million to $40 million. See “Description of Other Material Indebtedness and Certain Financing Arrangements”. In addition to the above recent developments, in line with Nord Anglia Education’s acquisition strategy, we are in advanced discussions for the acquisition of a limited number of single-site schools.

81 Our acquisition of WCL Group brings our total enrolment to 14,538 as at 26 May 2013. The following table presents regional enrolments for Nord Anglia Education as at 27 May 2012 and 26 May 2013 and for the combined group as at 26 May 2013.

Nord Anglia Nord Anglia Nord Anglia Education and Education Education WCL combined as at 27 May %of as at 26 May %of as at 26 May %of 2012 Total 2013 Total 2013 Total

Total ...... 7,520 100.0 9,991 100.0 14,538 100.0

Factors Affecting Our Results of Operations and Financial Condition

Macroeconomic Conditions Our results of operations are directly affected by our ability to recruit additional students in our schools, which in turn can be affected by general economic conditions in each of the countries in which we operate. As a result of the importance of education spend in the markets in which we operate and the relative resilience shown by expatriate flows during the recent difficult economic conditions, we believe our revenue and profitability are resilient to fluctuations as a result of macro-economic conditions. Total enrolment in our premium schools has grown at a CAGR of 21% from the end of FY2008 to 26 May 2013, excluding the impact of our acquisition of WCL. Of this increase in enrolment, 2,700 new student enrolments were through strategic acquisitions and 3,281 through organic growth. See “Business—Our Strengths—Robust and Highly Attractive Business Model—Resilient Performance Across Economic Cycles”.

Acquisitions We have acquired several schools over the past three years, in China, Switzerland and Thailand and we continue to look for future potential acquisition opportunities. During the periods presented, we: • acquired College Alpin Beau Soleil SA on 14 January 2011; • acquired College Champittet — Lausanne and College Champittet — Nyon on 25 February 2011; • acquired La Cote International School on 30 September 2011; and • acquired The Regent’s School, Chonburi on 1 August 2012. We may acquire schools in the future which impact our results of operations.

Currency Translation We conduct our business on a global basis in several major currencies, most notably the Chinese renminbi, Swiss franc, Polish zloty, pound sterling, U.A.E. dirham, Euro, Thai baht and Malaysian ringgit, while our reporting currency is the U.S. dollar. During the period under review, almost all of our revenue was recorded in currencies other than the U.S. dollar. Fluctuations in exchange rates between the U.S. dollar and our operating currencies affect the translation of our results and the net assets or liabilities of our overseas entities into U.S. dollars.

82 In FY2010, FY2011 and Q1 FY2013, most of our operating currencies strengthened against the U.S. dollar which positively influenced our results. In FY2012 and Q2 FY2013, most of our operating currencies except the Chinese renminbi weakened against the U.S. dollar which negatively influenced our results for this period.

Substantially all of our revenues and costs associated with our Premium Schools are denominated in the local currency of the countries in which we operate and are not denominated in U.S. dollars. We recognise translational gains and losses primarily upon the conversion of our foreign currency denominated earnings into U.S. dollars through other comprehensive income.

Increased Focus on Premium Schools

Since FY2009, we have shifted our focus toward the operation of our Premium Schools. As a result, our Premium Schools revenues, as a percentage of our total revenues, have grown significantly. For FY2010, FY2011, FY2012 and H1 FY2013, revenues from our Premium Schools represented 62.3%, 75.5%, 84.7% and 91.7% of our total Adjusted Revenues, respectively. Since FY2009 we have acquired schools in Switzerland, China and Thailand and we have also expanded capacity in our schools in China. We expect in the future to maintain our focus on the continued expansion of our Premium Schools. We have decided to reduce the size of our Learning Services operations. We are no longer bidding on new contracts and intend to gradually phase out our existing contracts.

Key Operating Metrics In addition to financial performance, we use the following key operating metrics to manage our Premium Schools: tuition fees; the number of FTEs; capacity; utilisation; and average annual revenue per student. We monitor these operating metrics on a weekly, monthly, quarterly and annual basis as we believe that they are the most reliable measures for accurately measuring and predicting the current and future profitability of our Premium Schools. Tuition Fees. Approximately 60% of our tuition fees are paid for by expatriate employers who are less sensitive to moderate pricing increases as education allowances typically represent only a small percentage of an overall expatriate’s total compensation. Self-funding expatriates and affluent local families, are also typically less sensitive to moderate price increases. As a result, we have been able to increase our tuition across our markets at an average of 4-6% p.a. over the last three years (in excess of the median rate of inflation in the markets where our schools are located), without materially impacting enrolment growth. Full-Time Equivalent Students. We monitor the number of average FTEs at any given time. The number of FTEs fluctuates throughout the academic year as new students enrol or as current students depart. Our average FTEs have grown from 4,292 in FY2009 to an average of 8,748 in H1 FY2013. This increase in FTEs has been primarily due to enrolment growth in our existing schools and acquisitions of new schools. As part of our monitoring of the number of average FTEs, we focus particular attention on the number of enquiries, visits and applications by prospective students at each of our schools and the number of applications that result in enrolments. In our experience, the ratios of enquiries to applications and of applications to enrolments are leading indicators of student enrolments. Thus, in our marketing and recruitment activities we seek to maximise the generation of enquiries, the conversion of enquiries into visits, of visits into applications and of applications into enrolments. See “Business—Marketing the Nord Anglia Education Schools—Student Recruitment”.

83 Average Capacity. We monitor our average capacity at any given time. We increased our average capacity from 5,513 places in FY2009 to 10,987 places in H1 FY2013. This increase in capacity was primarily due to the acquisition of new schools in Switzerland and Thailand and capacity expansion at our schools in China. Between FY2011 and H1 FY2013 we increased our average capacity from 8,912 to 10,987.

Utilisation. We measure utilisation at any given time. Our average utilisation increased from 73% in FY2011 to 80% in H1 FY2013. This increase was due to the acquisition of our school in Thailand and increased enrolment across our schools in China in FY2012, partially offset by reduced enrolment in Switzerland and incremental capacity additions.

Average Adjusted Revenue per Student. We calculate average Adjusted Revenue per student as total revenues from our Premium Schools for the relevant period divided by the average of the month-end FTEs throughout the calendar year. Our average Adjusted Revenue per student per region has steadily increased for the periods presented in this offering memorandum. These increases were primarily due to increased tuition fees and the acquisition of new schools with tuition fees higher than our historical average.

Principal Components of Our Results of Operations

Revenue Revenue is recognised net of indirect taxes, returns, rebates and discounts. Sales of services which have been invoiced but not yet recognised as revenue are included on the balance sheet as deferred income and accounted for within trade and other payables.

School fee income School fee income comprises tuition fees and income from ancillary sources including registration fees, examinations, school trips, bus transportation, lunch fees and the tuition fee insurance scheme. School fee income is generally recognised over the school terms from September to June and is generally payable in advance on or before the first day of each term and recognised across the months of each term. Where fees are received in advance for more than one term, the income is recognised over the months in the terms for which payment has been made. Our refund policy requires a full term’s notice for a refund. Therefore, we are entitled to a full year of tuition fees if we receive a withdrawal notice after the start of Term 2 in January.

Service contracts Learning Services contract revenue is recognised proportionally as we provide the services under each contract. Some degree of judgement is exercised where contracts have an element of revenue earned based on the delivery of contract milestones. Contract revenue and performance are regularly monitored and any revisions to estimated revenue recognition are recorded in the period in which they are identified.

Cost of Sales Cost of sales primarily represents direct educational costs and consultancy costs. Direct educational costs primarily consist of salary and benefits for school principals and teaching staff and lecturers employed in our Premium Schools and the costs of teaching materials, provision of school lunches, bus services and certain after school activities. Consultancy costs include the cost of independent consultants we use in the delivery of our Learning Services contracts.

84 Selling, General and Administrative Expenses Our selling, general and administrative expenses consist primarily of compensation and associated costs for our management, finance, human resources, marketing, education policy staff and administrative personnel at our corporate headquarters as well as regional teams in China, Switzerland, the Middle East and Central Europe. For FY2012, selling, general and administrative expenses also included our legal fees, audit fees and fees for tax advisory work. In FY2011, these fees were included in cost of sales and have been reclassified for FY2012. In addition, these expenses will include compensation and associated costs for our admissions and marketing personnel and other support staff in our schools as well as outside professional fees, property costs including the rent costs of our schools and other corporate expenses. Unrealised foreign exchange gains and losses due primarily to retranslation of currencies on our inter-company balances are also included in our selling, general and administrative expenses but are added back or deducted when calculating our Adjusted EBITDA.

Other Operating Expenses Other expenses consist primarily of amortisation and impairment charges on intangible assets, depreciation costs and other non-operating costs.

Finance Income Finance income primarily consists of interest on bank deposits.

Finance Costs Finance costs represent interest on borrowings and financial leases, shareholder loan notes and certain other miscellaneous interest costs.

Income Tax Expense Income tax expense consists of corporate income tax in the jurisdictions in which we operate as well as withholding taxes on dividends from our non-UK subsidiaries. In addition, the tax expense includes a charge or credit for deferred tax. Fluctuations in our effective tax rate are primarily attributed to changes in the operating results of our subsidiaries, which are subject to various tax rates and tax concessions in their respective jurisdictions. See “Regulation—Taxation”.

Critical Accounting Policies Critical accounting policies are those that require application of our management’s most difficult, subjective or complex judgements often as a need to make estimates about the effects of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgements. We have described below the critical accounting policies that our management believes are the most significant judgements and estimates used in the preparation of our consolidated financial statements.

Revenue Recognition We recognise revenues from our Premium Schools over the 10 months of the academic year from September to June. Hence no revenue is recognised in July or August except for some summer schools in China and Switzerland, any income earned where the academic year begins before 1 September and registration fees for new students earned and paid prior to the new financial year. This means that for the months of July and August, we normally incur an EBITDA loss as we recognise the vast majority of the revenue and direct costs of our schools over 10 months but their overheads over twelve months.

85 The revenue and costs of our Learning Services contracts and the costs of our central and regional support teams are recognised over twelve months. A degree of judgement is exercised where contracts have an element of revenue earned based on the delivery of contract milestones. Contract revenue and performance are constantly monitored and any revisions to estimated revenue recognition are recorded in the period in which they are identified.

Goodwill and Intangible Assets For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows. Intangible fixed assets that are not subject to amortisation are tested annually for impairment. Goodwill and brand name are tested for impairment but are the only intangible assets that are not subjected to amortisation. Assets that are subject to amortisation or depreciation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Intangible assets acquired as part of an acquisition of a business are capitalised separately from goodwill if those assets are identifiable and their fair value can be measured reliably. The initial identification of intangible assets requires considerable judgement in respect to the classification of the assets and in the assessment of their life. In addition, when assessing the values of the intangible assets, management is required to exercise judgement in determining the future profitability and cash flows of those assets, royalty rates, life of customer base and the appropriate weighted average cost of capital.

Pensions We maintain three defined benefit plans in the UK and similar arrangements in our schools in Switzerland and Thailand, for which we have recorded a pension liability. This liability is based upon an actuarial valuation that requires a number of assumptions including discount rate, mortality rates and actual returns on plan assets which may necessitate material adjustments to the liability in the future. The assumptions used by the actuary are the best estimates chosen from a range of possible actuarial assumptions. Details of the principal actuarial assumptions used in calculating the recognised liability for the plans are given in note 19 of the audited financial statements for FY2012 included elsewhere in this offering memorandum.

Taxation We are subject to income and other taxes in the various jurisdictions in which we operate. Judgements are required in determining the consolidated provision for income and other taxes. During the ordinary course of business, there are transactions and calculations for which the ultimate tax determination is uncertain. As a result, we recognise tax liabilities for anticipated issues arising from tax audits based on our estimates of whether additional taxes might become due. The amount of such liabilities is based on an assessment of several factors, including experience of previous tax audits and differing interpretations of local tax law. This assessment relies on estimates and assumptions on future possible events and involves a series of complex judgements. To the extent that the final outcome is different from the amounts recognised, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. The recognition of deferred tax assets is based upon whether it is probable that sufficient and suitable taxable profits will be available in the future against which the reversal of temporary timing differences can be deducted. Where the temporary differences relate to losses, the availability of the losses to offset against future forecast taxable profits is also considered. Recognition therefore involves judgement regarding the future financial performance of the particular legal entity or tax group in which the deferred tax asset has been recognised.

86 Nord Anglia Education Results of Operations

The six months ended 28 February 2013 compared to the six months ended 29 February 2012

Revenue Revenue increased 12.4% from $151.5 million in H1 FY2012 to $170.3 million in H1 FY2013. The increase was due to higher revenues from our Premium Schools, partly offset by a decrease in revenue from our Learning Services business. Revenue from Premium Schools increased 19.7% from $130.7 million in H1 FY2012 to $156.2 million in H1 FY2013. This increase was primarily due to the additional revenue in the period following the acquisition of the school in Thailand in August 2012 plus growing enrolment and revenue per FTE at our schools in China and certain schools in Europe. Revenue from Learning Services contracts decreased by 32.4% from $20.8 million in H1 FY2012 to $14.1 million in H1 FY2013. This decrease was due to reduced revenue on certain contracts in the Middle East, Malaysia and the UK, including a contract that ended in the Middle East. Nord Anglia Education has been steadily reducing the size of its Learning Services operations and is therefore no longer bidding on new contracts with the intention of gradually phasing out existing contracts.

Cost of Sales Cost of sales increased by 12.8% from $68.6 million in H1 FY2012 to $77.3 million in H1 FY2013. This increase was largely due to costs added as a result of managing the higher number of students, particularly in China, as well as the impact of our additional school in Thailand. This cost of sales increase was partially offset by a decrease in the cost of sales associated with Learning Services contracts due to the completion of certain contracts which directly reduced the number of consultants employed.

Gross Profit Gross profit increased 12.1% from $82.9 million in H1 FY2012 to $93.0 million in H1 FY2013. The gross profit margin decreased slightly from 54.8% in H1 FY2012 to 54.6% in H1 FY2013, due mainly to the marginally lower gross profit percentage of the newly acquired school in Thailand compared to the average for our other premium schools.

Selling, General and Administrative Expenses Selling, general and administrative expenses increased 3.7% from $41.0 million in H1 FY2012 to $42.6 million in H1 FY2013. This increase was due primarily to management fees of $2.3 million charged by Premier Education Holdings Limited in H1 FY2013, which were not incurred in the prior period, as well as the additional costs associated with the increase in student numbers over the previous period. These increases were offset by a $0.4 million foreign exchange gain in H1 FY2013 compared to a foreign exchange loss of $3.9 million in H1 FY2012.

Other Operating Income/(Expenses) Other operating expenses increased from a gain of $0.2 million in H1 FY2012 to an expense of $8.5 million in H1 FY2013. This was primarily due to an exceptional gain of $6.1 million in H1 FY2012 mainly relating to non-cash adjustments made to reduce the shareholder loan notes and related party balances in preparation for conversion to a PLC. The exceptional charges in H1 FY2013 of $2.4 million mainly relate to deferred consideration paid on an acquisition in Switzerland that was not provided for at the time of the acquisition and a number of other small items. There were also increased amortisation charges of $0.2 million, while depreciation charges remained in line with the prior period.

87 Finance Income Finance income decreased from $102.6 million in H1 FY2012 to $1.2 million in H1 FY2013. The significantly higher finance income in H1 FY2012 was primarily due to interest waived on shareholder loan notes in connection with the conversion to a PLC.

Finance Expense Finance expense decreased from $28.5 million in H1 FY2012 to $19.4 million in H1 FY2013. Taking into account the waiver of $19.8 million of interest, which is accounted for as finance income in H1 FY2012, finance expense in H1 FY2013 is greater due to higher principal and interest costs of the Original Notes compared with the previous bank debt.

Income Tax Expense Income tax expense increased from $11.5 million in H1 FY2012 to $12.3 million in H1 FY2013, primarily due to higher profits in China.

Profit for the Period As a result of the foregoing, profits decreased from $104.7 million in H1 FY2012 to $11.4 million in H1 FY2013.

Adjusted EBITDA Adjusted EBITDA increased 12.1% from $46.7 million in H1 FY2012 to $52.4 million in H1 FY2013 and Adjusted EBITDA as a percentage of Adjusted Revenue of 30.9% in H1 FY2013 was in line with the 31.0% in H1 FY2012.

The year ended 31 August 2012 compared to the year ended 31 August 2011

Revenue Revenue increased 20.7% from $219.3 million in FY2011 to $264.6 million in FY2012. The rise was due to increased revenue from Premium Schools, partly offset by a decrease in revenue from Learning Services. Revenue from our Premium Schools increased 41.4% from $158.8 million in FY2011 to $224.5 million in FY2012. This increase was primarily due to the acquisition of our four schools in Switzerland, increased enrolment at our schools in Beijing and Shanghai and increased tuition fees across all our schools. Between FY2011 and FY2012, our average FTEs increased from 6,482 to 7,397 and our average Adjusted Revenue per student increased from $28,800 to $30,100 due primarily to an increase in tuition fees. Revenue from Learning Services decreased 33.7% from $60.5 million in FY2011 to $40.1 million in FY2012. This decrease was largely due to the completion of certain contracts in Abu Dhabi, the UK and Saudi Arabia.

Cost of Sales Cost of sales increased by 18.6% from $99.8 million in FY2011 to $118.4 million in FY2012. This increase was primarily due to the direct costs associated with the number of teachers added as a result of the acquisition of our four schools in Switzerland and the increased student numbers at our Beijing and Shanghai schools. This cost of sales increase was partially offset by a decrease in the cost of sales associated with Learning Services due to the completion of certain contracts which directly reduced the number of consultants employed by us.

88 Gross Profit Our gross profit increased 22.3% from $119.5 million in FY2011 to $146.2 million in FY2012 resulting in a gross profit margin of 54.5% in FY2011 and 55.3% in FY2012. The increase in our gross profit margin was mainly due to the higher margin Premium Schools being a much greater percentage of the total in FY2012 compared to the prior year. We note the reclassification in FY2012 and FY2011 of certain expenses from cost of sales to selling, general and administrative expenses. See “—Principal Components of Our Results of Operations—Selling, General and Administrative Expenses”.

Selling, General and Administrative Expenses Our selling, general and administrative expenses increased by 10.2% from $71.8 million in FY2011 to $79.1 million in FY2012. This increase was primarily due to a foreign exchange loss of $4.6 million (primarily due to unrealised foreign exchange losses on intercompany loans) in FY2012 compared to a gain of $4.2 million for FY2011, the inclusion of the selling, general and administrative expenses of our schools in Switzerland for FY2012 which were acquired during FY2011 and additional costs (mainly rent) associated with the capacity expansion of our Shanghai Puxi school over the summer of 2011.

Other Operating Income/(Expenses) Our other operating expenses decreased from $34.7 million in FY2011 to $20.7 million in FY2012. This was mainly due to a reduced goodwill impairment charge of $10.7 million in FY2012 (this charge wrote off the remaining goodwill against the Learning Services) compared to a charge of $16.7 million in FY2011, increased amortisation charges from FY2011 to FY2012 of $0.6 million and an increase in depreciation of $2.2 million from FY2011 to FY2012 due mainly to the acquisition of our schools in Switzerland. These increases in other expenses were partly offset by exceptional income of $1.4 million in FY2012 compared to exceptional expenses of $9.4 million for FY2011. The gain in FY2012 primarily relates to non-cash adjustments made on the previously outstanding shareholder loan notes and related party balances in preparation for conversion of the Issuer to a PLC while the exceptional expense charged in FY2011 was primarily due to the cost of relocating our head office to Hong Kong from the UK.

Finance Income Finance income of $10.1 million for FY2011 included a one-time $9.5 million foreign exchange gain recognised on the translation of foreign currency borrowings as a result of the change in our presentational currency. Finance income for FY2012 of $103.0 million included a waiver of $101.0 million of interest on the shareholder loan notes in connection with the conversion of Nord Anglia Education to a PLC.

Finance Expenses Our finance expenses decreased 3.9% from $51.7 million in FY2011 to $49.7 million in FY2012 mainly due to the reduced interest on the shareholder loan notes of $13.4 million following the removal of all outstanding shareholder loan notes during FY2012. This saving was partly offset by the higher outstanding amount under the PLC Notes and the higher interest charged on the Notes compared to the previous bank facility.

Income Tax Expense Our income tax expense increased from $12.5 million in FY2011 to $16.4 million in FY2012, primarily due to higher profits in China and the tax due on the profits of our schools in Switzerland and Poland.

89 Loss/Profit for the Period As a result of the foregoing, we had a loss of $41.1 million in FY2011 and a profit of $83.3 million in FY2012.

Adjusted EBITDA Our Adjusted EBITDA increased 23.5% from $59.9 million in FY2011 to $74.0 million for FY2012 and Adjusted EBITDA as a percentage of Adjusted Revenue increased from 24.3% in FY2011 to 28.2% for FY2012. This improvement was primarily due to increased enrolment which filled existing capacity and increased tuition fees and the higher margin Premium Schools being a greater percentage of the total for FY2012 compared to FY2011. See “Summary Consolidated Financial and Operating Data—Nord Anglia Education’s Key Performance Indicators—Calculation of Nord Anglia Education’s Adjusted EBITDA”.

The year ended 31 August 2011 compared to the year ended 31 August 2010

Revenue Revenue increased 18.0% from $185.9 million in FY2010 to $219.3 million in FY2011. This increase was due to increased revenue from our Premium Schools which was partially offset by a decrease in revenue from our Learning Services. Revenue from our Premium Schools increased 32.4% from $119.9 million in FY2010 to $158.8 million in FY2011. This increase was primarily due to our acquisition of three schools in Switzerland and increased enrolment and tuition fees in our schools in China and Central Europe, which was partially offset by the disposal of BISAD and the closure of our Nanxiang school in Shanghai. Between FY2010 and FY2011: our average FTEs increased from 4,835 to 6,482 of which 1,222 related to the acquisition of our schools in Switzerland and our average Adjusted Revenue per student increased from $22,800 to $28,800 due to an increase in tuition fees and our acquisition of three new schools in Switzerland (where the average Adjusted Revenue per student is higher than that of our other schools). Revenue from our Learning Services decreased by 8.4% from $66.0 million in FY2010 to $60.5 million in FY2011. This decrease was due to the completion of certain of our contracts in Abu Dhabi, the UK and Saudi Arabia. This was partially offset by an increase in revenues from our contracts in Malaysia.

Cost of Sales Our cost of sales increased by 15.8% from $86.1 million for FY2010 to $99.8 million in FY2011. This increase was primarily due to the direct costs associated the number of teachers added as a result of the acquisition of three of our four schools in Switzerland and our increased enrolment of students in our schools in China. The cost of sales increase was partially offset by a decrease in the cost of sales associated with our Learning Services due to the completion of certain of our contracts which directly reduced the number of consultants employed by us.

Gross Profit Our gross profit increased 19.9% from $99.7 million in FY2010 to $119.5 million in FY2011 resulting in gross profit margins of 53.7% in FY2010 and 54.5% in FY2011. We experienced lower margins on our Learning Services contracts which was largely offset by increased margins in our Premium Schools.

90 Selling, General and Administrative Expenses

Our selling, general and administrative expenses increased by 13.2% from $63.4 million in FY2010 to $71.8 million in FY2011. This increase was primarily due to an increase in property costs of $6.4 million and other expenses of $1.7 million associated with the new schools we acquired during FY2011. This increase was partially offset by a decrease in management and support staff costs of $2.0 million as a result of the disposition of BISAD and the closure of our Nanxiang school in Shanghai.

Other Operating Expenses

Our other operating expenses decreased from $90.5 million in FY2010 to $34.7 million in FY2011. This reflects decreases in exceptional charges, impairment charges and depreciation which was partially offset by an increase in amortisation charges. Exceptional charges decreased from $40.5 million in FY2010 to $9.4 million in FY2011 as the charge in FY2010 included the cost of buying out a profit share agreement over our schools in Shanghai from a related party and professional fees relating to our proposed public fundraising efforts and the financing of the acquisition of our schools in Switzerland. The impairment charges of $41.3 million in FY2010 and $16.7 million in FY2011 were due to (i) the review of carrying values for BISAD that was subsequently sold and (ii) the UK portion of our Learning Services.

Finance Income Finance income increased from $0.7 million in FY2010 to $10.1 million in FY2011. This increase was primarily due to a one-time $9.5 million foreign exchange gain recognised on the translation of foreign currency borrowings as a result of the change in our presentational currency.

Finance Expense Our finance expense decreased 7.3% from $55.8 million in FY2010 to $51.7 million in FY2011. This decrease was due to lower interest incurred on bank loans and overdrafts of $3.8 million in FY2011. In addition, in FY2010 we recognised a one-time US$10.8 million foreign exchange loss recognised on the translation of foreign currency borrowings as a result of the change in our presentational currency to U.S. dollars. This was partially offset by an increase in accrued interest due to an additional issuance of shareholder loan notes in order to fund the acquisition of our schools in Switzerland.

Income Tax Expense Our income tax expense increased from $6.7 million in FY2010 to $12.5 million for FY2011. The tax on the profits of our newly acquired schools in Switzerland and new Learning Services contracts in Malaysia accounted for approximately $2.2 million with the remainder of this increase primarily due to higher income in China.

Loss for the Period As a result of the foregoing, our loss for the period decreased from $115.7 million in FY2010 to $41.1 million in FY2011.

91 Adjusted EBITDA

Our Adjusted EBITDA increased 32.9% from $45.1 million in FY2010 to $59.9 million in FY2011. Adjusted EBITDA was marginally lower as a percentage of Adjusted Revenue being 25.1% in FY2010 compared to 24.3% in FY2011. See “Summary Consolidated Financial and Operating Data—Nord Anglia Education’s Key Performance Indicators—Calculation of Nord Anglia Education’s Adjusted EBITDA”.

WCL Summary Results of Operations

WCL’s revenue has shown solid growth over the past few years, increasing from £41.7 million in FY2011 to £57.5 million in FY2012, a rise of £15.8 million or 37.9%. Revenue increased by £3.5 million from £28.7 million for H1 FY2012 to £32.2 million for H1 FY2013, an increase of 12.2%.

Adjusted revenue (after deducting the revenue of the Unrestricted Subsidiaries that operate the New York and Charlotte schools) increased from £40.2 million in FY2011 to £55.1 million, an increase of £14.9 million or 37.3%. Adjusted revenue for H1 FY2012 was £27.5 million compared to £30.7 million for H1 FY2013, a rise of £3.2 million or 11.6%.

Adjusted EBITDA showed an even greater improvement than adjusted revenue, reflecting the operational gearing of the business, growing from £7.5 million in FY2011 to £11.6 million in FY2012, an increase of £4.1 million or 54.7%. Adjusted EBITDA for H1 FY2012 was £6.1 million compared to £7.6 million for H1 FY2013, an increase of £1.5 million or 24.6%. The adjusted EBITDA margin improved from 18.6% in FY2011 to 21.1% in FY2012 and has continued to improve in the most recent period, rising from 22.2% in H1 FY2012 to 24.8% in H1 FY2013. The main driver of the adjusted revenue and adjusted EBITDA improvements was the growth in FTEs from acquisitions, greenfield sites and organic growth in existing schools. Average FTEs grew by 40.4% from 2,650 in FY2011 to 3,720 in FY2012 while average FTEs in H1 FY2012 were 3,612 compared to 4,384 in H1 FY2013 (4,175 excluding the Unrestricted Subsidiaries that operate the New York and Charlotte schools). This FTE growth and the fee increases of just over 2% in the past few years are the main drivers of the improvement in adjusted revenue and adjusted EBITDA.

Liquidity and Capital Resources Our on-going operations require the availability of cash to service debt, fund working capital needs, fund maintenance, capacity expansion, capital expenditure and any costs associated with the acquisition of schools (if any). We believe that our operating cash flows and available amounts under our Senior Secured Revolving Credit Facility will be sufficient to fund our working capital requirements, anticipated capital expenditures and debt service requirements for the foreseeable future. Our ability to generate sufficient cash, however, is subject to certain general economic, financial, industry, legislative, regulatory and other factors beyond our control. We intend to fund our future cash needs through a combination of our operating cash flow and our Senior Secured Revolving Credit Facility. See “Description of Other Material Indebtedness and Certain Financing Arrangements—Senior Secured Revolving Credit Facility”. We believe that our operating cash flows and available amounts under our Senior Secured Revolving Credit Facility will be sufficient to fund our working capital requirements, anticipated capital expenditures and debt service requirements for the next twelve months, although there can be no assurance that this will be the case.

92 Cash flows

The following table sets forth certain information relating to our historical cash flows:

For the year ended 31 August For the six months ended

29 February 28 February 2010 2011 2012 2012 2013

(US$ millions) IFRS IFRS IFRS IFRS IFRS

(unaudited) (unaudited) Cash generated from/(used in) operations ...... 62.0 56.8 74.5 (23.4) (22.0) Interest paid ...... (15.4) (10.9) (6.8) (5.0) (17.9) Tax paid ...... (7.9) (13.9) (15.9) (7.8) (10.6) Net cash from/(used in) operating activities ...... 38.7 32.0 51.8 (36.2) (50.5) Net cash used in investing activities...... (11.4) (11.6) (27.1) (5.2) (4.5) Net cash (used in)/ from financing activities ...... (10.5) (20.4) (2.2) (5.2) 10.2 Net increase/(decrease) in cash and cash equivalents ...... 16.8 — 22.5 (46.6) (44.8) Cash and cash equivalents at beginning of period ...... 66.5 81.8 88.0 88.0 108.2 Exchange (losses)/gains on cash and cash equivalent ...... (1.5) 6.2 (2.3) (1.0) 4.5 Cash and cash equivalents at end of period ...... 81.8 88.0 108.2 40.4 67.9

Cash flows from/(used in) operating activities Net cash used in operating activities increased from $36.2 million in H1 FY2012 to $50.5 million in H1 FY2013. The main reason for the rise was an increase in interest paid of $12.9 million from $5.0 million in H1 FY2012 compared to $17.9 million in H1 FY2013. The increase in interest paid H1 FY2013 reflects the higher interest coupon on the Original Notes compared to previous bank and other debt. Net cash generated from operating activities was $51.8 million in FY2012, primarily due to an operating profit before tax and non-cash expenses of $62.9 million and a cash inflow from working capital changes of $11.6 million, partly offset by tax paid of $15.9 million and interest paid of $6.8 million. This represents an increase of $19.8 million from the $32.0 million generated in FY2011. The main reason for the improvement in net cash generated from operations was the growth in FTE’s and hence revenue from our Premium Schools and a reduction in interest paid ($4.1 million), which was partly offset by an increase in tax paid ($2.0 million).

93 Net cash generated from operating activities was $32.0 million in FY2011. This was primarily due to an operating profit before tax and non-cash expenses of $40.1 million and cash inflow from working capital changes of $16.7 million. The improvement in cash generated from operations was due to growth in tuition receipts in line with our growth in student enrolments for the 2011/2012 academic year as well as the contribution from the schools we acquired in Switzerland and the reduced cash required to support BISAD, which we disposed of in FY2010. In addition we paid $13.9 million of taxes and $10.9 million of interest in FY2011. Our cash taxes increased in FY2011 as a result of our growth in operating profits and our cash interest expense reduced from FY2010 as a result of a reduction in the outstanding balance of secured bank loans and overdrafts and a reduction in the blended interest rate payable on these loans.

Net cash generated from operating activities was $38.7 million in FY2010. This was primarily due to a cash inflow from a decrease in working capital as a result of growth in pre-paid tuition receipts and a commensurate increase in deferred income in line with our growth in student enrolments for the 2010/2011 academic year. In addition we paid $7.9 million of taxes and $15.4 million of interest in FY2010.

Cash flows from/(used in) investing activities

Net cash used in investing activities decreased from an outflow of $5.2 million in H1 FY2012 to a $4.5 million outflow in H1 FY2013, a net change of $0.7 million. Capital expenditure was $4.5 million in H1 FY2012, increasing to $5.7 million in H1 FY2013. The H1 FY2012 cash used also included a net $1.0 million cash outflow from the acquisition of our La Cote school. No cash was expended on acquisitions in H1 FY2013. Net cash used in investing activities was $27.1 million for FY2012. This was due to the cash used in the acquisition of the La Cote School ($3.9 million) and The Regents School, Thailand ($22.1 million) offset by cash acquired on these schools of $2.9 million and $5.4 million respectively and a $1.1 million reduction in capital expenditure. Net cash used in investing activities was $11.6 million in FY2011. This was primarily due to the acquisition of property, plant and equipment of $11.8 million related to the expansion of our schools in Shanghai — Puxi, Bratislava, Budapest and general maintenance capital expenditure. Net cash used in investing activities was $11.4 million in FY2010 (under IFRS). This was primarily due to the acquisition of property, plant and equipment of $10.3 million related to the expansion of our schools in Beijing and general maintenance capital expenditure.

Cash flows from/(used in) financing activities Net cash from financing activities increased from an outflow of $5.2 million in H1 FY2012 to an inflow of $10.2 million in H1 FY2013, a change of $15.4 million. The inflow in H1 FY2013 was primarily due to proceeds from new loans, including the drawdown of the $11.5 million acquisition facility for our school in Thailand from HSBC. The outflow in H1 FY2012 was primarily due to a net repayment of borrowings. Net cash used in financing activities was $2.2 million in FY2012, This was primarily due to increased proceeds from new loans ($25.7 million) in FY2012 compared to FY2011 ($18.0 million) and payment of expenses related to issuance of the PLC Notes ($26.0 million). Net cash used in financing activities was $20.4 million in FY2011. This was primarily due to the repayment of borrowings of $50.7 million which was partially offset by the proceeds from new loans of $18.0 million, proceeds from the issuance of new shareholder loan notes of $7.4 million and the proceeds from the issuance of equity of $4.9 million.

94 Net cash used in financing activities was $10.5 million in FY2010 (under IFRS). This was primarily due to the repayment of borrowings of $11.3 million.

Capital Expenditures

Our capital expenditures relate primarily to capacity related capital expenditures and maintenance capital expenditures. We intend to fund our planned capital expenditures with existing financial resources and operating cash flow. We may also raise additional funds through debt or equity offerings or sales or other dispositions of assets in the future to finance all or a portion of our future development, acquisitions or for other purposes.

Operating Leases and Contractual Commitments

Our contractual commitments in connection with our Premium Schools relate primarily to our obligations under our long-term leases of the property upon which our schools are located. Our contractual commitments in connection with Learning Services relate primarily to performance guarantees under our Learning Services contracts.

The following table summarises our operating leases and capital commitments as at 31 August 2012.

Less than one Between one and More than five (US$ millions) year five years years Land and Buildings...... 27.0 93.5 300.0 Other ...... 0.7 0.4 0.0 Total...... 27.7 93.9 300.0

Our operating leases are payable at market rates and are not subject to any restrictions other than those that would normally be expected to apply to such leases. Agreements in respect of properties may be subject to renewal according to the landlord’s terms. There are no new terms of renewal applicable to any other operating lease agreements.

Quantitative and Qualitative Disclosures about Market Risk Market risk is the risk of loss related to adverse changes in market prices, including interest rates and foreign exchange rates, of financial instruments. We are exposed to various types of market risk, including changes in interest rates and foreign exchange rates, in the ordinary course of business. We face foreign exchange risk to the extent that our business’s revenue, costs, assets and liabilities are denominated in currencies other than the U.S. dollar. Our interest rate risk arises from changes in interest rates which may affect the cost of our financings. We do not hold or issue derivative or other financial instruments for trading purposes.

Foreign Currency Risk We have significant and expanding international operations trading in non U.S. dollar currencies. Movements in global exchange rates can cause currency exposures to our consolidated U.S. dollar financial results. Where stable currencies exist, trade is conducted in local currencies and where appropriate, borrowings are matched in that currency to mitigate the risk of exposure to our assets and liabilities from exchange rate movements. In countries of operation where currency trading zones are considered to be weaker, some transactions are conducted in U.S. dollars and euros to try to minimise exchange fluctuation risks.

95 In consideration of benefits against cost, we do not hedge our translation exposure, but will consider managing transactional exposures by using forward cover instruments where significant transactions are involved. Our Premium Schools holds significant non-U.S. dollar cash balances in overseas operations which arise from fee income and which represent a combination of working capital and trading profits. These balances are held in operations which include countries where exchange control restrictions may prevent full repatriation of funds to the UK parent undertakings. We utilise these funds through a combination of reinvestment in the expansion or improvement of existing overseas operations or by repatriation to the UK through management contracts including royalty agreements, management charges and dividends. Through these means we believe that satisfactory distribution of these funds can be achieved. For further information relating to our foreign currency risk exposure please see note 22 of our audited consolidated financial statements for FY2012.

Interest Rate Risk Our interest rate risk arises from our existing long-term borrowings. Borrowings issued at variable rates expose us to cash flow interest rate risk. Borrowings issued at fixed rates expose us to fair value interest rate risk. Our policy is to maintain approximately 50% of our variable rate secured borrowings in a position which is shielded by swap and cap arrangements. During FY2012 and FY2011, our borrowings at variable rates were denominated in U.S. dollars. For further information relating to our interest rate risk exposure please see note 22 of our audited consolidated financial statements for FY2012.

Off-Balance Sheet Arrangements We do not have any material off-balance sheet arrangements. We are sometimes required to provide bid or performance bank guarantees on certain of our Learning Service contracts. These bank guarantees provide legal evidence of our liability to our client or financial institution acting on their behalf, so that if we should default, the third party can require payment directly from the bank and we would be liable for the debt. As at 28 February 2013, the Group had $0.9 million in such guarantees.

Recent Accounting Pronouncements The Group considers that there are no relevant standards or relevant interpretations mandatory for the current accounting period that have not been applied. As of the date of authorisation of the financial statements reproduced in this offering memorandum, the following non-mandatory standards were in issue and have been endorsed by the EU. The Group has not applied these standards in the preparation of the financial statements: • IAS 19 (Amended) “Employee benefits” is effective from periods commencing on or after 1 January 2013. It eliminates the corridor approach and requires immediate recognition of all actuarial gains and losses in the other comprehensive income,immediate recognition of all past service costs and the replacement of interest cost and expected return on plan assets with a net interest amount that is calculated by applying the discount rate to the net defined benefit liability/asset. • IFRS 10 “Consolidated financial statements” is effective from periods commencing on or after 1 January 2013. It builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of the parent company. It also provides additional guidance to assist in the determination of control where it is difficult to assess.

96 • IFRS 11 “Joint arrangements” is effective from periods commencing on or after 1 January 2014. It is a more realistic reflection of joint arrangements by focusing on the rights and obligations of the arrangement rather than its legal form. There are now only two types of joint arrangement: joint operations and joint ventures.

• IFRS 12 “Disclosures of interest in other entities” is effective from periods commencing on or after 1 January 2013. It includes the disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles.

• IFRS 13 “Fair value measurement” is effective from periods commencing on or after 1 January 2013. It aims to improve consistency and reduce complexity by providing precise definition of fair value and single source of fair value measurement and disclosure requirements for use across IFRSs.

• IAS 27 (Amended) “Separate financial statements” is effective from periods commencing on or after 1 January 2013. It includes the provisions on separate financial statements that are left after the control provisions of IAS 27 have been included in the new IFRS 10.

• IAS 28 (Amended) “Associates and joint ventures” is effective from periods commencing on or after 1 January 2013. It includes the requirements for joint ventures, as well as associates, to be equity accounted following the issue of IFRS 11. • IFRS 7 (Amended) “Financial instruments: Disclosures” and IAS 32 (Amended) “Financial instruments: Presentation” are effective from 1 January 2013 and 2014 respectively. The IAS 32 amendment clarifies some of the requirements for offsetting financial assets and financial liabilities on the statement of financial position while the IFRS 7 amendment will require more extensive disclosures than are required under IFRS. As of the date of authorisation of the financial statements reproduced in this offering memorandum, the following standards were in issue but not yet effective and not yet been endorsed by the EU. The Group has not applied these standards in the preparation of the financial statements: • IFRS 9 “Financial instruments” is effective from periods commencing on or after 1 January 2015. It is the first standard issued as part of a wider project to replace IAS 39. It retains but simplifies the mixed measurement model and establishes two primary measurement categories for financial assets: i) amortised cost and ii) fair value. The basis of classification depends on the entity’s business model and the contractual cash flow characteristics of the financial asset. Management does not anticipate that the adoption of the above standards and interpretations will have a material impact on the Group’s financial statements in the period of initial application.

97 INDUSTRY OVERVIEW

Our Market Nord Anglia Education is a leading global operator of premium schools for K-12 students in China, Europe, the Middle East and South East Asia and, following the acquisition of WCL, North America. In addition to our Premium Schools, we provide educational services to governments in the Middle East, the United Kingdom and Asia as well as curriculum products to schools around the world. We operate in high-growth markets characterised by strong wealth creation, significant FDI and economic growth. The two main drivers of our business are increasing globalisation and a growing emphasis by parents on high quality education for their children.

The Premium Schools Market From time to time, we commission the Parthenon Group LLC (“Parthenon”), an education and general research consultancy, to research and compile information regarding our business and industry. Parthenon estimates that in the 2009/2010 academic year there were approximately 7,000 premium schools charging tuition fees of $10,000 or more per year, located in 90 countries, with approximately 2.2 million students. Based on this information, we estimate that these schools generated annual revenues of more than US$40 billion in the 2009/2010 academic year. Despite the large number of premium schools, the market is highly fragmented, and we believe school operators with two or more campuses constitute fewer than 10% of the total market. We believe the vast majority of schools are operated either on a “non-commercial” basis or a not-for-profit basis. The schools we refer to as “non-commercial” are mostly family-owned or operated by foundations, where operating and academic performance and increasing profitability are less frequently emphasised than in our schools. In addition, many premium school operators have historically been reluctant to add capacity, as a result of which they may be unable or unwilling to capitalise on economic opportunities when demand in their respective markets exceeds supply. The premium schools market benefits from the following characteristics and drivers that make it highly attractive, particularly to established operators:

Significant Barriers to Entry We believe that new entrants in each of our markets face significant barriers to entry, including: • the lead time to build brand recognition and reputation, both locally and globally; • the challenges faced by smaller or new school operators in securing government licences and regulatory approval, such as in China, that more established providers of education services are able to obtain; • the scarcity of real estate in the most desirable areas in various markets to establish a sizeable campus with the comprehensive and high-quality facilities expected of premium schools; • due to the substantial capital expenditure commitments faced by property developers and landlords when building premium school facilities they increasingly require tenants with a strong track record in school operation and of good financial standing; and • the tendency of students to stay enrolled in the same school until graduation or in the case of expatriate families’ children to stay enrolled in the same school at least until the expatriate parent completes his or her overseas assignment.

98 Globalisation and increasing foreign direct investment (“FDI”)

Expatriate children comprise approximately 74% of Nord Anglia Education’s and WCL’s combined student body. As a result, expatriate growth in the markets in which we operate is important to our business. For many decades, the primary driver of increased expatriate numbers has been the globalisation of the world economy.

All of the countries in which we operate premiums schools have experienced strong FDI trends over the last decade and we believe FDI is the primary driver of globalisation and increased expatriate flows. We believe globalisation and total FDI levels generally lead to an increase in the number of expatriates as international companies place more of their employees abroad to expand and manage their international operations. According to the United Nations Conference on Trade and Development, total stock of FDI inflows has grown meaningfully over the period from 2001 to 2011. For example, in our key markets over this period, the total stock of inward FDI increased by 1.4 times in the United States, by 3.1 to 3.6 times in China, Hungary and Spain, by 4.2 to 4.8 times in Thailand, the Czech Republic and Poland, by 9.0 times in Slovakia, by 13.8 times in Qatar and by 37.9 times in the UAE. According to Parthenon, total FDI stock has a significantly greater impact on expatriate numbers than annual changes in FDI. This factor would indicate stable expatriate numbers even during times of moderate incremental FDI outflows.

The following chart illustrates trends in expatriate flows and the resilience of these flows in the face of adverse social and economic conditions. The data presented is for Shanghai, which is a relatively new but growing market for expatriates.

NUMBER OF EXPATRIATES IN SHANGHAI

11-Sep Bali SARS Lehman Attacks Bombings Bankruptcy 200K

100K No. of Expats in ShanghaiExpats No. of

0K 2000 2005 2010

Source: Shanghai Statistical Yearbook, 2002-2011.

99 According to the Brookfield Global Relocation Services (“Brookfield”) report Global Relocation Trends 2012, Survey Report, 43% of total expatriates surveyed in January 2012 had accompanying children with them. In our experience, expatriate parents typically select premium schools in order to provide academic continuity for their children. For example, a British style education is available in many major cities where expatriates relocate, which enables the children of expatriates to seamlessly transfer from one school to another. This helps underpin strong and sustained demand for premium school education, particularly in countries or markets with large expatriate populations.

Importance of an English language education According to the British Council, the number of English-language learners grew from approximately 1 billion in 2000 to nearly 2 billion in 2010. We believe this is due in part to parents recognising the significant value of fluency in English, which is the international language of business and commerce. By attending schools that teach in English, children are better prepared for continuing their education in English language education institutions. We believe schools that teach primarily in English provide an excellent foundation for further education conducted in English. We believe parents are increasingly emphasising the pursuit of education in highly ranked universities as one of the main paths to career development and advancement, and obtaining quality primary and secondary education significantly enhances the likelihood of admission to such universities. In addition, the benefits of English language proficiency in the domestic job markets of non-English speaking countries are widely acknowledged and evidenced, including the ability to command higher salary levels and greater professional opportunities.

Increasing disposable personal income We believe that a key driver of increased demand from local families for premium quality K-12 education is a combination of rising absolute levels of GDP per capita providing greater disposable income to families and the predisposition of families to allocate a greater proportion of that disposable income to the education of their children. The emerging markets in which we operate have experienced significant growth as measured in terms of both national and per capita GDP. According to the World Bank, for the last decade, per capita GDP in terms of current U.S. dollars has increased five times in China, approximately three times in the Czech Republic, Hungary, Poland, Slovakia, Thailand and Qatar, approximately two times in Spain, and slightly higher than one time in the United Arab Emirates and the United States.

Inelasticity of demand We believe parents consider their children’s school education to be a non-discretionary expenditure and will avoid reducing spending on school education even during times of economic hardship. We believe expatriates and locals prioritise the quality and continuity of school education for their children and therefore seek premium schools that provide their desired curriculum, high academic standards, premium facilities and breadth of extra-curricular activities. Premium schools typically serve affluent local or expatriate communities where parents often prioritise education over other forms of expenditure and exhibit a high degree of demand inelasticity relative to changes in the general economic climate and household incomes. Although parents typically choose schools for their children, expatriate employment benefits funded by their employers frequently include the costs of schooling. We believe expatriate employers are less sensitive to moderate pricing increases as education allowances typically represent only a small percentage of an employee’s total compensation.

100 Increasing participation of private sector in global K-12 education

Many global public school systems are burdened by infrastructure that is aging, underfunded, and not designed to cater to increasing population growth and rising participation levels.

In the United States, according to the National Center for Education Statistics, the K-12 student population has been steadily growing since 1985 and is projected to continue to expand until at least 2020. Notwithstanding this increase in demand, analyses by the Center on Budget and Policy Priorities suggest that fiscal constraints have resulted in significant education spending cuts resulting in a reduction in teaching staff, elimination of extracurricular activities and an inability to invest in technology, which have negatively impacted the overall quality of public K-12 education, forcing parents to seek private alternatives.

Similar trends can be seen across international markets such as UAE and Qatar where between 2000 and 2012 the school age population grew by 5.0% and 4.2%, respectively, according to Euromonitor. We believe governments, particularly in emerging economies, recognise that public school systems lack the resources and expertise to address the significant supply-demand gap among the local population, and that expatriates require special consideration within the context of greater globalisation and the desire to encourage FDI.

Confronted with these issues, governments around the world continue to look to the private sector for assistance in education. For instance, in 2012 the authorities in Qatar started providing scholarships / school vouchers (up to US$7,500) to local students enrolling in pre-approved private schools, according to Booz & Co. Like these governments, we believe premium schools, particularly those privately owned by well-funded operators, are better equipped to offer high-quality education, school facilities and extra-curricular programs.

Local Dynamics and Trends In addition to the overall industry characteristics and market drivers discussed above, each of our markets is characterised by specific local dynamics and trends.

China China represents a large and growing market for premium schools serving expatriate students. According to Brookfield, China is the second-largest destination for international assignments, behind the United States, and the top emerging market destination. We believe this has increased demand for high quality premium education. The demand for English-language premium schools in China is almost entirely driven by expatriates because regulations prohibit local students without foreign passports from attending international schools. The regulatory environment in China favours existing operators given their operating track record and historical evidence of student outcomes. For instance in China, to our knowledge, only a limited number of new licences have been granted to international school operators since 2007. This is a strong barrier to entry for new operators looking to establish premium schools in China.

101 Shanghai The Shanghai premium schools market is large and has a growing student population. Based on analysis undertaken in 2011 and early 2012, Parthenon estimates that total enrolment in premium schools in Shanghai increased to approximately 16,800 students in 2012 from approximately 14,900 students in 2009. Based on analysis by Parthenon, enrolments in Shanghai are expected to increase at a 6% CAGR to approximately 21,000 in 2016.

Number of Students Enrolled in Premium Schools in Shanghai

22,000 21,000

16,800 14,900

11,000

0 2009 2012 2016E

Source: Parthenon In Shanghai, schools offering the National Curriculum account for approximately 45% of the market while those offering the American curriculum are the second most popular with approximately 40% of the market, according to Parthenon. Tuition fees at schools offering the National Curriculum are the highest in the market at an average of $32,000 per year, with American schools charging on average of between $28,000 and $30,000 per year.

Beijing The premium schools market in Beijing is somewhat smaller than Shanghai’s but has been growing at a faster rate. Based on analysis undertaken in 2011 and early 2012, Parthenon estimates that total enrolments at premium schools increased from approximately 9,100 in 2009 to 10,700 in 2012. Parthenon expects total enrolment at these schools in Beijing to increase at a CAGR of 8% to approximately 14,300 students by 2016.

Number of Students Enrolled in Premium Schools in Shanghai

16,000 14,300

10,700 9,100

8,000

0 2009 2012 2016E

Source: Parthenon In Beijing, schools offering the National Curriculum account for approximately 44% of the market, while schools offering the International Baccalaureate Curriculum and the American curriculum account for 30% and 20%, respectively. National Curriculum schools charge approximately US$28,000 on average compared to US$29,000 for IBC schools.

102 Europe

Central Europe There is robust demand for premium schools in the Central European countries in which Nord Anglia Education operates (the Czech Republic, Hungary, Poland and Slovakia). Historically, expatriates have been the dominant source of demand for our premium schools in Central Europe. However, we have also seen rapid growth in demand from affluent local families.

Our Central European markets exhibit a number of characteristics that are representative of most emerging markets, including strong FDI flows and a high propensity among parents to allocate more resources towards education. Further, FDI flows have driven expatriate growth in these markets, which underpins continued demand for premium schools.

Switzerland The premium schools market in Switzerland has a long history and enjoys an excellent international reputation for quality of education. It benefits from extremely strong demand for premium private schools and has some of the highest levels of tuition fees in the world.

The market is split between day schools and boarding schools. Based on our internal studies undertaken in 2011, the private day schools market serves approximately 30,000 students, of which approximately 12,000 are enrolled at for-profit institutions. The Swiss boarding school market serves approximately 3,500 students and to our knowledge, no new boarding school in Switzerland has been opened since 1966.

Spain WCL’s Spanish school, located in La Moraleja, an affluent residential district in Madrid, caters primarily to expatriates and affluent locals. Although macro-economic factors in Spain have been unfavourable since the 2008 global economic downturn, we believe that the impact on premium schools has been limited, as parents who enrol their children in these schools tend to have higher incomes and are less susceptible to economic declines.

ME/SEA

Middle East Nord Anglia Education operates one school in the United Arab Emirates, in Abu Dhabi, and expects to open a second school in Dubai in September 2014. WCL operates four schools in Qatar. The United Arab Emirates and Qatar have among the highest GDP per capita in the world and strong FDI inflow growth. Premium schools in these countries have experienced strong demand from expatriates. According to Euromonitor, between 2007 and 2012, the expatriate populations of Qatar and the UAE increased 2.0% and 5.4%, respectively. As of 2012, 80.0% of Qatar’s and 88.0% of the UAE’s populations were expatriates. We believe premium schools in these countries are also experiencing robust local demand because they provide higher quality education than public schools and parents increasingly value English language skills. For example, Parthenon estimates that in Qatar enrolment of local students in private international schools between 2005 and 2011 grew faster than expatriate enrolment.

103 The education market in Qatar and the UAE is also bolstered by increased government commitment to education. The governments of countries of the Cooperation Council for the Arab States of the Gulf (commonly referred to as the Gulf Cooperation Council or “GCC”) have identified sound educational systems as being key to developing competitive and diversified economies. As a result, these governments have taken several initiatives at improving the quality of education and increased public expenditure on the sector. The member states of the GCC are Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates. As a result, the GCC education sector has gone through important structural changes and is expected to grow strongly.

According to Booz & Co., the GCC private school market is already among the largest in the world, with $5.2 billion in annual tuition fees. The market is expected to grow significantly, with enrolment in the GCC region forecast to increase from 1.4 million students in 2013 to over 2.3 million students by 2020, a greater than 5% CAGR.

South East Asia Over the past few decades, SEA countries (including Thailand, India, Singapore, Vietnam, Malaysia and Indonesia) have undergone significant economic and social change. As in the Middle East, countries in the SEA region have identified education as playing an important role in transforming their respective economies and achieving sustainable long-term growth by developing their human capital. According to Parthenon, the drivers of growth in the SEA education sector include increases in average household income, increases in FDI inflow, increased demand for English language skills and increased demand for better infrastructure and quality of education. According to Parthenon, the size of the premium K-12 international school market in SEA was approximately US$1.9 billion in 2011. Our school in Thailand is located on the eastern seaboard, 120km south-east of Bangkok. The eastern seaboard accounts for approximately 20% of Thai GDP and approximately 50% of inbound FDI. According to Parthenon, our school represents approximately 47% of the premium schools market in the eastern seaboard region. Total premium school enrolments in this area of Thailand grew at a CAGR of approximately 1.5% between FY2008 and FY2012 to approximately 2,160 in FY2012. Parthenon estimates that day student enrolments in premium schools located in the eastern seaboard region will grow at approximately 7% CAGR to reach 3,000 students by FY2017, through a combination of expatriate student growth and local student growth of approximately 5.5% and 8.0% CAGR, respectively.

North America In general, the premium schools market in North America is attractive because of favourable demographics and industry dynamics, including high GDP per capita supporting considerable disposable incomes, strong growth in the school age population, limited available capacity in existing schools and fiscal constraints leading to poor quality state-funded school alternatives. In addition to these factors driving domestic demand, demand for premium quality education from expatriates is also high, with the United States representing the largest destination for international assignments, according to Brookfield. WCL has six established, leading schools in geographically diverse, large, urban markets. WCL has a differentiated market position due to its combination of high quality schools and an international curriculum that appeal to both expatriate and local affluent families. We believe a British style education is also attractive to many Americans given the reputation of British higher education institutions.

104 CORPORATE STRUCTURE

Our Corporate Structure The following chart shows a simplified summary of our corporate structure. See “—Subsidiaries”.

US$150 million1 Guarantors2 PIK Toggle Notes Nord Anglia Education, Inc.

US$325 million Original Notes and Nord Anglia Education (UK) Holdings plc US$165 million (the “Issuer”) Additional Notes

US$40 million Senior Secured Revolving Nord Anglia Education Limited Credit Facility (UK)

Learning NA Schools Poland Switzerland China Slovakia Thailand WCL Group Services Ltd (UK) Limited

Czech UK Hungary Hong Kong Republic

Bahrain

Saudi Learning Malaysia UAE U.S. Qatar Spain Arabia Services

1 Nord Anglia Education, Inc.’s US$150 million 8.50%/9.50% Senior PIK Toggle Notes due 2018 (the “PIK Toggle Notes”). The PIK Toggle Notes are unguaranteed and unsecured. 2 For a complete list of subsidiaries, including unrestricted subsidiaries, see “—Subsidiaries”. For a complete list of guarantors, see “Description of the Notes—Brief Description of the Structure and Ranking of the Notes, the Guarantees and the Security—The Guarantees”.

105 Subsidiaries The following table sets forth certain information on certain subsidiaries as at the date of this offering memorandum. This table omits subsidiaries which are dormant or soon to be dormant.

Effective Place of Class of Name of Company Equity Interest Incorporation Shares Held Holding Companies Nord Anglia Education Limited ...... 100% UK Ordinary NAE Hong Kong Limited ...... 100% Hong Kong Ordinary NA Educational Services Ltd...... 100% UK Ordinary NA Schools Limited ...... 100% UK Ordinary Nord Anglia Education Development Services Limited...... 100% UK Ordinary Nord Anglia Middle East Holding ...... 100% Bahrain Ordinary Nord International Schools Limited ...... 100% UK Ordinary Nord Anglia (Beijing) Consulting Limited ...... 100% China Ordinary EEE Enterprise Limited ...... 100% BVI Ordinary Rice Education Hong Kong Limited ...... 100% Hong Kong Ordinary Regent Pattaya Campus Management Co., Ltd. .... 49% Thailand Ordinary WCL HoldCo Limited ...... 100% UK Ordinary WCL Group Limited ...... 100% UK Ordinary WCL EBT Limited ...... 100% UK Ordinary WCL Intermediate Holdings Limited...... 100% UK Ordinary WCL Services Limited ...... 100% UK Ordinary British Schools of America LLC ...... 100% USA Ordinary WCL Intermediate Holdings Spain, S.L...... 100% Spain Ordinary

Premium Schools Czech English International School Prague ...... 100% Republic Ordinary The British School Sp. z o.o...... 100% Poland Ordinary British International School Bratislava ...... 100% Slovakia Ordinary British International School Foundation ...... 100% Hungary —1 The British International School, Shanghai ...... 100% China Ordinary British School of Beijing ...... 100% China Ordinary Collège Champittet SA ...... 100% Switzerland Ordinary Collège Alpin Beau-Soleil SA ...... 100% Switzerland Ordinary La Côte International School SA ...... 100% Switzerland Ordinary The Regent’s School ...... 49% Thailand Ordinary British School of Washington LLC ...... 100% USA Ordinary BSA Resource Solutions LLC ...... 50% USA Ordinary British School of Boston LLC...... 100% USA Ordinary

1 Held as a foundation.

106 Effective Place of Class of Name of Company Equity Interest Incorporation Shares Held British School of Houston LP...... 100% USA Ordinary British American School of Charlotte LLC2 ...... 100% USA Ordinary WCL Academy of New York LLC2 ...... 100% USA Ordinary British School of Chicago LLC...... 100% USA Ordinary International College Spain, S.A...... 100% USA Ordinary

Learning Services Nord Anglia Vocational Education and Training Services Ltd...... 100% UK Ordinary Nord Anglia Middle East Holding SPC (Abu Dhabi Branch) ...... 100% n/a n/a Nord Anglia Middle East Holding SPC (Malaysia Branch) ...... 100% n/a n/a Nord Anglia Educational Consultancies Saudi Arabia Limited ...... 100% KSA Ordinary Brighton Education Learning Services Sdn. Bhd .... 100% Malaysia Ordinary Education Overseas Qatar LLC...... 49% Qatar Ordinary WCL School Management Services Limited ...... 100% UK Ordinary Fieldwork Education Limited ...... 100% UK Ordinary

2 Unrestricted Subsidiaries.

107 BUSINESS

Overview of Nord Anglia Education We are a leading global operator of premium schools in China, Europe and ME/SEA through our Premium Schools. Our schools educate students in kindergarten to the end of secondary school. In addition, we provide educational services to governments in the Middle East, the United Kingdom and Asia through our Learning Services. We operate in high-growth markets characterised by strong wealth creation, significant FDI and economic growth. The two main drivers of our business are increasing globalisation and a growing emphasis by parents on high quality education for their children. For the twelve months ended 28 February 2013, our Premium Schools accounted for 88.4% and 90.4% of our Adjusted Revenues and Adjusted EBITDA before central and regional expenses, respectively. Learning Services accounted for 11.6% and 9.6% of our Adjusted Revenues and Adjusted EBITDA before central and regional expenses, respectively. For the twelve months ended 28 February 2013, we generated Adjusted Revenue of US$288.0 million and Adjusted EBITDA of US$81.2 million. See “Summary Consolidated Financial and Operating Data—Nord Anglia Education’s Key Performance Indicators—Nord Anglia Education’s Segment Analysis”, “—Calculation of Nord Anglia Education’s Adjusted Revenue”, “—Calculation of Nord Anglia Education’s Adjusted EBITDA” and “—Calculation of Nord Anglia Education’s Last Twelve Months Financial Information”.

Nord Anglia Education’s Premium Schools We operate fourteen premium schools in twelve locations in China, Europe and ME/SEA. For the six months ended 28 February 2013, our schools in China, Europe and ME/SEA contributed approximately 67.7%, 27.2% and 5.1% of our Premium Schools’ Adjusted EBITDA, respectively. Our schools in China primarily serve expatriates and our schools in Europe and ME/SEA serve both expatriates and affluent local families. Our overall student mix is 78% expatriates and 22% local students. Our Premium Schools are not directly exposed to government funding risk as all of their revenues are sourced from private sources, of which employers contribute approximately 60%. Since our going-private transaction in 2008, we have significantly increased both capacity and enrolments. We have increased our student capacity from approximately 5,400 places at the end of FY2008 to approximately 12,524 as at 26 May 2013. As at 26 May 2013, our enrolment was 9,991, representing a utilisation rate of 80% and a CAGR of 21% over our year end FTEs of 4,010 at the end of FY2008. This growth in capacity and enrolment was achieved through expansion at our existing schools and strategic acquisitions of new schools.

Nord Anglia Education’s Learning Services We provide targeted education-related services to governments, government agencies, regulatory bodies and related educational authorities in the Middle East, the United Kingdom, and Asia. Our services typically involve various aspects of the management and operation of public-sector schools. In FY2012, we decided to de-emphasise our Learning Services operations and are therefore no longer bidding on new contracts and intend to gradually phase out our existing contracts.

108 Acquisition of WCL Group On 22 May 2013, we completed the acquisition of 100% of the share capital of WCL Group for net consideration of GBP143.0 million (approximately US$222.2 million). We financed the acquisition and related fees and expenses through a capital contribution of US$133.4 million of ordinary equity by our parent, Nord Anglia Education, Inc., and borrowings of approximately US$113.9 million under the Bridge Loan Agreement. We intend to repay our borrowings under the Bridge Loan Agreement in full with the proceeds of this offering. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Our Recent Developments”, “Certain Relationships and Related Party Transactions”, “Description of Other Material Indebtedness and Certain Financing Arrangements” and “Use of Proceeds”. As part of the due diligence process for the acquisition of WCL, we developed a comprehensive integration plan and nominated senior executives from within the Nord Anglia Education leadership team to drive the key integration initiatives. WCL’s complementary curriculum, focus on premium quality education, teacher recruitment strategy and on-going professional development, as well as its asset-light approach to operations, are in line with the overall strategy of Nord Anglia Education. In addition, we expect our acquisition of WCL to generate significant benefits for the combined group, including significant cost savings as we integrate WCL’s operations into our platform and streamline the duplication of certain central cost functions. We expect to improve the financial performance of WCL by applying our proven operating model to WCL and improving WCL’s academic standards and the infrastructure of its schools in order to drive student achievement and increase enrolment.

109 Our Platform

The following map shows the geographic coverage of our Premium Schools (including WCL’s schools):

110 Our Strengths

Diversified Platform with Benefits of Scale

Our platform allows us to leverage expertise and resources across our entire network to enhance the quality of education and create significant operating benefits, including:

• strong brand equity supported by a reputation for quality, which enables us to drive enrolment growth and set tuition fees at the higher end of the market;

• credibility with our stakeholders, including educational authorities, teachers, parents, developers, landlords and sellers of premium schools;

• implementation of best practices, including cost management and control through benchmarking;

• training and development of principals and teachers through initiatives such as Nord Anglia University. The acquisition of WCL Group significantly increases the diversity of our platform and strengthens Nord Anglia Education’s position as one of the world’s leading premium schools organisations. WCL’s six schools in North America provide a solid foundation in the important North America market, and its four schools in the Middle East and one school in Europe strengthen our presence in those regions. The addition of WCL’s schools also diversifies our geographic distribution as shown in the following table, which presents regional enrolments for Nord Anglia Education as at 27 May 2012 and 26 May 2013 and for the combined group as at 26 May 2013.

Nord Anglia Nord Anglia Nord Anglia Education and Education Education WCL combined as at 27 May %of as at 26 May %of as at 26 May %of 2012 Total 2013 Total 2013 Total

Full time equivalent students China...... 3,749 49.9 4,156 41.6 4,156 28.6 Europe...... 3,771 50.1 3,790 37.9 4,470 30.7 ME/SEA...... 0 0.0 2,045 20.5 3,368 23.2 NorthAmerica...... 0 0.0 0 0 2,544 17.5

Total ...... 7,520 100.0 9,991 100.0 14,538 100.0

111 The following tables show segment analysis for the last twelve months of Nord Anglia Education, WCL Group and for the combined group on a pro forma combined basis. See “Summary Consolidated Financial and Operating Data—Summary Combined Pro Forma Financial Data”.

Pro Forma Combined Last Twelve Months Segment Analysis

For the twelve months ended 28 February 2013

Combined Nord Nord Anglia Anglia Education (US$ millions) Education WCL and WCL

For the twelve months ended 28 February 2013

Combined Nord Nord Anglia Anglia Education (US$ millions) Education WCL and WCL

(1) Derived from Nord Anglia Education’s financial information prepared in accordance with IFRS and WCL’s financial information prepared in accordance with U.K. GAAP. (2) See “Summary Consolidated Financial and Operating Data—Nord Anglia Education’s Key Performance Indicators—Calculation of Nord Anglia Education’s Adjusted Revenue”, “—Calculation of Nord Anglia Education’s Adjusted EBITDA”, “Summary Consolidated Financial and Operating Data—WCL’s Operating Data and Non-GAAP Financial Information—Calculation of WCL’s Adjusted Revenue” and “—Calculation of WCL’s Adjusted EBITDA”. (3) Budgeted cost savings relating to the acquisition of WCL currently being implemented arising from the ongoing elimination of duplicative head-office functions. There can be no assurance that such cost savings can be achieved.

112 Robust and Highly Attractive Business Model

Resilient Performance Across Economic Cycles Total enrolment in our schools has grown at a CAGR of 21% from the end of FY2008 through 26 May 2013. Of this increase in enrolment, 2,700 new student enrolments were through strategic acquisitions and 3,281 through organic growth. We are well positioned to deal with negative national or regional trends due to our geographically diverse operations across key education markets. Expatriate families often move from country to country for their employer. We refer to this movement as expatriate churn. As one of the top school operators in each of our markets, we believe that we are able to gain a disproportionate share of new enrolments among expatriate families. As a result, we have consistently been able to secure more new starters than leavers. The average student tenure across our network is 3.4 years, which provides stability in our student enrolment levels. Over the last three fiscal years, our student persistence rate, defined as the percentage of students re-enrolling in our schools, excluding those that leave for reasons outside our control (for example, expatriate churn and graduation), has averaged 98%. WCL has also shown strong growth across economic cycles. WCL’s enrolment increased by 100.9% between September 2004 and September 2008 and by 99.7% between September 2008 and September 2012. Between September 2004 and September 2012, WCL’s enrolment (excluding the impact of the acquisition of its school in Spain in 2011) grew at a CAGR of 16.4%. Over the last three fiscal years, the average student tenure across WCL’s schools is 4.9 years and WCL’s persistence rate has averaged 93%.

Price Inelasticity The private-pay nature of our model helps ensure that our schools are not directly exposed to any government funding risk and are insulated from any volatility in such funding as a result of changing economic or political conditions. Approximately 60% of our tuition fees are paid by expatriate employers, who are less sensitive to moderate pricing increases as education allowances typically represent only a small percentage of an expatriate’s total compensation. In addition, we believe self-funding expatriates and affluent local families, are also able to afford moderate price increases. As a result, we have been able to increase our tuition fees across our markets at an average of 4-6% per annum over the last four years (in excess of the median rate of inflation in the markets where our schools are located), while continuing to generate organic enrolment growth. WCL’s schools also follow the private-pay model and WCL has increased its tuition fees across its markets at an average of 2.2% over the last three years. Approximately 61% of WCL’s students’ tuition fees are paid by corporates.

113 Favourable Working Capital Dynamics and a Capital Efficient Approach to Growth We receive approximately 57% of our annual tuition fees in advance of the school year, which starts in late August/early September. We have generally received an additional 20% of our tuition fees prior to the start of Term 2, beginning in January, and the remainder prior to Term 3, beginning in April. In FY2012, approximately half of our students paid the full annual tuition fees in advance of the school year in exchange for a small average discount. As a result, our working capital needs are principally sourced from pre-paid tuition fees. In addition, our expansion strategy is based on an “asset-light” model and is focused on securing high quality purpose-built facilities through long-term leases. Accordingly, we are able to expand capacity at our existing schools and secure capacity at new schools without incurring major capital expenditure. For example, in China, developers of high-end residential communities paid for the construction of our school facilities within their developments, and our recently announced new school in Dubai is being built to our specifications by our landlord. As a result, our capital expenditure associated with these schools is generally limited to furniture, equipment and other materials for classroom, sports and extra-curricular activities. Further, the majority of our schools in China are newly built, which we would expect to result in low maintenance costs and capital expenditure in the near future. The capital expenditure for capacity expansion at our existing, new and acquired schools has been primarily funded by the owners of the real estate. As a result, we have relatively low capital expenditure requirements associated with our expansion. In the case of our acquired schools, we have structured these transactions so that we acquire the operating businesses and typically negotiate long-term leases from the sellers who retain ownership of the real estate. WCL also has a favourable working capital cycle. WCL receives approximately 56% of its annual tuition fees in advance of the school year, approximately 30% prior to January and the remainder by May. As a result, WCL’s working capital needs are principally sourced from pre-paid tuition fees. In addition, the timing differences between the receipt of tuition fees by Nord Anglia Education’s schools and WCL’s schools will complement our working capital cycle, as cash receipts by WCL’s schools in April and May each year spread our cash flow over a greater number of months. WCL also operates on an “asset-light” model, with all of its schools subject to long-term leases, with the exception of its school in Houston, which WCL owns.

114 development initiatives and a policy to promote from within wherever suitably capable candidates are identified. Initiatives such as Nord Anglia University, which provides comprehensive professional training programmes for teachers and principals, underscore our commitment to professional development. We believe the foundation for the high quality education we provide is built upon the quality and motivation of our teachers. Our students consistently outperform their peers in standardised examinations. In the last five academic years, our students’ average examination results were higher than the average in the United Kingdom for the International General Certificate of Secondary Education (“IGCSE”), which students take at the age of 16, and globally for the International Baccalaureate Diploma (“IBD”), which students take at the age of 18. For the 2012 academic year, 86.2% of our students gained 5 A* to C grades compared to 84.7% in the 2011 academic year and the UK average for 2012 of 81.8%. In the same year, the average IBD score achieved by our students was 33.3 points compared to 32.6 points in the 2011 academic year and a global average score in 2012 of 29.8 points. In addition, 17% of our graduates in 2012 went to the world’s top 30 universities and 75% went to the world’s top 600 universities, as ranked by www.topuniversities.com as at 20 January 2013. Given that our admissions approach is not based upon academic ability, and that English is the second language for a large number of our students, we believe our students’ examination results and university destinations demonstrate the quality and effectiveness of our approach to education. WCL has a strong commitment to education, focusing on academic rigour, student engagement and a high quality international learning experience. Like Nord Anglia Education, WCL follows a largely non-selective admissions policy. The aim of each school is to maximise outcomes for students of all abilities.

Superior Operational Capabilities We strongly emphasise operational efficiency and adopt a data-driven approach to manage our business. Our global, regional and school teams track and analyse KPIs on a weekly basis and refine our operating strategy accordingly. We focus on the following key areas at our operations: • Student recruitment: We have a systematic approach to student recruitment. Our comprehensive recruitment strategies are adapted to each of our specific markets and executed by each school’s principal, admissions team and marketing manager. We use a relationship management system that enables us to monitor an applicant’s file at every stage, from initial enquiry through enrolment. • Pricing: We monitor market trends, taking into consideration historic and regional economic trends and supply and demand dynamics, to set our tuition fee levels. • Cost management: We use metrics-based management throughout our school operations to enhance efficiencies. We achieve operational efficiencies through various means, including efficient class scheduling and optimising our teaching resources. We optimise our teaching resources by minimising the amount of administrative responsibilities allocated to our teachers to ensure that each teacher spends more time focused on teaching. • Capacity planning: We have developed expertise in planning and adding capacity to meet demand. This enables us to manage growth by efficiently utilising capacity at existing schools and expanding as necessary. We also work with architectural consultants who specialise in optimising school configurations. Our approach to growing our network of schools is highly analytical and includes the use of demographic and economic models, when identifying opportunities for expansion. • Cash and financial management: We have a centralised finance team that enables us to monitor and manage our business effectively. We have a track record of robust cash management and have historically had few instances of bad debt.

115 We plan to integrate WCL into our operational platform and apply the same metrics and analytical tools to WCL’s schools that we use for our existing schools. Having successfully integrated eight new schools since 2009, we believe our experience in managing acquisitions and greenfield projects provides us with the resources and expertise required to successfully manage the integration of WCL into our portfolio.

Partner of Choice

116 Our Strategies

We focus on the strategic initiatives described below to strengthen our position as one of the world’s leading premium schools organisations, and we intend to apply these initiatives to WCL’s schools.

Continue to increase student enrolments at our existing schools

We have been successful at driving enrolment growth and aim to continue this growth by applying our systematic processes for enquiry generation, converting enquiries to enrolment and retention of existing students. Our school principals lead the recruitment effort with dedicated admissions and marketing teams. We generate enquiries and visits through referrals, web-based strategies and other marketing activities.

Maintain price leadership at our existing schools

We have made significant investments in our schools which enable us to consistently provide high-quality premium education. We intend to leverage our superior quality and reputation to maintain price leadership in each of our markets and realise pricing growth in excess of inflation.

WCL has also successfully driven enrolment growth through a rigorous approach to student enrolment.

117 The key elements that we focus on to promote a high level of academic quality are:

An academically rigorous educational programme Our curricula meet internationally recognised requirements and are adapted to meet local regulatory requirements, culture and customs. The majority of our schools teach the National Curriculum of England. We utilise a highly customised IT platform designed around each student. It enables us to track performance of students on an individual basis as well as benchmark within and across our schools. We believe that this maximises student learning and performance by giving each student and faculty an accurate gauge of individual progress. In addition, this platform allows us to set clear expectations of learning objectives at a classroom, class year or school level and intervene as required. Further, our IT platform creates accountability among faculty members and drives consistency in instruction by applying comparable metrics across our network. In addition to our rigorous approach to classroom-based learning, we have a supplementary informal online learning environment which operates across all our schools that we call the Global Classroom. The Global Classroom is an internet-based system which allows our students to learn with other students in our schools throughout the world. This innovative and distinctive learning environment introduces students to a new learning style, which creates independent learners, preparing them well for future university study and turning them into global citizens. Like Nord Anglia Education’s schools, all of WCL’s schools use a British style of education and teach using the National Curriculum or the IBC.

Highly qualified principals, teachers and administrative staff We demonstrate our commitment to premium quality education by hiring and retaining highly qualified principals, teachers and administrative staff. We require all our teachers to be fully qualified and have significant teaching experience in national or international schools. The minimum credentials we require include formal teacher qualifications, such as a Post Graduate Certification in Education (“PGCE”) or its equivalent and at least two years of teaching experience. Our principals and teachers also benefit from the centralised support and experience of our educational team, led by Professor Deborah Eyre. In addition, we have in place various continuing professional development initiatives, including Nord Anglia University, which is designed to prepare some of our best teachers for career progression and help continuously improve all of our teaching staff. We regularly and rigorously review the performance of our principals and teaching staff to ensure that their performance meets our high standards. As with Nord Anglia Education, the majority of WCL’s teachers are qualified in the UK who are familiar with the National Curriculum and a British style of education.

High quality school facilities Our school facilities, such as science laboratories, music and theatre resources, swimming pools and other high quality sports facilities enhance the educational experience of our students. In addition, the majority of classrooms utilise interactive computerised white boards that facilitate students’ participation in learning. We use internationally-recognised architectural consultants specialised in school design to direct the development of new facilities and the expansion or refurbishment of our existing schools in order to promote the efficient use of our facilities by staff and students.

118 Nord Anglia Education’s Premium Schools We operate fourteen premium co-educational schools in twelve locations across China, Europe and ME/SEA. The following table sets forth certain information about each of our schools and their educational programmes:

Date Date Acquired/ School Founded Founded Curriculum Qualification China Sanlitun Beijing, China ...... 2003 2009 National n.a.(1) Curriculum Shunyi Beijing, China ...... 2009 2009 National IGCSE/A Curriculum levels Pudong Shanghai,...... 2002 2002 National IGCSE/IBD Curriculum Puxi Shanghai, China ...... 2005 2005 National IGCSE/IBD Curriculum

Europe Collège Aplin Beau-Soleil, Villars-sur-Ollon. . 1910 2011 French and IBD or French Swiss Bac Curriculum Collège Champittet, Lausanne ...... 1903 2011 French and French/ Swiss Swiss Bac/IBD Curriculum Collège Champittet, Nyon ...... 2007 2011 French and IBD Swiss Curriculum La Côte International School, Gland ...... 2008 2011 National IBD Curriculum Prague, Czech Republic ...... 1995 1995 National IGCSE/IBD Curriculum Warsaw, Poland ...... 1992 1992 National IGCSE/IBD Curriculum Bratislava, Slovakia...... 1998 1998 National IGCSE/IBD Curriculum Budapest, Hungary ...... 2002 2002 National IGCSE/IBD Curriculum

ME/SEA Abu Dhabi, UAE ...... 2009 2013 National IGCSE Curriculum Chonburi, Thailand ...... 1994 2012 National IGCSE/IBD Curriculum

(1) This school educates students from age 3 to 13, which are pre-qualification years.

119 Key Performance Indicators

For the year ended 31 August For the six months ended

29 February 28 February 2010 2011 2012 2012 2013 Full time equivalent students (average for the period)(1) China ...... 2,700 3,070 3,622 3,517 4,040 Europe ...... 2,135 3,412 3,775 3,784 3,764 ME/SEA ...... ————944 Total ...... 4,835 6,482 7,397 7,301 8,748 Capacity (average for the period)(2) China ...... 4,800 4,860 5,360 5,360 5,370 Europe ...... 2,678 4,052 4,342 4,342 4,417 ME/SEA ...... ————1,200 Total ...... 7,478 8,912 9,702 9,702 10,987 Utilisation (average for the period)(3) China ...... 56% 63% 68% 66% 75% United States ...... 80% 84% 87% 87% 85% ME/SEA ...... 79% Average ...... 65% 73% 76% 75% 80% Adjusted Revenue per full time equivalent student (in US$ thousands)(4) China ...... 26.2 27.9 30.8 18.2 19.4 Europe ...... 18.5 29.6 29.5 17.4 17.9 ME/SEA ...... 10.2

Average ...... 22.8 28.8 30.1 17.8 17.8

(1) We calculate average full time equivalent students (“FTEs”) for a period by dividing the total number of FTEs at each calendar month end in such period by the number of calendar months in such period. (2) We measure average capacity at the measurement date as the total number of FTEs that can be accommodated in a school based on its existing classrooms at each calendar month divided by the number of months in such period. (3) We measure utilisation during a period as a percentage equal to the ratio of average FTEs for the period enrolled at that school divided by average capacity. (4) We calculate Adjusted Revenue per student by dividing our total Adjusted Revenue from our Premium Schools for a relevant period by the average FTEs for such period. See “Summary Consolidated Financial and Operating Data—Nord Anglia Education’s Key Performance Indicators—Calculation of Nord Anglia Education’s Adjusted Revenue”.

Our Four Schools in China These schools all use English as the primary language of instruction and, in compliance with our Chinese education licences, each student receives four lessons of Mandarin a week. All of our schools in China were constructed through developer-funded arrangements under which we did not have to undertake construction costs.

120 All of our schools are located in prime areas for expatriates and have premium sporting and extra-curricular facilities. Due to the general unavailability of sizeable real estate in these areas, new entrants to the market will find it difficult to replicate our schools.

The British International School Shanghai—Pudong, China

We opened this school in 2002, our first school in China, with an initial capacity of 100 places and the school now has a capacity of 1,500 places. The school is located within a large scale residential development in Pudong, approximately five miles from the centre of Shanghai. Its facilities include science laboratories, computer suites, art, music and physical education rooms, libraries, a 1,000 seat state of the art theatre, a new secondary school building, three indoor sports halls and a 25 metre indoor swimming pool.

As at 26 May 2013, nearly all of the students at this school were expatriates.

The British International School Shanghai—Puxi, China

We opened this school in 2005 with an initial capacity of 500 places. The school is adjacent to several high-end residential developments popular with expatriate families. The school’s facilities include two gymnasiums, two swimming pools of 15 and 25 metres, a dance studio, a fitness suite, outdoor basketball courts, four tennis courts, one astro-turf football field and playing fields. Other facilities include two libraries, a 250 capacity auditorium, a 500 capacity auditorium, a new IB suite, an internet café, science laboratories, music rooms and two cafeterias. We have since expanded capacity to a total of 2,000 places. The expansion to this school was officially opened by His Royal Highness Prince Andrew in 2011. As at 26 May 2013, nearly all of the students at this school were expatriates.

The British School of Beijing—Shunyi, China We acquired this school in 2009 with a capacity of 400 places and moved it to new custom built facilities with 1,500 places one mile from its original location. The school is located in a large residential area containing many expatriate developments in suburbs on the outskirts of Beijing. The school’s campus includes outdoor and indoor sport facilities gymnasiums, fitness suites, a football field and tennis and basketball courts, along with an indoor swimming pool and dance studio. In addition, we have two theatres, dedicated music rooms, computer music suites, a recording studio, ICT suites, a Lego robotics lab, science laboratories and art studios. The school was officially opened by His Royal Highness Prince Andrew in 2010. We have recently signed contracts to expand the capacity by up to 300 places. This expansion is expected to be completed in time for September 2013. As at 26 May 2013, nearly all of the students at this school were expatriates.

The British School of Beijing—Sanlitun, China We acquired this school in 2009 with a capacity of 280 places. The school is located in the heart of the Embassy district of Beijing and educates students from age three to age 13. Its facilities include a football pitch, a full size gym, an assembly hall, tennis and basketball courts and an astroturf play area with climbing frames. The school now has a capacity of 380 places. We have recently signed contracts to expand the capacity of this school by approximately 200 places. The expansion will include additional facilities and a new entrance from the main road in Sanlitun and is expected to be completed in time for September 2013. As at 26 May 2013, nearly all of the students at this school were expatriates.

121 Our Eight Schools in Europe

Collège Champittet—Lausanne

An affiliate of our parent company acquired this school in 2009 and it was acquired by Nord Anglia Education in February 2011. The school has a capacity of 944 places and is located near the banks of Lake Geneva in Lausanne. The school includes high quality academic and recreation facilities including, sports fields, playgrounds, library, science laboratories, chapel, dining hall and cafeteria and computer suites. The school also has boarding accommodation for up to 100 students. Founded by Dominican monks in 1903, we believe that Collège Champittet is one of the best known private schools in Switzerland.

As at 26 May 2013, 29% of the students at this school were expatriates.

Collège Champittet—Nyon

This school was opened in 2007 and was acquired by an affiliate of our parent company in 2009. It was acquired by Nord Anglia Education in February 2011 in conjunction with the acquisition of Collège Champittet-Lausanne. The school has a capacity of 220 places and is located near the banks of Lake Geneva between Geneva and Lausanne. Its facilities include playgrounds, dining hall and a computer lab.

As at 26 May 2013, 14% of the students at this school were expatriates.

Collège Alpin Beau Soleil—Villars-sur-Ollon We acquired this boarding school in January 2011 with a capacity of 220 places. The school now has a capacity of 240 places and is located in the Alpine region not far from Lake Geneva. The school’s facilities include an astroturf pitch with seating, premium boarding facilities, a recently renovated art centre, a fitness centre, two restaurants, a theatre and a private ski slope. Founded in 1910, Beau-Soleil is one of the oldest Swiss educational establishments. As at 26 May 2013, 93% of the students at this school were expatriates.

La Cote International School—Gland This school was founded in 2008 and we acquired it in September 2011. The school has a capacity of 220 places and is located near Lake Geneva in Gland. On 15 April 2013, we entered into a definitive agreement for the development of a new state-of-the-art K-12 campus in Aubonne, Switzerland. It will accommodate the students from the existing campus of the La Cote International School and will provide total capacity of 840 places. As at 26 May 2013, 76% of the students at this school were expatriates.

The British International School Bratislava, Slovakia We opened this school in 1998 with an initial capacity of 100 places. The school is operated out of two locations, with one allocated for the kindergarten and Year 1 students and the other for students in Years 2 to 13. The location for younger students has its own library, information and communication technology room, music area, and a playground. The second building has three well-equipped science labs, three ICT rooms, two specialist music rooms, and a computer-equipped library. The campus also enjoys two gymnasiums, one of which has a

122 climbing wall, a dance studio, basketball courts, a 200 metre athletics track, and a half-size football field. In response to increasing demand, we opened the second building in 2006 bringing the school to its current capacity of 770 places. The new facilities were formally opened by His Royal Highness Prince Andrew.

As at 26 May 2013, 71% of the students at this school were expatriates.

The British International School Budapest, Hungary

We assumed operations of this school in 2002 with a capacity of 420 places. In 2005, we relocated the school to new custom built facilities in its current location in Budapest’s third district. Its facilities include two science labs, music rooms equipped with computers, a dance and drama studio, an amphitheatre and a library. Its outdoor facilities include an organic wild garden for science lessons as well as an outdoor pavilion classroom. Its sporting facilities include a half-size football pitch, a 220 metre track, outdoor basketball court, and a large indoor gymnasium. The school’s current capacity is 590 places.

As at 26 May 2013, 67% of the students at this school were expatriates.

The English International School Prague, Czech Republic

We opened this school in 1995 on a site that we converted for educational use near the centre of the city. In September 2007, we moved the school to a new custom built campus, with a capacity of 550 places. The campus includes modern facilities in two buildings including a sports field, gymnasium, two libraries, art and music rooms and a dance studio. The classrooms are all networked, utilising interactive whiteboard technology and each section of the school is equipped with its own computer suite. The new campus was formally opened by Her Royal Highness Princess Anne. As at 26 May 2013, 78% of the students at this school were expatriates.

The British School Warsaw, Poland Founded by Nord Anglia Education in 1992 in association with a local family, this was our first international school. In 2004, we opened a new building by converting a former electrical engineering college into high quality academic facilities and this building has been further expanded and upgraded on a number of occasions. The school has a capacity of 910 places and its facilities include a sports field, gymnasium, and art and music rooms. The new building was formally opened by His Royal Highness Prince Andrew. As at 26 May 2013, 53% of the students at this school were expatriates.

Our Two Schools in ME/SEA

The British International School Abu Dhabi We opened the British International School Abu Dhabi in September 2009 and in August 2010 sold our 49% equity interest in the school to Premier Education Holdings Limited, our indirect shareholder, and entered into an agreement to manage the school. On 28 September 2012, Nord Anglia Education entered into a definitive agreement to re-purchase the 49% equity interest from Premier Education Holdings Limited. On 1 April 2013, we began consolidating the results of BISAD under IFRS, as we obtained effective control of BISAD from that date. The school has a capacity of 1,500 places. The school’s facilities include dedicated music rooms, a

123 music technology suite, a drama studio with the latest media technology, gardens and outdoor learning areas as well as a wide range of indoor and outdoor sports facilities for swimming, rugby, cricket, hockey, netball and athletics.

As at 26 May 2013, 73% of the students at this school were expatriates.

The Regent’s School—Chonburi, Thailand

We acquired the Regent’s School on 1 August 2012 with a capacity of 1,200 places. The school is located in the Eastern Seaboard region of the Gulf of Thailand, 120km southeast of Bangkok and 16km north-east of Pattaya. The Eastern Seaboard in general and Chonburi in particular include many of Thailand’s largest industrial developments. The facilities at the school include a 25-metre swimming pool with audience seating, a full sized rugby and football pitch (with two additional, smaller football pitches), a double gymnasium with basketball facilities and tennis courts, a 400 seat theatre and a brand new early-years building for younger children. The boarding houses are home to more than 100 students and are equipped with modern fingerprint security technology.

As at 26 May 2013, 75% of the students at this school were expatriates.

Discontinued Schools

The British International School Shanghai—Nanxiang This school was opened in 2008. As part of our on-going strategic review efforts on our operations in Asia, this school has been closed as at the end of the 2010/2011 academic year. The pupils were transferred to either the Puxi or Pudong campuses. This closure frees up another licence for an alternate potential school campus in the Shanghai area, subject to applicable regulatory approval.

Marketing the Nord Anglia Education Schools Our marketing strategy is designed to develop brand awareness among prospective parents and students and brand loyalty and advocacy among existing parents and students. We seek to build brand awareness in each of our existing and new markets, with respect to our individual schools and the “Nord Anglia Education” name. We believe that this brand building approach also contributes to the recruitment and retention of quality teachers and principals. We believe that a school’s attractiveness to parents and students is based largely upon its reputation. Accordingly, our marketing strategy is focused on the communication and enhancement of the excellent reputation that our schools enjoy within their respective markets. The effective deployment of our marketing strategy is executed at each school by our principals and the admissions and marketing teams. Our marketing strategy is based upon our online presence, reputation and referrals from existing parents as opposed to costly media campaigns. Accordingly, we achieve our enrolment results in a highly cost effective manner. We have developed a systematic approach to student recruitment and retention and we ensure that enquiry generation and conversion into new student enrolments is prioritised and well managed.

124 Student Recruitment The student recruitment process has three stages: Enquiries: parents considering enrolling their child at one of our schools register their child’s details and request further information. Visits: parents personally visit the school campus often accompanied by the child/children. Enrolments: parents register their child with the school, specify a start date and pay a non-refundable application fee. Almost all applicants enrol either within the academic year in which they applied or in the subsequent academic year. Our marketing strategy has been very successful in generating enquiries, visits and applications. The table below shows an increase in enquiries and visits and the rate at which they have been converted into new enrolments for the past three fiscal years. Note the table below does not include Chonburi.

FY2010 FY2011 FY2012 Enquiries ...... 5,040 7,336 8,247 Visits ...... 3,579 4,895 5,772 Enrolments...... 1,582 2,760 3,020 Percentage Visits to Enrolments ...... 44% 56% 52%

Generation of Enquiries The majority of our enquiries are generated through the following methods.

Digital Marketing In our experience, when considering overseas assignments, parents’ first step is often to thoroughly research schools online. We recognise that online marketing is a critical means of communication with prospective parents and students and a key part of our strategy is to prioritise online tools. We ensure that our websites are optimised to deliver important information to prospective parents in a concise and user friendly manner. This enables them to make informed decisions when evaluating our schools. Corporate and School Websites: We have designed our corporate website to introduce parents to our Company’s commitment to education, network of schools and history. Our corporate website contains direct web links to each individual school and provides details of the innovative educational work undertaken by our educational team. Our school websites inform prospective parents about each individual school’s curriculum, facilities, admissions process and why parents should choose the school for their children. Our websites include publications such as proprietary city guides and educational magazines which are only available to parents who register their interest with the school via the website. Search Engine Optimisation/Web Advertising: We have tailored each school’s website to maximise effectiveness and ease of use. Our search engine optimisation techniques generate a substantial number of visits to our website. We also identify and advertise on popular websites used by our target families.

Parent Referrals Parent referrals are important for generating enquiries. We believe that prospective parents seek out parents of current and former students for their opinions on our schools, helping to convert enquiries to visits and applications. We encourage the parents of current and former students to speak positively about our schools and achieve this by providing high quality education, communicating with and involving parents in our schools and seeking to place each of our schools at the centre of its community.

125 We create parental endorsement by making sure each of our schools is at the centre of their community in three ways:

Inclusive events for parents: Each school holds regular events, which parents are encouraged to attend and at which they are able to interact with other parents. This is particularly important to the majority of our parents who are expatriates as the school becomes their primary route to social activities and inclusion in a new and often alien environment.

Community events: Each school runs events such as musical concerts and sports competitions which are open to the parents and students of other schools. We also invite influential individuals such as government officials, relocation agents and diplomatic staff to attend. These events demonstrate educational leadership and showcase our schools to prospective parents and influential leaders in the community.

Charitable activities: We use initiatives such as our Nordstar community investment programme to involve parents, teachers and students in local charitable activities. These activities demonstrate the school’s role as a leader in the community as well as providing social opportunities for expatriate and local families.

In our most recent parental surveys, more than 90% of our parents said that they would be happy to recommend our school.

Relocation Agents

Relocation agents who settle expatriate families in cities in which our schools are located are an important source of enquiries. We develop close relationships with these relocation agents through a variety of initiatives, such as hosting school visits, providing quality information on our schools and producing user-friendly materials they can share with their clients. In addition, we invite relocation agents to participate in the community events that the schools run. These events are a useful networking opportunity for relocation agents and also provide us with an excellent opportunity to showcase our schools.

Employers In each of our markets, we have established relationships with major employers, such as multinational corporations and embassies. From our research, we know that parents consult their employers for school recommendations and information. In addition, we ensure these key personnel participate in the community events the school runs, providing us with an excellent opportunity to showcase our schools.

Other Marketing Activities We supplement our marketing strategy with other targeted activities to further enhance our schools’ reputation, promote awareness and generate enquiries, including: Promotional materials: We use promotional materials such as school brochures, educational magazines and other publications to enhance the schools’ reputation as high quality and leading academic institutions. Public Relations: We create and distribute news stories such as our strong academic results and high quality school facilities to promote our schools’ profiles in the media.

126 Conferences: We demonstrate leadership in the world of education by speaking at conferences and sponsoring our own events. Nord Anglia Education employees speak at more than 100 conferences worldwide annually, while our executives speak at more than 50 conferences annually. Most active as public speakers are Andrew Fitzmaurice, our CEO, and Professor Deborah Eyre, our Education Director, who together speak at more than 30 events per year.

Converting Enquiries Parents will typically draw up a shortlist of schools for their child and then physically visit these school campuses. Parents generally visit two or three different schools and usually undertake these visits with an open mind as to which school they will eventually select. Research conducted by Parthenon with respect to our schools in China found that approximately 70% of parents did not have a clear first choice. Management of the school visit is therefore important and we have designed our systems carefully to help maximise the conversion ratio between visit and application. A parent’s perception of a school’s academic quality is a key factor in school selection. Based on research conducted by Parthenon, we found that the main criteria parents use to assess academic quality are teacher quality (40% of parents indicate it is the most important factor) and work of other students they observed during their visit (20% of parents indicate it is the most important factor). We therefore manage the visit to provide adequate time for parents to interact with the actual teachers who will educate their child and also ensure we showcase the excellent work produced by current pupils. Each of our schools has a dedicated admissions and marketing team who work closely with our principals during the student recruitment process in order to maximise the conversion of enquiries and visits to enrolments. Our marketing and admissions teams typically have prior education industry experience and are chosen through a highly selective hiring process. In order to ensure that we achieve high conversion rates, our admissions managers participate in proprietary training programmes which provide them with the necessary skills to maximise their effectiveness.

Retention We are focused on retaining our students. Once a student has enrolled at one of our schools, the school’s teaching staff and principal are responsible for ensuring that the student receives a premium education and remains enrolled. To this end, we track the number of students who leave for reasons other than those outside of our control such as graduation or family relocation. In FY2012, the percentage of students who left our schools for reasons other than those outside of our control was only 2%, resulting in a persistence rate of 98% in each of FY2010 through FY2012. We monitor the number of students leaving on a weekly basis and take immediate corrective action on any weaknesses identified for each school.

Current Visibility In addition to high levels of visibility in relation to the financial performance for the current fiscal year, we are able to forecast enrolments for the following fiscal year with a certain degree of confidence. Our students stay in our schools for an average of 3.4 years, which means that approximately 70% of the cohort remain for the following academic year. By tracking the lead indicators of enquiries and visits against prior years we can establish likely enrolment trends for each school. This visibility is an important tool in our budgetary process, most notably for the recruitment of additional teachers and planning capacity.

127 The table below shows information relating to the level of enquiries, visits and applications for the following September (including BISAD but excluding our schools in La Cote and Thailand) for each of the periods indicated. Year to date as at 11 June 2012 was an exceptionally positive period for enquiries and visits. Year to date as at 9 June 2013 has exceeded levels seen in the same period as at 12 June 2011. Our conversion rate of visits to applications improved from 38.8% year to date as at 12 June 2011 to 48.3% year to date as at 9 June 2013. Almost all applications result in enrolments.

Year to date Year to date Year to date 12 June 2011 11 June 2012 9 June 2013 Enquiries ...... 5,806 6,909 5,873 Visits ...... 3,923 4,741 3,997 September applications ...... 1,520 1,757 1,930

Nord Anglia Education’s Teaching and Learning, Administrative, Regional and Central Support Staff

As at 30 April 2013, we had 2,366 full time equivalent employees. Our Premium Schools had 2,040 full time equivalent employees, of whom 1,439 were teaching staff, 580 were school administration and management and 21 were regional support. Our Learning Services business employed 207 education professionals and 67 administrative/regional support staff. In addition, we had 53 Group Central Support staff. The full time equivalent employee numbers as at 30 April 2013 are listed in the table below.

Full time equivalent employees Group Central Support (Globally) ...... 53 Premium Schools - Teachers and Teaching Assistants ...... 1,439 - School Support ...... 580 - Regional Support...... 21 Learning Services - Education Professionals ...... 207 - Learning Services Support...... 63 - Regional Support...... 5 Total ...... 2,366

We place particular importance on recruiting teachers who are appropriately qualified, and experienced. The minimum credentials we require include formal teacher qualifications, such as a PGCE or its equivalent and at least two years teaching experience. We expect all employees to share our commitment to help “each individual child to become the best they can be” which is in keeping with our high performance culture. We have typically had an adequate number of highly qualified candidates to fill our principal and teacher positions. Candidates are attracted to our reputation, commitment to high quality education, established international presence and financial strength. In addition, we offer a compensation package that is typically equivalent to the remuneration of similarly qualified personnel in the United Kingdom and competitor schools in the markets in which we operate, which frequently includes a housing allowance and other benefits, such as healthcare and home-leave.

128 None of the employees in our Premium Schools are subject to collective bargaining agreements and we do not continue to employ those who are unable to meet our standards. Approximately 35.8% of our Learning Services employees are subject to collective bargaining agreements.

Outstanding Teachers for Outstanding Schools

Candidates are attracted to our reputation, commitment to high quality education, established international presence and financial strength. In addition we offer a compensation package that is typically equivalent to the remuneration of similarly qualified personnel in the United Kingdom and is, in most cases, highly competitive.

In our drive to position Nord Anglia Education’s recruitment practices to match our desire to be the leading global premium education company, we launched the Outstanding Teachers for Outstanding Schools project (“OTOS”) across the group in August 2012. The scope of the OTOS project includes: attracting premium candidates, maintaining an outstanding process and administration for recruitment, ensuring selection of quality candidates and enhancing levels of successful recruitment. We believe the project will drive improvement and best practice in each of these areas.

Staff Development Nord Anglia Education is committed to supporting our teachers to be the best that they can be. Through our Nord Anglia University, we provide on-going professional development for our principals and teachers, in the form of online and classroom based training. This programme is vital to ensure that we attract and retain the best possible academic faculty. Nord Anglia Education University offers the following: • Executive Leadership Programme: an online and classroom based comprehensive executive leadership programme for all school principals which develops academic and commercial capabilities. The programme includes individual mentoring and is independently accredited by the Windsor Leadership Trust, a leading organisation dedicated to providing opportunities for leaders to develop their own leadership wisdom and insight. • Senior Leadership Programme: currently in development and will offer bespoke development for Vice Principals and Heads of Schools to enable their career progression and development to more senior posts. • Management and Leadership Development Programme: an online and classroom based programme to develop current high potential middle leaders, such as academic department heads for future senior leadership posts. • Global Staffroom: a proprietary online portal for the development of all our teaching staff. Both external experts and our own staff, with relevant expertise, are used to enhance high quality teaching and to share best practice teaching methods throughout the organisation.

129 Nord Anglia Education’s Information Technology Systems and Management

We believe that we have a comprehensive and reliable information technology infrastructure that supports our data driven approach to the management of our Premium Schools. This platform enables our executive team, regional management, school principals and teachers to monitor and engage in timely decision-making based on data relating to key operating metrics. We use project management and Information Technology Information Library (“ITIL”) systems to support the high quality and timely delivery of our IT services across the schools and offices of Nord Anglia Education. Our information technology platform is scalable and is able to support the growth of our Premium Schools.

In our Premium Schools, we use a proprietary information technology platform to track students’ academic progress, our student recruitment process and to manage billing. We have tailored a platform initially designed by Serco to meet our own specific requirements. This platform is designed to deliver the best outcomes for each individual student by tracking performance at a student and subject specific level. We believe that the key benefits of this platform include the ability to:

• maximise individual student performance;

• implement accountability at a student, teacher, year group, subject group and overall school level; • encourage parental involvement and ownership of students’ academic objectives; and • maintain comprehensive benchmarking within and between schools. In addition, we use a commercial project management software application to support our planning and oversight of the design, development and construction of new schools and expansion of capacity at existing schools. For our Learning Services, we employ a suite of applications for contract management, revenue recognition and billing in relation to our customer contracts. We also use a customer relationship management system to track and record relevant interactions with clients, as well as the performance of independent consultants. All of our information technology platforms are managed internally by dedicated IT professionals. We manage the availability of our networks and wireless networks in schools through the use of well-resourced and modern technology. We monitor our systems on a real-time basis to verify the robustness and availability of our servers, wireless, network and data storage. Our server infrastructure uses resilient data storage and backup technology located in data centres in the United Kingdom, Europe and China.

Nord Anglia Education’s Intellectual Property We are the applicant or registrant of trademarks relating primarily to our logos and the name “Nord Anglia Education” covering as many as 39 regions, including the ones in which we operate. We do not own the rights to the name “British International School”, which may be used by any organisation subject to meeting certain accreditation requirements.

130 Nord Anglia Education’s Properties

Our headquarters are located at Worldwide House, Des Voeux Road, Central in Hong Kong where we lease 3,153 square feet. We continue to operate in eight locations in the United Kingdom for our Learning Services business. We believe that these facilities currently meet our needs and that, to the extent necessary, replacement space is or would be available on acceptable terms. We lease all of our current school facilities under long term leases. For additional information concerning our school facilities, please see “—Nord Anglia Education’s Premium Schools” above. The table below summarises the main operating leases for each of our schools:

Guarantee by Nord Anglia Education Limited School Termination Date* Rent Review to the Landlord China Sanlitun Beijing ...... 2023 None None Shunyi Beijing ...... 2029 None None Pudong Shanghai...... 2022 2.5% p.a. None Puxi Shanghai ...... 2025/2036 None None Europe Collège Alpin Beau Soleil, Villars-sur-Ollon . . . 2035 Annual CPI Yes Collège Champittet, Lausanne & Nyon...... 2017/2026 Annual CPI None La Côte International School, Gland...... 2015 Annual CPI None Prague, Czech Republic...... 2032 Annual CPI None Warsaw, Poland ...... 2025 Review 2015 None Bratislava, Slovakia ...... 2016/2039 None None Budapest, Hungary...... 2014/2034 Annual CPI None ME/SEA Regent’s, Chonburi...... 2037 Annual CPI None Abu Dhabi ...... 2014/2019 None None

* More than one date indicates the termination date of multiple leases. The prior owner of the shares of Beau-Soleil has a right for a period of ten years from the date we acquired the Collège Alpin Beau-Soleil S.A. shares to purchase, and require us to sell, all assets and liabilities associated with the operation of Collège Beau-Soleil in the ordinary course of business at fair market value, as determined by an independent accounting firm selected by the parties, and to terminate the lease for the school building of Collège Champittet, inter alia if (i) we do not pay rent under our lease for the Collège Alpin Beau-Soleil main school building for three months or (ii) the prior owner terminates our lease for such main school building for cause, provided (amongst other things) the prior owner remains the direct or indirect owner of such main school building.

131 WCL Group’s Premium Schools

WCL owns and operates 11 premium co-educational schools in nine locations across North America, the Middle East and Europe.

The following table shows WCL’s full time equivalent students (average for the period) for Fiscal 2010, 2011, 2012 and the 26 weeks to 28 February 2013:

For the 26 weeks ended 28 February Fiscal 2010 Fiscal 2011 Fiscal 2012 2013 Full time equivalent students (average for the period)(1) ...... 2,409 2,650 3,720 4,384

(1) WCL calculates average full time equivalent students for a period by dividing the total mumber of FTEs at each calendar month end in such period by the number of calendar months in such period.

The following table sets forth certain information about each of WCL’s schools and their educational programmes:

School Date Founded Date Acquired Curriculum Qualification North America Washington ...... 1998 2013 National IGCSE/IBD Curriculum Boston...... 2000 2013 National IGCSE/IBD Curriculum Houston ...... 2000 2013 National IGCSE/ Curriculum IBD/A-Levels Chicago...... 2001 2013 National IGCSE/IBD Curriculum Charlotte ...... 2003 2013 National K-10 Curriculum NewYork...... 2011 2013 National K-6 Curriculum

Middle East Gharaffa, Doha ...... 2006 2013 National K-6 Curriculum Madinat, Doha...... 2010 2013 National K-10 Curriculum Rayyan, Doha ...... 2009 2013 National K-3 Curriculum Al Khor ...... 2012 2013 National K-6 Curriculum

Europe Madrid...... 1982 2013 IBC IBD

132 WCL Group’s Six Schools in North America

The British School of Washington—Washington, D.C.

Founded in 1998, the British School of Washington was the first WCL Group school and established the British Schools of America brand. The school has a capacity of 538 places. The school is located in the Georgetown neighbourhood, in the heart of Washington, D.C. The school has been at this location for the past four years. The school has four science laboratories, four language rooms, two libraries, an indoor fitness room and an auditorium including stage. A nearby gymnasium and playing fields are rented as required for tennis, swimming, football, athletics and rugby.

As at 26 May 2013, 61% of the students at this school were expatriates.

The British School of Boston—Boston, Massachusetts

The British School of Boston was founded in 2000 and has been located at its current site near Jamaica Plains in Boston since 2004. The school has a capacity of 521 places. The school has three science laboratories, a music room, a gymnasium and a dance studio. Outdoor facilities include a playing field and wooded areas, all-weather outdoor play areas and a shared swimming pool.

As at 26 May 2013, 44% of the students at this school were expatriates.

The British School of Houston—Houston, Texas Founded in 2000, the British School of Houston is located in northwest Houston, twenty minutes from downtown. The school has a capacity of 790 places. The school has four science laboratories, a music room, five language rooms, two gymnasiums, two libraries, a dance studio and a drama room. Outdoor facilities include a large outdoor space with an all-weather running track, extensive green space for play and a purpose built all-weather play area for younger children. As at 26 May 2013, 94% of the students at this school were expatriates.

The British School of Chicago—Chicago, Illinois Founded in 2001, the British School of Chicago moved in 2008 to the prestigious Lincoln Park neighbourhood of Chicago, minutes from the business district. The school has a capacity of 770 places. The school has three science laboratories, three music rooms, three language rooms, a gymnasium, three libraries and a dance studio. Students also have access to third-party sports facilities. As at 26 May 2013, 13% of the students at this school were expatriates.

The British American School of Charlotte—Charlotte, North Carolina Founded in 2003, the British American School of Charlotte is located in the Ballantyne section of Charlotte. The school has a capacity of 304 places. The school has science laboratories, a computer room, an arts room, a music room, a language room, a gymnasium and a library. Outdoor facilities include an extensive green space with a soccer pitch, and a playground area. As at 26 May 2013, 30% of the students at this school were expatriates.

133 World Class Learning Academy—New York, New York

Founded in 2011, the World Class Learning Academy is the latest addition to WCL’s schools in the United States. The school has a capacity of 362 places. The brand new facilities in New York include a music room, a gymnasium and a library. A roof area complete with lift is currently being built and will be converted into an outside play area.

As at 26 May 2013, 35% of the students at this school were expatriates.

WCL Group’s Four Schools in ME/SEA

Compass International Schools, Gharaffa, Madinat and Rayyan—Doha, Qatar

Founded in 2006, the Compass International School, Doha was WCL Group’s first school in the Middle East and established the Compass International School brand. Doha comprises three separate schools located in the Gharaffa area: Gharaffa, Madinat and Rayyan. The schools have a total capacity of 1,096 places. The schools have one science laboratory, two music rooms, eight language rooms, one gymnasium and three libraries. Outdoor facilities include outside swimming pool, covered swimming pool and covered and grass recreational space for children.

As at 26 May 2013, 93% of the students at these schools were expatriates.

Compass International School, Al Khor—Al Khor, Qatar

Founded in 2012, the Compass International School, Al Khor is WCL Group’s second Compass International School in the Middle East. Al Khor is located on the outskirts of Doha 15 miles from the city limits. The school has a capacity of 493 places. The school has two science laboratories, a language room, a gymnasium and a library. Outdoor facilities include an extensive hard and soft area for sports and recreation, including a football pitch, basketball court and covered courtyard area. The school was established to provide high quality education to employees of Shell. While Al Khor recruits students whose parents do not work for Shell, it also benefits from a long term contract with Shell to supply up to 300 guaranteed student places. Of its 267 students as at September 2012, 195 enrolled under the Shell contract and 72 were recruited directly. The initial contract with Shell expires in July 2016 (unless terminated early with twelve months’ notice). We expect the contract to be extended beyond 2016. As at 26 May 2013, 83% of the students at this school were expatriates.

WCL Group’s School in Europe

International College Spain—Madrid, Spain

WCL Group acquired the International College Spain in 2011. This prestigious school has built an excellent reputation since it was established in 1980. The school is located in the prosperous suburb of Alcobendes. The school has a capacity of 800 places. The Madrid campus has five science laboratories, two music rooms, six language rooms, two gymnasiums, two libraries, a dance studio, a drama room and an auditorium including a stage. Outdoor facilities include extensive open recreational space for students, including fenced in tennis courts and space for a football pitch. As at 26 May 2013, 66% of the students at this school were expatriates.

134 WCL Group’s Properties

WCL leases all of its current school facilities under long term leases, except for the school in Houston, which it owns. The table below summarises WCL’s main operating leases for each of our schools:

Guarantee by Nord Anglia Education Limited School Termination Date* Rent Review to the Landlord North America Washington ...... 2019/2019 None None Boston ...... 2025 Fixed increase None Houston ...... N/A N/A N/A Chicago ...... 2017/2023 2.5% p.a. None Charlotte ...... 2021 Annual CPI None NewYork...... 2025 Fixed increase None ME/SEA Gharaffa, Doha...... 2014 None None Madinat, Doha ...... 2022 Fixed increase None Rayyan, Doha ...... 2029 None None Al Khor ...... N/A None None Europe Madrid ...... 2026 Annual CPI None

* More than one date indicates the termination date of multiple leases.

WCL’s Teaching and Learning, Administrative, Regional and Central Support Staff As at 31 August 2012, WCL had 677 full-time equivalent employees, including executive management, teachers, learning support staff, administrative personnel and other employees. The number of full-time equivalent employees by job function as at 31 August 2012 is set forth in the table below:

Full-time equivalent employees

Executive management ...... 9 Teachers ...... 400 Learning support ...... 120 Administration ...... 88 Other ...... 59 Total ...... 677

135 Litigation

Nord Anglia Education may be subject to legal or administrative proceedings or claims arising in the ordinary course of our business. We are not currently subject to any such claims that we believe could reasonably be expected to have a material and adverse effect on our business, results of operations or financial condition.

WCL is subject to the claims described below:

On 28 February 2013, a former admissions and marketing director of WCL’s school in New York filed suit against the school, its principal and its head of communications. The suit seeks damages of US$6.5 million for breach of contract, breach of the covenant of good faith and fair dealing, discrimination under New York human rights laws, sexual harassment, retaliation and other causes of action. Based on the advice of our local counsel, we are contesting the claim. Our insurance provider has confirmed that the matter is covered under our employment practices insurance policy, subject to a deductible of US$25,000 and excluding the breach of contract claim, for which the plaintiff seeks US$250,000.

On 19 March 2013, WCL offered US$100,000 to buy out the remainder of the lease of a tenant who occupies a portion of the ground floor of the building that houses WCL’s school in Chicago. The tenant changed the amount in the offer letter to US$610,500, signed the letter and returned it to WCL. WCL did not countersign the amendment. On 7 May 2013, the tenant filed suit against the British School of Chicago and other parties for anticipatory repudiation of agreement, breach of lease, tortious interference with prospective business expectancy and other causes of action. The plaintiff seeks damages of US$22.7 million and other relief. Based on the advice of our local counsel, we believe the suit is frivolous and are contesting the claim.

136 REGULATION Our premium schools are subject to regulation by national and/or local authorities under applicable law. Most of our premium schools are subject to regular inspections by national or local education authorities.

China The government of the People’s Republic of China regulates the education services industry both at central and at provincial levels. The highest executive organ of the central government of the PRC is the State Council, and we are regulated by several ministries and agencies under its authority, including the Ministry of Education (the “MOE”) and the Ministry of Civil Affairs (the “MCA”), and their respective local counterparts.

The Education Law In 1995, the National People’s Congress enacted the Education Law, which established the fundamental principles relating to the educational system of the PRC at all levels, from preschool through higher education, a system of nine year compulsory education and a system of education certificates. Under this legislation, the government formulates plans for the development of education and establishes and operates schools and other educational institutions.

Regulation of International Schools in China International schools in China (like The British International School Shanghai, and The British School of Beijing) are regulated under the Interim Regulations Concerning the Establishment of Schools for the Children of Expatriates issued by the MOE on 5 April 1995 (the “Interim Regulations”). Under the Interim Regulations, the establishment of international schools requires approval from the MOE with prior verification by the MOE’s local counterpart at the provincial or municipal level. Our international schools in Beijing and Shanghai have obtained such approval from the MOE. The approval authority has been delegated to a MOE’s local counterpart at the provincial level pursuant to the Decision of the State Council on the Sixth Batch of Cancelled and Amended Administrative Examination and Approval Items issued by the State Council of the PRC on 23 September 2012. From the date of approval, our international schools attained legal person status and could assume civil liabilities. International schools are permitted to admit only the children of parents holding a foreign passport and having a legal residence in China. The Interim Regulations impose various criteria and restrictions on the establishment and operation of international schools. For example: • only foreign individuals with legal residence in China or the following entities can apply to establish an international school: foreign institutions registered in China, wholly foreign owned enterprises duly established in China or international organisations’ institutions in China; and • the establishment and operation of an international school is subject to approval by the MOE. The Tentative Administrative Measures on the Registration of Civil Non-enterprise Entities issued by the State Council on 25 October 1998 require all civil non-enterprise entities to register with the local civil affairs authorities. It is commonly understood that international schools are civil non-enterprise entities as defined under these measures and, under these regulations, our schools in Shanghai and Beijing could be required to register with the Shanghai Civil Affairs Bureau and the Beijing Civil Affairs Bureau, respectively. See “Risk Factors — Risks Relating to

137 the Jurisdictions in which We operate — BISS has not registered with the Shanghai Civil Affairs Bureau, which could subject the school to enforcement action resulting in sanctions including a suspension of our operations”. BSB’s annual civil non-enterprise certificate of inspection expired on 31 May 2013 and the annual report to the relevant government authority is being processed.

Regulation of Transfers of Foreign Exchange

The transfer of foreign currency from within the PRC to persons offshore is regulated by the State Administration of Foreign Exchange (“SAFE”) under the Regulations on the Administration of Foreign Exchange of the People’s Republic of China, as amended on 1 August 2008. Under these regulations, these transfers require the approval of the competent office of SAFE. In the event of a transfer offshore of foreign exchange made in violation of these regulations, the competent office of SAFE may request that such foreign exchange be returned onshore within a time period specified by it and may also impose a fine. If imposed, the fine would be an amount less than 30% of the amount of foreign exchange improperly transferred. If the non-compliance is serious (the rules do not set forth criteria for determining which violations are serious), then a fine of up to 100% of the amount of foreign exchange improperly transferred may be imposed. In addition, the Administrative Measures on the Settlement, Sale and Payment of Foreign Exchange, which were issued in June 1996, require that revenues of onshore entities received offshore in foreign exchange must be remitted onshore timely. In the event that such foreign exchange revenues are not remitted onshore timely, the competent office of SAFE may request that such foreign exchange revenues be remitted onshore within a time period specified by it and may also impose a fine and/or confiscate illegal gains.

Europe In contrast to China, regulation of private schools such as ours in countries in which we operate in Europe is quite limited, except as described in the country sections below. There is a relatively simple registration regime for private schools, which is not focused on operations or curriculum, and there are few, if any, restrictions on fees. In addition, all of these countries are part of the European Union, which greatly facilitates the applicable administrative formalities.

Poland Under Polish law, all private primary schools (‘szkoła podstawowa’) and junior high schools (‘gimnazjum’), including Grades 1 through 9, must have equal status with Polish public schools. To this end, private primary schools and junior high schools must comply with terms and conditions established by Polish law, unless the Minister of Education gives a special authorisation permitting exceptions from such terms and conditions. Private schools are registered by the local authorities. In the case of our primary school, junior high school and high school in Poland, the competent local authority is the President of the capital city of Warsaw. Our primary school, junior high school and high school are duly registered with the registry of non-public schools and institutions maintained by the President of the capital city of Warsaw. The Minister of Education has given our junior high school and high school special authorisations allowing them to employ foreign teachers and teach the National Curriculum. We operate our school in Poland as a limited liability company.

The Czech Republic Our school in Prague, the English International School Prague, operates as a corporation under various licences, including those covering specialised retail operations and English language teaching. All licences are in full force and effect and are issued for an indefinite period.

138 The English International School Prague operates as a foreign school established by a foreign legal entity and is not registered in the Czech registry of schools. This precludes the school from obtaining government subsidies. In 2000, the Czech Ministry of Education ruled that Czech students at the school may fulfil their mandatory school attendance requirements at the English International School Prague. In order for the Czech authorities to recognise the educational qualifications earned by students at the school, the students need to arrange with a Czech school to take Czech examinations for certain subjects. Studying at the English International School Prague is recognised by the Czech Ministry of Education as being equivalent to studying at a Czech secondary school for the purpose of the Czech pension insurance and state social security systems relating to compulsory education, so long as the grade levels overlap with Czech secondary school levels. The English International School Prague has the appropriate licences to conduct its activities as well as a general uncertified licence that covers the provision of various services, including extracurricular education and training, courses, seminars and lectures. These licences are sufficient to operate an educational institution which is not a Czech school. We operate our school in the Czech Republic as a company and extract profits accordingly.

Hungary Under Hungarian law, a nondomestic educational entity may operate in Hungary if it is validly accredited under the law of its home country. Our school in Budapest, the British International School Budapest is accredited with Edexcel International and the Examinations Board. In addition, British International School Budapest is registered with the Hungarian Minister of National Resources and has a valid licence to carry on educational activities in Hungary. British International School Budapest is a separate legal entity established under Hungarian Act No. LXXIX of 1993 on Public Education, and was founded and is operated by the British International School Foundation. The British International School Budapest holds an operating permit granted by the Ministry of Education (now Ministry of National Resources).

Slovakia Under the laws of Slovakia, a private school can be established only if it forms part of a school system and the Ministry of Education has determined that it has been integrated into that school system. These requirements have been met by our school in Bratislava. British International School Bratislava operates as a legal entity on a not for profit basis and the founder has no right to dividends or similar distributions from the school. Under Slovak law, any use of profits from school fees is limited to operational expenses, financing of salaries, including insurance payments for mandatory public health insurance, social insurance, contributions for pension savings, modernisation of educational facilities, the development of the school, solving of emergency situations and the improvement of the quality of the services provided by it. The British International School Bratislava has received approval by the Ministry of Education for the integration into the network of schools and educational facilities in Slovakia Republic for the private primary school, nursery and private high school. The British International School Bratislava is duly registered with the statistical office.

Spain Education is acknowledged to be a fundamental right in the 1978 Spanish Constitution (Constitución Española), the main terms of which are set forth in two organic laws: (i) Organic Law on the right to education (Ley Órganica 8/1985, de 3 de julio, reguladora del derecho a la educación), which develops the basic rights and principles set forth in the Spanish Constitution regarding education, such as the right to receive an education, parents’ right to choose their

139 children’s educational centre, parents’ freedom of association, etc.; and (ii) Organic Law on Education (Ley Órganica 2/2006, de 3 de mayo, de Educación), which, on the basis of the principles of offering universal quality education cooperation at all levels and achieving the European Union’s goals in the education sector, this law sets forth the main organisation and planning of school-level education, teachers, educational centres, inspection and the allocation of public sector resources. Spanish privately-owned foreign schools, as is International College Spain, S.A.U., are regulated under the Royal Decree 806/1993 (Real Decreto 806/1993, de 28 de mayo, por el que se regula el régimen de los centros docentes extranjeros en España, hereinafter, the “Royal Decree”). In order to carry out their business in Spain, the aforementioned schools shall obtain an opening and functioning authorisation from the Spanish education authorities. Once obtained, they shall be registered within the Public Registry of Schools and are subject to inspection by the Spanish education authorities. In order to obtain the foregoing authorisation, foreign privately-owned schools must satisfy, along with certain basic Spanish requirements (such as adequate hygiene and safety conditions at the school premises), the legal requirements set forth by their domestic education authorities in order for the education received to be officially valid in their country, which shall be proved to the Spanish education authorities generally by means of a certificate issued by their relevant domestic authorities or their diplomatic representation in Spain (such as the Embassy or Consulate). In addition, in order to be able to teach Spanish students, pursuant to the Royal Decree, the teaching of the foreign educational curriculum shall be completed with certain Spanish-specific contents.

Switzerland Under Swiss law, operating and teaching in a private boarding school is subject to authorisation in accordance with applicable provisions of both Swiss federal and cantonal law regarding, in particular, the protection of minors and private education. Our schools in the canton of Vaud operate under the supervision of the cantonal authority, the Department of Education and Youth. The authorisation for the director to operate a private boarding school and the authorisations for the teachers to teach in the school are individual. The direction of the private school must confirm to the competent authority that all teachers meet the requirements. The Vaud Department of Education and Youth can verify, if necessary by examinations, that the education provided in a private school is at least equivalent to the education received in public schools. We operate our schools in Switzerland as a company and extract profits accordingly.

ME/SEA

Abu Dhabi, United Arab Emirates The Abu Dhabi Education Council (“ADEC”) regulates education institutions based in the Emirate of Abu Dhabi and has developed minimum standards for non-government schools. A proprietor intending to establish a new non-government school in Abu Dhabi must make an application to ADEC, in order to obtain a provisional licence. Under the laws of the Emirate of Abu Dhabi, all private schools are required to register with the ADEC and to allow inspections of their sites. BISAD registered accordingly and obtained such a licence, allowing the school to open on 6 September 2009. BISAD must continue to demonstrate on-going compliance with ADEC’s By-Laws for Non-Government Schools in order to qualify for annual licence renewal. In order to assess whether a school meets the criteria, a team from ADEC inspects the school approximately every

140 two years and compiles a report based on the school’s performance against nine inspection standards. ADEC also requires each licensed, non-government school to prepare an annual report to publicly disclose the school’s educational, financial performance and other policies of the school, as identified by the Director-General of ADEC. The ability for BISAD to increase tuition fees is restricted by law. The Ministerial Resolution No. (4592) of 2001 on the Executive Regulation of the Federal Law (28) of 1999, Concerning Special & Further Education as amended by Ministerial Resolution No. 203/1 of 2008 on the Controls of Private School Fees Increase (the “Resolution”) governs the ability of private schools to increase their tuition fees. Broadly, the Resolution limits the rate of increase to: (i) between 5% and 10% in the event that one year has lapsed since the last approved increase; (ii) between 10% and 20% in the event that two years have lapsed since the last approved increase; and (iii) between 20% and 30% in the event that three years have lapsed since the last approved increase. Authority to approve increases within these limits has been delegated from the Ministry of Education to ADEC. Any proposed increase must be justified on grounds such as the improvement of student services, development of school buildings or the incorporation of new technology into teaching methods. We intend to run our school in Abu Dhabi through British International School LLC. We entered into a definitive agreement to acquire the 49% equity interest in BISAD owned by an affiliate of our parent in September 2012. We continue to work with the local education authority to effect the transfer of the shareholding. In accordance with the provisions of the UAE Federal Commercial Companies Law No. 8 of 1984 (as amended) (the “Law”), the shares of a UAE partner in a limited liability company (“LLC”) should not be less than 51% at all times. Although the Law provides that the capital of a LLC should be divided into equal shares and further confirms that the profits and losses shall be equally divided amongst the shares, it qualifies this general provision by stating “unless otherwise stipulated in the memorandum of association”. It has been a widely accepted practice to provide in the memorandum of the LLC that the profits and losses of a LLC will be shared in a ratio different to that of the shareholder’s stake.

Qatar The regulation and supervision of schools in Qatar is the ultimate responsibility of the Ministry of Education and the Supreme Education Council (the “SECQ”). The legal and regulatory regime distinguishes between two classes of schools — namely government schools which are directly controlled by the Qatari authorities and which offer free-of-charge schooling to all children in Qatar who hold Qatari nationality and are governed by Public Schools Law, and the private sector, which includes our operations in Qatar. Private and independent schools in Qatar are governed by Qatari Law No. 11 of 2006 Regarding Independent Schools (as amended) and the Private Schools Law, as well as regulations issued by the SECQ. These regulations govern matters such as licensing and inspection.

Thailand

Regulation of private schools in Thailand A private school business must be conducted in accordance with the rules and procedures specified in the Private Schools Act B.E. 2550 (2007) (subsequently amended by the Private Schools Act (No.2) B.E. 2554 (2011) (the “Private Schools Act”), which has replaced the Private Schools Act B.E. 2525 (1982). The Private Schools Act reforms the previous supervisory system to promote self-management. The Office of the Private Education Promotion Board, under the supervision of the Office of the Permanent Secretary for Education, is responsible for the supervision of our school in Thailand. The monitoring, evaluation and standards that a private school is expected to comply with in Thailand are the same as those for Thai public schools.

141 The Private Schools Act requires that a private school must hold a school permit in order to operate. One of the main conditions for obtaining a permit to operate a school through a private limited company under the Private Schools Act is that not less than half of the total number of shares and shareholders must be Thai persons. Under the Private Schools Act, there are two separate entities which comprise the school: (i) the school entity and (ii) the permit holder (our Thai school company) that owns the school entity. As the school entity is a separate entity from the permit holder, it is managed by the school board under the school charter (which sets out the basis on which the school should be operated). Our Thai school company, as permit holder, is the school entity’s authorised representative and a member of the school board. Currently, our school in Thailand holds a school permit under the Private Schools Act, a school board has been appointed and a school charter is in place.

Regulation of Transfers of Foreign Exchange Thai foreign exchange controls are administered by the Bank of Thailand on behalf of the Ministry of Finance, pursuant to the Exchange Control Act B.E. 2485 (1942), as amended. The Bank of Thailand has granted commercial banks and certain other entities the authority to conduct foreign exchange transactions as authorised agents of the Bank of Thailand. The Bank of Thailand instituted measures in 1998 to restrict certain foreign exchange related transactions by domestic financial institutions with non-residents of Thailand and to safeguard against instability and speculation in the domestic currency market. The outward remittance from Thailand of dividends after payment of the applicable Thai taxes, if any, may be made without the requirement to file a specified form to the relevant authorised agent if the amount is less than US$50,000 (or the equivalent amount in the relevant currency) per remittance. If the amount is US$50,000 or above (or its equivalent in the relevant currency), a specified form must be submitted to the authorised commercial bank together with documents or evidence as to the particular transaction. Dividends paid to a non-resident must be converted into foreign currency prior to the outward remittance from Thailand.

North America

United States Schools in the United States are subject to national, state and local regulations and licensing requirements. We have policies and procedures in place to assist in complying with such regulations and requirements. These regulations and the administrative bodies in charge of these regulations vary from jurisdiction to jurisdiction and may apply differently within the same jurisdiction to elementary, middle school and high schools. In most jurisdictions, these agencies conduct scheduled and unscheduled inspections of the schools and licenses must be renewed periodically. Most jurisdictions establish requirements for background checks or other clearance procedures for new employees of schools. Repeated failures of a school to comply with applicable regulations can subject the school to sanctions, which might include probation or, in more serious cases, suspension or revocation of the school’s license to operate and could also lead to investigations of our other schools located in the same jurisdiction. In addition, this type of action could lead to negative publicity extending beyond that jurisdiction and potentially affecting our other locations. We believe that our operations are in substantial compliance with all material regulations applicable to our business. However, there is no assurance that a licensing authority will not determine a particular school to be in violation of applicable regulations and take action against that school and possibly other schools in the same jurisdiction. In addition, there may be unforeseen changes in regulations and licensing requirements, such as changes in

142 the required ratio of child center staff personnel to enrolled children that could have a material adverse effect on our operations. States in which we operate routinely review the adequacy of regulatory and licensing requirements and implement changes, which may significantly increase our costs to operate in those states.

Taxation

China

Our operations in China are subject to the Interim Regulations. However, the Interim Regulations do not address tax matters. Prior to the adoption of the Enterprise Income Tax Law (the “New EIT Law”) on 6 December 2007, many localities had local “tax” incentives in the forms of subsidies, tax rate reduction and rebates to attract foreign investments. However, with effect from 1 January 2008, the effective date of the New EIT Law, tax incentives could only be granted directly by the central government (the State Council), or indirectly through the State Administration of Taxation and Ministry of Finance. As a result, local governments are no longer permitted to offer tax incentives. Any preferential tax treatments granted to our schools by local tax authorities are subject to review and may be adjusted or revoked at any time.

Shanghai. Until 31 December 2007, our schools in Shanghai paid enterprise tax at a rate of 15%. At the beginning of tax year 2008, the New EIT Law imposed the new 25% enterprise income tax rate for foreign taxpayers previously subject to preferential tax treatment. This higher rate was phased in over four years. As a result, the enterprise tax rate applicable to our schools in Shanghai increased to 18% for the 2008 tax year (which is the calendar year), 24% for the 2011 tax year and 25% from 1 January 2012. In addition, there is a risk that if the preferential tax treatment we previously enjoyed is successfully challenged by the relevant tax authorities, we may be liable for additional taxes with regard to prior periods and subject to penalties or monetary sanctions. Our operations in Shanghai are subject to business tax, which is a tax on revenue, and is levied at a rate of 5%. Beijing. With effect from 1 January 2008, our schools in Beijing are subject to enterprise tax at the statutory enterprise tax rate of 25% under the New EIT Law. No business tax is paid since the Beijing Education Commission has granted to all the international schools in Beijing the status of degree-granting educational providers, which are exempt from business tax. Chinese withholding tax. We are generally subject to withholding tax on dividends or distributions paid by our subsidiaries in China at a rate of 10%. A new Double Taxation Agreement between China and the United Kingdom was signed on 27 June 2011 which, when it comes into force, will reduce the withholding tax rate on dividends paid by our subsidiaries in China to the United Kingdom to 5% subject to various conditions being met. Withholding tax paid on dividends received from China prior to 1 July 2009 is eligible for foreign tax credit against UK corporation tax to the extent that UK corporate tax is payable on dividends received. As a result of a change under UK tax rules, with effect from 1 July 2009, dividends received are no longer included in taxable income and therefore any withholding tax paid in China on such dividends will no longer be eligible for foreign tax credit treatment or treated as a deductible expense (although we may still elect to include such dividends in taxable income in order to claim a deduction against UK taxable income).

Europe In the United Kingdom, the statutory corporation tax rates applicable to FY2010, FY2011 and FY2012 were 28%, 27% and 25%.

143 Elsewhere in Europe, tax is provided on the profit/loss of our schools located in the Czech Republic, Poland, Spain and Switzerland at varying rates, as follows: • Czech Republic: for the 2006 and 2007 tax years—24%; for the 2008 tax year—21%; for the 2009 tax year—20%; for the 2010 and 2011 tax years—19%; • Poland: for the 2006-2009 tax years—19%; and • Spain: in Spain, the statutory corporation tax rate applicable to the 2008 tax year and subsequent tax years was 30%. • Switzerland: for the 2010 and 2011 tax years—23%. For our UK, Czech, Polish, Spanish and Swiss operating entities, tax is provided on the profit/loss of those entities as adjusted for disallowable items, exempt income and temporary differences. Our school in Budapest is not subject to Hungarian corporation tax, while the core activities of its founder and operator British International School Foundation is also exempt from corporate tax because it operates as charitable foundation. Educational services provided by our school in Bratislava are exempt from corporation tax, Thus, only further profitable activities, other than educational services, provided by our school and activities of its founder British International School Bratislava s.r.o. are subject to Slovak corporation tax. The statutory corporation tax in Slovakia for the 2006-2012 tax years was 19%. In cases where our UK subsidiary receives management fees, royalty payments and other payments under similar arrangements from our schools, those payments are taxed as UK source income at UK corporation tax rates In certain instances, until we establish a local affiliate, we may deliver services under our Learning Services contracts through a UK subsidiary, in which case our profit is taxed at UK corporation tax rates.

ME/SEA

Middle East In the Middle East, our operations in Bahrain and the UAE during the periods reported were not subject to local corporate income tax. Our operations in Qatar are subject to local corporate income tax which is computed on the profits of that portion of our Qatari subsidiary — Education Overseas Qatar LLC — which is held by foreign (i.e., non-Qatari shareholders) (currently 49%), which is held by Education Overseas Limited, an indirect subsidiary of the Issuer incorporated in England and Wales. The rate of corporate income tax payable in Qatar is 10%. In Saudi Arabia we are subject to tax on profits as adjusted for disallowable items and temporary differences at the statutory rate of 20%.

South East Asia

Thailand Our school in Thailand is exempt from corporation tax under Royal Decree (No 284). In order to qualify for this exemption the school must satisfy the condition that it only operates as a private school business and does not carry on any other type of business. There is a risk that the school could lose its eligibility for this exemption if it were to engage in an activity that generated income which was not considered to be income derived from the business of a private school. The school is permitted under Royal Decree (No 284) to distribute its net profits in the form of interim and final dividends and these distributions are exempt from withholding tax.

144 MANAGEMENT

Directors and Executive Officers of the Issuer

Name Age Position Andrew Fitzmaurice...... 52 Chief Executive Officer and Director Graeme Halder ...... 50 Chief Financial Officer and Director Alan Kelsey ...... 64 Chairman Jack Hennessy ...... 44 Director Kosmas Kalliarekos ...... 48 Director

Audit Committee of the Issuer

The primary duties of the audit committee are, among other things, to review and supervise our financial reporting process and internal control systems. The audit committee is responsible for, among other things:

• selecting the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors;

• reviewing with the independent auditors any audit problems or difficulties and management’s response; • discussing the annual audited financial statements with management and the independent auditors; • reviewing major issues as to the adequacy of our internal controls and any special audit steps adopted in light of material control deficiencies; • annually reviewing and reassessing the adequacy of our audit committee charter; and • meeting separately and periodically with management and the independent auditors. The audit committee is comprised of 3 members, namely Alan Kelsey, Jack Hennessy and Kosmas Kalliarekos. The audit committee is chaired by Jack Hennessy.

Executive Officers of Nord Anglia Education Limited The executive officers of Nord Anglia Education Limited are as follows:

Name Age Position Peter Burdon ...... 53 Chief Operating Officer Professor Deborah Eyre ...... 59 Education Director Philippe Lagger ...... 45 Corporate Development Director Nicky Duggan-Redfern ...... 44 Group HR Director

Andrew Fitzmaurice has served as our chief executive officer and as a member of our board since April 2003. From March 2000 until March 2003, Mr. Fitzmaurice served as chief executive officer of easyCar.com, an international online automobile rental company. Prior to his tenure at easyCar.com, Mr. Fitzmaurice spent 13 years at TNT Express UK where he served in a variety of positions, including as division managing director. Mr. Fitzmaurice graduated from the University of Wales Cardiff, Magna Cum Laude, with a degree in economics.

145 Graeme Halder has served as our chief financial officer since October 2010. Mr. Halder has more than 20 years’ experience serving as a director and CFO of both privately held and publicly listed companies with turnover ranging from $75 million to $3 billion in sectors including hospitality and leisure, retail and security services. Prior to joining us, Mr. Halder was the Interim CFO of Camco International, an AIM listed company with operations in China, Southeast Asia, Russia, Africa and the US. For four years, Mr. Halder served as CFO of Command Security Corporation, a NASDAQ quoted company with offices throughout the US. Mr. Halder has been an Associate Chartered Accountant since 1987.

Alan Kelsey has served as a member of our board of directors since November 2003 and became the chairman in January 2005. Prior to joining our Company, Mr. Kelsey had more than 30 years’ experience in the investment banking industry and commerce. Mr. Kelsey was the group corporate development director at National Express Group PLC, where he served as one of three executive directors between 1996 and 1998. Also, Mr. Kelsey served as the senior independent director at PD Ports PLC and is currently serving as the senior independent director at Stobart Group Ltd. Mr. Kelsey has a BA and MA from Oxford University and is a fellow of the Institute of Logistics and Transport. In addition, Mr. Kelsey is a trustee of the Prince’s Teaching Institute.

Jack Hennessy has served as a member of our board of directors since August 2008. Since January 2001, Mr. Hennessy has served as a managing director of Baring Private Equity Asia Pte. Ltd., where he also serves as a member of the firm’s investment committee and portfolio management committee. Mr. Hennessy graduated from Monash University in Australia with degrees in engineering and science and received an M.B.A. from INSEAD. Kosmas Kalliarekos has served as a member of our board of directors since August 2008. Since 2004, Mr. Kalliarekos has served as a managing director of Baring Private Equity Asia Limited, where he also serves as a member of the firm’s investment management team, portfolio management committee and board of advisors. Prior to joining Baring Private Equity Asia Limited, Mr. Kalliarekos was a founding member, senior partner and member of the executive committee of Parthenon, where he founded and headed the Global Education Industry Center of Excellence. Mr. Kalliarekos graduated from The Wharton School of Business at the University of Pennsylvania and received an M.B.A. with high distinction from Harvard Business School. Peter Burdon has served as our chief operating officer since November 2009 and, prior to that date, served as our corporate development director beginning in August 2009. Prior to joining our company, Mr. Burdon served as chief executive officer of Instore PLC from 2007 until 2009. From 2001 until 2007, Mr. Burdon served as chief executive officer of Thorntons PLC. Mr. Burdon previously held positions with The Boots company and McKinsey and Co. Mr. Burdon graduated from the University of Manchester with a degree in chemical engineering and received an M.B.A. from the University of New South Wales. Professor Deborah Eyre has served as our Education Director since December 2010 and as our senior educational consultant for the previous two years. Prior to working with Nord Anglia Education Professor Eyre was Director of the UK government’s flagship National Academy for Gifted and Talented Youth (NAGTY), based at the University of Warwick, and responsible for gifted education policy in all English schools (2002-2008). Between 1997-2002, Professor Eyre served as Deputy Dean at the Oxford Brookes University Institute of Education responsible for research, post-graduate teaching and enterprise activity. During her career, Professor Eyre has worked in a wide variety of educational positions and has advised governments and educational foundations in Hong Kong, South Africa, Kingdom of Saudi Arabia and Singapore on K-12 education. She is a Visiting Senior Research Fellow at the University of Oxford and has an Honorary Professorship at University of Warwick.

146 Philippe Lagger has served as our Corporate Development Director since January 2010. Mr. Lagger joined Nord Anglia Education in September 2009 as Managing Director for College Champittet. Prior to that, from January 2006 to June 2009 he was Investment Director with the private equity firm Lydian Capital, where he generated and led initiatives in the education, food and leisure sectors. Mr. Lagger started his career in Ciba Specialty Chemicals in Switzerland and India and then became a member of the Tetra Laval Group’s M&A team from February 2000 to December 2005. Mr. Lagger earned an MSc from the Swiss Federal Institute of Technology and an MBA from the International Institute for Management Development in Lausanne, Switzerland.

Nicky Duggan-Redfern has served has served Nord Anglia Education since 30 January 2012. In her new role as Group HR Director, based in Hong Kong, Ms. Duggan-Redfern is responsible for leading the development, implementation and delivery of our HR strategies across the group. Prior to joining us, Ms. Duggan Redfern worked for HSBC as the Regional Finance Head of Organisation Development, working with a community of 2,500 across 22 countries in the Asia Pacific region, as well as the global lead on a number of “people change” projects for the group. Prior to that Ms. Duggan-Redfern was the HR Director of a Creative Arts Tertiary Institute in Singapore, the ASEAN recruitment lead for IBM, Singapore, and held numerous HR-related roles with Flight Centre in their head office in Brisbane, Australia. Ms. Duggan-Redfern graduated with a BSc (Hons) degree in Psychology from the University of Stirling, Scotland.

Board Committees of Nord Anglia Education Limited

Compensation Committee The compensation committee will assist the board in reviewing and approving the compensation structure, including all forms of compensation, relating to our directors and executive officers. Our chief executive officer may not be present at any committee meeting during which his compensation is deliberated. The compensation committee will be responsible for, among other things: • reviewing and approving the total compensation package for our senior executives; • reviewing and recommending to the board of directors with respect to the compensation of our directors; and • reviewing periodically and approving any long-term incentive compensation or equity plans, programmes or similar arrangements, annual bonuses, employee pension and welfare benefit plans. The compensation committee is comprised of 3 members, namely Kosmas Kalliarekos, Alan Kelsey and Jack Hennessy. The compensation committee is chaired by Jack Hennessy.

147 PRINCIPAL SHAREHOLDERS

The following table sets forth certain information regarding ownership of our outstanding shares as at 1 June 2013 by those persons who beneficially own more than 5% of any class of our outstanding shares, as recorded in the register of shareholders of the Issuer.

Shares beneficially Shareholders of the Issuer owned Capital % Nord Anglia Education, Inc...... 67,541,555 100.0%

Shares beneficially Shareholders of Nord Anglia Education, Inc. owned Capital % Baring Private Equity Asia(1)(2)...... 62,805,520 93.0% Management ...... 1,626,265 2.4% Others(3) ...... 3,109,770 4.6%

(1) Baring Private Equity Asia beneficially owns our ordinary shares through its indirectly wholly-owned subsidiary, Premier Education Holdings Limited. As the sole shareholder of the entities that indirectly control Baring Private Equity Asia, Jean Eric Salata may be deemed to share voting and dispositive power with respect to the shares beneficially owned by Baring Private Equity Asia through its indirect ownership of Premier Education Holdings Limited, but he disclaims beneficial ownership of such shares. On 28 August 2008, Baring Private Equity Asia acquired our UK listed predecessor in a going-private transaction. (2) Baring Private Equity Asia refers to The Baring Asia Private Equity Fund IV, The Baring Asia Private Equity Fund III and two affiliated controlled co-investment vehicles, which, through their indirect ownership of Premier Education Holdings Limited, are the beneficial owners of our shares. (3) Representing direct and indirect interests.

148 CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Purchase of Nord Anglia Education shares in the Acquisition from Alan Kelsey and Andrew Fitzmaurice

On 28 August 2008, Nord Anglia Education was acquired in a going-private transaction led by Baring Private Equity Asia pursuant to which Nord Anglia Education shareholders received 460 pence in cash for each Nord Anglia Education share issued or to be issued (the “Offer”). Each of Mr. Kelsey and Mr. Fitzmaurice provided irrevocable undertakings to accept the Offer in respect of 30,000 shares held by Mr. Kelsey and 20,000 shares held by Mr. Fitzmaurice. Such shares held by Mr. Kelsey and Mr. Fitzmaurice represented approximately 0.1 percent of the existing share capital of Nord Anglia Education. Upon the completion of the Offer, the shares held by Mr. Kelsey and Mr. Fitzmaurice were purchased on the same terms as all other shares of Nord Anglia Education purchased in connection with the Acquisition.

Relationship with Baring Private Equity Asia

The Acquisition

On 28 August 2008, Nord Anglia Education was acquired in a going-private transaction led by Baring Private Equity Asia for aggregate consideration of approximately $371.1 million (the “Acquisition”). Subsequent to the Acquisition, Nord Anglia Education was delisted and renamed as Nord Anglia Education Limited. Nord Anglia Education (UK) Holdings plc was incorporated on 13 May 2008 as a private limited company under the Companies Act (1985) for England and Wales.

Certain Issuances of Shares On 22 May 2013, we sold one ordinary share to our direct parent, Nord Anglia Education, Inc. for US$133,400,000. We used the proceeds in partial payment of the consideration in the acquisition of WCL Group limited. In aggregate, we have issued and sold 67,541,555 ordinary shares to Nord Anglia Education, Inc.

Repayment of shareholder loans and loan notes On 28 March 2012, Nord Anglia Education issued the Original Notes and used $182.5 million of the proceeds to repay the senior and mezzanine facilities held by Nord Anglia Education, Inc. outstanding at the time and close out the hedging arrangements in connection with those facilities and $120.0 million of the proceeds to repay outstanding shareholder loans and loan notes held by Nord Anglia Education, Inc. Nord Anglia Education, Inc. then capitalised all remaining shareholder loans and loan notes owed by Nord Anglia Education to it in exchange for additional ordinary shares in Nord Anglia Education.

Acquisition of our Schools in Lausanne, Nyon and Villars-sur-Ollon With effect from 1 September 2009, our direct shareholder acquired College Champittet SA (formerly known as Cime Services SA), from the owner of College Champittet in Lausanne, Switzerland, and another school in Nyon, for total cash consideration of CHF 10.3 million. An affiliate of our direct shareholder paid us a fee of $0.9 million for due diligence services provided in connection with this acquisition. Since the completion of that acquisition, we have also provided educational and commercial services to this school with respect to which we recorded a further $2.0 million in fees in FY2010, $1.8 million of which was subsequently reversed. On 25

149 February 2011, we acquired these schools from our direct shareholder for $30 million paid for with 12,423,954 Class A ordinary shares and 29,763,547 preference shares and in applying our accounting policy chose to use acquisition accounting for common control transactions. We commenced consolidating the results of the school from the acquisition dates. On 14 January 2011, we acquired College Alpin Beau Soleil in Villars-sur-Ollon from our direct shareholder. Our direct shareholder had previously purchased this school from the same vendor as for College Champittet. Following these acquisitions, the vendor became a shareholder of our direct shareholder and took on a key management role within the business. The vendor retained ownership of the school premises in all three locations and we continue to rent these premises from companies which the vendor controls.

Sale and Repurchase of Interest in BISAD On 26 August 2010, we sold our 49% equity interest in BISAD to Premier Education Holdings, our indirect shareholder, for a total consideration of US$10.0 million payable in cash, comprising a US$0.1 million purchase of equity and a US$9.9 million loan repayment which the group and the purchaser deemed in substance to be part of the agreed total consideration. BISAD was the limited liability entity through which we have operated our school in Abu Dhabi since it opened in August 2009. As a result, with effect from 26 August 2010, we ceased to include BISAD in our consolidated financial statements. Premier Education Holdings Limited continued to invest in BISAD following the sale to further develop its operations. On 28 September 2012, we entered into a definitive agreement to re-purchase the 49% equity interest in BISAD. The purchase price of $19.5 million is to be paid in instalments of $5.0 million by 31 August 2013, $7.0 million by 31 August 2014 and $7.5 million by 31 August 2015. On 1 April 2013, we began consolidating the results of BISAD under IFRS, as we obtained effective control of BISAD from that date. We continue to work with the local education authority to affect the transfer of the shareholding.

Relationship with Parthenon

Parthenon Equity Ownership Pursuant to a call option agreement dated 1 October 2009, between Parthenon and Nord Anglia Education Inc. (the “Parthenon Call Option Agreement”), Parthenon held options to subscribe for up to 801,653 class F ordinary shares. The options were conditional upon Parthenon fulfilling its obligations under the Parthenon Consultancy Agreement (as described below). The Parthenon Call Option Agreement expired on 31 August 2010 and was fully exercised.

Parthenon Consultancy Agreement On 18 June 2009, we entered into a consultancy services agreement with Parthenon pursuant to which Parthenon agreed, in consideration for an agreed schedule of fees, payable in cash and our ordinary shares, to provide us with certain consultancy services, including, but not limited to the following: • Sourcing and screening international schools opportunities. Parthenon is responsible for compiling information on certain aspects of the premium schools market, assessing competition, identifying targets, negotiating acquisitions and identifying and managing developer relationships on Nord Anglia Education’s behalf; • Sector specific due diligence. Parthenon is responsible for carrying out diligence on site-specific demand projections, relevant competitor capacity expansion plans, pricing and capital requirements; • Board development. Parthenon is responsible for establishing advisory boards for each new school;

150 • Client development. Parthenon being responsible for developing relationships with leading expatriate employers in target locations and administering bulk sales to ensure rapid fill-up of the new schools; and

• Site development. Parthenon is responsible for developing green-field opportunities for Nord Anglia Education until a stage where Parthenon can hand over these opportunities to Nord Anglia Education’s chosen project manager, who can then apply for necessary licences and oversee the establishment and operation of the school.

Profit Sharing Agreements with Jian Tang and Her Affiliates

In FY2010, we bought out all rights under profit sharing agreements with Jian Tang for $28.2 million as described below.

Nord Anglia Education Limited entered into profit sharing agreements with Jian Tang, our Asia Regional Director, and her affiliates with respect to the British International School Shanghai-Puxi, the British International School Shanghai-Nanxiang and The British School of Beijing-Shunyi, as well as certain schools that we may open in the future. Pursuant to the terms of the agreements, in consideration for certain business development and consultancy services, Ms. Tang and her affiliates were entitled to receive a fee equal to 15% of the net operating profit of each school, which fee was guaranteed by us to be not less than $200,000 per annum for the British International School Shanghai-Puxi and not less than $100,000 per annum for the British International School Shanghai-Nanxiang. In addition, there was a profit sharing arrangement provided in Ms. Tang’s employment contract with the British International School Shanghai. Such arrangement provided that Ms. Tang was entitled to receive a 3% share of the audited annual profits before tax but after management charges, such charges not to exceed $227,820 in respect of the Shanghai school and $113,910 in respect of each of the Beijing School and the Tianjin School, which we subsequently determined not to open.

151 DESCRIPTION OF OTHER MATERIAL INDEBTEDNESS AND CERTAIN FINANCING ARRANGEMENTS To fund our existing operations and to finance our historical working capital requirements, we have borrowed money from various financial institutions and other third parties. As at 28 February 2013, we had total outstanding debt of US$336.5 million, of which US$325.0 million was due under the Original Notes and US$11.5 million was due under the HSBC Facility.

Bridge Loan Agreement On 22 May 2013, we borrowed US$125.0 million under the Bridge Loan Agreement, of which we used US$113.9 million to fund the acquisition of WCL and the remainder to repay the HSBC Facility. We intend to repay borrowings under the Bridge Loan Agreement in full with the proceeds of this Offering.

Senior Secured Revolving Credit Facility

General Nord Anglia Education entered into a senior secured revolving credit facility (the “Senior Secured Revolving Credit Facility Agreement” and the facility advanced thereunder, the “Senior Secured Revolving Credit Facility”) on 21 March 2012. The Senior Secured Revolving Credit Facility provided for borrowings up to an aggregate of $20.0 million but allowed for subsequent increases (by the existing lenders or by acceding new lenders) by up to a further $20.0 million. On 23 July 2012, Barclays Bank PLC increased its commitment under the Senior Revolving Credit Facility from $20.0 million to $30.0 million, and on 28 March 2013, Barclays Bank PLC increased its commitment from $30.0 million to $40.0 million. Loans may be borrowed, repaid and reborrowed at any time.

Maturity The Senior Secured Revolving Credit Facility matures on the earlier of the fifth anniversary of the date of signing Senior Secured Revolving Credit Facility and the date falling six months prior to the maturity date of the PLC Notes. Borrowings must be repaid in full on or prior to that date.

Interest Rate Borrowings under the Senior Secured Revolving Credit Facility Agreement bear interest at LIBOR/EURIBOR plus an applicable margin. The margin was fixed for the first twelve months but thereafter may vary based on the Total Net Leverage ratio.

Security The Senior Secured Revolving Credit Facility is guaranteed by substantially the same guarantors guaranteeing the Notes and is secured by substantially the same collateral, subject to certain agreed security principles. The security is subject to an intercreditor agreement. Security is given by the obligors over their ownership interests in each Guarantor and over the material assets of each Guarantor, subject to agreed security principles. Guarantees and security may at the option of Nord Anglia Education be released in the circumstances set forth in the Indenture and such releases shall be binding on the lenders under the Senior Secured Revolving Credit Facility. Nord Anglia Education shall ensure that other companies in the Restricted Group will accede as Guarantors so that the aggregate EBITDA of the Guarantors (tested annually) shall amount to at least 90% of the Restricted Group’s consolidated EBITDA.

152 Covenants The Senior Secured Revolving Credit Facility contains customary affirmative, restrictive and financial covenants. The Senior Secured Revolving Credit Facility contains, subject to certain modifications, certain of the incurrence covenants and restrictive covenants that are contained in the PLC Indenture for the PLC Notes. The affirmative covenants require: • obtaining, compliance with and maintenance of all authorisations; • compliance with laws and regulations including as to environmental and pensions matters; • payment of taxes; • maintenance of pari passu ranking; • preservation of assets; • providing access; • maintenance of insurances; • preservation and maintenance of intellectual property; • requirement that certain financial ratios are satisfied; • the creation of the security; and • further assurance provisions.

The restrictive covenants include restrictions, among others, relating to: • Nord Anglia Education carrying on other business and the carrying on of business by dormant subsidiaries; • change of business; • treasury transactions (limited to non-speculative interest rate and/or foreign exchange risk hedging in the ordinary course of business); • certain acquisitions, unless certain requirements are fulfilled; • centre of main interests of Guarantors incorporated in Europe; and • compliance with certain Swiss 10/20 non-bank rules.

The restrictive covenants also include a restriction on any Group company purchasing or redeeming the Notes or any other debt replacing the Notes following a refinancing or any other financial indebtedness with a maturity of twelve months or more (“Relevant Debt” where this would reduce the aggregate amount of Relevant Debt to less than $216.67 million) without making a pro rata cancellation and, if applicable, prepayment of the Senior Secured Revolving Credit Facility (for these purposes distinguishing between mandatory purchase or redemption, in which case the principal amount offered in respect of such purchase or redemption shall be used as the basis for such pro rata calculation, and voluntary purchase or redemption, in which case the aggregate amount actually accepted and applied thereto shall be used as the basis for such calculation).

Financial Covenants Under the Senior Secured Revolving Credit Facility Agreement, Nord Anglia Education is obliged to comply with a drawn super senior secured gross debt financial covenant. Under this covenant, the ratio of Drawn Super Senior Gross Debt (as defined therein) to EBITDA (as defined therein) must not exceed a specified level for each relevant quarter (the “Drawn Super Senior Gross Leverage Ratio”). The Drawn Super Senior Gross Leverage Ratio shall not exceed 0.75 to 1.00. This financial covenant is calculated and tested quarterly on a rolling twelve month basis by reference to our consolidated annual financial statements and our consolidated quarterly financial statements.

153 In addition, utilisations of the Senior Secured Revolving Facility are only permitted to the extent that the amount of utilisation, when aggregated with the then-outstanding amount of Drawn Super Senior Gross Debt, would not result in a notional pro forma non-compliance with the Drawn Super Senior Gross Leverage Ratio calculated for such purposes using such aggregated amount of Drawn Super Senior Gross Debt and EBITDA as at the end of the immediately preceding quarter date. The Senior Secured Revolving Credit Facility Agreement provides for customary events of default (subject to materiality thresholds, grace periods and other exceptions and qualifications), including: • non-payment; • breach of the financial covenants and failure to deliver a compliance certificate as required; • breach of other covenants and other obligations; • misrepresentation; • cross default; • insolvency; • insolvency proceedings; • creditor’s process; • unlawfulness and invalidity; • breach by a party to the Senior Secured Revolving Facility Agreement of the Intercreditor Agreement and failure by other parties thereto (other than a Finance Party or an Obligor) to comply in any material respect with their obligations under the Intercreditor Agreement; • cessation of business; • change of ownership of Obligor other than the Company; • audit qualification; • expropriation; • repudiation/rescission; • litigation; and • material adverse change.

Governing Law The Senior Secured Revolving Credit Facility Agreement is governed by and construed and enforced in accordance with English law except that provisions carried across from the Notes Indenture, including restrictive covenants and related definitions, shall be interpreted in accordance with New York law. Any security documents in relation to assets sited in a jurisdiction other than England and Wales shall be governed by the lex situs of these assets.

Intercreditor Agreement In connection with entering into the Senior Secured Revolving Credit Facility Agreement and the Indenture, the Issuer, the Guarantors and certain other subsidiaries of the Issuer and, the security agent entered into the Intercreditor Agreement on 28 March 2012 to govern the relationships and relative priorities among: (i) the lenders under the Senior Secured Revolving Credit Facility Agreement (the “RCF Lenders”); (ii) any persons that accede to the Intercreditor Agreement as counterparties to certain hedging agreements (collectively, the “Hedging Agreements” and any persons that accede to the lntercreditor Agreement as counterparties to the Hedging Agreements are referred to in such capacity as the “Hedge Counterparties”); (iii) the Trustee, on its behalf and on behalf of the holders of the Senior Secured Noteholders (iv)

154 intragroup creditors and debtors; and (v) the direct or indirect shareholder of the Issuer in respect of certain structural debt that the Issuer has or may incur in the future (including any subordinated shareholder loans) among other things, in connection with the documents in respect of the debt that will share in the Collateral (the “Secured Debt Documents”). In addition, the Intercreditor Agreement regulates the relationship between the Issuer and its Restricted Subsidiaries, on the one hand, and shareholders of the Issuer and related parties, on the other hand. The Issuer and each of its Restricted Subsidiaries that incurs any liability or provides any guarantee under the Senior Secured Revolving Credit Facility Agreement or the Indenture are each referred to in this description as a “Debtor” and are referred to collectively as the “Debtors”. In this description “Group” refers to the Issuer and its Restricted Subsidiaries. The Intercreditor Agreement will set forth: • the relative ranking of certain indebtedness of the Debtors; • the relative ranking of certain security granted by the Debtors; • when payments can be made in respect of certain indebtedness of the Debtors; • when enforcement actions can be taken in respect of that indebtedness; • the terms pursuant to which that indebtedness will be subordinated upon the occurrence of certain insolvency events; • turnover provisions; and • when security and guarantees will be released to permit a sale of any assets subject to Security (the “Security”). The Intercreditor Agreement contains provisions relating to future indebtedness that may be incurred by the Issuer and the Guarantors that is permitted by the Senior Secured Revolving Credit Facility Agreement and the Notes to rank pari passu with the Senior Secured Revolving Credit Facility Agreement and the Notes and be secured by the Collateral, subject to the terms of the Intercreditor Agreement, such debt being “Pari Passu Liabilities” and the creditors such debt being “Pari Passu Creditors”. Each lender of a credit facility which shares security in accordance with the key terms of the Intercreditor Agreement is a “Credit Facility Lender” and the liabilities of the Debtors to the Credit Facility Lenders are the “Credit Facility Lender Liabilities”. Unless expressly stated otherwise in the Intercreditor Agreement, in the event of a conflict between the terms of the Senior Secured Revolving Credit Facility Agreement, any hedging agreement, pari passu debt document, any security document, any intra-group debt document or shareholder debt document or the Indenture and the Intercreditor Agreement, the provisions of the Intercreditor Agreement will prevail. By accepting a Note, holders of the Notes are deemed to have agreed to, and accepted the terms and conditions of, the Intercreditor Agreement. The following description is a summary of certain provisions, among others, contained in the Intercreditor Agreement. It does not restate the Intercreditor Agreement in its entirety, and we urge you to read that document because it, and not the description that follows, defines your rights as holders of the Notes.

Ranking and Priority The Intercreditor Agreement provides, subject to the provisions in respect of permitted payments described below, that the Credit Facility Lender Liabilities and the liabilities of the Debtors with respect to the Senior Secured Revolving Credit Facility and the hedging agreements to the extent designated as having a super senior mark-to-market limit (and the aggregate amount of the super senior hedging mark-to-market limits may not (and therefore the exposure of the Debtors thereunder that rank super senior cannot) exceed $10 million at any one time) (the “Super Senior Hedging Liabilities”; together with the Credit Facility Lender Liabilities, the “Super Senior Liabilities”), the liabilities of the Debtors in respect of the Notes (the “Senior

155 Secured Notes Liabilities”), the liabilities of the Debtors with respect to the hedging agreements to the extent such hedging liabilities are not Super Senior Hedging Liabilities (the “Hedging Liabilities”), the liabilities of the Issuer in respect of the Notes (the “Senior Notes Issuer Liabilities”), the liabilities of the Debtors under the Note Guarantees (the “Senior Notes Guarantee Liabilities”), the liabilities of the Debtors to the Trustee (the “Trustee Liabilities”), and certain other unsecured liabilities will rank in right and priority of payment in the following order: • first, the Super Senior Liabilities, the Senior Secured Notes Liabilities, the Hedging Liabilities, the Trustee Liabilities and the Pari Passu Liabilities pari passu and without any preference between them; • second, certain intercompany obligations of the Issuer and the Guarantors (the “Obligors”) to the Issuer and its Restricted Subsidiaries (the “Intra-Group Liabilities”) and investor debt (which consists of certain liabilities owed by any Obligor to any shareholder, direct or indirect, of the Issuer,) (the “Shareholder Liabilities” and together with the Intra-Group Liabilities, the “Subordinated Liabilities”). The parties to the Intercreditor Agreement have agreed in the Intercreditor Agreement that the security provided by the Debtors and the other parties for the Super Senior Liabilities, the Hedging Liabilities, the Pari Passu Liabilities and the Senior Secured Notes (together the “Secured Liabilities”) will rank and secure the Super Senior Liabilities, the Senior Secured Notes Liabilities, the Hedging Liabilities and the Pari Passu Liabilities pari passu and without any preference between them (but only to the extent the security is expressed to secure those Liabilities) except as provided below.

Permitted Payments of Subordinated Debt The Intercreditor Agreement permits, inter alia, payments to be made by the Debtors under the Senior Secured Revolving Credit Facility, the Indenture and the Pari Passu Liabilities and payments by the Issuer of Senior Notes Issuer Liabilities and does not in any way limit or restrict any payment by any Debtor of them in the ordinary course of business. The Intercreditor Agreement also permits payments from time to time when due to lenders owed any Intra-Group Liabilities (“Intra-Group Liabilities Payments”) if at the time of payment no acceleration event has occurred in respect of a Credit Facility, the Pari Passu Liabilities, the Senior Secured Notes Liabilities or the liabilities of the Debtors under the Senior Notes (the “Senior Notes Liabilities”) (an “Acceleration Event”). The Intercreditor Agreement permits Intra-Group Liabilities Payments if such an Acceleration Event occurs if (i) prior to the date on which all Secured Liabilities are discharged (the “Secured Liabilities Discharge Date”), with the consent of an Instructing Group, see “—Manner of Enforcement”, or (ii) that payment is made to facilitate payment of the Secured Liabilities. Payments may be made on shareholder debt from time to time when due if: (i) the payment is not prohibited by the Senior Secured Revolving Credit Facility Agreement and the Indenture and the instruments governing the Pari Passu Liabilities (the “Pari Passu Debt Documents”); (ii) prior to the date on which all Super Senior Liabilities are discharged (the “Super Senior Discharge Date”), the Instructing Group gives written consent to such payment being made; (iii) on or after the Super Senior Discharge Date but prior to the Senior Secured Notes Discharge Date, the Majority Senior Secured Creditors (i.e. more than 50% of the total Senior Secured Credit Participation) give written consent to such payment being made.

Creditor Representative Under the Intercreditor Agreement, the parties appoint various creditor representatives. “Creditor Representative” means: (a) in relation to the RCF Lenders, the Revolving Credit Facility agent (the “RCF Agent”); (b) in relation to the Credit Facility Lenders under any other Credit Facility, the facility agent in respect of that credit facility (an “Additional Credit Facility Agent”, and, together with the RCF Agent, a “Credit Facility Agent”);

156 (c) in relation to the Senior Secured Noteholders, the Senior Secured Notes Trustee; (d) in relation to the Pari Passu Creditors, the creditor representative for the Pari Passu Creditors (the “Pari Passu Debt Representative”); and (e) in relation to any Hedge Counterparty, such Hedge Counterparty which shall be its own Creditor Representative.

Permitted Senior Secured Notes Payments The Debtors may make payments of the Senior Secured Notes Liabilities at any time in accordance with the Senior Secured Notes Documents and to the extent such payments are not prohibited under the terms of the Credit Facility.

Decision Making Certain key terms are used in relation to the decision making under the Intercreditor Agreement. “Majority Senior Secured Creditors” means Senior Secured Noteholders and Pari Passu Creditors whose outstandings under the Senior Secured Notes or Pari Passu Debt Documents, and the Hedging Liabilities of any Senior Secured Creditor, together exceed 50% of the aggregate of all such amounts. “Majority Super Senior Creditor” means Credit Facility Lenders whose drawn and undrawn commitments under the Credit Facilities, and the Super Senior Hedge Counterparties whose Hedge Liabilities, together exceed 662⁄3% of the aggregate of all such amounts. “Senior Secured Notes Required Holders” means Noteholders holding Notes in the amount required to approve the relevant matter under the Indenture, or if no such amount is specified, at least the majority of outstanding Notes (disregarding those held by Debtors). “Pari Passu Debt Required Holders” means Pari Passu Required Holders (defined in a similar way to Senior Secured Notes Required Holders). “Instructing Group” means, prior to the discharge of Super Senior Liabilities, the Notes Liabilities and the Pari Passu Liabilities (the “Priority Debt Discharge Date”), the Majority Super Senior Creditors and the Majority Senior Secured Creditors except for in the case of enforcement, certain additional provisions as discussed below.

Entitlement to Enforce Collateral The Security Agents may refrain from enforcing the Collateral unless otherwise instructed by the relevant instructing group. See “—Manner of Enforcement”. The Security Agent may disregard any instructions from any other person to enforce the Collateral and may disregard any instructions to enforce any Collateral if those instructions are inconsistent with the Intercreditor Agreement. The Security Agents are not obligated to enforce the Collateral if they are not appropriately indemnified by the relevant creditors.

Enforcement Instructions-Consultation Periods If either of the Majority Super Senior Creditors or the Majority Senior Secured Creditors wish to instruct the Security Agent to commence enforcement of any Collateral, such group of Creditors must deliver a copy of the proposed instructions as to enforcement (the “Enforcement Proposal”) to the Security Agent and the Creditor Representative for each of the Super Senior Creditors and/or the Senior Secured Creditors (as appropriate) at least 10 Business Days prior to the proposed date of issuance of instructions under such Enforcement Proposal (the “Proposed Enforcement Instruction Date”). Until the Super Senior Discharge Date and subject to the paragraphs below, if the Security Agent has received conflicting enforcement instructions, the Security Agent shall promptly notify the Creditor Representative for each of the Super Senior Creditors and the Senior Secured Creditors and such Creditor Representatives will consult with each other and the Security Agent

157 in good faith for a period of not less than twenty (20) days (or such shorter period as the relevant Creditor Representatives may agree) (the “Initial Consultation Period”) from the earlier of the date of the latest such Conflicting Enforcement Instruction and (ii) the date falling 10 Business Days after the date the original Enforcement Proposal is delivered in accordance with paragraph above, with a view to coordinating instructions as to Enforcement. The Creditor Representatives for each of the Super Senior Creditors and the Senior Secured Creditors shall not be obliged to consult (or, in the case where the Creditor Representatives are in agreement with regard to any proposed enforcement action, no Initial Consultation Period or such shorter consultation period as determined by the Creditor Representatives shall apply) in accordance with paragraph above or paragraph below, if (i) the Collateral has become enforceable as a result of an Insolvency Event; (ii) the Majority Super Senior Creditors or the Majority Senior Secured Creditors determine in good faith (and notifies the Creditor Representatives of the other Super Senior Creditors and the Senior Secured Creditors in writing) that to enter into such consultations and thereby delay the commencement of enforcement of the Collateral could reasonably be expected to have a material adverse effect on: (A) the Security Agent’s ability to enforce any of the Collateral; or (B) the realisation proceeds of an enforcement of the Collateral in any material respect; or (iii) the Senior Secured Notes Trustee, the Senior Secured Hedge Counterparties, the Pari Passu Debt Representative, the RCF Agent and the Creditor Representative of each other Super Senior Creditor agree not Initial Consultation Period is required. If consultation has taken place for at least 20 days as set out in paragraph above (or such shorter period as determined above) (or was not required to occur as provided for in the paragraph above) there shall be no further obligation to consult, the Security agent may act in accordance with the instructions as to enforcement then or previously received from the Instructing Group and the Instructing Group may issue instructions as to enforcement to the Security Agent at any time thereafter. If the Majority Super Senior Creditors or the Majority Senior Secured Creditors (acting reasonably) consider that the Security Agent is enforcing the Collateral in a manner which is not consistent with the Security Enforcement Principles (set out below), subject to the paragraphs above, the Creditor Representatives for the relevant Super Senior Creditors or the Senior Secured Creditors shall give notice to the Creditor Representatives for the other Super Senior Creditors and the Senior Secured Creditors (as appropriate) after which the Creditor Representatives for the other Super Senior Creditors and the Senior Secured Creditors shall consult with the Security Agent for a period of 10 days (or such lesser period as the relevant Creditor Representatives may agree) with a view to agreeing the manner of enforcement provided that such Creditors Representatives shall not be obliged to consult under this paragraph more than once in relation to each enforcement action. A Creditor Representative may only give enforcement instructions that are consistent with certain security enforcement principles (the “Security Enforcement Principles”), including that: The Collateral will be enforced and other action as to enforcement will be taken such that either: (a) all proceeds of enforcement are received by the Security Agent in cash for distribution in accordance with the Intercreditor Agreement; or (b) sufficient proceeds from enforcement will be received by the Security Agent in cash to ensure that when the proceeds are applied in accordance with the Intercreditor Agreement, the Super Senior Liabilities are repaid and discharged in full (unless the Majority Super Senior Creditors agree otherwise).

158 The enforcement action must be prompt and expeditious it being acknowledged that subject to the Intercreditor Agreement, the time frame for the realisation of value from the enforcement of the Collateral or Distressed Disposal pursuant to enforcement will be determined by the Instructing Group provided that it is consistent with the Security Enforcement Objective. On: (a) a proposed enforcement of any of the Collateral over assets other than shares in a member of the Group, where the aggregate book value of such assets exceeds a specified amount (or its equivalent); or (b) a proposed enforcement of any of the Collateral over some or all of the shares in a member of the Group over which Collateral exists, the Security Agent shall (unless it is incompatible with enforcement proceedings in a relevant jurisdiction) appoint a “big four” accounting firm, Grant Thornton, BDO, any reputable and independent internationally recognized investment bank or other reputable and independent professional services firm with experience in restructuring and enforcement in each case selected by the Security Agent acting reasonably and in good faith (a “Financial Advisor”) to opine as expert on: (i) the optimal method of enforcing the Collateral so as to achieve the Security Enforcement Principles and maximise the recovery of any such enforcement action; (ii) that the proceeds received from any such enforcement are fair and reasonable from a financial point of view after taking into account all relevant circumstances at that time; and (iii) that such sale is otherwise in accordance with the Security Enforcement Objective, (“Financial Advisor’s Opinion”). The Security Agent shall be under no obligation to appoint a Financial Advisor or to seek the advice of a Financial Advisor, unless expressly required to do so by the Security Enforcement Principles or under the Intercreditor Agreement. Where the Instructing Group is the Majority Senior Secured Creditors, the Majority Senior Secured Creditors may waive the requirement for a Financial Advisor’s Opinion where sufficient proceeds from enforcement will be received by the Security Agent in cash to ensure that when the proceeds are applied in accordance with the Intercreditor Agreement, the Super Senior Liabilities are repaid and discharged in full. The Financial Advisor’s Opinion (or any equivalent opinion obtained by the Security Agent in relation to any other enforcement of the Collateral in accordance with the Indenture that such action is fair from a financial point of view after taking into account all relevant circumstances) will be conclusive evidence that the Security Enforcement Objective has been met. In the event that an enforcement of the Collateral is over assets and shares referred to above and such enforcement is conducted by way of public auction (or private auction involving a competitive process) or other competitive bid process, any equity investors of the Group, the Super Senior Creditors and the Senior Secured Creditors shall be entitled to participate in such auction on the basis of equal information and access rights as other bidders and financiers in the auction. Nothing in this principle shall require enforcement of Collateral to take place by way of public auction. In the absence of written notice from a Secured Party or group of Secured Parties that are not part of the relevant Instructing Group that such Secured Party(ies) object to any enforcement of the Collateral on the grounds that such enforcement action does not aim to achieve the Security Enforcement Objective (an “Objection”), the Security Agent is entitled to assume that such enforcement of the Collateral is in accordance with the Security Enforcement Objective. If the Security Agent receives an Objection (and without prejudice to the ability of the Security Agent to rely on other advisors and/or exercise its own judgement In accordance with

159 the Intercreditor Agreement), a Financial Advisor’s Opinion to the effect that the particular action could reasonably be said to be aimed at achieving the Security Enforcement Objective will be conclusive evidence that the requirement to aim to achieve the Security Enforcement Objective has been met.

Manner of Enforcement The Instructing Group entitled to give instructions to the Security Agents in respect of enforcement of Collateral comprises the Majority Super Senior Creditors and the Majority Senior Secured Creditors (in each case acting through its respective Creditor Representative) unless an bankruptcy event occurs in which ease the instructions of the Majority Super Senior Creditors shall prevail. However, if before the Super Senior Discharge Date, and no bankruptcy event has occurred, any Security Agent has received conflicting enforcement instructions from the Creditor Representatives then, provided that the instructions from the Majority Senior Secured Creditors (to the extent given) comply with the initial consultation requirements described above and the Security Enforcement Principles, the relevant Security Agent will comply with the instructions from the Majority Senior Secured Creditor provided that if the Super Senior Liabilities have not been fully discharged, or no enforcement has occurred, within six months of the date on which the first such enforcement instructions were first issued, then the instructions of the Majority Super Senior Creditors will prevail.

Turnover The Intercreditor Agreement also provides that if any Super Senior Creditor, Senior Secured Notes Creditor, Senior Secured Hedge Counterparty or Pari Passu Creditor receives or recovers the proceeds of any enforcement of any Collateral and in addition or any creditors of Subordinated Liabilities receive or recover any payment or distribution not permitted under the Intercreditor Agreement or applied other than in accordance with “—Application of Proceeds” below that it shall: • in relation to receipts or recoveries not received or recovered by way of set-off, (i) hold that amount in trust for the relevant Security Agent and separate from other assets, property or funds and promptly pay that amount or an amount equal to that amount to the relevant Security Agent for application in accordance with the terms of the Intercreditor Agreement; and (ii) promptly pay an amount equal to the amount (if any) by which receipt or recovery exceeds the relevant liabilities owed to such creditor to the relevant Security Agent for application in accordance with the terms of the Intercreditor Agreement; and • in relation to receipts and recoveries received or recovered by way of set-off, promptly pay an amount equal to that recovery to the Security Agent for application in accordance with the terms of the Intercreditor Agreement.

Application of Proceeds The Intercreditor Agreement provides that amounts received from the realisation or enforcement of all or any part of the Collateral will be applied in the following order of priority (subject to certain country specific limitations): • first, in payment of the following amounts in the following order: (i) pari passu and pro rata any sums owing to any Security Agent, Receiver, Delegate and any Senior Secured Notes Trustee payable to a Senior Secured Notes Trustee, as the case may be; and then (ii) pari passu and pro rata to each Creditor Representative (to the extent not included in (i) above and excluding any Hedge Counterparty as its own Creditor Representative) of the unpaid fees, costs, expenses and liabilities (anti all interest thereon as provided in the relevant finance documents) of each Creditor Representative and any receiver, attorney or agent appointed by such Creditor Representative under any Collateral document or the Intercreditor Agreement (to the extent that such Collateral has been given in favour of such obligations);

160 • second, pari passu and pro rata in or towards payment of all costs and expenses incurred by the holders of Super Senior Liabilities in connection with any realization or enforcement of the Collateral taken in accordance with the terms of the Intercreditor Agreement or any action taken at the request of any Security Agent; • third, in or towards payment to, on a pro rata basis, (i) the Credit Facility Agent on its own behalf and on behalf of the Lenders for application towards the discharge of the Credit Facility Lender Liabilities; and (ii) the relevant Super Senior Hedge Counterparties for application towards the discharge of the Super Senior Hedging Liabilities; • fourth, pari passu and pro rata to the Senior Secured Notes Trustee on behalf of the Senior Secured Creditors, and the representative of the Pari Passu Creditors on behalf of the Pari Passu Creditors for application towards any unpaid costs and expenses incurred by or on behalf of any Senior Secured Noteholders or Pari Passu Creditors in connection with any realisation or enforcement of the Collateral taken in accordance with the terms of the Collateral documents and the Intercreditor Agreement or any action taken at the request of any Security Agent; • fifth, pari passu to the Hedge Counterparties for application towards the discharge of the Hedging Liabilities (other than the Super Senior Hedging Liabilities) to the Senior Secured Notes Trustee on behalf of the Senior Secured Noteholders for application towards the discharge of the Senior Secured Liabilities, and to the Pari Passu Creditor Representative on behalf of the Pari Passu Liabilities Creditors far application towards the discharge of the Pari Passu Liabilities; and • sixth, after the discharge of all Secured Liabilities, in payment of the surplus (if any) to the relevant Debtor or other person entitled to it.

Additional Indebtedness In the event that any Debtor incurs any additional indebtedness that is permitted to be designated as Super Senior Liabilities under the terms of the Notes and the Revolving Credit Facility and is entitled to be secured by the Collateral, the liabilities in respect of such additional Super Senior Liabilities will share in the proceeds of any enforcement of Collateral on a pro rata basis with the existing Super Senior Liabilities. In the event that any Debtor incurs any additional indebtedness that is pari passu in right of payment with the Senior Secured Notes and that is entitled to be secured by the Collateral, the liabilities in respect of such pari passu indebtedness will share in the proceeds of any enforcement of the Collateral on a pro rata basis with the Senior Secured Notes Liabilities.

Release of the Guarantees and the Security

Non-distressed Disposal In circumstances where a disposal is not being effected (i) by enforcement of Collateral, (ii) after the Collateral has become enforceable or (iii) in the case of a disposal to a person outside the Group, after an Acceleration Event in respect of Secured Liabilities has occurred (a “Distressed Disposal”) and is otherwise not prohibited by the Secured Debt Documents, the lntercreditor Agreement will provide that the Security Agent is instructed and authorized (i) to release the Collateral where permitted to do so by the Secured Debt Documents; and (ii) if the relevant asset consists of shares in the capital of a Debtor, to release the Collateral or any other claim in respect of the Secured Liabilities over the assets of that Debtor and the shares in and assets of any of its subsidiaries.

Distressed Disposal Where a Distressed Disposal of an asset is being effected, the Intercreditor Agreement provides that each of the Security Agent is instructed and authorized: (i) to release the Collateral,

161 or any other claim over that asset; (ii) if the asset which is disposed of consists of shares in the capital of a Debtor, to release (a) that Debtor and any subsidiary of that Debtor from all or any part of its liabilities as borrower under the liabilities governed by the Intercreditor Agreement (“Liabilities”) other than those owed by the Company to a holder (a “Primary Creditor”) of the Super Senior Liabilities, the Senior Secured Notes Liabilities, the Hedging Liabilities, the Senior Notes Liabilities, the Trustee Liabilities and the Pari Passu Liabilities, its liabilities as a guarantor of the Secured Debt or the Senior Notes or otherwise in connection with the Transaction (“Guarantee Liabilities”) or other liabilities it may have to an Intra-Group Lender or Debtor (’’Other Liabilities”); (b) any Collateral granted by that Debtor or any subsidiary of that Debtor over any of its assets; and (c) any other claim of a lender of Intra-Group Liabilities (an “Intra-Group Lender”), or another Debtor over that Debtor’s assets or over the assets of any subsidiary of that Debtor; (iii) if the asset which is disposed of consists of shares in the capital of any holding company of a Debtor, to release (a) that holding company and any subsidiary of that holding company from all or any part of its liabilities as borrower under the Liabilities other than those owed by the Company to a Primary Creditor, its Guarantee Liabilities and Other Liabilities; any Collateral granted by any subsidiary of that holding company over any of its assets; and any other claim of an Intra-Group Lender or another Debtor over the assets of any subsidiary of that holding company; and (iv) if the asset which is disposed of consists of shares in the capital of a Debtor or a holding company of a Debtor provides for the disposal of liabilities and/or the transfer of liabilities to another Debtor. In certain circumstances described in the Intercreditor Agreement, the Security Agents may, instead of releasing a borrowing claim against a Debtor (other than the Issuer), transfer that claim to the direct or indirect acquirer of that Debtor. Enforcement of Collateral in respect of a Distressed Disposal shall be consistent with the Security Enforcement Objective.

Amendment In addition to customary minor, technical or administrative matter amendments by the Security Agent, the Intercreditor Agreement provides that it may be amended with only the consent of the Majority Super Senior Creditors, the Senior Secured Notes Required Holders, the Pari Passu Debt Required Holders, the Senior Notes Required Holders, the Issuer and the Security Agents unless it is an amendment, waiver or consent that has the effect of changing or which relates to any amendment to the order of priority or subordination set out in the Intercreditor Agreement or certain provisions relating to the giving of instructions to the Security Agents or the exercise of discretion by the Security Agents or the amendments provisions in the Intercreditor Agreement which shall not be made without: (i) the Credit Facility Lenders; (ii) the Senior Secured Notes Trustee; (iii) the Senior Notes Trustee; (iv) the Pari Passu Debt Representative; (v) each Hedge Counterparty (to the extent that the amendment or waiver would materially and adversely affect the Hedge Counterparty); and (vi) the Issuer. If however an amendment, waiver or consent affects only one class of secured party and could not reasonably be expected to materially and adversely affect the interests of the other classes, only agreement from the requisite affected class is required. Subject to the paragraphs above and certain other exceptions, no amendment or waiver of the Intercreditor Agreement may impose new or additional obligations on or withdraw or reduce the rights of any party to the Intercreditor Agreement without the prior written consent of the party.

162 In addition the Intercreditor Agreement provides that if and to the extent (i) the Debtors (or any of them) wish to incur incremental borrowings or guarantees thereof or to refinance and thereof, which in any such case is intended to rank pari passu with any Liabilities and/or share pari passu with any existing security interest and/or to rank behind any existing Liabilities and/or to share in any existing security behind such existing Liabilities, and (ii) it is permitted by the terms of the Revolving Credit Facility, the Hedging Agreements, the Senior Secured Notes Indenture and the Pari Passu Debt Documents at that time, than the creditors party to the Intercreditor Agreement will (at the cost of the Issuer) co-operate with the Debtors with a view to enabling such financing or refinancing and such sharing of the security to take place. In each case the Super Senior Creditors, the Hedging Counterparties, the Senior Secured Creditors and the Senior Note Creditors authorize and direct its Representatives to execute any amendment to the Intercreditor Agreement and the other Debt Documents required to reflect such arrangements to the extent so permitted.

Option to Purchase: Senior Secured Noteholders and Pari Passu Creditors

The Senior Secured Notes Trustee and the Pari Passu Debt Representative may, after an Acceleration Event in respect of the Secured Liabilities or any enforcement of Collateral, by giving not less than 10 days’ notice to the Credit Facility Agent, and if appropriate the Hedge Counterparties, require the transfer to them (or to a nominee or nominees), of all, but not part, of the Credit Facility Lenders and Hedge Counterparties. Any such purchase will be on terms which will include, without limitation, payment in full in cash of an amount equal to the Liabilities purchased then outstanding, including in respect of any broken funding costs, as well as; certain costs and expenses (including legal fees) of the Secured Creditors; after the transfer, no Credit Facility Lender or Hedge Counterparty will be under any actual or contingent liability to any Debtor.

Governing Law The Intercreditor Agreement is governed by and construed in accordance with English law. In addition, certain limitation of obligations of certain Group members provided for in the Intercreditor Agreement are expressed to be governed by the applicable local law.

163 DESCRIPTION OF THE NOTES

The senior secured notes (the “Additional Notes”; together with the Original Notes (as defined below), the “Notes”) offered hereby will be issued as additional notes under the indenture (the “Indenture”) dated 28 March 2012, among Nord Anglia Education (UK) Holdings plc (the “Issuer”), the Guarantors (as defined below), Citicorp International Limited, as trustee (the “Trustee”) and Citicorp International Limited, as security agent (the “Security Agent”). The Additional Notes will not be registered under the Securities Act and will be subject to certain transfer restrictions. The Security Documents referred to below under the caption “—Security” define the terms of the security for the benefit of the Notes and the Guarantees. The definitions of certain terms used in this Description of the Notes are set out throughout the text and under the caption “—Certain Definitions”.

The following description is a summary of the material terms of the Indenture and the Security Documents. It does not, however, restate the Indenture and the Security Documents in their entirety, and where reference is made to a particular provision of the Indenture or a Security Document, such reference, including the definitions of certain terms, is qualified in its entirety by reference to all of the provisions of the Notes, the Guarantees, the Indenture and the Security Documents. You should read the Indenture and the Security Documents because they contain additional information and because they and not this description define your rights as a Holder. You may obtain a copy of the Indenture by requesting it from the Issuer at the address indicated under “Registered Office”.

The Indenture, the Notes and the Guarantees are subject to the Intercreditor Agreement. The terms of the Intercreditor Agreement are important to understanding the terms and ranking of the Notes and the Guarantees. Please see the section entitled “Description of Other Material Indebtedness and Certain Financing Arrangements—Intercreditor Agreement” for a summary of the material terms of the Intercreditor Agreement.

Approval in principle has been received for the listing and quotation of the Additional Notes on the Official List of the SGX-ST. The Additional Notes will be traded on the SGX-ST in a minimum board lot size of not less than S$200,000 (or its equivalent in other currencies) as long as the Additional Notes are listed on the SGX-ST and the rules of the SGX-ST so require. The SGX-ST assumes no responsibility for the correctness of any of the statements made or opinions or information contained in this offering memorandum. Admission of the Additional Notes to and quotation of the Additional Notes on the Official List of the SGX-ST are not to be taken as an indication of the merits of the offering, the Issuer, the Guarantors, their respective subsidiaries or associated companies (if any), the Guarantees, or the Additional Notes.

The registered Holder of a Note will be treated as the owner of it for all purposes. Only registered Holders will have rights under the Indenture.

Brief Description of the Structure and Ranking of the Notes, the Guarantees and the Security

The Notes The Additional Notes offered pursuant to this offering memorandum will be issued as additional notes under the Indenture and will be issued on the same terms and conditions (other than the issue date), and as the same series as, the 10.25% Senior Secured Notes due 2017 issued by the Issuer on 28 March 2012 (the “Original Notes”), and will vote on any matter submitted to noteholders with holders of the Original Notes. The Additional Notes will share CUSIP numbers, ISIN numbers and Common Codes and be fungible with the Original Notes.

164 The Notes will: (a) be the Issuer’s general obligations; (b) be secured as set forth below under the caption “—Security”; (c) mature on 1 April 2017, unless earlier redeemed pursuant to the terms thereof and the Indenture; (d) rank equally in right of payment with all of the Issuer’s existing and future debt that is not subordinated in right of payment to the Notes; (e) rank senior in right of payment to any existing and future debt of the Issuer expressly subordinated in right of payment to the Notes; (f) be structurally subordinated to all existing and future debt of Subsidiaries of the Issuer that do not provide Guarantees; (g) be guaranteed on a senior basis by the Guarantors, subject to limitations described under the caption “Limitations on Validity and Enforceability of the Guarantees and Security Interests and Certain Insolvency Law Considerations” and in “Risk Factors—Risks Relating to the Guarantees and the Collateral”; and (h) be effectively subordinated to the Issuer’s existing and future secured debt that is secured by assets that do not secure the Notes, to the extent of the value of the assets securing such debt.

The Guarantees The Guarantors are NA Schools Limited, NA Educational Services Limited, Nord Anglia Education Limited, Nord Anglia Vocational Education and Training Services Limited, Nord Anglia Education Development Services Limited, Nord Anglia Middle East Holding S.P.C., Nord International Schools Limited, The British School Sp. z o.o., British International School Foundation, Collège Champittet SA, Collège Alpin Beau-Soleil SA, La Côte International School SA, NAE Hong Kong Limited, Rice Education Hong Kong Limited and EEE Enterprise Limited. In accordance with the requirements of the Indenture, all members of WCL Group (other than those designated as Unrestricted Subsidiaries and intermediate holding companies in Spain that are legally prohibited from guaranteeing the Notes) will provide Guarantees by 21 July 2013, which is the date 60 days after their becoming Restricted Subsidiaries of the Issuer. Each Guarantee: (a) is a general obligation of the Guarantor that granted such Guarantee; (b) is secured as set forth below under the caption “—Security”; (c) ranks equally in right of payment with all of such Guarantor’s existing and future debt that is not subordinated in right of payment to such Guarantee; (d) is effectively subordinated to such Guarantor’s existing and future secured debt that is secured by assets that do not secure the Notes, to the extent of the value of the assets securing such debt; and (e) ranks senior in right of payment to such Guarantor’s existing and future debt that is expressly subordinated in right of payment to its Guarantee. Subject to the limitations described below and set forth under “—Certain Covenants— Limitation on Guarantees of Debt by Restricted Subsidiaries”, the Issuer will cause each of its future Restricted Subsidiaries to execute and deliver to the Trustee a supplemental indenture, pursuant to which such Restricted Subsidiary will become a party to the Indenture and guarantee the payment of the Notes, as soon as practicable but in any event within 60 days after such Person becomes a Restricted Subsidiary. See “—Certain Covenants—Limitation on Guarantees of Debt by Restricted Subsidiaries” and “—Security—Local law limitations on the value of the Guarantees and enforcement of Security”.

165 Not all of the Issuer’s Restricted Subsidiaries will Guarantee the Notes. None of the Issuer’s Immaterial Subsidiaries or Restricted Subsidiaries incorporated in or organized under the laws of the PRC, the Czech Republic or Slovakia or any jurisdiction that prohibits such Restricted Subsidiary from guaranteeing the payment of the Notes, will be a Guarantor on or after the Issue Date. See “Description of Other Material Indebtedness and Certain Financing Arrangements—Senior Secured Revolving Credit Facility—Security” for a detailed description of the guaranty requirements applicable to the Notes and the Revolving Credit Facility.

The Security

Subject to the limitations described in “Risk Factors—Risks Relating to the Guarantees and the Collateral” and “Limitations on Validity and Enforceability of the Guarantees and Security Interests and Certain Insolvency Law Considerations”, the Notes and the Guarantees are secured by a pledge of the Collateral as described below under the caption “—Security”.

General

As at 28 February 2013, after giving pro forma effect to the acquisition of WCL Group and related financings, the repayment of the HSBC Facility, the issuance of the Notes and the application of the proceeds therefrom, total debt of the Issuer and Guarantors and the Non-Guarantor Subsidiaries would have been as follows:

Pro forma total financial debt as at Entity 28 February 2013

(US$ millions) The Issuer and the Guarantors ...... 490.0 The Non-Guarantor Subsidiaries(1) ...... — Total ...... 490.0

(1) Excludes US$14.5 million of RMB-denominated working capital facilities which are collateralised with existing cash deposits. During the twelve months ended 28 February 2013, the Consolidated EBITDA of the Issuer and the Guarantors and the Non-Guarantor Subsidiaries, expressed as a percentage of total Consolidated EBITDA, would have been as follows:

Percent Consolidated EBITDA for the twelve months ended Entity 28 February 2013 The Issuer and the Guarantors ...... 37.5% The Non-Guarantor Subsidiaries ...... 62.5% Total ...... 100.0%

166 The Issuer conducts its operations through its Subsidiaries and, therefore, the Issuer depends on the cash flow of its Subsidiaries to meet its obligations, including its obligations under the Notes. The Notes will be effectively subordinated in right of payment to all Debt and other liabilities and commitments (including trade payables and lease obligations) of the Non-Guarantor Subsidiaries. Any right of the Issuer to receive assets of any of its Subsidiaries upon the Subsidiary’s liquidation or reorganization (and the consequent right of the Holders to participate in those assets) will be effectively subordinated to the claims of that Subsidiary’s creditors, except to the extent that the Issuer is itself recognized as a creditor of the Subsidiary, in which case the claims of the Issuer would still be subordinate in right of payment to any security in the assets of the Subsidiary and any Debt of the Subsidiary senior to that held by the Issuer. See “Risk Factors—Risks Relating to the Notes—The Issuer is a holding company and payments with respect to the Notes are structurally subordinated to liabilities, contingent liabilities and obligations of our Subsidiaries”. All of the Issuer’s Subsidiaries (other than WCL’s schools in Charlotte and New York) are “Restricted Subsidiaries”. However, under the circumstances described below under the caption “—Certain Covenants—Designation of Unrestricted and Restricted Subsidiaries”, the Issuer will be permitted to designate certain of its Subsidiaries as “Unrestricted Subsidiaries”. Unrestricted Subsidiaries will not be subject to the restrictive covenants in the Indenture and will not guarantee the Notes. Although the Indenture will contain limitations on the amount of additional Debt that the Issuer, the Guarantors and the Restricted Subsidiaries may incur, the amount of such additional Debt could be substantial. The Indenture will permit some of this Debt to be secured.

Principal, Maturity and Interest The Notes will mature on 1 April 2017, unless redeemed prior thereto as described herein. The redemption price at maturity will be 100% of the principal amount. Subject to the covenant described under “—Certain Covenants—Limitation on Debt”, the Issuer is permitted to issue additional Notes under the Indenture (“Future Additional Notes”). The Notes and any Future Additional Notes will be treated as a single class for all purposes of the Indenture, including with respect to waivers, amendments, redemptions and offers to purchase. However, in order for any Additional Notes to have the same common code or ISIN, as applicable, as the Notes, such Additional Notes must be fungible with the Notes for U.S. federal income tax purposes. Unless the context otherwise requires, references to the “Notes” for all purposes of the Indenture and in this Description of the Notes include references to the Notes and any Future Additional Notes. Each Additional Note will accrue interest at a rate per annum of 10.25%, payable semi-annually in arrears, from the issue date of such Additional Note. Interest will be payable on each Note on 1 April and 1 October of each year. Interest will be payable to Holders of record on each Note in respect of the principal amount thereof outstanding as at the immediately preceding 15 March or 15 September notwithstanding any transfer, exchange or cancellation thereof after such date and prior to the immediately following interest payment date, as the case may be. If the date of the payment of principal of or interest on the Notes shall not be a Business Day in the relevant place of payment, then payment of principal or interest need not be made in such place on such date but may be made on the next succeeding Business Day in such place. Any payment made on such Business Day shall have the same force and effect as if made on the date on which such payment is due, and no interest on the Notes shall accrue for the period after such date (for the avoidance of doubt, with respect to the period ended on such date). Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months. Interest on overdue principal and interest will accrue at a rate that is 1% higher than the then applicable interest rate on the Notes. In no event will the rate of interest on the Notes be higher than the maximum rate permitted by applicable law.

167 Guarantees

General The Guarantors jointly and severally guarantee the due and punctual payment of all amounts payable under the Notes, including principal, premium, if any, and interest payable under the Notes. Subject to the limitations set forth under “—Certain Covenants—Limitation on Guarantees of Debt by Restricted Subsidiaries”, the Issuer will cause each of its future Restricted Subsidiaries, as soon as practicable but in any event within 60 days after such Person becomes a Restricted Subsidiary, to execute and deliver to the Trustee a supplemental indenture, pursuant to which such Restricted Subsidiary will become a party to the Indenture and guarantee the payment of the Notes. All payments under the Guarantees will be made in U.S. dollars.

Release of the Guarantees A Guarantee will be automatically and unconditionally released (and thereupon will terminate and be discharged and be of no further force and effect): (1) upon the sale or disposition (including through merger, consolidation, amalgamation or other combination) or conveyance, transfer or lease of the Capital Stock, or all or substantially all of the assets, of the Guarantor (or a Holding Company thereof) if such sale is made in compliance either with the covenants described under “—Certain Covenants—Limitation on Asset Sales” or “—Certain Covenants—Merger, Consolidation or Sale of Assets of the Issuer” (and, in the latter instance, such covenant authorizes such release); (2) as provided in the Intercreditor Agreement (please see the section entitled “Description of Other Material Indebtedness and Certain Financing Arrangements—Intercreditor Agreement”); (3) upon the legal defeasance, covenant defeasance or satisfaction and discharge of the Indenture as provided in “—Defeasance” or “—Satisfaction and Discharge”, in each case, in accordance with the terms and conditions of the Indenture; (4) upon the designation by the Issuer of the Guarantor (or a Holding Company thereof) as an Unrestricted Subsidiary in compliance with the terms of the Indenture; (5) upon repayment in full of the Notes; or (6) as described under “—Amendments and Waivers”. Upon any occurrence giving rise to a release of a Guarantee as specified above, the Trustee will execute any documents required in order to evidence or effect such release, discharge and termination in respect of such Guarantee. Neither the Issuer nor any Guarantor will be required to make a notation on the Notes to reflect any such Guarantee or any such release, termination or discharge.

Security

General The obligations of the Issuer and the Guarantors under the Notes and the Indenture are secured (subject to certain agreed security principles and the Perfection Requirements set forth in the Security Documents) by: (a) a pledge over all present and future shares of capital stock of the Issuer; (b) a pledge over all present and future shares of capital stock of Nord Anglia Education Limited; (c) a pledge over all present and future shares of capital stock of Nord Anglia Vocational Education and Training Services Limited;

168 (d) a pledge over all present and future shares of capital stock of Nord Anglia Education Development Services Limited; (e) a pledge over all present and future shares of capital stock of Nord Anglia Middle East Holding S.P.C.; (f) a pledge over all present and future shares of capital stock of Nord International Schools Limited.; (g) a pledge over all present and future shares of capital stock of the British School Sp. zo.o.; (h) a pledge over all present and future shares of capital stock of College Champittet SA; (i) a pledge over all present and future shares of capital stock of College Alpin Beau Soleil SA; (j) a pledge over all present and future shares of capital stock of La Cote International School SA; (k) a pledge over all present and future shares of capital stock of NAE Hong Kong Limited; (l) a pledge over all present and future shares of capital stock of NA Schools Limited; (m) a pledge over all present and future shares of capital stock of NA Educational Services Limited; (n) a pledge over all present and future shares of capital stock of Brighton Education Services Sdn. Bhd.; (o) a pledge over all present and future shares of capital stock of British International School Bratislava s.r.o.; (p) a pledge over all present and future shares of capital stock of the English International School Prague s.r.o.; (q) a pledge over all present and future shares of Rice Education Hong Kong Limited; (r) a pledge over all present and future shares of EEE Enterprise Limited; (s) security in respect of certain shareholder loans made by Nord Anglia Education, Inc. to the Issuer, (if and to the extent outstanding on the Closing Date); (t) fixed and floating charges over the business assets of certain of the Guarantors; (u) assignments in respect of certain insurance policies, contracts or claims of certain of the Guarantors; and (v) pledges over the bank accounts of certain of the Guarantors. (together with any future Share Pledges and security interests in other assets granted in the future, the “Collateral”). The Collateral does not include pledges over the shares of the present or future shares of capital stock of Immaterial Subsidiaries or Restricted Subsidiaries that are organized under the laws of the PRC, the Czech Republic or Slovakia or any jurisdiction that prohibits such Restricted Subsidiary from guaranteeing the payment of the Notes. The Issuer, the Guarantors and the Security Agent have entered into certain security agreements defining the terms of the security interests that secure the Notes and the Guarantees (the “Security Documents”). The Collateral may be released as provided under “—Releases” below. By 21 July 2013, which is the date 60 days after the acquisition of WCL Group, the Collateral will include pledges of the capital stock of all members of WCL Group, other than those designated as Unrestricted Subsidiaries, certain Spanish subsidiaries and its subsidiary organised in Qatar. The Notes benefit from first-ranking pledges (subject to Permitted Collateral Liens) over all of the shares listed from (a) through (r) above and first-ranking security interests in certain of the assets listed from (s) through (v) above. Subject to certain conditions, including compliance with the covenant described under “—Certain Covenants—Impairment of Security Interest”, “—Certain

169 Covenants—Limitation on Debt” and “—Certain Covenants—Limitation on Liens”, the pledgors of the Collateral will be permitted to pledge the Collateral in connection with future issuances of Debt of the Issuer or its Restricted Subsidiaries, including any Additional Notes, permitted under the Indenture. Citicorp International Limited acts as Trustee and the Security Agent under the Security Documents in respect of the security over the Collateral. The Security Agent, acting in its capacity as such, has such duties with respect to the Collateral pledged, assigned or granted pursuant to the Security Documents as are set forth in the Secured Debt Documents, the Intercreditor Agreement and the Security Documents. Under certain circumstances, the Trustee and the Security Agent may have obligations under the Secured Debt Documents, the Security Documents or the Intercreditor Agreement that are in conflict with the interests of the Holders. Neither the Trustee nor the Security Agent will be under any obligation to exercise any rights or powers conferred under the Indenture, the Intercreditor Agreement or any of the Security Documents for the benefit of the parties, unless such parties have offered to the Trustee and/or the Security Agent indemnity or security satisfactory to the Trustee and the Security Agent, as applicable, against any loss, liability or expense. Furthermore, each Holder, by accepting the Notes will agree, for the benefit of the Security Agent and the Trustee, that it is solely responsible for its own independent appraisal of and investigation into all risks arising under or in connection with the Intercreditor Agreement and has not relied on and will not at any time rely on the Security Agent or the Trustee in respect of such risks. The Liens securing any Notes, the Additional Notes and the Guarantees also secure the obligations of the Issuer and the Guarantors under the Revolving Credit Facility, certain hedging obligations that we may enter into and certain Pari Passu Debt. Pursuant to the Intercreditor Agreement, the obligations of the Issuer and the Guarantors under the Revolving Credit Facility and certain hedging obligations will be paid from the proceeds of enforcement of the Security Documents prior to the Holders being paid. The Trustee and/or the Security Agent, as the case may be, is permitted and authorized, without the consent of any Holder, to enter into any amendments to the Security Documents or the Indenture and take any other action necessary to permit the creation and registration of Liens on the Collateral to secure the Secured Debt Documents in accordance with this paragraph. Neither the Trustee nor the Security Agent nor any of their officers, directors, employees, attorneys or agents will be responsible or liable for the existence, genuineness, value or protection of any Collateral securing the Notes, for the legality, enforceability, effectiveness or sufficiency of the Security Documents or the Intercreditor Agreement, for the creation, perfection, priority, sufficiency or protection of any of the Liens, or for any defect or deficiency as to any such matters, or for any failure to demand, collect, foreclose or realize upon or otherwise enforce any of the Liens or Security Documents or any delay in doing so. The Issuer has also agreed, for the benefit of the Holders, to pledge, or cause each Guarantor, including each future Guarantor, to pledge, the Capital Stock owned by the Issuer or such Guarantor of any Person that is a Guarantor or becomes a Guarantor after the Issue Date (except for Education Overseas Qatar LLC under the circumstances specified in the Indenture), upon such Person becoming a Guarantor, to secure the obligations of the Issuer and the Guarantors under the Notes and the Indenture in the manner described above (subject to the Perfection Requirements set forth in the Security Documents and the restrictions set forth under the heading “—Certain Covenants—Limitation on Liens” below). Such future pledges of such Capital Stock shall be deemed to constitute Collateral. As long as no Acceleration Event (as defined in the Intercreditor Agreement) has occurred and is continuing, and subject to the terms of the Security Documents, the Issuer and the Guarantors, as the case may be, will be entitled to exercise any and all voting rights and to receive and retain any and all cash dividends, stock dividends, liquidating dividends, non-cash dividends, shares of stock resulting from stock splits or reclassifications, rights issue, warrants, options and other distributions (whether similar or dissimilar to the foregoing) in respect of the shares subject to the Share Pledges.

170 The proceeds from realizing the Collateral securing the Notes and the Guarantees may not be sufficient to satisfy the Issuer’s and the Guarantors’ obligations under the Notes, the Guarantees and their respective obligations to certain other secured parties under the Intercreditor Agreement. In addition, the Collateral securing the Notes may be reduced or diluted under certain circumstances, including the issuance of Additional Notes, the Incurrence of Permitted Collateral Liens and the disposition of assets comprising the Collateral, subject to the terms of the Indenture. See “—Releases” below and “Risk Factors—Risks Relating to the Guarantees and the Collateral—The value of the Collateral will likely not be sufficient to satisfy our obligations under the Notes and other pari passu secured indebtedness”. No appraisals of the Collateral have been prepared by or on behalf of the Issuer or the Guarantors in connection with the offering of the Notes. There can be no assurance that the proceeds of any sale of the Collateral, in whole or in part, pursuant to the Indenture and the Security Documents following an Event of Default, would be sufficient to satisfy amounts due on the Notes or the Guarantees and the Issuer’s and Guarantors’ respective obligations to certain other secured parties under the Intercreditor Agreement. By its nature, some or all of the Collateral will be illiquid and may have no readily ascertainable market value. Accordingly, there can be no assurance that the Collateral would be sold in a timely manner or at all. The Security Documents are governed by applicable local laws and provide that the rights with respect to the Notes and the Indenture must, to the extent permitted by any applicable local laws, be exercised by the Security Agent and in respect of the entire outstanding amount of the Notes.

Releases The Collateral may be released: (1) upon repayment in full of the Notes; (2) as provided in the Intercreditor Agreement (please see the section entitled “Description of Other Material Indebtedness and Certain Financing Arrangements —Intercreditor Agreement”); (3) upon the legal defeasance, covenant defeasance or satisfaction and discharge of the Notes as provided in “—Defeasance” or “—Satisfaction and Discharge”, in each case, in accordance with the terms and conditions of the Indenture; (4) upon certain dispositions of the Collateral in compliance with either of the covenants entitled “—Certain Covenants—Limitation on Asset Sales” or “—Certain Covenants—Merger, Consolidation or Sale of Assets of the Issuer” (and in the latter instance, if such covenant authorizes such release); (5) in the case of a Guarantor that is released from its Guarantee pursuant to the terms of the Indenture; or (6) as described under “—Amendments and Waivers”.

Local law limitations on the value of the Guarantees and enforcement of Security The Notes are, and any Future Additional Notes will be, guaranteed by the Guarantors on a joint and several basis. The obligations of each Guarantor are contractually limited under the applicable Guarantee to an amount not to exceed the maximum amount that can be guaranteed by such Guarantor by law or without resulting in its obligations under its Guarantee being voidable or unenforceable under applicable laws relating to fraudulent transfer, fraudulent conveyance, financial assistance, corporate benefit, capital maintenance or similar laws affecting the rights of creditors generally.

171 For a description of such contractual limitations, please see “Risk Factors—Risks Relating to the Guarantees and the Collateral—The Guarantees may be challenged under applicable insolvency or fraudulent transfer laws, which could impair the enforceability of the Guarantees. In addition, the pledge of certain Collateral may in some circumstances be voidable”, “Risk Factors—Risks Relating to the Guarantees and the Collateral—Corporate benefit and capital maintenance laws and other limitations on the Guarantees and the security interests may adversely affect the validity and enforceability of the Guarantees and the security interests” and “Limitations on Validity and Enforceability of the Guarantees and Security Interests and Certain Insolvency Law Considerations”. The Intercreditor Agreement will provide for circumstances in which the Security Documents may be enforced. The Security Agent will enter into the Security Documents in its own name for the benefit of the Trustee and the Holders.

Intercreditor Agreement The Issuer, each Guarantor and the Trustee, among others, have entered into the Intercreditor Agreement. The section entitled “Description of Other Material Indebtedness and Certain Financing Arrangements—Intercreditor Agreement” describes the material terms of the Intercreditor Agreement. By accepting the Notes, each Holder shall be deemed to have consented to the execution and delivery of the Intercreditor Agreement, any amendments or modifications thereto, and any future intercreditor agreement required under the Indenture. The Indenture will also provide that each Holder, by accepting such Note, will be deemed to have: (a) appointed and authorized the Trustee to give effect to provisions in the Intercreditor Agreement; (b) agreed to be bound by the provisions of the Intercreditor Agreement; and (c) irrevocably appointed the Trustee to act on its behalf to enter into and comply with the provisions of the Intercreditor Agreement. The Security Agent may refrain from acting in accordance with the instructions of the Holders until it has received indemnity or security satisfactory to it against any liability or loss which it may incur in complying with the instructions. In addition, the Security Agent’s ability to foreclose on the Collateral may be subject to lack of perfection, the consent of third parties, prior Liens and practical problems associated with the realization of the Security Agent’s Liens on the Collateral. Neither the Security Agent nor the Trustee nor any of their officers, directors, employees, attorneys or agents will be responsible or liable for the existence, genuineness, value or protection of any Collateral securing the Notes, for the legality, enforceability, effectiveness or sufficiency of the Security Documents or the Intercreditor Agreement, for the creation, perfection, priority, sufficiency or protection of any of the Liens, or for any defect or deficiency as to any such matters, or for any failure to demand, collect, foreclose or realize upon or otherwise enforce any of the Liens or Security Documents or any delay in doing so. The Intercreditor Agreement and Security Documents will provide that the Issuer and the Guarantors shall jointly and severally forthwith on demand indemnify the Security Agent for any liability, damage, cost, expense or loss incurred by the Security Agent in any way relating to or arising out of its acting as the Security Agent, except to the extent of wilful default, gross negligence or wilful misconduct of the Trustee or the Security Agent.

Concerning the Trustee, the Security Agent and the Paying and Transfer Agent Citicorp International Limited has been appointed as Trustee under the Indenture and as Security Agent with respect to the Collateral under the Security Documents and the Intercreditor Agreement, and Citibank, N.A. London has been appointed as registrar and paying agent (the

172 “Paying Agent and Transfer Agent”) with regard to the Notes. Except during the continuance of a Default, the Trustee will not be liable, except for the performance of such duties as are specifically set forth in the Indenture. If an Event of Default has occurred and is continuing, the Trustee and the Security Agent will use the same degree of care and skill, as applicable, in its exercise of the rights and powers vested in it under the Indenture or the Security Documents and the Intercreditor Agreement as a prudent person would exercise under the circumstances in the conduct of such person’s own affairs. The Indenture contains limitations on the rights of the Trustee and the Security Agent, should they become creditors of the Issuer or any of the Guarantors, to obtain payment of claims in certain cases or to realize on certain property received by it in respect of any such claims, as security or otherwise. The Trustee or the Security Agent is permitted to engage in other transactions with the Issuer and its Affiliates and can profit therefrom without being obliged to account for any profit. The Trustee and the Security Agent may have interest in or may be providing or may in the future provide financial or other services to other parties. If the Issuer maintains a paying agent with respect to the Notes in a member state of the European Union, such paying agent will be located in a member state of the European Union that is not obligated to withhold or deduct tax pursuant to European Council Directive 2003/48/EC or any other directive implementing the conclusions of ECO FIN Council meeting of November 26-27, 2000 on the taxation of savings income, or any law implementing or complying with, or introduced in order to conform to, such Directive or such other directive. The Security Agent, acting in its capacity as such, has such duties with respect to the Collateral pledged, assigned or granted pursuant to the Security Documents as are set forth in the Intercreditor Agreement, the Indenture and the Security Documents. Under certain circumstances, the Security Agent and the Trustee may have obligations under the Indenture, the Intercreditor Agreement and the Security Documents that are in conflict with the interests of the Holders. The Trustee and Security Agent will be under no obligation to exercise any rights or powers conferred under the Indenture or any of the Security Documents for the benefit of the Holders unless such Holders have offered to the Trustee and Security Agent indemnity or security satisfactory to the Trustee against any loss, liability or expense. Furthermore, each Holder, by accepting the Notes will agree, for the benefit of the Trustee and Security Agent, that it is solely responsible for its own independent appraisal of and investigation into all risks arising under or in connection with the Security Documents and has not relied on and will not at any time rely on the Trustee or the Security Agent in respect of such risks.

Additional Amounts All payments made under or with respect to the Notes or the Guarantees will be made free and clear of and without withholding or deduction for or on account of any present or future taxes, duties, levies, imposts, assessments or other governmental charges and any interest, penalties and other liabilities with respect thereto (collectively, “Taxes”), unless the withholding or deduction of such Taxes is required by law or by the relevant taxing authority’s interpretation or administration thereof. If any withholding or deduction for or on account of any Taxes imposed or levied by or on behalf of any jurisdiction in which the Issuer or the relevant Guarantor is organized, engaged in business or resident for tax purposes, or from or through which payment under or with respect to the Notes or the Guarantees is made, or any political subdivision or authority thereof or therein having the power to tax (each, a “Relevant Taxing Jurisdiction”), will at any time be required to be made from any payment made under or with respect to the Notes or the Guarantees, the Issuer or the relevant Guarantor, as the case may be, will pay such additional amounts (“Additional Amounts”) as may be necessary so that the net amount received by each Holder of the Notes after such withholding or deduction (including any withholding or deduction attributable to Additional Amounts) will equal the amount that such Holder would have received if such Taxes had not been required to be withheld or deducted.

173 Notwithstanding the foregoing, neither the Issuer nor a Guarantor will pay Additional Amounts to a Holder of any Note in respect or on account of: (a) any Taxes that would not have been imposed or levied by a Relevant Taxing Jurisdiction but for the Holder’s present or former connection with such Relevant Taxing Jurisdiction (or a present or former connection between the Relevant Taxing Jurisdiction and a fiduciary, settlor, beneficiary, member or shareholder of such Holder if such Holder is an estate, a trust, partnership, limited liability company or a corporation), including, but not limited to, citizenship, nationality, residence, domicile or existence of a business, permanent establishment, dependent agent, place of business or place of management present or deemed present within the Relevant Taxing Jurisdiction, other than the mere receipt or holding of any Note or Guarantee or by reason of the receipt of payments thereunder or the exercise or enforcement of rights under such Note, such Guarantee or the Indenture; (b) any Taxes that are imposed or withheld by reason of the failure of the Holder or beneficial owner of any Note, prior to the relevant date on which a payment under or with respect to the Notes is due and payable (the “Relevant Payment Date”), to comply with a written request of the Issuer, addressed to the Holder at least 60 calendar days prior to the Relevant Payment Date, to comply with any certification, identification, information or other reporting requirement concerning nationality, residence, identity or connection with the Relevant Taxing Jurisdiction imposed by statute, treaty, regulation or administrative practice of the Relevant Taxing Jurisdiction as a precondition to an exemption from, or a reduction in the rate of deduction or withholding of, Taxes imposed by the Relevant Taxing Jurisdiction to which such Holder or beneficial owner is legally entitled (including, without limitation, a certification that the Holder or beneficial owner is not resident in the Relevant Taxing Jurisdiction); (c) any estate, inheritance, gift, sales, transfer, personal property or similar Taxes; (d) any Tax that is payable other than by deduction or withholding from payments made under or with respect to any Note or Guarantee; (e) any Tax that would not have been so imposed but for the presentation (where presentation is required in order to receive payment) by the Holder or beneficial owner of a Note for payment on a date more than 30 days after the date on which such payment becomes due and payable or the date on which payment thereof is duly provided for, whichever occurs later, except to the extent that the Holder or beneficial owner would have been entitled to such Additional Amounts on presenting the same for payment on any day (including the last day) within such 30-day period; (f) any withholding or deduction in respect of any Taxes where such withholding or deduction is imposed on a payment to an individual and is required to be made pursuant to the European Council Directive 2003/48/EC or any Directive otherwise implementing the conclusions of the ECOFIN Council meetings of November 26 and 27, 2000 or any law implementing or complying with, or introduced in order to conform to, any such Directive; (g) any Tax that is required to be withheld or deducted from a payment made to a Holder who would have been able to avoid such withholding or deduction by presenting a Note for a payment (where presentation is required) to another available paying agent in a member state of the European Union (unless such Notes could not have been presented for payment elsewhere); or (h) any Tax that is imposed on or with respect to any payment made to any Holder who is a fiduciary or partnership or an entity that is not the sole beneficial owner of such payment, to the extent that a beneficiary or settlor with respect to such fiduciary, a member of such partnership or the beneficial owner of such payment would not have been entitled to the Additional Amounts had such beneficiary, settlor, member or beneficial owner been the actual Holder of such Note.

174 In addition, Additional Amounts will not be payable with respect to any Taxes that are imposed in respect or on account of any combination of the above items (a) through (h). The Issuer or the relevant Guarantor will make or cause to be made such withholding or deduction of Taxes as required by, and remit the full amount of any Taxes so deducted or withheld to the relevant taxing authority in accordance with, all applicable laws. The Issuer will provide the Trustee with and, upon request, make available to the Holders, within 30 days after the date on which the payment of any Taxes so deducted or withheld is due pursuant to applicable law, certified copies of tax receipts evidencing such payment by the Issuer or relevant Guarantor or if, notwithstanding the Issuer’s or relevant Guarantor’s reasonable efforts to obtain such receipts, the same are not obtainable, other evidence of such payment reasonably satisfactory to the Trustee. At least 30 calendar days prior to each date on which any payment under or with respect to the Notes or the Guarantees is due and payable, if the Issuer or a Guarantor will be obliged to pay Additional Amounts with respect to such payment (unless such obligation to pay Additional Amounts arises after the 30th day prior to the date on which payment under or with respect to the Notes or the Guarantees is due and payable, in which case delivery of the Officer’s Certificate described below shall be made promptly thereafter), the Issuer or the relevant Guarantor will deliver to the Trustee an Officers’ Certificate stating that such Additional Amounts will be payable and the amounts so payable on the payment date. The Officer’s Certificate must also set forth any other information necessary to enable the paying agent to pay Additional Amounts on the relevant payment date. The Trustee shall be entitled to rely solely on such Officer’s Certificate as conclusive proof that such payments are necessary. In addition, the Issuer and the Guarantors will pay and (without duplication) indemnify the Holders for any present or future stamp, issue, registration, transfer, documentation, court, excise, property or other similar Taxes imposed or levied by any Relevant Taxing Jurisdiction in respect of the execution, issue, delivery, registration, enforcement, redemption or retirement of, or the receipt of any Payment under or with respect to, the Notes, the Indenture or the Guarantees, or any other document or instrument referred to thereunder. The foregoing provisions will survive any termination, defeasance or discharge of the Indenture (and any transfer of a Holder or beneficial owner of its Notes) and will apply mutatis mutandis to any jurisdiction in which any Surviving Entity (as defined below) or successor person to the Issuer or a Guarantor is organized, engaged in business or resident for tax purposes or any political subdivision or taxing authority or agency thereof or therein. Whenever in the Indenture or this Description of the Notes there is mentioned, in any context, the payment of principal (and premium, if any), a redemption price, interest or any other amount payable under or with respect to any Note (including payments thereof made pursuant to any Guarantee), such mention will be deemed to include mention of the payment of Additional Amounts provided for in the Indenture to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof.

Optional Redemption

Optional Redemption prior to 1 April 2015 upon Equity Offering At any time prior to 1 April 2015, upon not less than 30 nor more than 60 days’ notice, the Issuer may on any one or more occasions redeem up to 35% of the aggregate principal amount of Notes at a redemption price of 110.25% of their principal amount, plus accrued and unpaid interest and Additional Amounts, if any, to the redemption date, with the net proceeds from one or more Equity Offerings. The Issuer may only do this, however, if: (a) at least 65% of the aggregate principal amount of Notes that were initially issued would remain outstanding immediately after the proposed redemption; and (b) the redemption occurs within 90 days after the closing of such Equity Offering.

175 Optional Redemption prior to 1 April 2015 At any time prior to 1 April 2015, upon not less than 30 nor more than 60 days’ notice, the Issuer may, on any one or more occasions, redeem all or part of the Notes at a redemption price equal to 100% of the principal amount thereof plus the Applicable Redemption Premium and accrued and unpaid interest and Additional Amounts, if any, to the redemption date.

Optional Redemption on or after 1 April 2015 At any time on or after 1 April 2015 and prior to maturity, upon not less than 30 nor more than 60 days’ notice, the Issuer may, on any one or more occasions, redeem all or part of the Notes. These redemptions will be in amounts of US$200,000 or integral multiples of US$1,000 in excess thereof at the following redemption prices (expressed as percentages of their principal amount at maturity), plus accrued and unpaid interest and Additional Amounts, if any, to the redemption date, if redeemed during the 12-month period commencing on April 1 of the years set forth below.

Year Redemption Price 2015 ...... 105.125% 2016 and thereafter...... 100.000%

Any optional redemption or notice thereof may, at the Issuer’s discretion, be subject to one or more conditions precedent.

Redemption upon Changes in Withholding Taxes The Issuer may, at its option, redeem the Notes, in whole but not in part, at any time upon giving not less than 30 nor more than 60 days’ notice (which notice shall be irrevocable and given in accordance with the provisions of the Indenture) to the Holders, at a redemption price equal to 100% of the principal amount thereof, together with accrued and unpaid interest thereon, if any, to the redemption date to be fixed by the Issuer (a “Tax Redemption Date”) and all Additional Amounts, if any, then due and which will become due on the Tax Redemption Date as a result of the redemption or otherwise (subject to the right of Holders on the relevant record date to receive interest due on an interest payment date that is prior to the Tax Redemption Date and Additional Amounts, if any, in respect thereof) if the Issuer is or, on the next date on which any amount would be payable in respect of the Notes, would be obliged to pay Additional Amounts in excess of the Additional Amounts that the Issuer was obligated to pay as at the Issue Date in respect of the Notes, which the Issuer cannot avoid by the use of reasonable measures available to it (including taking reasonable measures to make payment through a paying agent located in another jurisdiction), as a result of: (a) any change in, or amendment to, the laws (or any regulations or rulings promulgated thereunder) of any Relevant Taxing Jurisdiction (as defined above under “—Additional Amounts”) affecting taxation that becomes effective on or after the date of the Indenture (or, in the case of a jurisdiction that becomes a Relevant Taxing Jurisdiction after the date of the Indenture, on or after such date; provided that there has been no formal proposal for such change or amendment the enactment of which was imminent when the jurisdiction became a Relevant Taxing Jurisdiction); or (b) any change in the official application, administration or interpretation of the laws, regulations or rulings of any Relevant Taxing Jurisdiction (including a holding, judgement or order by a court of competent jurisdiction) that becomes effective on or after the date of the Indenture (or, in the case of a jurisdiction that becomes a Relevant Taxing Jurisdiction after the date of the Indenture, on or after such date; provided that there has been no formal proposal for such change or amendment the enactment of which was imminent when the jurisdiction became a Relevant Taxing Jurisdiction), (each of the foregoing clauses (a) and (b), a “Change in Tax Law”).

176 Notwithstanding the foregoing, no such notice of redemption will be given (a) earlier than 60 days prior to the earliest date on which the Issuer would be obliged to make such payment of Additional Amounts or withholding if a payment in respect of the Notes or Guarantees were then due and (b) unless at the time such notice is given, the obligation to pay Additional Amounts in accordance with the terms of the Indenture remains in effect. Prior to the publication or, where relevant, mailing of any notice of redemption pursuant to the foregoing, the Issuer will deliver to the Trustee: (a) an Officers’ Certificate stating that the Issuer is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of the Issuer to so redeem have occurred (including that the obligation to pay such Additional Amounts cannot be avoided by the Issuer taking reasonable measures available to it); and (b) an opinion of independent tax counsel of recognized standing, qualified under the laws of the Relevant Taxing Jurisdiction to the effect that the Issuer is or would be obliged to pay such Additional Amounts as a result of a Change in Tax Law. The Trustee will accept such Officers’ Certificate and opinion as sufficient evidence of the satisfaction of the conditions precedent as described above, in which event it will be conclusive and binding on the Holders.

Notice of Optional Redemption The Issuer will publish a notice of any optional redemption of the Notes described above in accordance with the provisions of the Indenture. If fewer than all the Notes are to be redeemed at any time, the Trustee will select the Notes by a method that complies with the requirements, as certified to the Trustee by the Issuer, of the principal securities exchange, if any, on which the Notes are listed at such time or, if the Notes are not listed on a securities exchange, pro rata,by lot or by such other method as the Trustee in its sole discretion shall deem fair and appropriate; provided that no such partial redemption will reduce the portion of the principal amount of a Note not redeemed to less than US$200,000. If any Note is to be redeemed in part only, the notice of optional redemption relating to such Note will state the portion of the principal amount to be redeemed. A new Note in principal amount equal to the unredeemed portion will be issued upon cancellation of the original Note. The Trustee shall not be liable for any selections made by it in connection with or under this paragraph.

Mandatory Redemption; Offers to Purchase; Open Market Purchases The Issuer will not be required to make any mandatory redemption or sinking fund payments with respect to the Notes. However, under certain circumstances, the Issuer may be required to offer to purchase the Notes as described under the captions “—Certain Covenants—Change of Control” and “—Certain Covenants—Limitation on Asset Sales”. The Issuer and the Restricted Subsidiaries may at any time and from time to time purchase Notes in the open market or otherwise.

Certain Covenants The Indenture will contain, among others, the following covenants.

Limitation on Debt (1) The Issuer will not, and will not cause or permit any Restricted Subsidiary to, create, issue, incur, assume, guarantee or in any manner become directly or indirectly liable with respect to or otherwise become responsible for, contingently or otherwise, the payment of (individually and collectively, to “Incur” or, as appropriate, an “Incurrence”), any Debt (including any Acquired Debt); provided that the Issuer and any Guarantor will be permitted to Incur Debt (including Acquired Debt) if at the time of such

177 Incurrence and after giving effect to the Incurrence of such Debt and the application of the proceeds thereof, on a pro forma basis, the Consolidated Fixed Charge Coverage Ratio for the four full fiscal quarters for which internal financial statements are available immediately preceding the Incurrence of such Debt, taken as one period, would be greater than 2.5 to 1.0. (2) This “—Limitation on Debt” covenant will not, however, prohibit the following (collectively, “Permitted Debt”): (a) the Incurrence by the Issuer or any Restricted Subsidiary of Debt under the Revolving Credit Facility in an aggregate principal amount at any one time outstanding not to exceed an amount equal to (i) US$40.0 million (or the Dollar Equivalent thereof), plus (ii) in the case of any refinancing of any Debt permitted under this clause, the aggregate amount of fees, underwriting discounts, premiums and other costs and expenses incurred in connection with such refinancing; (b) the Incurrence by the Issuer of Debt pursuant to the Notes (other than Future Additional Notes) and the Incurrence of Debt by the Guarantors pursuant to the Guarantees (other than Guarantees of Future Additional Notes); (c) any Debt of the Issuer or any Restricted Subsidiary outstanding on the Issue Date; (d) the Incurrence by the Issuer or any Restricted Subsidiary of intercompany Debt between the Issuer and any Restricted Subsidiary or between or among Restricted Subsidiaries; provided that: (i) if the Issuer or a Guarantor is the obligor on any such Debt and the lender is not the Issuer or a Guarantor, it is unsecured and expressly subordinated in right of payment to the prior payment in full in cash (whether upon Stated Maturity, acceleration or otherwise) and the performance in full of its obligations under the Notes or its Guarantee, as the case may be; and (ii) (x) any disposition, pledge or transfer of any such Debt to any Person (other than a disposition, pledge or transfer to the Issuer or a Restricted Subsidiary) and (y) any transaction pursuant to which any Restricted Subsidiary that has Debt owing from the Issuer or another Restricted Subsidiary ceases to be a Restricted Subsidiary, will, in each case, be deemed to be an Incurrence of such Debt not permitted by this clause (d); (e) the Incurrence by the Issuer or any Restricted Subsidiary of Debt represented by Capitalized Lease Obligations, mortgage financings, purchase money obligations or other Debt Incurred or assumed in connection with the acquisition, construction, improvement or development of real or personal, movable or immovable equipment, property or assets (including the lease or other purchase of land use rights), in each case, Incurred for the purpose of financing or refinancing all or any part of the purchase price, lease expense or cost of construction, improvement or development of property, plant or equipment used in the Issuer’s or any Restricted Subsidiary’s business (including any related fees or expenses reasonably incurred in connection with such acquisition, construction, improvement or development), including any such purchase through the acquisition of Capital Stock of any Person that owns such real or personal, movable or immovable equipment, property or assets which will, upon acquisition, become a Restricted Subsidiary; provided that the principal amount of such Debt so Incurred when aggregated with other Debt previously Incurred in reliance on this clause (e) (together with any refinancings thereof) and still outstanding shall not in the aggregate exceed the greater of US$20 million (or the Dollar Equivalent thereof) or 3% of Total Assets;

178 (f) the Incurrence by the Issuer or any Restricted Subsidiary of Debt arising from agreements providing for guarantees, indemnities or obligations in respect of earnouts, purchase price adjustments or similar obligations in connection with the disposition of assets, including, without limitation, shares of Capital Stock, other than guarantees or similar credit support given by the Issuer or any Restricted Subsidiary of Debt Incurred by any Person acquiring all or any portion of such assets for the purpose of financing such acquisition; provided that the maximum aggregate liability in respect of all such Debt permitted pursuant to this clause (f) will at no time exceed the gross proceeds, including non-cash proceeds (the Fair Market Value of such non-cash proceeds being measured at the time received and without giving effect to any subsequent changes in value), actually received from the sale of such assets; (g) the Incurrence by the Issuer or any Restricted Subsidiary of Debt under Currency Agreements or Interest Rate Agreements entered into in the ordinary course of business and not for speculative purposes (it being understood that hedging in respect of the Notes and the Revolving Credit Facility using Currency Agreements and Interest Rate Agreements shall be deemed “in the ordinary course of business” under this clause (g)); (h) the Incurrence by the Issuer or any Restricted Subsidiary of Debt in respect of workers’ compensation and claims arising under similar legislation, or pursuant to self-insurance obligations and not in connection with the borrowing of money or the obtaining of advances or credit; (i) the Incurrence of Debt by the Issuer or any Restricted Subsidiary arising from (i) the honouring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds, provided that such Debt is extinguished within five Business Days of Incurrence, (ii) bankers’ acceptances, advance payments, payments of customs duties, the accounting for value added tax to a relevant taxing authority, performance, surety, judgement, appeal or similar bonds, instruments or obligations and (iii) completion guarantees provided, letters of credit or similar instruments in respect of self-insurance and workers compensation obligations obtained by the Issuer or any Restricted Subsidiary, in each case in the ordinary course of business; (j) the Incurrence by the Issuer or any Restricted Subsidiary of Permitted Refinancing Debt in exchange for or the net proceeds of which are used to refund, replace or refinance Debt Incurred by the Issuer or any Restricted Subsidiary pursuant to, or described in, clauses (1), 2(b), (c), (e), (j), (o) or (t) of this “—Limitation on Debt” covenant, as the case may be; provided, however, that Permitted Refinancing Debt with respect to Acquired Debt Incurred pursuant to paragraph (o) below, if guaranteed or in the form of a guarantee from the Issuer or any Guarantor, shall not be deemed to be permitted under this paragraph (j); (k) Debt Incurred by the Issuer or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit, trade guarantees or similar instruments issued in the ordinary course of business to the extent that such letters of credit, trade guarantees or similar instruments are not drawn upon or, if drawn upon, to the extent such drawing is reimbursed no later than 30 days following receipt by the Issuer or such Restricted Subsidiary of a demand for reimbursement; (l) Management Advances; (m) any customary cash or treasury management, cash pooling or netting or setting off arrangements in the ordinary course of business;

179 (n) without limiting the covenant described under “—Limitation on Liens”, Debt arising by reason of any Lien granted by or applicable to such Person securing Debt of the Issuer or any Restricted Subsidiary as long as the Incurrence of such Debt was permitted under the terms of the Indenture; (o) Acquired Debt Incurred by the Issuer or any Restricted Subsidiary (other than Debt Incurred (i) to provide all or any portion of the funds utilized to consummate the transaction or series of related transactions pursuant to which a Person becomes a Restricted Subsidiary or was otherwise acquired by the Issuer or a Restricted Subsidiary or (ii) otherwise in connection with or in contemplation of such acquisition); provided that, after giving pro forma effect to such acquisition, the Issuer could Incur at least US$1.00 of additional Debt pursuant to the ratio set forth in paragraph (1) of the “—Limitation on Debt” covenant; and provided further that if such Acquired Debt is guaranteed by the Issuer or a Restricted Subsidiary, such guarantee shall not be deemed to be permitted by this paragraph (o); (p) (i) the guarantee by the Issuer or any Guarantor of Debt of the Issuer or any Guarantor or (ii) the guarantee by a Non-Guarantor Subsidiary of Debt of any other Non-Guarantor Subsidiary, in each case to the extent that the guaranteed Debt was permitted to be Incurred by another provision of this covenant and provided that if the Debt being guaranteed is subordinated to the Notes or is unsecured, then such guarantee shall be subordinated or unsecured to the same extent as the Debt guaranteed; (q) Debt of any Restricted Subsidiary incurred as a result of (i) any governmental or regulatory restrictions, limitations or penalties in the nature of capital controls, exchange controls or similar restrictions affecting the incurrence or repayment of intercompany Debt by any Restricted Subsidiary or (ii) any ordinary course country risk management policies of the Issuer or any Restricted Subsidiary restricting or limiting transfers or distributions from the Issuer or any Restricted Subsidiary to the Issuer or any Restricted Subsidiary; (r) the Incurrence of any Subordinated Shareholder Funding; (s) payments by the Issuer or any Restricted Subsidiary permitted by paragraph (3)(n) of the caption entitled “—Limitation on Restricted Payments”; (t) Bank Deposit Debt Incurred by the Issuer or any Restricted Subsidiary, provided that, on the date of the Incurrence of such Debt and after giving effect thereto, the aggregate principal amount of all such Debt Incurred pursuant to this clause (together with any refinancings thereof) does not exceed an amount equal to US$35 million (or the Dollar Equivalent thereof); (u) unsecured Debt of the Issuer consisting of earnout provisions in connection with the acquisition of assets, including shares of Capital Stock, by the Issuer or any Restricted Subsidiary; and (v) the Incurrence of Debt by the Issuer or any Restricted Subsidiary (other than and in addition to Debt permitted under clauses (a) through (u) above) in an aggregate principal amount at any one time outstanding not to exceed US$20 million (or the Dollar Equivalent thereof). (3) For purposes of determining compliance with this “—Limitation on Debt” covenant, in the event that an item of Debt meets the criteria of more than one of the categories of Permitted Debt described in clauses (b) through (v) of paragraph (2) above, or is entitled to be Incurred pursuant to paragraph (1) of this “—Limitation on Debt” covenant, the Issuer in its sole discretion will be permitted to classify (and divide) such item of Debt on the date of its Incurrence in any manner that complies with this “—Limitation on Debt” covenant. Debt under the Revolving Credit Facility will be deemed to have been Incurred in reliance on the exception provided by clause (a) of

180 paragraph (2) above and may not be reclassified. In addition, any item of Debt initially classified as Incurred pursuant to one of the categories of Permitted Debt described in clauses (b) through (v) of paragraph (2) above, or entitled to be Incurred pursuant to the paragraph (1) of this “—Limitation on Debt” covenant, may later be reclassified (and divided) by the Issuer in its sole discretion such that it will be deemed as having been Incurred pursuant to such new clause or clauses or paragraph (1) of this “—Limitation on Debt” covenant to the extent that such reclassified Debt could be Incurred pursuant to such new clause or clauses or paragraph (1) of this “—Limitation on Debt” covenant at the time of such reclassification. (4) Notwithstanding any other provision of this covenant, the maximum amount of Debt that the Issuer may Incur pursuant to this covenant shall not be deemed to be exceeded solely as a result of fluctuations in the exchange rates of currencies. (5) (a) Obligations in the form of letters of credit, guarantees or Liens, in each case supporting Debt otherwise included in the determination of such particular amount; (b) any Liens granted pursuant to the equal and ratable provisions referred to in the “—Limitation on Liens” covenant; and (c) accrual of interest or preferred stock dividends, the accretion or amortization of original issue discount, the payment of interest on any Debt in the form of additional Debt with substantially equivalent terms, the reclassification of Preferred Stock as Debt due to a change in accounting principles, and the payment of dividends on Preferred Stock or Redeemable Capital Stock in the form of additional shares of the same class of Preferred Stock or Redeemable Capital Stock, will not, in any case, be treated as Debt that is subject to the “—Limitation on Debt” covenant; provided, in each such case and except with respect to Subordinated Shareholder Funding, that the amount of any such accrual, accretion, amortization, payment or reclassification is included in the Consolidated Interest Expense of the Issuer as accrued, and provided further, that with respect to clause (c) above (except with respect to accrual of interest and preferred stock dividends), the amount of any such accrual, accretion, amortization, payment or reclassification will be included as Debt for purposes of determining the amount of Debt outstanding for the Incurrence of additional Debt. (6) For purposes of determining compliance with this “—Limitation on Debt” covenant, the principal amount of Debt issued at a price that is less than the principal amount thereof will be equal to the amount of the liability in respect thereof determined in conformity with IFRS. (7) The Issuer will not Incur any Debt (including Permitted Debt) that is subordinated in right of payment to any other Debt of the Issuer unless such Debt is also contractually subordinated in right of payment to the Notes on substantially identical terms; provided, however, that no Debt will be deemed to be subordinated in right of payment to any other Debt of the Issuer solely by virtue of being unsecured or by virtue of being secured on a junior Lien basis. (8) The Guarantors will not Incur any Debt (including Permitted Debt) that is subordinated in right of payment to any Debt of the Guarantors unless such Debt is also contractually subordinated in right of payment to the Guarantees on substantially identical terms; provided, however, that no Debt will be deemed to be subordinated in right of payment to any other Debt of a Guarantor solely by virtue of being unsecured or by virtue of being secured on a junior Lien basis.

181 Limitation on Restricted Payments (1) The Issuer will not, and will not cause or permit any Restricted Subsidiary to, directly or indirectly, take any of the following actions (each of which is a “Restricted Payment” and which are collectively referred to as “Restricted Payments”): (a) declare or pay any dividend on or make any distribution, directly or indirectly (whether made in cash, securities or other property), with respect to any of the Issuer’s or any Restricted Subsidiary’s Capital Stock (including, without limitation, any payment in connection with any merger, consolidation, amalgamation or other combination involving the Issuer or any Restricted Subsidiary) (other than to the Issuer or any Restricted Subsidiary), except for dividends or distributions to the extent payable in (i) shares of the Issuer’s Qualified Capital Stock, (ii) options, warrants or other rights to acquire such shares of Qualified Capital Stock or (iii) Subordinated Shareholder Funding; (b) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger, consolidation, amalgamation or other combination), directly or indirectly (i) any shares of the Issuer’s Capital Stock or any Capital Stock of any Affiliate of the Issuer held by persons other than the Issuer or a Restricted Subsidiary (other than Capital Stock of any Restricted Subsidiary or any entity that becomes a Restricted Subsidiary as a result thereof), (ii) any options, warrants or other rights to acquire such shares of Capital Stock or (iii) any Subordinated Shareholder Funding held by any Person; (c) make any principal payment on, or repurchase, redeem, defease or otherwise acquire or retire for value, prior to any scheduled principal payment, sinking fund payment or Stated Maturity, any Subordinated Debt (other than intercompany Debt between the Issuer and any Restricted Subsidiary or among Restricted Subsidiaries); (d) make any Investment (other than any Permitted Investment) in any Person; or (e) pay any interest on any Subordinated Shareholder Funding (other than by capitalization to principal or through the issuance of additional Subordinated Shareholder Funding). If any Restricted Payment described above is not made in cash, the amount of the proposed Restricted Payment will be the Fair Market Value of the asset to be transferred as at the date of transfer. (2) Notwithstanding paragraph (1) above, the Issuer or any Restricted Subsidiary may make a Restricted Payment if, at the time of and after giving pro forma effect to such proposed Restricted Payment: (a) no Default or Event of Default has occurred and is continuing; (b) the Issuer could Incur at least US$1.00 of additional Debt pursuant to the ratio set forth in paragraph (1) of the “—Limitation on Debt” covenant; and (c) the aggregate amount of all Restricted Payments declared or made after the Issue Date, and after giving effect to any reductions required by paragraph (4), does not exceed the sum of: (i) 50% of aggregate Consolidated Net Income on a cumulative basis during the period beginning on the first day of the fiscal quarter in which the Notes are issued and ending on the last day of the Issuer’s last fiscal quarter ending prior to the date of such proposed Restricted Payment for which internal financial statements are available (or, if such aggregate cumulative Consolidated Net Income shall be a negative number, minus 100% of such negative amount); plus (ii) the aggregate Net Cash Proceeds (other than proceeds designated as Excluded Contributions) and the Fair Market Value of marketable securities

182 and non-cash property or assets (provided that only Restricted Investments may be made with such non-cash property or assets) received by the Issuer after the Issue Date as equity capital contributions or from the issuance or sale (other than to any Subsidiary) of (A) shares of the Issuer’s Qualified Capital Stock (including upon the exercise of options, warrants or rights), (B) options, warrants or rights to purchase shares of the Issuer’s Qualified Capital Stock or (C) Subordinated Shareholder Funding (except, in each case to the extent such proceeds are used to purchase, redeem or otherwise retire Capital Stock, Subordinated Debt or Subordinated Shareholder Funding as set forth in clause (d) or (e) of paragraph (3) below), excluding the Net Cash Proceeds and Fair Market Value of marketable securities and non-cash property or assets received from the issuance of the Issuer’s Qualified Capital Stock, options, warrants or rights to purchase shares of the Issuer’s Qualified Capital Stock or Subordinated Shareholder Funding financed, directly or indirectly, using funds borrowed from the Issuer or any Subsidiary until and to the extent such borrowing is repaid; plus (iii) (x) the amount by which the Issuer’s Senior Debt or Senior Debt of any Restricted Subsidiary is reduced on the Issuer’s consolidated balance sheet after the Issue Date upon the conversion or exchange (other than by a Subsidiary) of such Senior Debt into the Issuer’s Qualified Capital Stock and (y) the aggregate Net Cash Proceeds and Fair Market Value of marketable securities and non-cash property or assets (provided that only Restricted Investments may be made with such non-cash property or assets) received after the Issue Date by the Issuer from the issuance or sale (other than to any Subsidiary) of Debt or Redeemable Capital Stock that has been converted into or exchanged for the Issuer’s Qualified Capital Stock or Subordinated Shareholder Funding (other than Subordinated Shareholder Funding the proceeds of which are included in clause (c)(ii) above), to the extent such Debt or Redeemable Capital Stock was originally sold for cash or Cash Equivalents, together with, in the case of both clauses (x) and (y), the aggregate Net Cash Proceeds received by the Issuer at the time of such conversion or exchange, excluding the Net Cash Proceeds and the Fair Market Value of marketable securities and non-cash property or assets received from the issuance of the Issuer’s Qualified Capital Stock or Subordinated Shareholder Funding financed, directly or indirectly, using funds borrowed from the Issuer or any Subsidiary until and to the extent such borrowing is repaid; plus (iv) (x) proceeds realized upon the sale or other disposition to a Person other than the Issuer or a Restricted Subsidiary of any Restricted Investment, repayments of loans or advances or other transfers of assets (including by way of dividend, distribution, interest payments or returns of capital) to the Issuer or any Restricted Subsidiary, less the cost of the disposition of such Investment and net of taxes, (y) if a Restricted Investment constituted a guarantee, an amount equal to the amount of such guarantee upon the full and unconditional release of such guarantee and (z) in the case of the designation of an Unrestricted Subsidiary as a Restricted Subsidiary (as long as the designation of such Subsidiary as an Unrestricted Subsidiary was deemed a Restricted Payment), the Fair Market Value of the Issuer’s interest in such Subsidiary; plus (v) in the event that the Issuer or any Restricted Subsidiary makes any Restricted Investment in a Person after the Issue Date that becomes a Restricted Subsidiary, an amount equal to the Fair Market Value of the Issuer’s or such Restricted Subsidiary’s existing interest in such Person that was previously treated as a Restricted Payment.

183 (3) Notwithstanding paragraphs (1) and (2) above, the Issuer and any Restricted Subsidiary may take the following actions as long as (x) with respect to clauses (i) and (m) below no Default or Event of Default has occurred and is continuing and (y) with respect to clauses (l) and (p) below, no Event of Default has occurred and is continuing: (a) the payment of any dividend within 120 days after the date of its declaration if at such date of its declaration such payment would have been permitted by the provisions of this “—Limitation on Restricted Payments” covenant; (b) cash payments in lieu of issuing fractional shares pursuant to the exchange or conversion of any exchangeable or convertible securities; (c) the repurchase, redemption or other acquisition or retirement for value of any Capital Stock of the Issuer or any Restricted Subsidiary of the Issuer held by any employee benefit plan of the Issuer or any of its Restricted Subsidiaries, any current or former officer, director, consultant or employee of the Issuer or any of its Restricted Subsidiaries (or permitted transferees, estates or heirs of any of the foregoing) pursuant to any equity subscription agreement, stock option agreement, shareholders’ agreement or similar agreement (or, in each case, Restricted Payments to any Holding Company of the Issuer to enable such a repurchase, redemption or other acquisition or retirement of Capital Stock of such Holding Company); provided that the aggregate price paid (or Restricted Payments made) for all such repurchased, redeemed, acquired or retired Capital Stock may not exceed US$2 million (or the Dollar Equivalent thereof) in any twelve-month period; (d) the repurchase, redemption or other acquisition or retirement for value of any shares of the Issuer’s Capital Stock, options, warrants or other rights to acquire such Capital Stock or Subordinated Shareholder Funding in exchange for (including any such exchange pursuant to the exercise of a conversion right or privilege in connection with which cash is paid in lieu of the issuance of fractional shares or scrip), or out of the Net Cash Proceeds to the Issuer of a substantially concurrent issuance and sale (other than to a Subsidiary) of, shares of the Issuer’s Qualified Capital Stock, options, warrants or other rights to acquire such Capital Stock or Subordinated Shareholder Funding; provided, in each case, that the amount of any such Net Cash Proceeds that are utilized for any such Restricted Payment shall not constitute Excluded Contributions; (e) the prepayment, repayment, purchase, repurchase, redemption, defeasance or other acquisition or retirement for value or payment of principal of any Subordinated Debt in exchange for, or out of the Net Cash Proceeds to the Issuer of a substantially concurrent issuance and sale (other than to a Subsidiary) of, shares of the Issuer’s Qualified Capital Stock; (f) the prepayment, repayment, purchase, repurchase, redemption, defeasance or other acquisition or retirement for value of Subordinated Debt (other than Redeemable Capital Stock and Subordinated Shareholder Funding) in exchange for, or out of the Net Cash Proceeds of a substantially concurrent Incurrence (other than to a Subsidiary) of, Permitted Refinancing Debt; (g) the declaration or payment of any dividend to all holders of Capital Stock of a Restricted Subsidiary on a pro rata basis or on a basis that results in the receipt by the Issuer or a Restricted Subsidiary of dividends or distributions of greater value than the Issuer or such Restricted Subsidiary would receive on a pro rata basis; (h) the repurchase of Capital Stock deemed to occur upon the exercise of stock options with respect to which payment of the cash exercise price has been forgiven if the cumulative aggregate value of such deemed repurchases does not exceed the cumulative aggregate amount of the exercise price of such options received;

184 (i) the declaration and payment of dividends to holders of any class or series of Redeemable Capital Stock issued in accordance with the “—Limitation on Debt” covenant; (j) any Restricted Payment constituting or in respect of Management Fees; (k) the purchase, repurchase, redemption, retirement or other acquisition for value of Capital Stock deemed to occur upon the exercise of stock options, warrants or other securities, if such Capital Stock represents a portion of the exercise price of such options, warrants or other securities; (l) any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Subordinated Debt (excluding any Subordinated Shareholding Funding) of the Issuer or any of its Restricted Subsidiaries pursuant to provisions similar to those described under the caption “—Change of Control”; provided that all Notes validly tendered by Holders in connection with a Change of Control Offer, as applicable, have been repurchased, redeemed or acquired for value; (m) Restricted Payments that are made with Excluded Contributions; (n) payments pursuant to any tax sharing agreement or arrangement among the Issuer and its Subsidiaries and other Persons with which the Issuer or any of its Restricted Subsidiaries is required or permitted to file a consolidated income tax return or with which the Issuer or any of its Restricted Subsidiaries is properly a part of a unitary or combined group for income tax purposes; provided, however, that such payments will not exceed the amount of income tax that the Issuer and its applicable Subsidiaries would owe on a stand-alone basis if no such group filing were made and the related tax liabilities of the Issuer and its applicable Subsidiaries are relieved by the payment of such amounts; (o) Restricted Payments in connection with the Transactions; and (p) any other Restricted Payment; provided that the total aggregate amount of Restricted Payments made under this clause (p) does not exceed US$10 million (or the Dollar Equivalent thereof). (4) The actions described in clauses (a), (c), (l) and (p) of paragraph (3) above are Restricted Payments that will be permitted to be made in accordance with paragraph (3) but that will reduce the amount that would otherwise be available for Restricted Payments under clause (c) of paragraph (2) above.

Limitation on Issuances and Sales of Capital Stock of Restricted Subsidiaries (1) The Issuer will not sell or otherwise dispose of, and will not permit any Restricted Subsidiary (other than as permitted under the “—Limitation on Liens” covenant), directly or indirectly, to issue or sell, any shares of Capital Stock of a Restricted Subsidiary (including options, warrants or other rights to purchase shares of such Capital Stock). (2) The foregoing clause (1), however, will not apply to: (a) any issuance or sale of shares of Capital Stock of a Restricted Subsidiary to the Issuer or a Restricted Subsidiary; (b) any issuance or sale to directors of directors’ qualifying shares or issuances or sales of shares of Capital Stock of a Restricted Subsidiary to be held by third parties, in each case to the extent required by applicable law; (c) any issuance or sale of shares of Capital Stock of a Restricted Subsidiary made in compliance with the “—Limitation on Asset Sales” covenant; (d) any issuance or sale of shares of Capital Stock of a Restricted Subsidiary if, immediately after giving effect to such issuance or sale, such Restricted

185 Subsidiary would no longer constitute a Restricted Subsidiary and any remaining Investment in such Person would have been permitted to be made under the “—Limitation on Restricted Payments” covenant if made on the date of such issuance or sale; or (e) Capital Stock issued by a Person prior to the time: (i) such Person becomes a Restricted Subsidiary; (ii) such Person consolidates or merges with or into a Restricted Subsidiary; or (iii) a Restricted Subsidiary consolidates or merges with or into such Person; but only if such Capital Stock was not issued or Incurred by such Person in anticipation of it becoming a Restricted Subsidiary.

Limitation on Transactions with Affiliates (1) The Issuer will not, and will not cause or permit any Restricted Subsidiary to, directly or indirectly, enter into or suffer to exist any transaction or series of related transactions (including, without limitation, the sale, purchase, exchange or lease of assets or property or the rendering of any service), with, or for the benefit of, any Affiliate of the Issuer having a value greater than US$2 million (or the Dollar Equivalent thereof), unless such transaction or series of transactions is entered into in good faith and: (a) such transaction or series of transactions is on terms that, taken as a whole, are not materially less favourable to the Issuer or such Restricted Subsidiary, as the case may be, than those that could have been obtained in a comparable arm’s-length transaction with third parties that are not Affiliates of the Issuer; (b) with respect to any transaction or series of related transactions involving aggregate payments or the transfer of assets or the provision of services having a value greater than US$5 million (or the Dollar Equivalent thereof), the Issuer will deliver a resolution of its Board of Directors (attached to an Officers’ Certificate to the Trustee) resolving that such transaction complies with clause (a) above and that the fairness of such transaction has been approved by a majority of the Disinterested Members, if any, of the Board of Directors; and (c) with respect to any transaction or series of related transactions involving aggregate payments or the transfer of assets or the provision of services having a value greater than US$10 million (or the Dollar Equivalent thereof), the Issuer will deliver to the Trustee a written opinion of an Independent Financial Advisor stating that the transaction or series of transactions is fair to the Issuer or such Restricted Subsidiary from a financial point of view or that the terms are not materially less favourable to the Issuer or its relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Issuer or such Restricted Subsidiary with a Person that is not an Affiliate of the Issuer. (2) Notwithstanding the foregoing, the restrictions set forth in this description will not apply to: (i) customary directors’ fees, indemnities and similar arrangements (including the payment of directors’ and officers’ insurance premiums), consulting fees, employee compensation, employee and director bonuses, employment agreements and arrangements or employee benefit arrangements, including stock options or legal fees, in each case as long as the Issuer’s Board of Directors has approved the terms thereof and deemed the services performed or thereafter to be performed for amounts to be fair consideration therefor; (ii) any Restricted Payment (other than a Permitted Investment) not prohibited by the “—Limitation on Restricted Payments” covenant;

186 (iii) loans and advances (or guarantees to third party loans, but not any forgiveness of such loans or advances) to directors, officers or employees of the Issuer or any Restricted Subsidiary made in the ordinary course of business in an amount outstanding not to exceed at any one time US$2 million (or the Dollar Equivalent thereof); (iv) agreements and arrangements existing on the Issue Date and any amendment, extension, renewal, refinancing, modification or supplement thereto; provided that any such amendment, extension, renewal, refinancing, modification or supplement to the terms thereof is not more disadvantageous, taken as a whole, to the Holders and to the Issuer and the Restricted Subsidiaries, as applicable, in any material respect than the original agreement or arrangement as in effect on the Issue Date; (v) the issuance of securities or other payments, awards or grants in cash, securities or similar transfers pursuant to, or for the purpose of the funding of, employment arrangements, stock options, stock ownership plans and other similar arrangements, as long as the terms thereof are or have been previously approved by the Issuer’s Board of Directors; (vi) transactions between or among the Issuer and the Restricted Subsidiaries or between or among Restricted Subsidiaries; (vii) any issuance of Capital Stock (other than Redeemable Capital Stock) of the Issuer, options, warrants or other rights to acquire such Capital Stock or any issuance of Subordinated Shareholder Funding; provided that the interest rate and other financial terms of such Subordinated Shareholder Funding are approved by a majority of the members of the Board of Directors in their reasonable determination; (viii) the existence of, or the performance by the Issuer or any of its Restricted Subsidiaries of its obligations under the terms of, any stockholders agreement, joint venture agreement or restructuring termsheets (including any registration rights agreement or purchase agreement relating thereto) to which it is a party as at the Issue Date; provided, however, that the existence of, or the performance by the Issuer or any of its Restricted Subsidiaries of, obligations under any future amendment to any such existing agreement entered into after the Issue Date shall only be permitted by this clause (viii) to the extent that the terms of any such amendment or new agreement are not more disadvantageous to the Holders when taken as a whole in any material respect than the original agreement as in effect on the Issue Date; (ix) any transaction with a Person that is an Affiliate of the Issuer, solely because the Issuer or a Restricted Subsidiary owns Capital Stock in or otherwise controls such Person or has the right to designate one or more members of the Board of Directors or similar governing body of such Person; (x) transactions with customers, clients, suppliers, or purchasers or sellers of goods or services or providers of employees or other labor, in each case in the ordinary course of business and otherwise in compliance with the terms of the Indenture (xi) that are fair to the Issuer or the Restricted Subsidiaries, in the reasonable determination of the members of the Board of Directors of the Issuer or the senior management thereof, or are on terms at least as favourable as might reasonably have been obtained at such time from an unaffiliated Person; (xii) Management Advances; (xiii) the Transactions; (xiv) any Permitted Investment (other than a Permitted Investment as defined in clause (c)(iv) or (s) of the definition of “Permitted Investments” herein); and

187 (xv) Management Fees.

Limitation on Liens (1) The Issuer will not, and will not cause or permit any Restricted Subsidiary to, directly or indirectly, create, incur, assume, affirm or suffer to exist any Lien of any kind upon any property or assets of the Issuer or any Restricted Subsidiary, including any shares of stock or intercompany notes or other Debt of any Restricted Subsidiary, owned on the date of the Indenture or acquired after the date of the Indenture, or any income, profits or proceeds therefrom, except: (a) in the case of any property or asset that does not constitute Collateral, Permitted Liens; provided, however, that the Issuer and any such Restricted Subsidiary may only place Permitted Ordinary Course Liens on Non-Guarantor Shares. Notwithstanding the foregoing sentence, the Issuer or any Restricted Subsidiary may place a Lien on any property or asset that does not constitute Collateral (i) even if such Lien is not a Permitted Lien or (ii) in the case of Non-Guarantor Shares, even if such Lien is not a Permitted Ordinary Course Lien, if the Notes (or a Guarantee in the case of Liens of a Guarantor) are directly secured equally and ratably or on a prior basis with the obligation or liability secured by such Lien; and (b) in the case of any property or asset that constitutes Collateral, Permitted Collateral Liens; provided that no such Permitted Collateral Lien (except for Liens permitted under clauses (b) or (c) of the definition thereof) will be granted unless such assets or property also secure the Notes. (2) Any Lien arising as a result of paragraph (1)(a) above will be automatically and unconditionally released and discharged concurrently with (i) the unconditional release of the Lien that gave rise to such Lien (other than as a consequence of an enforcement action with respect to the assets subject to such Lien) or (ii) as set forth in the section entitled “—Security—Releases”.

Change of Control (1) If a Change of Control occurs, each Holder will have the right to require the Issuer to repurchase all or any part (equal to $200,000 or an integral multiple of $1,000 in excess thereof) of that holder’s Notes pursuant to a Change of Control Offer on the terms set forth in the Indenture. In the Change of Control Offer, the Issuer will offer a Change of Control Payment in cash equal to 101% of the aggregate principal amount of Notes repurchased, plus accrued and unpaid interest, if any, on the Notes repurchased to the date of purchase, subject to the rights of Holders on the relevant record date to receive interest due on the relevant interest payment date. Within ten days following any Change of Control, the Issuer will mail a notice to each holder describing the transaction or transactions that constitute the Change of Control and offering to repurchase Notes on the Change of Control Payment Date specified in the notice, which date will be no earlier than 30 days and no later than 60 days from the date such notice is mailed, pursuant to the procedures required by the Indenture and described in such notice. (2) The Issuer will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Change of Control. To the extent that the provisions of any securities laws or (3) regulations conflict with the Change of Control provisions of the Indenture, the Issuer will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Change of Control provisions of the Indenture by virtue of such compliance.

188 (4) On the Change of Control Payment Date, the Issuer will, to the extent lawful: (a) accept for payment all Notes or portions of Notes properly tendered pursuant to the Change of Control Offer; (b) deposit with the paying agent an amount equal to the Change of Control Payment in respect of all Notes or portions of Notes properly tendered; and (c) deliver or cause to be delivered to the trustee the Notes properly accepted together with an officers’ certificate stating the aggregate principal amount of Notes or portions of Notes being purchased by the Issuer. (i) The paying agent will promptly mail to each Holder properly tendered the Change of Control Payment for such Notes, and the trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any. The Issuer will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. (ii) The provisions described above that require the Issuer to make a Change of Control Offer following a Change of Control will be applicable whether or not any other provisions of the Indenture are applicable. Except as described above with respect to a Change of Control, the Indenture does not contain provisions that permit the holders of the Notes to require that the Issuer repurchase or redeem the Notes in the event of a takeover, recapitalization or similar transaction. (iii) The Issuer will not be required to make a Change of Control Offer upon a Change of Control if (a) a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Change of Control Offer made by the Issuer and purchases all Notes properly tendered and not withdrawn under the Change of Control Offer or (b) notice of redemption has been given pursuant to the Indenture as described above under the caption “—Optional Redemption”, unless and until there is a default in payment of the applicable redemption price. Notwithstanding anything to the contrary contained herein, a Change of Control Offer may be made in advance of a Change of Control, conditioned upon the consummation of such Change of Control, if a definitive agreement is in place for the Change of Control at the time the Change of Control Offer is made. The definition of Change of Control includes a phrase relating to the direct or indirect sale, lease, transfer, conveyance or other disposition of “all or substantially all” of the properties or assets of the Issuer and its Subsidiaries taken as a whole. Although there is a limited body of case law interpreting the phrase “substantially all”, there is no precise established definition of the phrase under applicable law. Accordingly, the ability of a Holder to require the Issuer to repurchase its Notes as a result of a sale, lease, transfer, conveyance or other disposition of less than all of the assets of the Issuer and its Subsidiaries taken as a whole to another Person or group may be uncertain.

Limitation on Asset Sales (1) The Issuer will not, and will not cause or permit any Restricted Subsidiary to, consummate any Asset Sale unless: (a) the consideration the Issuer or such Restricted Subsidiary receives for such Asset Sale is not less than the Fair Market Value of the assets sold (as determined by the Issuer’s Board of Directors);

189 (b) at least 75% of the consideration the Issuer or such Restricted Subsidiary receives in respect of such Asset Sale consists of: (i) cash (including any Net Cash Proceeds received from the conversion to cash within 90 days of such Asset Sale of securities, notes or other obligations received in consideration of such Asset Sale); (ii) Cash Equivalents (including any Net Cash Proceeds received from the conversion to cash within 90 days of such Asset Sale of securities, notes or other obligations received in consideration of such Asset Sale); (iii) the assumption by the purchaser of (x) the Issuer’s Debt or Debt of any Restricted Subsidiary (other than Subordinated Debt) as a result of which neither the Issuer nor any of the Restricted Subsidiaries remains obliged in respect of such Debt or (y) Debt of a Restricted Subsidiary that is no longer a Restricted Subsidiary as a result of such Asset Sale, if the Issuer and each other Restricted Subsidiary is released from any guarantee of such Debt as a result of such Asset Sale; (iv) Replacement Assets; (v) any Designated Non-cash Consideration received by the Issuer or any of its Restricted Subsidiaries in such Asset Sale; provided that the aggregate Fair Market Value of such Designated Non-cash Consideration, taken together with the Fair Market Value at the time of receipt of all other Designated (vi) Non-cash Consideration received pursuant to this clause (v), does not exceed (with the Fair Market Value of each item of Designated Non-cash Consideration being measured at the time received and without giving effect to subsequent changes in value) US$25 million (or the Dollar Equivalent thereof); or (vii) any combination of the consideration specified in the foregoing clauses (i) through (v); and (c) the Issuer delivers an Officers’ Certificate to the Trustee certifying that such Asset Sale complies with the provisions described in the foregoing clauses (a) and (b). (2) If the Issuer or any Restricted Subsidiary consummates an Asset Sale, the Net Cash Proceeds of the Asset Sale, within 365 days of the consummation of such Asset Sale (or the Issuer or any such Restricted Subsidiary may enter into a binding commitment to so use; provided that such Net Cash Proceeds are so used within 90 days after the expiration of the aforementioned 365 day period) may be used by the Issuer or any Restricted Subsidiary to: (a) in the case of Net Cash Proceeds from the sale or other disposition of assets or properties that are part of the Collateral, (i) permanently repay or prepay (A) the Notes or (B) Debt incurred under clause (a) of the definition of Permitted Debt, (ii) permanently repay or prepay any other Pari Passu Debt that is secured by the Collateral, as long as the Issuer or such Restricted Subsidiary makes an offer on a pro rata basis to all Holders at a purchase price equal to 100% of the principal amount of the Notes plus accrued and unpaid interest, if any, to the date of purchase, (iii) invest in Replacement Assets or make a capital expenditure, provided that if any such Replacement Asset or asset purchased through capital expenditures constitutes Capital Stock of a Person that is, or will upon the consummation of such Asset Sale become, a Restricted Subsidiary that is required to be a Guarantor, such Capital Stock shall become part of the Collateral subject to the security documents relating to the Collateral or (iv) do any combination of the foregoing; and (b) in the case of Net Cash Proceeds from the sale or other disposition of assets or properties that are not part of the Collateral, (i) permanently repay or prepay (A)

190 the Notes or (B) Debt incurred under clause (a) of the definition of Permitted Debt, (ii) permanently repay or prepay any other Senior Debt owing to a Person other than the Issuer or a Restricted Subsidiary, as long as the Issuer or the applicable Restricted Subsidiary makes an offer on a pro rata basis to all Holders at a purchase price equal to 100% of the principal amount of the Notes plus accrued and unpaid interest, if any, to the date of purchase, (iii) invest in Replacement Assets, (iv) make a capital expenditure or (v) do any combination of the foregoing. The amount of such Net Cash Proceeds not so used as set forth in this paragraph (2) constitutes “Excess Proceeds”. (3) When the aggregate amount of Excess Proceeds exceeds US$10 million (or the Dollar Equivalent thereof), the Issuer will, within 30 Business Days, make an offer to purchase (an “Excess Proceeds Offer”) from all Holders and, at the Issuer’s election, from the holders of any Pari Passu Debt, to the extent required by the terms thereof, on a pro rata basis, in accordance with the procedures set forth in the Indenture or the agreements governing any such Pari Passu Debt, the maximum principal amount, in the case of the Notes (expressed as a minimum amount of US$200,000 and integral multiples of US$1,000 in excess thereof) of the Notes and any such Pari Passu Debt that may be purchased with the amount of the Excess Proceeds. The offer price as to each Note and any such Pari Passu Debt will be payable in cash in an amount equal to (solely in the case of the Notes) 100% of the principal amount of such Note and (solely in the case of Pari Passu Debt) no greater than 100% of the principal amount (or accreted value, as applicable) of such Pari Passu Debt, plus, in each case, accrued and unpaid interest, if any, to the date of purchase. To the extent that the aggregate principal amount of Notes and any such Pari Passu Debt tendered pursuant to an Excess Proceeds Offer is less than the aggregate amount of Excess Proceeds, the Issuer may use the amount of such Excess Proceeds not used to purchase Notes and Pari Passu Debt for general corporate purposes that are not otherwise prohibited by the Indenture. If the aggregate principal amount of Notes and any such Pari Passu Debt validly tendered and not withdrawn by holders thereof exceeds the aggregate amount of Excess Proceeds, the Notes and any such Pari Passu Debt to be purchased will be selected by the Trustee on a pro rata basis (based upon the principal amount of Notes and the principal amount or accreted value of such Pari Passu Debt tendered by each holder). Upon completion of each such Excess Proceeds Offer, the amount of Excess Proceeds will be reset to zero. (4) If the Issuer is obliged to make an Excess Proceeds Offer, the Issuer will purchase the Notes and Pari Passu Debt, at the option of the holders thereof, in whole or in part in a minimum amount of US$200,000 and integral multiples of US$1,000 in excess thereof on a date that is not earlier than 30 days and not later than 60 days from the date the notice of the Excess Proceeds Offer is given to such holders, or such later date as may be required under the Exchange Act. Pending the final application of any Net Proceeds, the Issuer may temporarily reduce revolving credit borrowings or otherwise invest the Net Proceeds in any manner that is not prohibited by the Indenture. If the Issuer is required to make an Excess Proceeds Offer, the Issuer will comply with the applicable tender offer rules, including Rule 14e-1 under the Exchange Act and any other applicable securities laws and regulations, including the requirements of any applicable securities exchange on which Notes are then listed. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this “—Limitation on Asset Sales” covenant, the Issuer will comply with such securities laws and regulations and will not be deemed to have breached its obligations described in this “—Limitation on Asset Sales” covenant by virtue thereof.

191 Impairment of Security Interest

(1) Subject to paragraphs (2) and (3) below, the Issuer will not, and will not cause or permit any of its Restricted Subsidiaries to, take or knowingly omit to take, any action, which action of omission would have the result of materially impairing any security interest over any of the assets comprising the Collateral (it being understood that the incurrence of Liens on the Collateral permitted by the definition of Permitted Collateral Liens shall not be deemed to materially impair the security interest with respect to any Collateral) for the benefit of the Holders (including the priority thereof).

(2) The Indenture will provide that, at the direction of the Issuer and without the consent of the Holders, the Trustee and the Security Agent may from time to time enter into one or more amendments to the Security Documents to: (i) cure any ambiguity, omission, defect or inconsistency therein; (ii) provide for any Permitted Collateral Liens; (iii) add to the Collateral or (iv) make any other change thereto that does not adversely affect the Holders in any material respect; provided, however, that no

(3) Security Document may be amended, extended, renewed, restated, supplemented or otherwise modified or replaced, unless contemporaneously with such amendment, extension, renewal, restatement, supplement, modification or renewal, the Issuer delivers to the Trustee, any of:

(a) a solvency opinion, in form satisfactory to the Trustee, from an Independent Financial Advisor confirming the solvency of the Issuer and its Subsidiaries, taken as a whole, after giving effect to any transactions related to such amendment, extension, renewal, restatement, supplement, modification or replacement; (b) a certificate from the board of directors or chief financial officer of the Issuer (acting in good faith), substantially in the form set forth as an exhibit to the Indenture, confirming the solvency of the Person granting such Lien after giving effect to any transactions related to such amendment, extension, renewal, restatement, supplement, modification or replacement; or (c) an opinion of counsel, in form satisfactory to the Trustee confirming that, after giving effect to any transactions related to such amendment, extension, renewal, restatement, supplement, modification or replacement, the Lien or Liens securing the Notes created under the Security Documents as so amended, extended, renewed, restated, supplemented, modified or replaced remain valid and perfected Liens not otherwise subject to any limitation, imperfection or new hardening period, in equity or at law, that such Lien or Liens were not otherwise subject to immediately prior to such amendment, extension, renewal, restatement, supplement, modification or replacement, which shall be substantially in the form attached to the Indenture.

(4) Nothing in this “Impairment of Security Interest” covenant will restrict the release or replacement of any security interests in compliance with the provisions set out in the section entitled “—Security—Releases”. (5) In the event that the Issuer complies with the requirements of this “Impairment of Security Interest” covenant, the Trustee and/or the Security Agent (as the case may be) will consent to any such amendment, extension, renewal, restatement, supplement, modification or replacement without the need for instructions from the Holders; provided such amendments do not impose any personal obligations on the Trustee or adversely affect the rights, duties, liabilities or immunities of the Trustee under the Indenture or the Intercreditor Agreement.

192 Limitation on Sale and Leaseback Transactions (1) The Issuer will not, and will not cause or permit any Restricted Subsidiary to, enter into any Sale and Leaseback Transaction with respect to any property or assets (whether now owned or hereafter acquired), unless: (a) the “—Limitation on Asset Sales” covenant is complied with, including the provisions concerning the application of Net Cash Proceeds (treating all of the net consideration received in such Sale and Leaseback Transaction as Net Cash Proceeds for the purposes of such “—Limitation on Asset Sales” covenant); (b) the Issuer or such Restricted Subsidiary, as applicable, would be permitted to Incur Debt under the “—Limitation on Debt” covenant in the amount of the Attributable Debt Incurred in respect of such Sale and Leaseback Transaction; and (c) the Issuer or such Restricted Subsidiary, as applicable, would be permitted to grant a Lien to secure Debt under the “—Limitation on Liens” covenant in the amount of the Attributable Debt in respect of such Sale and Leaseback Transaction. (2) Notwithstanding the foregoing, nothing shall prevent the Issuer or any Restricted Subsidiary from engaging in a Sale and Leaseback Transaction solely between the Issuer and any Restricted Subsidiary or solely between or among Restricted Subsidiaries.

Limitation on Guarantees of Debt by Restricted Subsidiaries (1) Subject to clauses (2), (3) and (4) below, the Issuer will cause all future Restricted Subsidiaries to Guarantee the Notes (other than an Immaterial Subsidiary or a Restricted Subsidiary incorporated in or organized under the laws of the PRC, the Czech Republic or Slovakia or any jurisdiction that prohibits such Restricted Subsidiary from guaranteeing the payment of the Notes) as soon as practicable but in any event within 60 days after each such person becomes a Restricted Subsidiary. The Issuer will not permit any Restricted Subsidiary that is not a Guarantor, directly or indirectly, to guarantee, assume or in any other manner become liable for the payment of any Debt of the Issuer or any Guarantor (other than the Notes), unless: (a) (i) such Restricted Subsidiary simultaneously executes and delivers a supplemental indenture to the Indenture providing for a Guarantee of payment of the Notes by such Restricted Subsidiary on the same terms as the guarantee of such other Debt; and (ii) with respect to any guarantee of Subordinated Debt by such Restricted Subsidiary, any such guarantee shall be subordinated to such Restricted Subsidiary’s Guarantee with respect to the Notes at least to the same extent as such Subordinated Debt is subordinated to the Notes; and (b) to the maximum extent permitted by law, such Restricted Subsidiary waives and will not in any manner whatsoever claim or take the benefit or advantage of any rights of reimbursement, indemnity or subrogation or any other rights against the Issuer or any other Restricted Subsidiary as a result of any payment by such Restricted Subsidiary under its Guarantee. (2) Paragraph (1) will not be applicable to any guarantee of any Restricted Subsidiary: (a) guaranteeing Debt existing on the Issue Date; (b) that existed at the time such Person became a Restricted Subsidiary if the guarantee was not Incurred in connection with, or in contemplation of, such Person becoming a Restricted Subsidiary; (c) arising solely due to the granting of a Permitted Lien that would not otherwise constitute a guarantee of Debt of the Issuer or any Guarantor; or

193 (d) given to a bank or trust company incorporated in any member state of the Pre-Expansion European Union as at the date of the Indenture or any commercial banking institution (or any branch, Subsidiary or Affiliate thereof) in each case having combined capital and surplus and undivided profits of not less than =C500.0 million, whose debt has a rating, at the time such guarantee was given, of at least A or the equivalent thereof by S&P and at least A2 or the equivalent thereof by Moody’s, in connection with the operation of cash management programs established for the Issuer’s benefit or that of any Restricted Subsidiary. (3) Notwithstanding the foregoing, any Guarantee of the Notes created pursuant to the provisions described in paragraph (1) above may provide by its terms that it will be automatically and unconditionally released and discharged upon: (a) any sale, exchange or transfer, to any Person who is not the Issuer’s Affiliate, of all of the Capital Stock owned by the Issuer and its Restricted Subsidiaries in, or all or substantially all the assets of, such Restricted Subsidiary (which sale, exchange or transfer is not prohibited by the Indenture); or (b) (with respect to any Guarantee created after the Issue Date) the release by the holders of the Issuer’s or the Guarantor’s Debt described in paragraph (1) above, of the guarantee by such Restricted Subsidiary (including any deemed release upon payment in full of all obligations under such Debt other than as a result of payment under such guarantee), at a time when: (i) no other Debt of the Issuer (other than the Notes) or any Guarantor (other than the Guarantees) has been guaranteed by such Restricted Subsidiary; or (ii) the holders of all such other Debt that is guaranteed by such Restricted Subsidiary also release their guarantee by such Restricted Subsidiary (including any deemed release upon payment in full of all obligations under such Debt other than as a result of payment under such guarantee); or (c) the release of the Guarantees on the terms and conditions and in the circumstances described in the section entitled “—Guarantees—Release of the Guarantees”. (4) Notwithstanding the foregoing, the Issuer will not be obligated to cause such Restricted Subsidiary to guarantee the Notes to the extent such Guarantee could reasonably be expected to give rise to or result in: (a) any conflict with or violation of applicable law; (b) risk of personal or criminal liability for the officers, directors, shareholders or partners of such Restricted Subsidiary; (c) any cost, expense, liability or obligation (including with respect to any Taxes but excluding any reasonable guarantee or similar fee payable to the Issuer or any Restricted Subsidiary) other than reasonable expenses and other than reasonable governmental expenses incurred in connection with any governmental or regulatory filings required as a result of, or any measures pursuant to clause (1) undertaken in connection with, such Guarantee; or (d) breach of, or any termination event under, any existing material contract (and any amendment, modification or supplement thereto) of such Restricted Subsidiary in the reasonable opinion of the Board of Directors of such Restricted Subsidiary or the Issuer.

194 Limitation on Dividends and Other Payment Restrictions Affecting Restricted Subsidiaries (1) The Issuer will not, and will not cause or permit any Restricted Subsidiary to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction of any kind on the ability of any Restricted Subsidiary to: (a) pay dividends, in cash or otherwise, or make any other distributions on or in respect of its Capital Stock or any other interest or participation in, or measured by, its profits; (b) pay any Debt owed to the Issuer or any other Restricted Subsidiary; (c) make loans or advances to the Issuer or any other Restricted Subsidiary; or (d) transfer any of its properties or assets to the Issuer or any other Restricted Subsidiary, provided that (i) the priority of any Preferred Stock in receiving dividends or liquidating distributions prior to dividends or liquidating distributions being paid on common stock and (ii) the subordination of (including the application of any standstill requirements to) loans or advances made to the Issuer or any Restricted Subsidiary to other Debt Incurred by the Issuer or any Restricted Subsidiary shall not be deemed to constitute such an encumbrance or restriction. (2) The provisions of the “—Limitation on Dividends and Other Payment Restrictions Affecting Restricted Subsidiaries” covenant described in paragraph (1) above will not apply to: (a) encumbrances and restrictions imposed by the Notes, the Indenture, the Guarantees, the Revolving Credit Facility, the Intercreditor Agreement or the Security Documents; (b) encumbrances or restrictions imposed by Debt permitted to be Incurred under Credit Facilities or any guarantee thereof in accordance with the “—Limitation on Debt” covenant; provided that in the case of any such encumbrances or restrictions imposed under any Credit Facilities, such encumbrances or restrictions are not materially more restrictive taken as a whole than those imposed by the Revolving Credit Facility as at the Issue Date; (c) encumbrances or restrictions contained in any agreement in effect on the Issue Date; (d) with respect to restrictions or encumbrances referred to in clause (1)(d) above, encumbrances and restrictions: (i) that restrict in a customary manner the subletting, assignment or transfer of any properties or assets that are subject to a lease, license, conveyance or other similar agreement to which the Issuer or any Restricted Subsidiary is a party or (ii) contained in operating leases for real property and restricting the transfer of such real property upon the occurrence and during the continuance of a default in the payment of rent; (e) encumbrances or restrictions contained in any agreement or other instrument of a Person or relating to assets acquired by the Issuer or any Restricted Subsidiary in effect at the time of such acquisition (but not created in contemplation thereof), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired; (f) encumbrances or restrictions contained in contracts for sales of Capital Stock or assets permitted by the “—Limitation on Asset Sales” covenant with respect to the assets or Capital Stock to be sold pursuant to such contract or in customary merger or acquisition agreements (or any option to enter into such contract) for the purchase or acquisition of Capital Stock or assets or any of the Issuer’s Subsidiaries by another Person;

195 (g) encumbrances or restrictions imposed by applicable law or regulation or by governmental licenses, concessions, franchises or permits; (h) encumbrances or restrictions on cash or other deposits or net worth imposed by customers under contracts entered into the ordinary course of business; (i) encumbrances or restrictions in customary provisions in joint venture and similar agreements entered into in good faith; provided that (x) the encumbrance or restriction is not materially more disadvantageous to the Holders than is customary in comparable agreements (as determined in good faith by the Issuer) and (y) the Issuer determines in good faith that any such encumbrance or restriction will not materially affect the ability of the Issuer or any Guarantor to make any principal or interest payments on the Notes; (j) in the case of clause (1)(d) above, customary encumbrances or restrictions in connection with purchase money obligations, mortgage financings and Capitalized Lease Obligations for property acquired in the ordinary course of business; (k) any encumbrance or restriction arising by reason of customary non-assignment provisions in agreements; (l) any encumbrance or restriction pursuant to an agreement or instrument effecting a refunding, replacement or refinancing of Debt Incurred pursuant to, or that otherwise extends, renews, refunds, refinances or replaces, an agreement or instrument referred to in clauses (a), (b), (c), (e), (i) or (j) of this paragraph (an “Initial Agreement”) or contained in any amendment, supplement or other modification to an Initial Agreement; provided, however, that the encumbrances and restrictions with respect to such Restricted Subsidiary contained in any such agreement or instrument are no less favourable in any material respect to the Holders taken as a whole than the encumbrances and restrictions contained in such Initial Agreement (as determined in good faith by the Issuer); (m) any encumbrance or restriction arising pursuant to an agreement or instrument relating to any Debt permitted to be Incurred pursuant to the provisions of the covenant described under “—Limitation on Debt” if either (i) the encumbrances and restrictions contained in any such agreement or instrument taken as a whole are not materially less favourable to the Holders than the encumbrances and restrictions contained in the Initial Agreements (as determined in good faith by the Issuer) or (ii) such encumbrance or restriction is customary in comparable financings (as determined in good faith by the Issuer) and either: (x) the Issuer (n) determines that such encumbrance or restriction will not materially affect the Issuer’s ability to make principal or interest payments on the Notes as and when they come due or (y) such encumbrance or restriction applies only if a default occurs relating to such Debt; (o) any encumbrances or restrictions imposed by any amendments, modifications, restatements, renewals, extensions, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred to in clauses (l) or (m) of this paragraph; provided that such amendments, modifications, restatements, renewals, extensions, increases, supplements, refundings, replacements or refinancings are, in the good faith judgement of the Issuer’s Board of Directors, no more restrictive (taken as a whole) with respect to such encumbrances or restrictions in any material respect than those contained in the encumbrances or restrictions prior to such amendment, modification, restatement, renewal, extension, increase, supplement, refunding, replacement or refinancing; or (p) with respect to restrictions or encumbrances referred to in clause (1)(d) above, encumbrances or restrictions existing by reason of any Lien permitted under “—Limitations on Liens”.

196 Designation of Unrestricted and Restricted Subsidiaries (1) The Issuer’s Board of Directors may designate any Subsidiary (including newly acquired or newly established Subsidiaries) to be an “Unrestricted Subsidiary”, provided that: (a) no Default has occurred and is continuing at the time of or after giving effect to such designation; (b) the Issuer would be permitted to make an Investment at the time of designation (assuming the effectiveness of such designation) pursuant to the “—Limitation on Restricted Payments” covenant in an amount equal to the Fair Market Value of the Issuer’s interest in such Subsidiary; (c) such Subsidiary does not own any Capital Stock, Redeemable Capital Stock or Debt of, or own or hold any Lien on any property or assets of, or have any Investment in, the Issuer or any other Restricted Subsidiary; (d) such Subsidiary is not liable, directly or indirectly, with respect to any Debt, Lien or other obligation that, if in default, would result (with the passage of time or giving of notice or otherwise) in a default on any of the Issuer’s Debt or Debt of any Restricted Subsidiary; provided that an Unrestricted Subsidiary may provide a Guarantee for the Notes; (e) such Subsidiary, either alone or in the aggregate with all other Unrestricted Subsidiaries, does not operate, directly or indirectly, all or substantially all of the businesses of the Issuer and its Subsidiaries; (f) such Subsidiary is a Person with respect to which neither the Issuer nor any Restricted Subsidiary has any direct or indirect obligation to: (i) subscribe for additional Capital Stock of such Person; or (ii) maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results; and (g) neither the Issuer nor any Restricted Subsidiary directly or indirectly guarantees, is liable for or provides credit support for the Debt of such Subsidiary. (2) In the event of any such designation, the Issuer will be deemed to have made an Investment constituting a Restricted Payment pursuant to the “—Limitation on Restricted Payments” covenant for all purposes of the Indenture in an amount equal to the Fair Market Value of the Issuer’s interest in such Subsidiary. (3) The Issuer’s Board of Directors may designate any Unrestricted Subsidiary as a Restricted Subsidiary, provided that: (a) no Default or Event of Default has occurred and is continuing at the time of, or will occur and be continuing after giving effect to, such designation; (b) such designated Unrestricted Subsidiary shall not have any Debt outstanding (other than Debt that would be Permitted Debt), immediately before and after giving effect to such proposed designation, or after giving pro forma effect to the Incurrence of any such Debt of such designated Unrestricted Subsidiary as if such Debt was Incurred on the date of its designation as a Restricted Subsidiary, the Issuer could Incur at least US$1.00 of additional Debt pursuant to the ratio set forth in paragraph (1) of the “—Limitation on Debt” covenant; and (c) any Lien on the property of such Unrestricted Subsidiary at the time of such designation which will be deemed to have been incurred by such newly designated Restricted Subsidiary as a result of such designation would be permitted to be incurred by the covenant described under the “—Limitation on Liens” covenant. (4) Any such designation as an Unrestricted Subsidiary or Restricted Subsidiary by the Issuer’s Board of Directors will be evidenced to the Trustee by filing a resolution of the

197 Issuer’s Board of Directors with the Trustee giving effect to such designation and an Officers’ Certificate certifying that such designation complies with the foregoing conditions, and giving the effective date of such designation. Any such filing with the Trustee must occur within 45 days after the end of the Issuer’s fiscal quarter in which such designation is made (or, in the case of a designation made during the last fiscal quarter of the Issuer’s fiscal year, within 90 days after the end of such fiscal year).

Listing on the SGX-ST Each of the Issuer and the Guarantors will use its commercially reasonable efforts to maintain the listing of the Notes on the Official List of the SGX-ST for as long as such Notes are outstanding; provided, that if at any time the Issuer determines that it will not maintain such listing, it will obtain prior to the delisting of the Notes from the Official List of the SGX-ST, and thereafter use its best efforts to maintain, a listing of such Notes on another recognized stock exchange. So long as the Notes are listed on the SGX-ST and the rules of the SGX-ST so require, the Issuer will appoint and maintain a paying agent in Singapore, where the Notes may be presented or surrendered for payment or redemption, in the event that any global note is exchanged for Notes in definitive form. In addition, in the event that any global note is exchanged for Notes in definitive form, announcement of such exchange shall be made by or on behalf of the Issuer through the SGX-ST and such announcement will include all material information with respect to the delivery of the Notes in definitive form, including details of the paying agent in Singapore, so long as the Notes are listed on the SGX-ST and the rules of the SGX-ST so require.

Reports to Holders (1) As long as any Notes are outstanding, the Issuer will furnish to the Trustee (who, at the Issuer’s expense will furnish by mail to the Holders) and post on the website https://sf.citidirect.com/ : (a) within 120 days after the end of the Issuer’s fiscal year beginning with the fiscal year ended 31 August 2012, annual reports containing: (i) information with a level of detail that is substantially comparable in all material respects to the sections in this offering memorandum entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, “Business” and “Description of Other Material Indebtedness and Certain Financing Arrangements”; (ii) the audited consolidated balance sheet of the Issuer as at the end of the most recent fiscal year and audited consolidated income statements and statements of cash flow of the Issuer for the most recent two fiscal years, including appropriate footnotes to such financial statements, for and as at the end of such fiscal years and the report of the independent auditors on the financial statements and (iii) calculations of Consolidated EBITDA and Consolidated Interest Expense, in each case, for such fiscal year; (b) within 90 days following the end of the fiscal quarter ended 29 February 2012 and within 60 days following the end of each of the first three fiscal quarters in each fiscal year of the Issuer thereafter, quarterly financial statements containing the following information: (i) the Issuer’s unaudited condensed consolidated balance sheet as at the end of such quarter and unaudited condensed statements of income and cash flow for the most recent quarter year-to-date period ending on the unaudited condensed balance sheet date and the comparable prior period, together with condensed footnote disclosure; (ii) an operating and financial review of the unaudited financial statements, including a discussion of the results of operations, financial condition and material changes in liquidity and capital resources of the Issuer and (iii) calculations of Consolidated EBITDA and Consolidated Interest Expense, in each case, for the four quarters ended with such fiscal quarter; and

198 (c) all current reports that would be required to be filed with the SEC on Form 8-K if the Issuer were required to file such reports, within the time periods specified in such form. (2) At any time that any of the Issuer’s subsidiaries are Unrestricted Subsidiaries and any such Unrestricted Subsidiary or a group of Unrestricted Subsidiaries, taken as a whole, constitutes a Significant Subsidiary of the Issuer, then the annual and quarterly financial information required by clauses (1)(a) and (b) above will include a reasonably detailed presentation, either on the face of the financial statements or in the footnotes thereto, of the financial condition and results of operations of the Issuer and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of the Issuer. (3) The availability of the reports required by the foregoing paragraphs (1) and (2) above on the SEC’s EDGAR database shall be deemed to satisfy the Issuer’s reporting obligations under such paragraphs. In addition, at any time the common stock of the Issuer is listed for trading on a recognized stock exchange other than The New York Stock Exchange or The Nasdaq Stock Market, the Issuer need not comply with Section 1(c) of this covenant. (4) Subject to subsections (1) and (2) above, no report need include separate financial statements for any Guarantors or Non-Guarantor Subsidiaries or any disclosure with respect to the results of operations or any other financial or statistical disclosure not of a type included in this Offering Memorandum. (5) The Issuer shall furnish to the Holders and to prospective investors, upon the request of such Holders, any information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act as long as the Notes are not freely transferable under the Exchange Act by Persons who are not “affiliates” under the Securities Act. (6) All reports provided pursuant to this “Reports to Holders” covenant shall be made in the English language.

Merger, Consolidation or Sale of Assets of the Issuer (1) The Issuer will not, in a single transaction or through a series of transactions, merge, consolidate, amalgamate or otherwise combine with or into any other Person or sell, assign, convey, transfer, lease or otherwise dispose of, or take any action pursuant to any resolution passed by the Issuer’s Board of Directors or shareholders with respect to a demerger or division pursuant to which the Issuer would dispose of, all or substantially all of the Issuer’s properties and assets to any other Person or Persons, and the Issuer will not, and will not cause or permit any Restricted Subsidiary to, enter into any such transaction or series of transactions if such transaction or series of transactions, in the aggregate, would result in the sale, assignment, conveyance, transfer, lease or other disposition of all or substantially all of the properties and assets of the Issuer and its Restricted Subsidiaries on a consolidated basis to any other Person or Persons. The previous sentence will not apply if at the time and immediately after giving effect to any such transaction or series of transactions: (a) either: (i) the Issuer will be the continuing corporation or (ii) the Person (if other than the Issuer) formed by or surviving any such merger, consolidation, amalgamation or other combination or to which such sale, assignment, conveyance, transfer, lease or disposition of all or substantially all of the properties and assets of the Issuer and the Restricted Subsidiaries on a consolidated basis has been made (the “Surviving Entity”): (x) will be a corporation duly incorporated and validly existing under the laws of any member state of the Pre-Expansion European Union as at the Issue Date, the United States of America, any state thereof, the District of Columbia, the British Virgin Islands or the Cayman Islands; and

199 (y) will expressly assume, by a supplemental indenture in form satisfactory to the Trustee, the Issuer’s obligations under the Notes, the Indenture, the Intercreditor Agreement and the Security Documents, and the Notes, the Indenture, the Intercreditor Agreement and the Security Documents will remain in full force and effect as so supplemented; (b) immediately after giving effect to such transaction or series of transactions on a pro forma basis (and treating any obligation of the Issuer or any Restricted Subsidiary Incurred in connection with or as a result of such transaction or series of transactions as having been Incurred by the Issuer or such Restricted Subsidiary at the time of such transaction), no Default or Event of Default will have occurred and be continuing; (c) immediately after giving effect to such transaction or series of transactions on a pro forma basis (on the assumption that the transaction or series of transactions occurred on the first day of the four-quarter fiscal period immediately prior to the consummation of such transaction or series of transactions with the appropriate adjustments with respect to the transaction or series of transactions being included in such pro forma calculation), the Issuer (or the Surviving Entity if the Issuer is not the continuing obligor under the Indenture) could Incur at least US$1.00 of additional Debt pursuant to paragraph (1) of the “—Limitation on Debt” covenant; (d) any Guarantor, unless it is the other party to the transactions described above, has, by way of execution of a supplemental indenture, confirmed that its Guarantee will apply to such Person’s obligations under the Indenture and the Notes; (e) if any of the Issuer’s or any Restricted Subsidiary’s property or assets will thereupon become subject to any Lien, the provisions of the “—Limitation on Liens” covenant are complied with; and (f) the Issuer or the Surviving Entity has delivered to the Trustee, in form satisfactory to the Trustee, an Officers’ Certificate (attaching the computations to demonstrate compliance with clause (c) above) and an opinion of counsel, each stating that such merger, consolidation, amalgamation or other combination or sale, assignment, conveyance, transfer, lease or other disposition, and if a supplemental indenture is required in connection with such transaction, such supplemental indenture, comply with the requirements of the Indenture and that all conditions precedent in the Indenture relating to such transaction have been satisfied. (2) The Surviving Entity will succeed to, and be substituted for, and may exercise every right and power of, the Issuer under the Indenture, the Security Documents and the Intercreditor Agreement, but, in the case of a lease of all or substantially all of the Issuer’s assets, the Issuer will not be released from the obligation to pay the principal of, premium, if any, and interest, on the Notes. (3) Nothing in the Indenture will prevent: (i) any Restricted Subsidiary that is not a Guarantor from consolidating with, merging into or transferring all or substantially all of its properties and assets to the Issuer, a Guarantor or any other Restricted Subsidiary that is not a Guarantor or (ii) any Guarantor from merging into or transferring all or part of its properties and assets to the Issuer or another Guarantor. In addition, the Issuer may consolidate or otherwise combine with or merge into an Affiliate incorporated or organized for the purpose of changing the legal domicile of the Issuer, reincorporating the Issuer in another jurisdiction in compliance with paragraph (1)(a)(x) above or changing the legal form of the Issuer. The Issuer will publish a notice of any merger, consolidation, amalgamation or other combination or sale of assets described above in accordance with the provisions of the

200 Indenture if and as long as the Notes are listed and quoted on the Official List of the SGX-ST and to the extent that the rules of the SGX-ST so require, notify such exchange of any such merger, consolidation, amalgamation or other combination or sale.

Merger, Consolidation or Sale of Assets of the Guarantors (1) Subject to the provisions described under “—Guarantees—Release of the Guarantees”, no Guarantor will, in a single transaction or through a series of transactions, merge, consolidate, amalgamate or otherwise combine with or into any other Person or sell, assign, convey, transfer, lease or otherwise dispose of, or take any action pursuant to any resolution passed by such Guarantor’s Board of Directors or shareholders with respect to a demerger or division pursuant to which such Guarantor will dispose of, all or substantially all of such Guarantor’s properties and assets to any other Person or Persons. The previous sentence will not apply if at the time and immediately after giving effect to any such transaction or series of transactions: (a) such Guarantor is the surviving corporation or the Person formed by or surviving any such consolidation or merger (if other than such Guarantor) or to which such sale, assignment, transfer, lease, conveyance or other disposition will have been made is a corporation incorporated, organized or existing under the laws of a member state of the Pre-Expansion European Union as at the Issue Date, the United States of America, any state thereof, the District of Columbia, the British Virgin Islands, the Cayman Islands or the jurisdiction under the laws of which such Guarantor was organized at the time immediately prior to such consolidation, merger or other transactions referred to in this paragraph (a) (such Guarantor or such Person, as the case may be, being herein called the “Successor Guarantor”); (b) the Successor Guarantor (if other than such Guarantor) expressly assumes all the obligations of such Guarantor under its Guarantee, the Indenture, the Intercreditor Agreement and the Security Documents, pursuant to supplemental indentures and/or agreements in form satisfactory to the Trustee; (c) immediately after giving pro forma effect to such transaction, no Default or Event of Default exists and is continuing; and (d) the Guarantor or the Successor Guarantor has delivered to the Trustee, in form satisfactory to the Trustee, an Officers’ Certificate and an opinion of counsel, each stating that such merger, consolidation, amalgamation or other combination or sale, assignment, conveyance, transfer, lease or other disposition, and if a supplemental indenture is required in connection with such transaction, such supplemental indenture, comply with the requirements of the Indenture and that all conditions precedent in the Indenture relating to such transaction have been satisfied. (2) The Successor Guarantor will succeed to, and be substituted for, and may exercise every right and power of, the relevant Guarantor under the Indenture, but, in the case of a lease of all or substantially all of the Guarantor’s assets, the Guarantor will not be released from the obligation to pay the principal of, premium, if any, and interest, on the Guarantee.

Additional Intercreditor Agreement The Indenture will provide that at the request of the Issuer, at the time of, or prior to, the Incurrence of any Debt that is permitted to share the Collateral, the Issuer, the relevant Guarantors, the Trustee and the Security Agent shall enter into an Additional Intercreditor Agreement on terms substantially similar to the Intercreditor Agreement or an accession or amendment to the Intercreditor Agreement (which accession or amendment does not adversely

201 affect the rights of the Holders), in each case without the consent of any Holder; provided that such Intercreditor Agreement or Additional Intercreditor Agreement will not impose any personal obligations on the Trustee or the Security Agent or adversely affect the rights, duties, liabilities or immunities of the Trustee under the Indenture or the Intercreditor Agreement. The Indenture will also provide that each Holder, by accepting such Note, shall be deemed to have agreed to and accepted the terms and conditions of each such Intercreditor Agreement, Additional Intercreditor Agreement or accession or amendment to the Intercreditor Agreement, and the Trustee or the Security Agent shall not be required to seek the consent of any Holders to perform its obligations under and in accordance with this covenant.

Statement as to Compliance The Issuer will deliver to the Trustee no later than the date on which the Issuer is required to deliver annual reports pursuant to the covenant described under the caption “—Reports to Holders” above, an Officers’ Certificate stating that in the course of the performance by the relevant officers of their respective duties as an officer of the Issuer they would normally have knowledge of any Default and whether or not such officers know of any Default that occurred during such period and, if any, specifying such Default, its status and what action the Issuer is taking or proposes to take with respect thereto. For purposes of this “Statement as to Compliance” covenant, such compliance will be determined without regard to any period of grace or requirement of notice under the Indenture.

Payments for Consent The Issuer will not, and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, pay or cause to be paid any consideration to or for the benefit of any Holder for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of the Indenture or the Notes unless such consideration is offered to be paid and is paid to all Holders that consent, waive or agree to amend in the time frame set forth in any documents distributed relating to such consent, waiver or agreement. Notwithstanding the foregoing, the Issuer and its Subsidiaries shall be permitted, in connection with any offer or payment of consideration for, or as an inducement to, any consent, waiver or amendment of any of the terms or provisions of this Indenture, to exclude any Holder, or to offer and pay different consideration to any Holder for, or as an inducement to, any such consent, waiver or amendment, in each case to the extent (and only to the extent) that such Holder is in any jurisdiction where: (1) (a) the solicitation of such consent, waiver or amendment in the manner deemed appropriate by the Issuer, (b) the payment of the consideration therefor or (c) the conduct or completion of a related offer to purchase or exchange the Notes for cash or other securities in the manner deemed appropriate by the Issuer would require the Issuer or any of its Restricted Subsidiaries to (i) file a registration statement, prospectus or similar document or subject the Issuer or any of its Restricted Subsidiaries to on-going periodic reporting or similar requirements under any applicable securities laws (including, but not limited to, the United States federal securities laws and the laws of the European Union or its member states), which the Issuer in its sole discretion determines (acting in good faith) would be materially burdensome, (ii) qualify as a foreign corporation or other entity or as a dealer in securities in such jurisdiction if it is not otherwise required to so qualify, (iii) generally consent to service of process in any such jurisdiction or (iv) subject itself or any of its Restricted Subsidiaries to taxation in any such jurisdiction if it is not otherwise so subject; or (2) such solicitation would otherwise not be permitted under applicable law in such jurisdiction.

202 Events of Default (1) Each of the following will be an “Event of Default” under the Indenture: (a) default for 30 days in the payment when due of any interest or any Additional Amounts on any Note; (b) default in the payment of the principal of or premium, if any, on any Note at its Maturity (upon acceleration, optional or mandatory redemption, if any, required repurchase or otherwise); (c) failure to comply with the provisions of “—Certain Covenants—Merger, Consolidation or Sale of Assets of the Issuer”; (d) failure to make or consummate an Excess Proceeds Offer in accordance with the provisions of “—Certain Covenants—Limitation on Asset Sales”; (e) failure to make or consummate a Change of Control Offer in accordance with the provisions of “—Certain Covenants—Change of Control”; (f) failure to comply with any covenant or agreement of the Issuer or any Restricted Subsidiary that is contained in the Indenture or any Guarantee (other than specified in clause (a), (b), (c), (d) or (e) above) and such failure continues for a period of 30 days after written notice by the Trustee or the Holders of 25% or more in aggregate principal amount of the Notes then outstanding; (g) default under the terms of any instrument evidencing or securing the Debt of the Issuer or any Restricted Subsidiary having an outstanding principal amount in excess of US$15 million (or the Dollar Equivalent thereof) individually or in the aggregate, if that default: (x) results in the acceleration of the payment of such Debt; or (y) is caused by the failure to pay principal of such Debt prior to the expiration of any applicable grace periods provided in such Debt on the date of such default; (h) (i) any Guarantee of a Guarantor that is a Significant Subsidiary or any group of Guarantors that, taken together, would constitute a Significant Subsidiary, is held in any judicial proceeding to be unenforceable or invalid or ceases to be in full force and effect or enforceable in accordance with its terms or (ii) any Guarantor denies or disaffirms such Guarantor’s obligations in writing under its Guarantee, in each case, other than as provided for in the Indenture, any Guarantee or the Intercreditor Agreement; (i) any security interest under the Security Documents shall, at any time, cease to be in full force and effect with respect to Collateral having Fair Market Value in excess of $25 million (or the Dollar Equivalent thereof), or any such security interest shall be declared invalid or unenforceable by a court of competent jurisdiction or the relevant grantor of the security granted pursuant to a Security Document asserts, in any pleading in any court of competent jurisdiction, that any such security interest is invalid or unenforceable for any reason other than the satisfaction in full of all obligations under the Indenture and discharge of the Indenture, or the Trustee ceases to have a first priority security interest (subject to the Perfection Requirements) in the Collateral (subject to any Permitted Collateral Liens), other than, in each case, pursuant to limitations on enforceability, validity or effectiveness imposed by applicable law or the terms of such Security Document or except in accordance with the terms of such Security Document, the Intercreditor Agreement or the Indenture, including the release provisions thereof; (j) one or more final judgements, orders or decrees (not subject to appeal and not covered by insurance) shall be rendered against the Issuer, a Guarantor or any Significant Subsidiary either individually or in an aggregate amount, in each case

203 in excess of US$15 million (or the Dollar Equivalent thereof), and either a creditor shall have commenced an enforcement proceeding upon such judgement, order or decree or there shall have been a period of 60 consecutive days or more during which a stay of enforcement of such judgement, order or decree was not (by reason of pending appeal or otherwise) in effect; and

(k) the occurrence of certain events of bankruptcy, insolvency, receivership, schemes of arrangement (where any creditors are impaired) or reorganization with respect to the Issuer, a Guarantor or any Significant Subsidiary.

(2) If an Event of Default (other than as specified in clause (1)(k) above) occurs and is continuing, the Trustee or the Holders of not less than 25% in aggregate principal amount of the Notes then outstanding by written notice to the Issuer (and to the Trustee if such notice is given by the Holders) may, and the Trustee, upon the written request of such Holders, shall, declare the principal of, premium, if any, any Additional Amounts and accrued interest on all of the outstanding Notes immediately due and payable, and upon any such declaration all such amounts payable in respect of the Notes will become immediately due and payable.

(3) If an Event of Default specified in clause (1)(k) above occurs and is continuing, then the principal of, premium, if any, Additional Amounts and accrued and unpaid interest on all of the outstanding Notes shall become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder.

(4) At any time after a declaration of acceleration under the Indenture, but before a judgement or decree for payment of the money due has been obtained by the Trustee, the Holders of a majority in aggregate principal amount of the outstanding Notes, by written notice to the Issuer and the Trustee, may rescind such declaration and its consequences if: (a) the Issuer has paid or deposited with the Trustee a sum sufficient to pay: (i) all overdue interest and Additional Amounts on all of the Notes then outstanding; (ii) all unpaid principal of and premium, if any, on any outstanding Notes that has become due otherwise than by such declaration of acceleration and interest thereon at the rate borne by the Notes; (iii) to the extent that payment of such interest is lawful, interest upon overdue interest and overdue principal at the rate borne by the Notes; and (iv) all sums paid or advanced by the Trustee under the Indenture and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; (b) the rescission would not conflict with any judgement or decree of a court of competent jurisdiction; and (c) all Events of Default, other than the non-payment of amounts of principal of, premium, if any, and any Additional Amounts and interest accrued on the Notes that has become due solely by such declaration of acceleration, have been cured or waived. No such rescission shall affect any subsequent default or impair any right consequent thereon.

204 (5) In the event of a declaration of acceleration of the Notes because of an Event of Default described in clause (1)(g) above has occurred and is continuing, the declaration of acceleration of the Notes will be automatically annulled if the event of default or payment default triggering such Event of Default pursuant to clause (1)(g) is remedied or cured by the Issuer or a Restricted Subsidiary of the Issuer or waived by the Holder of the relevant Debt within 20 days after the declaration of acceleration with respect thereto, provided that: (a) the annulment of the acceleration of the Notes would not conflict with any judgement or decree of a court of competent jurisdiction, and (b) all existing Events of Default, except in the payment of principal of, premium, if any, Additional Amounts or interest on any Notes that became due solely because of the acceleration of the Notes, have been cured or waived. (6) The Holders of not less than a majority in aggregate principal amount of the outstanding Notes may, on behalf of the Holders of all of the Notes, waive any past defaults under the Indenture, except a default in the payment of the principal of, premium, if any, and Additional Amounts or interest on any Note held by a non-consenting Holder (which may only be waived with the consent of each Holder affected). (7) No Holder of any of the Notes has any right to institute any proceedings with respect to the Indenture or any remedy thereunder unless the Holders of at least 25% in aggregate principal amount of the outstanding Notes have made a written request and offered an indemnity and/or security satisfactory to the Trustee to institute such proceeding as Trustee under the Notes and the Indenture, the Trustee has failed to institute such proceeding within 30 days after receipt of such notice and the Trustee within such 30-day period has not received directions inconsistent with such written request by Holders of a majority in aggregate principal amount of the outstanding Notes. Such limitations do not, however, apply to a suit instituted by a Holder of a Note for the enforcement of the payment of the principal of, premium, if any, and Additional Amounts or interest on such Note on or after the respective due dates expressed in such Note. (8) If a Default or an Event of Default occurs and is continuing and is known to the Trustee, the Trustee will mail to each Holder of the Notes notice of the Default or Event of Default within 15 Business Days after its occurrence. Except in the case of a Default or an Event of Default in the payment of principal of, premium, if any, Additional Amounts or interest on any Notes, the Trustee may withhold the giving of such notice to the Holders of such Notes if a committee of its trust officers in good faith determines that withholding the giving of such notice is in the best interests of the Holders of the Notes. (9) The Issuer will also be required to notify the Trustee within 15 Business Days of becoming aware of the occurrence of any Default.

Defeasance (1) The Indenture will provide that the Issuer may, at its option and at any time prior to the Stated Maturity of the Notes, elect to have the obligations of the Issuer and the Guarantors discharged with respect to the outstanding Notes (“Legal Defeasance”). Legal Defeasance means that the Issuer will be deemed to have paid and discharged the entire Debt represented by the outstanding Notes except as to: (a) the rights of Holders of outstanding Notes to receive payments in respect of the principal of, premium, if any, Additional Amounts and interest on such Notes when such payments are due from the trust referred to below;

205 (b) the Issuer’s obligations to issue temporary Notes, register, transfer or exchange any Notes, replace mutilated, destroyed, lost or stolen Notes, maintain an office or agency for payments in respect of the Notes and segregate and hold such payments in trust; (c) the rights, powers, trusts, duties and immunities of the Trustee and the obligations of the Issuer and the Guarantors in connection therewith; and (d) the Legal Defeasance provisions of the Indenture. (2) In addition, the Issuer may, at its option and at any time, elect to have the obligations of the Issuer and the Guarantors released with respect to certain covenants set forth in the Indenture (“Covenant Defeasance”) and thereafter any failure to comply with such covenants will not constitute a Default or an Event of Default with respect to the Notes. In the event that a Covenant Defeasance occurs, certain events described under “—Events of Default” will no longer constitute an Event of Default with respect to the Notes. These events will not include events relating to non-payment, bankruptcy, insolvency, receivership and reorganization. The Issuer may exercise its Legal Defeasance option regardless of whether it has previously exercised any Covenant Defeasance. (3) In order to exercise either Legal Defeasance or Covenant Defeasance: (a) the Issuer must irrevocably deposit or cause to be deposited on trust with the Trustee, for the benefit of the Holders of the Notes, cash in U.S. dollars, Government Obligations or a combination thereof, in such amounts as will be sufficient, in the opinion of an internationally recognized firm of independent public accountants, to pay and discharge the principal of, premium, if any, Additional Amounts and interest, on the outstanding Notes on the Stated Maturity or on the applicable redemption date, as the case may be, and the Issuer must: (i) specify whether the Notes are being defeased to maturity or to a particular redemption date and (ii) if applicable, have delivered to the Trustee an irrevocable notice to redeem all of the outstanding Notes; (b) in the case of Legal Defeasance, the Issuer must have delivered to the Trustee an opinion of counsel stating that: (x) the Issuer has received from, or there has been published by, the U.S. Internal Revenue Service a ruling or (y) since the Issue Date, there has been a change in applicable U.S. federal income tax law, in either case to the effect that (and based thereon such opinion shall confirm that) the Holders of the outstanding Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Legal Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (c) in the case of Covenant Defeasance, the Issuer must have delivered to the Trustee an opinion of counsel to the effect that the Holders of the outstanding Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Covenant Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (d) no Default or Event of Default will have occurred and be continuing: (i) on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit) or (ii) insofar as bankruptcy or insolvency events described in clause (1)(k) of “—Events of Default” above are concerned, at any time during the period ending on the 123rd day after the date of such deposit;

206 (e) such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit), the Indenture or any material agreement or instrument to which the Issuer or any Restricted Subsidiary is a party or by which the Issuer or any Restricted Subsidiary is bound; (f) such Legal Defeasance or Covenant Defeasance will not result in the trust arising from such deposit constituting an investment company within the meaning of the U.S. Investment Company Act of 1940 unless such trust shall be registered under such act or be exempt from registration thereunder; (g) the Issuer must have delivered to the Trustee an opinion of counsel in the country of the Issuer’s incorporation to the effect that after the 123rd day following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally and an opinion of counsel that the Trustee shall have a perfected security interest in such trust funds for the ratable benefit of the Holders of the Notes; (h) the Issuer must have delivered to the Trustee an Officers’ Certificate stating that the deposit was not made by the Issuer with the intent of preferring the Holders of the Notes over the other creditors of the Issuer with the intent of defeating, hindering, delaying or defrauding creditors of the Issuer or other creditors, or removing assets beyond the reach of the relevant creditors or increasing debts of the Issuer to the detriment of the relevant creditors; (i) no event or condition exists that would prevent the Issuer from making payments of the principal of, premium, if any, Additional Amounts and interest on the Notes on the date of such deposit or at any time ending on the 123rd day after the date of such deposit; and (j) the Issuer must have delivered to the Trustee an Officers’ Certificate and an opinion of counsel, each stating that all conditions precedent provided for relating to the Legal Defeasance or the Covenant Defeasance, as the case may be, have been complied with. (4) If the funds deposited with the Trustee to effect Covenant Defeasance are insufficient to pay the principal of, premium, if any, Additional Amounts and interest on the Notes when due because of any acceleration occurring after an Event of Default, then the Issuer and the Guarantors will remain liable for such payments.

Satisfaction and Discharge The Indenture will be discharged and will cease to be of further effect (except as to surviving rights of registration of transfer or exchange of the Notes as expressly provided for in the Indenture) when: (1) the Issuer has irrevocably deposited or caused to be deposited with the Trustee as funds on trust for such purpose an amount in U.S. dollars or Government Obligations sufficient to pay and discharge the entire Debt on such Notes that have not, prior to such time, been delivered to the Trustee for cancellation, for principal of, premium, if any, and any Additional Amounts and accrued and unpaid interest on the Notes to the date of such deposit (in the case of Notes which have become due and payable) or to the Stated Maturity or redemption date, as the case may be, and the Issuer has delivered irrevocable instructions to the Trustee under the Indenture to apply the deposited money toward the payment of Notes at Stated Maturity or on the redemption date, as the case may be and either: (a) all of the Notes that have been authenticated and delivered (other than destroyed, lost or stolen Notes that have been replaced or paid and Notes for

207 which payment money has been deposited on trust or segregated and held on trust by the Issuer and thereafter repaid to the Issuer or discharged from such trust as provided for in the Indenture) have been delivered to the Trustee for cancellation; or (b) all Notes that have not been delivered to the Trustee for cancellation: (x) have become due and payable (by reason of the mailing of a notice of redemption or otherwise); (y) will become due and payable within one year of Stated Maturity or (z) are to be called for redemption within one year of the proposed discharge date under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the Issuer’s name and at the Issuer’s expense; (2) the Issuer has paid or caused to be paid all sums payable by the Issuer under the Indenture; and (3) the Issuer has delivered to the Trustee an Officers’ Certificate and an opinion of counsel, each stating that: (a) all conditions precedent provided in the Indenture relating to the satisfaction and discharge of the Indenture have been satisfied; and (b) such satisfaction and discharge will not result in a breach or violation of, or constitute a default under, the Indenture or any other agreement or instrument to which the Issuer or any Subsidiary is a party or by which the Issuer or any Subsidiary is bound.

Amendments and Waivers (1) With the consent of the Holders of not less than a majority in aggregate principal amount of the Notes then outstanding, the Issuer, the Guarantors, the Security Agent and the Trustee are permitted to amend, waive compliance with or supplement the Indenture, the Notes, the Guarantees, the Intercreditor Agreement and/or the Security Documents; provided that no such modification or amendment may, without the consent of the Holders of 90% of the then outstanding Notes: (a) change the Stated Maturity of the principal of, or any instalment of or Additional Amounts or interest on, any Note (or change any Default or Event of Default under clause (a) of the definition thereof related thereto); (b) reduce the principal amount of any Note (or Additional Amounts or premium, if any) or the rate of or change the time for payment of interest on any Note (or change any Default or Event of Default under clause (b) of the definition thereof related thereto); (c) change the coin or currency in which the principal of any Note or any premium or any Additional Amounts or the interest thereon is payable; (d) impair the right to institute suit for the enforcement of any payment of any Note in accordance with the provisions of such Note, the Indenture and the Intercreditor Agreement; (e) reduce the principal amount of Notes whose Holders must consent to any amendment, supplement or waiver of provisions of the Indenture requiring the consent of 90% of Holders of the Notes; (f) modify any of the provisions relating to supplemental indentures requiring the consent of 90% of Holders of the Notes; (g) release any Guarantee except in compliance with the terms of the Indenture and the Intercreditor Agreement; or (h) release any Lien on the Collateral granted for the benefit of the Holders of the Notes, except in compliance with the terms of the Security Documents, Indenture and the Intercreditor Agreement.

208 (2) Notwithstanding the foregoing, without the consent of any Holder of the Notes, the Issuer, the Guarantors, the Security Agent and the Trustee may modify, amend or supplement the Indenture, the Notes, the Guarantees, the Intercreditor Agreement and/or the Security Documents: (i) to evidence the succession of another Person to the Issuer or a Guarantor and the assumption by any such successor of the covenants in the Indenture and in the Notes in accordance with “—Certain Covenants—Merger, Consolidation or Sale of Assets of the Issuer”; (ii) to add to the Issuer’s covenants and those of any Guarantor or any other obligor in respect of the Notes for the benefit of the Holders of the Notes or to surrender any right or power conferred upon the Issuer or any Guarantor or any other obligor in respect of the Notes, as applicable, in the Indenture, the Notes or any Guarantee; (iii) to cure any ambiguity, or to correct or supplement any provision in the Indenture, the Notes, any Guarantee, the Intercreditor Agreement or any Security Document that may be defective or inconsistent with any other provision in the Indenture, the Notes, any Guarantee, the Intercreditor Agreement or any Security Document or make any other change or provision to the Indenture, the Notes, any Guarantee, the Intercreditor Agreement or any Security Document; provided that, in each case, such change or provision shall not materially adversely affect the interests of the Holders; (iv) to conform the text of the Indenture, the Notes, any Guarantee, the Intercreditor Agreement or any Security Document to any provision of this Description of the Notes to the extent that such provision in this Description of the Notes was intended to be a verbatim recitation of a provision of the Indenture, the Notes, any Guarantee, the Intercreditor Agreement or any Security Document; (v) to release (a) any Guarantee in accordance with (and if permitted by) the terms of the Indenture and the Intercreditor Agreement or (b) any Collateral in accordance with the Indenture, the Intercreditor Agreement and the Security Documents; (vi) to add a Guarantor or other guarantor under the Indenture; (vii) to evidence and provide the acceptance of the appointment of a successor Trustee under the Indenture; (viii) to mortgage, pledge, hypothecate or grant a security interest in favour of the Trustee for the benefit of the Holders as additional security for the payment and performance of the Issuer’s and any Guarantor’s obligations under the Indenture, in any property or assets, including any of which are required to be mortgaged, pledged or hypothecated or in which a security interest is required to be granted to the Trustee pursuant to the Indenture or otherwise; (ix) to provide for the issuance of Future Additional Notes in accordance with and if permitted by the terms of and limitations set forth in the Indenture; (x) to provide for the addition of (by way of an Additional Intercreditor Agreement) or the amendment of, or accession to, the Intercreditor Agreement of a representative acting on behalf of such holders of Debt that is permitted to share in Collateral; and (xi) to comply with the procedures of DTC, Euroclear or Clearstream. (3) The Holders of a majority in aggregate principal amount of the Notes outstanding may waive compliance with certain restrictive covenants and provisions of the Indenture. (4) In entering into any amendments, the Trustee shall be entitled to request and rely on Officer’s Certificates and opinions of counsel.

209 Currency Indemnity The U.S. dollar is the sole currency of account and payment for all sums payable under the Notes, the Guarantees and the Indenture. Any amount received or recovered in respect of the Notes or the Guarantees in a currency other than U.S. dollars (whether as a result of, or of the enforcement of, a judgement or order of a court of any jurisdiction, in the winding up or dissolution of the Issuer, any Subsidiary or otherwise) by the Trustee and/or a Holder of the Notes in respect of any sum expressed to be due to such parties from the Issuer or the Guarantors will constitute a discharge of their obligation only to the extent of the U.S. dollar amount which the recipient is able to purchase with the amount so received or recovered in such other currency on the date of that receipt or recovery (or, if it is not possible to purchase U.S. dollars on that date, on the first date on which it is possible to do so). If the U.S. dollar amount that could be recovered following such a purchase is less than the dollar amount expressed to be due to the recipient under any Note, the Issuer and the Guarantors will jointly and severally indemnify the recipient against the cost of the recipient’s making a further purchase of U.S. dollars in an amount equal to such difference. For the purposes of this paragraph, it will be sufficient for the Trustee and/or Holder to certify that it would have suffered a loss had the actual purchase of U.S. dollars been made with the amount so received in that other currency on the date of receipt or recovery (or, if a purchase of U.S. dollars on that date had not been possible, on the first date on which it would have been possible). These indemnities, to the extent permitted by law: (1) constitute a separate and independent obligation from the Issuer’s and the Guarantors’ other obligations; (2) give rise to a separate and independent cause of action; (3) apply irrespective of any waiver granted by any Holder of a Note; and (4) will continue in full force and effect despite any other judgement, order, claim or proof for a liquidated amount in respect of any sum due under any Note or any other judgement or order.

No Personal Liability of Directors, Officers, Employees and Stockholders No director, officer, employee, incorporator, controlling person or stockholder of the Issuer or any Guarantor, as such, will have any liability for any obligations of the Issuer or the Guarantors under the Notes, the Indenture, the Guarantees, the Intercreditor Agreement or the Security Documents or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note will waive and release all such liability. The waiver and release will be part of the consideration for issuance of the Notes. The waiver may not be effective to waive liabilities under U.S. federal securities laws.

The Trustee The Indenture will contain limitations on the rights of the Trustee under the Indenture in the event the Trustee becomes a creditor of the Issuer or any Guarantor. These include limitations on the Trustee’s rights to obtain payment of claims in certain cases or to realize on certain property received by it in respect of any such claims, as security or otherwise. The Indenture will contain provisions for the indemnification of the Trustee and for its relief from responsibility, including provisions relieving it from taking action unless indemnified to its satisfaction.

Unclaimed Money Claims against the Issuer or the Guarantors for the payment of principal of, premium, if any, or interest, on the Notes will become void unless presentation for payment is made as required in the Indenture within a period of six years.

210 Book-Entry; Delivery and Form The certificates representing the Notes will be issued in fully registered form without interest coupons. Notes will only be issued in denominations of US$200,000 and integral multiples of US$1,000 in excess thereof. Notes sold in offshore transactions in reliance on Regulation S under the Securities Act will initially be represented by one or more permanent global notes in definitive, fully registered form without interest coupons (each a “Regulation S Global Note”) and will be deposited with the Trustee as custodian for, and registered in the name of a nominee of, DTC for the accounts of Euroclear and Clearstream. Notes sold in reliance on Rule 144A will initially be represented by one or more permanent global notes in definitive, fully registered form without interest coupons (each a “Restricted Global Note”, and together with the Regulation S Global Notes, the “Global Notes”) and will be deposited with the Trustee as custodian for, and registered in the name of a nominee of, DTC. Each Global Note (and any Notes issued for exchange therefor) will be subject to certain restrictions on transfer set forth therein as described under “Transfer Restrictions”. Ownership of beneficial interests in a Global Note will be limited to persons who have accounts with DTC (“participants”) or persons who hold interests through participants. Ownership of beneficial interests in a Global Note will be shown on, and the transfer of that ownership will be effected only through, records maintained by DTC or its nominee (with respect to interests of participants) and the records of participants (with respect to interests of persons other than participants). Qualified institutional buyers may hold their interests in a Restricted Global Note directly through DTC if they are participants in such system, or indirectly through organizations which are participants in such system. Investors may hold their interests in a Regulation S Global Note directly through Euroclear or Clearstream, if they are participants in such systems, or indirectly through organizations that are participants in such system. Euroclear and Clearstream will hold interests in the Regulation S Global Notes on behalf of their participants through DTC. So long as DTC, or its nominee, is the registered owner or Holder of a Global Note, DTC or such nominee, as the case may be, will be considered the sole owner or Holder of the Notes represented by such Global Note for all purposes under the Indenture and the Notes. No beneficial owner of an interest in a Global Note will be able to transfer that interest except in accordance with DTC’s applicable procedures, in addition to those provided for under the Indenture and, if applicable, those of Euroclear and Clearstream. Payments of the principal of, and interest on, a Global Note will be made to DTC or its nominee, as the case may be, as the registered owner thereof. Neither the Issuer, nor any of the Guarantors, the Trustee nor any Paying Agent will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in a Global Note or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. The Issuer expects that DTC, Euroclear, Clearstream or their respective nominees, upon receipt of any payment of principal or interest in respect of a Global Note, will credit participants’ accounts with payments in amounts proportionate to their respective beneficial interests in the principal amount of such Global Note as shown on the records of DTC, Euroclear, Clearstream or their respective nominees. The Issuer also expects that payments by participants to owners of beneficial interests in such Global Note held through such participants will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers registered in the names of nominees for such customers. Such payments will be the responsibility of such participants. Transfers between participants in DTC will be effected in the ordinary way in accordance with DTC rules and will be settled in same day funds. Transfers between participants in Euroclear and Clearstream will be effected in the ordinary way in accordance with their respective rules and operating procedures.

211 The Issuer expects that DTC will take any action permitted to be taken by a Holder (including the presentation of Notes for exchange as described below) only at the direction of one or more participants to whose account the DTC interests in a Global Note is credited and only in respect of such portion of the aggregate principal amount of Notes as to which such participant or participants has or have given such direction. However, if there is an Event of Default under the Notes, DTC will exchange the applicable Global Note for Certificated Notes, which it will distribute to its participants and which may be legended as set forth in the section entitled “Transfer Restrictions”. Although DTC, Euroclear and Clearstream are expected to follow the foregoing procedures in order to facilitate transfers of interests in a Global Note among participants of DTC, Euroclear and Clearstream, they are under no obligation to perform or continue to perform such procedures, and such procedures may be discontinued at any time. None of the Issuer, any of the Guarantors, the Trustee or any Paying Agent will have any responsibility for the performance by DTC, Euroclear or Clearstream or their respective participants or indirect participants of their respective obligations under the rules and procedures governing their operations. If DTC is at any time unwilling or unable to continue as a depositary for the Global Notes and a successor depositary is not appointed by the Issuer within 90 days, the Issuer will issue Certificated Notes in registered form, which may bear the legend referred to under “Transfer Restrictions”, in exchange for the Global Notes. Holders of an interest in a Global Note may receive Certificated Notes, which may bear the legend referred to under “Transfer Restrictions”, in accordance with the DTC’s rules and procedures in addition to those provided for under the Indenture otherwise.

The Clearing Systems

General DTC, Euroclear and Clearstream have advised the Issuer as follows: DTC. DTC is a limited purpose trust issuer organized under the laws of the State of New York, a “banking organization” within the meaning of New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Exchange Act. DTC was created to hold securities of its participants and to facilitate the clearance and settlement of securities transactions among its participants in such securities through electronic book entry changes in accounts of its participants, thereby eliminating the need for physical movement of securities certificates. DTC’s participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations, some of whom own DTC, and may include the dealer manager. Indirect access to the DTC system is also available to others that clear through or maintain a custodial relationship with a DTC participant, either directly or indirectly (“indirect participants”). Transfers of ownership or other interests in Notes in DTC may be made only through DTC participants. In addition, beneficial owners of Notes in DTC will receive all distributions of principal of and interest on the Notes from the Trustee through such DTC participant. Euroclear and Clearstream. Euroclear and Clearstream hold securities for participating organizations and facilitate the clearance and settlement of securities transactions between their respective participants through electronic book entry changes in accounts of such participants. Euroclear and Clearstream provide to their participants, among other things, services for safekeeping, administration, clearance and settlement of internationally traded securities and securities lending and borrowing. Euroclear and Clearstream interface with domestic securities markets. Euroclear and Clearstream participants are financial institutions such as underwriters, securities brokers and dealers, banks, trust companies and certain other organizations. Indirect access to Euroclear or Clearstream is also available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Euroclear or Clearstream participant, either directly or indirectly.

212 Initial Settlement Initial settlement for the Notes will be made in same-day funds. All Notes issued in the form of Global Notes will be deposited with the Trustee as custodian for DTC. Investors’ interests in Notes held in book entry form by DTC will be represented through financial institutions acting on their behalf as direct and indirect participants in DTC. As a result, Euroclear and Clearstream will initially hold positions on behalf of their participants through DTC. Investors electing to hold their Notes through DTC (other than through accounts at Euroclear or Clearstream) must follow the settlement practices applicable to United States corporate debt obligations. The securities custody accounts of investors will be credited with their holdings against payment in same day funds on the settlement date. Investors electing to hold their Notes through Euroclear or Clearstream accounts will follow the settlement procedures applicable to conventional Eurobonds in registered form. Notes will be credited to the securities custody accounts of Euroclear Holders and of Clearstream Holders on the Business Day following the settlement date against payment for value on the settlement date.

Secondary Market Trading Because the purchaser determines the place of delivery, it is important to establish at the time of trading of any Notes where both the purchaser’s and seller’s accounts are located to ensure that settlement can be made on the desired value date. Trading between DTC Participants. Secondary market trading between DTC participants will occur in the ordinary way in accordance with DTC rules and will be settled using the procedures applicable to United States corporate debt obligations in same day funds using DTC’s Same Day Funds Settlement System. Trading between Euroclear and Clearstream Participants. Secondary market trading between Euroclear participants and Clearstream participants will occur in the ordinary way in accordance with the applicable rules and operating procedures of Clearstream and Euroclear and will be settled using the procedures applicable to conventional Eurobonds in same day funds. Trading between DTC Seller and Euroclear or Clearstream Purchaser. When Notes are to be transferred from the account of a DTC participant to the account of a Euroclear participant or a Clearstream participant, the purchaser must send instructions to Euroclear or Clearstream through a participant at least one Business Day prior to settlement. Euroclear or Clearstream, as the case may be, will receive the Notes against payment. Payment will then be made to the DTC participant’s account against delivery of the Notes. Payment will include interest accrued on the Notes from and including the last interest payment date to and excluding the settlement date, on the basis of a calendar year consisting of twelve 30-day calendar months. For transactions settling on the 31st day of the month, payment will include interest accrued to and excluding the first day of the following month. Payment will then be made to the DTC participant’s account against delivery of the Notes. After settlement has been completed, the Notes will be credited to the respective clearing system and by the clearing system, in accordance with its usual procedures, to the Euroclear participant’s or Clearstream participant’s account. Credit for the Notes will appear on the next day (European time) and cash debit will be back valued to, and the interest on the Notes will accrue from, the value date (which would be the preceding day when settlement occurs in New York). If settlement is not completed on the intended value date (i.e., the trade date fails), the Euroclear or Clearstream cash debit will be valued instead as at the actual settlement date. Euroclear or Clearstream participants will need to make available to the respective clearing systems the funds necessary to process same day funds settlement. The most direct means of doing so is to pre-position funds for settlement, either from cash on hand or existing lines of credit, as such participants would for any settlement occurring within Euroclear or Clearstream. Under this approach, such participants may take on credit exposure to Euroclear or Clearstream until the Notes are credited to their accounts one day later.

213 As an alternative, if Euroclear or Clearstream has extended a line of credit to them, participants can elect not to pre-position funds and allow that credit line to be drawn upon to finance settlement. Under this procedure, Euroclear participants or Clearstream participants purchasing Notes would incur overdraft charges for one day, assuming they cleared the overdraft when the Notes were credited to their accounts. However, interest on the Notes would accrue from the value date. Therefore, in many cases, the investment income on Notes earned during that one day period may substantially reduce or offset the amount of such overdraft charges, although this result will depend on each participant’s particular cost of funds. The sale proceeds will be available to the DTC seller on the settlement date. Thus, to a DTC participant, a cross market transaction will settle no differently than a trade between two DTC participants. Finally, day traders that use Euroclear or Clearstream and that purchase Notes from DTC participants for credit to Euroclear or Clearstream participants should note that these trades will automatically fail on the sale side unless affirmative action is taken. At least three techniques should be readily available to eliminate this potential problem: (1) borrowing through Euroclear or Clearstream for one day (until the purchase side of the day trade is reflected in their Euroclear account or Clearstream account) in accordance with the clearing system’s customary procedures; (2) borrowing the Notes in the United States from a DTC participant no later than one day prior to settlement, which would give the Notes sufficient time to be reflected in the borrower’s Euroclear account or Clearstream account in order to settle the sale side of the trade; or (3) staggering the value dates for the buy and sell sides of the trade so that the value date for the purchase from the DTC participant is at least one day prior to the value date for the sale to the Euroclear participants or Clearstream participants. Trading between Euroclear or Clearstream Seller and DTC Purchaser. Due to the time zone differences in their favour, Euroclear participants or Clearstream participants may employ their customary procedures for transactions in which Notes are to be transferred by the respective clearing system to another DTC participant. The seller must send instructions to Euroclear or Clearstream through a participant at least one Business Day prior to settlement. In these cases, Euroclear or Clearstream will credit the Notes to the DTC participant’s account against payment. Payment will include interest accrued on the Notes from and including the last interest payment date to and excluding the settlement date, on the basis of a calendar year consisting of twelve 30-day calendar months. For transactions settling on the 31st day of the month, payment will include interest accrued to the Notes excluding the first day of the following month. Payment will then be made to the DTC participant’s account against delivery of the Notes. The payment will then be reflected in the account of the Euroclear participant or Clearstream participant the following day, and receipt of the cash proceeds in the Euroclear or Clearstream participant’s account will be back valued to the value date (which would be the preceding day when settlement occurs in New York). If the Euroclear or Clearstream participant has a line of credit with its respective clearing system and elects to draw on such line of credit in anticipation of receipt of the sale proceeds in its account, the back valuation may substantially reduce or offset any overdraft charges incurred over the one day period. If settlement is not completed on the intended value date (i.e., the trade date fails), receipt of the cash proceeds in the Euroclear or Clearstream participant’s account would instead be valued as at the actual settlement date. As in the case with respect to sales by a DTC participant to a Euroclear or Clearstream participant, participants in Euroclear and Clearstream will have their accounts credited the day after their settlement date. See “—Trading between DTC Seller and Euroclear or Clearstream Purchaser” above.

214 None of the Issuer, the Trustee or any Paying Agent will have any responsibility for the performance by DTC, Euroclear or Clearstream or their respective participants or indirect participants of their respective obligations under the rules and procedures governing their operations.

Payments on the Notes; Paying Agent The Issuer will make all payments, including principal of, premium, if any, and interest on the Notes, at its office or through an agent in New York that it will maintain for this purpose at Citibank, N.A., London Branch, 21st Floor, Citigroup Centre, Canada Square, Canary Wharf, London E14 5LB. Initially, that agent will be the corporate trust office of the Trustee. The Issuer may change the paying agent without prior notice to the Holders. In addition, the Issuer or any of its Subsidiaries may act as paying agent in connection with the Notes other than for the purposes of effecting a redemption described under “—Optional Redemption” or an offer to purchase the Notes described under either of “—Certain Covenants—Change of Control” and “—Certain Covenants—Limitation on Asset Sales”. The Issuer will make all payments in same-day funds. Payments on the Global Notes will be made to DTC or its nominee as the registered Holder of the Global Notes. No service charge will be made for any registration of transfer, exchange or redemption of the Notes, but the Issuer may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection with any such registration of transfer or exchange.

Governing Law The Indenture, the Notes and the Guarantees will be governed by and construed in accordance with the laws of New York. The Intercreditor Agreement will be governed by and construed in accordance with the laws of England and Wales. The Security Documents will be governed by and construed in accordance with the laws of the jurisdictions in which the Collateral subject to such Security Documents is located or to which it is subject.

Consent to Jurisdiction; Service of Process The Issuer and each of the Guarantors will irrevocably (i) submit to the non-exclusive jurisdiction of any U.S. federal or New York State court located in the Borough of Manhattan, The City of New York, in connection with any suit, action or proceeding arising out of, or relating to, the Notes, any Guarantee or the Indenture and (ii) designate and appoint Law Debenture Corporation for receipt of service of process in any such suit, action or proceeding.

Certain Definitions “Acquired Debt” means Debt of a Person: (a) existing at the time such Person becomes a Restricted Subsidiary or is merged into or consolidated with the Issuer or any Restricted Subsidiary; or (b) assumed in connection with the acquisition of assets from any such Person, in each case, whether or not such Debt was Incurred in connection with, or in contemplation of, or to finance, such Person becoming a Restricted Subsidiary or such acquisition, as the case may be. Acquired Debt will be deemed to be Incurred on the date the acquired Person becomes a Restricted Subsidiary (or is merged into or consolidated with the Issuer or any Restricted Subsidiary, as the case may be) or the date of the related acquisition of assets from any Person. “Additional Intercreditor Agreement” means (a) any additional intercreditor agreement to be entered into by the Trustee on behalf of the Holders of any Future Additional Notes, the Issuer and each guarantor in connection with the issuance of Additional Notes or (b) any additional intercreditor agreement to be entered into by the representative on behalf of such holders of Debt that is permitted to share in the Collateral.

215 “Affiliate” means, with respect to any specified Person: (a) any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person; (b) any other Person that owns, directly or indirectly, 10% or more of such specified Person’s Capital Stock or any officer or director of any such specified Person; or (c) any other Person 10% or more of the Voting Stock of which is beneficially owned or held, directly or indirectly by such specified Person. For the purposes of this definition, “control”, when used with respect to any specified Person, means the power to direct or cause the direction of the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing. “Applicable Redemption Premium” means, with respect to any Note on any redemption date, the greater of: (a) 1.0% of the principal amount of the Note; and (b) the excess of: (i) the present value at such redemption date of: (x) the redemption price of such Note at 1 April 2015 (such redemption price being set forth in the table appearing below the caption “—Optional Redemption—Optional Redemption on or after 1 April 2015”) plus (y) all required interest payments that would otherwise be due to be paid on such Note during the period between the redemption date and 1 April 2015 (excluding accrued but unpaid interest), computed using a discount rate equal to the Treasury Rate at such redemption date plus 50 basis points; over (ii) the outstanding principal amount of the Note. For the avoidance of doubt, calculation of the Applicable Redemption Premium shall not be a duty or obligation of the Trustee or any Paying Agent. “Asset Sale” means any sale, issuance, conveyance, transfer, lease or other disposition (including, without limitation, by way of merger, consolidation, amalgamation or other combination or Sale and Leaseback Transaction) by the Issuer or a Restricted Subsidiary (collectively, a “transfer”), directly or indirectly, in one or a series of related transactions, of: (a) any Capital Stock of any Subsidiary (other than directors’ qualifying shares or shares required by applicable law to be held by a Person other than the Issuer or a Subsidiary); (b) all or substantially all of the properties and assets of any division or line of business of the Issuer or any Restricted Subsidiary; or (c) any other of the Issuer’s or any Restricted Subsidiary’s properties or assets. Notwithstanding the preceding, none of the following items will be deemed to be an Asset Sale: (i) any single transaction or series of related transactions that involves assets or Capital Stock having, at the time of such transaction, a Fair Market Value of less than US$5 million (or the Dollar Equivalent thereof); (ii) any transfer or disposition of assets (x) by the Issuer to any Guarantor or (y) by any Guarantor to the Issuer or any other Guarantor; (iii) any transfer or disposition of assets (x) by the Issuer or any Guarantor to any Non-Guarantor Subsidiary or (y) by any Non-Guarantor Subsidiary to the Issuer, any Guarantor or any other Non-Guarantor Subsidiary; provided that any such transfer or disposition under (x) or (y) complies with clause (1)(a) of the covenant described under “—Certain Covenants—Limitation on Transactions with Affiliates”;

216 (iv) any transfer or disposition of obsolete, worn out, damaged or other equipment, facilities or assets that are no longer useful in the conduct of the Issuer’s and any Restricted Subsidiary’s business and that are disposed of in the ordinary course of business; (v) sales or dispositions of receivables in any factoring transaction in the ordinary course of business; (vi) any transfer or disposition of assets that is governed by the provisions of the Indenture described under “—Certain Covenants—Merger, Consolidation or Sale of Assets of the Issuer” and “—Certain Covenants—Change of Control”; (vii) for the purposes of “—Certain Covenants—Limitation on Asset Sales” only, the making of a Permitted Investment or a Restricted Payment permitted under “—Certain Covenants—Limitation on Restricted Payments”; (viii) the sale, lease, sublease, assignment, transfer or other disposition of any equipment, inventory or receivables in the ordinary course of business; (ix) an issuance of Capital Stock by a Restricted Subsidiary to the Issuer or to another Restricted Subsidiary; (x) any transfer, termination, unwinding or other disposition of Hedging Agreements in the ordinary course of business and not for speculative purposes (it being understood that hedging with respect to the Notes and the Revolving Credit Facility shall be deemed “in the ordinary course of business” under this clause (x)); (xi) sales or transfers of assets received by the Issuer or any Restricted Subsidiary upon the foreclosure on a Lien granted in favour of the Issuer or any Restricted Subsidiary or any other transfer of title with respect to any secured investment in default; (xii) the granting of Liens not prohibited by the covenant described under “—Certain Covenants—Limitation on Liens”; (xiii) the surrender or waiver of contract rights or the settlement, release or surrender of contract, tort or other claims, in the ordinary course of business; (xiv) disposition or transfer of receivables in connection with the compromise, settlement or collection thereof in the ordinary course of business or in bankruptcy or similar proceedings and exclusive of factoring or similar arrangements; or (xv) a disposition of cash or Cash Equivalents. “Attributable Debt” means, with respect to any Sale and Leaseback Transaction at the time of determination, the present value (discounted at the interest rate implicit in the lease determined in accordance with IFRS or, if not known, at the Issuer’s incremental borrowing rate) of the total obligations of the lessee of the property subject to such lease for rental payments during the remaining term of the lease included in such Sale and Leaseback Transaction, including any period for which such lease has been extended or may, at the option of the lessor, be extended, or until the earliest date on which the lessee may terminate such lease without penalty or upon payment of penalty (in which case the rental payments shall include such penalty), after excluding from such rental payments all amounts required to be paid on account of maintenance and repairs, insurance, taxes, assessments, water, utilities and similar charges. “Average Life” means, as at the date of determination with respect to any Debt, the quotient obtained by dividing: (a) the sum of the products of: (i) the numbers of years from the date of determination to the date or dates of each successive scheduled principal payment of such Debt; multiplied by (ii) the amount of each such principal payment; by (b) the sum of all such principal payments.

217 “Bank Deposit Debt” means Debt of the Issuer or any Restricted Subsidiary that is subject to a Lien over one or more bank accounts of the Issuer or its Restricted Subsidiaries and is used by the Issuer and/or Restricted Subsidiaries to, directly or indirectly, engage in foreign currency exchange transactions; provided, however, that the aggregate amount of deposits in all such pledged bank accounts shall not at any time be less than 90% or exceed an amount equal to 110% of the aggregate outstanding principal amount of such Debt. “Board of Directors” means: (a) with respect to any corporation, the board of directors or managers of the corporation (which, in the case of any corporation having both a supervisory board and an executive or management board, shall be the executive or management board) or any duly authorized committee thereof; (b) with respect to any partnership, the board of directors of the general partner of the partnership or any duly authorized committee thereof; (c) with respect to a limited liability company, the managing member or members (or analogous governing body) or any controlling committee of managing members thereof; and (d) with respect to any other Person, the board or any duly authorized committee thereof or committee of such Person serving a similar function. “Business Day” means a day other than a Saturday, Sunday or other day on which banking institutions in London, New York, Hong Kong, Singapore or a place of payment under the Indenture are authorized or required by law to close. “Capital Stock” means, with respect to any Person, any and all shares, interests, partnership interests (whether general or limited), participations, rights in or other equivalents (however designated) of such Person’s equity, any other interest or participation that confers the right to receive a share of the profits and losses, or distributions of assets of, such Person and any rights (other than debt securities convertible into or exchangeable for Capital Stock), warrants or options exchangeable for, or convertible into, such Capital Stock, whether now outstanding or issued after the Issue Date. For the avoidance of doubt, in no event should any Subordinated Shareholder Debt or any instrument issued on similar terms constitute Capital Stock. “Capitalized Lease Obligation” means, with respect to any Person, any obligation of such Person under a lease of (or other agreement conveying the right to use) any property (whether real, personal or mixed), which obligation is required to be classified and accounted for as a capital lease obligation under IFRS, and, for purposes of the Indenture, the amount of such obligation at any date will be the capitalized amount thereof at such date, determined in accordance with IFRS and the Stated Maturity thereof will be the date of the last payment of rent or any other amount due under such lease prior to the first date such lease may be terminated without penalty. For the avoidance of doubt, an operating lease will not be deemed a Capital Lease Obligation, regardless of any reclassification or recharacterization under IFRS. “Cash Equivalents” means any of the following: (a) any evidence of Debt denominated in Euro, Sterling or U.S. dollars with a maturity of 180 days or less from the date of acquisition, issued or directly and fully guaranteed or insured by a member state (an “EU Member State”) of the Pre-Expansion European Union whose sole lawful currency on the Issue Date is the Euro, the government of the United Kingdom of Great Britain and Northern Ireland, the United States of America, any state thereof or the District of Columbia, or any agency or instrumentality thereof (each, an “Approved Jurisdiction”); (b) demand or time deposit accounts, certificates of deposit, money market deposits or bankers’ acceptances denominated in Euro, Sterling or U.S. dollars with a maturity of 180 days or less from the date of acquisition issued by a bank or trust company organized in an EU Member State, the United Kingdom of Great Britain and Northern

218 Ireland or any commercial banking institution that is a member of the U.S. Federal Reserve System, in each case having combined capital and surplus and undivided profits of not less than US$500.0 million, whose long-term, unsecured, unsubordinated and unguaranteed debt has a rating, at the time any investment is made therein, of at least A or the equivalent thereof from S&P and at least A2 or the equivalent thereof from Moody’s; (c) commercial paper with a maturity of 180 days or less from the date of acquisition issued by a corporation that is not the Issuer’s or any Restricted Subsidiary’s Affiliate and which is incorporated under the laws of an EU Member State, United Kingdom of Great Britain and Northern Ireland, the United States of America or any state thereof and, at the time of acquisition, having a short-term credit rating of at least A-1 or the equivalent thereof from S&P or at least P-l or the equivalent thereof from Moody’s; (d) repurchase obligations with a term of not more than seven days for underlying securities of the type described in clause (a) above, entered into with a financial institution meeting the qualifications described in clause (b) above; (e) Investments in money market mutual funds at least 95% of the assets of which constitute Cash Equivalents of the kind described in clauses (a) through (d) above; (f) direct obligations of China and Hong Kong or any agency of any of the foregoing or obligations fully and unconditionally guaranteed by China and Hong Kong or any agency of any of the foregoing, in each case maturing within one year; (g) demand or time deposit accounts, certificates of deposit, overnight or call deposits and money market deposits with (i) Agricultural Bank of China, Bank of China, Bank of Communications, China CITIC Bank, China Merchants Bank, Industrial Commercial Bank of China, China Construction Bank, Bank of Shanghai or China Huaxia Bank or (h) (ii) any other bank, trust company, financial institution or similar entity organized under the laws of the PRC whose long-term debt is rated as high or higher than any of those institutions described in clause (i) of this subsection (g); (i) demand or time deposit accounts, certificates of deposit, overnight or call deposits and money market deposits with Ahli United Bank, Standard Chartered Bank, Standard Chartered Bank Malaysia Berhad, UOB Bank, Australia and New Zealand Bank, National Bank of Abu Dhabi or Samba Financial Group; (i) demand or time deposit accounts, certificates of deposit, overnight or call deposits and money market deposits with any bank, trust company, financial institution or similar entity, not otherwise included under clause (b), (g) or (h) above which would rank, in terms of combined capital and surplus and undivided profits or the ratings on its long-term debt, among the top five such institutions in a jurisdiction in which the Issuer or a Restricted Subsidiary conducts its business or is organized; or (j) demand or time deposits, certificates of deposit, overnight or call deposits and money market deposits with any bank, trust company, financial institution or similar entity organized under the laws of the PRC or Hong Kong; provided that such deposits do not exceed US$10 million (or the Dollar Equivalent thereof) with any single bank or US$30 million (or the Dollar Equivalent thereof) in the aggregate at any date of determination thereafter. “Change of Control” means the occurrence of any of the following events: (a) prior to the consummation of an Initial Public Offering, (i) the Permitted Holders cease to “beneficially own” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, more than 50% of the voting power of the Issuer’s outstanding

219 Voting Stock and (ii) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than a Permitted Holder or the Permitted Holders, is or becomes the “beneficial owner”, directly or indirectly, of a larger percentage of such Voting Stock than the Permitted Holders; (b) after the consummation of an Initial Public Offering, (i) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than a Permitted Holder or the Permitted Holders, is or becomes the “beneficial owner”, directly or indirectly, of more than 35% of the voting power of the Issuer’s outstanding Voting Stock and (ii) the Permitted Holders do not beneficially own a larger percentage of such Voting Stock than such person or group (for the purposes of this clause (b), such other person or group shall be deemed to beneficially own all Voting Stock of a specified entity directly held by a parent entity, if such other person or group becomes the “beneficial owner” (as defined in clause (a) above), directly or indirectly, of more than 35% of the Voting Stock of such parent entity and the Permitted Holders do not beneficially own more than 35% of the Voting Stock of such entity); (c) the merger or consolidation of the Issuer with or into another Person, the merger of another Person with or into the Issuer or the sale of all or substantially all of the assets of the Issuer and its Subsidiaries, taken as a whole, to any Person, in any case other than (i) a transaction in which the survivor or transferee is a Permitted Holder or a Person that is controlled by a Permitted Holder or (ii) a transaction following which (i) in the case of a merger or consolidation transaction, holders of securities that represented 100% of the Voting Stock of the Issuer immediately prior to such transaction (or other securities into which such securities are converted as part of such merger or consolidation transaction) own directly or indirectly at least a majority of the voting power of the Voting Stock of the surviving Person in such merger or consolidation transaction immediately after such transaction and in substantially the same proportion as before the transaction and (B) in the case of a sale of assets transaction, each transferee becomes an obligor in respect of the Notes and a Subsidiary of the transferor of such assets; or (ii) during any consecutive two-year period following an Initial Public Offering, individuals who at the beginning of such period constituted the Issuer’s Board of Directors (together with any new members whose election to such Board of Directors, or whose nomination for election by the Issuer’s shareholders, was approved by a vote of at least a majority of the members of the Issuer’s Board of Directors then still in office who were either members at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the members of the Issuer’s Board of Directors then in office. “Change of Control Offer” has the meaning assigned to that term in the Indenture. “Change of Control Payment Date” has the meaning assigned to that term in the Indenture. “Clearstream” means Clearstream Banking, société anonyme, Luxembourg. “Commission” means the U.S. Securities and Exchange Commission. “Consolidated EBITDA” means the sum of (A) Consolidated Net Income plus (B) in each case to the extent deducted in computing Consolidated Net Income for such period: (a) Consolidated Interest Expense; (b) Consolidated Tax Expense; (c) Consolidated Non-cash Charges, less all non-cash items increasing Consolidated Net Income for such period (other than, for the avoidance of doubt, the accrual of revenue in the ordinary course of business); (d) any extraordinary, exceptional or non-recurring losses (minus any extraordinary, exceptional or non-recurring gains);

220 (e) any losses (less gains) attributable to sales of assets of the Issuer or any Restricted Subsidiary that are not sold in the ordinary course of business; (f) Management Fees; (g) any expenses, charges or fees relating to any Equity Offering, Permitted Investment, acquisition or Debt permitted to be Incurred under the Indenture, in each case, whether or not successful; and (h) all expenses incurred directly in connection with any early extinguishment of Debt less any gain from any write off or forgiveness of Debt. “Consolidated Fixed Charge Coverage Ratio” of the Issuer means, for any period, the ratio of (1) Consolidated EBITDA to (2) Consolidated Interest Expense; provided that: (a) if the Issuer or any Restricted Subsidiary has Incurred, repaid or redeemed any Debt since the beginning of such period that, in the case of Debt Incurred, remains outstanding, or if the transaction giving rise to the need to calculate the Consolidated Fixed Charge Coverage Ratio is an Incurrence of Debt, Consolidated Net Income and Consolidated Interest Expense for such period shall be calculated after giving effect on a pro forma basis to such Debt, Incurrence, repayment or redemption as if such Debt had been Incurred, repaid or redeemed on the first day of such period and the discharge of any other Debt repaid, repurchased, defeased or otherwise discharged with the proceeds of such new Debt as if such discharge had occurred on the first day of such period, provided that in the event of any such repayment or redemption, the pro forma Consolidated EBITDA for such period shall be calculated as if the Issuer or such Restricted Subsidiary had not earned any interest income actually earned during such period in respect of funds used to repay or redeem such Debt; (b) if, since the beginning of such period, the Issuer or any Restricted Subsidiary shall have made any Asset Sale, Consolidated Net Income for such period shall be reduced on a pro forma basis by an amount equal to the Consolidated Net Income (if positive) directly attributable to the assets which are the subject of such asset sale for such period, or increased on a pro forma basis by an amount equal to the Consolidated Net Income (if negative) directly attributable thereto, for such period and the Consolidated Interest Expense for such period shall be reduced on a pro forma basis by an amount equal to the Consolidated Interest Expense directly attributable to any Debt of the Issuer or of any Restricted Subsidiary repaid, repurchased, defeased or otherwise discharged with respect to the Issuer and the continuing Restricted Subsidiaries in connection with such Asset Sale for such period (or, if the Capital Stock of any Restricted Subsidiary is sold, the Consolidated Interest Expense for such period directly attributable to the Debt of such Restricted Subsidiary to the extent the Issuer and the continuing Restricted Subsidiaries are no longer liable for such Debt after such sale); (c) if, since the beginning of such period the Issuer or any Restricted Subsidiary (by merger, consolidation, amalgamation or other combination or otherwise) shall have made an Investment in any Restricted Subsidiary (or any Person which becomes a Restricted Subsidiary) or an acquisition of assets, including any acquisition of an asset occurring in connection with a transaction causing a calculation to be made hereunder, Consolidated Net Income and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto (including the Incurrence of any Debt) as if such Investment or acquisition occurred on the first day of such period; and (d) if, since the beginning of such period any Person (that subsequently became a Restricted Subsidiary or was merged with or into the Issuer or any Restricted Subsidiary since the beginning of such period) shall have made any Asset Sale or any Investment or acquisition of assets that would have required an adjustment pursuant to

221 clause (b) or (c) if made by the Issuer or a Restricted Subsidiary during such period, Consolidated Net Income and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto as if such asset sale or Investment or acquisition occurred on the first day of such period. If any Debt bears a floating rate of interest and is being given pro forma effect, the interest expense on such Debt shall be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire period (taking into account any Interest Rate Agreement applicable to such Debt for a period equal to the remaining term of such Interest Rate Agreement). “Consolidated Interest Expense” means, for any period, without duplication and in each case determined on a consolidated basis in accordance with IFRS, the sum of: (a) the Issuer’s and the Restricted Subsidiaries’ interest expense for such period (excluding (i) any capitalized interest on any Subordinated Shareholder Funding, (ii) amortization of deferred financing fees, debt issuance costs, commissions, fees and expenses (including without limitation, in respect of the Transactions) and (iii) any net interest on any Entrusted Loans), plus, to the extent not otherwise included in interest expense: (i) amortization of debt discount and original issue discount; (ii) the net payments made or received pursuant to Currency Agreements or Interest Rate Agreements (including amortization of fees and discounts, but excluding any non-cash interest expense attributable to the movement in the mark-to-market valuation of obligations under Currency Agreements or Interest Rate Agreements or other derivative instruments pursuant to IFRS); (iii) realized commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing and similar transactions; and (iv) the interest portion of any deferred payment obligation and amortization of debt issuance costs; plus (b) the interest component of the Issuer’s and the Restricted Subsidiaries’ Capitalized Lease Obligations accrued and/or scheduled to be paid or accrued during such period other than the interest component of Capitalized Lease Obligations between or among the Issuer and any Restricted Subsidiary or between or among Restricted Subsidiaries; plus (c) the Issuer’s and the Restricted Subsidiaries non-cash interest expenses and interest that was capitalized during such period; plus (d) the interest expense on Debt of another Person (other than the Issuer or any Restricted Subsidiary) to the extent such Debt is guaranteed by the Issuer or any Restricted Subsidiary or secured by a Lien on the Issuer’s or any Restricted Subsidiary’s assets; plus (e) cash and non-cash dividends due (whether or not declared) on the Issuer’s Redeemable Capital Stock and any Restricted Subsidiary’s Preferred Stock (to any Person other than the Issuer and any Restricted Subsidiary and other than dividends payable solely in Capital Stock of the Issuer (other than Redeemable Capital Stock)), in each case for such period. “Consolidated Net Income” means, for any period, the Issuer’s and the Restricted Subsidiaries’ consolidated net income (or loss) for such period as determined in accordance with IFRS, adjusted by excluding (to the extent included in such consolidated net income or loss), without duplication: (a) the portion of net income (and the loss to the extent such loss is funded in cash by the Issuer or a Restricted Subsidiary) of any Person (other than the Issuer or a Restricted Subsidiary), including Unrestricted Subsidiaries, in which the Issuer or any Restricted Subsidiary has an interest, except that the Issuer’s or a Restricted Subsidiary’s interest

222 in the net income of such Person for such period shall be included in such Consolidated Net Income to the extent of the aggregate amount of dividends or other distributions actually paid to the Issuer or any Restricted Subsidiary in cash dividends or other distributions during such period; (b) solely for the purpose of determining the amount available for Restricted Payments under the caption “—Certain Covenants—Limitation on Restricted Payments”, the net income (but not the loss) of any Restricted Subsidiary to the extent that the declaration or payment of dividends or similar distributions by such Restricted Subsidiary is not at the date of determination permitted, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgement, decree, order, statute, rule or governmental regulation applicable to such Restricted Subsidiary (other than (i) restrictions pursuant to the Indenture, (ii) restrictions in effect on the Issue Date with respect to a Restricted Subsidiary, and other restrictions with respect to such Restricted Subsidiary that, taken as a whole, are not materially less favourable to the Holders than such restrictions in effect on the Issue Date, (iii) restrictions specified in clause (2)(m) of the covenant described under “—Certain Covenants—Limitation on Dividends and Other Payment Restrictions Affecting Restricted Subsidiaries” and (iv) restrictions permitted by clause (2)(a) and (b) of the covenant described under “—Certain Covenants—Limitation on Dividends and Other Payment Restrictions Affecting Restricted Subsidiaries”); (c) net after-tax gains (or losses) attributable to the termination of any employee pension benefit plan; (d) any restoration to net income of any contingency reserve, except to the extent provision for such reserve was made out of income accrued; (e) the net income (or losses) attributable to discontinued operations (including, without limitation, operations disposed of during such period whether or not such operations were classified as discontinued); (f) the cumulative effect of a change in accounting principles; (g) any one time non-cash charges or any amortization or depreciation or any impact of asset revaluation resulting from purchase accounting, in each case, in relation to any acquisition of, or merger or consolidation with, another Person or business or resulting from any reorganization or restructuring involving the Issuer or its Subsidiaries (including without limitation, in respect of the Transactions); (h) any unrealized gains or losses in respect of Hedging Agreements; (i) the impact of capitalized or accreting or pay-in-kind interest or principal in respect of Subordinated Shareholder Funding; (j) any unrealized gains (or losses) due solely to fluctuations in currency values and related tax effects; (k) any non-cash compensation charge or expenses arising from any grant of stock, stock options or other equity-based awards and any non-cash deemed finance charges in respect of any pension liabilities or other provisions; (l) expenses, costs or other charges (including non-cash charges) relating to the Transactions; and (m) any goodwill or other intangible asset impairment charges. “Consolidated Non-cash Charges” means, for any period, the aggregate depreciation, amortization and other non-cash expenses of the Issuer and the Restricted Subsidiaries for such period, determined on a consolidated basis in accordance with IFRS (excluding any such non-cash charge that requires an accrual of or reserve for cash charges for any future period).

223 “Consolidated Tax Expense” means, for any period with respect to any Relevant Taxing Jurisdiction, the provision for all national, local and foreign federal, state or other income taxes (including without limitation, withholding taxes) of the Issuer and the Restricted Subsidiaries for such period as determined on a consolidated basis in accordance with IFRS. “Credit Facility” or “Credit Facilities” means, one or more debt facilities or indentures, as the case may be (including the Revolving Credit Facility), or commercial paper facilities providing for revolving credit loans, term loans, notes, letters of credit or other forms of Debt, guarantees and assurances or other credit facilities or extensions of credit, including overdrafts, in each case, as amended, restated, modified, renewed, refunded, replaced, refinanced, repaid, increased or extended in whole or in part from time to time. “Currency Agreements” means, in respect of a Person, any spot or forward foreign exchange agreements and currency swap, currency option, futures, collars or other similar agreements or arrangements or to which such Person is a party or beneficiary. “Debt” means, with respect to any Person, without duplication: (a) all liabilities of such Person for borrowed money or for the deferred purchase price of property or services due more than six months after such property is acquired or services provided, excluding trade payables incurred in the ordinary course of business; (b) all obligations of such Person evidenced by bonds, notes, debentures or other similar instruments; (c) all reimbursement obligations of such Person in connection with any letters of credit, bankers’ acceptances, receivables facilities or other similar facilities, except to the extent such reimbursement obligation relates to a trade payable arising in the ordinary course of business; (d) all debt of such Person created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even if the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), which is due more than one year after its incurrence but excluding trade payables arising in the ordinary course of business; (e) all Capitalized Lease Obligations of such Person; (f) all obligations of such Person under or in respect of Hedging Agreements (the amount of any such obligation to be equal at any time to the termination value of such agreement or arrangement giving rise to such obligation that would be payable by such Person at such time); (g) all Redeemable Capital Stock of such Person valued at the greater of its voluntary maximum fixed repurchase price and its involuntary maximum fixed repurchase price plus accrued and unpaid dividends; and (h) Preferred Stock of any Restricted Subsidiary, provided, however, that clauses (a) through (f) above (other than letters of credit, Attributable Debt and Hedging Obligations) will be included in definition of “Debt” if and to the extent any such items would appear as a liability on a balance sheet of the specified Person prepared in accordance with IFRS; provided further, that the term “Debt” shall not include: (i) anything initially accounted for as an operating lease, regardless of any reclassification or recharacterization under IFRS; (ii) customer deposits and advance payments received in the ordinary course of business from customers for goods purchased in the ordinary course of business; (iii) any pension obligations of the Issuer or a Restricted Subsidiary; (iv) other than for purposes of the definitions of “Subordinated Shareholder Funding” and “Subordinated Debt”, Subordinated Shareholder Funding; (v) accrued liabilities Incurred in the ordinary course of business and (vi)

224 Entrusted Loans. In addition, the term “Debt” includes all Debt of others secured by a Lien on any asset of the Person (whether or not whether such Debt is assumed by the Person) and, to the extent not otherwise included, the guarantee by such Person of any Debt of any other Person. For purposes of this definition, the “maximum fixed repurchase price” of any Redeemable Capital Stock that does not have a fixed redemption, repayment or repurchase price will be calculated in accordance with the terms of such Redeemable Capital Stock as if such Redeemable Capital Stock were purchased on any date on which Debt will be required to be determined pursuant to the Indenture, and if such price is based upon, or measured by, the fair market value of such Redeemable Capital Stock, such fair market value will be determined in good faith by the Board of Directors of the issuer of such Redeemable Capital Stock; provided, that if such Redeemable Capital Stock is not then permitted to be redeemed, repaid or repurchased, the redemption, repayment or repurchase price shall be the book value of such Redeemable Capital Stock as reflected in the most recent financial statements of such Person. “Default” means any event that is, or after the giving of notice or passage of time or both would be, an Event of Default. “Designated Non-cash Consideration” means the Fair Market Value of non-cash consideration received by the Issuer or any of its Restricted Subsidiaries in connection with an Asset Sale that is designated as Designated Non-cash Consideration pursuant to an Officers’ Certificate, setting forth the basis of such valuation, less the amount of cash or Cash Equivalents received in connection with a subsequent sale of such Designated Non-cash Consideration. “Disinterested Member” means, with respect to any transaction or series of related transactions, a member of the Issuer’s Board of Directors who does not have any material direct or indirect financial interest in or with respect to such transaction or series of related transactions or is not an Affiliate, or an officer, director, member of a supervisory, executive or management board or employee of any Person (other than the Issuer or a Restricted Subsidiary) who has any direct or indirect financial interest in or with respect to such transaction or series of related transactions. “Dollar Equivalent” means, with respect to any monetary amount in a currency other than U.S. dollars, the amount of U.S. dollars obtained by converting such foreign currency involved in such computation into U.S. dollars at the base rate for the purchase of U.S. dollars with the applicable foreign currency as quoted by the Federal Reserve Bank of New York using exchange rates prevailing on the Issue Date. “DTC” means The Depository Trust Company and its successors. “Entrusted Loans” means borrowings by the Issuer or any Restricted Subsidiary from a bank, trust company or other financial institution that are subject to a Lien on deposits made by the Issuer or another Restricted Subsidiary as security for such borrowings; provided that no assets other than such deposits secure such borrowings, the value of such borrowings does not exceed the value of such deposits and such borrowings are denominated in the same currency as such deposits. “Equity Interests” means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). “Equity Offering” means an offer and sale in an underwritten public offering or private placement of Capital Stock (which is Qualified Capital Stock) of the Issuer, or any Holding Company of the Issuer, to any Person other than a Restricted Subsidiary of the Issuer or the Permitted Holders; provided that the net proceeds of such offer and sale are contributed to the equity capital of the Issuer and provided further that the aggregate gross cash proceeds received by the Issuer or any Holding Company of the Issuer from such transaction shall not be less than US$20 million (or the Dollar Equivalent thereof). “Euro” or “C= ” means the lawful currency of the member states of the European Union that participate in the third stage of the European Economic and Monetary Union.

225 “Euroclear” means Euroclear Bank S.A./N.V. “Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, or any successor statute, and the rules and regulations promulgated by the Commission thereunder. “Excluded Contributions” means the net cash proceeds received by the Issuer after the Issue Date from the sale (other than to a Subsidiary of the Issuer) of Capital Stock (other than Redeemable Capital Stock) of the Issuer, designated as “Excluded Contributions” pursuant to an Officers’ Certificate of the Issuer (which shall be designated no later than the date on which such Excluded Contribution has been received by the Issuer). Such Excluded Contributions shall be excluded from the calculation set forth in clause (c)(ii) under paragraph (2) of the covenant described under “—Certain Covenants—Limitation on Restricted Payments” hereof. “Fair Market Value” means, with respect to any asset or property, the sale value that would be obtained in an arm’s-length transaction between an informed and willing seller under no compulsion to sell and an informed and willing buyer under no compulsion to buy, as determined in good faith by the Issuer’s Board of Directors. “Government Obligations” means direct obligations (or certificates representing an ownership interest in such obligations) of an Approved Jurisdiction as at the Issue Date for the payment of which the full faith and credit of such government is given. “guarantee” means, as applied to any obligation: (a) a guarantee (other than by endorsement of negotiable instruments for collection or deposit in the ordinary course of business), direct or indirect, in any manner, of any part or all of such obligation; and (b) an agreement, direct or indirect, contingent or otherwise, the practical effect of which is to assure in any way the payment or performance (or payment of damages in the event of non-performance) of all or any part of such obligation, including, without limiting the foregoing, by the pledge of assets and the payment of amounts drawn down under letters of credit. “Guarantee” means any guarantee of the Issuer’s obligations under the Indenture and the Notes by any Restricted Subsidiary or any other Person in accordance with the provisions of the Indenture. When used as a verb, “Guarantee” shall have a corresponding meaning. “Guarantors” means the Restricted Subsidiaries party to the Indenture on the Issue Date as guarantors and any other Restricted Subsidiary that Incurs a Guarantee. For the avoidance of doubt, if a Guarantee is released in accordance with the provisions of the Indenture, the entity that provided such Guarantee shall no longer be considered a “Guarantor” and shall be excluded from the definition of “Guarantors”. “Hedging Agreements” means Currency Agreements, Interest Rate Agreements and any other future or forward contracts, swaps, options or similar agreements or arrangements, including with respect to fluctuations in commodity prices. “Holder” means the Person in whose name a Note is recorded on the Registrar’s books. “Holding Company” of a Person means any other Person (other than a natural person) of which the first Person is a Subsidiary. “IFRS” means International Financial Reporting Standards as adopted by the European Union as in effect from time to time. “Immaterial Subsidiary” means any Restricted Subsidiary that has Consolidated EBITDA of less than 3% of the Issuer’s Consolidated EBITDA for the four quarters ended most recently for which internal financial statements are available, measured on a pro forma basis giving effect to any acquisitions or dispositions of companies, division or lines of business since the start of such four quarter period and on or prior to the date of acquisition of such subsidiary. “Independent Financial Advisor” means an investment banking firm, bank, accounting firm or third-party appraiser, in any such case, of international standing; provided that such firm is not an Affiliate of the Issuer.

226 “Initial Public Offering” means an Equity Offering of the Issuer or any Holding Company of the Issuer or any successor of the Issuer or any Holding Company of the Issuer (the “IPO Entity”) following which there is a Public Market and, as a result of which, the Capital Stock of the IPO Entity in such offering is listed on an internationally recognized exchange or traded on an internationally recognized market. “Interest Rate Agreements” means, in respect of a Person, any interest rate protection agreements and other types of interest rate hedging agreements (including, without limitation, interest rate swaps, caps, floors, collars and similar agreements or arrangements) as to which such Person is a party or beneficiary. “Intercreditor Agreement” means the Intercreditor Agreement among the Issuer, the Security Agent, the Trustee and certain other parties, as amended, waived or modified from time to time. “Investments” means, with respect to any Person, all direct or indirect investments by such Person in other Persons (including Affiliates) in the forms of loans (including Guarantees or other similar obligations), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions in consideration of Debt, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with IFRS. If the Issuer or any Subsidiary of the Issuer sells or otherwise disposes of any Equity Interests of any direct or indirect Subsidiary of the Issuer such that, after giving effect to any such sale or disposition, such Person is no longer a Subsidiary of the Issuer, the Issuer will be deemed to have made an Investment on the date of any such sale or disposition equal to the Fair Market Value of the Issuer’s Investments in such Subsidiary that were not sold or disposed of in an amount determined as provided in the definition of Fair Market Value. The acquisition by the Issuer or any Subsidiary of the Issuer of a Person that holds an Investment in a third Person will be deemed to be an Investment by the Issuer or such Subsidiary in such third Person in an amount equal to the Fair Market Value of the Investments held by the acquired Person in such third Person in an amount determined as provided in the final paragraph of clause (1) of the covenant described above under the caption “—Certain Covenants—Limitation on Restricted Payments”. Except as otherwise provided in the Indenture, the amount of an Investment will be determined at the time the Investment is made and without giving effect to subsequent changes in value. “Issue Date” means 28 March 2012. “Lien” means any mortgage or deed of trust, charge, pledge, lien (statutory or otherwise), privilege, security interest, hypothecation, assignment for or by way of security, claim, preference, priority or other encumbrance upon or with respect to any property of any kind, real or personal, movable or immovable, now owned or hereafter acquired. A Person will be deemed to own subject to a Lien any property which such Person has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement. “Management Advances” means loans or advances made to, or guarantees with respect to loans or advances made to, directors, officers, employees or consultants of the Issuer or any Restricted Subsidiary for purposes of funding any such person’s purchase of Capital Stock of the Issuer or any holding company of the Issuer with the approval of the Board of Directors in an aggregate amount outstanding not exceeding US$2 million (or the Dollar Equivalent thereof). “Management Fees” means: (a) customary annual fees for the performance of management or monitoring services by any Permitted Holder or any of its Affiliates for the Issuer or any Restricted Subsidiary; provided that such fees will not, in the aggregate, exceed $2.0 million (or the Dollar Equivalent thereof) per annum (exclusive of out of pocket expenses); and (b) fees and related expenses for the performance of transaction, management, consulting, financial or other advisory services or underwriting, placement or other investment banking activities, including in connection with mergers, acquisitions,

227 dispositions, joint ventures or raising of debt or equity, by any Permitted Holder or any of its Affiliates for the Issuer or any Restricted Subsidiary, which payments, in the aggregate under this clause (b), equal to up to 1.0% of the value of the underlying transaction. “Maturity” means, with respect to any Debt, the date on which any principal of such Debt becomes due and payable as therein or herein provided, whether at the Stated Maturity with respect to such principal or by declaration of acceleration, call for redemption or purchase or otherwise. “Moody’s” means Moody’s Investors Service, Inc. and its successors. “Net Cash Proceeds” means: (a) with respect to any Asset Sale, the proceeds thereof in the form of cash or Cash Equivalents (except to the extent that such obligations are financed or sold with recourse to the Issuer or any Restricted Subsidiary), net of: (i) brokerage commissions and other fees and expenses (including, without limitation, fees and expenses of legal counsel, accountants, investment banks and other consultants) related to such Asset Sale; (ii) provisions for all taxes paid or payable, or required to be accrued as a liability under IFRS as a result of such Asset Sale; (iii) all distributions and other payments required to be made to any Person (other than the Issuer or any Restricted Subsidiary) owning a beneficial interest in the assets subject to the Asset Sale; and (iv) appropriate amounts required to be provided by the Issuer or any Restricted Subsidiary, as the case may be, as a reserve in accordance with IFRS against any liabilities associated with such Asset Sale and retained by the Issuer or any Restricted Subsidiary, as the case may be, after such Asset Sale, including, without limitation, pension and other post-employment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale, all as reflected in an Officers’ Certificate delivered to the Trustee; and (b) with respect to any capital contributions, issuance or sale of Capital Stock or options, warrants or rights to purchase Capital Stock, or debt securities or Capital Stock that have been converted into or exchanged for Capital Stock as referred to under “—Certain Covenants—Limitation on Restricted Payments”, the proceeds of such issuance or sale in the form of cash or Cash Equivalents, payments in respect of deferred payment obligations when received in the form of, or stock or other assets when disposed of for, cash or Cash Equivalents (except to the extent that such obligations are financed or sold with recourse to the Issuer or any Restricted Subsidiary), net of attorney’s fees, accountant’s fees and brokerage, consultation, underwriting and other fees and expenses actually Incurred in connection with such issuance or sale and net of taxes paid or payable as a result of thereof. “Non-Guarantor Subsidiary” means a Restricted Subsidiary that is not a Guarantor. “Non-Guarantor Debt” means, for any Non-Guarantor Subsidiary, Debt attributable to such Non-Guarantor Subsidiary. “Non-Guarantor Shares” means shares of Capital Stock of a Non-Guarantor Subsidiary that are directly owned by a Person organized outside of the PRC. “Officers’ Certificate” means a certificate signed by two officers of the Issuer, a Guarantor or a Surviving Entity, as the case may be, who are authorized to represent the relevant Person and delivered to the Trustee.

228 “Pari Passu Debt” means Senior Debt including, without limitation, (a) any Debt of the Issuer that ranks equally in right of payment with the Notes or (b) with respect to any Guarantee, any Debt that ranks equally in right of payment to such Guarantee. “Perfection Requirements” means the making of the appropriate registrations, filings or notifications (and the corresponding acknowledgements) of, or the payment of any stamp, duty (including mortgage duty), registration or similar taxes or payments on, or in respect of, the Security Documents in order to create or perfect (if applicable) the security created or purported to be created by the Security Documents or in order to achieve the relevant priority for such Security, as specifically contemplated in any Security Document or in any related legal opinion delivered to the Trustee or the Security Agent. “Permitted Business” means any business related, ancillary or complementary to the business of the Issuer and the Restricted Subsidiaries on the date of the Indenture. “Permitted Collateral Liens” means any Lien on the Collateral: (a) to secure: (i) Pari Passu Debt of the Issuer or a Restricted Subsidiary that is permitted to be Incurred under clause (a) or (b) of the definition of Permitted Debt (which in the case of Senior Debt under clause (2)(a) of the definition of Permitted Debt may have priority in an intercreditor waterfall); (ii) Pari Passu Debt of the Issuer or a Restricted Subsidiary that is permitted to be Incurred under clause (e) of the definition of Permitted Debt; provided that all collateral securing such Debt secures the Notes and the Guarantees on at least an equal and ratable basis; (iii) Pari Passu Debt of the Issuer or a Guarantor that is permitted to be Incurred under paragraph (1) or (2)(v) of the covenant described under “—Certain Covenants—Limitation on Debt”; (iv) any obligations under Currency Agreements or Interest Rate Agreements permitted under clause (g) of the definition of Permitted Debt, as long as the related Debt is permitted to be incurred under the Indenture; or (v) any Permitted Refinancing Debt thereof; (b) that is a statutory Lien arising by operation of law; or (c) any Lien permitted by clause (a), (e), (f), (g), (h), (i), (j), (m), (n), (o), (s), (t), (u), (v), (w), (aa) or (bb) of the definition of “Permitted Liens”, by clause (p) of such definition, only to the extent the Lien being extended, renewed or replaced was a Permitted Collateral Lien, and by clause (q) of such definition, only to the extent the Debt being refinanced was secured by a Permitted Collateral Lien; provided, in the case of clause (a) above, that such Lien either ranks: (A) equal to all other Liens on such Collateral securing Pari Passu Debt of the Issuer or the relevant Guarantor, if the Lien secures Pari Passu Debt or (B) junior to the Liens securing the Notes and the Guarantees; provided further that, in the case of clauses (a)(i) (other than with respect to Debt under clause (2)(a) of the definition of Permitted Debt), (a)(ii), (a)(iii), (a)(iv) (other than with respect to Interest Rate Agreements with respect to the Notes and Debt under clause (2)(a) of the definition of Permitted Debt), (b) and (c) above, any Debt related to such Lien does not rank in priority to the Notes in any appropriation or distribution provisions in the Intercreditor Agreement (or any similar agreement among creditors). “Permitted Debt” has the meaning given to such term under “—Certain Covenants— Limitation on Debt”.

229 “Permitted Holders” means (i) Baring Private Equity Asia III Holding (5) Limited, Baring Private Equity Asia IV Holding (7) Limited, Premier Education Co-Investment Limited and Premier Education Co-Investment II Limited, (ii) any Affiliate or Related Person of any Person named in clause (i) of this definition and/or (iii) any successor to any Person described in clause (i) or (ii) of this definition. “Permitted Investments” means any of the following: (a) Investments in cash or Cash Equivalents; (b) intercompany Debt to the extent permitted under clause (d) of the definition of “Permitted Debt”; (c) Investments in: (i) the Issuer, (ii) a Guarantor, (iii) a Restricted Subsidiary that is not a Guarantor, provided that in the case of such Restricted Subsidiary, such Investment complies with clause (1)(a) of the covenant described under “—Certain Covenants— Limitation on Transactions with Affiliates” or (iv) another Person if as a result of such Investment such other Person becomes a Guarantor or such other Person is merged or consolidated with or into, or transfers or conveys all or substantially all of its assets to, the Issuer or a Guarantor; (d) Investments made by the Issuer or any Restricted Subsidiary as a result of or received in connection with an Asset Sale permitted under or made in compliance with “—Certain Covenants—Limitation on Asset Sales” to the extent such Investments are non-cash proceeds permitted thereunder; (e) expenses or advances to cover payroll, travel entertainment, moving, other relocation and similar matters that are expected at the time of such advances to be treated as expenses in accordance with IFRS; (f) Investments in the Notes and any other Senior Debt of the Issuer or a Restricted Subsidiary that is a Guarantor; (g) Investments existing, or made pursuant to legally binding commitments in existence, at the Issue Date and any Investment that amends, extends, renews, replaces or refinances an Investment existing on the date of the Indenture; provided that such new Investment is on terms and conditions no less favourable to the Issuer or the applicable Restricted Subsidiary than the Investment being amended, extended, renewed, replaced or refinanced; (h) Investments in Hedging Agreements permitted under clause 2(g) of “—Certain Covenants—Limitation on Debt”; (i) Management Advances; (j) Investments in a Person to the extent that the consideration therefor consists of the Issuer’s Qualified Capital Stock or the net proceeds of the substantially concurrent issue and sale (other than to any Subsidiary) of shares of the Issuer’s Qualified Capital Stock; provided that the net proceeds of such sale have been excluded from, and shall not have been included in, the calculation of the amount determined under clause (2)(c)(ii) of “—Certain Covenants—Limitation on Restricted Payments”; (k) (i) stock, obligations or securities received in satisfaction of judgements, foreclosure of liens or settlement of debts and (ii) any Investments received in compromise of obligations, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor, trade debtor or customer; (l) advances made to contractors, vendors, distributors, manufacturers or suppliers, including advance payments for the acquisition of assets, equipment, machinery, consumables, supplies or services, in each case in the ordinary course of business and dischargeable in accordance with customary trade terms;

230 (m) pledges or deposits with respect to leases or utilities provided to third parties in the ordinary course of business or Liens otherwise described in the definition of “Permitted Liens” or made in connection with Liens permitted under the covenant “—Limitation on Liens”; (n) receivables owing to the Issuer or any Restricted Subsidiary created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided, however, that such trade terms may include such concessionary trade terms as the Issuer or any such Restricted Subsidiary deems reasonable under the circumstances; (o) deposits made to secure the performance of tenders, bids or trade or government contracts, or to secure statutory or regulatory obligations, surety or appeal bonds, performance bonds or other obligations of a like nature Incurred in the ordinary course of business; (p) lease, utility and workers’ compensation, performance and similar deposits or advances made in the ordinary course of business; (q) deposits made in connection with the acquisition of real property or land use rights; (r) an Investment in an Unrestricted Subsidiary consisting solely of an Investment in another Unrestricted Subsidiary; and (s) other Investments in any Person having an aggregate Fair Market Value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (s) that are at the time outstanding, not to exceed US$15 million (or the Dollar Equivalent thereof). “Permitted Liens” means the following types of Liens: (a) Liens (other than Liens securing Debt under the Revolving Credit Facility) existing as at the date of the issuance of the Notes; (b) Liens on any property or assets of a Restricted Subsidiary granted in favour of the Issuer or any Restricted Subsidiary; (c) Liens on any of the Issuer’s or any Restricted Subsidiary’s property or assets securing the Notes or any Guarantee; (d) any interest or title of a lessor under any Capitalized Lease Obligation and Liens to secure Debt (including Capitalized Lease Obligations) of the types permitted by clause of the definition of “Permitted Debt” covering only the equipment, property or assets acquired with such Debt and any improvements thereon, to the extent the related Debt may be incurred under the Indenture; (e) Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into by the Issuer or any Restricted Subsidiary in the ordinary course of business in accordance with the Issuer’s or such Restricted Subsidiary’s past practices prior to the Issue Date; (f) statutory Liens of landlords and carriers, warehousemen, mechanics, suppliers, materialmen, repairmen, employees, pension plan administrators or other like Liens arising in the ordinary course of the Issuer’s or any Restricted Subsidiary’s business and with respect to amounts not yet delinquent or being contested in good faith by appropriate proceedings and for which a reserve or other appropriate provision, if any, as shall be required in conformity with IFRS shall have been made and Liens arising solely by virtue of any statutory or common law provisions relating to attorney’s liens or bankers’ liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a creditor depositary institution;

231 (g) Liens for taxes, assessments, government charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted and for which a reserve or other appropriate provision, if any, as shall be required in conformity with IFRS shall have been made; (h) Liens Incurred or deposits made to secure the performance of tenders, bids or trade or government contracts, or to secure statutory or regulatory obligations, bankers’ acceptances (not issued to support Debt for borrowed money), surety or appeal bonds, performance bonds or other obligations of a like nature Incurred in the ordinary course of business; (i) zoning restrictions, easements, licenses, reservations, title defects, rights-of-way, utilities, sewers, electrical lines, telephone lines, telegraph wires, restrictions, encroachments and other similar charges, encumbrances or title defects incurred in the ordinary course of business that do not in the aggregate materially interfere with the ordinary conduct of the business of the Issuer and its Restricted Subsidiaries on the properties subject thereto, taken as a whole; (j) (i) Liens arising out of judgements or awards not constituting an Event of Default and (ii) Liens arising by reason of any judgement, decree or order of any court as long as such Lien is adequately bonded and any appropriate legal proceedings that may have been duly initiated for the review of such judgement, decree or order shall not have been finally terminated or the period within which such proceedings may be initiated shall not have expired; (k) Liens on property of, or on shares of Capital Stock or Debt of, any Person existing at the time such Person is acquired by, merged with or into or consolidated with, the Issuer or any Restricted Subsidiary (or at the time the Issuer or a Restricted Subsidiary acquires such property, Capital Stock or Debt); provided that such Liens: (i) do not extend to or cover any property or assets of the Issuer or any Restricted Subsidiary other than the property or assets acquired or than those of the Person merged into or consolidated with the Issuer or Restricted Subsidiary and (ii) were created prior to, and not in connection with or in contemplation of, such acquisition, merger, consolidation, amalgamation or other combination; (l) Reserved. (m) Liens Incurred or deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security or other insurance; (n) Liens Incurred in connection with any cash or treasury management program, or cash pooling, netting or set off arrangements, in each case established in the ordinary course of business for the Issuer’s benefit or that of any Restricted Subsidiary; (o) Liens securing reimbursement obligations with respect to letters of credit that encumber documents and other property relating to such letters of credit and the products and proceeds thereof; (p) any extension, renewal or replacement, in whole or in part, of any Lien; provided that any such extension, renewal or replacement shall be no more restrictive in any material respect than the Lien so extended, renewed or replaced and shall not extend in any material respect to any additional property or assets; (q) Liens securing Debt Incurred to refinance Debt that has been secured by a Lien permitted by the Indenture; provided that: (i) any such Lien shall not extend to or cover any assets not securing the Debt so refinanced and (ii) the Debt so refinanced shall have been permitted to be Incurred; (r) Liens with respect to obligations (other than for the borrowing of money) that do not exceed US$10 million (or the Dollar Equivalent thereof) at any one time outstanding;

232 (s) Liens made to secure obligations arising from statutory, regulatory, contractual or warranty requirements of the Issuer or any Restricted Subsidiary, including rights of offset and set-off; (t) Liens resulting from escrow arrangements entered into in connection with the disposition of assets; (u) any right of refusal, right of first offer, option or other arrangement to sell or otherwise dispose of an asset of the Issuer or any Restricted Subsidiary; (v) any encumbrance or restriction (including put and call arrangements) with respect to Capital Stock of any joint venture or similar arrangement pursuant to any joint venture or similar agreement; (w) leases or subleases granted to others that in the aggregate do not materially interfere with the ordinary course of business of the Issuer and the Restricted Subsidiaries, taken as a whole; (x) Liens incurred on one or more bank accounts to secure Bank Deposit Debt; (y) Liens incurred or deposits made to secure Entrusted Loans; (z) Liens on assets of a Non-Guarantor Subsidiary to secure Debt of such Non-Guarantor-Subsidiary or any other Non-Guarantor Subsidiary; (aa) Liens on deposits made in order to secure the performance of the Issuer or any Restricted Subsidiary in connection with the acquisition of real property or land use rights and not securing Debt of the Issuer or any Restricted Subsidiary; (bb) Liens to secure Debt permitted by clause (2)(q) of “Permitted Debt”; and (cc) Liens on assets of the Issuer or a Guarantor to secure Debt of the Issuer or such Guarantor that is permitted by clause 2(v) of “Permitted Debt”; provided that, notwithstanding the foregoing, Permitted Liens shall not include Liens securing Non-Guarantor Debt in the form of, or represented by, bonds, debentures, notes or other investment securities which are, or are intended to be or capable of being, quoted, listed, ordinarily dealt in or traded on any stock exchange or over the counter or other securities market. “Permitted Ordinary Course Liens” means Liens described in clauses (a), (g), (j), (k) and (v) of the definition of Permitted Liens. “Permitted Refinancing Debt” means any renewals, extensions, substitutions, defeasances, discharges, refinancings or replacements (each, for purposes of this definition and paragraph (2)(j) of “—Certain Covenants—Limitation on Debt”, a “refinancing”) of any Debt of the Issuer or a Restricted Subsidiary or pursuant to this definition, including any successive refinancings, as long as: (a) such Debt is in an aggregate principal amount (or if Incurred with original issue discount, an aggregate issue price) not in excess of the sum of: (i) the aggregate principal amount (or if Incurred with original issue discount, the aggregate accreted value) then outstanding of the Debt being refinanced and (ii) an amount necessary to pay all accrued interest on such Debt and any fees and expenses, including premiums and defeasance costs, related to such refinancing; (b) such new Debt, determined as at the date of Incurrence of such new Debt, does not mature prior to the earlier of the final maturity date of the Notes and the Stated Maturity of the Debt to be refinanced, and the Average Life of the portion, if any, of such new Debt that is scheduled to mature on or prior to the final maturity date of the Notes is at least equal to the remaining Average Life of the portion of the Debt to be refinanced that is scheduled to mature on or prior to the final maturity date of the Notes; (c) if the Debt being renewed, extended, substituted, defeased, discharged, refinanced or replaced is subordinated in right of payment to the Notes or the Guarantees (as

233 applicable), such Permitted Refinancing Debt is subordinated in right of payment to, the Notes or the Guarantees (as applicable) on terms at least as favourable to the Holders as those contained in the documentation governing the Debt being renewed, extended, substituted, defeased, discharged, refinanced or replaced; (d) the new Debt is not senior in right of payment to the Debt that is being refinanced; and (e) such Debt is Incurred either by the Issuer or by the Restricted Subsidiary who is the obligor in relation to the Debt being renewed, extended, substituted, defeased, discharged, refinanced or replaced, provided that Permitted Refinancing Debt will not include (i) Debt of a Non-Guarantor Subsidiary that refinances the Debt of a Guarantor or (ii) Debt of any Restricted Subsidiary that refinances Debt of an Unrestricted Subsidiary. “Person” means any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. “PRC” means the People’s Republic of China, excluding (solely for purposes of this definition) the Hong Kong Special Administrative Region, the Macau Special Administrative Region and Taiwan. ‘‘Pre-Expansion European Union’’ means Austria, Belgium, Denmark, Finland, France, Germany, Luxembourg, the Netherlands, Sweden and the United Kingdom. For the avoidance of doubt, such countries shall not include (i) Greece, Ireland, Italy, Portugal and Spain or (ii) any country that became or becomes a member of the European Union after January 1, 2004. “Preferred Stock” means, with respect to any Person, Capital Stock of any class or classes (however designated) of such Person that is preferred as to the payment of dividends or distributions, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over the Capital Stock of any other class of such Person, whether now outstanding or issued after the Issue Date and including, without limitation, all classes and series of preferred or preference stock of such Person. “pro forma” means, with respect to any calculation made or required to be made pursuant to the terms of the Notes, a calculation made in good faith by the Issuer. “Public Market” means any time after: (a) a public Equity Offering has been consummated; and (b) either: (i) 20% or more of the total issued and outstanding shares of common stock or common equity interests of the IPO Entity as at the date of such offering, or (ii) shares of common stock or other common equity interests of the IPO Entity with a market value in excess of $150 million as at the date of such Equity Offering have been distributed to investors other than the Permitted Holders, any Related Person or any other direct or indirect shareholders of the Issuer as at the date of the Equity Offering. “Qualified Capital Stock” of any Person means any and all Capital Stock of such Person other than Redeemable Capital Stock. “Redeemable Capital Stock” means any class or series of Capital Stock that, either by its terms, by the terms of any security into which it is convertible or exchangeable or by contract or otherwise, is, or upon the happening of an event or passage of time would be, required to be redeemed prior to the final Stated Maturity of the Notes or is redeemable at the option of the holder thereof at any time prior to such final Stated Maturity (other than upon a change of control of the Issuer in circumstances in which the Holders of the Notes would have similar rights), or is convertible into or exchangeable for debt securities at any time prior to such final Stated Maturity; provided that any Capital Stock that would constitute Qualified Capital Stock but for provisions thereof giving holders thereof the right to require such Person to repurchase or redeem such Capital Stock upon the occurrence of any “asset sale” or “change of control”

234 occurring prior to the Stated Maturity of the Notes will not constitute Redeemable Capital Stock if the “asset sale” or “change of control” provisions applicable to such Capital Stock are no more favourable to the holders of such Capital Stock than the provisions contained in “—Certain Covenants—Limitation on Asset Sales” and “—Certain Covenants—Change of Control” covenants described herein and such Capital Stock specifically provides that such Person will not repurchase or redeem any such stock pursuant to such provision prior to the Issuer’s repurchase of such Notes as are required to be repurchased pursuant to “—Certain Covenants—Limitation on Asset Sales” and “—Certain Covenants—Change of Control”. “refinance” means to refinance, repay, prepay, replace, renew or refund. “Related Person” with respect to any Permitted Holder means: (a) any controlling equity-holder or majority (or more) owned Subsidiary of such Permitted Holder; (b) in the case of any individual, any spouse, family member or relative of such individual, any trust or partnership for the benefit of one or more of such individuals and any such spouse, family member or relative, or the estate, executor, administrator, committee, legal representative or beneficiaries of any thereof; (c) any trust, corporation, partnership or other Person for which one or more of the Permitted Holders and other Related Persons of any thereof constitute the beneficiaries, stockholders, partners or owners thereof, or persons beneficially holding in the aggregate a majority (or more) controlling interest therein; or (d) any investment fund or vehicle managed, sponsored or advised by such Permitted Holder on their behalf or any successor thereto or by any Affiliate of such Permitted Holder on their behalf or any such successor. “Replacement Assets” means, on any date, property or assets (other than current assets) of a nature or type that are used in a Permitted Business, including the Capital Stock of any Person holding such property or assets that is primarily engaged in a Permitted Business and is, or will, upon the acquisition by the Issuer or any of its Restricted Subsidiaries of such Capital Stock, become, a Restricted Subsidiary. “Restricted Investment” means any Investment other than a Permitted Investment. “Restricted Subsidiary” means any Subsidiary of the Issuer other than an Unrestricted Subsidiary. “Revolving Credit Facility” means that certain facilities agreement to be entered into, (as amended from time to time) between, among others, the Issuer, the Guarantors, Nord Anglia Education, Inc., Barclays Corporate and Barclays Bank PLC, and all documentation relating thereto, including collateral documents, letter of credit and guarantees, as such documentation, in whole or in part, may be amended, renewed, extended, substituted, refinanced, restructured, replaced, supplemented or otherwise modified from time to time, in each case under one or more credit facilities for working capital purposes where the Debt incurred thereunder has a maturity of one year or less. “Sale and Leaseback Transaction” means any direct or indirect arrangement relating to property (whether real, personal or mixed), now owned or hereafter acquired whereby the Issuer or any Restricted Subsidiary transfers such property to another Person and the Issuer or any Restricted Subsidiary leases it from such Person. “S&P” means Standard and Poor’s Ratings Service, a division of The McGraw-Hill Companies, Inc. and its successors. “Securities Act” means the U.S. Securities Act of 1933, as amended, or any successor statute, and the rules and regulations promulgated by the Commission thereunder. “Senior Debt” means (i) any Debt of the Issuer or any Guarantor that is either secured or not Subordinated Debt and (ii) any Non-Guarantor Debt other than Non-Guarantor Debt Incurred pursuant to clause (2)(d) of the covenant described in the section entitled “—Certain Covenants—Limitation on Debt”. “SGX-ST” means Singapore Exchange Securities Trading Limited.

235 “Significant Subsidiary” means, at any time a Subsidiary of the Issuer which (i) has earnings before interest, tax, depreciation and amortization calculated on the same basis as Consolidated EBITDA (calculated on a consolidated basis if such Subsidiary has any Subsidiaries) representing 7.5% or more of the Consolidated EBITDA of the Issuer and its Subsidiaries or (ii) has total assets (calculated on a consolidated basis if such Subsidiary has any Subsidiaries) representing 7.5% or more of Total Assets. “Stated Maturity” means, when used with respect to any Note or any instalment of interest thereon, the date specified in such Note as the fixed date on which the principal of such Note or such instalment of interest, respectively, is due and payable, and, when used with respect to any other debt, means the date specified in the instrument governing such debt as the fixed date on which the principal of such debt, or any instalment of interest thereon, is due and payable. “Sterling” means the lawful currency of the United Kingdom of Great Britain and Northern Ireland. “Subordinated Debt” means Debt of the Issuer or any of the Guarantors that is subordinated in right of payment to the Notes or the Guarantees of such Guarantors, as the case may be, including any Subordinated Shareholder Funding. “Subordinated Shareholder Funding” means, collectively, any Debt provided to the Issuer by any direct or indirect Holding Company of the Issuer (or any Affiliate of any such Holding Company) or any Permitted Holder; provided that such Subordinated Shareholder Funding: (a) does not (including upon the happening of any event) mature or require any amortization or other payment of principal prior to the first anniversary of the maturity of the Notes (other than through conversion or exchange for Equity Interests of the Issuer (other than Redeemable Capital Stock) or for any other security or instrument meeting the requirements of this definition); (b) does not (including upon the happening of any event) require the payment of cash interest prior to the first anniversary of the Stated Maturity of the Notes; (c) does not (including upon the happening of any event) provide for the acceleration of its maturity nor confers on its holders any right (including upon the happening of any event) to declare a default or event of default or take any enforcement action, in each case, prior to the first anniversary of the Stated Maturity of the Notes; (d) is not secured by a Lien on any assets of the Issuer or a Restricted Subsidiary and is not guaranteed by any Subsidiary of the Issuer (except a guarantee that otherwise meets the terms of this definition); (e) is subordinated in right of payment to the prior payment in full in cash of the Notes in the event of any default, bankruptcy, reorganization, liquidation, winding up or other disposition of assets of the Issuer at least to the same extent as the Subordinated Liabilities (as defined in the Intercreditor Agreement) are subordinated to the Notes under the Intercreditor Agreement; (f) does not (including upon the happening of any event) restrict the payment of amounts due in respect of the Notes or compliance by the Issuer with its obligations under the Notes and the Indenture; (g) does not (including upon the happening of an event) constitute Voting Stock; and (h) is not (including upon the happening of any event) mandatorily convertible or exchangeable, or convertible or exchangeable at the option of the holder, in whole or in part, prior to the Stated Maturity of the Notes other than into or for Capital Stock (other than Redeemable Capital Stock) of the Issuer, provided, however, that upon any event or circumstance that results in such Debt ceasing to qualify as Subordinated Shareholder Funding, such Debt shall constitute an incurrence of such Debt by the Issuer.

236 “Subsidiary” means, with respect to any Person, any corporation, association or other business entity:

(a) a majority of whose Voting Stock is at the time, directly or indirectly, owned by such Person, by one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of such Person;

(b) whose financial statements are consolidated with those of such Person in accordance with IFRS; or

(c) in which such Person, one or more Subsidiaries of such Person or such Person and one or more Subsidiaries thereof, directly or indirectly, at the date of determination thereof, has at least a majority interest entitled to vote in the election of directors, managers or trustees thereof (or other Person performing similar functions).

“Total Assets” means the consolidated total assets of the Issuer and its Restricted Subsidiaries as shown on the most recent balance sheet (excluding the notes thereto) of the Issuer; provided that, for purposes of clause (2)(e) of the “Limitation on Debt” covenant, “Total Assets” shall be calculated after giving pro forma effect to include the cumulative value of all of the assets, property or equipment the acquisition, construction, improvement or development of which involves the calculation of Total Assets, as measured by the purchase price or cost therefor or budgeted cost determined in good faith by the Issuer or a Restricted Subsidiary. “Transactions” means certain transactions that occurred in connection with the issuance of the Original Notes, including the repayment of the Company’s then outstanding secured bank loans, the partial repayment of the Company’s shareholder loan notes, the conversion of the remaining shareholder loan notes into equity and the entry into the Senior Secured Revolving Credit Facility. “Treasury Rate” means, as at any redemption date, the yield to maturity as at such date of United States Treasury securities (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly available at least two Business Days prior to the date the redemption notice is mailed (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from the redemption date to 1 April 2015; provided, that if the period from the redemption date to such date is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year will be used. “Unrestricted Subsidiary” means: (a) any Subsidiary of the Issuer that at the time of determination is an Unrestricted Subsidiary (as designated by the Issuer’s Board of Directors pursuant to the “—Certain Covenants—Designation of Unrestricted and Restricted Subsidiaries” covenant); and (b) any Subsidiary of an Unrestricted Subsidiary. “U.S. dollars” means the lawful currency of the United States of America. “Voting Stock” means any class or classes of Capital Stock pursuant to which the holders thereof have the general voting power under ordinary circumstances to elect at least a majority of the Board of Directors, managers or trustees (or Persons performing similar functions) of any Person (irrespective of whether or not, at the time, stock of any other class or classes shall have, or might have, voting power by reason of the happening of any contingency).

237 TAXATION

Potential purchasers and sellers of the Notes should be aware that they may be required to pay taxes and other documentary charges or duties in accordance with the laws and practices of the country where the Notes are transferred or other jurisdictions. In some jurisdictions, no official statements of the tax authorities or court decisions may be available with respect to the tax treatment of the Notes. Potential investors are advised not to rely upon this taxation summary but to ask for their own tax advisor’s advice on their individual taxation with respect to the acquisition, holding, sale and redemption of the Notes. Only these advisors are in a position to consider the specific situation of the potential investor.

European Tax Considerations

European Union Savings Tax Directive Under EC Council Directive 2003/48/EC on the taxation of savings income (the “Tax Directive”), Member States (including Belgium as from January 1, 2010) are required to provide to the tax authorities of another Member State details of payments of interest (or similar income) paid by a person within its jurisdiction to an individual resident in that other Member State. However, for a transitional period, Luxembourg and Austria are instead required (unless during that period they elect otherwise) to operate a withholding system in relation to such payments, deducting tax at rates rising over time to 35% (the ending of such transitional period being dependent upon the conclusion of certain other agreements relating to information exchange with certain other countries). A number of non-E.U. countries and territories including Switzerland and certain dependent or associated territories of certain Member States have adopted or agreed to adopt similar measures (a withholding system in the case of Switzerland). In addition, the Member States have entered into reciprocal provision of information or transitional withholding arrangements with certain of those dependent or associated territories in relation to payments made by a person in a Member State to, or collected by such a person for, an individual resident in one of those territories. A consultation process is currently underway within the E.U. in relation to the scope of the Tax Directive and, in particular, whether the Tax Directive should also extend to payments channelled through intermediate entities and/or to payments considered to be of an interest-like nature. If any of the proposed changes are made in relation to the Tax Directive, they may amend or broaden the scope of the requirements above. If a payment were to be made or collected through a Member State which has opted for a withholding system and an amount of, or in respect of, tax were to be withheld from that payment, neither the Issuer nor any paying agent nor any other person would be obliged to pay additional amounts to the noteholders or to otherwise compensate noteholders for the reduction in the amounts that they will receive as a result of the imposition of such withholding tax. However, the Issuer is required to maintain a paying agent in a Member State that will not be obliged to withhold or deduct tax pursuant to the Tax Directive (if such a state exists).

Certain United States Federal Income Tax Considerations TO ENSURE COMPLIANCE WITH INTERNAL REVENUE SERVICE CIRCULAR 230, YOU ARE HEREBY NOTIFIED THAT ANY DISCUSSION OF U.S. FEDERAL TAX MATTERS SET FORTH HEREIN WAS WRITTEN IN CONNECTION WITH THE PROMOTION OR MARKETING OF THE TRANSACTIONS OR MATTERS ADDRESSED HEREIN AND WAS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED BY ANY PROSPECTIVE INVESTOR, FOR THE PURPOSE OF AVOIDING PENALTIES UNDER U.S. TAX LAW. EACH PROSPECTIVE INVESTOR SHOULD SEEK ADVICE BASED ON ITS PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.

238 The following discussion, subject to the limitations and conditions set forth herein, describes certain U.S. federal income tax considerations to U.S. Holders (as defined below) in acquiring, owning and disposing of Notes. The discussion is only applicable to U.S. Holders that hold Notes as “capital assets” (generally, property held for investment purposes), and who purchase Notes pursuant to this Offering at the offering price set forth on the cover page. This discussion does not address all aspects of U.S. federal income taxation that may be applicable to a U.S. Holder subject to special treatment under U.S. federal income tax law (including, but not limited to, banks and other financial institutions, tax-exempt organisations, regulated investment companies, real estate investment trusts, insurance companies, dealers in securities or foreign currencies, traders who elect to mark their investment to market, U.S. expatriates, partnerships or other pass-through entities (or investors in such entities), U.S. Holders who have a functional currency other than the U.S. dollar or holders that hold Notes as part of a hedge, constructive sale, straddle, conversion or integrated transaction). This discussion does not address any U.S. state, local, or non-U.S. tax consequences of the acquisition, ownership or disposition of Notes. In addition, this discussion does not address any U.S. federal tax consequences other than U.S. federal income tax consequences, such as the estate and gift tax, the alternative minimum tax or the Medicare tax on net investment income. The discussion below is based upon the provisions of the Internal Revenue Code of 1986, as amended (the “Code”), U.S. Treasury regulations, rulings and other pronouncements of the U.S. Internal Revenue Service (the “IRS”) and judicial decisions as at the date hereof. Such authorities may be repealed, revoked or modified (with possible retroactive effect) so as to result in U.S. federal income tax consequences different from those discussed below.

Holders of Notes are urged to consult their own independent tax advisors concerning the U.S. federal income tax consequences of the acquisition, ownership and disposition of Notes in light of their particular situations, as well as any consequences arising under the laws of any other taxing jurisdiction. As used herein, the term “U.S. Holder” means a beneficial owner of Notes that is (i) an individual who is a citizen or resident of the United States, (ii) a corporation, or other entity treated as a corporation for U.S. federal income tax purposes, created or organised in or under the laws of the United States, any State thereof or the District of Columbia, (iii) an estate the income of which is subject to U.S. federal income taxation regardless of its source, or (iv) a trust (X) that is subject to the primary supervision of a court within the United States and the control of one or more United States persons as described in Section 7701(a)(30) of the Code or (Y) that has a valid election in effect under applicable U.S. Treasury regulations to be treated as a United States person. If a partnership (or an entity classified as a partnership for U.S. federal income tax purposes) holds Notes, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. A U.S. Holder that is a partner of a partnership holding Notes is urged to consult its tax advisors regarding the consequences of the acquisition, ownership and disposition of Notes.

Possible Application of Rules Governing Contingent Payment Debt Instruments The terms of the Notes provide for payments in excess of stated interest and principal under certain circumstances. For example, in the event of a Change of Control, we would generally be required to offer to repurchase the Notes at 101% of their principal amount plus accrued and unpaid interest. See “Description of the Notes—Certain Covenants—Change of Control”. Under applicable U.S. Treasury regulations, the possibility that certain payments in excess of stated interest and principal will be made will not cause the Notes to be treated as “contingent payment debt instruments” for U.S. federal income tax purposes (which are subject to special rules, as described below) if there is only a remote likelihood as at the issue date of the Notes that these payments will be made, and/or if the amounts thereof are considered incidental. We intend to take the position that, as at the issue date of the Notes, the likelihood

239 that we will pay these excess amounts is remote or these amounts are incidental, and therefore that the Notes will not be considered contingent payment debt instruments. Our position is binding on a U.S. Holder unless such holder discloses that it is taking a contrary position in the manner required by applicable U.S. Treasury regulations. Our position is not, however, binding on the IRS, and if the IRS were to challenge this position, a U.S. Holder might be required to use the accrual method, even if it were otherwise a cash method taxpayer, to take into account interest income on the Notes and to treat as ordinary income rather than capital gain any income that it realises on the taxable disposition of a Note. The remainder of this discussion assumes that the Notes will not be considered contingent payment debt instruments.

Taxation of Payments of Interest and Additional Amounts Interest paid on a Note (including Additional Amounts, if any) will be included in the gross income of a U.S. Holder as ordinary interest income at the time it is treated as received or accrued, in accordance with the U.S. Holder’s regular method of tax accounting. A portion of the purchase price of the Notes is attributable to the amount of interest accrued prior to the date the Notes are issued (the “pre-issuance accrued interest”). We intend to take the position, and the following discussion assumes, that a portion of the first interest payment on the Notes will be treated as a return of pre-issuance accrued interest, rather than as interest payable on the Notes. If this position is respected, the payment of such amount would not be treated as taxable interest income to U.S. Holders. Any amount treated as pre-issuance accrued interest will reduce the U.S. Holder’s adjusted tax basis in the Notes by a corresponding amount. U.S. Holders are urged to consult their tax advisors about the tax treatment of pre-issuance accrued interest. If U.K. or other non-U.S. withholding taxes are imposed on payments on the Notes (including withholding tax on payments of Additional Amounts), U.S. Holders will be treated as having actually received an amount equal to the amount of such taxes and as having paid such amount to the relevant taxing authority. As a result, the amount of income included in gross income by a U.S. Holder may be greater than the amount of cash actually received by the U.S. Holder. Subject to certain limitations, a U.S. Holder generally will be entitled to a credit against its U.S. federal income tax liability for U.K. or other non-U.S. income taxes withheld by us. Alternatively, a U.S. Holder may elect to claim a deduction for such U.K. or other non-U.S. income taxes in computing its U.S. federal taxable income provided that the election shall apply to all foreign income taxes paid or accrued by the U.S. Holder for the taxable year. Interest received or accrued on the Notes and Additional Amounts generally will constitute foreign source income to U.S. Holders for U.S. foreign tax credit purposes. For purposes of the foreign tax credit limitation, foreign source income is classified in one of two “baskets”, and the credit for foreign taxes paid or accrued with respect to foreign source income in any basket is limited to U.S. federal income tax allocable to that income. Interest on the Notes (including Additional Amounts, if any) generally will be in the “passive category income” basket. The calculation of U.S. foreign tax credits and, in the case of a U.S. Holder that elects to deduct foreign taxes, the availability of deductions involve the application of complex rules that depend on a U.S. Holder’s particular circumstances. U.S. Holders should, therefore, consult their own tax advisors regarding the application of the U.S. foreign tax credit rules.

Amortisable Bond Premium A U.S. Holder that purchases Notes for an amount in excess of the principal amount (excluding amounts attributable to pre-issuance accrued interest) will be considered to have purchased the note at a “premium” equal in amount to such excess. A U.S. Holder generally may elect to amortise the premium over the remaining term of the Note on a constant yield method. However, since the Note may be optionally redeemed by us for an amount in excess of its principal amount, special rules apply that could result in the deferral of the amortisation of the bond premium until later in the term of the Note. Premium permitted to be amortised in any year will be treated as a reduction of the U.S. Holder’s interest income from the Note and a reduction in the U.S. Holder’s adjusted tax basis in the Note. The election to amortise bond premium, once made, applies to all debt obligations held or subsequently acquired by the electing U.S. Holder

240 on or after the first day of the first taxable year to which the election applies and may not be revoked without the consent of the IRS. Alternatively, U.S. Holders may generally elect to treat all interest on the Notes as original issue discount and calculate taxable interest income taking premium and stated yield into account under a constant yield to maturity method. The rules associated with either election are complex, and U.S. Holders should consult their own tax advisors before making any election with respect to the Notes.

Sale, Exchange, Retirement and Other Taxable Disposition of the Notes A U.S. Holder will generally recognize gain or loss on the sale, exchange, retirement or other taxable disposition of a Note in an amount equal to the difference between (i) the amount of cash and the fair market value of property received by such U.S. Holder on such disposition (less any amounts attributable to accrued but unpaid interest (other than the pre-issuance accrued interest), which will be taxable as ordinary interest income to the extent not previously so taxed), and (ii) the U.S. Holder’s adjusted tax basis in the Note. A U.S. Holder’s tax basis in a Note will generally equal the acquisition cost of such Note to the U.S. Holder, reduced by any amount received from us with respect to the pre-issuance accrued interest. Gain or loss with respect to a taxable disposition of a Note generally will be U.S. source capital gain or loss. Capital gains of certain non-corporate U.S. Holders, including individuals, derived with respect to capital assets held for over one year may be eligible for reduced rates of taxation. The deductibility of capital losses is subject to limitations.

Backup Withholding and Information Reporting In general, payments of principal and interest, and payments of the proceeds of a sale, exchange retirement and other taxable disposition of Notes, paid within the United States or through certain United States-related financial intermediaries to a U.S. Holder, may be subject to information reporting and backup withholding unless the U.S. Holder (i) is an exempt recipient or (ii) in the case of backup withholding (but not information reporting), provides an accurate taxpayer identification number and certifies that no loss of exemption from backup withholding has occurred. Backup withholding is not an additional tax. The amount of any backup withholding from a payment to a U.S. Holder will be allowed as a credit against the U.S. Holder’s U.S. federal income tax liability, and may entitle the U.S. Holder to a refund, provided the required information is timely provided to the IRS. Recently enacted legislation requires individual U.S. Holders to report information to the IRS with respect to their investment in Notes unless certain requirements are met. Investors who are individuals and fail to report required information could become subject to substantial penalties. Prospective investors are encouraged to consult with their own tax advisors regarding the possible implications of this new legislation on their investment in Notes.

Material U.K. Tax Considerations The following is a general guide to U.K. tax considerations relating to the Notes based on the Company’s understanding of current U.K. law and practice. It does not purport to be a complete analysis of all U.K. tax considerations relating to the Notes. It applies only to persons who are the absolute beneficial owners of Notes and some aspects do not apply to some classes of taxpayer (such as dealers and persons connected with the Issuer), to whom special treatments may apply. The U.K. tax treatment of prospective holders of Notes depends on their individual circumstances and may be subject to change in the future. Prospective holders of Notes who may be subject to tax in a jurisdiction other than the U.K. or who are in any doubt as to their tax position should consult their own professional advisors.

241 Payment of Interest The Notes will constitute “quoted Eurobonds” within the meaning of section 987 of the Income Tax Act 2007 (the “2007 Act”), as long as they are and continue to be listed on a “recognized stock exchange” within the meaning of section 1005 of the 2007 Act. The SGX-ST is such a recognized stock exchange. The Notes will satisfy this requirement if they are officially listed on the Main Board of the SGX-ST. Provided, therefore, that the Notes are and remain so listed, payments of interest on the Notes may be made without withholding or deduction on account of U.K. tax. In the event that the Notes fail to be or cease to be listed on a recognized stock exchange, payments of interest must be made under deduction of income tax at the basic rate, currently 20%, subject to any direction to the contrary by the HM Revenue & Customs under an applicable double taxation treaty, unless payments are made to some categories of recipients, including companies who the Issuer reasonably believes are subject to U.K. corporation tax (provided HM Revenue & Customs has not given a direction that interest should be paid under deduction of tax). If, in such circumstances, the beneficial owner is not within the charge of U.K. corporation tax as regards the payment of interest, the right to pay without deduction is treated as never having applied to any such payment. Interest on the Notes constitutes U.K. source income for tax purposes and, as such, may be subject to income tax by direct assessment even where paid without deduction or withholding on account of U.K. income tax. Interest on the Notes received without deduction or withholding on account of U.K. tax will not be chargeable to U.K. tax in the hands of a holder of Notes who is not resident for tax purposes in the U.K. (other than in the case of certain trustees) unless that holder of Notes carries on a trade, profession or vocation in the U.K. through a U.K. branch or agency, or for holders of Notes who are companies, through a U.K. permanent establishment, in connection with which the interest is received or to which the Notes are attributable. There are exemptions from U.K. tax for interest received by certain categories of agent, such as some brokers and investment managers. The provisions of any applicable double tax treaty may also be relevant to such a holder of Notes. The provisions relating to additional payments referred to under “Description of Notes—Additional Amounts” would not apply if HM Revenue & Customs successfully sought to assess the person entitled to the interest directly to U.K. income tax. Exemption from or reduction of U.K. tax liability might be available under an applicable double taxation treaty.

Payments by a Guarantor If a Guarantor makes any payments in respect of interest on the Notes (or other amounts due under the Notes other than the repayment of amounts subscribed for the Notes), it is possible that such payments may be subject to U.K. withholding tax of 20%, subject to any claim which could be made under an applicable double taxation treaty or any other exemption which may apply. Such payments by a Guarantor may not be eligible for the quoted Eurobonds exemption described above.

Provision of Information Holders of Notes should note that where any interest on Notes is paid to them (or to any person acting on their behalf) by the Issuer or any person in the U.K. acting on behalf of the Issuer (a “paying agent”), or is received by any person in the U.K. acting on behalf of the relevant noteholder (other than solely by clearing or arranging the clearing of a check) (a “collecting agent”), then the Issuer, the paying agent or the collecting agent (as the case may be) may, in certain cases, be required to supply to HM Revenue & Customs details of the payment and certain details relating to the beneficial owner of the interest (including such person’s name and address). These provisions will apply whether or not the interest has been paid subject to withholding or deduction for or on account of U.K. income tax and whether or not the noteholder

242 is resident in the U.K. for U.K. taxation purposes. Where the noteholder is not so resident, the details provided to HM Revenue & Customs may, in certain cases, be passed by HM Revenue & Customs to the tax authorities of the jurisdiction in which the noteholder is resident for taxation purposes. For the above purposes, “interest” should be taken, for practical purposes, as including payments made by a Guarantor in respect of interest on the Notes.

Sale, Exchange and Redemption of Notes

U.K. corporation taxpayers In general, a holder of Notes which is subject to U.K. corporation tax will be treated for U.K. tax purposes as realising profits, gains or losses in respect of the Notes under the “loan relationship” rules in Part 5 of the Corporation Tax Act 2009 on a basis reflecting the treatment in its statutory accounts, calculated in accordance with generally accepted accounting practice. These profits, gains or losses will be taken into account in computing income for U.K. corporation tax purposes. Exchange gains and losses on the Notes will be treated for U.K. tax purposes as included within the profits, gains and losses realized in respect of the notes and thereby taxable under the loan relationship rules referred to above.

Other U.K. Taxpayers

Taxation of Chargeable Gains A disposal of Notes by an individual noteholder who is resident or ordinarily resident in the U.K. may give rise to a chargeable gain or allowable loss for the purposes of the U.K. taxation of chargeable gains.

Taxation of Discount Notwithstanding the paragraph entitled “—Taxation of Chargeable Gains” above, if the Notes constitute “deeply discounted securities” for the purposes of Chapter 8 of Part 4 of the Income Tax (Trading and Other Income) Act 2005 then any gain realised on redemption or transfer of the Notes by a noteholder who is within the charge to U.K. income tax in respect of the Notes will generally be taxable as income but such noteholder will not be able to claim relief from income tax in respect of costs incurred on the acquisition, transfer or redemption, or losses incurred on the transfer or redemption, of the Notes. The Notes would generally be treated as deeply discounted securities for these purposes if, as at the Issue Date, the amount payable on maturity or other occasion of redemption, other than an Optional Redemption or Redemption upon Changes in Withholding Tax, (“A”) exceeds, or may exceed, the issue price of the Notes by more than A x 0.5% x Y, where Y is the number of years between the issue Date and redemption.

Accrued income Scheme On a disposal of Notes by a noteholder, any interest which has accrued since the last interest payment date may be chargeable to tax as income under the rules of the accrued income scheme as set out in Part 12 of the Income Tax Act 2007, if that noteholder is resident or ordinarily resident in the U.K. or carries on a trade in the U.K. through a branch or agency to which the Notes are attributable. The accrued income scheme will not apply if the Notes are deeply discounted securities for the purposes of Chapter 8 of Part 4 of the Income Tax (Trading and Other Income) Act 2005, as to which see the paragraph entitled “—Taxation of Discount” above.

243 Holders who are not Resident in the U.K.

A body corporate, that is neither resident in the U.K. nor carrying on a trade in the U.K. through a permanent establishment will not be liable for U.K. corporation tax on profits, gains and losses on, or fluctuations in value of, the Notes. Other holders of Notes who are neither resident nor ordinarily resident for tax purposes in the U.K. and who do not carry on a trade, profession or vocation in the U.K. through a branch or agency to which the Notes are attributable will not be liable to U.K. tax on chargeable gains realised on or profits arising on the disposal of their Notes.

Stamp Duty and Stamp Duty Reserve Tax

Assuming that the Notes quality as exempt loan capital within the meaning of section 79(4) of the Finance Act 1986 as is anticipated, no U.K. stamp duty or stamp duty reserve tax is payable on the issue of the Notes or on a transfer of the Notes.

244 CAYMAN ISLANDS TAX CONSIDERATIONS

Prospective investors should consult their professional advisors on the possible tax consequences of buying, holding or selling any Notes under the laws of their country of citizenship, residence or domicile.

Cayman Islands Taxation

The following is a discussion on certain Cayman Islands income tax consequences of an investment in the Notes. The discussion is a general summary of present law, which is subject to prospective and retroactive change. It is not intended as tax advice, does not consider any investor’s particular circumstances, and does not consider tax consequences other than those arising under Cayman Islands law.

Under Existing Cayman Islands Laws:

Payments of interest and principal on the Notes will not be subject to taxation in the Cayman Islands and no withholding will be required on the payment of interest and principal to any holder of the Notes nor will gains derived from the disposal of the Notes or Shares be subject to Cayman Islands income or corporation tax. The Cayman Islands currently have no income, corporation or capital gains tax and no estate duty, inheritance tax or gift tax.

No stamp duty is payable in respect of the issue of the Notes. The Notes themselves will be stampable if they are executed in or brought into the Cayman Islands. An instrument of transfer in respect of a Note is stampable if executed in or brought into the Cayman Islands. The Company has been incorporated under the laws of the Cayman Islands as an exempted company with limited liability and, as such, has obtained an undertaking from the Governor in Cabinet of the Cayman Islands in the following form:

The Tax Concessions Law 2011 Revision Undertaking As To Tax Concessions In accordance with the provision of section 6 of The Tax Concessions Law (2011 Revision), the Governor in Cabinet undertakes with Nord Anglia Education, Inc. (“the Company”). That no law which is hereafter enacted in the Islands imposing any tax to be levied on profits, income, gains or appreciations shall apply to the Company or its operations; and In addition, that no tax to be levied on profits, income, gains or appreciations or which is in the nature of estate duty or inheritance tax shall be payable: on or in respect of the shares, debentures or other obligations of the Company; or by way of the withholding in whole or part, of any relevant payment as defined in Section 6(3) of the Tax Concessions Law (2011 Revision). These concessions shall be for a period of twenty years from the 27th day of March 2012.

245 PLAN OF DISTRIBUTION

Subject to the terms and conditions stated in the purchase agreement dated 27 June 2013, each Initial Purchaser has agreed to purchase from us, and we have agreed to sell to each Initial Purchaser, the principal amount of Additional Notes set forth opposite the Initial Purchaser’s name.

Initial Purchaser Principal Amount of Notes Goldman, Sachs & Co...... $ 55,000,000 Credit Suisse Securities (Europe) Limited ...... 55,000,000 HSBC Securities (USA) Inc...... 55,000,000 Total ...... $165,000,000

The Initial Purchasers propose to offer the Additional Notes to purchasers at the price to investors indicated on the cover page of this offering memorandum. After the initial offering of the Additional Notes, the Initial Purchasers may from time to time vary the offering price and other selling terms without notice. The offering of the Additional Notes by the Initial Purchasers is subject to receipt and acceptance and subject to the Initial Purchasers’ right to reject any order in whole or in part.

The Issuer expects that delivery of the Additional Notes will be made against payment therefor on or about the date specified on the cover page of this offering memorandum, which will be the fourth business day following the date of pricing of the Additional Notes (this settlement cycle being referred to as ‘‘T+4’’). Under Rule 15c6-1 of the U.S. Exchange Act, trades in the secondary market generally are required to settle in three business days, unless the parties to any such trade expressly agree otherwise. Accordingly, purchasers who wish to trade Additional Notes on the date of this offering memorandum will be required, by virtue of the fact that the Additional Notes initially will settle in T+4, to specify an alternate settlement cycle at the time of any such trade to prevent a failed settlement. Purchasers of the Additional Notes who wish to make such trades should consult their own advisor.

The Issuer has agreed to indemnify the Initial Purchasers against certain liabilities, including liabilities under the Securities Act, or to contribute to payments which the Initial Purchasers may be required to make in respect of any such liabilities. The Issuer will pay the Initial Purchasers a commission and pay certain expenses of the Offering.

The Issuer has agreed that for a period of 90 days after the date hereof, the Issuer will not, without the prior written consent of the Initial Purchasers, directly or indirectly, offer, sell, contract or grant any option to sell, pledge, transfer or otherwise dispose of any debt securities of the Issuer that are substantially similar to the Additional Notes.

No action has been or will be taken in any jurisdiction by us or the Initial Purchasers that would permit a public offering of the Additional Notes, or the possession, circulation or distribution of this offering memorandum or any other material relating to us or the Additional Notes in any jurisdiction where action for that purpose is required. Accordingly, the Additional Notes may not be offered or sold, directly or indirectly, and neither this offering memorandum nor any other offering material or advertisements in connection with the Additional Notes may be distributed or published, in or from any country or jurisdiction, except in compliance with any applicable rules and regulations of any such country or jurisdiction. This offering memorandum does not constitute an offer to sell or a solicitation of an offer to purchase in any jurisdiction

246 where such offer or solicitation would be unlawful. Persons into whose possession this offering memorandum comes are advised to inform themselves about, and to observe, any restrictions relating to the offering of the Additional Notes, the distribution of this offering memorandum and resales of the Additional Notes. See “Transfer Restrictions”.

In connection with the Offering, the Initial Purchasers may purchase and sell Notes in the open market. These transactions may include short sales, stabilising transactions and purchases to cover positions created by short sales. Short sales involve the sale by the Initial Purchasers of a greater number of Notes than they are required to purchase in the Offering. Stabilising transactions consist of certain bids or purchases made for the purpose of preventing or retarding a decline in the market price of the Notes while the Offering is in progress.

These activities by the Initial Purchasers, as well as other purchases by the Initial Purchasers for their own accounts, may stabilise, maintain or otherwise affect the market price of the Notes. As a result, the price of the Notes may be higher than the price that otherwise might exist in the open market. If these activities are commenced, they may be discontinued by the Initial Purchasers at any time. These transactions may be effected in the open market or otherwise.

Persons who purchase Additional Notes from the Initial Purchasers may be required to pay stamp duty, taxes and other charges in accordance with the laws and practice of the country of purchase in addition to the offering price set forth on the cover page hereof.

The Initial Purchasers and their respective affiliates are full service financial institutions engaged in various activities, which may include trading, commercial and investment banking, financial advisory, investment management, principal investment, hedging, market making, brokerage and other financial and non-financial activities and services. The Initial Purchasers and their respective affiliates have, from time to time, provided, and may in the future provide, various financial advisory, commercial and investment banking services and other services to the Issuer and to persons and entities with relationships with the Issuer, for which they received or will receive customary fees and expenses. Certain affiliates of the Initial Purchasers are arrangers, bookrunners, syndication agents and lenders under the Bridge Loan Agreement. We intend to use part of the proceeds from this Offering to repay our borrowings under the Bridge Loan Agreement in full.

In the ordinary course of its business activities, the Initial Purchasers and their respective affiliates may purchase, sell or hold a broad array of investments and actively trade securities, derivatives, loans, commodities, currencies, credit default swaps and financial instruments for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investment and trading activities may involve or relate to assets, securities and/or instruments of the Issuer and/or persons and entities with relationships with the Issuer. The Initial Purchasers and their respective affiliates may also communicate independent investment recommendations, market colour or trading ideas and/or publish or express independent research views in respect of such assets, securities or instruments and may at any time hold, or recommend to clients that they should acquire, long and/or short positions in such assets, securities and instruments.

The Additional Notes have not been and will not be registered under the Securities Act, and may not be offered or sold except (i) to QIBs in offers and sales that occur within the United States in reliance on the exemption from the registration requirements of the Securities Act provided by Rule 144A; and (ii) outside the United States in reliance on Regulation S, and in accordance with any applicable securities laws of any state or territory of the United States or any other jurisdiction. Accordingly, each Initial Purchaser has represented and agreed that it has not offered or sold, and will not offer or sell, any of the Additional Notes at any time other than to

247 QIBs in the United States in accordance with Rule 144A or outside of the United States in accordance with Rule 903 of Regulation S. Transfer of the Additional Notes will be restricted and each purchaser of Additional the Notes in the United States will be required to make certain acknowledgements, representations and agreements, as described under “Transfer Restrictions”.

Any offer or sale in the United States will be made by affiliates of the Initial Purchasers who are broker-dealers registered under the U.S. Securities Exchange Act of 1934, as amended.

Selling Restrictions

General

No action has been or will be taken in any jurisdiction by us or the Initial Purchasers that would permit a public offering of the Notes or the possession, circulation or distribution of this offering memorandum or any other material relating to the Issuer or the Additional Notes in any jurisdiction where action for the purpose is required. Accordingly, the Additional Notes may not be offered or sold, directly or indirectly, and neither this offering memorandum nor any other offering material or advertisements in connection with the Additional Notes may be distributed or published, in or from any country or jurisdiction, except in compliance with any applicable rules and regulations of any such country or jurisdiction. This offering memorandum does not constitute an offer to purchase or a solicitation of an offer to sell in any jurisdiction where such offer or solicitation would be unlawful. Persons into whose possession this offering memorandum comes are advised to inform themselves about and to observe any restrictions relating to the offering, the distribution of this offering memorandum and resales of the Additional Notes. See “Transfer Restrictions”.

United States The Additional Notes have not been and will not be registered under the Securities Act and may not be offered or sold within the United States, except in transactions exempt from, or not subject to, the registration requirements of the Securities Act and applicable state securities laws. The Initial Purchasers propose to offer the Additional Notes for resale in transactions not requiring registration under the Securities Act or applicable state securities laws, including sales pursuant to Rule 144A. The Initial Purchasers will not offer or sell the Additional Notes except to persons it reasonably believes to be “qualified institutional buyers” as defined in Rule 144A, or pursuant to offers and sales that occur outside the United States in accordance with Regulation S. Each purchaser of the Additional Notes will be deemed to have made acknowledgements, representations and agreements as described under “Transfer Restrictions”.

European Economic Area In relation to each member state of the European Economic Area which has implemented the Prospectus Directive (each a “Relevant Member State”), including each Relevant Member State that has implemented the 2010 PD Amending Directive with regard to persons to whom an offer of securities is addressed and the denomination per unit of the offer of securities (each, an “Early Implementing Member State”) with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the “Relevant Implementation Date”), no offer of Notes will be made to the public in that Relevant Member State (other than offers (the “Permitted Public Offers”) where a prospectus will be published in relation to the Additional Notes that has been approved by the competent authority in a Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus

248 Directive), except that with effect from and including that Relevant Implementation Date, offers of Notes may be made to the public in that Relevant Member State at any time:

• to “qualified investors” as defined in the Prospectus Directive including:

• (in the case of Relevant Member States other than Early Implementing Member States), legal entities which are authorised or regulated to operate in the financial markets or, if not so authorised or regulated, whose corporate purpose is solely to invest in securities or any legal entity which has two or more of (i) an average of at least 250 employees during the last financial year; (ii) a total balance sheet of more than= C43.0 million and (iii) an annual turnover of more than= C50.0 million as shown in its last annual or consolidated accounts; or

• (in the case of Early Implementing Member States), persons or entities that are described in points (1) to (4) of Section I of Annex II to Directive 2004/39/EC, and those who are treated on request as professional clients in accordance with Annex II to Directive 2004/39/EC, or recognised as eligible counterparties in accordance with Article 24 of Directive 2004/39/EC unless they have requested that they be treated as non-professional clients; or

• to fewer than 100 (or, in the case of Early Implementing Member States, 150) natural or legal persons (other than “qualified investors” as defined in the Prospectus Directive), as permitted in the Prospectus Directive subject to obtaining the prior consent of the representatives for any such offer; or • in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of Additional Notes shall result in a requirement for the publication of a prospectus pursuant to Article 3 of the Prospectus Directive or of a supplement to a prospectus pursuant to Article 16 of the Prospectus Directive. Each person in a Relevant Member State (other than a Relevant Member State where there is a Permitted Public Offer) who initially acquires any Additional Notes or to whom any offer is made will be deemed to have represented, acknowledged and agreed that (A) it is a “qualified investor”, and in the case of any Additional Notes acquired by it as a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, (x) the Additional Notes acquired by it in the offering have not been acquired on behalf of, nor have they been acquired with a view to their offer or resale to, persons in any Relevant Member State other than “qualified investors” as defined in the Prospectus Directive, or in circumstances in which the prior consent of the Subscribers has been given to the offer or resale or (y) where Additional Notes have been acquired by it on behalf of persons in any Relevant Member State other than “qualified investors” as defined in the Prospectus Directive, the offer of those Additional Notes to it is not treated under the Prospectus Directive as having been made to such persons. The Issuer, the Initial Purchasers, their respective affiliates and others will rely upon the truth and accuracy of the foregoing representation acknowledgement and agreement. For the purpose of the above provisions, the expression “an offer to the public” in relation to any Additional Notes in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer of any Additional Notes to be offered so as to enable an investor to decide to purchase any Additional Notes, as the same may be varied in the Relevant Member State by any measure implementing the Prospectus Directive in the Relevant Member State and the expression “Prospectus Directive” means Directive 2003/71 EC (including the 2010 PD Amending Directive, in the case of Early Implementing Member States) and includes any relevant implementing measure in each Relevant Member State and the expression “2010 PD Amending Directive” means Directive 2010/73/EU.

249 Hong Kong The Initial Purchaser has represented and agreed that: • it has not offered or sold and will not offer or sell in Hong Kong, by means of any document, any Additional Notes other than (a) to “professional investors” as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made under that Ordinance or (b) in other circumstances which do not result in the offering memorandum being a “prospectus” as defined in the Companies Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the public within the meaning of that Ordinance; and • it has not issued or had in its possession for the purposes of issue, and will not issue or have in its possession for the purposes of issue whether in Hong Kong or elsewhere, any advertisement invitation or document relating to the Notes, which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to Additional Notes which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” as defined in the Securities and Futures Ordinance and any rules made under that Ordinance.

Republic of Italy The offering of the Additional Notes has not been registered pursuant to Italian securities legislation and, accordingly, no Additional Notes may be offered, sold or delivered, nor may copies of this offering memorandum or of any other document relating to the Additional Notes be distributed in the Republic of Italy, except: • to qualified investors (investitori qualificati), as defined pursuant to Article 100 of Legislative Decree No. 58 of 24 February 1998, as amended (the “Financial Services Act”) and Article 34-ter, first paragraph, letter (b) of CONSOB Regulation No. 11971 of 14 May 1999, as amended from time to time (“Regulation No. 11971”); or • in other circumstances which are exempted from the rules on public offerings pursuant to Article 100 of the Financial Services Act and Article 34-ter of the Regulation No. 11971. Any offer, sale or delivery of the Notes or distribution of copies of this offering memorandum or any other document relating to the Additional Notes in the Republic of Italy under (i) or (ii) above must be: • made by an investment firm, bank or financial intermediary permitted to conduct such activities in the Republic of Italy in accordance with the Financial Services Act, CONSOB Regulation No. 16190 of 29 October 2007 (as amended from time to time) and Legislative Decree No. 385 of 1 September 1993, as amended (the “Banking Act”); and • in compliance with Article 129 of the Banking Act, as amended, and implementing guidelines of the Bank of Italy, as amended from time to time, pursuant to which the Bank of Italy may request information on the issue or the offer of securities in the Republic of Italy; and • in compliance with any other applicable laws and regulations or requirement imposed by CONSOB or other Italian authority.

Japan The Additional Notes have not been and will not be registered under the Financial Instruments and Exchange Act of Japan (the “Financial Instruments and Exchange Act”). Accordingly, each Initial Purchaser has represented and agreed that it has not, directly or indirectly, offered or sold and will not, directly or indirectly, offer or sell any Additional Notes in Japan or to, or for the benefit of any resident of Japan (which term as used herein means any

250 person resident in Japan, including any corporation or other entity organised under the laws of Japan) or to others for re-offering or re-sale, directly or indirectly, in Japan or to or for the benefit of, any resident of Japan except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Act and other relevant laws and regulations of Japan.

Singapore The Initial Purchasers have acknowledged that this offering memorandum has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, each Initial Purchaser has represented and agreed that it has not offered or sold any Additional Notes or caused such Additional Notes to be made the subject of an invitation for subscription or purchase and will not offer or sell such Additional Notes or cause such Additional Notes to be made the subject of an invitation for subscription or purchase, and has not circulated or distributed, nor will it circulate or distribute this offering memorandum, or any other document or material in connection with the offer or sale or invitation for subscription or purchase of such Additional Notes, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”), (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275, of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA in each case, subject to compliance with the conditions set forth in the SFA. Where the Additional Notes are subscribed or purchased in reliance of an exemption under Sections 274 or 275 of the SFA, the Additional Notes shall not be sold within the period of six months from the date of the initial acquisition of the Additional Notes, except to any of the following persons: • an institutional investor (as defined in Section 4A of the SFA); • a relevant person (as defined in Section 275 (2) of the SFA); or • any person pursuant to an offer referred to in Section 275 (1A) of the SFA, unless expressly specified otherwise in Section 276(7) of the SFA. Where Additional Notes are subscribed or purchased under Section 275 of the SFA by a relevant person which is: • a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or • a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor, • securities (as defined in Section 239(1) of the SFA) of that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the Notes pursuant to an offer made under Section 275 of the SFA except: • to an institutional investor (under Section 274 of the SFA), or to a relevant person (as defined in Section 275(2) of the SFA) and in accordance with the conditions specified in Section 275 of the SFA; • (in the case of a corporation) where the transfer arises from an offer referred to in Section 276(3)(i)(B) of the SFA or (in the case of a trust) where the transfer arises from an offer referred to in Section 276(4)(i)(B) of the SFA; • where no consideration is or will be given for the transfer; • where the transfer is by operation of law; or • as specified in Section 276(7) of the SFA.

251 Poland The Additional Notes have not been and will not be registered under the Act on Public Offering, Conditions Governing the Introduction of Financial Instruments to Organised Trading and Public Companies, dated 29 July 2005. Accordingly, each Initial Purchaser has agreed that it has offered or sold and will offer and sell any Additional Notes to residents in the Republic of Poland as part of their initial distribution only in accordance with the applicable Polish laws and regulations as amended or supplemented from time to time.

Switzerland This offering memorandum is not intended to constitute an offer or solicitation to purchase or invest in the Additional Notes described herein. The Additional Notes may not be publicly offered, sold, redistributed on a professional basis or advertised, directly or indirectly, in, into or from Switzerland nor may any other solicitation for investments in the Additional Notes be communicated or distributed in Switzerland in any way that could constitute a public offering within the meaning of article 652a or article 1156 of the Swiss Code of Obligations (“CO”). The Additional Notes will not be listed on the SIX Swiss Exchange or on any other exchange or regulated trading facility in Switzerland. Neither this document nor any other offering or marketing material relating to the Additional Notes constitutes a prospectus as such term is understood pursuant to article 652a or article 1156 of the CO, or a listing prospectus within the meaning of the listing rules of the SIX Swiss Exchange Ltd., and neither this document nor any other offering or marketing material relating to the Additional Notes may be publicly distributed or otherwise made publicly available in Switzerland.

United Kingdom Each Initial Purchaser has represented and agreed that: • it has only communicated or caused to be communicated and will only communicate or cause to be communicated in the United Kingdom an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Market Act 2000 Financial Promotion (“FSMA”)) received by it in connection with the issue or sale of the Additional Notes in circumstances in which Section 21(1) of the FSMA does not apply to the Issuer; and • it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Additional Notes in, from or otherwise involving the United Kingdom.

Bahrain This offering memorandum has not been reviewed by the Central Bank of Bahrain (“CBB”). These Additional Notes may not be offered for subscription or sold, directly or indirectly, nor may any invitation or offer to subscribe to any Additional Notes be made to persons in the Kingdom of Bahrain. The CBB is not responsible for the performance of the Issuer or the Initial Purchasers. The Ministry of Industry and Commerce of Bahrain, the CBB or the Bahrain Bourse do not take any responsibility for the accuracy and completeness of the statements and information contained in this document and expressly disclaim any liability whatsoever for any loss howsoever arising from reliance upon the whole or any part of the contents of this document. The board of directors and the management of the Issuer accept responsibility for the information contained in this document. To the best of the knowledge and belief of the board of directors and the management, who have taken all reasonable care to ensure that such is the case, the information contained in this document is in accordance with the facts and does not omit anything likely to affect the reliability of such information.

252 This offering memorandum does not constitute, and may not be used in connection with, an offer or solicitation in the Kingdom of Bahrain. No action has been or will be taken in the Kingdom of Bahrain by the Initial Purchasers or the Issuer that would or is intended to permit a public offering of the Additional Notes, or possession or distribution of the offering memorandum (in preliminary, proof or final form) or any other offering or publicity material relating to the Additional Notes, in the Kingdom of Bahrain.

Under no circumstances shall this offering memorandum constitute an offer to sell or the solicitation of an offer to buy nor shall there by any sale of these Additional Notes in the Kingdom of Bahrain as such an offer, solicitation or sale would be unlawful.

Qatar

This offering memorandum does not, and is not intended to, constitute an invitation or offer of securities in or from the State of Qatar (including the Qatar Financial Centre (the “QFC”)), and accordingly should not be construed as such. This offering memorandum has not been reviewed or approved by or registered with the the Qatar Financial Markets Authority, the Qatar Central Bank, the Qatari Ministry of Business and Trade, the Qatar Financial Centre Regulatory Authority or any other competent legal body or authority in the State of Qatar (including the QFC). This offering memorandum may not be reproduced or used for any purpose other than its intended purpose, nor provided to any person other than the recipient thereof. The Issuer has not been approved or licensed by or registered with the any licensing authorities in the State of Qatar (including the QFC).

Dubai International Financial Centre In the Dubai International Financial Centre (the “DIFC”), the Notes have not been and are not being, publicly offered, sold, promoted or advertised other than in compliance with the laws of the DIFC and applicable rules of the Dubai Financial Services Authority (the “DFSA”). No offer of the Notes shall be made to any person in or from the DIFC unless such offer is (i) an “Exempt Offer” for the purposes of the Markets Rules (MKT) module of the DFSA Rulebook; and (ii) made only to persons who meet the “Professional Client” criteria set out in Rule 2.3.3 of the Conduct of Business (COB) module of the DFSA Rulebook. This document has not been and will not be filed with the DFSA or with any other authority in the DIFC and no such authority assumes any liability for its contents.

United Arab Emirates (excluding the Dubai International Financial Centre) In the United Arab Emirates (outside of the Dubai International Financial Centre), the Notes have not been, and are not being, publicly offered, sold, promoted or advertised other than in compliance with the laws of the UAE governing the issue, offering and sale of securities. Further, this offering memorandum does not constitute a public offer of securities in the UAE and is not intended to be a public offer. This offering memorandum has not been approved by or filed with the Central Bank of the UAE, the UAE Securities and Commodities Authority, or any other federal or emirate-level authority in the UAE or any free zone established in the UAE.

253 TRANSFER RESTRICTIONS

Because the following restrictions will apply to the Additional Notes, purchasers are advised to consult legal counsel prior to making any offer, sale, resale, pledge or other transfer of the Additional Notes.

The Additional Notes have not been registered under the Securities Act and may not be offered or sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Accordingly, the Additional Notes are being offered and sold only to (1) “qualified institutional buyers” (as defined in Rule 144A) (“QIBs”) in compliance with Rule 144A, or (2) outside the United States in offshore transactions in reliance on Regulation S.

By its purchase of Additional Notes, each purchaser of Additional Notes will be deemed to have acknowledged, represented and agreed with the Issuer and the Initial Purchasers as follows: 1. it is purchasing the Additional Notes for its own account or for an account with respect to which it exercises sole investment discretion and that it and any such account is, either (i) a QIB, and is aware that the sale to it is being made in reliance on Rule 144A; or (ii) a purchaser that is outside the United States in compliance with Regulation S; 2. the Additional Notes are being offered for resale in a transaction not involving a public offering in the United States (within the meaning of the Securities Act) and have not been registered under the Securities Act or any other securities laws and may not be offered or sold, pledged or otherwise transferred within the United States except as set forth below; 3. it shall not offer, resell, pledge or otherwise transfer the Additional Notes except (A) to the Issuer or any of its subsidiaries, (B) inside the United States to a QIB in a transaction complying with Rule 144A, (C) outside the United States in compliance with Rule 904 under the Securities Act, (D) pursuant to the exemption from the registration requirements of the Securities Act provided by Rule 144 under the Securities Act (if available), (E) pursuant to any available exemption from the registration requirements under the Securities Act (provided that the Issuer or the Trustee may, in circumstances that any of them deems appropriate, require evidence as to compliance with any such exemption), or (F) pursuant to an effective registration statement under the Securities Act. It acknowledges that no representation is made as to the availability of the exemption provided by Rule 144 under the Securities Act for resale of the Additional Notes; 4. it will inform each person to whom it transfers Additional Notes of any restrictions on transfer of such Additional Notes; 5. it is relying on the information contained in this offering memorandum in making its investment decision with respect to the Additional Notes. It acknowledges that neither the Issuer nor any of the Initial Purchasers has made any representation to it with respect to the Issuer, the Group or the offering or sale of any Additional Notes, other than the information contained in this offering memorandum which has been delivered to it and upon which it is relying in making its investment decision with respect to the Additional Notes. It has had access to such financial and other information concerning the Issuer, the Group and the Additional Notes as it has deemed necessary in connection with its decision to purchase the Additional Notes, including an opportunity to ask questions of and request information from the Issuer, the Group and the Initial Purchasers;

254 6. the Additional Notes will bear a legend to the following effect unless otherwise agreed by the Issuer and the holder of the Additional Notes:

“THIS NOTE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR ANY STATE SECURITIES LAWS, AND ACCORDINGLY, NEITHER THIS NOTE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, ASSIGNED, PLEDGED OR OTHERWISE TRANSFERRED OR SOLD WITHIN THE UNITED STATES IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM [IN THE CASE OF 144A NOTES: AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT IT WILL NOT PRIOR TO THE DATE THAT IS ONE YEAR AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS THE OWNER OF THE SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (I) NORD ANGLIA EDUCATION (UK) HOLDINGS PLC OR ANY SUBSIDIARY THEREOF; (II) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT; (III) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT; (IV) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE); (V) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (PROVIDED THAT THE ISSUER OR THE TRUSTEE MAY, IN CIRCUMSTANCES THAT ANY OF THEM DEEMS APPROPRIATE, REQUIRE EVIDENCE AS TO COMPLIANCE WITH ANY SUCH EXEMPTION); OR (VI) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT; AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT SUCH CERTIFICATE TO THE TRUSTEE. EACH OWNER AND BENEFICIAL OWNER, BY ITS ACCEPTANCE OF THIS NOTE OR AN INTEREST IN THE NOTE EVIDENCED HEREBY, REPRESENTS THAT IT UNDERSTANDS AND AGREES TO THE FOREGOING RESTRICTIONS AND THAT NO REPRESENTATIONS CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT FOR RESALES OF THIS NOTE. AS USED HEREIN, THE TERMS “OFFSHORE TRANSACTION” AND “UNITED STATES” HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTIONS”.]; 7. the Trustee will not be required to accept for registration of transfer any Additional Note acquired by it, except upon presentation of evidence satisfactory to the Issuer and the Trustee that the restrictions set forth herein have been complied with; and

255 8. the Issuer, the Initial Purchasers and others will rely upon the truth and accuracy of the foregoing acknowledgements, representations and agreements, and agree that if any of the acknowledgements, representations or agreements deemed to have been made by it by its purchase of Additional Notes are no longer accurate, it shall promptly notify the Issuer and the Initial Purchasers. If it is acquiring any Additional Notes as a fiduciary or agent for one or more investor accounts, it represents that it has sole investment discretion with respect to each such account and it has full power to make the foregoing acknowledgements, representations and agreements on behalf of each such account.

Prospective purchasers are hereby notified that sellers of the Additional Notes may be relying on the exemption from the provisions of section 5 of the Securities Act provided by Rule 144A.

256 LIMITATIONS ON VALIDITY AND ENFORCEABILITY OF THE GUARANTEES AND SECURITY INTERESTS AND CERTAIN INSOLVENCY LAW CONSIDERATIONS

The following is a summary description of certain limitations on the validity and enforceability of the Guarantees and the security interests for the Notes, and a summary of certain insolvency law considerations in some of the jurisdictions in which the Issuer and the Guarantors are incorporated or organised. The description is only a summary and does not purport to be complete or to discuss all of the limitations or considerations that may affect the validity and enforceability of the Notes, the Guarantees and the security interests. Prospective investors in the Notes should consult their own legal advisors with respect to such limitations and considerations.

European Union

The Issuer and certain of the Guarantors are incorporated or organised under the laws of the Member States of the EU.

Pursuant to Council Regulation (EC) no. 1346/2000 on insolvency proceedings (the “EU Insolvency Regulation”), the court that shall have jurisdiction to open insolvency proceedings in relation to a company in the court of the Member State (other than Denmark) where the company concerned has its “center of main interest” (as that term is used in Article 3(1) of the EU Insolvency Regulation). The determination of where any such company has its “center of main interest” is a question of fact on which the courts of the different Member States may have differing and even conflicting views. To date, no final decisions have been taken in cases that have been brought before the European Court of Justice in relation to questions of interpretation or the effects of the EU Insolvency Regulation throughout the EU. The term “center of main interest” is not a static concept and may change from time to time. Although there is a rebuttable presumption under Article 3(1) of the EU Insolvency Regulation that any such company has its “center of main interests” in the Member State in which it has its registered office, Preamble 13 of the EU Insolvency Regulation states that the “center of main interest” of a debtor should correspond to the place where the debtor conducts the administration of its interests on a regular basis and is therefore ascertainable by third parties. In that respect, factors such as where board meetings are held, the location where the company conducts the majority of its business and the location where the large majority of the company’s creditors are established may all be relevant in the determination of the place where the company has its “center of main interest”. If the center of main interest of a company is and will remain located in the state in which it has its registered office, the main insolvency proceedings with respect to the company under the EU Insolvency Regulation would be commenced in such jurisdiction and accordingly a court in such jurisdiction would be entitled to commence the types of insolvency proceedings referred to in Annex A to the EU Insolvency Regulation. Insolvency proceedings opened in one Member State under the EU Insolvency Regulation are to be recognized in the other Member States (other than Denmark), although secondary proceedings may be opened in another Member State. If the “center of main interest” of a debtor is in one Member State (other than Denmark), under Article 3(2) of the EU Insolvency Regulation, the courts of another Member State (other than Denmark) have jurisdiction to open “territorial proceedings” only in the event that such debtor has an “establishment” in the territory of such other Member State. The effects of those territorial proceedings are restricted to the assets of the debtor situated in the territory of such other Member State. If the company does not have an establishment in any other Member State, no court of any other Member State has jurisdiction to open territorial proceedings with respect to such company under the EU Insolvency Regulation.

257 In the event that any one or more of the Issuer, the Guarantors or any of the Subsidiaries experience financial difficulty, it is not possible to predict with certainty in which jurisdiction or jurisdictions insolvency or similar proceedings would be commenced or the outcome of such proceedings. Applicable insolvency laws may affect the enforceability of the obligations and the security of the Issuer and the Guarantors.

Switzerland The aggregate liability of each Swiss Guarantor pursuant to its Guarantee, the Indenture as well as pursuant to any and all Security Documents (as defined in the Indenture) for obligations of its Affiliates, or in case the Swiss Guarantor is otherwise obliged to grant economic benefits to its Affiliates, and the unrestricted proceeds from the enforcement of collateral granted by each such Swiss Guarantor, shall be limited to the amount of unrestricted equity capital surplus (including the unrestricted portion of general and statutory reserves, other free reserves, retained earnings and current net profits) available for distribution as dividends to the shareholders of the Swiss Guarantor at the time the Swiss Guarantor is required to perform under the Finance Documents (as defined in the Indenture). Each Swiss Guarantor’s respective obligations in excess of the unrestricted equity capital surplus are not discharged but rather are postponed until such time as performance is again permitted notwithstanding such limitation. Pursuant to the Indenture, the Swiss Guarantors will take any and all actions (including passing shareholders’ resolutions, seeking regulatory confirmations and writing up under-valued assets) in order to facilitate prompt payments with respect to their Guarantees and the collateral with a minimum of limitations under Swiss law. If and to the extent (i) proceeds made available to the Issuer under the Notes are used for any financing activities in Switzerland that would cause payments under the Notes to be subject to Swiss Anticipatory Tax (as defined in the Indenture) and/or (ii) any direct or indirect flow-back of proceeds under the Notes to any Swiss Guarantor or other of the Issuer’s Affiliates incorporated and organised under the laws of Switzerland occurs, the Swiss Guarantors shall have no obligations under this Indenture, including, without limitation the Guarantee, as well as any and all Security Documents (as defined in the Indenture).

Spain One of the Restricted Subsidiaries that is expected to become a Guarantor is incorporated under the laws of Spain (the “Spanish Guarantor”). As a general rule, in the event of an insolvency of the Spanish Guarantor, insolvency proceedings may be initiated in Spain and governed by Spanish law. The Spanish Act 22/2003 of July 9, 2003 on Insolvency Proceedings (the “Spanish Insolvency Act”), as further amended, regulates court insolvency proceedings.

Concept and Petition for Insolvency In Spain, insolvency proceedings are only triggered in the event of a debtor’s current insolvency (insolvencia actual) or imminent insolvency (insolvencia imminente). Under the Spanish Insolvency Act, a debtor is insolvent when it becomes unable to regularly meet its obligations as they become due or when it expects that it will shortly be unable to do so. A petition for insolvency may be initiated by the debtor, by any creditor (provided that it has not acquired the credit within the six months prior to the filing of the petition for insolvency, for inter vivos acts, on a singular basis and once the credit was mature) or by certain other interested third parties.

Voluntary Insolvency Insolvency is considered voluntary (concurso voluntario) if filed by the debtor. The debtor is obliged to file a petition for insolvency within two months after it becomes aware, or should have become aware, of its state of insolvency. It is presumed that the debtor becomes aware of its insolvency, unless otherwise proved, if any of the circumstances that qualify as the basis for a petition for mandatory insolvency occur.

258 Mandatory Insolvency Insolvency is considered mandatory (concurso necesario) if filed by a creditor or by certain other interested third-parties. Under Section 2.4 of the Spanish Insolvency Act, a creditor can apply for a declaration of insolvency if, inter alia: (i) there is a generalised default on payments by the debtor; (ii) there is a seizure of assets affecting or comprising the generality of the debtor’s assets; (iii) there is a misplacement, “fire sale” or ruinous liquidation of the debtor’s assets; or (iv) there is a generalised default on certain tax, social security and employment obligations during the applicable statutory period (three months).

Conclusion of Insolvency: Proposal of Agreement or Liquidation The Spanish Insolvency Act provides that insolvency proceedings conclude following either the implementation of an agreement between the creditors and the debtor (the “Company Voluntary Agreement” or the “CVA”) or the liquidation of the debtor.

Certain Effects of the Insolvency for the Debtor and on Contracts As a general rule, the debtor in a voluntary insolvency retains its powers to manage and dispose of its business, but is subject to the intervention of the insolvency administrators (“administración concursal”). In the case of mandatory insolvency, as a general rule, the debtor no longer has power over its assets, and management’s powers (including the power to dispose of assets) are conferred solely upon the insolvency administrators. However, the court has the power to modify this general regime subject to the specific circumstances of the case. Under Section 61 of the Spanish Insolvency Act, all clauses in contracts with mutual obligations that entitle any party to terminate an agreement based solely on the other party’s declaration of insolvency are deemed as not included in the agreement and, therefore, unenforceable, except if expressly permitted by specific laws (i.e. agency laws). A declaration of insolvency does not affect agreements with reciprocal obligations pending on performance by either the insolvent party or the counterparty, which remain in full force and effect, and the obligations of the insolvent debtor will be fulfilled against the insolvent estate. The court can nonetheless terminate any such contracts at the request of the insolvency administrators, the company itself or the non-debtor when such termination is in the interest of the estate or if there has been a breach of such contract. The enforcement of any security over certain assets that are linked to the commercial or professional activity, or to a business unit of the insolvent company (in rem securities) is prohibited until the earlier of: (i) an arrangement of CVA being reached provided that the CVA does not affect such right or (ii) one year having elapsed as of the declaration of the insolvency without the opening of a liquidation.

Ranking of Credits Creditors are required to report their claims to the insolvency administrators within one month from the last official publication of the court order declaring the insolvency, providing original documentation to justify such claims. Based on the documentation provided by the creditors and documentation held by the debtor, the court administrators draw up a list of acknowledged creditors/claims and classify them according to the categories established in the Spanish Insolvency Act. Under the Spanish Insolvency Act, claims are classified in two groups: • Estate Claims: Section 84 of the Spanish Insolvency Act sets out the so-called “estate claims” which can in essence be defined as claims arising from the operations of the insolvent debtor after the date of the declaration of insolvency (although there are

259 some exceptions such as certain employment claims arising in the 30 days prior to the declaration of insolvency, subject to certain caps). These claims are preferred to all others except for specially privileged claims specifically with regard to the assets (collateral) subject to the relevant security interest or special privilege. • Insolvency Claims: Insolvency claims are classified as follows: • Specially Privileged Claims: Creditors benefiting from special privileges, representing security over certain assets (in rem securities). These privileges may entail separate proceedings, though subject to certain restrictions derived from a waiting period that may last up to one year and certain additional limitations set forth by the Spanish Insolvency Act. Privileged creditors are not subject to the CVA, except if they give their express support by voting in favor of the CVA. In the event of liquidation, they are the first to collect payment against the assets on which they are secured. However, the receiver has the option to halt any enforcement of the securities and pay these claims as administrative expenses under specific payment rules. • Generally Privileged Claims: Creditors benefiting from a general privilege, including, among others, specific labor claims and specific claims brought by public entities or authorities are recognised for half their amount, and claims held by the creditor taking the initiative to apply for the insolvency proceedings, for up to half of the amount of such debt. The holders of general privileges are not to be affected by the CVA if they do not agree to the said CVA and, in the event of liquidation, they are the first to collect payment against assets other than those secured by a specially privileged claim after specially privileged creditors, in accordance with the ranking established under the Spanish Insolvency Act. • Ordinary Claims: Ordinary creditors (non-subordinated and non-privileged claims) are paid pro rata. • Subordinated Claims: Subordinated creditors is a statutory category of claims which includes, among others: credits communicated late (outside the specific one-month period mentioned above); credits which are contractually subordinated vis-à-vis all other credits of the debtor; credits relating to unpaid interest claims (including default interest) except for those credits secured with an in rem right up to the secured amount; fines; and claims of creditors which are “specially related parties” to the insolvent debtor. In the case of a legal entity, the following shall be deemed as “specially related parties”: (i) shareholders with unlimited liability; (ii) limited liability shareholders holding 10% or more of the insolvent company’s share capital (or 5% if the company is listed) at the time the credit is generated; or (iii) directors, shadow directors and those holding general powers of attorney from the insolvent company; and (iv) companies pertaining to the same group as the debtor and their respective shareholders provided such shareholders meet the minimum shareholding requirements set forth in (ii) above. Subordinated creditors do not vote on the CVA but are subject to its terms, being paid once ordinary claims are satisfied pursuant to the terms of the CVA. Thus, subordinated creditors have limited chances of collecting payment according to the ranking established in the Spanish Insolvency Act. As a general rule, insolvency proceedings are not compatible with other enforcement proceedings which can have an effect on the estate. When compatible, in order to protect the interests of the debtor and creditors, the Spanish Insolvency Act extends the jurisdiction of the court dealing with insolvency proceedings, which is then legally authorised to handle any enforcement proceedings or interim measures affecting the debtor’s assets (whether based upon civil, labor, or administrative law).

260 Hardening Periods There is no clawback date by operation of law. Therefore, there are no prior transactions that automatically become void as a result of the initiation of insolvency proceedings, but instead the insolvency administrators must expressly challenge those transactions. Under the Spanish Insolvency Act, upon the declaration of insolvency, only transactions that could be deemed as having damaged (perjudiciales) the insolvent debtor’s estate (i.e., causing a so-called “patrimonial damage”) during the two years prior to the date the insolvency is declared, may be challenged, even if there was no fraudulent intention. Transactions taking place earlier than two years prior to the declaration of insolvency may be rescinded subject to ordinary Spanish Civil Code based actions. The Spanish Insolvency Act does not define the meaning of “patrimonial damage”. Damage does not refer to the intention of the parties, but to the consequences of the transaction on the debtor’s interest resulting on the damage to the insolvent debtor’s estate or the prejudice to the equality of the treatment among creditors which drives insolvency proceedings (pars condition creditorum). There are several “irrebuttable presumptions” expressly set forth by the Spanish Insolvency Act (i.e., free disposals and prepayment or cancellation of the company’s claims or obligations prior to them being due and where the due dates of the relevant claims or payment obligations fall after the date of declaration of insolvency), except if such obligations were secured by an in rem security, in which case such transactions are subject to a rebuttable presumption of “patrimonial damage” as set forth below. In addition to the above, the Spanish Insolvency Act sets forth certain actions which are deemed to cause a “patrimonial damage”to the insolvent company, but which are “rebuttable presumptions” and therefore subject to being contested by the other party (i.e., disposals in favor of “specially related parties” (as described above), the provision of security in respect of previously existing obligations or in respect of new obligations replacing existing ones and the payment or other acts to terminate obligations being secured by an in rem security and which mature after the declaration of insolvency). Ordinary transactions carried out within the debtor’s ordinary course of business cannot be rescinded, provided that they are carried out at arm’s length.

Parallel Debt The holders of the Notes from time to time will not be the secured parties under the security interests governed by Spanish law. Under Spanish law, a security interest created as security for the benefit of third parties who are not direct parties to the relevant agreement creating the security interest are unenforceable by such parties. The Intercreditor Agreement provides (shall provide) for the creation of a parallel debt structure (as an abstract obligation independent from the obligation under the Notes) whereby, subject to the terms of the Intercreditor Agreement, all the Debtors (as defined therein) undertake to pay to the Spanish co-security agent any amount payable by them under the Notes. This allows the Security Agent to be the beneficiary of the security interest governed by Spanish law. The use of parallel debt in Spanish deals is a new concept, and there has not been any court precedent to ensure its validity and enforceability. Also, the registration of the security interests governed by Spanish law may be rejected if the relevant registrar considers that this structure is not valid or enforceable.

Spanish Guarantor Under Spanish law, the guarantee to be granted pursuant to the Indenture may only be granted by those guarantors that are incorporated as stock companies under the laws of Spain (sociedades anónimas or “S.A.”). This is due to the fact that all other subsidiaries which are incorporated as limited liability companies under the laws of Spain (sociedades de responsabilidad limitada or “S.L.”) are subject to the prohibition contained in Article 402 of the Spanish Capital Companies Law (Real Decreto Legislativo 1/2010, de 2 de julio, por el que se aprueba el Texto Refundido de la Ley de Sociedades de Capital) (the “Spanish Capital Companies Law”), which states that a limited liability company cannot execute or secure a bond issuance or other issuance of securities.

261 Spanish Financial Assistance Limitations on Guarantees and Security Interests Spanish Capital Companies Law prohibits financial assistance for stock companies (“sociedades ano´nimas”or“S.A.”) in relation to the acquisition of their own shares or the shares of their direct or indirect controlling company. A guarantee or indemnity granted or assumed pursuant to the Indenture by the Spanish Guarantor or any security interest created by the Spanish Guarantor may not extend to any obligation related to the acquisition of the shares representing the share capital of such Spanish Guarantor or, in the case of stock companies (“sociedades ano´nimas”or“S.A.”) shares representing the share capital of their direct or indirect controlling companies, or in the case of limited liability companies (“sociedades de responsabilidad limitada”or“S.L.”), shares representing the share capital of companies belonging to the group of the Spanish Guarantor, or to the refinancing of a previous debt incurred for the acquisition of shares representing the share capital of the Spanish Guarantor or shares representing the share capital of its direct or indirect controlling companies. There is, therefore, a risk that the obligations assumed by any Spanish Guarantor pursuant to the security intended to be created or guarantees to be granted pursuant to the Indenture could be considered financial assistance under the Spanish Capital Companies Law to the extent that they refer to an institution of guarantees in connection with the prior acquisition of shares in the Spanish Guarantor or its direct or indirect controlling companies. NB: to be included if there is financial assistance in this deal.

Poland Any Guarantee granted or assumed by a Guarantor incorporated in Poland (a “Polish Guarantor”) shall be limited in accordance with the following rules: • To the extent the liability under the Indenture is considered a liability (zobowia˛zanie) within the meaning of Article 11 section 2 of the Polish Bankruptcy and Rehabilitation Law of 28 February 2003 (Polish Journal of Laws No. 60, item 535, as amended) (“Polish Bankruptcy Law”), the liability of each Polish Guarantor under the Indenture will be limited to the aggregate value of the assets of such Polish Guarantor current at the time less the aggregate value of its liabilities current at the time (other than the Polish Guarantor’s liability under the Indenture), and thus such liability should not result in the Polish Guarantor’s insolvency as defined in Article 11 section 2 of the Polish Bankruptcy Law; • In addition to the provisions of the foregoing, each Polish Guarantor that is a limited liability company (Sp. z o.o.) has the right to refrain from making a payment under the Indenture in the event and to the extent that such payment would result in a reduction of its assets necessary to fully cover its registered share capital under Article 189 section 2 of the Polish Commercial Companies Code of 15 September 2000 (Kodeks spo´łek handlowych, Polish Journal of Laws No. 94, item 1037, as amended). The limitation in the first bullet point above will not apply if one or more of the following circumstances occurs: • any Event of Default is continuing, irrespective of whether such Event of Default occurs before or after the relevant Polish Guarantor becomes insolvent within the meaning of Article 11 section 2 of the Polish Bankruptcy Law; • the liabilities of the relevant Polish Guarantor (other than those under the Security Documents) result in its insolvency within the meaning of Article 11 section 2 of the Polish Bankruptcy Law; or • Polish law is amended in such a manner that over-indebtedness (stan nadmiernego zadłuz˙enia) as provided for in Article 11 section 2 of the Polish Bankruptcy Law (as in force on the date of this Agreement) no longer gives grounds for bankruptcy or obliges the representatives of the Polish Guarantor to file for bankruptcy.

262 Hungary

The obligations and liabilities of any Guarantor formed under the laws of Hungary under the Indenture will at all times be limited to the maximum aggregate amount that does not result in any conflict with Hungarian laws applicable to foundations and such Guarantor’s deed of foundation.

The obligations and liabilities of any such Guarantor under the Indenture may not:

• threaten the performance of such Guarantor’s activities that serve the purposes stated in its deed of foundation or threaten the maintenance of its operation;

• exceed in amount the value of such Guarantor’s assets;

• threaten such Guarantor’s charitable activities or the status of such

Notwithstanding any term of the Indenture, any guarantee or indemnity given by or other obligation assumed by such Guarantor is meant as and is to be interpreted as an abstract guarantee agreement and not as surety as regulated in Articles 272-276 of the Hungarian Civil Code (kezesség) and the Hungarian Guarantor undertakes to comply with the provisions of this clause.

Bahrain

Any Guarantee, indemnity and other obligations of any Guarantor incorporated under the laws of the Kingdom of Bahrain expressed to be assumed under the Indenture shall be deemed to have been given only to the extent that the same do not violate the provisions of Articles 1033 to 1054 (Privileged Rights) of the Civil Code promulgated by Legislative Decree No. 19 of 2001 and the provisions of this Indenture and the Notes shall be construed accordingly.

Qatar One of the Restricted Subsidiaries that is expected to become a Guarantor — Education Overseas Qatar LLC — is incorporated under the laws of the State of Qatar. The Qatari legal system and courts are considerably less developed than in more established jurisdictions in the United States or Western Europe. Investors should refer to “Risks relating to insolvency in Qatar and the Qatari legal system in general” under “Risk Factors” above for more information. In addition, it should be noted that Education Overseas Qatar LLC is a limited liability company incorporated under the Commercial Companies Law of Qatar. Unlike in the case of a joint stock company, there is no formal legal regime in Qatar governing the taking of security over the shares of a limited liability company.

263 RATINGS The Notes have been rated B3 by Moody’s and B by S&P. The ratings reflect the rating agencies’ assessment of the likelihood of timely payment of the principal of and interest on the Notes. The ratings do not constitute recommendations to purchase, hold or sell the Notes inasmuch as such ratings do not comment as to market price or suitability for a particular investor. There can be no assurance that the ratings will remain in effect for any given period or that the ratings will not be revised by such rating agencies in the future if in their judgement circumstances so warrant. Each such rating should be evaluated independently of any other rating on the Notes, on other of our securities, or on us.

LEGAL MATTERS Certain legal matters will be passed upon for us by Latham & Watkins as to United States federal, New York and English law, by Schellenberg Wittmer Zurich as to Swiss law and by Han Kun Law Offices as to PRC law. Certain legal matters will be passed upon for the Initial Purchasers by Milbank, Tweed, Hadley & McCloy as to United States federal, New York and English law, by Homburger as to Swiss law and Grandall Law Firm (Beijing) as to PRC law.

INDEPENDENT AUDITORS Our auditors are PricewaterhouseCoopers LLP (“PwC”), independent auditors, whose address is Donington Court, Pegasus Business Park, Castle Donington, East Midlands DE74 2UZ, United Kingdom. The consolidated financial statements of Nord Anglia Education (UK) Holdings plc (formerly Premier Education (UK) Holdco Limited) as at and for the three years ended 31 August 2010, 2011 and 2012, set forth elsewhere in this offering memorandum, have been audited by PwC, as stated in their reports appearing herein, in accordance with English law. Each of the reports of PricewaterhouseCoopers LLP dated 7 December 2012, 23 December 2011 and 23 December 2010 with respect to such audited consolidated financial statements, in accordance with guidance issued by The Institute of Chartered Accountants in England and Wales, provides: “These reports, including the opinions, have been prepared for and only for the Company’s members as a body in accordance with Chapter 3 of Part 16 of the U.K. Companies Act 2006, and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come including without limitation under any contractual obligations of the company, save where expressly agreed by our prior consent in writing”. The auditors of WCL Group Limited are Grant Thornton UK LLP, independent auditors, whose address is Grant Thornton House, Melton Street, Euston Square, London NW1 2EP. The consolidated financial statements of WCL Group Limited as at and for the two periods ended 26 August 2011 and 31 August 2012, set forth elsewhere in this offering memorandum, have been audited by Grant Thornton UK LLP, as stated in their reports appearing herein, in accordance with English law. Each of the reports of Grant Thornton UK LLP with respect to such audited consolidated financial statements, in accordance with guidance issued by The Institute of Chartered Accountants in England and Wales, provides: “These reports, including the opinions, have been prepared for and only for the Company’s members as a body in accordance with Chapter 3 of Part 16 of the U.K. Companies Act 2006, and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come including without limitation under any contractual obligations of the company, save where expressly agreed by our prior consent in writing”.

264 Investors in the Notes should understand these statements are intended to disclaim any liability to parties (such as the purchasers of the Notes) other than the Company and their shareholders with respect to those reports. In the context of the offering of the Notes, our auditors have reconfirmed to us that they do not intend their duty of care to extend to any party other than those to whom their reports were originally addressed (i.e., the Issuer and their shareholders). The SEC would not permit the language quoted in the above paragraph to be included in a registration statement or a prospectus used in connection with an offering of securities registered under the Securities Act or in any report filed under the Exchange Act. The effect of such language is untested by a U.S. court (or any other court) and thus may or may not be effective to limit the direct liability of the auditors under U.S. Law or under any other laws to persons such as investors in the Notes.

265 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page Unaudited Interim Consolidated Financial Statements of Nord Anglia Education (UK) Holdings plc for the Six Months Ended 28 February 2013 Unaudited Interim Consolidated Income Statement ...... F-2 Unaudited Interim Consolidated Statement of Comprehensive Income...... F-3 Unaudited Interim Consolidated Balance Sheet ...... F-4 Unaudited Interim Consolidated Statement of Changes in Equity ...... F-5 Unaudited Interim Consolidated Cash Flow Statement ...... F-6 Notes to the Unaudited Interim Financial Statements ...... F-7 Audited Consolidated Financial Statements of Nord Anglia Education (UK) Holdings plc for the Year Ended 31 August 2012 Report of the Directors ...... F-23 Independent Auditor’s Report...... F-30 Audited Consolidated Income Statement ...... F-32 Audited Consolidated Statement of Comprehensive Income...... F-33 Audited Consolidated Balance Sheet ...... F-34 Audited Company Balance Sheet ...... F-35 Audited Consolidated Statement of Changes in Equity ...... F-36 Audited Consolidated Cash Flow Statement...... F-37 Notes to the Audited Financial Statements...... F-38 Audited Consolidated Financial Statements of Nord Anglia Education (UK) Holdings plc for the Year Ended 31 August 2011 Report of the Directors ...... F-85 Independent Auditor’s Report...... F-92 Audited Consolidated Income Statement ...... F-94 Audited Consolidated Statement of Comprehensive Income...... F-95 Audited Consolidated Balance Sheet ...... F-96 Audited Company Balance Sheet ...... F-97 Audited Consolidated Statement of Changes in Equity ...... F-98 Audited Consolidated Cash Flow Statement...... F-100 Notes to the Audited Financial Statements...... F-101 Audited Consolidated Financial Statements of Nord Anglia Education (UK) Holdings plc for the Period Ended 31 August 2010 Report of the Directors ...... F-157 Independent Auditor’s Report...... F-164 Audited Group Profit and Loss Account ...... F-166 Audited Group Statement of Total Recognised Gains and Losses ...... F-167 Audited Group Balance Sheet ...... F-168 Audited Company Balance Sheet ...... F-169 Audited Group Cash Flow Statement ...... F-170 Audited Group Reconciliation of Net Cash Flow to Movement in Net Debt ...... F-171 Notes to the Audited Financial Statements...... F-172 WCL Group Limited Interim Financial Statements for the Period ended 28 February 2013 Principal Accounting Policies ...... F-200 Group Profit and Loss Account...... F-203 Group Balance Sheet ...... F-204 Group Cash Flow Statement ...... F-205 Group Statement of Total Recognised Gains and Losses...... F-206 Notes to the Financial Statements ...... F-207 WCL Group Limited Financial Statements for the Year ended 31 August 2012 Report of the Directors ...... F-217 Independent Auditor’s Report to the Members of WCL Group Limited ...... F-221 Principal Accounting Policies ...... F-222 Group Profit and Loss Account...... F-225 Group Balance Sheet ...... F-226 Company Balance Sheet ...... F-227 Group Cash Flow Statement ...... F-228 Group Statement of Total Recognised Gains and Losses...... F-229 Notes to the Financial Statements ...... F-230 WCL Group Limited Report of the Directors for the Year ended 26 August 2011 Report of the Directors ...... F-243 Report of the Independent Auditor to the Members of WCL Group Limited...... F-247 WCL Group Limited Principal Accounting Policies for the Year ended 26 August 2011...... F-248 WCL Group Limited Group Profit and Loss Account for the Year Ended 26 August 2011 ...... F-251 WCL Group Limited Group Balance Sheet at 26 August 2011 ...... F-252 WCL Group Limited Group Cash Flow Statement for the Year Ended 26 August 2011 ...... F-254 WCL Group Limited Group Statement of Total Recognised Gains and Losses ...... F-255 Notes to the Financial Statements ...... F-256

F-1 INTERIM CONSOLIDATED INCOME STATEMENT for the 6 month period ended 28 February 2013

6 month period ended

28 February 29 February 2013 2012 Note Reclassified*

$m $m Unaudited Unaudited Revenue ...... 3 170.3 151.5 Cost of sales ...... (77.3) (68.6) Gross profit ...... 93.0 82.9 Selling, general and administrative expenses ...... (42.6) (41.0) Depreciation ...... 4 (4.2) (4.2) Amortisation ...... 4 (1.9) (1.7) Exceptional (expenses)/income, net ...... 4 (2.4) 6.1 Total expenses ...... (51.1) (40.8) Operating profit ...... 41.9 42.1 Finance income ...... 5 1.2 102.6 Finance expense ...... 5 (19.4) (28.5) Net financing (expenses)/income ...... (18.2) 74.1 Profit from continuing operations before taxation ...... 23.7 116.2 Income tax expense ...... 6 (12.3) (11.5) Profit for the period from continuing operations, all attributable to the equity owners of the Parent ...... 11.4 104.7

* See Note 1 Accounting policies for details of reclassification

The notes on pg. 6 to pg. 24 are an integral part of the interim financial statements.

F-2 INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the 6 month period ended 28 February 2013

6 month period ended

28 February 29 February 2013 2012

$m $m Unaudited Unaudited Profit for the period from continuing operations, all attributable to the equity owners of the Parent ...... 11.4 104.7 Other comprehensive income/(loss) Items that may be reclassified subsequently to profit or loss: Foreign exchange translation differences ...... 10.5 (8.4) Items that will not be reclassified to profit or loss: Actuarial gain/(losses) on defined benefit pension plans ...... 0.1 (13.2) Other comprehensive income/(loss) for the period, net of income tax ...... 10.6 (21.6) Total comprehensive income for the period, all attributable to the equity owners of the Parent ...... 22.0 83.1

The notes on pg. 6 to pg. 24 are an integral part of the interim financial statements.

F-3 INTERIM CONSOLIDATED BALANCE SHEET as at 28 February 2013 28 February 31 August 29 February Note 2013 2012 2012

$m $m $m Unaudited Audited Unaudited Non-current assets Property, plant and equipment ...... 7 33.1 30.3 29.8 Intangible assets ...... 8 462.4 454.9 448.1 Investments in jointly controlled entities ...... 0.5 0.5 0.5 Derivative financial instruments ...... 0.0 — 0.1 Trade and other receivables...... 2.5 10.8 15.8 Deferred tax assets ...... 6.5 6.1 4.0 505.0 502.6 498.3 Current assets Tax receivable ...... 0.3 0.3 — Trade and other receivables...... 50.9 47.0 33.0 Cash and cash equivalents ...... 67.9 108.2 40.4 119.1 155.5 73.4 Total assets ...... 624.1 658.1 571.7 Current liabilities Other interest-bearing loans and borrowings . . 9 (29.9) (21.8) (33.9) Trade and other payables ...... (140.9) (206.8) (119.2) Provisions for other liabilities and charges.... 11 (0.9) (3.1) (2.6) Current tax liabilities ...... (7.4) (5.0) (5.9) (179.1) (236.7) (161.6) Non-current liabilities Other interest-bearing loans and borrowings . . 9 (322.3) (318.9) (404.2) Other payables...... (6.1) (6.2) (1.6) Derivative financial instruments ...... — — (6.1) Retirement benefit obligations ...... 10 (29.0) (30.4) (26.3) Provisions for other liabilities and charges.... 11 (2.0) (2.3) (2.0) Deferred tax liabilities ...... (10.5) (10.5) (11.4) (369.9) (368.3) (451.6) Total liabilities ...... (549.0) (605.0) (613.2) Net assets/(liabilities) ...... 75.1 53.1 (41.5) Equity attributable to equity holders of the parent Share capital ...... 12 67.5 67.5 67.5 Share premium ...... 131.1 131.1 0.1 Other reserves ...... 6.9 6.9 6.9 Currency translation reserve ...... 10.4 (0.1) 12.2 Shareholder’s deficit ...... (140.8) (152.3) (128.2) Total shareholder’s surplus/(deficit) ...... 75.1 53.1 (41.5)

The notes on pg. 6 to pg. 24 are an integral part of the interim financial statements.

F-4 INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the 6 month period ended 28 February 2013

Currency Share Share Other translation Shareholder’s Total parent capital premium reserves reserve deficit equity

$m $m $m $m $m $m Balance at 1 September 2012 . . 67.5 131.1 6.9 (0.1) (152.3) 53.1 Total comprehensive income for the year Profit for the period ...... ————11.411.4 Actuarial gain on retirement benefit obligations ...... ———— 0.10.1 Other comprehensive income . . — — — 10.5 — 10.5 Total comprehensive income for the period...... — — — 10.5 11.5 22.0 Balance at 28 February 2013 (Unaudited) ...... 67.5 131.1 6.9 10.4 (140.8) 75.1

for the 6 month period ended 29 February 2012

Currency Share Share Other translation Shareholder’s Total parent capital premium reserves reserve deficit equity

$m $m $m $m $m $m Balance at 1 September 2011 . . 67.5 0.1 6.9 20.6 (219.9) (124.8) Total comprehensive loss for the year Profit for the period ...... ————104.7 104.7 Actuarial loss on retirement benefit obligations ...... ————(13.2) (13.2) Other comprehensive loss..... — — — (8.4) — (8.4) Total comprehensive loss for the period...... — — — (8.4) 91.5 83.1 Transactions with owners, recorded directly in equity Equity-settled share based payment transactions ...... ———— 0.20.2 Total contributions by and distributions to owners ...... ———— 0.20.2 Balance at 29 February 2012 (Unaudited) ...... 67.5 0.1 6.9 12.2 (128.2) (41.5)

The notes on pg. 6 to pg. 24 are an integral part of the interim financial statements.

F-5 INTERIM CONSOLIDATED CASH FLOW STATEMENT for the 6 month period ended 28 February 2013 6 month period ended

28 February 29 February Note 2013 2012

$m $m Unaudited Unaudited Cash flows from operating activities Profit for the year before taxation ...... 23.7 116.2 Adjustments for: Depreciation and amortisation ...... 4 6.1 5.9 Difference between pension contributions paid and amounts recognised in the income statement...... (0.4) (0.5) Loss on sale of property, plant and equipment...... 4 0.1 0.1 Net financial expense/(income) ...... 5 18.2 (74.1) Bond issuance income, net ...... — (7.4) Equity settled share-based payment expenses ...... — 0.3 47.7 40.5 Decrease in trade and other receivables ...... 4.4 6.0 Decrease in trade and other payables ...... (74.1) (69.9) Cash used in operations ...... (22.0) (23.4) Interest paid...... (17.9) (5.0) Tax paid ...... (10.6) (7.8) Net cash used in operating activities ...... (50.5) (36.2) Cash flows from investing activities Proceeds from sale of property, plant and equipment ..... 0.0 0.0 Purchase of intangible assets ...... 8 (0.0) (0.6) Acquisition of subsidiary ...... 2 — (3.9) Cash acquired with subsidiaries...... 2 — 2.9 Acquisition of property, plant and equipment ...... (5.7) (4.5) Interest received ...... 1.2 0.9 Net cash used in investing activities ...... (4.5) (5.2) Cash flows from financing activities Proceeds from new loan ...... 34.0 13.5 Repayment of borrowings ...... (23.4) (18.7) Loan issuance expenses ...... (0.4) — Payment of finance lease liabilities ...... — (0.0) Equity dividends paid ...... (0.0) — Net cash generated from/(used) financing activities ..... 10.2 (5.2) Net decrease in cash and cash equivalents...... (44.8) (46.6) Cash and cash equivalents at 1 September...... 108.2 88.0 Effect of exchange rate fluctuations on cash held ...... 4.5 (1.0) Cash and cash equivalents at 28 February 2013/ 29 February 2012 ...... 67.9 40.4

The notes on pg. 6 to pg. 24 are an integral part of the interim financial statements.

F-6 NOTES TO THE INTERIM FINANCIAL STATEMENTS FOR THE 6 MONTH PERIOD ENDED 28 FEBRUARY 2013 (forming part of the financial statements)

Interim management report and principal risks The condensed Group interim financial statements for the six months ended 28 February 2013 are produced in conjunction with the Offering Circular which will be registered as part of a high yield bond offering in Singapore (the “Offering Circular”).

1 ACCOUNTING POLICIES

General information Nord Anglia Education (UK) Holdings PLC (“the Company”) is a public limited company incorporated and domiciled in the United Kingdom under the Companies Act 2006 (Registration number 06590752). The address of the registered office is The Old Vicarage, Market Street, Castle Donington, Derbyshire, DE74 2JB, United Kingdom. The main activities of the Company and its subsidiaries (together “the Group”) are the operation of Premium Schools worldwide and the delivery of a range of education and training contracts both in the UK and overseas.

1.1 Basis of preparation The Condensed Group interim financial statements consolidate the Company and its subsidiaries (together referred to as the “Group”) and equity account for the Group’s interest in jointly controlled entities. The Condensed Group interim financial statements have been prepared in accordance with International Accounting Standard (‘IAS’) 34 ‘Interim financial reporting’ as adopted by the European Union (the ‘EU’). The Condensed Group interim financial statements should be read in conjunction with the Group’s statutory financial statements for the year ended 31 August 2012 which are included in the Offering Circular. The Condensed Group interim financial statements comprise the consolidated results of the Group for the 6 month period ended 28 February 2013 and 29 February 2012. The financial information for the year ended 31 August 2012 included herein has been extracted from the Group’s statutory financial statements for that year. The interim consolidated income statement has been reclassified in order to more adequately reflect the way management views the results of the business. The Group present the interim consolidated income statement on a function of expenses basis, except that the Group disclose selling, general and administrative expenses without including depreciation, amortisation and exceptional items, which are separately disclosed as a nature of expense on the face of the interim consolidated income statement. The Group consider depreciation, amortisation and exceptional items to be selling, general and administrative expenses in nature, these items are summarised in total in the notes to the accounts. The Condensed Group interim financial statements are prepared on a going concern basis. The interim consolidated balance sheet as at 28 February 2013 shows total assets exceeding total liabilities by $75.1 million. The issuance of the Notes and the related write-off’s on the shareholder loan notes during the year ended 31 August 2012 had significantly improved the net asset position of the Group. The directors have reviewed the latest guidance relating to going concern and, having made all relevant enquiries, have formed a judgement that the Group has adequate resources at its disposal to continue its operations for the foreseeable future. This judgement is based on a review undertaken of the current business forecast to 31 August 2014 and the projected cash requirements over that period to assess the likelihood of the Group being able to continue as a going concern. Suitable sensitivities were run for the periods up to 31 August 2014 to assess the headroom available. This review concluded that there were no material uncertainties that potentially could give rise to a significant doubt about the business continuing as a going concern.

F-7 1.2 Accounting policies and estimates

The Condensed Group interim financial statements have been prepared applying the same accounting policies, significant judgements made by management in applying them, and key sources of estimation uncertainty applied by the Group that were used in the Group’s statutory financial statements for the year ended 31 August 2012, except for taxes on income in the interim periods which are accrued using the tax rate that would be applicable to expected total annual earnings in each tax jurisdiction.

The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the reported amount of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities. If in the future such estimates and assumptions, which are based on management’s best judgement at the date of these consolidated interim financial statements deviate from actual circumstances, the original estimates and assumptions will be modified as appropriate in the period in which the circumstances change. There have been no significant changes in the bases upon which estimates have been determined compared to those applied at 31 August 2012, and no change in estimate has had a material effect on the current period.

Goodwill held in the Group’s balance sheet is tested annually for impairment at the year end. No circumstances have arisen in the six months ended 28 February 2013 which indicate additional impairment testing is required. The Group had no material or unusual share based payment transactions for the six months ended 28 February 2013. Full details of share based payment arrangements were provided in the Group’s statutory financial statements for the year ended 31 August 2012.

1.3 Recent accounting pronouncements There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Group other than amendments disclosed in the Group’s financial statements for the year ended 31 August 2012.

1.4 Functional and presentational currency Items included in the financial statements of each of the Group’s subsidiary undertakings are measured using the currency of the primary economic environment in which the subsidiary undertaking operates (the ‘functional currency’). The Group financial statements are presented in US Dollars.

2 ACQUISITIONS OF SUBSIDIARIES

Acquisitions in the prior period On 30 September 2011, the Company acquired the entire share capital of La Cote International School for a total consideration of CHF 3.5 million, satisfied in cash. The company is a Premium School located in Switzerland. The business combination occurred as a result of the directors’ decision to strengthen the Group’s existing portfolio of Premium Schools within Europe, and in particular Switzerland. In the period to 29 February 2012 the subsidiary contributed turnover and net profit of $3.1 million and $0.4 million respectively to the consolidated result for the period. If the acquisition had occurred on 1 September 2011, Group revenue would have been an estimated $0.5 million higher and the Group’s net profit would have been an estimated $0.1 million higher. In determining these amounts, management has assumed that the fair value adjustments that arose on the date of acquisition would have been the same if the acquisition had occurred on 1 September 2011.

F-8 Effect of acquisition

The acquisition had the following effect on the Group’s assets and liabilities:

Recognised values on acquisition

$m Acquiree’s identifiable assets and liabilities as at the date of acquisition were: Intangible assets - Brand ...... 0.5 - Customer relationships ...... 0.5 Property, plant and equipment ...... 0.5 Trade and other receivables...... 2.1 Cash and cash equivalents ...... 2.9 Trade and other payables ...... (6.3) Retirement benefit obligations...... (0.4) Deferred tax liabilities...... (0.0)

Net identifiable liabilities ...... (0.2)

Consideration paid: Cash price paid ...... 3.9

Total consideration transferred ...... 3.9

Goodwill on acquisition ...... 4.1

The goodwill arising from the acquisition is based on the anticipated synergies existing within the acquired businesses and also the synergies expected to be achieved as a result of combining the school with the rest of the group. None of the goodwill recognised is expected to be deductible for income tax purposes.

All transaction costs incurred in relation to the acquisitions have been expensed to the income statement and not deducted for tax purposes.

F-9 3 OPERATING SEGMENTAL INFORMATION

Management has determined the operating segments based on the reports reviewed by the strategic steering committee (which has been identified as the CODM) that are used to make strategic decisions.

For management purposes, the Group is currently organised into two business segments for reporting to the CODM, Premium Schools and Learning Services. These segments are the basis on which the Group reports its segment information. The Group has four geographical regions of operation in the Premium Schools division, being, Asia, Central Europe, Switzerland and the Middle East. The Learning Services division is split by contract and managed by each country of operation, namely the United Kingdom, Saudi Arabia, UAE and Malaysia.

The reportable operating segments derive their revenue primarily from school fees (Premium Schools segment) and service contracts (Learning Services segment). Revenue includes a management fee from The British International School Abu Dhabi LLC.

The segment information provided to the strategic steering committee for the reportable segments is as follows:

2013 — Divisional analysis

Premium Learning Schools Services Unallocated Total

$m $m $m $m Revenue ...... 156.2 14.1 — 170.3

Adjusted EBITDA before exceptional items...... 58.0 3.7 (9.3) 52.4

Statutory exceptional items ...... (2.4) (0.5) 0.5 (2.4) Non statutory exceptional items ...... — — (2.4) (2.4) Exchange gain ...... (0.2) 0.0 0.6 0.4 Depreciation ...... (4.1) (0.1) (0.0) (4.2) Amortisation...... (1.9) (0.0) (0.0) (1.9) Net finance income/(expense)...... 0.6 0.0 (18.8) (18.2) Tax...... (9.0) (0.3) (3.0) (12.3)

Profit/(loss) for the period attributable to equity holders of the parent ...... 41.0 2.8 (32.4) 11.4

Adjusted EBITDA before exceptional expenses represents earnings before interest, tax, depreciation, amortisation, impairment, management charges and statutory exceptional items and is the profit measure reviewed by the CODM. Total selling, general and administrative costs when including depreciation, amortisation and exceptional items is $51.1 million (2012 - $40.8 million).

2013 — Geographical analysis

Europe (excluding United UK and Asia Kingdom Switzerland) Middle East Switzerland Total

$m $m $m $m $m $m Revenue ...... 93.9 4.8 27.4 4.1 40.1 170.3

At 28 February 2013 Goodwill and intangible assets ...... 287.7 0.0 52.9 — 121.8 462.4 Property, plant and equipment ...... 20.1 0.5 6.8 0.0 5.7 33.1 Other non-current assets. . . 2.5 1.1 1.9 — 4.0 9.5

Total non-current assets . . 310.3 1.6 61.6 0.0 131.5 505.0

F-10 2012 — Divisional analysis

Premium Learning Schools Services Unallocated Total

$m $m $m $m Revenue ...... 130.7 20.8 — 151.5

Adjusted EBITDA before exceptional items...... 50.0 4.5 (7.8) 46.7

Statutory exceptional items ...... (1.4) — 7.5 6.1 Non statutory exceptional items ...... (0.6) (0.0) (0.3) (0.9) Exchange loss ...... (0.5) (0.2) (3.2) (3.9) Depreciation ...... (3.9) (0.1) (0.2) (4.2) Amortisation...... (1.7) (0.0) (0.0) (1.7) Net finance income ...... 0.1 0.0 74.0 74.1 Tax...... (8.8) (0.5) (2.2) (11.5)

Profit for the period attributable to equity holders of theparent...... 33.2 3.7 67.8 104.7

2012 — Geographical analysis

Europe (excluding United UK and Asia Kingdom Switzerland) Middle East Switzerland Total

$m $m $m $m $m $m Revenue ...... 71.8 7.9 25.8 6.0 40.0 151.5

At 29 February 2012 Goodwill and intangible assets ...... 253.7 1.1 55.0 10.5 127.8 448.1 Property, plant and equipment ...... 18.2 0.7 5.9 0.0 5.0 29.8 Other non-current assets. 16.3 0.8 1.1 — 2.2 20.4

Total non-current assets . 288.2 2.6 62.0 10.5 135.0 498.3

At 31 August 2012 Goodwill and intangible assets ...... 281.9 0.1 51.7 0.0 121.2 454.9 Property, plant and equipment ...... 18.3 0.5 5.8 0.0 5.7 30.3 Other non-current assets. 15.9 — — — 1.5 17.4

Total non-current assets . 316.1 0.6 57.5 0.0 128.4 502.6

F-11 4 OPERATING PROFIT

Operating profit is shown after charging/(crediting):

2013 2012

$m $m Exceptional charges/(credit) (a)...... 2.4 (6.1) Foreign exchange (gain)/loss ...... (0.4) 3.9 Loss on disposal of fixed assets ...... 0.1 0.1 Depreciation ...... 4.2 4.2 Amortisation...... 1.9 1.7

(a) Exceptional charges during the 6 month period ended 28 February 2013 relates to costs arising from schools acquisition ($2.4 million), restructuring costs in the Learning Service division ($0.5 million) and an exceptional credit ($0.5 million) for the provision of services to the Group’s immediate parent company, Nord Anglia Education Inc., in respect of the issuance of the Senior PIK Toggle Notes due 2018.

In the prior period, the exceptional credit was due to various non-cash adjustments made to reduce the balance outstanding on the shareholder loan notes and related party balances in preparation for conversion of the Company to a PLC. The $6.1 million is comprised of several components, $1.4 million relates to marketing costs, consultants costs and legal and professional fees which are not capitalised. Furthermore, a charge of $9.2 million and a credit of $16.7 million relates to the writing-off of the related party balance and the principle value of loan notes respectively.

5 FINANCE INCOME AND EXPENSE

Recognised in profit or loss

2013 2012

$m $m Bank interest ...... 1.2 1.1 Derivative financial instruments ...... — 0.5 Interest waived on loan notes from parents, senior management and related party: - prior year...... — 81.2 - current year ...... — 19.8

Total finance income ...... 1.2 102.6

2013 2012

$m $m Loan notes from parent, senior management and related party ...... — 21.1 10.25% Senior secured notes due 2017 ...... 17.8 — Bank loans and overdrafts ...... 1.4 6.6 Interest on defined benefit pension plan obligation ...... 0.2 0.2 Amortisation of loan costs ...... — 0.6 Derivative financial instruments ...... 0.0 —

Total finance expense...... 19.4 28.5

Net finance (expense)/income...... (18.2) 74.1

F-12 6 INCOME TAX EXPENSE

Recognised in the income statement

2013 2012

$m $m Currenttax...... (12.8) (11.2) Deferredtax...... 0.5 (0.3)

Tax recognised in the income statement ...... (12.3) (11.5)

Profitfortheperiodbeforetax...... 23.7 116.2

Effective rate of tax based on profit before tax ...... (51.9)% (9.9)%

The Group tax charge recognised in the period is derived from management’s best estimate of the tax rate for the full year, as calculated in each tax jurisdiction and therefore may not be representative of the expected annual group effective tax rate.

The rate represents a blended effective rate which is a mixture of tax payable in some jurisdictions and some non-tax paying jurisdictions. It is also impacted by non-deductible interest and other items payable in jurisdictions where they are not fully tax deductible. The effective rate of tax for the period ended 29 February 2012 includes the impact of the interest waived on loan notes which is not tax assessable (see note 5).

F-13 7 PROPERTY, PLANT AND EQUIPMENT

Land and Fixtures Computer Motor buildings and fittings equipment vehicles Total

$m $m $m $m $m Cost Balance at 1 September 2012 ...... 31.1 7.3 6.6 1.3 46.3 Additions...... 2.4 1.9 2.1 0.1 6.5 Disposals ...... (0.1) (0.0) (0.1) — (0.2) Effect of movements in foreign exchange. . 0.7 0.6 0.5 (0.1) 1.7

Balance at 28 February 2013 ...... 34.1 9.8 9.1 1.3 54.3

Accumulated depreciation and impairment Balance at 1 September 2012 ...... 10.3 2.5 2.6 0.6 16.0 Depreciation charge for the period ...... 1.8 0.9 1.2 0.3 4.2 Disposals ...... — (0.0) (0.1) — (0.1) Effect of movements in foreign exchange. . 0.5 0.4 0.2 0.0 1.1

Balance at 28 February 2013 ...... 12.6 3.8 3.9 0.9 21.2

Net book value At 1 September 2012 ...... 20.8 4.8 4.0 0.7 30.3

At 28 February 2013 ...... 21.5 6.0 5.2 0.4 33.1

Land and Fixtures Computer Motor buildings and fittings equipment vehicles Total

$m $m $m $m $m Cost Balance at 1 September 2011...... 27.0 7.7 6.5 1.1 42.3 Acquisitions through business combinations ...... 0.0 0.2 0.2 0.1 0.5 Additions...... 2.7 1.5 1.5 0.1 5.8 Disposals ...... (0.1) (0.1) (0.7) — (0.9) Effect of movements in foreign exchange. . (0.7) (0.3) (0.0) (0.1) (1.1)

Balance at 29 February 2012 ...... 28.9 9.0 7.5 1.2 46.6

Accumulated depreciation and impairment Balance at 1 September 2011...... 7.0 3.1 3.6 0.2 13.9 Depreciation charge for the period ...... 1.9 1.0 1.0 0.3 4.2 Disposals ...... (0.1) (0.1) (0.6) — (0.8) Effect of movements in foreign exchange. . (0.2) (0.2) (0.2) 0.1 (0.5)

Balance at 29 February 2012 ...... 8.6 3.8 3.8 0.6 16.8

Net book value At 1 September 2011 ...... 20.0 4.6 2.9 0.9 28.4

At 29 February 2012 ...... 20.3 5.2 3.7 0.6 29.8

F-14 8 INTANGIBLE ASSETS

Brand Customer Computer Goodwill name relationships Contracts software Total

$m $m $m $m $m $m Cost Balance at 1 September 2012 . 451.6 24.0 29.9 0.7 1.2 507.4 Additions...... ————0.10.1 Effect of movements in foreign exchange ...... 6.5 0.6 0.8 (0.1) (0.0) 7.8

Balance at 28 February 2013 . . 458.1 24.6 30.7 0.6 1.3 515.3

Accumulated amortisation and impairment Balance at 1 September 2012 . 47.6 — 4.3 0.4 0.2 52.5 Amortisationfortheperiod.... — — 1.6 0.1 0.2 1.9 Effect of movements in foreign exchange ...... (1.6) — 0.0 (0.1) 0.2 (1.5)

Balance at 28 February 2013 . . 46.0 — 5.9 0.4 0.6 52.9

Net book value At 1 September 2012 ...... 404.0 24.0 25.6 0.3 1.0 454.9

At 28 February 2013 ...... 412.1 24.6 24.8 0.2 0.7 462.4

Brand Customer Computer Goodwill name relationships Contracts software Total

$m $m $m $m $m $m Cost Balance at 1 September 2011. . 447.5 21.4 27.9 0.7 3.1 500.6 Acquisitions through business combinations ...... 4.1 0.5 0.5 — — 5.1 Additions...... ————0.50.5 Effect of movements in foreign exchange ...... (11.0) (1.8) (2.3) (0.0) (0.1) (15.2)

Balance at 29 February 2012 . . 440.6 20.1 26.1 0.7 3.5 491.0

Accumulated amortisation and impairment Balance at 1 September 2011. . 37.9 — 1.7 0.2 2.0 41.8 Amortisationfortheperiod.... — — 1.3 0.1 0.3 1.7 Effect of movements in foreign exchange ...... (0.7) — 0.2 0.0 (0.1) (0.6)

Balance at 29 February 2012 . . 37.2 — 3.2 0.3 2.2 42.9

Net book value At 1 September 2011 ...... 409.6 21.4 26.2 0.5 1.1 458.8

At 29 February 2012 ...... 403.4 20.1 22.9 0.4 1.3 448.1

F-15 9 OTHER INTEREST-BEARING LOANS AND BORROWINGS This note provides information about the contractual terms of the Group and Company’s interest-bearing loans and borrowings, which are measured at amortised cost.

28 February 31 August 29 February 2013 2012 2012

$m $m $m Current liabilities Current portion of secured bank loans and bank overdrafts...... 16.0 6.8 16.8 Current portion of 10.25% Senior secured notes due 2017 ...... 13.9 15.0 — Loan from parent undertaking (note 16)...... — — 17.1

29.9 21.8 33.9

Non-current liabilities Secured bank loans and overdrafts ...... 9.7 8.3 171.3 10.25% Senior secured notes due 2017 ...... 312.6 310.6 — Loan notes owed to parent undertaking...... — — 232.9

322.3 318.9 404.2

All borrowings are secured by a debenture creating fixed and floating charges over all of the material current and future assets of certain Group entities. In addition to the above, specific registered pledges have been made over bank accounts, assignment of receivables and assignment of insurance. The exposure of the Group’s borrowings to interest rate changes is as follows:

28 February 31 August 29 February 2013 2012 2012

$m $m $m Less than six months ...... 14.7 15.0 33.1 Between six months and one year ...... 15.2 — 0.8 Between one and five years ...... 322.3 325.7 171.3 More than five years ...... — — 232.9

352.2 340.7 438.1

10 RETIREMENT BENEFIT OBLIGATIONS The Group operates a variety of post-employment benefit arrangements, covering both funded defined contribution and funded and unfunded defined benefit schemes. The most significant of these are the funded defined benefit pension schemes for the Group’s employees in the UK and Switzerland. The Group operates three defined benefit pension schemes in the UK, three defined benefit pension schemes in Switzerland and one in Thailand. In each case the assets of the scheme are held separately from those of the Group in independently administered funds. The current service costs of the schemes are charged to the income statement so as to spread the cost of pensions over the employees’ working lifetimes with the Group. At 31 August 2012, all three UK schemes closed to future accruals and active members became deferred pension members. Whilst the Group will continue to make future employer contributions to the schemes, member contributions are no longer made. There have been no significant changes in the Swiss or Thai pension schemes in the period.

The amounts recognised in the balance sheet were as follows:

28 February 31 August 29 February 2013 2012 2012

$m $m $m Liability for defined benefit obligations recognised in the balance sheet: UK...... 23.8 25.4 23.3 Switzerland...... 5.2 5.0 3.0 Thailand...... 0.0 0.0 —

29.0 30.4 26.3

F-16 The Group has reviewed the valuation of its principal defined benefit pension plan and, in light of changes in the key actuarial assumptions; an adjustment has been incorporated into the Group interim financial statements at 28 February 2013. The actuarial assumption with the most significant impact at 28 February 2013 is the increase in discount rate from 3.9% at 31 August 2012 to 4.2% at 28 February 2013 for the UK schemes.

Expense recognised in the income statement

28 February 31 August 29 February 2013 2012 2012

$m $m $m Current service cost...... (0.7) (1.6) (0.5) Interest on defined benefit pension plan obligation ...... (1.3) (2.7) (1.0) Expected return on defined benefit pension plan assets...... 1.1 2.1 0.8

Total...... (0.9) (2.2) (0.7)

11 PROVISIONS FOR OTHER LIABILITIES AND CHARGES

Property Other Total

$m $m $m Balance at 1 September 2012 ...... 0.9 4.5 5.4 Provisions used during the period ...... (0.4) (2.1) (2.5) Foreign Exchange ...... (0.0) 0.0 (0.0)

Balance at 28 February 2013 ...... 0.5 2.4 2.9

Non-current ...... — 2.0 2.0 Current...... 0.5 0.4 0.9

0.5 2.4 2.9

Property Other Total

$m $m $m Balance at 1 September 2011 ...... 6.6 3.3 9.9 Provisions made during the period ...... 0.1 — 0.1 Provisions used during the period ...... (2.4) (1.5) (3.9) Provisions released during the period ...... (0.9) (0.4) (1.3) Foreign Exchange ...... (0.1) (0.1) (0.2)

Balance at 29 February 2012 ...... 3.3 1.3 4.6

Non-current ...... 0.7 1.3 2.0 Current...... 2.6 — 2.6

3.3 1.3 4.6

Provisions for property at the beginning of the period related to lease dilapidations. The majority of these provisions are expected to be utilised over the period ending 31 August 2013.

Other provisions relate to the costs associated with the issuance of the senior notes, additional costs associated with the relocation of the head office function and costs related to overseas employees. The overseas employees’ provision is likely to be utilised over several years, although the timing of utilisation is uncertain.

F-17 12 SHARE CAPITAL

Group and Company

Share capital

Redeemable preference shares of $1.00 each Ordinary shares

28 February 29 February 28 February 29 February In thousands of shares 2013 2012 2013 2012

On issue at 1 September & 28 February/ 29 February — fully paid ...... — 65,246 67,542 140,980

On 2 March 2012, the Company re-registered as a PLC and was renamed to “Nord Anglia Education (UK) Holdings PLC”. With effect on 15 March 2012, the Company redenominated the “Class A” portion of its share capital back into US Dollars, and pursuant to the same documents (Articles of Association), the Company adopted new articles to simplify its capital structure such that the Company has a single class of ordinary shares.

Furthermore, the Company converted it’s A, B, C, D, E and F Ordinary shares together with its Redeemable Preference shares into one Ordinary share. The share carried the same aggregate nominal value as previous Ordinary and Preference shares. The one ordinary share was subsequently sub-divided and converted into 67,541,354 ordinary shares of $1.00 each and one deferred share of $0.19.

On 28 March 2012, 200 shares with an aggregate nominal value of $200 were issued at $1.00 each with a share premium of $654,929 per share and a total share premium of $131.0 million. The shares were issued to Nord Anglia Education, Inc. (immediate parent company) for the conversion of $131.0 million of senior and junior loan notes. The remaining $120.0 million of senior and junior loan notes was settled during the year ended 31 August 2012 using part of the proceeds of the senior secured loan notes issued in March 2012.

The ordinary shares and preferred shares have full rights to vote, to any dividend or other distribution and to any return of capital. The deferred share has no right to vote or to participate in a dividend or other distribution and only being entitled to a return of its nominal value on a return of capital.

Before the share consolidation preference shares were redeemable at any time at the option of the Company. The amount payable on redemption was the “Aggregate Value”. For the purposes of the redemption or conversion of the preference shares, the term “Aggregate Value” has the meaning given to it by the current articles of association of the Company.

The holders of the preference shares were not entitled to receive dividends and were not entitled to vote at meetings of the Company. The preference shares were convertible at the option of the Company into such number of A ordinary shares in the Company as having a market value equal to the “Aggregate Value”.

13 FINANCIAL RISK MANAGEMENT

13.1 Financial risk factors

The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and equity price risk), credit risk and liquidity risk.

The interim consolidated financial statements do not include all financial risk management information and disclosures required in the annual financial statements and should be read in conjunction with the Group’s annual financial statements for the year ended 31 August 2012.

There have been no changes in any risk management policies since 31 August 2012.

13.2 Fair value estimation

The table below analyses financial instruments measured at fair value into a fair value hierarchy based on the valuation technique used to determine fair value.

• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

• Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e. derived from prices).

• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

F-18 The following table presents the Group’s assets and liabilities that are measured at fair value at 28 February 2013.

Level 1 Level 2 Level 3 Total

$m $m $m $m Financial liabilities designated at fair value through profit or loss Derivative financial assets ...... — 0.0 — 0.0 Derivative financial liabilities...... ————

—0.0—0.0

The following table presents the Group’s assets and liabilities that are measured at fair value at 29 February 2012.

Level 1 Level 2 Level 3 Total

$m $m $m $m Financial liabilities designated at fair value through profit or loss Derivative financial assets ...... — 0.1 — 0.1 Derivative financial liabilities...... — (6.1) — (6.1)

— (6.0) — (6.0)

The derivative financial assets and liabilities represent interest rate cap in the 6 months to 28 February 2013 and interest rate swaps in the 6 months to 29 February 2012 held by the Group.

In the period ended 28 February 2013 there were no significant changes in the business or economic circumstances that affect the fair value of the Group’s financial assets and financial liabilities, and there were no reclassifications of financial assets.

14 COMMITMENTS

Capital commitments

2013 2012

$m $m Contractedbutnotprovidedfor...... 0.6 0.7 Authorisedbutnotcontractedorprovidedfor...... 5.7 1.4

6.3 2.1

All capital commitments relate to tangible assets.

On 28 September 2012, Nord Anglia Education entered into a definitive agreement to acquire the 49% equity interest owned by an affiliate of its parent in the British International School Abu Dhabi (“BISAD”) in the Middle East. Whilst regulatory approval is still on-going, from 1 April 2013 Nord Anglia Education has gained effective control over BISAD and the results of BISAD will be consolidated with group under IFRS. The consideration of $19.5 million is all deferred with the first payment of $5.0 million being due in August 2013 followed by two further payments in August 2014 and August 2015 of $7.0 million and $7.5 million respectively.

15 CONTINGENCIES

In 2013 all borrowings are secured by a debenture creating fixed and floating charges over Group assets and by a fixed charge over specified Group bank accounts. In addition specific registered pledges have been made by certain overseas subsidiaries.

The Group has provided the following bank guarantees:

To SCTAI Anglo Iskola KFT for= C0.3 million ($0.4 million) in respect of a 30 year lease of school premises in Budapest. The annual payments under this lease are= C0.4 million ($0.6 million) and the guarantee expires on 18 January 2014.

To Abu Dhabi Education Council for AED0.9m ($0.2 million) expiring 30 June 2013 and AED1.3 million ($0.3 million) which is open ended.

F-19 16 RELATED PARTY TRANSACTIONS

Included within loans and borrowings are the following inter-company balances resulting from transactions with Premier Education Holdings s.a.r.l., the former immediate parent company of Nord Anglia Education (UK) Holdings PLC:

Balance at Balance at Loan type 28 February 2013 29 February 2012

($m) ($m) Senior and Junior loan notes ...... — 234.0 Loans to parent undertaking...... — 17.1

Part of the proceeds from the issuance of the 10.25% Senior Secured Notes due 2017 were used to repay the senior and mezzanine facilities. During the year to 31 August 2012, $16.7 million of the principle value of loan notes were written off. Additionally, remaining amounts after a waiver of interest amounting to $101.0 million were converted to equity.

Included within trade and other payables is an amount of $2.9 million (2012: $nil) due to Nord Anglia Education Inc and an amount of $2.4 million (2012: $nil) due to Premier Education Holdings Limited at 28 February 2013.

The immediate parent company also has the following shareholdings in Nord Anglia Education (UK) Holdings PLC:

Number of Number of shares held Shares shares held Shares at 28 issued at 29 issued February during the February during the 2013 period Value 2012 period Value

($m) ($m) Ordinary shares ...... 67,541,554 — 67.5 136,640,737 — 2.2 Preference shares ...... — — — 65,246,056 — 65.2

Details of the share conversion is disclosed in note 12. As a result of this Senior Management now hold shares in the immediate parent of Nord Anglia Education (UK) Holdings PLC, Nord Anglia Education, Inc.

Also included in the consolidated financial statements are the following balances resulting from transactions with Senior Management of Nord Anglia Education (UK) Holdings PLC and shareholdings held by Senior Management:

Balance at Balance at 28 February Interest 29 February Interest Loan type 2013 New loans charge 2012 charge

($m) ($m) ($m) ($m) ($m) Senior and Junior loan notes .... ————0.2

Number of Number of shares held Shares shares held Shares at 28 issued at 29 issued February during the February during the Shareholdings 2013 period Value 2012 period Value

($m) ($m) Ordinary ‘B’ shares ...... — — — 841,623 — 0.0 Ordinary ‘C’ shares ...... — — — 210,406 — 0.0 Ordinary ‘D’ shares ...... — — — 273,527 — 0.0 Ordinary ‘E’ shares ...... — — — 1,213,746 — 0.0

F-20 Included within loans and borrowings are the following balances resulting from transactions with the Parthenon Group LLC, an entity in which a director of Nord Anglia Education (UK) Holdings PLC has a shareholding. Details of the shareholdings held by the related party are detailed below.

Balance at Balance at 28 February Interest 29 February Interest Loans type 2013 New loans charge 2012 charge

($m) ($m) ($m) ($m) ($m) Junior loan notes ...... ————0.1

Number of Number of shares held Shares shares held Shares at 28 issued at 29 issued of February during the Value February during the Value Shareholdings 2013 period ($m) 2012 period ($m)

Ordinary ‘F’ shares ...... — — — 801,653 — 0.0

Included within trade and other receivables is the following balance resulting from transactions with The British International School Abu Dhabi LLC, an entity held under common control.

Balance at Balance at Counterparty 28 February 2013 29 February 2012

($m) ($m) Nord Anglia Middle East Holdings S.p.c (Abu Dhabi branch) ...... 0.4 0.2

Within the amount owed to Nord Anglia Middle East Holdings S.p.c (Abu Dhabi) is a fee of $0.9 million (2012:$0.9 million) in respect of management charges made to The British International School Abu Dhabi LLC of which $0.4 million is outstanding at the end of the period (2012: $0.2 million).

In the prior period, an amount due from Nord Anglia Middle East Holdings S.p.c. of $9.2 million was waived by the Company.

The Group holds a 50% shareholding in EduAction Waltham Forest Limited through its 100% owned subsidiary Nord Anglia Education Limited. At the balance sheet date the jointly controlled entity was owed an amount of $1.1 million (2012 — $1.1 million) by the Group which is included within other creditors due in less than one year.

During the period to 28 February 2013, consistent with the 31 August 2012 financial statements, the Swiss schools continue to rent premises from companies which are controlled by a key member of management.

Balance at Rental Balance at Rental 28 February charge for 29 February charge for 2013 the period 2012 the period

($m) ($m) ($m) ($m) Lesolais SA ...... 1.6 1.6 1.7 1.7 Hunters SA ...... 0.4 0.4 0.4 0.4 Toumim SA ...... 0.2 0.2 0.2 0.2 DelphimSA...... 1.6 1.6 1.7 1.7 La Renardières Service SA ...... 0.3 0.3 Nil 0.1

There is a rental guarantee made to Delphim SA for CHF1.2m in respect of a 14 year lease of school premises is Switzerland. The annual payments under this lease are CHF3.1 million ($3.3 million) and the guarantee expires on 31 August 2026.

Included in other creditors due in greater than one year is an amount of $1.0 million (2012: $nil) in respect of an earn-out arrangement from the purchase of College Champittet due to Delphim SA.

In addition to the above, the vendor was also paid a consultancy fee of $0.2 million (2012: $0.3 million) and reimbursement of costs $1.5 million (2012: $nil).

F-21 Included in other creditors due within one year is an amount of $1.3 million (2012: $nil) and due in greater than one year is an amount of $nil (2011: $1.3 million) relating to deferred consideration due to the vendor for the initial purchase of College Champittet by Premier Education Holdings s.a.r.l. The repayment date for this deferred consideration is 1 September 2013. These amounts relate to the original purchase of the trade and assets of College Champittet by the corporate vehicle (Cime Services SA) used to purchase College Champittet.

During the period an amount of $0.1 million (2012: $0.1 million) was paid to a close family member of senior management for consultancy services.

During the period an amount of $2.4 million (2012: $nil) was paid to a Baring Private Equity Asia, the ultimate parent of the Group in respect of management fees.

17 SEASONALITY

Premium Schools results are subject to seasonal fluctuation. As outlined in the accounting policy for revenue recognition in the 31 August 2012 financial statements, school fee income is recognised over the school terms. Term 1 being September to December, Term 2 being January to March and Term 3 being April to June.

Within the Learning Services business a number of contracts are performed in close alignment with the academic year of September to June.

18 EVENTS AFTER THE BALANCE SHEET DATE

On 28 March 2013, Barclays Bank PLC increased its commitment under the Senior Revolving Credit Facility from $30 million to $40 million in order to provide the group with greater flexibility to pursue its growth strategy.

On 1 April 2013, the Group began consolidating the results of BISAD under IFRS, as effective control was obtained from that date (see note 14 for further details of the acquisition).

Following a competitive tender process, the Hong Kong Education Bureau announced on 11 April 2013 that it has selected Nord Anglia Education as the operator for a 660 place school in Lam Tin, Kowloon. Occupying the site of a former local school, we intend to open a leading international school in Hong Kong in September 2014, serving primary and secondary students from years one to eight.

On 15 April 2013, our Swiss school La Côte International School, entered into a definitive agreement for the development of a brand new state of the art K-12 campus in Aubonne, Switzerland. The new campus will accommodate the students in the existing campus of the La Côte International School and will provide a total capacity of 840 places.

On 15 April 2013, Nord Anglia Education entered into a Bridge Loan Agreement with Goldman Sachs Bank USA, Credit Suisse Securities (USA) LLC and HSBC Securities (USA) Inc. The total borrowings under the Bridge Loan Agreement amounted to $125.0 million and the purpose of the funds is to facilitate the subsequent acquisition of WCL Group Limited (“WCL”) and to repay the HSBC Facility.

On 21 April 2013, Nord Anglia Education entered into a definitive agreement for the development of a brand new purpose built K-12 school in Dubai in the United Arab Emirates. The target date for the school opening is September 2014 and will provide a total capacity of 1,500 places.

On 3 May 2013, Nord Anglia Education entered into a definitive sale and purchase agreement to acquire 100% of the issued share capital of WCL for a net consideration of GBP143.0 million. The acquisition was completed on 22 May 2013. WCL delivers premium K-12 education to approximately 4,500 students in eleven international schools over 3 geographical regions: 6 schools in the United States, 1 in Spain and 4 in Qatar in the Middle East. Additionally, WCL offers leading-edge educational products and services to schools worldwide, including its international curricula which are used by nearly 1,500 schools in some 80 countries. WCL’s 11 school portfolio is highly complementary to the existing Nord Anglia Education family of schools.

On 20 May 2013, the company issued 1 additional ordinary share to our intermediate parent undertaking, Nord Anglia Education Inc. at par with a premium of $133.4 million. The purpose of the capital contribution is to facilitate the acquisition of WCL.

On 22 May 2013, an amount of $11.1 million from funds raised from the Bridge Loan Agreement were repaid to HSBC Bank to settle the HSBC Facility.

F-22 DIRECTORS’ REPORT FOR THE YEAR ENDED 31 AUGUST 2012 The directors present their annual report and the audited consolidated financial statements of the Group and Company for the year ended 31 August 2012.

Principal activities The principal activities of the Group and its subsidiaries are the operation of Premium Schools worldwide and the delivery of a wide range of education and training contracts both in the UK and overseas. The principal activity of the Company is that of a holding company.

Business review and future developments The Group’s results reflect a year of continued strong trading, most notably in its Premium School’s division. The Group’s profit before interest, tax, depreciation and amortisation, impairment charges and exceptional items was $67.1m (2011 - $47.7m). The profit on ordinary activities before interest and taxation and before exceptional items was $45.0m (2011 - $22.4m). Exceptional administrative costs incurred in the year are detailed in note 4, Exceptional income/(expenses). The major elements of the charge relates to the impact of non-cash adjustments made on the shareholder loan notes and related party balances in preparation for conversion to a PLC in March 2012 as well as costs related to the acquisition of schools. Included within total expenses are costs totalling $6.9 million (2011 - $5.9 million) which the directors believe are not related to the normal trading of the Group. This amount includes a foreign exchange loss of $4.6 million, pre-acquisition and business integration costs ($0.6 million) and share based payments ($0.6 million). These costs fall outside the definition of exceptional costs for statutory purposes but it is the view of the directors that these costs should be highlighted in order that the underlying profit of the Group can be fully evaluated. On 28 March 2012, the Company issued $325.0 million of 10.25% Senior Secured Notes due 2017 (the “Notes”) pursuant to an indenture dated 28 March 2012 between the Company, Citicorp International Limited as Trustee and Security Agent, Citibank NA. London branch as Paying Agent and Citigroup Global Markets Deutschland AG as Registrar. During the year, the Company and its direct parent, Nord Anglia Education Inc. undertook various restructuring steps to facilitate the issuance of these Notes, including changing the name of the company from Premier Education (UK) Holdco Limited, converting the Company to a public limited company (“PLC”) and transitioning the shareholder capitalisation of the Issuer to 100% ordinary equity. To convert the Company to a PLC, on 29 February 2012, NAE Inc. waived all accrued interest and a sufficient amount of principal of the then outstanding shareholder loans and loan notes between NAE Inc. and the Company in order to meet the distributable reserve requirement to enable the Issuer’s re-registration as a PLC. On 2 March 2012, the Company re-registered as a PLC. On 28 March 2012, the Company issued the Notes. On issuance of the Notes, the Company made available $120.0 million of the proceeds to repay outstanding shareholder loans and loan notes held by NAE Inc. All remaining shareholder loans and loan notes owed by the Company to NAE Inc. were then capitalised in exchange for additional ordinary shares in the Issuer.

Premium Schools In the year ended 31 August 2012, the results of the Premium School’s division benefited from strong growth in student numbers both at the start of the first term as well as during the 2011/12 academic year. In addition, the Company completed the acquisition and successful integration of an additional school in Switzerland (La Cote International School) and a school in Thailand (The Regent’s School, Chonburi) which have helped to continue the better balancing of the cash generating regions of the Group (see note 2, Acquisitions of subsidiaries).

F-23 Full-time equivalent pupil numbers increased to an average of 7,397 for the year, from an average of 6,482 for the previous year (both excluding the pupil numbers of the school acquired in August 2012 in Thailand). The increase in pupil numbers in 2012 reflects the positive impact of the addition of one new school, along with the effects of management’s decision to drive the maximisation of classroom space through architectural-based initiatives and from continued and targeted marketing. Average consolidated school occupancy rates for 2012 were 76% compared to 73% in 2011.

Learning Services

In the year ended 31 August 2012, the results of the Learning Services division reflected a year of continuing consolidation in light of very difficult trading conditions in all the markets served. The directors believe that this trend will not change in the near future and have therefore taken the decision to impair fully the remaining goodwill associated with the Learning Services division.

Corporate developments

The Group remains committed to both the expansion of its Premium Schools’ base and to the development of its existing schools. Within the Learning Services division, the Group has decided to reduce the resources dedicated to developing the division but will continue to manage the existing contracts which contribute to the profitability of the business.

Debt On 28 March 2012, the Company issued $325.0 million of Notes due 2017 pursuant to a debenture dated 28 March 2012. The proceeds were used to repay the outstanding senior and mezzanine facilities and to close out the hedging arrangements in connection with those facilities ($182.5 million) and to repay $120.0 million of the outstanding shareholder loans and loan notes owed by the Company in exchange for additional ordinary shares in the Company. The balance relates to fees incurred and cash that remained in the business for working capital purposes.

Strategy The Group will continue to promote its strategy of growth across its Premium Schools division whilst maintaining the existing contracts within the Learning Services division. Both the quality of educational delivery and the quality of people resources are at the core of the Group’s performance and provide the foundation for expansion.

Financial outlook Whilst the economic environment in the markets in which the Company operates remain difficult, the prospects for the Group remain good. The Group has been internationally established for a number of years and in recent years has added to its international base. The multi-territory trading base provides the Group with the ability to balance its trading risks and to manage the impact of individual territory recessionary pressures and governmental changes within the education sector.

Results and dividends The profit for the year, after taxation, amounted to $83.3 million (2011 — loss of $41.1 million). During the year no interim dividend was paid (2011 - $nil). The directors do not recommend the payment of a final dividend (2011 - $nil).

F-24 Directors The directors who served during the period and up to the date of the signing of the financial statements were: K Kalliarekos J Hennessy A Fitzmaurice (appointed 3 March 2012) G Halder (appointed 3 March 2012) A Kelsey (appointed 3 March 2012)

Principal risks and uncertainties The board is responsible for establishing a coherent framework for the Group to manage risk, which is designed to identify, manage and mitigate business risk. Summarised below are what the board consider to be potential risks to the Group.

Corporate reputation and brand recognition The diversification of brands and products within the operating divisions mitigates the potential exposure the Group may have as a result of adverse effects on consumer confidence and continuity of supply.

Overseas operations Some of the Group’s operations are domiciled in global overseas economies and are therefore subject to local legislative and taxation risks and regulatory development. Such operations are closely monitored enabling the Group to respond and adapt the business to address local issues.

Government contracts The Learning Services division has several contracts working in partnership with government bodies. These contracts have strict guidelines and clauses which, if not adhered to, may result in the cancellation of such agreements or the application of financial penalties. The Group mitigates these risks by effective project management of agreed KPIs, regular internal audit of operations and review of procedures to ensure compliance.

Health and safety Due to the nature of the Group’s operations, health and safety is subject to regular internal audit and external review, which assess and monitor health and safety risks related to customers and staff and ensures that government and group guidelines on such policies are adhered to. Where necessary the Group also engages the services of independent parties to advise on such matters. The board reviews health and safety performance within the Group at each monthly board meeting and the Group has a health and safety committee which places great importance on health and safety matters.

Staff The Group aims to recruit and retain high calibre staff to ensure that corporate business objectives are delivered. Procedures are in place to ensure that Criminal Record Bureau reports are obtained for all members of staff having exposure to children during the course of business. In respect of overseas employees, such checks, equivalent to those performed in the UK, are obtained from relevant local authorities. These checks are audited annually by internal audit.

Disaster recovery policy The board has an Information and Communications Technology (“ICT”) disaster recovery procedure and reviews the adequacy of this at appropriate intervals. Other operational areas of the business are also reviewed and improvements recommended where identified.

F-25 Key performance indicators Key measures used by the board to gauge performance within the Group include revenue, EBITDA (note 3) and net income. On a divisional basis measures include pupil numbers and occupancy rates for Premium Schools.

2012 2011 Capacity (average for the year)(1) ...... 9,702 8,912 Full time equivalent students (average for the year)(2) ..... 7,397 6,482 Utilisation (average for the year)(3) ...... 76% 73% Adjusted Revenue per full time equivalent student ($’000)(4) ...... 30.1 28.8

(1) We measure average capacity at the measurement date as the total number of FTEs that can be accommodated in a school based on its existing classrooms at each academic calendar month divided by the number of months in such period. (2) We calculate average full time equivalent students (“FTEs”) for a period by dividing the total number of FTEs at each academic calendar month end in such period by the number of academic calendar months in such period. (3) We measure utilisation during a period as a percentage equal to the ratio of average FTEs for the period enrolled at each school divided by average capacity. (4) We calculate Adjusted Revenue per student by dividing our total Adjusted Revenue for a relevant period by the average FTEs for such period. Adjusted Revenue, being Revenue adjusted for management charges made to The British International School Abu Dhabi LLC.

Financial risk management The Group assesses and manages its potential exposure to financial risks, including price risk, credit risk, interest rate volatility, foreign currencies and exchange control restrictions, counterparty performance, liquidity risk and going concern as follows:

Cash flow and interest rate risks On 28 March 2012, the Company issued $325.0 million of 10.25% Senior Secured Notes due 2017, part of the proceeds of which were used to repay the senior and mezzanine facilities outstanding at the time and to close out the hedging arrangements in connection with those facilities. Given the certainty provided by a fixed rate and the very low level of current interest rates, the Company has decided not to hedge its’ existing fixed rate at this time.

Price risk The Group is not exposed to commodity price risk as a result of its operations. The Company has no exposure to equity securities price risk as it holds no listed or other equity investments other than wholly owned subsidiaries of the parent..

Credit risk The Group has implemented policies that ensure appropriate credit checks on potential customers. The amount of any exposure to any individual counter party is subject to a limit which is assessed regularly by the board.

F-26 The Group’s Premium Schools division holds significant non-dollar cash balances in overseas operations which arise from fee income and represent a combination of working capital and trading profits. These monies are held in operations in countries which include those where exchange control restrictions may prevent full repatriation of funds to the UK parent undertaking. The Group utilises these funds through a combination of reinvestment in the expansion or improvement of overseas operations, or by repatriation to the UK through management contracts, including royalty agreements, management charges and dividends. Through these means the directors believe that satisfactory distribution of these funds can be achieved.

Counterparty risk

The Group employs local advisers in each of its major countries of operation to provide professional advice and enhance local business knowledge in understanding compliance with local operating laws and regulations. The Group acknowledges that there are risks of ownership and in the control and safeguarding of assets in operations outside the European zone and has taken measures to reduce these risks by ensuring cash held, particularly in China, is deposited with secure national institutions that are also favoured by other western companies. Increasing the number of overseas countries in which the Group operates should reduce reliance on any one significant country of operation going forward.

Liquidity risk

The Group aims to maintain a flexible borrowing structure by combining the certainty afforded by the fixed rate Notes with additional leasing and credit facilities including a Senior Revolving Credit Facility with Barclays Bank PLC. The initial facility on issuance of the Notes was $20.0 million but this was subsequently increased to $30.0 million on 23 July 2012 in order to provide the Company with greater flexibility to pursue its growth strategy. The Group monitors its future funding requirements over the short and medium term such that it can take actions to supplement its operating cash flows to service future debt obligations where appropriate. The Group must comply with a set of covenant restrictions as outlined in the Indenture, such as the ability of the Company to incur or guarantee additional debt, declare dividends or sell capital stock or assets. These restrictions are monitored on a regular basis by the board.

Going concern The Group and Company balance sheets as at 31 August 2012 show that assets exceed liabilities by $53.1 million and $189.0 million respectively. The issuance of the Notes and the related write-off’s on the shareholder loan notes has significantly improved the net asset position of the Company (the prior year Group Balance Sheet showed a deficit of $124.8 million of liabilities over assets). The directors have reviewed the latest guidance relating to going concern and, having made all relevant enquiries, have formed a judgement at the date of the approval of the financial statements that the Group has adequate resources at its disposal to continue its operations for the foreseeable future. This judgement is based on a review undertaken of the current business forecast to 31 August 2014 and the projected cash requirements over that period to assess the likelihood of the Group being able to continue as a going concern. Suitable sensitivities were run for the periods up to 31 August 2014 to assess the headroom available. This review concluded that there were no material uncertainties that potentially could give rise to a significant doubt about the business continuing as a going concern.

Qualifying third party indemnity

A qualifying third party indemnity provision is in place for the directors of the Company during the financial year and also at the date of approval of the financial statements. This covers liability for the actions of directors and officers of the Company and associated costs, including legal costs.

F-27 Subsequent events Subsequent to the balance sheet date, the Group entered into an agreement to purchase the 49% equity interest held by its ultimate parent in The British International School Abu Dhabi (“BISAD”) for $19.5 million. The acquisition which is pending regulatory approval, is expected to be completed before the end of calendar year 2012. The consideration of $19.5 million is all deferred with the first payment of $5.0 million being due in August 2013 followed by two further payments in August 2014 and August 2105 of $7.0 million and $7.5 million respectively. This will bring the total number of schools managed by the Group to fourteen.

Employees The directors recognise the benefits that accrue from keeping employees informed of the progress of the business and involving them in the Group’s performance. Each Company within the Group adopts such employee consultation as is appropriate in individual circumstances and the executive directors make presentations to the divisional staff following annual announcements. The Group gives consideration to applications for employment from disabled persons where the requirements of the job may be adequately covered by a disabled person. Disabled employees are employed under the normal terms and conditions and are given the same access to training, career development and promotion as able-bodied employees. In the event of a staff member becoming disabled every effort is made to ensure that their employment with the Company continues and the appropriate training is arranged. The Group strives towards achieving equality of opportunity in all of its employment practices and service provision. The executive board is committed to ensuring that every employee is treated fairly and consistently in respect of day to day work activity. The Group aims to eliminate inadvertent and unlawful discrimination practices in order to enable all employees to have access to opportunities to realise their own potential and to build a diverse and socially inclusive workforce that is responsive and appropriate to all our service users. The Group takes the necessary steps to ensure all employees are aware of the financial and economic factors affecting the Group’s performance and also encourages employee participation in the Group’s performance by way of remuneration and for selected employees a cash bonus scheme. All employees in the Group are expected to avoid personal activities and financial interests which could conflict with their responsibilities to the Group. Employees must not seek gain for themselves or others through misuse of their positions.

Donations Charitable donations made in the year totalled $0.3 million (2011 - $nil). There were no political donations (2011 - $nil).

Payment of suppliers The Group’s policy is, wherever practical, to:- i) negotiate terms of payment with suppliers up front; ii) ensure that the suppliers are made aware of the terms of payment; and iii) abide by the terms of payment. The Group’s average creditor payment period at 31 August 2012 was 62 days (2011 - 64 days). The Company had trade creditors amounting to $0.3 million at 31 August 2012 (2011 - $nil). The Company’s average creditor payment period at 31 August 2012 was 60 days (2011 - nil).

Statement of directors’ responsibilities The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

F-28 Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have prepared the Group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union, and the parent Company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of Nord Anglia Education (UK) Holdings PLC and the Group for that period.

In preparing those financial statements, the directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and accounting estimates that are reasonable and prudent;

• state whether IFRSs as adopted by the European Union and applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the Group and parent Company financial statements respectively; and

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Statement of disclosure of information to auditors In the case of each director in office at the date the directors’ report is approved, the following applies: • so far as the director is aware, there is no relevant audit information of which the Company’s auditors are unaware; and • they have taken all the steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the Company and Group auditors are aware of that information. On behalf of the Board,

G Halder Nord Anglia Education (UK) Holdings PLC Director The Old Vicarage, Market Street, 7 December 2012 Castle Donington, Derbyshire, DE74 2JB

F-29 INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF NORD ANGLIA EDUCATION (UK) HOLDINGS PLC We have audited the Group and parent Company financial statements (the ‘‘financial statements’’) of Nord Anglia Education (UK) Holdings PLC for the year ended 31 August 2012 which comprise the Consolidated Income Statement, the Consolidated and Company Balance Sheets, the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Changes in Equity, the Consolidated Cash Flow Statement and the related notes. The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. The financial reporting framework that has been applied in the preparation of the parent Company financial statements is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

Respective responsibilities of directors and auditors As explained more fully in the Directors’ Responsibilities Statement set out on page 8, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors. This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Group’s and parent Company’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Directors’ Report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion In our opinion: • the financial statements give a true and fair view of the state of the Group’s and of the parent Company’s affairs as at 31 August 2012 and of the Group’s profit and cash flows for the year then ended; • the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union; • the parent financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and • the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other matter prescribed by the Companies Act 2006 In our opinion the information given in the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements.

F-30 Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

• adequate accounting records have not been kept by the parent Company, or returns adequate for our audit have not been received from branches not visited by us; or

• the parent Company financial statements are not in agreement with the accounting records and returns; or

• certain disclosures of directors’ remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit.

Andrew Lyon BSc FCA (Senior Statutory Auditor) for and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors East Midlands

7 December 2012

F-31 CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 AUGUST 2012

Reclassified*

Note 2012 2011

$m $m Revenue ...... 3 264.6 219.3 Cost of sales ...... (118.4) (99.8) Gross profit ...... 146.2 119.5 Selling, general and administrative expenses ...... (79.1) (71.8) Depreciation ...... 10 (8.0) (5.8) Amortisation ...... 11 (3.4) (2.8) Impairment of goodwill ...... 11 (10.7) (16.7) Exceptional income/(expenses) ...... 4 1.4 (9.4) Total expenses ...... 5 (99.8) (106.5) Operating profit ...... 46.4 13.0 Finance income ...... 8 103.0 10.1 Finance expense ...... 8 (49.7) (51.7) Net financing income/(expense) ...... 53.3 (41.6) Share of profit of jointly controlled entity ...... 0.0 0.0 Profit/(loss) before tax 99.7 (28.6) Income tax expense ...... 9 (16.4) (12.5) Profit/(loss) for the year ...... 83.3 (41.1)

Attributable to: Equity holders of the parent ...... 83.3 (41.1) Profit/(loss) for the year ...... 83.3 (41.1)

* See Note 1 Accounting policies for details of reclassification

The notes on pages 16 to 83 form an integral part of these financial statements.

F-32 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR YEAR ENDED 31 AUGUST 2012

Note 2012 2011

$m $m Profit/(loss) for the year ...... 83.3 (41.1) Other comprehensive (loss)/income Foreign exchange translation differences ...... (20.7) 9.3 Actuarial losses on defined benefit pension plans ...... 19 (16.3) (1.1) Other comprehensive (loss)/income for the period, net of income tax ...... (37.0) 8.2 Total comprehensive profit/(loss) for the period...... 46.3 (32.9) Attributable to: Equity holders of the parent ...... 46.3 (32.9) Total comprehensive profit/(loss) for the period...... 46.3 (32.9)

The notes on pages 16 to 83 form an integral part of these financial statements.

F-33 CONSOLIDATED BALANCE SHEET AS AT 31 AUGUST 2012

Note 2012 2011

$m $m Non-current assets Property, plant and equipment ...... 10 30.3 28.4 Intangible assets ...... 11 454.9 458.8 Investments in jointly controlled entities ...... 13 0.5 0.5 Derivative financial instruments ...... 22 — 0.2 Trade and other receivables...... 15 10.8 11.6 Deferred tax assets ...... 14 6.1 5.6 502.6 505.1 Current assets Tax receivable ...... 0.3 — Trade and other receivables...... 15 47.0 47.1 Cash and cash equivalents ...... 16 108.2 88.0 155.5 135.1 Total assets ...... 658.1 640.2 Current liabilities Other interest-bearing loans and borrowings ...... 17 (21.8) (29.4) Trade and other payables ...... 18 (206.8) (178.7) Provisions for other liabilities and charges...... 20 (3.1) (3.1) Current tax liabilities ...... (5.0) (3.3) (236.7) (214.5) Non-current liabilities Other interest-bearing loans and borrowings ...... 17 (318.9) (507.8) Other payables...... 18 (6.2) (2.0) Derivative financial instruments ...... 22 — (6.4) Retirement benefit obligations ...... 19 (30.4) (14.6) Provisions for other liabilities and charges...... 20 (2.3) (6.9) Deferred tax liabilities ...... 14 (10.5) (12.8) (368.3) (550.5) Total liabilities ...... (605.0) (765.0) Net assets/(liabilities) ...... 53.1 (124.8) Equity attributable to equity holders of the parent Share capital ...... 21 67.5 67.5 Share premium ...... 21 131.1 0.1 Other reserves ...... 6.9 6.9 Currency translation reserve ...... (0.1) 20.6 Shareholder deficit ...... (152.3) (219.9) Shareholders’ equity ...... 53.1 (124.8) Total shareholder surplus/(deficit) ...... 53.1 (124.8)

The notes on pages 16 to 83 form an integral part of these financial statements. These financial statements set out on pages 10 to 83 were approved by the board of directors on 7 December 2012 and were signed on its behalf by:

A Fitzmaurice G Halder Director Director Company registered number: 06590752

F-34 COMPANY BALANCE SHEET AS AT 31 AUGUST 2012

Note 2012 2011

$m $m Fixed assets Investments...... 29(iii) 321.8 321.6 Current assets Debtors ...... 29(iv) 427.8 13.4 Cash at bank and in hand...... 0.4 — 428.2 13.4 Creditors: Amounts falling due within one year ...... 29(v) (250.5) (16.4) Net current assets/(liabilities) ...... 177.7 (3.0) Total assets less current liabilities ...... 499.5 318.6 Creditors: Amounts falling due after more than one year ...... 29(vi) (310.5) (331.1) Net assets/(liabilities)...... 189.0 (12.5)

Capital and reserves Called up share capital ...... 21* 67.5 67.5 Share premium account ...... 21* 131.1 0.1 Other reserves ...... 29(ix) (0.9) (0.9) Profit and loss account ...... 29(x) (8.7) (79.2) Total shareholder surplus/(deficit) ...... 29(xi) 189.0 (12.5)

These financial statements set out on pages 10 to 83 were approved by the board of directors on 6 December 2012 and were signed on its behalf by:

A Fitzmaurice G Halder Director Director Company registered number: 06590752

* Note reference refers to consolidated financial statements note.

F-35 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 AUGUST 2012

Currency Total Share Share Other translation Shareholders’ parent capital premium reserves reserves deficit equity

$m $m $m $m $m $m Balance at 1 September 2010 . . . 1.6 0.2 6.6 12.6 (179.0) (158.0) Total comprehensive income/(loss) for the year Loss for the year ...... ————(41.1) (41.1) Currency translation differences . . 0.1 — 0.3 8.0 0.9 9.3 Actuarial losses on defined benefit pension schemes...... ———— (1.1) (1.1) Total comprehensive income/(loss) for the year ..... 0.1 (0.0) 0.3 8.0 (41.3) (32.9) Transactions with owners, recorded directly in equity Contributions by and distributions to owners Issue of shares ...... 30.4 35.3 — — — 65.7 Issue of preference shares (note 21)...... 35.4 (35.4) — — — — Equity-settled share based payment transactions ...... ———— 0.40.4 Total contributions by and distributions to owners...... 65.8 (0.1) — — 0.4 66.1 Balance at 31 August 2011 and 1 September 2011 ...... 67.5 0.1 6.9 20.6 (219.9) (124.8) Total comprehensive income/(loss) for the year Profit for the year ...... ————83.3 83.3 Currency translation differences . . — — — (20.7) — (20.7) Actuarial losses on defined benefit pension schemes...... ————(16.3) (16.3) Total comprehensive income/(loss) for the year ..... — — — (20.7) 67.0 46.3 Transactions with owners, recorded directly in equity Issue of shares (note 21) ...... — 131.0 — — — 131.0 Equity-settled share based payment transactions ...... ———— 0.60.6 Total contributions by and distributions to owners...... — 131.0 — — 0.6 131.6 Balance at 31 August 2012..... 67.5 131.1 6.9 (0.1) (152.3) 53.1

The notes on pages 16 to 83 form an integral part of these financial statements.

F-36 CONSOLIDATED CASH FLOW STATEMENT FOR YEAR ENDED 31 AUGUST 2012

Note 2012 2011

$m $m Cash flows from operating activities Profit/(loss) for the year before taxation ...... 99.7 (28.6) Adjustments for: Depreciation, amortisation and impairment ...... 22.1 25.3 Bond issuance income, net ...... 4c (6.3) — Other non-cash item ...... 0.4 — Difference between pension contribution paid and amounts recognised in the consolidated income statement...... (0.6) — Pension deficit taken directly to reserves...... — 0.3 Loss on sale of property, plant and equipment and intangible assets...... 0.3 1.1 Net financial (income)/expense ...... (53.3) 41.6 Share of profit of equity-accounted investees ...... 0.0 (0.0) Equity settled share-based payment expenses ...... 0.6 0.4 62.9 40.1 Decrease in trade and other receivables ...... 2.9 39.7 Decrease in inventories ...... — 0.5 Increase/(decrease) in trade and other payables ...... 8.7 (23.5) Cash generated from operations ...... 74.5 56.8 Interest paid...... (6.8) (10.9) Tax paid ...... (15.9) (13.9) Net cash generated from operating activities ...... 51.8 32.0 Cash flows from investing activities Proceeds from sale of property, plant and equipment and intangible and assets ...... 0.1 0.0 Purchase of intangible assets ...... (0.6) (0.4) Acquisition of subsidiary ...... 2 (26.0) (0.7) Cash acquired with subsidiaries...... 2 8.3 0.7 Acquisition of property, plant and equipment ...... (10.7) (11.8) Interest received ...... 1.8 0.6 Net cash used in investing activities ...... (27.1) (11.6) Cash flows from financing activities Proceeds from the issue of share capital ...... 21 — 4.9 Proceeds from new loan ...... 25.7 18.0 Proceeds from issue of 10.25% Senior secured notes..... 325.0 — Proceeds from issues of loan notes ...... — 7.4 Repayment of borrowings ...... (326.9) (50.7) Payment of bond issuance expenses...... (26.0) — Payment of finance lease liabilities ...... (0.0) (0.0) Net cash used in financing activities (2.2) (20.4) Net increase in cash and cash equivalents ...... 22.5 0.0 Cash and cash equivalents at 1 September...... 88.0 81.8 Effect of exchange rate fluctuations on cash held ...... (2.3) 6.2 Cash and cash equivalents at 31 August ...... 16 108.2 88.0

The notes on pages 16 to 83 form an integral part of these financial statements

F-37 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2012

1 ACCOUNTING POLICIES

General information Nord Anglia Education (UK) Holdings PLC (“the Company”) is a public limited company incorporated and domiciled in the United Kingdom under Companies Act 2006 (Registration number 06590752). The address of the registered office is The Old Vicarage, Market Street, Castle Donington, Derbyshire, DE74 2JB, United Kingdom. The main activities of the Company and its subsidiaries (together “the Group”) are the operation of Premium Schools worldwide and the delivery of a wide range of education and training contracts both in the UK and overseas.

1.1 Basis of preparation The Group financial statements consolidate those of the Company and its subsidiaries (together referred to as the “Group”) and equity account the Group’s interest in jointly controlled entities. The parent Company financial statements present information about the Company as a separate entity and not about its Group. The Consolidated Financial Statements have been prepared and approved by the Directors in accordance with International Financial Reporting Standards as adopted by the European Union (IFRSs as adopted by the EU), IFRIC Interpretations and the Companies Act 2006 applicable to companies reporting under IFRS. The Company has elected to prepare its parent Company financial statements in accordance with UK GAAP. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the company’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in note 1.28, Critical judgements and accounting policies. The information reflects the consolidated results of the Group and in the case of acquisitions and disposals, from or to the date control passes or ceases. All transactions between the Group’s businesses have been eliminated in the preparation of the consolidated financial information. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group. The Group’s jointly controlled entity has an accounting year end which is coterminous with the Group. However, due to timing of statutory accounts preparation, management accounts are used at 31 August 2012 for consolidation purposes. The financial statements are prepared on the historical cost basis except that the following assets and liabilities are stated at their fair value: derivative financial instruments classified as fair value through profit or loss. The Consolidated Income Statement has been reclassified in order to more adequately reflect the way management views the results of the business. Consequently, the Consolidated Income Statement is presented on a function of expense basis. The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements.

Recent accounting pronouncements The Group considers that there are no relevant standards or relevant interpretations mandatory for the current accounting period that have not been applied.

As of the date of authorisation of these financial statements, the following standards were in issue and have been endorsed by the EU. The Group has not applied these standards in the preparation of the financial statements: • IAS 19 (Amended) ‘Employee benefits’ is effective from periods commencing on or after 1 January 2013. It eliminates the corridor approach and requires immediate recognition of all actuarial gains and losses in the other comprehensive income, immediate recognition of all past service costs and the replacement of interest cost and expected return on plan assets with a net interest amount that is calculated by applying the discount rate to the net defined benefit liability/asset. • IFRS 7 (Amended) ‘Financial instruments: Disclosures’ and IAS 32 (Amended) ‘Financial instruments: Presentation’ are effective from 1 January 2013 and 2014 respectively. The IAS 32 amendment clarifies some of the requirements for offsetting financial assets and financial liabilities on the statement of financial position while the IFRS 7 amendment will require more extensive disclosures than are required under IFRS. As of the date of authorisation of these financial statements, the following standards were in issue but not yet effective and not yet been endorsed by the EU. The Group has not applied these standards in the preparation of the financial statements: • IFRS 9 ‘Financial instruments’ is effective from periods commencing on or after 1 January 2015. It is the first standard issued as part of a wider project to replace IAS 39. It retains but simplifies the mixed measurement model and establishes two primary measurement categories for financial assets: i) amortised cost and ii) fair value. The basis of classification depends on the entity’s business model and the contractual cash flow characteristics of the financial asset.

F-38 • IFRS 10 ‘Consolidated financial statements’ is effective from periods commencing on or after 1 January 2013. It builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of the parent company. It also provides additional guidance to assist in the determination of control where this is difficult to assess. • IFRS 12’ Disclosures of interest in other entities’ is effective from periods commencing on or after 1 January 2013. It includes the disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles. • IFRS 13 ‘Fair value measurement’ is effective from periods commencing on or after 1 January 2013. It aims to improve consistency and reduce complexity by providing precise definition of fair value and single source of fair value measurement and disclosure requirements for use across IFRSs. • IAS 27 (Amended) ‘Separate financial statements’ is effective from periods commencing on or after 1 January 2013. It includes the provisions on separate financial statements that are left after the control provisions of IAS 27 have been included in the new IFRS 10. • IAS 28 (Amended) ‘Associates and joint ventures’ is effective from periods commencing on or after 1 January 2013. It includes the requirements for joint ventures, as well as associates, to be equity accounted following the issue of IFRS 11. Management does not anticipate that the adoption of the above standards and interpretations will have a material impact on the Group’s financial statements in the period of initial application.

1.2 Revenue recognition Revenue represents the fair value of the consideration received during the year and is stated net of sales taxes and discounts. Sales of services which have been invoiced but not yet recognised as revenue are included on the balance sheet as deferred income and accounted for within trade and other payables.

School fee income School fee income comprises tuition fees and income from ancillary sources including examinations, school trips, bus transportation, lunch fees and the tuition fee refund scheme. School fee income is recognised over the school terms, Term 1 being September to December, Term 2 January to March and Term 3 April to June. School fees are payable in advance on or before the first day of each term and are recognised across the months of each term. Where fees are received in advance for more than one term, the income is recognised over the months in the terms for which payment has been made.

Service contracts Revenue is proportionally recognised as we provide services, however, when there are performance criteria that may adjust the total revenue earned attached to the contract under which we provide services, we do not recognise revenue until it is probable that the performance criteria have been met. Amounts recoverable on contracts, disclosed within trade and other receivables, is the amount by which revenue recognised exceeds payments on account received. Services which have been invoiced but not yet provided are included on the balance sheet as deferred income and are accounted for within trade and other payables. The method of revenue recognition requires an element of judgment to be applied to estimating total revenue and costs including assumptions relative to the performance of contract Key Performance Indicators (“KPI”) and contractual deliverables. Contract revenue and performance are continually monitored over the term of the contract and are subject to revision as each contract progresses. When revisions in estimated contract revenue are determined, such adjustments are recorded in the period in which they are identified. Anticipated claims against contracts are recognised in the period they are deemed probable and can be reasonably estimated.

1.3 Expenses

Cost of sales Cost of sales consist principally of salary and benefits for school principals and teaching staff and lecturers employed in our Premium Schools and Learning Services businesses, plus the costs of teaching materials as well as expenses for the provision of school lunches, bus services and athletics programmes. For the Learning Services businesses the costs are recognised as incurred. For the Premium Schools business these costs are spread over the school year and matched against the relevant fee income. This cost also includes the cost of independent consultants we use in the delivery of our Learning Service contracts, which can be a material cost under some of these contracts.

Selling, general and administrative expenses Selling, general and administrative expenses consist of several cost categories including salary and benefits for our senior management team and other personnel engaged in finance, human resources, education policy and quality, legal compliance, information systems and infrastructure and other corporate functions at our corporate headquarters. In addition, this category of expense encompasses salary and benefits for regional personnel supporting our operations in Asia, United Kingdom, Europe and Switzerland. Additionally, this category includes business travel costs, advertising and promotion expenses, conference costs, general liability insurance premiums, communication costs, bad debt expense, training costs and other. Travel costs are a significant component as this expense category includes costs of our own internal staff and realised and unrealised foreign currency gains and losses recognised on intercompany transactions and

F-39 on external third-party transaction not denominated in the local operating currency of a member of the Group. Finally, this category includes property costs which comprise all property-related costs associated with the operation of our business, including rent, service charges, repair and renewal costs, property taxes and utilities costs paid under leases for our corporate headquarters, regional offices, school facilities used in our Premium Schools business and office space used in our Learning Services business.

1.4 Pre-contract costs The Group expenses all pre-contract costs unless it is probable that a contract will be obtained and the contract is expected to result in future net cash inflows with a present value greater than the amount recognised as an asset. Costs previously expensed are not subsequently reinstated when a contract award is achieved.

1.5 Foreign exchange

Functional and presentational currency Items included in the financial statements of each of the Group’s subsidiary undertakings are measured using the currency of the primary economic environment in which the subsidiary undertaking operates (the ‘functional currency’). The Group financial statements are presented in US Dollars.

Transactions and balances Transactions in currencies other than the functional currency of each entity are converted into the functional currency at the rate of exchange ruling at the date of the transaction or valuation where items are re-measured. Foreign exchange gains and losses arising from the settlement of such transactions, and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies, are recognised in the income statement. Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the income statement within ‘finance income or cost’. All other foreign exchange gains and losses, if any, are presented in the income statement within other expenses. Translation differences on non-monetary financial assets and liabilities such as financial instruments held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss.

Group companies The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: (a) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet; (b) income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and (c) all resulting exchange differences are recognised in other comprehensive income. Goodwill and intangible assets and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

1.6 Pension costs Pensions are accounted for under IAS 19, ‘Employee benefits’. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. A defined benefit plan is a pension plan that is not a defined contribution plan. Typically defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation. In the case of a defined benefit plan, the Group has legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to the employee service in the current and prior periods. For defined benefit schemes, obligations are valued using the projected unit credit method and measured at discounted present value whilst scheme assets are recorded at fair value. The assets of such schemes are held separately from those of the Group. The service and financing costs of such schemes are recognised separately in the income statement. Current service costs are spread systematically over the lives of employees, and financing costs are recognised in the periods in which they arise. Actuarial gains and losses are recognised immediately in the statement of other comprehensive income. Payments to defined contribution schemes are charged as an expense as they fall due.

1.7 Share based payments The Group operates a share based compensation plan under which the entity receives services from employees as consideration for equity instruments (options) of the Group. The fair value of the employee services received in exchange for the grant of the options is recognised as an expense over the vesting period. The total amount to be expensed is determined by reference to the fair value of the options granted and estimation of the number of options that expect to vest.

F-40 Fair value is calculated using the Black Scholes Option Pricing Model, the details of which are disclosed in Note 19.

1.8 Exceptional items

Exceptional items are those significant items which are separately disclosed by virtue of their size or incidence to enable a full understanding of the Group’s financial performance. Transactions which may give rise to exceptional items are principally early termination of debt instruments, restructurings, costs related to the acquisition of subsidiaries and other significant transactions not expected to occur as part of normal operating activities.

1.9 Borrowings and borrowing costs

All loans and borrowings are initially recognised at the fair value of the consideration received net of issue costs associated with the borrowing. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest rate method.

Borrowing costs are expensed in the period in which they are incurred, except for issue costs, which are amortised over the period of the borrowing. Any initial differences between book value and the fair value of the loan due to the parent company are adjusted to equity to the extent they represent capital transactions with the parent.

1.10 Taxation

The taxation charge is based on the Group profit or loss for the period and takes into account current and deferred taxation. Tax is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In those cases the tax is also recognised in other comprehensive income or directly in equity, respectively.

Current taxation is calculated on the basis of the tax laws enacted or substantially enacted and relates to the amounts payable to tax authorities in respect of the Group’s taxable profits and is based on an interpretation of these tax laws.

Deferred taxation is recognised on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base at tax rates that are expected to apply when the asset is realised or the liability settled, based on tax rates that are enacted or substantially enacted at the balance sheet date. Deferred tax assets are only recognised when it is probable that taxable profits will be available against which the deferred tax asset can be used. Deferred tax liabilities are not provided for in respect of the distribution of profit retained by overseas subsidiary undertakings and joint venture undertakings to the extent that the reversal of the temporary difference is controlled by the Group and is not expected to reverse in the foreseeable future.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

1.11 Consolidation

Joint ventures

Jointly controlled entities are those entities where the Group and another party jointly share control per the terms of a contractual agreement. Jointly controlled entities are accounted for using the equity method and are initially recognised at cost. The results and assets and liabilities are stated in accordance with Group accounting policies. Where jointly controlled entities do not adopt Group accounting policies, their reported results are restated to comply with these policies. The Group share of the jointly controlled entities profit or losses are recognised in the income statement and its share of movements in reserves is recognised in reserves. The cumulative movements are adjusted against the carrying amount of the investment. When the Group’s share of losses in a jointly controlled entity equals or exceeds its interest in the entity the Group does not recognise further losses unless it has incurred obligations or made payments on behalf of the jointly controlled entity. Unrealised gains on transactions between the Group and its jointly controlled entity are eliminated up to the value of the Group’s interest in the jointly controlled entity. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transfer.

Subsidiaries

Subsidiaries are all entities (including special purpose entities) over which the group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the group controls another entity. The group also assesses existence of control where it does not have more than 50% of the voting power but is able to govern the financial and operating policies by virtue of de-facto control.

De-facto control may arise from circumstances where it does not have more than 50% of the voting power but is able to govern the financial and operating policies by virtue of de-facto control.

Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are de-consolidated from the date that control ceases.

F-41 Inter-company transactions, balances, income and expenses on transactions between group companies are eliminated. Profits and losses resulting from inter-company transactions that are recognised in assets are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group.

1.12 Dividends Dividends are recorded in the financial statements in the period in which they are approved by the Group’s shareholders.

1.13 Segmental reporting The Group’s reportable segments, which are those reported to the Chief Operating Decision Maker (“CODM”), are the two distinct product lines, Premium Schools and Learning Services. Each reportable segment derives its revenue from a separate business activity; school fees (Premium Schools) and service contracts (Learning Services). The main geographic regions in which the Group operates are Asia, United Kingdom, Central Europe, Switzerland and the Middle East. The Group’s business is not highly seasonal and its customer base is diversified, with no individually significant customer.

1.14 Goodwill Goodwill arising on consolidation represents the carrying value of goodwill held under a previous GAAP at the date of transition to IFRS and, for business combinations subsequent to the date of transition, the excess of the cost of acquisitions over the Group’s interest in the fair value of the identifiable assets and liabilities at the date of acquisition. Fair values are attributed to the identifiable assets, liabilities and contingent liabilities that existed at the date of acquisition, reflecting their condition at that date. Goodwill is carried at cost less accumulated impairment losses and is recognised as an asset. It is not subject to annual amortisation but is assessed for impairment at least annually or more frequently if there are indications of impairment. Goodwill is allocated to cash generating units which are expected to benefit from the business combination on which the goodwill arose. The recoverable amounts of goodwill are calculated on a discounted cashflow basis by applying appropriate long term growth rates and discount rates, based on historic trends adjusted for management’s estimates of future prospects, to the cash generating units on an individual basis. Impairment losses are recognised immediately in the income statement. Upon disposal of a subsidiary the attributable goodwill is included in the calculation of the profit or loss arising on disposal.

1.15 Intangible assets Intangible assets acquired as part of an acquisition of a business are capitalised separately from goodwill if those assets are identifiable and their fair value can be measured reliably. Intangible assets acquired separately from the acquisition of a business are capitalised at cost. Intangible assets which have been recognised due to acquisition in the current year are detailed in note 2, Acquisitions of subsidiaries. The initial identification of intangible assets requires considerable judgment in respect of the classification of the assets and in the assessment of their life. In addition, when assessing the values of the intangible assets, management is required to exercise judgment in determining the future profitability and cash flows of those assets, royalty rates, life of customer base and the appropriate weighted average cost of capital. The subsequent impairment reviews equally require continuing assessment of the above factors as well as continuous assessment of the assets’ lives.

Brand name Legally protected or otherwise separable brand names acquired as part of a business combination are capitalised at fair value on acquisition. Management’s expectation is to retain brand names within the business for an infinite life due to the nature and premium associated with the brand names that the Group has acquired, as such they are not amortised and are therefore subject to an annual impairment review.

Customer relationships Contractual and non-contractual customer relationships acquired as part of a business combination are capitalised at fair value on acquisition and amortised on a straight line basis over 6 to 10 years, based on management’s estimates of the average lives of such relationships.

Contractual rights Contractual rights acquired as part of a business combination are capitalised at fair value on acquisition and amortised on a straight line basis over the life of the contract.

Computer software Acquired computer software licenses are capitalised on the basis of the costs incurred to acquire and bring into use the specific software. Computer software licenses are held at cost and are amortised on a straight line basis over 3 years.

F-42 1.16 Property, plant and equipment

Property, plant and equipment are stated at historic cost less accumulated depreciation and any provision for impairment in value. Cost includes the original purchase price of the asset and the costs attributable to bringing the asset to its working condition for its intended use. Depreciation is provided at rates calculated to write-off the cost, less the estimated residual value, of property, plant and equipment over their estimated useful lives. Estimated useful lives and depreciation rates are as follows:

Freehold and long leasehold buildings 2% straight line Short leasehold land and buildings The unexpired term of the lease on a straight line basis Computer equipment 162/3%—331/3% straight line Motor vehicles 20-25% on reducing balance Fixtures and fittings 15% on reducing balance/141/2%—331/3% straight line

Residual values and economic useful lives are reviewed annually. Depreciation is charged on all additions to, or disposals of, depreciating assets in the year of purchase or disposal, other than on assets held for sale. Any impairment is charged to the income statement.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within ‘Selling, general and administration’ expenses in the income statement.

1.17 Impairment of non-financial assets

Assets that are not subject to amortisation are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which an asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell, and value-in-use. Cash generating units (“CGUs”) are defined at the lowest level at which cash inflows are separately identifiable. For the purpose of goodwill impairment testing, CGUs are grouped at the level at which operating cash flows can be separately determined, which is at a level below our operating segments, as disclosed in note 11, Intangible assets.

1.18 Assets held under finance and operating leases

Where assets are financed by leasing agreements where the risks and rewards are substantially transferred to the Group (“finance leases”) the assets are treated as if they had been purchased outright and are depreciated in accordance with the policy stated above. The assets which are held under finance leases and similar hire purchase contracts are recorded in the balance sheet as non-current assets on the lease commencement date at the lower of fair value and present value of minimum lease payments. The obligation to pay future rentals has been shown as a liability. The interest charged on finance leases is charged to the income statement over the lease period at a constant periodic rate of interest. Rentals applicable to operating leases, where substantially all the benefits and risks of ownership remain with the lessor, are recognised in the income statement using the straight line basis over the lease term. Incentives from lessors are recognised as a systematic reduction of the charge over the periods benefiting from the incentives.

1.19 Receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the entity that owes the receivable, probability that the entity that owes the receivable will enter bankruptcy or financial reorganisation, and default or delinquency in payments (which is 60-75 days overdue depending on the nature of the invoice) are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the income statement. When a receivable is uncollectible, it is written-off against the allowance account for receivables.

1.20 Cash and cash equivalents

Cash and cash equivalents include cash in hand, term and call deposits held with banks and other short-term highly liquid investments with original maturities of three months or less. Bank overdrafts with a right of set off are included within the balance sheet as cash and cash equivalents.

1.21 Trade payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

F-43 1.22 Derivative financial instruments and hedging activities Derivative financial instruments are recognised at fair value, generally being the cost at the date a contract is entered into, and are subsequently re-measured at their fair value. Depending on the type of the derivative financial instrument, fair value calculation techniques include, but are not limited to, quoted market value and present value of estimated future cash flows (of which the valuation of interest rate instruments is an example). Derivative assets and liabilities are classified as non-current unless they mature within one year from the balance sheet date. Changes in fair value of interest rate swaps are charged to net financing costs over the period of the contracts, together with the interest differentials reflected in foreign exchange contracts. Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.

1.23 Provisions Provisions are recognised when: — the Group has a present legal or constructive obligation as a result of past events; and — it is more likely than not that an outflow of resources will be required to settle the obligation; and — the amount has been reliably estimated. Property provisions relate to the future costs of properties no longer utilised by the Group and include onerous lease costs, dilapidation expenses and other costs specifically associated with the property. Other provisions predominantly relate to restructuring provisions and other significant costs that meet the definition of a provision. Provisions are not recognised for future operating losses. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as an interest expense. Where the Group expects amounts to be received in relation to a provision, the reimbursement is recognised as a separate asset when its receipt is considered virtually certain.

1.24 Loss contingencies The Group is subject to various claims and contingencies which are in the scope of ordinary and routine litigation incidental to the business, including those related to regulation, litigation, business transactions, employee-related matters and taxes, among others. When a claim or potential claim is identified, the likelihood of any loss or exposure is assessed. If it is probable that a loss will result and the amount of the loss can be reasonably estimated, a liability for the loss is recorded in the income statement. The liability recorded includes probable and estimable legal costs incurred to date and future legal costs. If the loss is not probable or the amount of the loss cannot be reasonably estimated, the claim is disclosed if the likelihood of a potential loss is reasonably possible and the amount of the potential loss could be material. For matters where no loss contingency is recorded, legal fees are expensed as incurred.

1.25 Share capital Ordinary shares are classified as equity. Mandatorily redeemable preference shares are classified as liabilities. Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds.

1.26 Equity instruments Following the adoption of IAS 32, financial instruments issued by the Group are treated as equity only to the extent that they meet the following two conditions: (a) they include no contractual obligations upon the Company (or Group as the case may be) to deliver cash or other financial assets or to exchange financial assets or financial liabilities with another party under conditions that are potentially unfavourable to the Company (or Group); and (b) where the instrument will or may be settled in the company’s own equity instruments, it is either a non-derivative that includes no obligation to deliver a variable number of the company’s own equity instruments or is a derivative that will be settled by the company’s exchanging a fixed amount of cash or other financial assets for a fixed number of its own equity instruments. To the extent that this definition is not met, the proceeds of issue are classified as a financial liability. Where the instrument so classified takes the legal form of the Company’s own shares, the amounts presented in these financial statements for called up share capital and share premium account exclude amounts in relation to those shares.

F-44 1.27 Business combinations

The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquiree on an acquisition- by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets.

Acquisition-related costs are expensed as incurred.

Deferred consideration is accounted as a liability in the balance sheet and discounted at an appropriate rate where applicable. The discount is recognised in the income statement.

Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with IAS 39 either in profit or loss or as a change to other comprehensive income. Contingent consideration that is classified as equity is not remeasured, and its subsequent settlement is accounted for within equity.

1.28 Critical judgments and accounting policies

The Group and Company balance sheets as at 31 August 2012 show that assets exceed liabilities by $53.1m and $189.0m respectively. The issuance of the Notes and the related write-off’s on the shareholder loan notes has significantly improved the net asset position of the Company (the prior year Group Balance Sheet showed a deficit of $124.8 million of liabilities over assets).

The directors have reviewed the latest guidance relating to going concern and, having made all relevant enquiries, have formed a judgement at the date of the approval of the financial statements that the Group has adequate resources at its disposal to continue its operations for the foreseeable future. This judgement is based on a review undertaken of the current business forecast to 31 August 2014 and the projected cash requirements over that period to assess the likelihood of the Group being able to continue as a going concern. Suitable sensitivities were run for the periods up to 31 August 2014 to assess the headroom available. This review concluded that there were no material uncertainties that potentially could give rise to a significant doubt about the business continuing as a going concern.

Management has made certain judgments in the process of applying the Group’s accounting policies set out above that have a significant effect on the amounts recognised in the Group financial statements.

Revenue recognition

Service contracts

Service contract revenue represents a material income stream for the Group. Under certain contracts, the revenue, or an element of the revenue, is only receivable if Key Performance Indicators, “KPIs”, built into the contract terms have been met and the services have been delivered in line with the contract terms. A KPI is a measurable performance condition, for which documentary evidence can be supplied, agreed between the Group and its customers, and which is used as a basis to recognise income. Therefore revenue is only recognised as and when services are performed, if the Group can estimate that it is probable that KPIs and contract deliverables have been met. Where it has not been determined whether KPIs have been met, the element of the revenue relating to meeting these terms is deferred.

Contract revenue and performance are continually monitored over the term of the contract and are subject to revision as each contract progresses. KPIs are such that they can be measured internally, although in certain cases may require validation by the customer. When revisions in estimated contract revenue are determined, such adjustments are recorded in the period in which they are identified.

The Group has sufficient history of monitoring KPI performance to understand the accuracy of its monitoring procedures, and as a result few adjustments arise to estimates that have been made other than to recognise revenue that has previously been deferred, due to the probable recognition criteria not yet being met. Furthermore the nature of the Group’s contracts and their alignment to the academic year mean that the level of estimation required at a fiscal year end is considerably less than at any interim period.

Goodwill

Goodwill arising on consolidation represents the excess of the cost of acquisitions over the Group’s interest in the fair value of the identifiable assets and liabilities at the date of acquisition. Fair values are attributed to the identifiable assets, liabilities and contingent liabilities that existed at the date of acquisition, reflecting their condition at that date.

Goodwill is recognised as an asset. It is not subject to annual amortisation, but is assessed for impairment at least annually or more frequently if there are indications that goodwill might be impaired. The recoverable amounts of the goodwill are calculated on a discounted cash flow basis by applying appropriate long-term growth rates and discount rates, based on historic trends adjusted for management’s estimates of future prospects, to the cash generating units on an individual basis. Both the calculated recoverable value of goodwill and any impairment adjustment could vary significantly if different long-term growth rates and discount rates were applied.

F-45 For the purpose of determining potential goodwill impairment, recoverable amounts are determined from value-in-use calculations using cash flow projections covering a five-year period. The growth rate assumptions used in the projections were based on past performance and management’s expectations of market developments. In the interests of prudence, the annual growth rate used to determine the cash flows beyond the five-year period has been set at 1.5% across the European and Swiss markets, and 2% in the Asia market. When testing for impairment the Group applies a discount rate commensurate to each cash generating unit. The discount rate that was used for this testing as of 31 August 2012 was 13.2% (2011 - 12%).

Intangible assets

Intangible assets acquired as part of an acquisition of a business are capitalised separately from goodwill if those assets are identifiable and their fair value can be measured reliably.

Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method are reviewed at least at each financial year end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates.

Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the cash generating unit level and are not amortised. The useful life of an intangible asset with an indefinite life is reviewed annually to determine whether indefinite life assessment continues to be supportable. If not, the change in the useful life assessment from indefinite to finite is made on a prospective basis.

The initial identification of intangible assets requires considerable judgment in respect of the classification of the assets and in the assessment of their life. In addition, when assessing the values of the intangible assets, management is required to exercise judgment in determining the future profitability and cash flows of those assets, royalty rates, life of customer base and the appropriate weighted average cost of capital. The subsequent impairment reviews equally require continuing assessment of the above factors as well as continuous assessment of the assets’ lives.

Gains and losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the income statement when the asset is derecognised.

Share based payments

The Group operates an equity settled share based compensation plan.

The fair value of the employee services received under share based payment plans is recognised as an expense in the income statement. Fair value is calculated by using the Black Scholes Option Pricing Model for share option schemes and the Binomial method for long term incentive plans. The amount charged over the vesting period is determined by reference to the fair value of share incentives excluding the impact of any non-market vesting conditions. Non-market vesting conditions are considered within the assumptions to estimate the number of share incentives that are expected to vest. The impact of the revision of original estimates, if any, is recognised in the income statement over the remaining vesting period with corresponding adjustments made to equity. For cash settled share-based payment transactions for which there was no obligation to settle in cash, the cash payment is accounted for as a reduction to shareholders’ equity, except when the cash settlement exceeds the fair value of the equity instruments that would have been issued, for which such amount is recorded to expense.

The application of both the Black-Scholes Option Pricing Model and the Binomial method require the application of a number of judgments including, the following; volatility, risk free interest rate, expected life to exercise. Accordingly the recognition of the fair value expense of the employee services received under share based payment plans could vary if significantly different assumptions were applied to the valuation models.

2 ACQUISITIONS OF SUBSIDIARIES

The Group made two acquisitions during the year, the details of which are shown below.

Acquisitions in the current period

Acquisition 1

On 30 September 2011, Nord Anglia Education (UK) Holdings PLC acquired the entire share capital of La Côte International School for a total consideration of CHF 3.5 million, satisfied in cash.

The company is a Premium School located in Switzerland. The business combination occurred as a result of the directors’ decision to strengthen the Group’s existing portfolio of Premium Schools within Europe, and in particular Switzerland. If the acquisition had occurred on 1 September 2011, Group revenue would have been an estimated $0.5 million higher and the Group’s net profit would have been an estimated $0.1 million higher. In determining these amounts, management has assumed that the fair value adjustments that arose on the date of acquisition would have been the same if the acquisition had occurred on 1 September 2011.

F-46 Effect of acquisition

The acquisition had the following effect on the Group’s assets and liabilities:

Recognised values on acquisition

$m Acquiree’s net assets at the acquisition date: Intangible assets — Brand ...... 0.5 — Customer relationships ...... 0.5 Property, plant and equipment ...... 0.5 Trade and other receivables...... 2.1 Cash and cash equivalents ...... 2.9 Trade and other payables ...... (6.3) Retirement benefit obligations...... (0.4) Deferred tax liability ...... (0.0)

Net identifiable assets and liabilities ...... (0.2)

Consideration paid: Cash price paid ...... 3.9

Total consideration transferred ...... 3.9

Goodwill on acquisition ...... 4.1

Acquisition 2

On 1 August 2012, Nord Anglia Education (UK) Holdings PLC acquired the entire share capital of EEE Enterprise Limited for a total consideration of THB960 million (of which THB260 million is deferred consideration where THB150 million is due over one year), satisfied in cash.

The entity is a non-trading holding company with a 49% ownership of The Regent’s School, a Premium School located in Chonburi, Thailand. 51% of the share capital is comprised of preference shares owned by two Thai shareholders. The preference shares are entitled to 1 vote per 10 shares and the ordinary shares are entitled to 1 vote per share, thus giving the Group an effective control of the business. The business combination occurred as a result of the directors’ decision to strengthen the Group’s existing portfolio of Premium Schools within Asia, and in particular gain presence within Thailand. In the period to 31 August 2012 the subsidiary contributed turnover and net profit of $nil and $nil respectively to the consolidated result for the year. If the acquisition had occurred on 1 September 2011, Group revenue would have been an estimated $15.9 million higher and the Group’s net profit would have been an estimated $3.6 million higher. In determining these amounts, management has assumed that the fair value adjustments that arose on the date of acquisition would have been the same if the acquisition occurred on 1 September 2011. Due to the proximity of the acquisition of The Regent’s School to the end of the period, the fair values listed below and subsequent goodwill calculation are provisional for the purposes of these financial statements as the necessary market valuation and other calculations have not been finalised.

F-47 Effect of acquisition

The acquisition had the following effect on the Group’s assets and liabilities:

Recognised values on acquisition

$m Acquiree’s net assets at the acquisition date: Intangible assets — Brand ...... 4.8 — Customer relationships ...... 5.0 Property, plant and equipment ...... 0.5 Trade and other receivables...... 3.3 Cash and cash equivalents ...... 5.4 Trade and other payables ...... (8.5)

Net identifiable assets and liabilities ...... 10.5

Consideration paid: Cash price paid ...... 22.1 Deferred consideration ...... 8.4

Total consideration ...... 30.5

Goodwill on acquisition ...... 20.0

The goodwill arising from both acquisitions is based on the anticipated synergies existing within the acquired businesses and also the synergies expected to be achieved as a result of combining the two schools with the rest of the group. None of the goodwill recognised is expected to be deductible for income tax purposes.

All transaction costs incurred in relation to the acquisitions has been expensed to the income statement and not deducted for tax purposes.

F-48 3 OPERATING SEGMENTAL INFORMATION

Management has determined the operating segments based on the reports reviewed by the strategic steering committee (which has been identified as the CODM) that are used to make strategic decisions.

The reportable operating segments derive their revenue primarily from school fees (Premium Schools segment) and service contracts (Learning Services segment). Revenue includes a management fee from

The segment information provided to the strategic steering committee for the reportable segments is as follows:

2012 — Divisional analysis

Premium Learning Schools Services Unallocated Total

$m $m $m $m Revenue ...... 224.5 40.1 — 264.6

Adjusted EBITDA before exceptional items...... 79.4 10.2 (15.6) 74.0

Statutory exceptional items (note 4) ...... (3.6) (0.5) 5.5 1.4 Non statutory exceptional items ...... (0.8) (0.1) (1.1) (2.0) Exchange loss ...... — — (4.6) (4.6) Loss of disposal of property, plant and equipment . — — (0.3) (0.3) Depreciation ...... (7.8) (0.1) (0.1) (8.0) Amortisation...... (2.6) (0.2) (0.6) (3.4) Impairment of goodwill ...... — (10.7) — (10.7) Finance income ...... — — 103.0 103.0 Finance expense...... — — (49.7) (49.7) Share of profit of jointly controlled entity ...... — — 0.0 0.0 Tax...... (13.4) (1.1) (1.9) (16.4)

Profit/(loss) for the year attributable to equity holders of the parent ...... 51.2 (2.5) 34.6 83.3

Adjusted EBITDA before exceptional expenses represents earnings before interest, tax, depreciation, amortisation, impairment and management accounts and statutory exceptional items and is the profit measure reviewed by the CODM.

2012 — Geographical analysis

Europe (excluding United UK and Asia Kingdom Switzerland) Middle East Switzerland Total

$m $m $m $m $m $m Revenue ...... 125.2 17.4 43.5 10.8 67.7 264.6

Goodwill and intangible assets ...... 281.9 0.1 51.7 0.0 121.2 454.9 Property, plant and equipment ...... 18.3 0.5 5.8 0.0 5.7 30.3 Other non-current assets. . . 15.9 — — — 1.5 17.4

Total non-current assets . . 316.1 0.6 57.5 0.0 128.4 502.6

F-49 2011 — Divisional analysis

Premium Learning Schools Services Unallocated Total

$m $m $m $m Revenue...... 158.8 60.5 — 219.3

Adjusted EBITDA before exceptional items...... 56.7 13.7 (16.8) 53.6

Statutory exceptional items ...... (3.3) — (6.1) (9.4) Non statutory exceptional items ...... (4.5) (0.4) (4.2) (9.1) Exchange gain ...... — — 4.2 4.2 Loss of disposal of property, plant and equipment . — — (1.0) (1.0) Depreciation ...... (5.3) (0.3) (0.2) (5.8) Amortisation...... (2.1) (0.1) (0.6) (2.8) Impairment of goodwill ...... — (16.7) — (16.7) Finance income ...... — — 10.1 10.1 Finance expense...... — — (51.7) (51.7) Share of profit of jointly controlled entity ...... — — 0.0 0.0 Tax...... (9.5) (1.1) (1.9) (12.5)

Profit/(loss) for the year attributable to equity holdersoftheparent...... 32.0 (4.9) (68.2) (41.1)

2011 — Geographical analysis

Europe (excluding United UK and Asia Kingdom Switzerland) Middle East Switzerland Total

$m $m $m $m $m $m Revenue...... 86.1 17.8 43.3 44.5 27.6 219.3

Goodwill and intangible assets ...... 249.7 0.9 60.5 11.2 136.5 458.8 Property, plant and equipment ...... 13.8 3.7 6.5 0.1 4.3 28.4 Other non-current assets. . . 15.7 0.7 — — 1.5 17.9

Total non-current assets . . . 279.2 5.3 67.0 11.3 142.3 505.1

4 EXCEPTIONAL INCOME/(EXPENSES), NET

2012 2011

$m $m Exceptional administrative expenses a Corporate restructure ...... (1.4) (6.0) b Profit share buy out ...... (0.7) (2.4) c Bond issuance income, net ...... 6.3 — d Acquisition related costs ...... (2.8) (1.0)

1.4 (9.4)

a On 10 July 2011, the Group announced its intention to relocate its central services function to Hong Kong and subsequent to the balance sheet date this proposal was confirmed. The associated restructuring costs of $6.0m relate predominantly to the onerous lease cost of the building that housed the head office function, along with both statutory and enhanced redundancy costs payable to affected employees. In the year to 31 August 2012, a further provision was created to cover additional expenses amounting to $0.8 million, bringing the total cost of the project to $6.8 million. The balance of the charge in 2012 of $0.6 million relates to the closure of the Learning Service divisional team in the Middle East.

F-50 b The $0.7 million cost (prior year additional costs of $2.4 million) incurred during the year was as a result of the Group purchasing any past and all future rights under a profit sharing agreement and under an employment profit share agreement in the prior year.

None of the costs relating to this transaction are considered to be tax deductible.

Full details of this arrangement are documented in note 26, Related party transactions.

c During the year ended 31 August 2012, net exceptional income of $6.3 million was recognised due to the issuance of the Senior secured notes.

The $6.3 million is comprised of several components, charges of $1.2 million relating to marketing costs, consultants costs and legal and professional fees which are not capitalised. Furthermore, a charge of $9.2 million and a credit of $16.7 million relates to the writing-off of the related party balance and the principle value of loan notes respectively.

Full details of the bond are documented in note 17, Other interest-bearing loans and borrowings.

d During the year the Group acquired two new subsidiaries to complement its existing portfolio of Premium Schools, as detailed in note 2, Acquisitions of subsidiaries.

Acquisition related costs in 2012 related to the acquisition of the La Côte International School, Switzerland and The Regent’s School, Chonburi in Thailand, including legal fees and fees payable to advisors in relation to various aspects of the acquisitions, as well as final costs incurred on the acquisitions made in 2011.

The prior year costs related to the two subsidiaries acquired during the year ended 31 August 2011.

5 EXPENSES AND AUDITORS’ REMUNERATION

Included in profit/(loss) are the following:

2012 2011

$m $m Hire of plant and machinery ...... — 0.4 Impairment loss on goodwill ...... 10.7 16.7 Staff costs (excluding share based payments)...... 107.5 94.0 Share based payments ...... 0.6 0.4 Foreign exchange loss/(gain) ...... 4.6 (4.2) Loss on disposal of property, plant and equipment and intangible assets ...... 0.3 1.0 Operating lease rentals: Land and buildings ...... 24.7 23.8 Other...... 0.7 0.7 Depreciation — owned assets ...... 8.0 5.8 Amortisation of intangible assets ...... 3.4 2.8

Auditors’ remuneration:

2012 2011

$m $m Fees payable to Company’s auditor for the audit of parent Company and consolidated financial statements ...... 0.2 0.1 Disclosure below based on fees payable in respect of services to the company and its subsidiaries Fees payable to Group’s auditors and their associates in respect of: Audit of financial statements of subsidiaries and associates pursuant to legislation (including that of countries and territories outside Great Britain) . . . 0.3 0.4 Otherservicesrelatingtotaxation...... 0.1 — Services relating to corporate finance transactions entered into or proposed to be entered into by or on behalf of the Company or the Group or any of its associates ...... — — Allotherservices...... 0.5 0.2

F-51 6 STAFF NUMBERS AND COSTS

The monthly average number of persons employed by the Group (including directors) during the year, analysed by category, was as follows:

Number of employees

2012 2011

Administration and management ...... 653 693 Teaching...... 1,321 1,190 Advisors and guidance officers ...... 239 180

2,213 2,063

The aggregate payroll costs of these persons were as follows:

2012 2011

$m $m Wages and salaries ...... 94.8 85.0 Share based payments (See note 19) ...... 0.6 0.4 Social security costs ...... 9.9 7.3 Contributionstodefinedcontributionplans(Seenote19)...... 1.2 0.5 Expenses related to defined benefit plans (See note 19) ...... 1.6 1.2

108.1 94.4

During the year ended 31 August 2012, an amount of $0.7 million (2011 - $2.4 million) was paid as a result of the Group purchasing any past and all future rights under a profit sharing agreement and under an employment profit sharing agreement. This is in addition to aggregate payroll costs above and the amounts paid to key management personnel, as shown below.

7 KEY MANAGEMENT PERSONNEL

2012 2011

$m $m Fee, salaries and other short term employment benefits...... 5.8 4.7 Termination benefits...... — 0.3 Other benefits ...... 0.3 0.1

The key management personnel are the directors and senior managers who received emoluments, as noted above.

Other short term employment benefits relate to medical insurance premiums and rental benefit paid.

Other benefits relate to contributions to defined contribution schemes.

2012 2011

Number of key management personnel accruing benefits under: — Defined benefit schemes ...... 1 —

F-52 8 FINANCE INCOME AND EXPENSE

Recognised in profit or loss

2012 2011

$m $m Foreign exchange gains recognised on the retranslation of foreign currency borrowings...... — 9.5 Derivative financial instruments ...... 0.2 — Interest waived on loan notes from parents, senior management and related party: — prior year...... 81.2 — — current year ...... 19.8 — Bank interest ...... 1.8 0.6

Total finance income ...... 103.0 10.1

2012 2011

$m $m Net loss on financial instruments designated as fair value through profit or loss: Derivative financial instruments ...... 0.8 1.1 Total interest expense on financial liabilities measured at amortised cost: Loan notes from parent, senior management and related party ...... 22.1 35.5 10.25% Senior secured notes due 2017 ...... 15.0 — Bank loans and overdrafts ...... 7.9 13.0 Interest on defined benefit pension plan obligation ...... 0.6 0.3 Amortisation of loan costs ...... 3.3 1.3 Interest payable to parent undertaking ...... — 0.5

Total finance expense...... 49.7 51.7

Net finance income/(expense)...... 53.3 (41.6)

During the prior year ended 31 August 2011, the Group recognised a gain of $9.5 million relating to foreign exchange movements arising on the remeasurement of its US dollar debt, $nil in the year ended 31 August 2012.

9 INCOME TAX EXPENSE

Recognised in the consolidated income statement

2012 2011

$m $m Current tax expense United Kingdom current year corporation tax charge ...... — — Adjustment for prior years UK corporation tax charge ...... — — Overseas current tax charge ...... 18.1 14.0 Adjustment for prior years overseas tax charge ...... (0.3) (1.2)

Current tax expense ...... 17.8 12.8

Deferred tax expense Origination and reversal of temporary differences...... (1.3) (1.2) Adjustment in respect of prior years ...... (0.1) 0.9

Deferred tax expense ...... (1.4) (0.3)

Total tax expense ...... 16.4 12.5

F-53 Reconciliation of effective tax rate

The tax assessed for the period differs from the standard rate of Corporation tax in the United Kingdom of 25.16% (2011: 27.16%) per the explanation below:

2012 2011

$m $m Profit/(loss) for the year ...... 83.3 (41.1) Total tax expense ...... 16.4 12.5

Profit/(loss) before tax ...... 99.7 (28.6)

Tax using the UK corporation tax rate of 25.16 % (2011: 27.16%)...... 25.1 (7.8) Effectoftaxratesinforeignjurisdictions...... (0.9) (0.3) Non-deductible expenses ...... 3.8 1.6 Interestwaived...... (25.4) — Losses not deductible ...... 5.0 5.2 Withholding tax paid on overseas dividends for which no relief is available ...... 2.1 1.9 Timing difference for which no deferred tax was recognised ...... (2.5) 1.6 Amortisation and impairment of goodwill ...... 2.7 4.5 Current year losses for which no deferred tax asset was recognised ...... 6.9 6.0 Over provided in prior years...... (0.4) (0.2)

Total tax expense (including tax on joint venture) ...... 16.4 12.5

Tax charged to other comprehensive income* ...... (0.2) —

* Included within Actuarial losses on defined benefit pension schemes

Deferred tax assets are recognised for tax losses carried forward to the extent that the realisation of the related tax benefit through future taxable profits is probable. The Group did not recognise deferred tax assets of $33.2 million (2011 - $40.3 million). This includes an unprovided deferred tax asset of $24.8 million (2011 - $35.6 million) which relates to UK losses which have no expiry date for which relief is not anticipated to be available in the foreseeable future. It also includes an unprovided deferred tax asset of $5.8 million (2011 - $2.7 million) in relation to the deficit in the UK pension scheme and an unprovided deferred tax asset of $1.0 million (2011 - $nil) which relates to losses in overseas entities.

Factors affecting future tax charges

The Budget in March 2012 announced a reduction in the UK Corporation tax rate from 26% to 24% effective from 1 April 2012, and a further reduction in the UK corporation tax to 23% effective from 1 April 2013. These changes were substantively enacted in July 2012.

In addition to the changes in rates of Corporation tax disclosed above a further change to the UK Corporation tax system was announced in the March 2012 UK Budget Statement. A further reduction to the main rate is proposed to reduce the rate to 22% effective from 1 April 2014. This further change had not been substantively enacted at the balance sheet date and, therefore, is not included in these financial statements.

The proposed reduction in the main rate of corporation tax to 22% by 1 April 2014 is expected to be enacted in a future Finance Bill. The overall effect of the further change from 23% to 22%, if these applied to the deferred tax balance at the balance sheet date, would have no impact on the deferred tax liabilities and assets recognised.

F-54 10 PROPERTY, PLANT AND EQUIPMENT

Land and Fixtures Computer Motor buildings and fittings equipment vehicles Total

$m $m $m $m $m Cost Balance at 1 September 2010 ...... 19.1 4.4 4.4 0.2 28.1 Acquisitions through business combinations . . . 0.5 1.1 0.3 0.7 2.6 Additions...... 8.6 1.9 1.1 0.1 11.7 Transfer of assets ...... — (0.1) 0.1 — — Disposals ...... (3.3) (0.4) (0.2) (0.0) (3.9) Effect of movements in foreign exchange ..... 2.1 0.8 0.8 0.1 3.8

Balance at 31 August 2011 ...... 27.0 7.7 6.5 1.1 42.3

Balance at 1 September 2011 ...... 27.0 7.7 6.5 1.1 42.3 Acquisitions through business combinations . . . 0.1 0.9 — — 1.0 Additions...... 5.5 1.7 3.2 0.3 10.7 Disposals ...... (0.1) (2.0) (2.8) — (4.9) Effect of movements in foreign exchange ..... (1.4) (1.0) (0.3) (0.1) (2.8)

Balance at 31 August 2012...... 31.1 7.3 6.6 1.3 46.3

Accumulated depreciation and impairment Balance at 1 September 2010 ...... 6.1 1.7 1.7 0.0 9.5 Depreciation charge for the year ...... 2.8 1.3 1.5 0.2 5.8 Disposals ...... (2.6) (0.2) (0.1) (0.0) (2.9) Effect of movements in foreign exchange ..... 0.7 0.3 0.5 0.0 1.5

Balance at 31 August 2011 ...... 7.0 3.1 3.6 0.2 13.9

Balance at 1 September 2011 ...... 7.0 3.1 3.6 0.2 13.9 Depreciation charge for the year ...... 3.9 1.6 2.0 0.5 8.0 Disposals ...... (0.1) (1.7) (2.7) — (4.5) Effect of movements in foreign exchange ..... (0.5) (0.5) (0.3) (0.1) (1.4)

Balance at 31 August 2012...... 10.3 2.5 2.6 0.6 16.0

Net book value At 1 September 2010 ...... 13.0 2.7 2.7 0.2 18.6

At 31 August 2011 and 1 September 2011 .... 20.0 4.6 2.9 0.9 28.4

At 31 August 2012 ...... 20.8 4.8 4.0 0.7 30.3

F-55 11 INTANGIBLE ASSETS

Brand Customer Computer Goodwill name relationships Contracts software Total

$m $m $m $m $m $m Cost Balance at 1 September 2010 . . 333.4 — — — 2.5 335.9 Acquisitions through business combinations ...... 77.8 18.8 24.5 0.7 — 121.8 Additions...... ————0.40.4 Effect of movements in foreign exchange ...... 36.3 2.6 3.4 0.0 0.2 42.5

Balance at 31 August 2011 .... 447.5 21.4 27.9 0.7 3.1 500.6

Balance at 1 September 2011. . . 447.5 21.4 27.9 0.7 3.1 500.6 Acquisitions through business combinations ...... 24.1 5.3 5.5 — — 34.9 Additions...... ————0.60.6 Disposals ...... ————(2.5)(2.5) Effect of movements in foreign exchange ...... (20.0) (2.7) (3.5) (0.0) — (26.2)

Balance at 31 August 2012 .... 451.6 24.0 29.9 0.7 1.2 507.4

Accumulated amortisation and impairment Balance at 1 September 2010 . . 20.0 — — — 1.2 21.2 Amortisation for the year ...... — — 1.8 0.2 0.8 2.8 Impairment charge ...... 16.7 ————16.7 Effect of movements in foreign exchange ...... 1.2 — (0.1) 0.0 0.0 1.1

Balance at 31 August 2011 .... 37.9 — 1.7 0.2 2.0 41.8

Balance at 1 September 2011. . . 37.9 — 1.7 0.2 2.0 41.8 Amortisation for the year ...... — — 2.6 0.2 0.6 3.4 Disposals ...... ————(2.4)(2.4) Transfers ...... ————0.00.0 Impairment charge ...... 10.7 ————10.7 Effect of movements in foreign exchange ...... (1.0) — — (0.0) 0.0 (1.0)

Balance at 31 August 2012 .... 47.6 — 4.3 0.4 0.2 52.5

Net book value At 1 September 2010 ...... 313.4 — — — 1.3 314.7

At 31 August 2011 and 1 September 2011 ...... 409.6 21.4 26.2 0.5 1.1 458.8

At 31 August 2012 ...... 404.0 24.0 25.6 0.3 1.0 454.9

Goodwill is allocated to the Groups Cash Generating Units (CGU’s) identified according to operating segment.

F-56 A summary of the goodwill allocation is shown below:

2012 2011

Premium Learning Premium Learning schools services Total schools services Total

$m $m $m $m $m $m Asia...... 271.0 — 271.0 249.6 — 249.6 Europe...... 51.7 — 51.7 60.5 — 60.5 Switzerland..... 81.3 — 81.3 88.8 — 88.8 Middle East ..... ————10.710.7

404.0 — 404.0 398.9 10.7 409.6

The recoverable amount of a CGU is determined based on value-in-use calculations. These calculations use pre-tax cash flow projections based on financial budgets approved by management covering a 5 year period discounted using pre-tax discount rates. Cash flows beyond the five-year period are extrapolated using the estimated growth rates stated below. The growth rate does not exceed the long-term average growth rate for the education industry in which the CGU operates. The key assumptions used for value-in-use calculations in 2012 are as follows:

Premium Schools

Asia Europe Switzerland

Growth in pupil numbers (over 5 years)...... 30.0% 15.2% 21.4% Long term growth rate ...... 2.0% 1.5% 1.5% Discount rate ...... 13.2% 13.2% 13.2%

The key assumptions used for value-in-use calculations in 2011 are as follows:

Premium Schools

Asia Europe Switzerland

Growth in pupil numbers (over 5 years)...... 31.3% 13.6% 13.3% Long term growth rate ...... 2.0% 1.0% 1.0% Discount rate ...... 12.0% 12.0% 12.0%

Learning Services

UK Middle East

Long term growth rate ...... 1.5% 1.0% Discount rate ...... 12.0% 12.0%

Premium Schools In the year ended 31 August 2012, the results of the Premium School’s division benefited from strong growth in student numbers both at the start of the first term as well as during the 2011/12 academic year. In addition, the acquisition and successful integration of two schools in Switzerland and Thailand (La Côte International School and Regent’s School Chonburi) respectively bodes well for the future as regards pupil numbers. Growth rates are declining year on year due to existing capacity becoming more utilised. The figures do not include growth as a result of proposed campus expansion. Management therefore consider that no impairment is required to any of the goodwill or indefinite life of intangible assets regions allocated to the Premium Schools division.

Learning Services

Middle East During 2012, the results of the Learning Services division reflected a year of continuing consolidation in the light of very difficult trading conditions in all the markets served. Based on the latest available forecasts, the directors believe that this trend will not change in the near future and which resulted in an impairment of goodwill associated with the remaining Middle East Learning Services Division. A charge of $10.7 million has accordingly been made to the Group’s income statement in the year ended 31 August 2012.

F-57 UK

During 2011, potential new Learning Service contracts in the UK which had remained in the Group’s budget following the prior year review did not materialise due to the continued reduction in government spending. Based on the latest available forecasts the directors believe that this policy by the government will not change in the near future which resulted in an impairment of the goodwill associated with the UK Learning Services division. A charge of $16.7 million has accordingly been made to the Group’s income statement in the year ended 31 August 2011.

12 SUBSIDIARIES

The Group had the following interests in subsidiaries:

Class of Country of shares Incorporation held Ownership

2012 2011 Holding companies Premier Education (UK) Bidco Limited*SG ...... UK Ordinary 100% 100% Premier Education (UK) Midco Limited+SG ...... UK Ordinary 100% 100% Nord Anglia Education Limited*SG ...... UK Ordinary 100% 100% NAE Hong Kong Limited*dSG% ...... Hong Kong Ordinary 100% 100% Nord Anglia Education Development Services Limited*SG . . UK Ordinary 100% 100% Nord Anglia Middle East Holding SPC*dSG ...... Bahrain Ordinary 100% 100% Nord International Schools Limited*SG...... UK Ordinary 100% 100% Nord Anglia (Beijing) Consulting Limited* ...... China Ordinary 100% 100% EEE Enterprise Limited*SG...... BVI Ordinary 100% — Broad-Asia (Shanghai) Business Consultation Co., Ltd.* . . China Ordinary 100% 100% KG (Beijing) Investment Consultant Co., Ltd.^ ...... China Ordinary 100% 100% KG Investments Limited^ ...... Jersey Ordinary 100% 100% KG Investments Limited (UK Branch)^...... UK n/a 100% 100% Rice Education Hong Kong Limited*SG ...... Hong Kong Ordinary 100% — Regent Pattaya Campus Management Co., Ltd.S ...... Thailand Ordinary 49% — ABET International Limited*SG ...... UK Ordinary 100% 100% NA Educational Services Limited*SG ...... UK Ordinary 100% 100% NA Schools Limited*SG ...... UK Ordinary 100% 100% Nord International Nurseries Limited* ...... UK Ordinary 100% 100% Emile Woolf International Pte Ltd...... Singapore Ordinary 51% 51% Premium Schools English International School Prague, s.r.o.^ S ...... Czech Republic Ordinary 100% 100% The British School Sp. z o.o.* dSG ...... Poland Ordinary 100% 100% British International School Bratislava^ ...... Slovakia Ordinary 100% 100% British International School Bratislava, s.r.o.^ S ...... Slovakia Ordinary 100% 100% British International School Kindergarten, Primary and Secondary School*...... Hungary Ordinary 100% 100% British International School Foundation*dG ...... Hungary Ordinary 100% 100% The British International School, Shanghai* ...... China Ordinary 100% 100% British School of Beijing^ ...... China Ordinary 100% 100% Collège Champittet S.A.*dSG...... Switzerland Ordinary 100% 100% Collège Alpin Beau-Soleil SA*dSG ...... Switzerland Ordinary 100% 100% La Côte International School SA*dSG ...... Switzerland Ordinary 100% — The Regent’s School ...... Thailand Ordinary 49% —

F-58 Class of Country of shares Incorporation held Ownership

2012 2011 Learning Services Nord Anglia Lifetime Development Limited*SG ...... UK Ordinary 100% 100% Nord Anglia Lifetime Development North East Limited*dSG . UK Ordinary 100% 100% Nord Anglia Lifetime Development North West Limited*& . . UK Ordinary 100% 100% Nord Anglia Lifetime Development London and South East Limited*& ...... UK Ordinary 100% 100% Nord Anglia Lifetime Development South West Limited*SG . UK Ordinary 100% 100% Nord Anglia Vocational Education and Training Services Ltd*SG...... UK Ordinary 100% 100% Nord Anglia eLearning Limited*& ...... UK Ordinary 100% 100% Nord Anglia Education Improvement Services Limited*& . . . UK Ordinary 100% 100% Nord Anglia Recruitment Limited*& ...... UK Ordinary 100% 100% Nord Anglia Education Partnerships Limited*dSG ...... UK Ordinary 100% 100% Nord Anglia Middle East Holding SPC (Abu Dhabi Branch)* ...... n/a n/a 100% 100% Nord Anglia Middle East Holding SPC (Malaysia Branch)* . n/a n/a 100% 100% Nord Anglia Educational Consultancies Saudi Arabia Limited^ ...... KSA Ordinary 100% 100% Brighton Education Learning Services Sdn. Bhd.*dSG .... Malaysia Ordinary 100% 100% Nord Anglia Education Sdn. Bhd.* ...... Malaysia Ordinary 100% 100%

* Investment held indirectly by 100% owned subsidiary of Group’s parent company

^ Investments held 100% within the Group by more than one subsidiary of the Group’s parent company

+ The Companies denoted are direct subsidiaries of the parent Company, Nord Anglia Education (UK) Holdings PLC

d Material assets of subsidiary form part of security arrangement for borrowings (see note 17)

S Share capital of subsidiary is pledged as security for borrowings (see note 17)

G Subsidiary is a guarantor under the security arrangement for borrowings (see note 17)

% Formerly known as Eduasia Limited

& In liquidation status

13 INVESTMENTS IN JOINTLY CONTROLLED ENTITIES

Joint Venture

EduAction (Waltham Forest) Limited, a company which provided education services to the London Borough of Waltham Forest, is owned 50% each by Nord Anglia Education Limited and Amey PLC. The company has ceased trading.

A summary of the aggregated financial information for EduAction (Waltham Forest) Limited is shown below:

2012 2011

$m $m Revenue ...... — —

Interest receivable and other income ...... 0.0 0.0

Profit on ordinary activities before tax ...... 0.0 0.0

Foreign exchange ...... (0.0) (0.0)

F-59 2012 2011

$m $m Current assets ...... 1.2 1.2

1.2 1.2

Current liabilities ...... (0.7) (0.7)

(0.7) (0.7)

0.5 0.5

There are no capital commitments or contingent liabilities in EduAction (Waltham Forest) Limited.

14 DEFERRED TAX ASSETS AND LIABILITIES

Recognised deferred tax assets and liabilities

Deferred tax assets and liabilities are attributable to the following:

Assets Liabilities

2012 2011 2012 2011

$m $m $m $m Property, plant and equipment ...... 0.3 0.1 (0.7) (0.8) Intangible assets...... — — (9.2) (11.1) Financial liabilities ...... — 0.7 — (0.1) Interest-bearing loans and borrowings...... — — — (0.6) Employee benefits...... 1.2 1.0 — — Taxvalueoflosscarry-forwards...... 1.0 0.6 — — Provisions and accruals ...... 3.6 3.2 — — Goodwill ...... — — (0.6) (0.2)

Tax assets / (liabilities) ...... 6.1 5.6 (10.5) (12.8)

Net tax (liabilities) ...... — — (4.4) (7.2)

Movement in deferred tax during the year

Recognised in Foreign Acquired in 1 September Recognised comprehensive exchange business 31 August 2011 in income income movements combination 2012

$m $m $m $m $m $m Property, plant and equipment ...... (0.7) 0.3 — — — (0.4) Intangible assets.... (11.1) 0.6 — 1.5 (0.2) (9.2) Financial liabilities . . . 0.6 (0.6) — — — — Interest-bearing loans and borrowings . . . (0.6) 0.6 — — — — Employee benefits. . . 1.0 0.1 0.2 (0.2) 0.1 1.2 Tax value of loss carry-forwards utilised ...... 0.6 0.3 — (0.1) 0.2 1.0 Provisions and accruals ...... 3.2 0.5 — (0.2) 0.1 3.6 Goodwill ...... (0.2) (0.4) — — — (0.6)

(7.2) 1.4 0.2 1.0 0.2 (4.4)

F-60 Movement in deferred tax during the prior year

Foreign Acquired in 1 September Recognised exchange business 31 August 2010 in income movements combination 2011

$m $m $m $m $m Property, plant and equipment . . . 0.1 (0.8) 0.0 — (0.7) Intangible assets...... — 0.5 (1.5) (10.1) (11.1) Financial liabilities ...... 1.3 (0.8) 0.1 — 0.6 Interest-bearing loans and borrowings...... (1.2) 0.7 (0.1) — (0.6) Employee benefits...... — — 0.1 0.9 1.0 Tax value of loss carry-forwards utilised ...... — 0.5 0.1 0.0 0.6 Provisions and accruals ...... 2.6 0.4 0.2 — 3.2 Goodwill ...... — (0.2) 0.0 — (0.2)

2.8 0.3 (1.1) (9.2) (7.2)

Deferred income tax liabilities of $1.6 million (2011: $0.2 million) have not been recognised for the withholding tax and other taxes that would be payable on the unremitted earning of certain subsidiaries. Such amounts are permanently reinvested. Unremitted earnings totalled $17.4 million at 31 August 2012 (2011: $2.3 million).

15 TRADE AND OTHER RECEIVABLES

2012 2011

$m $m Trade receivables ...... 25.3 24.6 Less: Provision for impairment of trade receivables (See note 22) ...... (0.8) (1.1)

Net trade receivables ...... 24.5 23.5 Prepayments ...... 9.0 6.9 Accrued income ...... 0.6 8.4 Amounts due from related undertaking (See note 26) ...... 0.9 5.4 Other receivables ...... 12.0 2.9

47.0 47.1

Non-current Other receivables ...... 10.8 11.6

Amounts due from related undertakings are unsecured and interest free.

Non-current receivables mainly relate to cash deposits that cannot be drawn until at least 12 months after the balance sheet date and a deposit on a Premium school site which is not recoverable for at least 12 months from this date.

16 CASH AND CASH EQUIVALENTS/ BANK OVERDRAFTS

2012 2011

$m $m Cash and cash equivalents ...... 167.3 155.6 Bank overdrafts ...... (59.1) (67.6)

Cash and cash equivalents per cash flow statements ...... 108.2 88.0

F-61 17 OTHER INTEREST-BEARING LOANS AND BORROWINGS This note provides information about the contractual terms of the Group and Company’s interest-bearing loans and borrowings, which are measured at amortised cost. For more information about the Group’s exposure to interest rate and foreign currency risk, see note 22, Financial instruments.

2012 2011

$m $m Current liabilities Current portion of secured bank loans and bank overdrafts...... 6.8 13.0 Current portion of 10.25% Senior secured notes due 2017 ...... 15.0 — Loan from parent undertaking (See note 26)...... — 16.4

21.8 29.4

Non-current liabilities Secured bank loans and overdrafts ...... 8.3 179.1 10.25% Senior secured notes due 2017 ...... 310.6 — Loan notes owed to parent (See note 26) ...... — 323.9 Loan notes owed to senior management (See note 26) ...... — 3.0 Loan notes owed to related party (See note 26) ...... — 1.8

318.9 507.8

All borrowings are secured by a debenture creating fixed and floating charges over all of the material current and future assets of certain Group entities. The material subsidiaries which are party to this arrangement are detailed in note 12, Subsidiaries, along with details of certain entities whose share capital has also been pledged as part of the security arrangement. In addition to the above, specific registered pledges have been made over certain bank accounts, assignment of receivables and assignment of insurance. At 31 August 2012, the carrying value of the bank accounts and receivables which have been pledged were $15.5 million (2011: $13.9 million) and $2.6 million (2011: $2.7 million) respectively.

Terms and debt repayment schedule

Nominal interest Year of Face Carrying Face Carrying Currency rate maturity value amount value amount

2012 2012 2011 2011

$m $m $m $m Senior A facility+ ...... US$ 3.43% 2015 — — 32.8 32.8 Senior B facility+ ...... US$ 3.69% 2015 — — 63.2 63.2 Working capital facility+...... US$ 3.44% 2015 — — 30.5 30.5 Mezzanine financing facility+ ..... US$ 10.52% 2015 — — 55.4 55.4 Loan notes owed to parent ...... US$ 12% 2038 — — 323.6 321.2 Loan notes owed to parent ...... US$ 4.5% 2038 — — 1.1 1.1 Loan notes owed to parent ...... US$ 2.5% 2038 — — 1.6 1.6 Loan notes owed to senior management ...... US$ 12% 2038 — — 3.0 3.0 Loan notes owed to related party. . . US$ 12% 2038 — — 1.8 1.8 Finance leases ...... GBP 2013 — — 0.0 0.0 Working capital facility ...... RMB 6.8% 2013 15.0 15.0 10.1 10.1 Business loan ...... CHF 4.5% 2013 — — 0.1 0.1 Business loan ...... HUF 23% 2012 — — 0.0 0.0 Loan from parent undertaking ..... CHF 4.5% n/a — — 7.5 7.5 Loan from parent undertaking ..... US$ 2.5% n/a — — 8.9 8.9 10.25% Senior secured notes ..... US$ 10.25% 2017 340.0 325.6 — — Business loan ...... CHF 3.61% 2013 0.1 0.1 — —

355.1 340.7 539.6 537.2

+ Interest rate represents the average rate for the year as the facility incurs interest at LIBOR plus a margin.

F-62 All interest is settled by cash payments on the required date, with the exception of 5.5% of the 10% of the mezzanine facility was rolled forward. On 28 March 2012, the Company issued $325.0 million of 10.25% Senior Secured Notes due 2017 (the “Notes”) pursuant to an indenture dated 28 March 2012 between the Company, Citicorp International Limited as Trustee and Security Agent, Citibank NA. London branch as Paying Agent and Citigroup Global Markets Deutschland AG as Registrar. The exposure of the Group’s borrowings to interest rate changes is as follows:

2012 2011

$m $m Less than one year ...... 15.0 198.2 Between one and five years ...... 325.7 10.3 More than five years ...... — 328.7

340.7 537.2

18 TRADE AND OTHER PAYABLES

2012 2011

$m $m Current Trade payables due to third parties ...... 4.3 4.3 Other taxes and social security ...... 0.4 1.2 Amounts owed to parent undertaking ...... 0.3 0.5 Other payables...... 32.0 18.4 Accrued expenses...... 10.2 17.1 Deferred income ...... 159.6 137.2

206.8 178.7

Non-current Other payables...... 6.2 2.0

Non-current payables predominantly relate to deferred consideration for the acquisition of The Regent’s School, Chonburi, Thailand, due to a third party.

19 EMPLOYEE BENEFITS

Pension plans The Group operates a variety of post-employment benefit arrangements, covering both funded defined contribution and funded and unfunded defined benefit schemes. The most significant of these are the funded defined benefit pension schemes for the Group’s employees in the UK and Switzerland.

Defined contribution plans The Group operates a number of defined contribution pension plans. The total expense relating to these plans in the current year was $1.2 million (2011 - $0.5 million), recognised in the Consolidated income statement.

Defined benefit plans A summary of the defined benefit plans operated by the Group:

UK Switzerland Total

2012 2011 2012 2011 2012 2011

$m $m $m $m $m $m Present value of funded defined benefit obligations ...... (56.8) (41.5) (24.2) (23.4) (81.0) (64.9) Fair value of plan assets ...... 31.4 31.1 19.2 19.2 50.6 50.3

Liability for defined benefit obligations recognised in the balance sheet ...... (25.4) (10.4) (5.0) (4.2) (30.4) (14.6)

F-63 UK

The Group operates three defined benefit pension schemes in the UK. In each case the assets of the scheme are held separately from those of the Group in independently administered funds. The current service costs of the schemes are charged to the income statement so as to spread the cost of pensions over the employees’ working lifetimes with the Group.

A defined benefit scheme was established for Lifetime Careers employees (employed by a Group subsidiary). Contributions are determined by independently professionally qualified actuaries on the basis of triennial valuations. The most recent formal actuarial valuation of the scheme was performed at 31 August 2008. A new actuarial valuation is in the process of being performed and is expected to be completed shortly.

The Nord Anglia Joint Pension Scheme is a closed scheme and therefore under the projected unit method the current service costs will increase as members of the scheme approach retirement. The most recent formal actuarial valuation of the scheme was performed at September 1, 2007 using the aggregate method which assesses the adequacy of the fund to meet the minimum funding requirement and calculates contributions on the level of pensionable payroll to provide the retirement benefits for the members.

The Wyburn School Limited Pension and Life Assurance Scheme (1985) is a closed scheme and therefore under the projected unit method the current service costs will increase as the members of the scheme approach retirement. The most recent actuarial valuation of the scheme was performed at September 1, 2007 using the aggregate method which assesses the adequacy of the fund to meet the minimum funding requirement and calculates contributions on the level of pensionable payroll to provide the retirement benefits for the members.

Actuarial valuation reports have been requested by the Group for both the Nord Anglia Joint Pension Scheme and The Wyburn School Limited Pension and Life Assurance Scheme (1985). Given the underlying size of these schemes (0.8% of the consolidated pension assets and liabilities), any movement as a result of changes reported in the actuarial valuation is unlikely to be material.

The Company information disclosed below is in respect of the whole of the plans for which the Company is either the sponsoring employer or has been allocated a share of cost under an agreed Group policy throughout the periods shown.

2012 2011 2010 2009 2008

$m $m $m $m $m Present value of funded defined benefit obligations ...... (56.8) (41.5) (37.0) (34.4) (40.4) Fair value of plan assets ...... 31.4 31.1 27.6 26.6 29.2

Liability for defined benefit obligations recognised in the balance sheet ...... (25.4) (10.4) (9.4) (7.8) (11.2)

Closure of schemes

At 31 August 2011, all three schemes closed to future accruals and active members became deferred pension members. Whilst the Group will continue to make future employer contributions to the schemes, member contributions will no longer be made.

Movements in present value of defined benefit obligation

2012 2011

$m $m At 1 September ...... (41.5) (37.0) Current service cost...... — (0.5) Interest cost ...... (2.1) (2.0) Curtailment gain ...... — 0.4 Actuarial losses ...... (16.6) (0.8) Contributions by members ...... — (0.3) Benefits paid ...... 2.5 0.6 Exchange adjustments ...... 0.9 (1.9)

At 31 August ...... (56.8) (41.5)

F-64 Movements in fair value of plan assets

2012 2011

$m $m At 1 September ...... 31.1 27.6 Expected return on plan assets...... 1.6 1.7 Actuarial gains/(losses)...... 1.2 (0.3) Contributions by employer ...... 0.8 0.9 Contributions by members ...... — 0.3 Benefits paid ...... (2.5) (0.5) Exchange adjustments ...... (0.8) 1.4

At 31 August ...... 31.4 31.1

Expense recognised in the income statement

2012 2011

$m $m Current service cost...... — (0.5) Interest on defined benefit pension plan obligation ...... (2.1) (2.0) Expected return on defined benefit pension plan assets...... 1.6 1.7 Curtailment gain ...... — 0.4 Exchange adjustments ...... (0.0) (0.0)

Total...... (0.5) (0.4)

The expense is recognised in the following line items in the income statement:

2012 2011

$m $m Cost of sales ...... — (0.1) Finance expense...... (0.5) (0.3) Exchange adjustments ...... (0.0) (0.0)

(0.5) (0.4)

Actuarial gains and losses recognised directly in equity in the statement of comprehensive income since 1 September 2009, the transition date to IFRSs:

2012 2011

$m $m Cumulative amount at 1 September ...... 3.8 4.9 Recognised in the year ...... (15.4) (1.1)

Cumulative amount at 31 August ...... (11.6) 3.8

F-65 The fair value of the plan assets and the return on those assets were as follows:

2012 2011

Fair value Fair value

$m $m Equities ...... 25.8 24.8 Diversified Growth Assets ...... 3.0 — Corporate bonds ...... 1.3 1.3 Cash ...... 0.6 4.3 With profits funds ...... 0.7 0.7

31.4 31.1

Actual return on plan assets ...... 2.8 1.4

Principal actuarial assumptions (expressed as weighted averages) at the year-end were as follows:

2012 2011

%% Investment/discount rate ...... 3.90 5.40 Inflation...... 3.10 3.00 Future salary increases...... n/a n/a Future payment increases ...... 3.10 3.00

The expected return on plan assets is 5.6% (2011 — 4.6%; 2010 — 4.6%).

The assumptions relating to longevity underlying the pension liabilities at the balance sheet date are based on standard actuarial mortality tables and include an allowance for future improvements in longevity. The assumptions are equivalent to expecting a 65-year old to live for a number of years as follows:

• Current pensioner aged 65: 22.1 years (2011 and 2010 — 22.1 years) (male), 25 years (2011 and 2010 — 25 years) (female).

• Future retiree upon reaching 65: 23.2 years (2011 — 23.2 years and 2010 — 23.2 years) (male), 26 years (2011 — 26 years and 2010 — 26 years) (female).

History of plans

The history of the plans for the current and prior periods is as follows:

Balance sheet

2012 2011

$m $m Present value of the defined benefit obligation ...... (56.8) (41.5) Fair value of plan assets ...... 31.4 31.1

Deficit...... (25.4) (10.4)

Experience adjustments

2012 2011

$m $m Experience adjustments on plan liabilities ...... (0.8) (0.1) Experience adjustments on plan assets...... 1.2 (0.3)

F-66 Experience adjustments

2012 2011

Experience adjustments on plan liabilities as a percentage of plan liabilities ..... 1.42% 0.02% Experience adjustments on plan assets as a percentage of plan assets ...... 3.84% 0.94%

The Group expects to contribute approximately $1.0 million to its defined benefit plans in the next financial year.

Switzerland

Following the acquisition of College Alpin Beau Soleil, College Champittet and La Côte International School, the Group has acquired additional defined benefit pension schemes. The assets of each scheme are held separately from those of the Group in independently administered funds. Contributions to the schemes are charged to the income statement so as to spread the cost of pensions over the employees working lifetime within the Group.

Under Swiss GAAP, there is no requirement for company pension schemes to be valued and therefore an IAS 19 valuation has been prepared at the date of acquisition and as at 31 August 2012 for all of these subsidiaries. Under IAS 19 the net pension deficit has been recognised in the Group financial statements.

2012 2011

$m $m Present value of funded defined benefit obligations ...... (24.2) (23.4) Fair value of plan assets ...... 19.2 19.2

Liability in the balance sheet ...... (5.0) (4.2)

Movements in present value of defined benefit obligation

2012 2011

$m $m At 1 September ...... (23.4) — Acquisition through business combination ...... (1.2) (18.7) Current service cost...... (1.6) (0.7) Interest cost ...... (0.6) (0.3) Actuarial losses ...... (0.8) — Contributions by members ...... (1.2) (0.6) Benefits paid ...... 0.8 0.0 Exchange adjustments ...... 3.8 (3.1)

At 31 August ...... (24.2) (23.4)

Movements in fair value of plan assets

2012 2011

$m $m At 1 September ...... 19.2 — Acquisition through business combination ...... 0.8 15.1 Expected return on plan assets...... 0.5 0.2 Actuarial (losses)/gains...... (0.1) 0.0 Contributions by employer ...... 1.4 0.7 Contributions by members ...... 1.2 0.7 Benefits paid ...... (0.8) (0.0) Exchange adjustments ...... (3.0) 2.5

At 31 August ...... 19.2 19.2

F-67 Expense recognised in the income statement

2012 2011

$m $m Current service cost...... (1.6) (0.7) Interest on defined benefit pension plan obligation ...... (0.6) (0.3) Expected return on defined benefit pension plan assets...... 0.5 0.2 Exchange adjustments ...... 0.0 (0.0)

Total...... (1.7) (0.8)

The expense is recognised in the following line items in the income statement:

2012 2011

$m $m Management, administrative and support staff expense ...... (1.6) (0.8) Finance expense...... (0.1) (0.0) Exchange adjustments ...... 0.0 (0.0)

(1.7) (0.8)

Actuarial gains and losses recognised directly in equity in the statement of comprehensive income since the date of acquisition:

2012 2011

$m $m Cumulative amount at 1 September ...... 0.0 — Recognised in the year ...... (0.9) 0.0

Cumulative amount at 31 August ...... (0.9) 0.0

The fair value of the plan assets and the return on those assets were as follows:

2012 2011

Fair value Fair value

$m $m Insurance assets ...... 19.2 19.3

Actual return on plan assets ...... (0.4) 0.3

Principal actuarial assumptions (expressed as weighted averages) at the year-end were as follows:

2012 2011

%% Investment/discount rate ...... 2.20 2.50 Inflation...... 1.50 1.50 Future salary increases...... 1.00 n/a Future payment increases ...... 1.50 1.50

The expected return on plan assets is 2.50% (2011 — 2.50%).

F-68 History of plans

The history of the plans for the current and prior periods is as follows:

2012 2011

$m $m Present value of defined benefit obligation ...... (24.2) (23.4) Fair value of plan assets ...... 19.2 19.2

Deficit...... (5.0) (4.2)

Experience adjustments

2012 2011

$m $m Experience adjustments on plan liabilities ...... 0.4 —

Experience adjustments on plan assets ...... (0.0) —

Experience adjustments

2012 2011

Experience adjustments on plan liabilities as a percentage of plan liabilities ..... 1.65% — Experience adjustments on plan assets as a percentage of plan assets ...... 0.00% 0.38%

Share-based payments

The Group operates an equity settled share based compensation plan. During the year the Issuing entity was changed from Nord Anglia Education (UK) Holdings PLC to its immediate parent undertaking Nord Anglia Education Inc. The employing entity also changed from NAE Limited to NAE Hong Kong Limited. There are no other changes to the terms of the scheme. Management has reassessed the vesting conditions of the awards, the awards will now vest at the earlier of February 2015 or a complete exit by Baring Private Equity Asia. None of the awards vested in the period.

Management has been issued shares based on their level of seniority. When vesting conditions are met the number of shares held by management will multiply in accordance with the ratchet attached to that class of shares. The vesting of shares will be satisfied by adjusting the ownership of the equity between the parent company and management. If the full IRR is satisfied, the stake owned by the employees would be 11.7%. The ratchet by class of share is noted below:

2012 & 2011:

IRR B shares C shares D shares E shares

Less than 18% ...... 3.514 3.347 3.606 Notapplicable 18%to25%...... 4.514 4.347 4.606 2 25%to35%...... 5.514 5.347 5.606 3 35%+...... 6.514 6.347 6.606 4

A fair value for the shares issued was calculated using the Black-Scholes Option Pricing Model incorporating the following assumptions; the terms and conditions of the grants are as follows:

Shares Shares Shares Shares issued 2012 issued 2011 issued 2010 issued 2009

Exercise price ...... $0.016281 $0.016281 $ 0.01551 $ 0.0163 Equityprice...... $ 0.1791 $ 0.1791 $ 0.1160 $ 0.1219 Volatility ...... 100% 100% 100% 100% Dividend yield ...... 0% 0% 0% 0% Riskfreeinterestrate...... 5% 5% 5% 5% Expected life to exercise ...... >0.5years 1.5 years 2.5 years 3.5 years Number of shares exercised ...... — 360,145 1,059,414 2,919,837

F-69 The fair value of each share was calculated as $0.1791 (2011 — $0.1791; 2010 — $0.1160; 2009 — $0.1017).

20 PROVISIONS FOR OTHER LIABILITIES AND CHARGES

Property Other Total

$m $m $m Balance at 1 September 2010 ...... 3.0 1.6 4.6 Provisions made during the year ...... 4.6 2.1 6.7 Provisions used during the year ...... (1.1) (0.3) (1.4) Provisions reversed during year ...... — (0.2) (0.2) Foreign exchange ...... 0.2 0.1 0.3

Balance as at 31 August 2011 ...... 6.7 3.3 10.0

Balance at 1 September 2011 ...... 6.7 3.3 10.0 Provisions made during the year ...... 0.1 19.4 19.5 Provisions used during the year ...... (3.0) (18.2) (21.2) Provisions reversed during the year ...... (2.9) — (2.9) Foreign exchange ...... (0.0) (0.0) (0.0)

Balance at 31 August 2012 ...... 0.9 4.5 5.4

Non-current ...... 0.3 2.0 2.3 Current...... 0.6 2.5 3.1

0.9 4.5 5.4

Provisions for property at the beginning of the year related to lease dilapidations and future lease costs resulting from the restructuring of the business within the Learning Services division. An element of the provision in excess of that utilised during the year has been released as a result of a settlement on one of these leases subsequent to the balance sheet date. The majority of these provisions are expected to be utilised over the period to 2014.

Other provisions relate to the costs associated with the issuance of the senior notes, additional costs associated with the relocation of the head office function and costs related to overseas employees. The overseas employees provision is likely to be utilised over several years, although the timing of utilisation is uncertain. The remaining balance is classified as current at the year end.

21 CAPITAL AND RESERVES

Group and Company

Share capital

Redeemable preference shares of $1.00 each Ordinary shares

In thousands of shares 2012 2011 2012 2011

On issue at 1 September ...... 65,246 — 140,980 103,843 Share consolidation ...... (65,246) — (140,980) — Share conversion ...... — — 67,542 — Debt for equity swap ...... — — 0 — Issued in consideration for business combination . . — 29,764 — 37,137 Share premium used to issue preference shares . . — 35,482 — —

On issue at 31 August — fully paid ...... — 65,246 67,542 140,980

F-70 2012 2011

In thousands of shares Number $m Number $m

Allotted, called up and fully paid Ordinary shares of $1.00 each ...... 67,542 67.5 — — Deferred share of $0.19 each ...... 0 0.0 — — A Ordinary shares of $0.016281/£0.01 each ..... — — 136,641 2.2 B Ordinary shares of $0.016281/£0.01 each ..... — — 842 0.0 C Ordinary shares of $0.016281/£0.01 each ..... — — 210 0.0 D Ordinary shares of $0.016281/£0.01 each ..... — — 273 0.0 E Ordinary shares of $0.016281/£0.01 each ..... — — 2,212 0.1 F Ordinary shares of $0.016281/£0.01 each ..... — — 802 0.0 Redeemable preference shares of $1.00 each.... — — 65,246 65.2

67,542 67.5 206,226 67.5

2012 2011

$m $m Shares classified as liabilities ...... — — Shares classified in shareholders’ funds ...... 67.5 67.5

67.5 67.5

With effect from 21 February 2012, Premier Education (UK) Holdco Limited redenominated the “Class A” portion of its share capital into Sterling in order to meet the Sterling share capital requirement for re-registration as a PLC. On 2 March 2012, the Company re-registered as a PLC and was renamed to “Nord Anglia Education (UK) Holdings PLC”. With effect on 15 March 2012, the Company redenominated the “Class A” portion of its share capital back into US Dollars, and pursuant to the same documents (Articles of Association), the Company adopted new articles to simplify its capital structure such that the Company has a single class of ordinary shares. Furthermore, the Company converted it’s A, B, C, D, E and F Ordinary shares together with its Redeemable Preference shares into one Ordinary share. The share carried the same aggregate nominal value as previous Ordinary and Preference shares. The one ordinary share was subsequently sub-divided and converted into 67,541,354 ordinary shares of $1.00 each and one deferred share of $0.19. On 28 March 2012, 200 shares with an aggregate nominal value of $200 were issued at $1.00 each with a share premium of $654,929 per share and a total share premium of $131.0 million. The shares were issued to Nord Anglia Education, Inc. (immediate parent company) for the conversion of $131.0 million of senior and junior loan notes. The remaining $120.0 million of senior and junior loan notes was settled during the year using part of the proceeds of the senior secured loan notes issued in March 2012. The ordinary shares and preferred shares have full rights to vote, to any dividend or other distribution and to any return of capital. The deferred share has no right to vote or to participate in a dividend or other distribution and only being entitled to a return of its nominal value on a return of capital. Before the share consolidation preference shares were redeemable at any time at the option of the Company. The amount payable on redemption was the “Aggregate Value”. For the purposes of the redemption or conversion of the preference shares, the term “Aggregate Value” has the meaning given to it by the current articles of association of the Company. The holders of the preference shares were not entitled to receive dividends and were not entitled to vote at meetings of the Company. The preference shares were convertible at the option of the Company into such number of A ordinary shares in the Company as had a market value equal to the “Aggregate Value”.

Currency translation reserve The currency translation reserve comprises all foreign exchange differences arising since 1 September 2009, the transition date to IFRSs, from the translation of the financial statements of foreign operations.

Other reserves Other reserves relate to the capital contributions reserve created upon the settlement of loan notes issued to the parent company and senior management.

22 FINANCIAL INSTRUMENTS

22 (a) Fair values of financial instruments

Trade and other receivables The fair value of trade and other receivables, is estimated as the present value of future cash flows, discounted at the market rate of interest at the balance sheet date if the effect is material.

F-71 Trade and other payables The fair value of trade and other payables is estimated as the present value of future cash flows, discounted at the market rate of interest at the balance sheet date if the effect is material.

Cash and cash equivalents The fair value of cash and cash equivalents is estimated as its carrying amount where the cash is repayable on demand. Where it is not repayable on demand then the fair value is estimated at the present value of future cash flows, discounted at the market rate of interest at the balance sheet date.

Interest-bearing borrowings Fair value is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the balance sheet date. For finance leases the market rate of interest is determined by reference to similar lease agreements.

Derivative financial instruments The fair value of interest rate swaps is determined through the use of valuation techniques which maximise observable market data as the instruments are not traded in an active market.

Fair values The fair values of all financial assets and financial liabilities by class together with their carrying amounts shown in the balance sheet are as follows:

Carrying Carrying amount Fair value amount Fair value

2012 2012 2011 2011

$m $m $m $m IAS 39 categories of financial instruments Financial assets held for trading (including all derivatives) Derivative financial instruments ...... — — 0.2 0.2

Total financial assets at fair value through profit or loss...... — — 0.2 0.2 Loans and receivables Cash and cash equivalents (note 16) ...... 108.2 108.2 88.0 88.0 Other loans and receivables ...... 47.6 47.6 43.4 43.4

Total loans and receivables ...... 155.8 155.8 131.4 131.4

Total financial assets ...... 155.8 155.8 131.6 131.6

Financial liabilities designated as fair value through profit or loss Financial liabilities held for trading (including all derivatives) Derivative financial instruments ...... — — (6.4) (6.4)

Total financial liabilities at fair value through profit orloss...... — — (6.4) (6.4) Financial liabilities measured at amortised cost Other interest-bearing loans and borrowings (note17)...... (340.7) (358.0) (208.5) (208.5) Trade and other payables ...... (53.0) (53.0) (44.0) (44.0) Loan notes owed to parent company ...... — — (323.9) (326.3) Loan notes owed to senior management ...... — — (3.0) (3.0) Loan notes owed to related party...... — — (1.8) (1.8)

Total financial liabilities measured at amortised cost ...... (393.7) (411.0) (581.2) (583.6)

Total financial liabilities ...... (393.7) (411.0) (587.6) (590.0)

Total financial instruments ...... (237.9) (255.2) (456.0) (458.4)

F-72 Fair value hierarchy

The table below analyses financial instruments measured at fair value, into a fair value hierarchy based on the valuation technique used to determine fair value.

• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities

• Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices)

• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

2012

Level 1 Level 2 Level 3 Total

$m $m $m $m Financial liabilities designated at fair value through profitandloss...... Derivative financial assets ...... ———— Derivative financial liabilities...... ————

————

2011

Level 1 Level 2 Level 3 Total

$m $m $m $m Financial liabilities designated at fair value through profitandloss...... Derivative financial assets ...... — 0.2 — 0.2 Derivative financial liabilities...... — (6.4) — (6.4)

— (6.2) — (6.2)

The fair value of interest rate swaps is determined through the use of valuation techniques which maximise observable market data as the instruments are not traded in an active market.

22 (b) Credit risk

Financial risk management

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables from customers, cash and bank balances, and derivatives. This credit risk is minimised by a policy under which the Group only enters into such contracts with companies, governments, banks and financial institutions with strong credit ratings within limits set for each organisation. In respect of derivatives, dealing activity is closely controlled and counterparty positions are monitored regularly. No credit limits were exceeded during the year and the Group does not anticipate that any losses will arise from non-performance by these counterparties.

Exposure to credit risk

The carrying amount of financial assets represents the maximum credit exposure. Therefore, the maximum exposure to credit risk at the balance sheet date was $47.6 million (2011 - $43.4 million) being the total of the carrying amount of financial assets.

F-73 Financial assets

The maximum exposure to credit risk for financial assets at the balance sheet date by currency was:

2012 2011

$m $m Sterling ...... 2.7 2.8 Dollar and dollar peg currencies ...... 5.9 7.0 Chinese renminbi ...... 16.2 10.7 European currencies (excluding sterling) ...... 4.9 5.1 Malaysian ringgit...... 3.0 3.5 Swissfranc...... 11.4 14.3 Thai Baht ...... 3.5 —

47.6 43.4

The maximum exposure to credit risk for financial assets at the balance sheet date by type of counterparty was:

2012 2011

$m $m School fees ...... 15.4 15.1 Amounts receivable through learning services contracts...... 9.1 8.5 Cash deposit accounts ...... 15.0 10.1 Others ...... 8.1 9.7

47.6 43.4

Credit quality of financial assets and impairment losses

The ageing of trade receivables at the balance sheet date was:

Net after Net after Gross impairment Gross impairment

2012 2012 2011 2011

$m $m $m $m Not past due ...... 6.2 6.2 6.5 6.5 Less than 1 month past due...... 8.7 8.7 10.0 10.0 1 — 3 months past due ...... 9.2 9.2 6.1 5.9 More than 3 months past due ...... 1.2 0.4 2.0 1.1

25.3 24.5 24.6 23.5

The Group defines impaired trade receivables to include those in legal hands or unrecoverable due to financial difficulties. The trade receivables that are past due but not impaired relate to customers for whom there is no history of default.

The movement in the allowance for impairment in respect of trade receivables during the year was as follows:

2012 2011

$m $m Balance at 1 September ...... 1.1 2.9 Impairment loss recognised ...... 0.2 0.8 Impairment loss reversed ...... (0.3) (2.6) Effect of foreign exchange movements ...... (0.2) 0.0

Balance at 31 August ...... 0.8 1.1

F-74 22 (c) Liquidity risk

Financial risk management

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.

The Group aims to maintain a flexible borrowing structure by combining committed bank borrowing facilities with additional overdraft and capital facilities. The Group monitors its future funding requirements over the short to medium term such that it can take actions to supplement its operating cash flows to service future debt obligations where appropriate.

Management monitors rolling forecasts of the Group’s liquidity resources (comprising the undrawn borrowing facility, and cash and cash equivalents) on the basis of expected cash flow. This is carried out at both Group level and local level in the operating companies of the Group in accordance with practice and limits set by the Group. These limits vary by location to take into account the liquidity of the market in which the entity operates. In addition, the Group’s liquidity management policy involves projecting cash flows in major currencies and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements, and maintaining debt financing plans.

The table below analyses the Group’s financial liabilities and net-settled derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.

The financial statements are prepared on the going concern basis. The balance sheet shows that assets exceed liabilities by $53.8 million. The directors have considered the future forecasts and on-going strategy when assessing the needs of the Group and consider the Group has adequate resources at its disposal to continue its operations for the foreseeable future. Further details are included in note 1.

The Group has complied with all covenants included in the various debt facilities and instruments.

Borrowing facilities

The Group has $30.0 million of borrowing facilities of which $2.5m was drawn down as overdraft facilities and $5.0m was drawn down as a bond facility. There were undrawn borrowing facilities at the balance sheet date of $22.5 million (2011 - $7.5 million).

For the year ended 31 August 2011, the Group was committed to a $31.0m (2010 - $31.0m) cap-ex facility and utilised $nil of the revolving line of credit. Both these facilities were repaid on 28 March 2012.

Liquidity risk — Group

The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the effect of netting agreements:

2012 2011

Carrying Carrying amount of amount of contractual 1 year or 1to 2to 5 years contractual 1 year or 1to 2to 5 years cashflows less < 2 years < 5 years and over cashflows less < 2 years < 5 years and over

$m $m $m $m $m $m $m $m $m $m Non-derivative financial liabilities Borrowings...... 490.6 23.8 41.9 424.9 — 234.8 27.1 30.3 177.4 — Finance lease liabilities . . . —————0.00.00.0—— Trade and other payables . . 53.0 46.8 6.2 — — 44.0 42.0 2.0 — Loan notes owed to parent company ...... —————6,907.0 — — — 6,907.0 Loan notes owed to senior management ...... —————63.1———63.1 Loan note owed to related party...... —————39.0———39.0 Other loans due to related party...... 0.3 0.3 — — — 17.3 — 17.3 — — Derivative financial liabilities Interestrateswap..... —————6.4——6.4—

543.9 70.9 48.1 424.9 — 7,311.6 69.1 49.6 183.8 7,009.1

F-75 22 (d) Market risk

Financial risk management

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group’s income or the value of its holdings of financial instruments

Market risk — Foreign currency risk

The Group has significant and expanding international operations trading in non US dollar currencies. Movements in global exchange rates can cause currency exposures to the Group’s consolidated US dollar financial results. Where stable currencies exist, trade is conducted in local currencies and where appropriate, borrowings are matched in that currency to mitigate the risk of exposure to the Group’s assets and liabilities from exchange rate movements. In countries of operation where currency trading zones are considered to be weaker, some transactions are conducted in US dollars and euros to try to minimise exchange fluctuation risks.

In consideration of benefits against cost, the Group does not hedge its translation exposure, but will consider managing transactional exposures by using forward cover instruments where significant transactions are involved.

The Group’s Premium Schools division holds significant non US dollar cash balances in overseas operations which arise from fee income and which represent a combination of working capital and trading profits. These balances are held in operations which include countries where exchange control restrictions may prevent full repatriation of funds to the UK parent undertakings. The Group utilises these funds through a combination of reinvestment in the expansion or improvement of existing overseas operations or by repatriation to the UK through management contracts including royalty agreements, management charges and dividends. Through these means the directors believe that satisfactory distribution of these funds can be achieved.

The Group’s exposure to foreign currency risk is as follows. This is based on the carrying amount for monetary financial instruments except derivatives when it is based on notional amounts.

31 August 2012

US dollar European and US Chinese Swiss Malaysian Sterling currencies dollar peg renminbi franc ringgit Thai Baht Total

$m $m $m $m $m $m $m $m Cash and cash equivalents . . . 3.5 43.7 (26.6) 84.4 (2.5) 0.5 5.2 108.2 Trade receivables . 2.6 2.9 4.5 0.3 9.7 2.0 2.5 24.5 Other receivables . 0.1 2.0 1.1 7.6 0.2 1.0 0.9 12.9 Other non-current receivables . . . — — 0.4 8.3 1.5 — — 10.2 Secured bank loans and overdrafts .... — — (325.6) (15.0) (0.1) — — (340.7) Trade and other payables ..... (2.0) (7.7) (2.3) (21.1) (6.9) (1.3) (11.7) (53.0)

Balance sheet exposure ..... 4.2 40.9 (348.5) 64.5 1.9 2.2 (3.1) (237.9)

F-76 31 August 2011

US dollar European and US Chinese Swiss Malaysian Sterling currencies dollar peg renminbi franc ringgit Total

$m $m $m $m $m $m $m Cash and cash equivalents...... (38.9) 40.7 7.9 50.7 26.6 1.0 88.0 Trade receivables ...... 2.7 4.7 2.4 0.0 10.3 3.4 23.5 Other receivables ...... 0.1 0.4 4.6 0.7 2.4 0.1 8.3 Other non-current receivables...... — — — 10.1 1.5 — 11.6 Secured bank loans and overdrafts ...... — (0.2) (181.7) (10.1) — — (192.0) Trade and other payables . (15.9) (8.5) (4.1) — (13.3) (2.2) (44.0) Derivative financial instruments ...... — — (6.4) — — — (6.4) Loan notes owed to parent undertaking, senior management and related parties ...... — — (328.7) — — — (328.7) Other loans due to related party...... — — (8.9) — (7.5) — (16.4)

Balance sheet exposure . . (52.0) 37.1 (514.9) 51.4 20.0 2.3 (456.1)

Sensitivity analysis A 1% strengthening of the following currencies against the US dollar at 31 August would have increased/(decreased) equity and profit or loss by the amounts shown below. This calculation assumes that the change occurred at the balance sheet date and had been applied to risk exposures existing at that date. This analysis assumes that all other variables, in particular other exchange rates and interest rates, remain constant. The analysis is performed on the same basis for the year ended 31 August 2011.

Profit or loss Equity

2012 2011 2012 2011

$m $m $m $m Sterling ...... 0.0 (0.2) 0.5 (1.5) SwissFranc...... (0.1) (0.3) (1.0) (0.1) Chinese Renminbi ...... (0.5) (0.3) (2.5) (0.0) PolishZloty...... (0.1) (0.1) (0.3) (0.1) Thai Baht ...... 0.0 — (0.3) —

A 1% weakening of the above currencies against the US dollar at 31 August would have had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant.

Market risk — Interest rate risk

Profile At the balance sheet date the interest rate profile of the Group’s interest-bearing financial instruments was:

2012 2011

$m $m Fixed rate instruments Financial liabilities ...... 325.7 347.7

Variable rate instruments Financial liabilities ...... 15.0 195.2

F-77 The Group does not apply hedge accounting for any of its derivative financial instruments. As such the Group recognises changes in fair value in respect of any of its derivatives immediately in its income statement. The valuations of the interest rate swap and interest rate cap are sensitive to changes in future interest rates. In 2011, if interest rates increased by 1% the interest rate swap would be valued at $(4.2) million and the interest rate cap at $0.5 million and if interest rates decreased by 1% then the interest rate swap would be valued at $(8.3) million and the interest rate cap at $nil. The swap and cap agreement were cancelled during the year. Two interest rate derivative financial instruments were established in October 2008 and were held over the Group’s US dollar loan facility. The hedging instruments fixed the US$ LIBOR rates that the Group could experience in relation to its US$ loans. The two interest rate instruments had a penalty free break clause that was exercisable on or before 31 August 2010 which the Group elected to utilise. On 15 July 2010, the Group restructured its existing agreements into one swap and into one cap agreement effective from 15 July 2010. The swap agreement extended to 28 February 2015 and provided the Group with a series of fixed US$ LIBOR rates on its US$ loans across the life of the agreement. The cap agreement extended to 31 August 2015 and places a cap of 3.00% on the US$ LIBOR rate the Group can experience on a secondary portion of the value of the loans. Both the swap and the cap were cancelled following the repayment of the bank facility on the issuance of the Notes. On 28 March 2012, following the issue of the 10.25% Senior secured notes the swap and cap agreements have been settled. The nominal value of the swap and the cap agreements at 31 August 2011 were $73.8 million and $49.2 million respectively. The Group’s interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. The interest rate profile of the Group’s debt following the issue of the $325.0 million senior secured notes in March 2012 is predominately fixed. At the 31st August 2012, approximately 96% of its borrowings have been issued at a fixed interest rate. The interest periods on the Senior A and B facilities, the Working Capital facility and Mezzanine facility are selected by the borrower and may be a period of one, two or three months, or any other period agreed between the borrower and the lenders. The interest rate is set at the beginning of the interest period. On 28 March 2012, following the issue of the 10.25% Senior secured notes the swap and cap agreements have been settled. The Group analyses its interest rate exposure on a regular basis. The impact of a 1% increase in interest rates on the Group’s variable interest rate debt not covered by the derivative financial instruments would be to increase the Group’s interest charge by approximately $0.2 million.

22 (e) Capital management The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may issue new shares or sell fixed assets to reduce debt. The Group monitors capital on the basis of the debt:equity ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including ‘current and non-current borrowings’ as shown in the consolidated balance sheet) less cash and cash equivalents. Total capital is calculated as ‘equity’ as shown in the consolidated balance sheet plus net debt. Prior to the issuance of the notes and the repayment of the bank debt, the Group’s strategy was to monitor its debt:equity ratio, as well as to ensure in respect of each quarter ending, that cash flow cover to total debt servicing was not less than the ratio of 1.1. Post the issuance of the notes, the Group’s strategy is to monitor the fixed charge cover ratio (“FCCR”) (Consolidated EBITDA divided by Consolidated Interest Expense as defined in the Indenture to the Senior secured notes due 2017). The debt equity ratios and FCCR at 31 August 2012, 2011 and 2010 were as follows:

2012 2011 2010

$m $m $m Totalborrowings...... 340.7 537.2 443.9 Less cash and cash equivalents ...... (108.2) (88.0) (81.8)

Net debt ...... 232.5 449.2 362.1 Totalequity...... 53.8 (124.8) (158.0)

Totalcapital...... 286.3 324.4 204.1

Net debt to total equity ratio...... 4.3:1 (3.6:1) (2.3:1)

Fixed charge coverage ratio* ...... 2.26 — —

The issuance of the Senior secured notes dated 2017 and the waiver of the loan notes owed to parent means that the net debt to total equity ratio has become positive and will continue to be monitored going forward. The focus has also now been switched from monitoring not just EBITDA but net income as well. * FCCR only monitored from 28 March 2012

F-78 23 OPERATING LEASES Future aggregate minimum lease payments are as follows:

2012 2011

$m $m Land and Buildings Less than one year ...... 27.0 25.9 Between one and five years ...... 93.5 97.9 More than five years ...... 300.0 335.7

420.5 459.5 Other Less than one year ...... 0.7 0.9 Between one and five years ...... 0.4 0.5 More than five years ...... — —

1.1 1.4

421.6 460.9

Operating leases are payable at market rates and are not subject to any restrictions other than those that would normally be expected to apply to such agreements. Agreements in respect of properties may be subject to renewal according to the landlord’s terms. There are no new terms of renewal applicable to any other operating lease agreements.

24 COMMITMENTS

Capital commitments

2012 2011

$m $m Contractedbutnotprovidedfor...... 2.4 2.7 Authorisedbutnotcontractedorprovidedfor...... 2.4 0.0

4.8 2.7

All capital commitments relate to tangible assets.

25 CONTINGENCIES In 2012 all borrowings are secured by a debenture creating fixed and floating charges over Group assets and by a fixed charge over specified Group bank accounts. In addition, specific registered pledges have been made by certain overseas subsidiaries (see note 12 for further details of these arrangements). The Group has provided the following bank guarantees: To SCTAI Anglo Iskola KFT for= C0.3m ($0.4m) in respect of a 30 year lease of school premises in Budapest. The annual payments under this lease are= C0.4m ($0.6m) and the guarantee expires on 18 January 2013. To Abu Dhabi Education Council for AED0.9m ($0.2m) expiring 30 June 2013 and AED1.3m ($0.3m) which is open ended.

26 RELATED PARTY TRANSACTIONS Included within loans and borrowings are the following inter-company balances resulting from transactions with Premier Education Holdings s.a.r.l., the former immediate parent company of Nord Anglia Education (UK) Holdings PLC:

Balance at Balance at Loan type 31 August 2012 31 August 2011

($m) ($m) Senior and Junior loan notes ...... — 323.9 Loans to parent undertaking...... — 16.4

Part of the proceeds from the issuance of the 10.25% Senior Secured Notes due 2017 were used to repay the senior and mezzanine facilities. During the year $16.7 million of the principle value of loan notes were written off. Additionally, remaining amounts after a waiver of interest amounting to $101.0 million were converted to equity.

F-79 Included within amounts owed to Parent undertaking is an amount of $0.3 million due to Nord Anglia Education Inc. The immediate parent company owns 100% of the ordinary shares (note 21) in Nord Anglia Education (UK) Holdings PLC. Also included in the consolidated financial statements are the following balances resulting from transactions with Senior Management of Nord Anglia Education (UK) Holdings PLC and shareholdings held by Senior Management:

Balance at Balance at Balance at 31 August 31 August Interest 31 August Loans 2012 Waived 2011 New loans charge 2010

($m) ($m) ($m) ($m) ($m) ($m) Senior and Junior loan notes...... — (3.0) 3.0 0.6 0.3 2.1

Number of Number of Number of shares shares Shares shares held at Converted held at issued held at 31 August during the 31 August during the 31 August Shareholdings 2012 year Value 2011 year Value 2010

($m) ($m) Ordinary ‘B’ shares . . — (841,623) — 841,623 — 0.0 841,623 Ordinary ‘C’ shares . . — (210,406) — 210,406 — 0.0 210,406 Ordinary ‘D’ shares . . — (273,527) — 273,527 — 0.0 273,527 Ordinary ‘E’ shares . . — (1,213,746) — 1,213,746 366,287 0.0 847,459

Details of the share conversion is disclosed in note 21. As a result of this Senior Management now hold shares in the immediate parent of Nord Anglia Education (UK) Holdings PLC, Nord Anglia Education, Inc. Remuneration of senior management is disclosed in note 7 of the consolidated financial statements. Included within loans and borrowings are the following balances resulting from transactions with the Parthenon Group LLC, an entity in which a director of Nord Anglia Education (UK) Holdings PLC has a shareholding. Details of the shareholdings held by this related party are also detailed below.

Balance at Balance at Balance at 31 August 31 August Interest 31 August Loans 2012 Repayment 2011 New loans charge 2010

($m) ($m) ($m) ($m) ($m) ($m) Junior loan notes ...... — (1.8) 1.8 0.4 0.2 1.2

Number of Number of shares held shares held Shares at Converted at issued of 31 August during the 31 August during the Shareholdings 2012 year Value 2011 year Value

($m) ($m) Ordinary ‘F’ shares ...... — (801,653) — 801,653 201,505 0.0

Details of the share conversion is disclosed in note 21. Included within amounts due from related undertakings is the following balances resulting from transactions with The British International School Abu Dhabi LLC, an entity held under common control.

Balance at Balance at Counterparty 31 August 2012 31 August 2011

($m) ($m) Nord Anglia Middle East Holdings S.p.c. (Abu Dhabi branch). 0.9 4.0 College Alpin Beau Soleil ...... — 1.4

0.9 5.4

Within the amount owed to Nord Anglia Middle East Holdings S.p.c (Abu Dhabi) is a fee of $1.8 million (2011: $1.8 million) in respect of management charges made to The British International School Abu Dhabi LLC.

F-80 During the year an amount due from Nord Anglia Middle East Holdings S.p.c. of $9.2 million was waived by the Company.

The Group holds a 50% shareholding in EduAction Waltham Forest Limited through its 100% owned subsidiary Nord Anglia Education Limited. At the balance sheet date the jointly controlled entity was owed an amount of $1.1 million (2011 — $1.1 million) by the Group which is included within other creditors due less than one year.

During the year ended 31 August 2012, consistent with 31 August 2011 financial statements, the Swiss schools continue to rent premises from companies which are controlled by a key member of management.

Balance at Rental charge for Balance at Rental charge for 31 August 2012 the period 31 August 2011 the period

($m) ($m) ($m) ($m) Lesolais SA ..... nil 3.1 nil 1.9 Hunters SA ..... nil 0.8 nil 0.5 Toumim SA ..... nil 0.3 nil 0.2 DelphimSA..... 0.1 3.3 nil 1.7 La Renardières ServiceSA.... nil 0.3 nil —

There is a rental guarantee made to Delphim SA for CHF1.2m in respect of a 14 year lease of school premises in Switzerland. The annual payments under this lease are CHF3.1m ($3.3m) and the guarantee expires on 31 August 2026.

In addition to the above, the vendor was also paid a consultancy fee of $0.3 million (2011: $0.3 million), reimbursement of temporary staff costs $0.5 million (2011: $nil) and $0.4 million of non-cash consideration for the acquisition of the Swiss schools during the year (2011: $nil).

Included within other creditors due in greater than one year is an amount of $1.2 million relating to deferred consideration due to the vendor for the initial purchase of College Champittet by Premier Education Holdings s.a.r.l.. The repayment date for this deferred consideration is 1 September 2013. These amounts relate to the original purchase of the trade and assets of College Champittet by the corporate vehicle (Cime Services SA) used to purchase College Champittet.

Included within exceptional items for the year ended 31 August 2010 is an amount of $28.2 million incurred as a result of the Group purchasing any past and all future rights under a profit share agreement.

On 23 December 2009, Nord Anglia Education Limited, the British International School Shanghai, Ms. Tang and her affiliates entered into an agreement in respect of the purchase of any past and all future rights under the profit share agreement among those parties. This agreement was amended by the parties on August 23, 2010. Under the amended profit share buyout agreement, the Group agreed to purchase any such past and all future rights under the profit share agreement and that payment for these rights would be made in two tranches. The first payment tranche of $9.4 million (RMB64 million) was made on 1 September 2010. The Group had accrued a further $7.5 million for final payment on 31 December 2010. Thus an amount of $16.9 million was included in exceptional items. However, the payment was delayed until 12 January 2011 thus incurring a late penalty fee and uplift in the exchange rate between the RMB and US $, therefore the amount paid was $8.2 million.

A completion fee was also paid to Ms Tang and her affiliates and to Ms Tang under each of the profit share agreement respectively, which was equal to the amount of profit share due under each such agreement for the fiscal year ending August 31, 2010 less any amounts that had been paid before completion. A charge equal to the completion fees totalling $2.9 million was made to the consolidated income statement in 2010.

In addition to the above, the Group is obliged to pay deferred consideration in respect of the second tranche to the value of $1.3 million, of which 50% was payable within 30 days after 31 August 2011 and 50% is payable 30 days after 31 August 2012. Each of these payments is conditional upon Ms Tang still being employed by the British International School Shanghai at the relevant date. Ms Tang will however be entitled to the deferred consideration in the event the British International School Shanghai terminates her employment (other than for serious or gross misconduct or wilful neglect) at any time prior to 31 August 2012. The deferred consideration component can also be adjusted for specified variations in the $/Chinese renminbi exchange rate between 23 August 2010 and the date the payments are made. Thus for 31 August 2011 and 31 August 2012, the actual payment made was $0.7 million which is reflected in exceptional items.

During the year ended 31 August 2012, a consultancy fee of $0.3 million (2011 - $0.3 million) was paid to a close family member of senior management for consultancy purposes.

F-81 During the year ended 31 August 2012, $0.1 million was paid to Barings Private Equity Asia for the reimbursement of travelling expenses. Furthermore, an amount of $1.1 million of legal related expenses in relation to acquisitions were passed down from Barings Private Equity Asia to the Group. During the year ended 31 August 2012, $0.5 million was paid to Parthenon Group LLC for consultancy purposes.

27 ULTIMATE PARENT COMPANY Nord Anglia Education (UK) Holdings PLC is controlled by its immediate parent company Nord Anglia Education, Inc. Nord Anglia Education (UK) Holdings PLC is the smallest and largest Group for which consolidated financial statements are prepared. The ultimate controlling party is Baring Private Equity Asia.

28 SUBSEQUENT EVENTS Subsequent to the balance sheet date, the Group entered into an agreement to purchase the 49% equity interest held by its ultimate parent in The British International School Abu Dhabi (“BISAD”) for $19.5 million. The acquisition pending regulatory approval is expected to be completed before the end of calendar year 2012. The consideration of $19.5 million is all deferred with the first payment of $5.0 million being due in August 2013 followed by two further payments in August 2014 and August 2015 of $7.0 million and $7.5 million respectively. This brings the total number of schools managed by the Group to fourteen.

29 NOTES TO THE COMPANY FINANCIAL STATEMENTS

29 (i) Principal accounting policies of the Company

(a) Accounting principles The Company balance sheet has been prepared on the going concern basis under the historical cost convention in accordance with applicable United Kingdom accounting standards and the Companies Act 2006.

(b) Basis of preparation No profit and loss account is presented for the Company as permitted by Section 408(2) of the Companies Act 2006. The profit recognised in the accounts of the Company was $70.3m (2011: loss of $34.3m).

(d) Investments Investments in subsidiaries are carried at historical cost less provision for impairment. Impairment reviews are performed by the directors when there has been an indication of potential impairment.

(e) Cash flow statement As the parent Company of the Group and therefore included in the consolidated financial statements which are publicly available, the Company has relied upon the exemption in FRS 1 (Revised 1996) not to present a cash flow statement as part of its financial statements.

(f) Related parties Under FRS 8 “Related party disclosures” the Company is exempt from the requirement to disclose related party transactions with other Group undertakings as they are all wholly owned within the Group and are included in the Nord Anglia Education (UK) Holdings PLC consolidated financial statements.

(g) Foreign currency Monetary assets and liabilities expressed in foreign currencies are translated into sterling at rates of exchange ruling at the date of the balance sheet or at an agreed contractual rate. All exchange differences are taken to the profit and loss account.

29 (ii) Directors remuneration

2012 2011

$m $m Emoluments ...... — —

F-82 The amounts in respect of the highest paid director are as follows:

2012 2011

$m $m Emoluments ...... — —

29 (iii) Investments

Shares in Group undertakings

Cost $m At 1 September 2011 ...... 321.6 Additions...... 0.2

31 August 2012 ...... 321.8

The directors believe that the carrying value of the investments is supported by their underlying net assets.

Investments represent 100% of the issued ordinary share capital of Premier Education (UK) Midco Limited, a company incorporated in the United Kingdom. The principle activity of this subsidiary is that of a holding company.

Details of investments indirectly held by the Company are disclosed in note 12 of the consolidated financial statements.

29 (iv) Debtors

2012 2011

$m $m Amounts owed by parent undertaking ...... 0.0 — Amounts owed by group undertakings...... 426.8 13.2 Other debtors...... 1.0 0.2

427.8 13.4

Amounts owed by group undertakings are unsecured, interest free and repayable on demand.

Amounts falling due after more than one year included above are:

2012 2011

$m $m Other debtors...... 0.6 —

29 (v) Creditors: Amounts falling due within one year

2012 2011

$m $m Bank overdraft ...... 32.9 — Trade payables...... 0.3 — Amounts owed to parent undertaking ...... 0.0 16.4 Amounts owed to group undertakings ...... 199.5 — Othercreditors...... 17.8 0.0

250.5 16.4

Amounts owed to group undertakings are unsecured, incur interest at either 4.5% or 2.5% (2011: 4.5% or 2.5%) and are repayable on demand.

F-83 29 (vi) Creditors: Amounts falling after more than one year

2012 2011

$m $m Amounts owed to parent undertaking ...... — 326.3 Othercreditors...... — 4.8 10.25% Senior secured notes due 2017 ...... 310.5 —

310.5 331.1

Details of creditors due after more than one year are disclosed in note 18 of the consolidated financial statements.

29 (vii) Share based payments

Details of share based payments are disclosed in note 19 of the consolidated financial statements.

29 (viii) Share capital

Details of share capital are disclosed in note 21 of the consolidated financial statements.

29 (ix) Other reserves

Other reserves relate to the foreign exchange revaluation reserve.

29 (x) Profit and loss account

2012 2011

$m $m Opening balance for the year ...... (79.2) (45.4) Profit/(loss) for the financial year ...... 70.3 (34.3) Share based payments ...... 0.2 0.5

Closing balance for the year...... (8.7) (79.2)

29 (xi) Reconciliation of movement in total shareholders’ surplus/(deficit)

2012 2011

$m $m Opening balance for the year ...... (12.5) (42.2) Profit/(loss) for the financial year ...... 70.3 (34.3) New shares issued in the year ...... 0.0 65.8 Debt for equity swap ...... 131.0 Conversion of share premium to preference shares ...... — (0.1) Foreign exchange movement on shares ...... — 0.0 Share based payments ...... 0.2 0.5 Foreign exchange movement ...... — (2.2)

Closing balance for the year...... 189.0 (12.5)

F-84 DIRECTORS’ REPORT FOR THE YEAR ENDED 31 AUGUST 2011 The directors present their annual report and the audited consolidated financial statements of the Group and Company for the year ended 31 August 2011.

Business review and future developments The Group’s results reflect a year of continued strong trading, most notably in its Premium School’s division. The Group’s profit before interest, tax, depreciation and amortisation, impairment charges and exceptional items was $47.722m (2010 - $36.357m). The profit on ordinary activities before interest and taxation and before exceptional items was $22.418m (2010 - loss of $13.675m). Exceptional administrative costs incurred in the year are detailed in note 5, Exceptional expenses. The major element of the charge relates to the decision of the Group to relocate its central services function to Hong Kong to support the planned future expansion of the business. The largest element of the charge relates to the onerous lease cost of the existing head office, along with redundancy costs payable to affected employees. Included within total expenses are costs totalling $6.486m (2010 - $4.431m) which the directors believe are not related to the normal trading of the Group. This amount includes closure costs of a school in Shanghai where the area had not developed as previously thought and as a result the number of potential students was limited. The school was closed to avoid future losses. In addition, costs were incurred relating to the restructuring of the Group, including legal and professional costs incurred in relation to the conversion of the Company loan notes from sterling and Swiss franc to US dollar loan notes, as well as the renegotiation of banking covenants to better reflect the current trading conditions of the business. These costs fall outside the definition of exceptional costs for statutory purposes but it is the view of the directors that these costs should be highlighted in order that the underlying profit of the Group can be fully evaluated. On 31 August 2011, the parent undertaking of Premier Education (UK) Holdco Limited converted the senior and junior loan notes it had with Premier Education (UK) Holdco Limited from sterling and Swiss francs to US dollars. This event triggered a review of the appropriateness of the Company having a sterling functional currency and it was determined that the Company should adopt a US dollar functional currency. The decision was also taken by the directors for the Group to make the transition to reporting under International Financial Reporting Standards (“IFRS”) as opposed to UK GAAP. As a result the Group consolidated financial statements were converted to IFRS from 1 September 2009.

Premium Schools In the year ended 31 August 2011, the results of the Premium School’s division benefited from strong growth in student numbers both at the start of the first term as well as during the 2010/11 academic year. In addition, the acquisition and successful integration of two schools in Switzerland (College Alpin Beau Soleil and College Champittet) have helped to better balance the cash generating regions of the Group (see note 2, Acquisitions of subsidiaries). Full-time equivalent pupil numbers increased to 6,610 during the year, from 4,900 at 31 August 2010 (both excluding the pupil numbers of the school closed in Shanghai and the school disposed of in Abu Dhabi in August 2010). The increase in pupil numbers in 2011 reflects the positive impact of the addition of two new schools, along with the effects of management’s decision to drive the maximisation of classroom space through architectural-based initiatives and from continued and targeted marketing. At the close of August 2011 consolidated school occupancy rates were 73% compared to 65% in 2010.

F-85 Learning Services

In the year ended 31 August 2011, the results of the Learning Services division reflected a year of consolidation in the light of very difficult trading conditions in the UK, primarily driven by cutbacks in spending by the government. The directors believe that this policy by the government will not change in the near future and have therefore taken the decision to fully impair the goodwill associated with the UK Learning Services division. As a result of the Middle East Learning Services operations, successful new contracts were won in Malaysia, whilst the existing contracts continued to trade in line with the previous year. The pipeline for potential future work showed strong development during the year and places the Group well for future years.

Corporate developments

The Group remains committed to both the expansion of its Premium Schools’ base and to the development of its existing schools. Within the Learning Services division, the Group has significant international development opportunities both in its existing Middle East markets as well as in new territories in the Far East. The Group is committed to the long term development of its UK-based Learning Services business, but recognises that the UK market is likely to be impacted in the short to medium term by restrictions in UK governmental spending.

Debt The total value of the loan notes, including accrued interest, at 31 August 2011 is $328.734m (2010 - $225.029m). As at 31 August 2011, all loan notes were converted to US dollar loan notes at an exchange rate of £1: $1.6281 and CHF 1: $1.2336 as a result of the Company changing its functional currency from sterling to US dollar. The Group issued loan notes in January 2011 as part of the consideration for the acquisition of College Alpin Beau Soleil. These loan notes were issued in sterling, US dollars and Swiss francs. The total value of bank debt is $195.353m excluding amortised costs of $3.333m (2010 - $208.719m excluding amortised costs of $4.387m) of which $185.099m (2010 - $208.709m) is supported by a syndicated arrangement led by Credit Suisse (Singapore).

Strategy The Group will continue to promote its strategy of growth across each of its business streams where strong expansion opportunities exist in markets where the Group has good knowledge and reputation. Both the quality of educational delivery and the quality of people resources are at the core of the Group’s performance and provide the foundation for expansion.

Financial outlook Whilst the impact of international recessionary pressures have still to permeate all markets, the prospects for the Group remain good. The Group has been internationally established for a number of years and in recent years has added to its international base. The multi-territory trading base provides the Group with the ability to balance its trading risks and to manage the impact of individual territory recessionary measures and governmental changes within the education sector.

Results and dividends The loss for the year, after taxation, amounted to $41.072m (2010 - $115.739m). During the year no interim dividend was paid (2010 - $nil). The directors do not recommend the payment of a final dividend (2010 - $nil).

F-86 Directors The directors who served during the period and up to the date of the signing of the financial statements were: K Kalliarekos J Hennessy

Government contracts The Learning Services division has many contracts working in partnership with government bodies. These contracts have strict guidelines and clauses which, if not adhered to, may result in the cancellation of such agreements or the application of financial penalties. The Group mitigates these risks by effective project management of agreed KPIs, regular internal audit of operations and review of procedures to ensure compliance.

Health and safety Due to the nature of the Group’s operations, health and safety is subject to regular internal audit and external review, which assess and monitor health and safety risks related to customers and staff and ensures that government and group guidelines on such policies are adhered to. Where necessary the Group also engages the services of independent parties to advise on such matters. The board reviews health and safety performance within the Group at each board meeting and the Group has a health and safety committee which places great importance on health and safety matters.

Disaster recovery policy The board has an ICT disaster recovery procedure and reviews the adequacy of this at appropriate intervals. Other operational areas of the business are also reviewed and improvements recommended where identified.

Key performance indicators Key measures used by the board to measure performance within the Group include turnover and EBITDA. On a divisional basis measures include pupil numbers and occupancy rates for Premium Schools and contract wins for Learning Services. These are discussed throughout this report.

F-87 Financial risk management The Group assesses and manages its potential exposure to financial risks, including price risk, credit risk, interest rate volatility, foreign currencies and exchange control restrictions, counterparty performance, liquidity risk and going concern as follows:

Cash flow and interest rate risks On 15 July 2010, the Group restructured its existing derivatives into one swap and one cap agreement effective from 1 June 2010. These agreements extend to 28 February 2015 for the swap and 28 August 2015 for the cap. As the cap agreement is cancellable under certain circumstances, the Group has retained flexibility to allow it to best match the hedging requirements of its senior and mezzanine debt going forward. The life and value of the new instruments is consistent with the amortisation profile attached to the US dollar borrowings. At 31 August 2011, 66.4% of US dollar borrowings were shielded by these instruments (2010 — 64.8%).

Foreign currency and exchange controls The Group converted to a US dollar functional currency on 31 August 2011 and the Group has significant and expanding international operations trading in non-dollar currencies. Movements in global exchange rates can cause currency exposures to the Group’s consolidated US dollar financial results. Where stable currencies exist trade is conducted in local currencies and, where appropriate, borrowings are matched in that currency to mitigate the risk of exposure to the Group’s assets and liabilities from exchange rate movements. In countries of operation where currency trading zones are considered to be weaker, some transactions are conducted in US dollars and euro’s to try to minimise exchange fluctuation risks. In consideration of benefits against cost, the Group does not hedge its translational exposure. The Group will consider managing transactional exposures by using forward cover instruments where significant transactions are involved. The Group’s Premium Schools division holds significant non-dollar cash balances in overseas operations which arise from fee income and represent a combination of working capital and trading profits. These monies are held in operations in countries which include those where exchange control restrictions may prevent full repatriation of funds to the UK parent undertaking. The Group utilises these funds through a combination of reinvestment in the expansion or improvement of overseas operations, or by repatriation to the UK through management contracts, including royalty agreements, management charges and dividends. Through these means the directors believe that satisfactory distribution of these funds can be achieved.

Counterparty risk The Group employs local advisers in each of its major countries of operation to provide professional advice and enhance local business knowledge in understanding compliance with local operating laws and regulations. The Group acknowledges that there are risks of ownership and in the control and safeguarding of assets in operations outside the European zone and has taken measures to reduce these risks by ensuring cash held, particularly in China, is deposited with secure national institutions that are also favoured by other western companies. Increasing the number of overseas countries in which the Group operates should reduce reliance on any one significant country of operation going forward.

F-88 Liquidity risk The Group aims to maintain a flexible borrowing structure by combining committed bank borrowing facilities with additional leasing and credit facilities. The Group monitors its future funding requirements over the medium term such that it can take actions to supplement its operating cash flows to service future debt obligations where appropriate. The Group must comply with a set of three covenants each quarter. These covenants are monitored on a regular basis by the board.

Going concern The Group and Company balance sheets as at 31 August 2011 show that liabilities exceed assets by $124.750m and $12.512m respectively. The senior and junior loan notes that form a significant part of these liabilities are not due for repayment until 2038, and interest on these loan notes is compounded rather than paid. In addition, deferred income shown as a liability is released to the income statement in the following year rather than being payable in cash. The directors have reviewed the latest guidance relating to going concern and, having made all relevant enquiries, have formed a judgement at the date of the approval of the financial statements that the Group has adequate resources at its disposal to continue its operations for the foreseeable future. This judgement is based on a review undertaken of the current business forecast to 31 August 2013 and the projected headroom under the existing bank covenants to assess the likelihood of the Group being able to continue as a going concern. Suitable sensitivities were run for the periods up to 31 August 2013 to assess the headroom available. This review concluded that there were no material uncertainties that potentially could give rise to a significant doubt about the business continuing as a going concern.

Qualifying third party indemnity A qualifying third party indemnity provision is in place for the directors of the Company during the financial year and also at the date of approval of the financial statements. This covers liability for the actions of directors and officers of the Company and associated costs, including legal costs.

Subsequent events Subsequent to the balance sheet date, the Group acquired Le Cote International — a Premium school operating in Switzerland. Further details are disclosed in note 30 subsequent events.

F-89 All employees in the Group are expected to avoid personal activities and financial interests which could conflict with their responsibilities to the Group. Employees must not seek gain for themselves or others through misuse of their positions.

Donations

Charitable donations made in the year totalled $3,165 (2010 - $13,127). There were no political donations (2010 - $nil).

Payment of suppliers

The Group’s policy is, wherever practical, to:-

i) negotiate terms of payment with suppliers up front;

ii) ensure that the suppliers are made aware of the terms of payment; and

iii) abide by the terms of payment.

The Group’s average creditor payment period at 31 August 2011 was 64 days (2010 - 75 days). The Company had no trade creditors at 31 August 2011 (2010 - $nil).

Statement of directors’ responsibilities

The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have prepared the Group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union, and the parent Company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). In preparing the Group financial statements, the directors have also elected to comply with IFRSs, issued by the International Accounting Standards Board (IASB).Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of Premier Education Holdco (UK) Limited and Group for that period. In preparing those financial statements, the directors are required to: • select suitable accounting policies and then apply them consistently; • make judgements and accounting estimates that are reasonable and prudent; • state whether IFRSs as adopted by the European Union and UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the Group and parent Company financial statements respectively; and • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business. The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

F-90 Statement of disclosure of information to auditors

In the case of each director in office at the date the directors’ report is approved, the following applies:

• so far as the director is aware, there is no relevant audit information of which the Company’s auditors are unaware; and

• they have taken all the steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the Company and Group auditors are aware of that information.

On behalf of the Board,

J Hennessy Premier Education (UK) Holdco Limited Director Nord House, Third Avenue Centrum 100, Date 23 December 2011 Burton Upon Trent Staffordshire DE14 2WD

F-91 INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF PREMIER EDUCATION (UK) HOLDCO LIMITED

We have audited the Group and parent Company financial statements (the “financial statements”) of Premier Education (UK) Holdco Limited for the year ended 31 August 2011 which comprise the Consolidated Income Statement, the Consolidated and Company Balance Sheets, the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Changes in Equity, the Consolidated Statement of Cash Flow and the related notes. The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. The financial reporting framework that has been applied in the preparation of the parent Company financial statements is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

Respective responsibilities of directors and auditors

As explained more fully in the Statement of directors responsibilities set out on page 8, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Opinion In our opinion: • the financial statements give a true and fair view of the state of the Group’s and of the parent Company’s affairs as at 31 August 2011 and of the Group’s loss and cash flows for the year then ended; • the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union; • the parent financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

F-92 Opinion on other matter prescribed by the Companies Act 2006

In our opinion the information given in the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

• adequate accounting records have not been kept by the parent Company, or returns adequate for our audit have not been received from branches not visited by us; or

• the parent Company financial statements are not in agreement with the accounting records and returns; or

• certain disclosures of directors’ remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit.

Andrew Lyon BSc FCA (Senior Statutory Auditor) for and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors East Midlands 23 December 2011

F-93 CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 AUGUST 2011

Note 2011 2010

$000 $000 Revenue ...... 3 217,495 182,971 Other income...... 4 1,800 2,887 219,295 185,858 Direct educational costs ...... (92,303) (72,613) Property costs ...... (24,688) (18,291) Management, administrative and support staff expenses .... (24,666) (26,708) Consultancy costs ...... (9,819) (8,409) Other expenses ...... (20,097) (23,480) Depreciation ...... 11 (5,838) (7,929) Amortisation ...... 12 (2,809) (773) Impairment of goodwill ...... 12 (16,657) (41,330) Exceptional expenses ...... 5 (9,356) (40,476) Total expenses ...... 6 (206,233) (240,009) Operating profit/(loss) ...... 13,062 (54,151) Finance income ...... 9 10,076 701 Finance expense ...... 9 (51,683) (55,755) Net financing expense ...... (41,607) (55,054) Share of profit of jointly controlled entity ...... 4 149 Loss before tax ...... (28,541) (109,056) Income tax expense ...... 10 (12,531) (6,683) Loss for the year ...... (41,072) (115,739)

Attributable to: Equity holders of the parent ...... (41,072) (116,377) Non-controlling interest ...... — 638 Loss for the year ...... (41,072) (115,739)

The notes on pages 17 to 89 form an integral part of these financial statements.

F-94 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR YEAR ENDED 31 AUGUST 2011

Note 2011 2010

$000 $000 Loss for the year ...... (41,072) (115,739) Other comprehensive income/(loss) Foreign exchange translation differences ...... 9,222 (11,808) Actuarial losses on defined benefit pension plans ...... 21 (1,078) (2,265) Other comprehensive income/(loss) for the period, net of income tax ...... 8,144 (14,073) Total comprehensive loss for the period ...... (32,928) (129,812) Attributable to: Equity holders of the parent...... (32,928) (130,344) Non-controlling interest ...... — 532 (32,928) (129,812)

The notes on pages 17 to 89 form an integral part of these financial statements.

F-95 CONSOLIDATED BALANCE SHEET AS AT 31 AUGUST 2011

Note 2011 2010 2009 $000 $000 $000 Non-current assets Property, plant and equipment...... 11 28,437 18,644 34,738 Intangible assets ...... 12 458,789 314,741 373,875 Investments in jointly controlled entities ...... 14 540 511 370 Derivative financial instruments ...... 24 162 391 — Trade and other receivables ...... 17 11,570 — — Deferred tax assets ...... 15 5,565 4,056 2,723 505,063 338,343 411,706 Current assets Inventories...... 16 — 71 376 Tax receivable ...... — — 85 Trade and other receivables ...... 17 47,172 35,475 33,517 Cash and cash equivalents ...... 18 87,968 81,826 66,499 135,140 117,372 100,477 Total assets...... 640,203 455,715 512,183 Current liabilities Other interest-bearing loans and borrowings ...... 19 (29,389) (31,430) (16,307) Trade and other payables ...... 20 (178,739) (146,062) (107,716) Provisions for other liabilities and charges ...... 22 (3,051) (1,691) (584) Current tax liabilities ...... (3,276) (3,060) (2,990) (214,455) (182,243) (127,597) Non-current liabilities Other interest-bearing loans and borrowings ...... 19 (507,820) (412,501) (403,527) Other payables ...... 20 (2,005) (170) (263) Derivative financial instruments ...... 24 (6,463) (5,342) (4,947) Retirement benefit obligations ...... 21 (14,621) (9,362) (7,804) Provisions for other liabilities and charges ...... 22 (6,827) (2,909) (1,095) Deferred tax liabilities ...... 15 (12,762) (1,212) (1,994) (550,498) (431,496) (419,630) Total liabilities...... (764,953) (613,739) (547,227) Net liabilities ...... (124,750) (158,024) (35,044) Equity attributable to equity holders of the parent Share capital ...... 23 67,541 1,611 1,678 Share premium ...... 107 202 197 Other reserves ...... 6,871 6,545 6,879 Currency translation reserve ...... 20,618 12,586 7,575 Shareholder deficit ...... (219,887) (178,968) (53,964) Shareholders’ equity...... (124,750) (158,024) (37,635) Non controlling interests ...... — — 2,591 Total shareholder deficit ...... (124,750) (158,024) (35,044)

The notes on pages 17 to 89 form an integral part of these financial statements. These financial statements set out on pages 10 to 89 were approved by the board of directors on 23 December 2011 and were signed on its behalf by:

J Hennessy K Kalliarekos Director Director Company registered number: 06590752

F-96 COMPANY BALANCE SHEET AS AT 31 AUGUST 2011

Note 2011 2010

$000 $000 Fixed assets Investments ...... 32(ii) 321,643 187,017 Current assets Debtors...... 32(iii) 13,351 232 Cash at bank and in hand ...... — 20 13,351 252 Creditors: Amounts falling due within one year ...... 32(iv) (16,428) (16) Net current (liabilities)/assets ...... (3,077) 236 Total assets less current liabilities ...... 318,566 187,253 Creditors: Amounts falling due after more than one year ...... 32(v) (331,078) (229,520) Net liabilities...... (12,512) (42,267)

Capital and reserves Called up share capital ...... 23* 67,541 1,611 Share premium account ...... 107 202 Other reserves ...... (908) 1,308 Profit and loss account ...... 32(viii) (79,252) (45,388) Total shareholder deficit ...... 32(ix) (12,512) (42,267)

These financial statements set out on pages 10 to 89 were approved by the board of directors on 23 December 2011 and were signed on its behalf by:

J Hennessy K Kalliarekos Director Director

Company registered number: 06590752

* Note reference refers to consolidated financial statements note.

F-97 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 AUGUST 2010

Currency Total Non- Share Share Other translation Shareholder’s parent controlling Total capital premium reserves reserve deficit equity interest equity

$000 $000 $000 $000 $000 $000 $000 $000 Balance at 1 September 2009 ...... 1,678 197 6,879 7,575 (53,964) (37,635) 2,590 (35,045)

Total comprehensive income/(loss) for the year (Loss)/income for the year . — — — — (116,377) (116,377) 638 (115,739) Other comprehensive income/(loss) (note 23) . . (81) (9) (334) 5,011 (18,554) (13,967) (106) (14,073)

Total comprehensive income/(loss) for the year ...... (81) (9) (334) 5,011 (134,931) (130,344) 532 (129,812)

Transactions with owners, recorded directly in equity Issue of shares ...... 14 14 — — — 28 — 28 Equity-settled share based payment transactions . . — — — — 464 464 — 464 Acquisition of non-controlling interest (seenote5)...... — — — — 9,463 9,463 (3,122) 6,341

Total contributions by and distributions to owners . . 14 14 — — 9,927 9,955 (3,122) 6,833

Balance at 31 August 2010 ...... 1,611 202 6,545 12,586 (178,968) (158,024) — (158,024)

F-98 Currency Total Share Share Other translation Shareholders’ parent capital premium reserves reserves deficit equity

$000 $000 $000 $000 $000 $000 Balance at 1 September 2010 ...... 1,611 202 6,545 12,586 (178,968) (158,024) Total comprehensive income/(loss) for the year Loss for the year ...... — — — — (41,072) (41,072) Other comprehensive income/(loss) (note 23) .... 79 9 326 8,032 (302) 8,144 Total comprehensive income/(loss) for the year . . 79 9 326 8,032 (41,374) (32,928) Transactions with owners, recorded directly in equity Contributions by and distributions to owners .... Issue of shares...... 30,369 35,378 — — — 65,747 Issue of preference shares. . . 35,482 (35,482) — Equity-settled share based payment transactions ..... — — — — 455 455 Total contributions by and distributions to owners .... 65,851 (104) — — 455 66,202 Balance at 31 August 2011 . 67,541 107 6,871 20,618 (219,887) (124,750)

The notes on pages 17 to 89 form an integral part of these financial statements.

F-99 CONSOLIDATED CASH FLOW STATEMENT FOR YEAR ENDED 31 AUGUST 2011

Note 2011 2010

$000 $000 Cash flows from operating activities Loss for the year before taxation...... (28,541) (109,056) Adjustments for: Depreciation, amortisation and impairment ...... 25,304 50,032 Pension deficit taken directly to reserves...... 290 (514) Other non-cash movements ...... — (4,316) Loss/(gain) on sale of property, plant and equipment...... 976 (1,128) Net financial expense...... 41,607 55,054 Share of profit of equity-accounted investees ...... (4) (151) Loss on sale of subsidiary ...... — 2,462 Equity settled share-based payment expenses ...... 455 464 40,087 (7,153) Decrease/(increase) in trade and other receivables ...... 39,737 (5,140) Decrease in inventories ...... 467 288 (Decrease)/increase in trade and other payables...... (23,465) 59,373 Increase in related party debts...... — 14,648 Cash generated from operations ...... 56,826 62,016 Interest paid...... (10,894) (15,369) Tax paid ...... (13,918) (7,912) Net cash from operating activities ...... 32,014 38,735 Cash flows from investing activities Proceeds from sale of property, plant and equipment ..... 8 201 Purchase of intangible assets ...... (442) — Acquisition of subsidiary, net of cash acquired...... 2 (667) (1,044) Cash acquired/(disposed) with subsidiaries ...... 742 (1,050) Acquisition of property, plant and equipment ...... 11 (11,825) (10,266) Interest received ...... 618 695 Net cash from investing activities ...... (11,566) (11,464) Cash flows from financing activities Proceeds from the issue of share capital ...... 23 4,860 30 Proceeds from new loan ...... 17,995 842 Proceeds from issues of loan notes ...... 7,400 — Repayment of borrowings ...... (50,730) (11,285) Payment of finance lease liabilities ...... (11) (92) Net cash from financing activities ...... (20,486) (10,505) Net (decrease)/increase in cash and cash equivalents .... (38) 16,766 Cash and cash equivalents at 1 September...... 81,826 66,499 Effect of exchange rate fluctuations on cash held ...... 6,180 (1,439) Cash and cash equivalents at 31 August ...... 18 87,968 81,826

The notes on pages 17 to 89 form an integral part of these financial statements

F-100 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2011 (FORMING PART OF THE FINANCIAL STATEMENTS)

1. ACCOUNTING POLICIES

1.1 Basis of preparation Premier Education (UK) Holdco Limited (the “Company”) is a company incorporated and domiciled in the UK. The Group financial statements consolidate those of the Company and its subsidiaries (together referred to as the “Group”) and equity account the Group’s interest in jointly controlled entities. The parent Company financial statements present information about the Company as a separate entity and not about its Group. The Consolidated Financial Statements have been prepared and approved by the Directors for the first time and in all aspects in accordance with International Financial Reporting Standards as adopted by the European Union (IFRSs as adopted by the EU), IFRIC Interpretations and the Companies Act 2006 applicable to companies reporting under IFRS. The Company has elected to prepare its parent Company financial statements in accordance with UK GAAP. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the company’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 1.32, Critical judgements and accounting policies. On 31 August 2011, following the conversion of sterling and Swiss franc loan notes to US dollars the parent Company’s functional currency was changed from sterling to US dollars. This has been applied prospectively. The Group has chosen to adopt US dollars as the presentational currency for the year ended 31 August 2010 and 31 August 2011. All amounts are in US dollars unless otherwise stated. The information reflects the consolidated results of the Group and in the case of acquisitions and disposals, from or to the date control passes or ceases. All transactions between the Group’s businesses have been eliminated in the preparation of the consolidated financial information. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group. The Group’s jointly controlled entity has an accounting year end which is coterminous with the Group. However, due to timing of statutory accounts preparation, management accounts are used at 31 August 2011 for consolidation purposes. The financial statements are prepared on the historical cost basis except that the following assets and liabilities are stated at their fair value: derivative financial instruments classified as fair value through profit or loss.

Recent accounting pronouncements The Group considers that there are no relevant standards or relevant interpretations mandatory for the current accounting period that have not been applied. The Group considers that the following amendments issued by the International Accounting Standards Board (IASB), which are not effective for the financial year beginning 1 September 2010 and have not been early adopted, will have an impact on the financial statements in the future: • IAS 19, ‘Employee benefits’ was amended in June 2011. The impact on the Group will be as follows: to immediately recognise all past service costs; and to replace interest cost and expected return on plan assets with a net interest amount that is calculated by applying the discount rate to the net defined benefit liability (asset). The Group is yet to assess the full impact of the amendments; • IFRS 9, ‘Financial instruments’, addresses the classification, measurement and recognition of financial assets and financial liabilities. IFRS 9 was issued in November 2009 and October 2010. It replaces the parts of IAS 39 that relate to the classification and measurement of financial instruments. IFRS 9 requires financial assets to be classified into two measurement categories: those measured as at fair value and those measured at amortised cost. The determination is made at initial recognition. The classification depends on the entity’s business model for managing its financial instruments and the contractual cash flow characteristics of the instrument. For financial liabilities, the standard retains most of the IAS 39 requirements. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity’s own credit risk is recorded in other comprehensive income rather than the income statement, unless this creates an accounting mismatch. The Group is yet to assess IFRS 9’s full impact and intends to adopt IFRS 9 no later than the accounting period beginning on or after 1 September 2013, subject to endorsement by the EU; • IFRS 10, Consolidated financial statements’ builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of the parent Company. The standard provides additional guidance to assist in the determination of control where this is difficult to assess. The Group is yet to assess IFRS 10’s full impact and intends to adopt IFRS 10 no later than the accounting period beginning on or after 1 September 2013, subject to endorsement by the EU; • IFRS 12, ‘Disclosures of interests in other entities’ includes the disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles. The Group is yet to assess IFRS 12’s full impact and intends to adopt IFRS 12 no later than the accounting period beginning on or after 1 September 2013, subject to endorsement by the EU;

F-101 • IFRS 13, ‘Fair value measurement’, aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRSs. The requirements, which are largely aligned between IFRSs and US GAAP, do not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards within IFRSs or US GAAP. The Group is yet to assess IFRS13’s full impact and intends to adopt IFRS 13 no later than the accounting period beginning on or after 1 September 2012, subject to endorsement by the EU. There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Group.

1.2 Transition to Adopted IFRSs The Group is preparing its financial statements in accordance with Adopted IFRS for the first time and consequently has applied IFRS 1. An explanation of how the transition to Adopted IFRSs has affected the reported financial position, financial performance and cash flows of the Group is provided in note 31. IFRS 1 grants certain exemptions from the full requirements of Adopted IFRSs in the transition period. The following exemptions have been taken in these financial statements: • Business combinations — Business combinations that took place prior to transition date have not been restated. • Cumulative translation differences — Cumulative translation differences for all foreign operations have been set to zero at first day of comparative period.

1.3 Revenue recognition Revenue represents the fair value of the consideration received during the year and is stated net of sales taxes and discounts. Sales of services which have been invoiced but not yet recognised as revenue are included on the balance sheet as deferred income and accounted for within trade and other payables.

School fee income School fee income comprises tuition fees and income from ancillary sources including registration fees, examinations, school trips, bus transportation, lunch fees and the tuition fee refund scheme. School fee income is recognised over the school terms, Term 1 being September to December, Term 2 January to March and Term 3 April to June. School fees are payable in advance on or before the first day of each term and are recognised across the months of each term. Where fees are received in advance for more than one term, the income is recognised over the months in the terms for which payment has been made.

1.4 Expenses

Direct educational costs Direct educational costs consist principally of salary and benefits for school principals and teaching staff and lecturers employed in our Premium Schools and Learning Services businesses, and also include the costs of teaching materials as well as expenses for the provision of school lunches, bus services and athletics programs. For the Learning Services businesses the costs are recognised as incurred. For the Premium Schools business these costs are spread over the school year and matched against the relevant fee income.

Property costs Property costs comprise all property-related costs associated with the operation of our business. These costs include rent, service charges, repair and renewal costs, property taxes and utilities costs paid under leases for our corporate headquarters, regional offices, school facilities used in our Premium Schools business and office space used in our Learning Services business.

F-102 Management, administrative and support staff expenses Management, administrative and support staff expenses consist of salary and benefits for our senior management team and other personnel engaged in finance, human resources, education policy and quality, legal compliance, information systems and infrastructure and other corporate functions at our corporate headquarters. In addition, this category of expense encompasses salary and benefits for regional personnel supporting our operations in Asia, United Kingdom, Europe, Switzerland and the Middle East. Finally, this category includes salary and benefits for admissions and marketing personnel, teaching support staff and other support personnel in our Premium Schools business and, in our Learning Services business, for personnel employed in business development, bidding and proposal submission, contract administration and other support for the delivery of services under our customer contracts.

Consultancy costs Consultancy costs include the cost of independent consultants we use in the delivery of our Learning Services contracts, which can be a significant cost under some of these contracts. In addition, this category includes legal fees, audit fees and fees for tax advisory work.

Other expense Other expense include business travel costs, advertising and promotion expense, conference costs, general liability insurance premiums, communication costs, bad debt expense, training costs and other. Travel costs are a significant component as this expense category includes all travel costs of professional advisors used in connection with the delivery of our Learning Services contracts as well as travel costs of our own international staff. This category also includes realised and unrealised foreign currency gains and losses recognised on intercompany transactions and on external third-party transactions not denominated in the local operating currency of a member of the Group.

1.5 Pre-contract costs The Group expenses all pre-contract costs unless it is probable that a contract will be obtained and the contract is expected to result in future net cash inflows with a present value greater than the amount recognised as an asset. Costs previously expensed are not subsequently reinstated when a contract award is achieved.

1.6 Foreign exchange

Functional and presentational currency

Items included in the financial statements of each of the Group’s subsidiary undertakings are measured using the currency of the primary economic environment in which the subsidiary undertaking operates (the ‘functional currency’). On 31 August 2011, Premier Education (UK) Holdco Limited converted the senior and junior loan notes owed to its parent company to US dollars. This triggered a change in the functional currency of Premier Education (UK) Holdco Limited to US dollars at 31 August 2011. All amounts are in US dollars unless otherwise stated. The Group has elected to present its financial statements for the year ended 31 August 2010 with the US dollar as the presentational currency.

Transactions and balances

Transactions in currencies other than the functional currency of each entity are converted into the functional currency at the rate of exchange ruling at the date of the transaction or valuation where items are re-measured. Foreign exchange gains and losses arising from the settlement of such transactions, and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies, are recognised in the income statement.

Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the income statement within ‘finance income or cost’. All other foreign exchange gains and losses, if any, are presented in the income statement within other expenses. Translation differences on non-monetary financial assets and liabilities such as financial instruments held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss.

F-103 1.7 Pension costs Pensions are accounted for under IAS 19, ‘Employee benefits’. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. A defined benefit plan is a pension plan that is not a defined contribution plan. Typically defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation. In the case of a defined benefit plan, the Group has legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to the employee service in the current and prior periods. For defined benefit schemes, obligations are valued using the projected unit credit method and measured at discounted present value whilst scheme assets are recorded at fair value. The assets of such schemes are held separately from those of the Group. The service and financing costs of such schemes are recognised separately in the income statement. Current service costs are spread systematically over the lives of employees, and financing costs are recognised in the periods in which they arise. Actuarial gains and losses are recognised immediately in the statement of other comprehensive income. Payments to defined contribution schemes are charged as an expense as they fall due.

1.8 Share based payments The Group operates a share based compensation plan under which the entity receives services from employees as consideration for equity instruments (options) of the Group. The fair value of the employee services received in exchange for the grant of the options is recognised as an expense over the vesting period. The total amount to be expensed is determined by reference to the fair value of the options granted and estimation of the number of options that expect to vest. Fair value is calculated using the Black Scholes Option Pricing Model, the details of which are disclosed in Note 21.

1.9 Exceptional items Exceptional items are those significant items which are separately disclosed by virtue of their size or incidence to enable a full understanding of the Group’s financial performance. Transactions which may give rise to exceptional items are principally gains or losses on disposal of fixed assets, early termination of debt instruments, restructurings, costs related to the acquisition of subsidiaries and other significant transactions not expected to occur as part of normal operating activities.

1.10 Borrowings and borrowing costs All loans and borrowings are initially recognised at the fair value of the consideration received net of issue costs associated with the borrowing. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest rate method. Borrowing costs are expensed in the period in which they are incurred, except for issue costs, which are amortised over the period of the borrowing. Any initial differences between book value and the fair value of the loan due to the parent company are adjusted to equity, to the extent they represent capital transactions with the parent.

1.11 Taxation The taxation charge is based on the Group profit or loss for the period and takes into account current and deferred taxation. Tax is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In those cases the tax is also recognised in other comprehensive income or directly in equity, respectively. Current taxation is calculated on the basis of the tax laws enacted or substantially enacted and relates to the amounts payable to tax authorities in respect of the Group’s taxable profits and is based on an interpretation of these tax laws. Deferred taxation is recognised on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base at tax rates that are expected to apply when the asset is realised or the liability settled, based on tax rates that are enacted or substantially enacted at the balance sheet date. Deferred tax assets are only recognised when it is probable that taxable profits will be available against which the deferred tax asset can be used. Deferred tax liabilities are not provided for in respect of the distribution of profit retained by overseas subsidiary undertakings and joint venture undertakings to the extent that the reversal of the temporary difference is controlled by the Group and is expected to reverse in the forseeable future. Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

1.12 Jointly controlled entities Jointly controlled entities are those entities where the Group and another party jointly share control per the terms of a contractual agreement. Jointly controlled entities are accounted for using the equity method and are initially recognised at cost. The results and assets and liabilities are stated in accordance with Group accounting policies. Where jointly controlled entities do not adopt Group accounting policies, their reported results are restated to comply with these

F-104 policies. The Group share of the jointly controlled entities profit or losses are recognised in the income statement and its share of movements in reserves is recognised in reserves. The cumulative movements are adjusted against the carrying amount of the investment. When the Group’s share of losses in a jointly controlled entity equals or exceeds its interest in the entity the Group does not recognise further losses unless it has incurred obligations or made payments on behalf of the jointly controlled entity. Unrealised gains on transactions between the Group and its jointly controlled entity are eliminated up to the value of the Group’s interest in the jointly controlled entity. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transfer.

1.13 Discontinued operations A discontinued operation is a component of the Group’s business that represents a separate geographical area of operation or a separate major line of business. Classification as a discontinued operation occurs upon disposal or earlier, if the operation meets the criteria to be classified as held for sale under IFRS 5.

1.14 Dividends Dividends are recorded in the financial statements in the period in which they are approved by the Group’s shareholders.

1.15 Non-controlling interests in equity The non-controlling interests in equity in the Group balance sheet represent the share of net assets of subsidiary undertakings held outside the Group. The movement in the period comprises the profit attributable to such interests together with any dividends paid, movements in respect of corporate transactions and related exchange differences.

1.16 Segmental reporting The Group’s reportable segments, which are those reported to the CODM, are the two distinct product lines, Premium Schools and Learning Services. Each reportable segment derives its revenue from a separate business activity; school fees (Premium Schools) and service contracts (Learning Services). The main geographic regions in which the Group operates are Asia, United Kingdom, Europe, Switzerland and the Middle East. The Group’s business is not highly seasonal and its customer base is diversified, with no individually significant customer.

1.17 Goodwill Goodwill arising on consolidation represents the carrying value of goodwill held under a previous GAAP at the date of transition to IFRS and, for business combinations subsequent to the date of transition, the excess of the cost of acquisitions over the Group’s interest in the fair value of the identifiable assets and liabilities at the date of acquisition. Fair values are attributed to the identifiable assets, liabilities and contingent liabilities that existed at the date of acquisition, reflecting their condition at that date. Goodwill is carried at cost less accumulated impairment losses and is recognised as an asset. It is not subject to annual amortisation but is assessed for impairment at least annually or more frequently if there are indications of impairment. Goodwill is allocated to cash generating units which are expected to benefit from the business combination on which the goodwill arose. The recoverable amounts of goodwill are calculated on a discounted cashflow basis by applying appropriate long term growth rates and discount rates, based on historic trends adjusted for management’s estimates of future prospects, to the cash generating units on an individual basis. Impairment losses are recognised immediately in the income statement. Upon disposal of a subsidiary the attributable goodwill is included in the calculation of the profit or loss arising on disposal.

1.18 Intangible assets Intangible assets acquired as part of an acquisition of a business are capitalised separately from goodwill if those assets are identifiable and their fair value can be measured reliably. Intangible assets acquired separately from the acquisition of a business are capitalised at cost. Intangible assets which have been recognised due to acquisition are detailed in note 2, Acquisitions of subsidiaries. The initial identification of intangible assets requires considerable judgment in respect of the classification of the assets and in the assessment of their life. In addition, when assessing the values of the intangible assets, management is required to exercise judgment in determining the future profitability and cash flows of those assets, royalty rates, life of customer base and the appropriate weighted average cost of capital. The subsequent impairment reviews equally require continuing assessment of the above factors as well as continuous assessment of the assets’ lives. All intangible assets detailed below are subject to impairment review should indicators of impairment be identified.

F-105 Customer relationships Contractual and non-contractual customer relationships acquired as part of a business combination are capitalised at fair value on acquisition and amortised on a straight line basis over 6 to 10 years, based on management’s estimates of the average lives of such relationships.

Contractual rights Contractual rights acquired as part of a business combination are capitalised at fair value on acquisition and amortised on a straight line basis over the life of the contract.

1.19 Property, plant and equipment Property, plant and equipment are stated at historic cost less accumulated depreciation and any provision for impairment in value. Cost includes the original purchase price of the asset and the costs attributable to bringing the asset to its working condition for its intended use. Depreciation is provided at rates calculated to write-off the cost, less the estimated residual value, of property, plant and equipment over their estimated useful lives. Estimated useful lives and depreciation rates are as follows:

Freehold and long leasehold buildings 2% straight line Short leasehold land and buildings The unexpired term of the lease on a straight line basis

Computer equipment 162⁄3%—331⁄3% straight line Motor vehicles 20-25% on reducing balance straight line 3%⁄331מFixtures and fittings 15% on reducing balance/141⁄2%

Depreciation is not provided on freehold and long leasehold land. Residual values and economic useful lives are reviewed annually. Depreciation is charged on all additions to, or disposals of, depreciating assets in the year of purchase or disposal, other than on assets held for sale. Any impairment is charged to the income statement. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognized within ‘Other expenses’ in the income statement.

1.20 Impairment of non-financial assets Assets that are not subject to amortisation are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which an asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell, and value-in-use. Cash generating units (“CGUs”) are defined at the lowest level at which cash inflows are separately identifiable. For the purpose of goodwill impairment testing, CGUs are grouped at the level at which operating cash flows can be separately determined, which is at a level below our operating segments, as disclosed in note 12, Intangible assets.

1.21 Assets held under finance and operating leases Where assets are financed by leasing agreements where the risks and rewards are substantially transferred to the Group (“finance leases”) the assets are treated as if they had been purchased outright and are depreciated in accordance with the policy stated above. The assets which are held under finance leases and similar hire purchase contracts are recorded in the balance sheet as non-current assets on the lease commencement date at the lower of fair value and present value of minimum lease payments. The obligation to pay future rentals has been shown as a liability. The interest charged on finance leases is charged to the income statement over the lease period at a constant periodic rate of interest. Rentals applicable to operating leases, where substantially all the benefits and risks of ownership remain with the lessor, are recognised in the income statement using the straight line basis over the lease term. Incentives from lessors are recognised as a systematic reduction of the charge over the periods benefiting from the incentives.

1.22 Inventories Inventory, comprising educational books and materials, are stated at the lower of cost and net realisable value. The cost basis used within the Group is a ‘First In First Out’ or FIFO basis. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.

1.23 Receivables Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the entity that owes the receivable, probability that the entity that owes the receivable will enter bankruptcy or financial reorganisation, and default or delinquency in payments (which is 60-75

F-106 days overdue depending on the nature of the invoice) are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the income statement. When a receivable is uncollectible, it is written-off against the allowance account for receivables.

1.24 Cash and cash equivalents Cash and cash equivalents include cash in hand, term and call deposits held with banks and other short-term highly liquid investments with original maturities of three months or less. Bank overdrafts with a right of set off are included within the balance sheet as cash and cash equivalents.

1.25 Trade payables Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities. Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

1.26 Derivative financial instruments and hedging activities During the year ended 31 August 2011, the Group used financial instruments to manage its exposure to fluctuations in interest rates. The Group’s derivative arrangements are one swap and one cap agreement. The swap agreement extends to 28 February 2015 and provides the Group with a series of fixed US$ LIBOR rates on a portion of the Group’s US$ loans across the life of the agreement. The cap agreement extends to 28 August 2015 and places a cap of 3.00% on the US$ LIBOR rate the Group can experience on a secondary portion of the value of the loans covered by these agreements. Both the swap and the cap agreements have cancellation provisions under certain circumstances. The life and values of the instruments mirrors the amortisation schedule attached to the US dollar loans. At 31 August 2011, 66.4% (2010 - 64.8%) of the US dollar loans was sheltered by these instruments. Derivative financial instruments are recognised at fair value, generally being the cost at the date a contract is entered into, and are subsequently re-measured at their fair value. Depending on the type of the derivative financial instrument, fair value calculation techniques include, but are not limited to, quoted market value and present value of estimated future cash flows (of which the valuation of interest rate instruments is an example). Derivative assets and liabilities are classified as non-current unless they mature within one year from the balance sheet date. Changes in fair value of interest rate swaps are charged to net financing costs over the period of the contracts, together with the interest differentials reflected in foreign exchange contracts. Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.

1.27 Provisions Provisions are recognised when: — the Group has a present legal or constructive obligation as a result of past events; and — it is more likely than not that an outflow of resources will be required to settle the obligation; and — the amount has been reliably estimated. Property provisions relate to the future costs of properties no longer utilised by the Group and include onerous lease costs, dilapidation expenses and other costs specifically associated with the property. Other provisions predominantly relate to restructuring provisions and other significant costs that meet the definition of a provision. Provisions are not recognised for future operating losses. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as an interest expense. Where the Group expects amounts to be received in relation to a provision, the reimbursement is recognised as a separate asset when its receipt is considered virtually certain.

1.28 Loss contingencies The Group is subject to various claims and contingencies which are in the scope of ordinary and routine litigation incidental to the business, including those related to regulation, litigation, business transactions, employee-related matters and taxes, among others. When a claim or potential claim is identified, the likelihood of any loss or exposure is assessed. If it is probable that a loss will result and the amount of the loss can be reasonably estimated, a liability for the loss is recorded in the income statement. The liability recorded includes probable and estimable legal costs incurred to

F-107 date and future legal costs to the point in the legal matter. If the loss is not probable or the amount of the loss cannot be reasonably estimated, the claim is disclosed if the likelihood of a potential loss is reasonably possible and the amount of the potential loss could be material. For matters where no loss contingency is recorded, legal fees are expensed as incurred.

1.29 Share capital Ordinary shares are classified as equity. Mandatorily redeemable preference shares are classified as liabilities. Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds.

1.30 Equity instruments Following the adoption of IAS 32, financial instruments issued by the Group are treated as equity only to the extent that they meet the following two conditions: (a) they include no contractual obligations upon the Company (or Group as the case may be) to deliver cash or other financial assets or to exchange financial assets or financial liabilities with another party under conditions that are potentially unfavourable to the Company (or Group); and (b) where the instrument will or may be settled in the company’s own equity instruments, it is either a non-derivative that includes no obligation to deliver a variable number of the company’s own equity instruments or is a derivative that will be settled by the company’s exchanging a fixed amount of cash or other financial assets for a fixed number of its own equity instruments. To the extent that this definition is not met, the proceeds of issue are classified as a financial liability. Where the instrument so classified takes the legal form of the Company’s own shares, the amounts presented in these financial statements for called up share capital and share premium account exclude amounts in relation to those shares.

1.31 Business combinations The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquiree on an acquisition- by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets. Acquisition-related costs are expensed as incurred. Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with IAS 39 either in profit or loss or as a change to other comprehensive income. Contingent consideration that is classified as equity is not remeasured, and its subsequent settlement is accounted for within equity.

1.32 Critical judgments and accounting policies The Group and Company balance sheets as at 31 August 2011 show that liabilities exceed assets by $124.750m and $12.512m respectively. The senior and junior loan notes that form a significant part of these liabilities are not due for repayment until 2038, and interest on these loan notes is compounded rather than paid. In addition, deferred income shown as a liability is released to the income statement in the following year rather than being payable in cash. The directors have reviewed the latest guidance relating to going concern and, having made all relevant enquiries, have formed a judgement at the date of the approval of the financial statements that the Group has adequate resources at its disposal to continue its operations for the foreseeable future. This judgement is based on a review undertaken of the current business forecast to 31 August 2013 and the projected headroom under the existing bank covenants to assess the likelihood of the Group being able to continue as a going concern. Suitable sensitivities were run for the periods up to 31 August 2013 to assess the headroom available. This review concluded that there were no material uncertainties that potentially could give rise to a significant doubt about the business continuing as a going concern. Management has made certain judgments in the process of applying the Group’s accounting policies set out above that have a significant effect on the amounts recognised in the Group financial statements.

Revenue recognition

Service contracts Service contract revenue represents a significant income stream for the Group. Under certain contracts, the revenue, or an element of the revenue, is only receivable if Key Performance Indicators, “KPIs”, built into the contract terms have been met and the services have been delivered in line with the contract terms. A KPI is a measurable performance condition, for which documentary evidence can be supplied, agreed between the Group and its customers, and which is used as a basis to recognise income. Therefore revenue is only recognised as and when services are performed, if the Group can estimate that it is probable that KPIs and contract deliverables have been met. Where it has not been determined whether KPIs have been met, the element of the revenue relating to meeting these terms, is deferred.

F-108 Contract revenue and performance are continually monitored over the term of the contract and are subject to revision as each contract progresses. KPIs are such that they can be measured internally, although in certain cases may require validation by the customer. When revisions in estimated contract revenue are determined, such adjustments are recorded in the period in which they are identified.

Goodwill

For the purpose of determining potential goodwill impairment, recoverable amounts are determined from value-in-use calculations using cash flow projections covering a five-year period. The growth rate assumptions used in the projections were based on past performance and management’s expectations of market developments. In the interests of prudence, the annual growth rate used to determine the cash flows beyond the five-year period has been set at 1% across the European and Swiss markets, 1.5% in the Middle East market and 2% in the Far East market. When testing for impairment the Group applies a discount rate commensurate to each cash generating unit. The discount rate that was used for this testing as of 31 August 2011 was 12% (2010 - 12%).

As part of the Group’s assessment of goodwill as at 31 August 2011, the Group has performed a sensitivity analysis of its discounted cash flow calculations by either applying discount rates ranging up to 3% in excess of the rate adopted or by holding operating cash flows constant at the levels forecast for 2013. Under these assumptions, impairment would occur within the UK Learning Services division. Based on this assessment goodwill in respect of this division has been impaired, as detailed per note 12, Intangible assets.

Intangible assets

Intangible assets acquired as part of an acquisition of a business are capitalised separately from goodwill if those assets are identifiable and their fair value can be measured reliably. Intangible assets are tested for impairment at least annually if there are indications they might be impaired.

Share based payments

The Group operates an equity settled share based compensation plan.

2. ACQUISITIONS OF SUBSIDIARIES

The Group made a number of acquisitions during the year, the details of which are shown below.

F-109 Acquisitions in the current period

Acquisition 1 On 14 January 2011, Premier Education (UK) Holdco Limited acquired the entire share capital of College Alpin Beau Soleil SA for a total consideration of $75.517m, satisfied through a combination of loan notes and equity as detailed below. The company is a Premium School located in Switzerland. The business combination occurred as a result of the directors’ decision to strengthen the Group’s existing portfolio of Premium Schools within Europe, and in particular gain presence within Switzerland. In the period to 31 August 2011 the subsidiary contributed turnover and net profit of $15.919m and $3.475m respectively to the consolidated result for the year. If the acquisition had occurred on 1 September 2010, Group revenue would have been an estimated $11.922m higher and the Group’s net loss would have been an estimated $3.297m lower. In determining these amounts, management has assumed that the fair value adjustments that arose on the date of acquisition would have been the same if the acquisition occurred on 1 September 2010.

Effect of acquisition The acquisition had the following effect on the Group’s assets and liabilities:

Recognised values on acquisition

$000 Acquiree’s net assets at the acquisition date: Intangible assets — Brand ...... 12,723 — Customer relationships ...... 18,102 Property, plant and equipment ...... 859 Deferred tax assets ...... 169 Trade and other receivables ...... 23,780 Cash and cash equivalents...... (35) Trade and other payables ...... (21,304) Deferred tax liabilities ...... (7,089) Obligations under existing defined benefit pension schemes ...... (733)

Net identifiable assets and liabilities ...... 26,472

Consideration paid: Loan notes issued ...... 45,854 Equity instruments issued ...... 29,663

Total consideration transferred...... 75,517

Goodwill on acquisition ...... 49,045

Premier Education (UK) Holdco Limited issued Ordinary shares with a par value of £0.01 to satisfy the equity component of consideration. Further details of the shares issued are shown per note 23, Capital and reserves.

Acquisition related costs The Group incurred acquisition related costs of $0.871m related to legal and professional fees and other advisory fees associated with the transaction. As per the Group’s policy, these costs have been included in exceptional expenses in the Group’s consolidated statement of comprehensive income, as per note 5, Exceptional expenses.

Acquired receivables The fair value of acquired receivables was $6.090m. The gross contractual amounts receivable are $6.220m and, at the acquisition date, $0.130m of contractual cash flows were not expected to be received.

Acquisition 2 The Company acquired all of the share capital of Premier Education Luxco II SA on 25 February 2011 for $30.0m satisfied through the issue of shares. The entity is a non-trading holding company with a 100% investment in College Champittet, a Premium school located in Switzerland. The business combination was effected to compliment the recent acquisition of College Alpin Beau Soleil into the Group and gain further presence within the region. Subsequent to the acquisition of Luxco II SA, College Champittet was purchased by Nord Anglia Education Limited (a Group subsidiary) and the holding company was liquidated. Consequently, the only impact of the business combination on the results of the Group are those contributed by College Champittet. In the 6 months to 31 August 2011 the subsidiary contributed turnover and a net loss of $11.717m

F-110 and $1.054m respectively to the consolidated result for the year. If the acquisition had occurred on 1 September 2010, Group revenue would have been an estimated $18.119m higher and the net loss would have been an estimated $0.050m lower. In determining these amounts, management has assumed that the fair value adjustments that arose on the date of acquisition would have been the same if the acquisition occurred on 1 September 2010.

Effect of acquisition

The acquisition had the following effect on the Group’s assets and liabilities:

Recognised values on acquisition

$000 Acquiree’s net assets at the acquisition date: Intangible assets — Brand ...... 6,060 — Customer relationships ...... 6,368 Property, plant and equipment ...... 1,772 Deferred tax assets ...... 702 Trade and other receivables ...... 16,902 Cash and cash equivalents...... 784 Interest-bearing loans and borrowings ...... (180) Trade and other payables ...... (25,335) Deferred tax liabilities ...... (2,859) Obligations under existing defined benefit pension schemes ...... (2,838)

Net identifiable assets and liabilities ...... 1,376

Consideration paid: Equity instruments issued ...... 30,000

Total consideration ...... 30,000

Goodwill on acquisition ...... 28,624

Premier Education (UK) Holdco Limited issued Ordinary shares with a par value of £0.01 and Preference shares with a par value of $1.00 to satisfy the equity component of consideration. Further details of the shares issued are shown per note 23, Capital and reserves.

The fair value of the consideration for acquisitions 1 and 2 combined equals the total book value of shares and loan notes issued as consideration.

Acquisition related costs

The Group incurred acquisition related cost of $0.032m related to legal and professional fees and other advisory fees associated with the transaction. As per the Groups policy, these costs have been included in exceptional expenses in the Group’s consolidated statement of comprehensive income, as per note 5, Exceptional expenses.

Acquired receivables

The fair value of acquired receivables was $7.442m. The gross contractual amounts receivable are $8.189m and, at the acquisition date, $0.747m of contractual cash flows were not expected to be received.

Acquisition 3

During the year, the Company also acquired all of the ordinary shares in Brighton Education Learning Services Sdn Bhd, a company registered and operating in Malaysia. The date of acquisition is deemed to have been on 1 October 2010 as this is the date from which the entity was controlled by the Group. The principal activity of the Company is the provision of learning services to the education council in Malaysia under the terms of a contract commencing on this date and lasting for the duration of 3 years. The business combination was effected to strengthen the Group’s Learning Services division. The purchase consideration of the entity was based on a multiple of forecast EBITDA arising from a specific learning services contract with the Malaysian education council. The valuation of the intangible asset associated with this contract is based on the same model of forecast cash flows over the life of the contract. No other assets or liabilities were held by the Company prior to the commencement of the contract. In the 9 months to 31 August 2011, the subsidiary contributed turnover and net profit of $9.367m and $2.769m respectively to the consolidated result for the year. If the acquisition had occurred on 1 September 2010, Group revenue and net loss would have remained the same as the contract commencement date would not be affected. In determining these amounts, management has assumed that the fair value adjustments that arose on the date of acquisition would have been the same if the acquisition occurred on 1 September 2010.

F-111 Effect of acquisition

The acquisition had the following effect on the Group’s assets and liabilities:

Recognised values on acquisition

$000 Acquiree’s net assets at the acquisition date: Intangible assets — contractual rights ...... 667 Deferred tax liabilities ...... (167)

Net identifiable assets and liabilities ...... 500

Consideration paid: Initial cash price paid ...... 667

Total consideration ...... 667

Goodwill on acquisition ...... 167

Goodwill arising on all three acquisitions is based on the anticipated synergies expected to arise from the business combinations.

Goodwill recognised on all acquisitions is not deductable for tax purposes.

3. OPERATING SEGMENTAL INFORMATION

Management has determined the operating segments based on the reports reviewed by the strategic steering committee (which has been identified as the CODM) that are used to make strategic decisions.

For management purposes, the Group is currently organised into two business segments to the CODM, Premium Schools and Learning Services. These segments are the basis on which the Group reports its segment information. The Group has five geographical regions of operation, Asia, United Kingdom, Europe, Switzerland and the Middle East, although results are only reviewed by the CODM on a business segment basis.

The reportable operating segments derive their revenue primarily from school fees (Premium Schools segment) and service contracts (Learning Services segment).

The segment information provided to the strategic steering committee for the reportable segments is as follows:

2011 — Divisional analysis

Premium Learning Schools Services Unallocated Total

$000 $000 $000 $000 Revenue ...... 157,038 60,457 — 217,495

Adjusted EBITDA before exceptional items...... 54,593 8,627 (9,012) 54,208

Statutory exceptional items ...... (3,316) — (6,040) (9,356) Non statutory exceptional items ...... (2,657) (354) (3,475) (6,486) Depreciation ...... (5,270) (351) (217) (5,838) Amortisation...... (2,124) (147) (538) (2,809) Impairment of goodwill ...... — (16,657) — (16,657) Net finance expense ...... — — (41,607) (41,607) Share of profit of jointly controlled entity ...... — — 4 4 Tax...... — — (12,531) (12,531)

Profit/(loss) for the year attributable to equity holders of the parent ...... 41,226 (8,882) (73,416) (41,072)

F-112 Adjusted EBITDA before exceptional expenses represents earnings before interest, tax, depreciation, amortisation, impairment and management accounts and statutory exceptional items and is the profit measure reviewed by the CODM.

2011 — Geographical analysis

Europe (excluding United UK and Asia Kingdom Switzerland) Middle East Switzerland Total

$000 $000 $000 $000 $000 $000 Revenue ...... 86,127 17,821 43,276 42,635 27,636 217,495

Goodwill and intangible assets ...... 249,729 902 60,490 11,175 136,493 458,789 Property, plant and equipment ...... 13,728 3,712 6,532 132 4,333 28,437 Other non-current assets. . . 10,103 — — — 1,467 11,570

Total non-current assets . . 273,560 4,614 67,022 11,307 142,293 498,796

2010 — Divisional analysis

Premium Learning Schools Services Unallocated Total

$000 $000 $000 $000 Revenue ...... 116,980 65,991 — 182,971

Adjusted earnings before finance income and expense, tax, depreciation, amortisation and exceptional items...... 36,550 12,724 (8,486) 40,788

Statutory exceptional items ...... (25,832) (16) (14,628) (40,476) Non statutory exceptional items ...... (2,066) (1,130) (1,235) (4,431) Depreciation ...... (7,323) (391) (215) (7,929) Amortisation...... (330) — (443) (773) Impairment of goodwill ...... (21,177) (20,153) — (41,330) Finance expense...... — — (55,054) (55,054) Share of profit of jointly controlled entity ...... — — 149 149 Tax...... — — (6,683) (6,683)

Loss for the year attributable to equity holders of theparent...... (20,178) (8,966) (86,595) (115,739)

2010 — Geographical analysis

Europe (excluding United UK and Asia Kingdom Switzerland) Middle East Switzerland Total

$000 $000 $000 $000 $000 $000 Revenue ...... 73,148 34,898 39,587 35,338 — 182,971

Goodwill and intangible assets ...... 233,739 17,409 53,113 10,480 — 314,741 Property, plant and equipment ...... 12,105 924 5,087 528 — 18,644 Other non-current assets. . . ——————

Total non-current assets . . . 245,844 18,333 58,200 11,008 — 333,385

F-113 4. OTHER INCOME

2011 2010

$000 $000 Management fee charged to related party ...... 1,800 — Provision of educational and commercial services ...... — 1,951 Provision of due diligence services ...... — 936

1,800 2,887

During the year, $1.800m was charged to the British International School Abu Dhabi, a company under common control, in respect of management services provided by another Group company. Full details of this arrangement are detailed in note 28, Related party transactions.

In the prior year, other operating income related to income of $1.951m arising from the provision of educational and commercial services by the Group to Cime Services SA, and a fee of $0.936m for due diligence services performed by Nord Anglia Education Limited (a Group subsidiary) in relation to the acquisition of the company during that year by the immediate parent undertaking of Premier Education (UK) Holdco Limited, Premier Education Holdings s.a.r.l..

5. EXCEPTIONAL EXPENSES

2011 2010

$000 $000 Exceptional administrative expenses a Professional fees relating to restructuring of the Group ...... — 13,235 b Nursery division lease exit costs ...... — 242 c Profitonsaleoflandandbuildings...... — (555) d Corporate restructure ...... 6,040 1,031 e Profit share buy out ...... 2,390 28,173 f Legal costs ...... — 205 g Acquisition related costs ...... 926 —

Other exceptional expenses...... 9,356 42,331 h Exceptional profit on disposal of subsidiary ...... — (1,855)

9,356 40,476

a Costs of $11.418m were incurred in the year ended 31 August 2010 in relation to the review of potential exit routes and related advisers’ fees.

In addition to the above, the Group also incurred professional fees of $1.817m arising from the research and implementation of new commercial initiatives driven by the parent company.

b During the year ended 31 August 2010, the Group made additional provisions of $0.242m in respect of the lease costs attached to a vacant property relating to its former Nursery division following a re-appraisal of the expected surrender date of the lease.

c On 25 February 2010, an agreement was reached with the minority shareholder in The British School Warsaw for the Group to acquire their 25% equity interest in the school. Under this agreement, the Group acquired the remaining 25% equity interest in exchange for the transfer of the school’s Limanowskiego campus to the former minority shareholder and $1.036m of cash. Under IFRS, the difference between the non-controlling interest and the consideration paid was debited to equity. The property disposed of through the share redemption was formally valued by a firm of independent surveyors and a gain of $1.177m was recognised in respect of the disposal of this property. Offset against this profit are the legal costs of $0.622m associated with the acquisition of the 25% equity interest in the British School Warsaw. The transaction was completed on 1 March 2010.

d On 10 July 2011, the Group announced its intention to relocate its central services function to Hong Kong and subsequent to the balance sheet date this proposal was confirmed. The associated restructuring costs of $6.040m relate predominantly to the onerous lease cost of the building currently housing the head office function, along with both statutory and enhanced redundancy costs payable to affected employees.

In the year ended 31 August 2010, the Group incurred redundancy and lease exit costs totalling $1.031m as a result of the termination of a number of its Learning Services contracts and the related scale reductions in its central service functions.

F-114 e Additional costs of $2.390m were incurred during the year as a result of the Group purchasing any past and all future rights under a profit sharing agreement and under an employment profit share agreement in the prior year. Included within this figure is $0.620m of foreign exchange as a result of the difference between the spot rate at the date the payment was made and the average exchange rate at which the charge was originally made to the income statement. Original costs of $28.173m were incurred in the year ended 31 August 2010.

None of the costs relating to this transaction are considered to be tax deductible.

Full details of this arrangement are documented in note 28, Related party transactions.

f During the year ended 31 August 2010, $0.205m of costs were incurred in relation to a provision in respect of an overseas legal claim.

g During the year the Group acquired two new subsidiaries to complement its existing portfolio of Premium Schools, as detailed per note 2, Acquisitions of subsidiaries.

Costs of acquisition in respect of College Alpin Beau Soleil and Luxco II s.a.r.l. include legal fees and fees payable to advisors in relation to various aspects of the acquisitions.

In addition to the above, preliminary acquisition costs to the value of $0.023 were incurred in respect of Le Cote International School, a subsidiary acquired after the balance sheet date. See note 30, Subsequent events, for full details.

h On 26 August 2010, the Group disposed of its entire shareholding in the British International School Abu Dhabi LLC to its parent company, Premier Education Holdings s.a.r.l..

At the date of disposal the subsidiary held net liabilities, resulting in the recognition of a profit on disposal. Full details of this transaction are documented in note 28, Related party transactions.

6. EXPENSES AND AUDITORS’ REMUNERATION

Included in profit/(loss) are the following:

2011 2010

$000 $000 Hire of plant and machinery ...... 376 286 Impairment loss on goodwill ...... 16,657 41,330 Staff costs (excluding share based payments)...... 93,929 78,732 Share based payments ...... 455 464 Foreign exchange (gain) ...... (4,208) (499) Loss on disposal of property, plant and equipment ...... 976 48 Operating lease rentals: Land and buildings ...... 23,762 17,186 Other...... 698 316 Depreciation Owned assets...... 5,838 7,123 Leased assets ...... — 806 Amortisation of intangible assets ...... 2,809 773

F-115 Auditors’ remuneration:

2011 2010

$000 $000 Fees payable to Company’s auditor for the audit of parent Company and consolidated financial statements ...... 64 63 Disclosure below based on fees payable in respect of services to the company and its subsidiaries Fees payable to Group’s auditors and their associates in respect of: Audit of financial statements of subsidiaries and associates pursuant to legislation (including that of countries and territories outside Great Britain) . . . 441 223 Otherservicesrelatingtotaxation...... — 130 Services relating to corporate finance transactions entered into or proposed to be entered into by or on behalf of the Company or the Group or any of its associates ...... — 3,362 Allotherservices...... 165 105

7. STAFF NUMBERS AND COSTS

The monthly average number of persons employed by the Group (including directors) during the year, analysed by category, was as follows:

Number of employees

2011 2010

Administration and management ...... 693 650 Teaching...... 1,190 893 Advisors and guidance officers ...... 180 137

2,063 1,680

The aggregate payroll costs of these persons were as follows:

Group

2011 2010

$000 $000 Wages and salaries ...... 84,985 71,971 Share based payments (See note 21) ...... 455 464 Social security costs ...... 7,267 5,829 Contributionstodefinedcontributionplans(Seenote21)...... 482 468 Expenses related to defined benefit plans ...... 1,195 464

94,384 79,196

During the year ended 31 August 2011, an amount of $2.390m (2010 - $28.173m) was paid as a result of the Group purchasing any past and all future rights under a profit sharing agreement and under an employment profit sharing agreement. This is in addition to aggregate payroll costs above and the amounts paid to key management personnel, as shown below.

Further detail is provided in note 5, Exceptional expenses.

8. KEY MANAGEMENT PERSONNEL

2011 2010

$000 $000 Fee, salaries and other short term employment benefits...... 4,667 3,780 Termination benefits...... 313 — Other benefits ...... 137 155

F-116 The key management personnel are the directors and senior managers who received emoluments, as noted above.

Other benefits relate to contributions to defined contribution benefit schemes.

There are no amounts accruing under defined benefit schemes for any directors or senior managers during the current or prior year.

9. FINANCE INCOME AND EXPENSE

Recognised in profit or loss

2011 2010

$000 $000 Foreign exchange gains recognised on the retranslation of foreign currency borrowings...... 9,457 — Bank interest ...... 619 701

Total finance income ...... 10,076 701

2011 2010

$000 $000 Net loss on financial instruments designated as fair value through profit or loss: Derivative financial instruments ...... 1,090 245 Total interest expense on financial liabilities measured at amortised cost: Loan notes from parent, senior management and related party ...... 35,485 24,724 Foreign exchange losses recognised on the retranslation of foreign currency borrowings...... — 10,816 Bank loans and overdrafts ...... 13,009 16,804 Interest on defined benefit pension plan obligation ...... 324 201 Finance leases and similar hire purchase contracts ...... — 1,562 Amortisation of loan costs ...... 1,252 1,403 Interest payable to parent undertaking ...... 513 — Otherinterest...... 10 —

Total finance expense...... 51,683 55,755

Net finance expense ...... 41,607 55,054

During the year ended 31 August 2011, the Group recognised a gain of $9.457m (2010 — loss of $10.816m) relating to foreign exchange movements arising on the remeasurement of its US dollar debt.

F-117 10. INCOME TAX EXPENSE

Recognised in the income statement

2011 2010

$000 $000 Current tax expense United Kingdom current year corporation tax charge ...... — — Adjustment for prior years UK corporation tax charge ...... — (69) Overseas current tax charge ...... 13,961 8,104 Adjustment for prior years overseas tax charge ...... (1,184) 20

Current tax expense ...... 12,777 8,055

Deferred tax expense Origination and reversal of temporary differences...... (1,211) (1,372) Adjustment in respect of prior years ...... 965 —

Deferred tax expense ...... (246) (1,372)

Total tax expense ...... 12,531 6,683

Reconciliation of effective tax rate The tax assessed for the period differs from the standard rate of Corporation tax in the United Kingdom of 27.16% (2010: 28%) per the explanation below:

2011 2010

$000 $000 Loss for the year...... (41,072) (115,739) Total tax expense ...... 12,531 6,683

Loss excluding tax...... (28,541) (109,056)

Tax using the UK corporation tax rate of 27.16 % (2010: 28%) ...... (7,752) (30,536) Effectoftaxratesinforeignjurisdictions...... (299) (2,448) Effect of rate change ...... — 266 Non-deductible expenses ...... 1,550 18,349 Losses not deductable ...... 5,192 614 Withholding tax paid on overseas dividends for which no relief is available ...... 1,881 1,888 Profit on disposal of subsidiary ...... — (542) Timing difference for which no deferred tax was recognised ...... 1,648 569 Amortisation and impairment of goodwill ...... 4,529 11,967 Current year losses for which no deferred tax asset was recognised ...... 6,001 6,605 Over provided in prior years...... (219) (49)

Total tax expense (including tax on joint venture) ...... 12,531 6,683

There is no tax charged to other comprehensive income. Deferred tax assets are recognised for tax losses carried forward to the extent that the realisation of the related tax benefit through future taxable profits is probable. The Group did not recognise deferred tax assets of $40.255m (2010 - $27.607m). This includes an unprovided deferred tax asset of $35.585m (2010 - $25.170m) which relates to UK losses which have no expiry date for which relief is not anticipated to be available in the foreseeable future. It also includes an unprovided deferred tax asset of $2.717m (2010 - $2.437m) in relation to the deficit in the pension scheme. There are no significant unprovided deferred tax liabilities relating to overseas entities.

Factors affecting future tax charges The Budget in March 2011 announced that the UK corporation tax rate will reduce from 28% to 26% effective from 1 April 2011, and this was substantively enacted on 19 July 2011. In addition to the changes in rates of Corporation tax disclosed above a number of further changes to the UK Corporation tax system were announced in the March 2011 UK Budget Statement. Further reductions to the main rate are proposed to reduce the rate by 1% per annum to 23% by 2014. These further changes had not been substantively enacted at the balance sheet date and, therefore, are not included in these financial statements.

F-118 The proposed reductions of the main rate of corporation tax by 1% per year to 23% by 1 April 2014 are expected to be enacted separately each year. The overall effect of the further changes from 25% to 23%, if these applied to the deferred tax balance at the balance sheet date, would be to further reduce the deferred tax liabilities and assets by an additional $0.1m and $0.1m respectively.

11. PROPERTY, PLANT AND EQUIPMENT

Land and Fixtures Computer Motor buildings and fittings equipment vehicles Total

$000 $000 $000 $000 $000 Cost Balance at 1 September 2009 ...... 27,423 7,503 4,107 281 39,314 Additions...... 40,731 1,883 1,289 — 43,903 Transfer of assets ...... (164) (171) 283 — (52) Disposals ...... (49,461) (4,525) (1,180) (82) (55,248) Effect of movements in foreign exchange ..... 579 (313) (37) (32) 197

Balance at 31 August 2010...... 19,108 4,377 4,462 167 28,114

Balance at 1 September 2010 ...... 19,108 4,377 4,462 167 28,114 Acquisitions through business combinations . . . 489 1,154 316 672 2,631 Additions...... 8,630 1,941 1,122 132 11,825 Transfer of assets ...... (35) (46) 81 — — Disposals ...... (3,323) (423) (169) (42) (3,957) Effect of movements in foreign exchange ..... 2,095 761 718 123 3,697

Balance at 31 August 2011 ...... 26,964 7,764 6,530 1,052 42,310

Accumulated depreciation and impairment Balance at 1 September 2009 ...... 2,710 1,112 754 — 4,576 Depreciation charge for the year ...... 4,502 1,848 1,509 70 7,929 Transfer of assets ...... — — (34) — (34) Disposals ...... (1,371) (1,419) (448) (28) (3,266) Effect of movements in foreign exchange ..... 303 124 (135) (27) 265

Balance at 31 August 2010...... 6,144 1,665 1,646 15 9,470

Balance at 1 September 2010 ...... 6,144 1,665 1,646 15 9,470 Depreciation charge for the year ...... 2,757 1,331 1,517 233 5,838 Disposals ...... (2,598) (239) (98) (38) (2,973) Effect of movements in foreign exchange ..... 705 313 485 35 1,538

Balance at 31 August 2011 ...... 7,008 3,070 3,550 245 13,873

Net book value At 1 September 2009 ...... 24,713 6,391 3,353 281 34,738

At 31 August 2010 and 1 September 2010 .... 12,964 2,712 2,816 152 18,644

At 31 August 2011 ...... 19,956 4,694 2,980 807 28,437

Included within additions for the year ended 31 August 2010 is an amount of $33.956m for a new finance lease in respect of a new campus in Shunyi, Beijing, entered into on 1 September 2009 for the British School Beijing. The Group initially operated under 30 year lease terms for the Beijing campus from 1 September 2009. The terms were revised with the landlord in April 2010, to cover a 20 year period, with an option to extend for a further 10 years. The Group commissioned a review of market rentals and available property in the Beijing area, which was finalised in May 2010. Following a review of this data, management concluded that they should not include the extension period in assessing the substance of the revised lease agreement, as it was inconclusive at the time of signing as to whether the option to extend would be exercised by the Group. Management consequently concluded that the ongoing classification of this lease based on the new terms in place should be that of an operating lease, similar to the other school leases in the Group’s portfolio. Included within disposals therefore, is an amount of $34.923m together with a related adjustment for foreign exchange of $0.967m to reflect the reclassification of the finance lease to an operating lease on 30 April 2010.

F-119 12. INTANGIBLE ASSETS

Brand Customer Computer Goodwill name relationships Contracts software Total

$000 $000 $000 $000 $000 $000 Cost Balance at 1 September 2009 . . 372,035 — — — 2,391 374,426 Additions...... ————317317 Disposals ...... (29,489) — — — (67) (29,556) Transfer of assets ...... ————5252 Effect of movements in foreign exchange ...... (9,143) — — — (168) (9,311)

Balance at 31 August 2010 .... 333,403 — — — 2,525 335,928

Balance at 1 September 2010 . . 333,403 — — — 2,525 335,928 Acquisitions through business combinations ...... 77,836 18,783 24,470 667 — 121,756 Additions...... ————442442 Effect of movements in foreign exchange ...... 36,246 2,664 3,417 2 153 42,482

Balance at 31 August 2011 .... 447,485 21,447 27,887 669 3,120 500,608

Accumulated amortisation and impairment Balance at 1 September 2009 . . ————551551 Amortisation for the year ...... ————773773 Impairment charge ...... 41,330 ————41,330 Disposals ...... (21,177) — — — (55) (21,232) Transfer of assets ...... ————3333 Effect of movements in foreign exchange ...... (154) — — — (114) (268)

Balance at 31 August 2010 .... 19,999 — — — 1,188 21,187

Balance at 1 September 2010 . . 19,999 — — — 1,188 21,187 Amortisation for the year ...... — — 1,813 146 850 2,809 Impairment charge ...... 16,657 ————16,657 Effect of movements in foreign exchange ...... 1,226 — (148) 4 84 1,166

Balance at 31 August 2011 .... 37,882 — 1,665 150 2,122 41,819

Net book value At 1 September 2009 ...... 372,035 — — — 1,840 373,875

At 31 August 2010 and 1 September 2010 ...... 313,404 — — — 1,337 314,741

At 31 August 2011 ...... 409,603 21,447 26,222 519 998 458,789

Goodwill is allocated to the Groups Cash Generating Units (CGU’s) identified according to operating segment.

F-120 A summary of the goodwill allocation is shown below:

2011 2010 2009

Premium Learning Premium Learning Premium Learning schools services Total schools services Total schools services Total

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 Asia...... 249,729 — 249,729 233,739 — 233,739 234,200 — 234,200 UK...... ————16,08716,087—37,92637,926 Europe..... 60,461 — 60,461 53,098 — 53,098 59,773 — 59,773 Switzerland..88,760—88,760—————— Middle East . . — 10,653 10,653 10,480 — 10,480 29,428 10,708 40,136

398,950 10,653 409,603 297,317 16,087 313,404 323,401 48,634 372,035

The key assumptions used for value-in-use calculations in 2011 are as follows:

Premium Schools

Asia Europe Switzerland

Growth in pupil numbers ...... 31.25% 13.6% 13.32% Long term growth rate ...... 2% 1% 1% Discount rate ...... 12% 12% 12%

Learning Services

UK Middle East

Long term growth rate ...... 1.5% 1% Discount rate ...... 12% 12%

The key assumptions used for value-in-use calculations in 2010 are as follows:

Premium Schools

Asia Europe Switzerland

Growth in pupil numbers ...... 62.5% 17.8% — Long term growth rate ...... 2% 1% — Discount rate ...... 12% 12% —

Learning Services

UK Middle East

Long term growth rate ...... 1% 1% Discount rate ...... 12% 12%

F-121 Premium Schools

In the year ended 31 August 2011, the results of the Premium School’s division benefited from strong growth in student numbers both at the start of the first term as well as during the 2010/11 academic year. In addition, the acquisition and successful integration of two schools in Switzerland (College Alpin Beau Soleil and College Champittet) bodes well for the future as regards pupil numbers.

Growth rates are declining year on year due to existing capacity becoming more utilised. The figures do not include growth as a result of proposed campus expansion. Management therefore consider that no impairment is required to any of the goodwill or indefinite life of intangible assets regions allocated to the Premium Schools division.

During the prior year the Group witnessed an under-performance against its business plan of its Abu Dhabi school which was operated through its subsidiary the British International School LLC. The under- performance gave rise to an impairment review and as a consequence goodwill, in relation to the Abu Dhabi school, was written down to its recoverable level. The impairment charge made to the profit and loss account in the year ended 31 August 2010 was $21.177m.

On 26 August 2010, the Group sold its subsidiary The British International School Abu Dhabi LLC, to Premier Education Holdings s.a.r.l., its immediate parent company. The remaining goodwill relating to this investment was written off at the date of sale and included in the calculation of the profit on disposal.

Learning Services

In May 2010, the new UK government announced its intention to dramatically reduce government spending from previous levels. The budget published in July 2010 by the government contemplates sizable reductions in spending by the government across all of its sectors in the remaining months of the current fiscal year ending 31 March 2011 and beyond, including expenditures for outsourced educational services. Although the details of which national and local government authorities’ programmes would be affected by these spending cuts were not known at the time, the directors predicted a substantial decline in the pipeline of revenues from the UK portion of its Learning Services business in the year ending 31 August 2011 and possibly beyond. Based on the latest available forecasts for the UK portion of the Group’s Learning Services business, the directors identified that an impairment adjustment of $20.153m was required in respect of the goodwill held for this business. A charge of $20.153m was accordingly been made to the Group’s Income statement and against goodwill in the year ended 31 August 2010.

During 2011, potential new Learning Service contracts in the UK which had remained in the Group’s budget following the prior year review did not materialise due to the continued reduction in government spending. Based on the latest available forecasts the directors believe that this policy by the government will not change in the near future and which resulted in an impairment of the goodwill associated with the UK Learning Services division. A charge of $16.657m has accordingly been made to the Group’s income statement in the year ended 31 August 2011.

Middle East

Management feel that due to the nature of the Learning Services division, growth in contract revenue is determined by future market development. The growth rates used are consistent with approved forecasts for the region in which the division operates. The discount rates used are consistent with the Groups assessment to risk.

The external market is showing signs of new contracts being offered out to tender. Management have responded accordingly by reorganising and developing the business development team into a more efficient and streamlined operation as well as refocusing how it operates in tendering for new contracts. This is reflected in the number of contracts that the Group has bid for now being close to finalisation.

Management considers that the recoverable amount of the cash generating unit exceeds its carrying amount and that no impairment is required in the Middle East Learning Services.

F-122 13. SUBSIDIARIES

The Group had the following interests in subsidiaries:

Class of Country of shares Incorporation held Ownership

2011 2010 Holding companies Premier Education (UK) Bidco Limited*dG...... UK Ordinary 100% 100% Premier Education (UK) Midco Limited+dG ...... UK Ordinary 100% 100% Nord Anglia Education Limited*dG ...... UK Ordinary 100% 100% Eduasia Limited*G ...... Hong Kong Ordinary 100% 100% Nord Anglia Education Development Services Limited*dG .. UK Ordinary 100% 100% Nord Anglia Middle East Holdings SPC*SG ...... Bahrain Ordinary 100% 100% Nord International Schools Limited*dG ...... UK Ordinary 100% 100% Nord Anglia (Beijing) Consulting Limited*S ...... China Ordinary 100% 100% Premium Schools English International School Prague^SG ...... Czech Republic Ordinary 100% 100% The British School SpZo.o*G ...... Poland Ordinary 100% 100% The British International School Bratislava*SG ...... Slovakia Ordinary 100% 100% The British International School Budapest* ...... Hungary Ordinary 100% 100% The British International School Shanghai*S ...... China Ordinary 100% 100% The British School Beijing^...... China Ordinary 100% 100% College Champittet*SG ...... Switzerland Ordinary 100% — College Alpin Beau Soleil*SG ...... Switzerland Ordinary 100% — Learning Services Nord Anglia Lifetime Development North East Limited*dG .. UK Ordinary 100% 100% Nord Anglia Lifetime Development North West Limited*dG.. UK Ordinary 100% 100% Nord Anglia Lifetime Development London and South East Limited*dG ...... UK Ordinary 100% 100% Nord Anglia Lifetime Development South West Limited*dG . UK Ordinary 100% 100% Nord Anglia Vocational Education and Training Services Limited*dG ...... UK Ordinary 100% 100% Nord Anglia eLearning Limited*dG ...... UK Ordinary 100% 100% Nord Anglia Education Improvement Services Limited*G .. UK Ordinary 100% 100% Nord Anglia Recruitment Limited*dG ...... UK Ordinary 100% 100% Nord Anglia Education Partnerships Limited*dG ...... UK Ordinary 100% 100% Nord Anglia Middle East Holdings SPC (Abu Dhabi Branch)* ...... n/a 100% 100% Nord Anglia Middle East Holdings SPC (Malaysia Branch)*. n/a 100% — Nord Anglia Education Consultancies Saudi Arabia Limited*G ...... KSA Ordinary 100% — Brighton Education Learning Services SDN BHD* ...... Malaysia Ordinary 100% — Nord Anglia Education SDN BHD* ...... Malaysia Ordinary 100% —

* Investment held by 100% owned subsidiary of Group’s parent company

^ Investments held 100% within the Group by subsidiaries of the Group’s parent company

+ The Companies denoted are direct subsidiaries of the parent Company, Premier Education (UK) Holdco Limited

d Material assets of subsidiary form part of security arrangement for bank borrowings (see note 19)

S Share capital of subsidiary is pledged as security for bank borrowings (see note 19)

G Subsidiary is a guarantor under the security arrangement for bank borrowings (see note 19)

F-123 14. INVESTMENTS IN JOINTLY CONTROLLED ENTITIES

Joint Venture

EduAction (Waltham Forest) Limited, a company which provides education services to the London Borough of Waltham Forest, is owned 50% each by Nord Anglia Education Limited and Amey PLC. The company has ceased trading.

A summary of the aggregated financial information for EduAction (Waltham Forest) Limited is shown below:

2011 2010 2009

$000 $000 $000 Turnover ...... — — 1,504

Interest receivable and other income ...... 10 9 181

Profit on ordinary activities before tax ...... 10 157 559

Foreign exchange ...... (6) (8) —

2011 2010 2009

$000 $000 $000 Current assets ...... 1,219 2,836 3,927

1,219 2,836 3,927

Current liabilities ...... (679) (2,325) (3,557)

(679) (2,325) (3,557)

540 511 370

There are no capital commitments or contingent liabilities in EduAction (Waltham Forest) Limited.

15. DEFERRED TAX ASSETS AND LIABILITIES

Recognised deferred tax assets and liabilities

Deferred tax assets and liabilities are attributable to the following:

Assets Liabilities

2011 2010 2009 2011 2010 2009

$000 $000 $000 $000 $000 $000 Property, plant and equipment . . 110 104 (571) (764) — — Intangible assets...... — — — (11,094) — — Financial liabilities ...... 679 1,337 1,385 (69) — — Interest-bearing loans and borrowings...... — — — (610) (1,212) (1,994) Employee benefits...... 956 ————— Taxvalueoflosscarry-forwards.625————— Provisions...... 3,195 2,615 1,909 — — — Goodwill ...... — — (225) — —

Tax assets / (liabilities) ...... 5,565 4,056 2,723 (12,762) (1,212) (1,994)

Net tax assets / (liabilities)..... — 2,844 729 (7,197) — —

F-124 Movement in deferred tax during the year

Foreign Acquired in 1 September Recognised exchange business 31 August 2010 in income movements combination 2011

$000 $000 $000 $000 $000 Property, plant and equipment . . . 104 (764) 6 — (654) Intangible assets...... — 453 (1,432) (10,115) (11,094) Financial liabilities ...... 1,337 (782) 55 — 610 Interest-bearing loans and borrowings...... (1,212) 654 (52) — (610) Employee benefits...... — — 135 821 956 Tax value of loss carry-forwards utilised ...... — 511 64 50 625 Provisions...... 2,615 380 200 — 3,195 Goodwill ...... — (206) (19) (225)

2,844 246 (1,043) (9,244) (7,197)

Movement in deferred tax during the prior year

Foreign Included in 1 September Recognised exchange disposal 31 August 2009 in income movements group Other 2010

$000 $000 $000 $000 $000 $000 Property, plant and equipment ...... (571) 72 (38) 641 — 104 Financial liabilities .... 1,385 19 (67) — — 1,337 Interest-bearing loans andborrowings.... (1,994) 691 91 — — (1,212) Provisions...... 1,909 590 (83) — 199 2,615

729 1,372 (97) 641 199 2,844

16. INVENTORIES

2011 2010 2009

$000 $000 $000 Goods for resale ...... — 71 376

— 71 376

17. TRADE AND OTHER RECEIVABLES

2011 2010 2009

$000 $000 $000 Trade receivables ...... 24,662 18,740 20,688 Less: Provision for impairment of trade receivables (See note 24) . (1,120) (2,869) (3,536)

Net trade receivables ...... 23,542 15,871 17,152 Prepayments ...... 6,975 8,629 11,093 Accrued income ...... 8,374 3,192 2,456 Amount due from parent undertaking ...... — 17 — Amounts due from related undertaking (See note 28) ...... 5,369 5,936 24 Other receivables ...... 2,912 1,830 2,792

47,172 35,475 33,517

Non-current Other receivables ...... 11,570 — —

F-125 Amounts due from related undertakings are unsecured and interest free.

Non-current receivables relate to cash deposits that cannot be drawn until at least 12 months after the balance sheet date and a deposit on a Premium school site which is not recoverable for at least 12 months from this date.

18. CASH AND CASH EQUIVALENTS/ BANK OVERDRAFTS

2011 2010 2009

$000 $000 $000 Cash and cash equivalents ...... 155,581 109,755 87,204 Bank overdrafts ...... (67,613) (27,929) (20,705)

Cash and cash equivalents per cash flow statements ...... 87,968 81,826 66,499

19. OTHER INTEREST-BEARING LOANS AND BORROWINGS

This note provides information about the contractual terms of the Group and Company’s interest-bearing loans and borrowings, which are measured at amortised cost. For more information about the Group’s exposure to interest rate and foreign currency risk, see note 24, Financial instruments.

2011 2010 2009

$000 $000 $000 Non-current liabilities Secured bank loans and overdrafts ...... 179,084 178,868 193,889 Loan notes owed to parent (See note 28) ...... 323,945 221,771 208,344 Finance lease liabilities...... 2 4 37 Loan notes owed to senior management (See note 28) ...... 2,961 2,071 1,257 Loan notes owed to related party (See note 28) ...... 1,828 1,187 — Loan from related undertaking (See note 28) ...... — 8,600 —

507,820 412,501 403,527

Current liabilities Current portion of secured bank loans and bank overdrafts...... 12,936 25,464 16,205 Current portion of finance lease liabilities...... 30 30 102 Loan from related undertaking (See note 28) ...... — 5,936 — Loan from parent undertaking (See note 28)...... 16,423 — —

29,389 31,430 16,307

In addition to the above, specific registered pledges have been made over bank accounts, assignment of receivables and assignment of insurance. At 31 August 2011, the carrying value of the bank accounts and receivables which have been pledged were $13.928m and $2.741m respectively.

F-126 Terms and debt repayment schedule

Face Carrying Face Carrying Face Carrying Nominal value amount value amount value amount interest Year of Currency rate maturity 2011 2011 2010 2010 2009 2009

$000 $000 $000 $000 $000 $000 Senior A facility+ . . . US $ 3.96% 2015 32,751 32,751 49,010 49,010 59,513 59,513 Senior B facility+ . . . US $ 4.21% 2015 63,234 63,234 65,346 65,346 64,924 64,924 Working capital facility+ ...... US$ 3.96% 2015 30,440 30,440 30,322 30,322 30,127 30,127 Mezzanine financing facility+ ...... US$ 10.98% 2015 55,341 55,341 52,166 52,166 49,040 49,040 Revolving capital facility+ ...... US$ 3.96% 2012 — — 7,484 7,484 6,399 6,399 Loan notes owed to parent^...... US$ 12% 2038 323,578 321,234 226,261 221,771 215,466 208,344 Loan notes owed to parent...... US$ 4.5% 2038 1,086 1,086 ———— Loan notes owed to parent...... US$ 2.5% 2038 1,625 1,625 ———— Loan notes owed to senior management^ . . . US $ 12% 2038 2,961 2,961 2,071 2,071 1,257 1,257 Loan notes owed to relatedparty.... US$ 12% 2038 1,828 1,828 1,187 1,187 — — Finance leases .... GBP 2013 32 32 34 34 139 139 Working capital facility ...... RMB 5.52% 2013 10,103 10,103 ———— Business loan ..... KRW 5% 2010 ————9191 Business loan ..... CHF 4.5% 2013 133 133 ———— Business loan ..... HUF 23% 2012 18 18 4 4 — — Loan from parent undertaking ..... CHF 4.5% n/a 7,520 7,520 ———— Loan from related undertaking ..... CHF 3% n/a — — 5,936 5,936 — — Loan from parent undertaking ..... US$ 2.5% n/a 8,903 8,903 ———— Loan from related undertaking ..... US$ 3% 2011 — — 8,600 8,600 — —

539,553 537,209 448,421 443,931 426,956 419,834

^ Loan notes were denominated in sterling in the prior year. All other attributes remained the same.

+ Interest rate represents the average rate for the year as the facility incurs interest at 3 month LIBOR plus a margin. See table below for details of margins throughout the year.

F-127 All interest is settled by cash payments on the required date, with the exception of 5.5% of the 10% of the mezzanine facility which is rolled forward.

Interest rate Period

Senior A facility ...... 3.25%+LIBOR 1September 2010 to 16 October 2010 3.00% + LIBOR 17 October 2010 to 31 August 2011 Senior B facility ...... 3.50%+LIBOR 1September 2010 to 16 October 2010 3.25% + LIBOR 17 October 2010 to 31 August 2011 Working capital facility ...... 3.25%+LIBOR 1September 2010 to 16 October 2010 3.00% + LIBOR 17 October 2010 to 31 August 2011 Mezzanine financing facility ...... 10.00%+LIBOR 1September 2010 to 31 August 2011 Revolving capital facility ...... 3.25%+LIBOR 1September 2010 to 16 October 2010 3.00% + LIBOR 17 October 2010 to 31 August 2011

The exposure of the Group’s borrowings to interest rate changes is as follows:

2011 2010 2009

$000 $000 $000 Less than six months ...... 198,189 218,864 210,094 Between six months and one year ...... — — — Between one and five years ...... 10,286 38 139 More than five years ...... 328,734 225,029 209,601

537,209 443,931 419,834

Finance lease liabilities Finance lease liabilities are payable as follows:

Minimum Minimum Minimum lease lease lease payments Interest Principal payments Interest Principal payments Interest Principal

2011 2011 2011 2010 2010 2010 2009 2009 2009

$000 $000 $000 $000 $000 $000 $000 $000 $000 Less than one year . . . 30 — 30 30 — 30 102 — 102 Between one and five years ...... 2 — 2 4 — 4 37 — 37 More than five years . . —————————

32 — 32 34 — 34 139 — 139

There is no material difference between the total future minimum lease payments at the balance sheet date and their present value.

20. TRADE AND OTHER PAYABLES

2011 2010 2009

$000 $000 $000 Current Trade payables due to third parties ...... 4,326 3,046 3,449 Other taxes and social security ...... 1,177 1,170 2,231 Amounts owed to parent undertaking ...... 486 — — Other payables...... 18,384 14,750 9,232 Accrued expenses and deferred income ...... 154,366 127,096 92,804

178,739 146,062 107,716

Non-current Other payables...... 2,005 170 263

2,005 170 263

F-128 Non-current payables predominantly relate to deferred consideration due to a related party, as detailed per note 28, Related party transactions.

21. EMPLOYEE BENEFITS

Pension plans The Group operates three defined benefit pension schemes in the UK. In each case the assets of the scheme are held separately from those of the Group in independently administered funds. The current service costs of the schemes are charged to the income statement so as to spread the cost of pensions over the employees’ working lifetimes with the Group. A defined benefit scheme was established for Lifetime Careers employees (employed by a Group subsidiary). Contributions are determined by independently professionally qualified actuaries on the basis of triennial valuations. The most recent formal actuarial valuation of the scheme was performed at 31 August 2008. A new actuarial valuation is in the process of being performed and is expected to be completed shortly. The Nord Anglia Joint Pension Scheme is a closed scheme and therefore under the projected unit method the current service costs will increase as members of the scheme approach retirement. The most recent formal actuarial valuation of the scheme was performed at September 1, 2007 using the aggregate method which assesses the adequacy of the fund to meet the minimum funding requirement and calculates contributions on the level of pensionable payroll to provide the retirement benefits for the members. The Wyburn School Limited Pension and Life Assurance Scheme (1985) is a closed scheme and therefore under the projected unit method the current service costs will increase as the members of the scheme approach retirement. The most recent actuarial valuation of the scheme was performed at September 1, 2007 using the aggregate method which assesses the adequacy of the fund to meet the minimum funding requirement and calculates contributions on the level of pensionable payroll to provide the retirement benefits for the members. Actuarial valuation reports have been requested by the Group for both the Nord Anglia Joint Pension Scheme and The Wyburn School Limited Pension and Life Assurance Scheme (1985). Given the underlying size of these schemes (5.1% of the consolidated net assets and liabilities), any movement as a result of changes reported in the actuarial valuation is unlikely to be material. An IAS 19 valuation has been prepared for each of the three defined benefit schemes as at August 31, 2011. Under IAS 19 the net pension deficit has been recognised in the Group financial statements. Details of the IAS 19 valuations are set out below. The Company information disclosed below is in respect of the whole of the plans for which the Company is either the sponsoring employer or has been allocated a share of cost under an agreed Group policy throughout the periods shown.

Closure of schemes At 31 August 2011, all three schemes closed to future accruals and active members became deferred pension members. Whilst the Group will continue to make future employer contributions to the schemes, member contributions will no longer be made.

2011 2010 2009 2008 2007 $000 $000 $000 $000 $000 Present value of funded defined benefit obligations...... (41,518) (37,010) (34,395) (44,708) (38,605) Fair value of plan assets ...... 31,067 27,648 26,591 29,207 33,040 Netobligations...... (10,451) (9,362) (7,804) (15,501) (5,565) Deferred tax asset...... — — — 4,341 1,670 Liability for defined benefit obligations recognised in the balance sheet...... (10,451) (9,362) (7,804) (11,160) (3,895)

Movements in present value of defined benefit obligation

2011 2010 2009 $000 $000 $000 At 1 September ...... (37,010) (34,395) (44,708) Current service cost...... (509) (464) (1,462) Interest cost ...... (1,958) (1,844) (2,521) Curtailment gain ...... 385 — — Actuarial losses ...... (832) (2,557) 9,602 Contributions by members ...... (304) (336) (558) Benefits paid ...... 586 886 733 Exchange adjustments ...... (1,876) 1,700 4,519 At 31 August ...... (41,518) (37,010) (34,395)

F-129 Movements in fair value of plan assets

2011 2010 2009

$000 $000 $000 At 1 September ...... 27,648 26,591 29,207 Expected return on plan assets...... 1,677 1,643 1,818 Actuarial (losses)/gains...... (292) 292 (2,454) Contributions by employer ...... 915 978 975 Contributions by members ...... 304 336 558 Benefits paid ...... (586) (886) (733) Exchange adjustments ...... 1,401 (1,306) (2,780)

At 31 August ...... 31,067 27,648 26,591

Expense recognised in the income statement

2011 2010 2009

$000 $000 $000 Current service cost...... (509) (464) (1,462) Interest on defined benefit pension plan obligation ...... (1,958) (1,844) (2,521) Expected return on defined benefit pension plan assets...... 1,677 1,643 1,818 Curtailment gain ...... 385 — — Exchange adjustments ...... (11) 4 (94)

Total...... (416) (661) (2,259)

The expense is recognised in the following line items in the income statement:

2011 2010 2009

$000 $000 $000 Management, administrative and support staff expense ...... (124) (464) (1,462) Finance expense...... (281) (201) (703) Exchange adjustments ...... (11) 4 (94)

(416) (661) (2,259)

Actuarial gains and losses recognised directly in equity in the statement of comprehensive income since 1 September 2009, the transition date to Adopted IFRSs:

2011 2010 2009

$000 $000 $000 Cumulative amount at 1 September ...... 4,883 7,148 — Recognised in the year ...... (1,124) (2,265) 7,148

Cumulative amount at 31 August ...... 3,759 4,883 7,148

F-130 The fair value of the plan assets and the return on those assets were as follows:

2011 2010 2009

Fair value Fair value Fair value

$000 $000 $000 Equities ...... 24,886 22,375 21,125 Property...... — — 1,001 Fixed interest and index linked gilts ...... 1,255 2,109 813 Corporate bonds ...... — 1,055 3,040 Cash ...... 4,243 1,599 163 With profits funds ...... 683 510 449

31,067 27,648 26,591

Actual return on plan assets ...... 1,384 1,935 (634)

Principal actuarial assumptions (expressed as weighted averages) at the year end were as follows:

2011 2010 2009

%%% Investment/discount rate ...... 5.40 5.10 5.60 Inflation...... 3.00 2.60 2.90 Future salary increases...... n/a 3.10 3.40 Future payment increases ...... 3.00 2.60 2.70

The expected return on plan assets is 4.6% (2010 — 4.6%; 2009 — 5.8%).

• Current pensioner aged 65: 22.1 years (2010 and 2009 — 22.1 years) (male), 25 years (2010 and 2009 — 25 years) (female).

• Future retiree upon reaching 65: 23.2 years (2010 — 23.2 years and 2009 — 23.1 years) (male), 26 years (2010 — 26 years and 2009 — 25.9 years) (female).

History of plans

The history of the plans for the current and prior periods is as follows:

Balance sheet

2011 2010 2009

$000 $000 $000 Present value of the defined benefit obligation ...... (41,518) (37,010) (34,395) Fair value of plan assets ...... 31,067 27,648 26,591

Deficit...... (10,451) (9,362) (7,804)

Experience adjustments

2011 2010 2009

$000 $000 $000 Experience adjustments on plan liabilities ...... 9 (126) 2,551 Experience adjustments on plan assets...... 292 (292) 2,454

F-131 Experience adjustments

2011 2010 2009 $000 $000 $000 Experience adjustments on plan liabilities as a percentage of plan liabilities ...... 0.02% 0.34% (7.42%) Experience adjustments on plan assets as a percentage of plan assets ...... 0.94% (1.05%) 9.23%

The Group expects to contribute approximately $0.521m to its defined benefit plans in the next financial year.

Defined contribution plans

The Group operates a number of defined contribution pension plans.

The total expense relating to these plans in the current year was $482,000 (2010 — $468,000)

Following the acquisition of College Alpin Beau Soleil and College Champittet, the Group has acquired additional defined benefit pension schemes. The assets of each scheme are held separately from those of the Group in independently administered funds. Contributions to the schemes are charged to the income statement so as to spread the cost of pensions over the employees working lifetime within the Group.

A defined benefit pension scheme was acquired on the acquisition of College Alpin Beau Soleil for the employees of that school. Contributions are determined by independent professionally qualified actuaries.

Upon the acquisition of College Champittet, three defined benefit pension scheme was acquired for the employees of that school. Contributions are determined by independent professionally qualified actuaries. These three schemes are administered under the umbrella of one scheme for reporting purposes.

Under Swiss GAAP, there is no requirement for company pension schemes to be valued and therefore an IAS 19 valuation has been prepared at the date of acquisition and as at 31 August 2011 for both of these subsidiaries. Under IAS 19 the net pension deficit has been recognised in the Group financial statements.

2011 $000 Present value of funded defined benefit obligations ...... (23,432) Fair value of plan assets ...... 19,262 Liability in the balance sheet ...... (4,170)

Movements in present value of defined benefit obligation

2011 $000 At acquisition ...... (18,710) Current service cost...... (686) Interest cost ...... (278) Contributions by members ...... (640) Benefits paid ...... 40 Exchange adjustments ...... (3,158) At 31 August ...... (23,432)

Movements in fair value of plan assets

2011 $000 At 1 September ...... 15,139 Expected return on plan assets...... 235 Actuarialgains...... 46 Contributions by employer ...... 688 Contributions by members ...... 640 Benefits paid ...... (40) Exchange adjustments ...... 2,554 At 31 August ...... 19,262

F-132 Expense recognised in the income statement

2011

$000 Current service cost...... (686) Interest on defined benefit pension plan obligation ...... (278) Expected return on defined benefit pension plan assets...... 235 Exchange adjustments ...... (15)

Total...... (744)

The expense is recognised in the following line items in the income statement:

2011

$000 Management, administrative and support staff expense ...... (686) Finance expense...... (43) Exchange adjustments ...... (15)

(744)

Actuarial gains and losses recognised directly in equity in the statement of comprehensive income since the date of acquisition:

2011

$000 Cumulative amount at 1 September ...... — Recognised in the year ...... 46

Cumulative amount at 31 August ...... 46

The fair value of the plan assets and the return on those assets were as follows:

2011

Fair value

$000 Insurance assets ...... 19,262

19,262

Actual return on plan assets ...... 281

Principal actuarial assumptions (expressed as weighted averages) at the year end were as follows:

2011

% Investment/discount rate ...... 2.50 Inflation...... 1.50 Future salary increases...... n/a Future payment increases ...... 1.50

The expected return on plan assets is 2.5%.

• Current pensioner aged 65: 19.56 years (male), 21.89 years (female).

• Future retiree upon reaching 65: 21.6 years (male), 23.85 years (female).

F-133 History of plans The history of the plans for the current and prior periods is as follows:

2011

$000 Present value of defined benefit obligation ...... (23,432) Fair value of plan assets ...... 19,262

Deficit...... (4,170)

Experience adjustments

2011

$000 Experience adjustments on plan liabilities ...... —

Experience adjustments on plan assets ...... 46

Experience adjustments

2011

$000 Experience adjustments on plan liabilities as a percentage of plan liabilities ...... — Experience adjustments on plan assets as a percentage of plan assets ...... 0.38%

Share-based payments In the year ended 31 August 2011 shares were issued to management, the effective grant date for these awards were at various stages during the year. The vesting conditions of these awards are that they will vest at the earlier of August 2012 or a complete exit by Baring Private Equity Asia. None of the awards vested in the period. Management have been issued shares based on their level of seniority. When vesting conditions are met the number of shares held by management will multiply in accordance with the ratchet attached to that class of shares. The vesting of shares will be satisfied by adjusting the ownership of the equity between the parent company and management. If the full IRR is satisfied, the stake owned by the employees would be 14.6%. The ratchet by class of share is noted below:

IRR B shares C shares D shares E shares

Less than 18% ...... 3.514 3.347 3.606Notapplicable 18%to25%...... 4.514 4.347 4.606 2 25%to35%...... 5.514 5.347 5.606 3 35%+...... 6.514 6.347 6.606 4

A fair value for the shares issued was calculated using the Black-Scholes Option Pricing Model incorporating the following assumptions: The terms and conditions of the grants are as follows:

Shares Shares Shares issued 2011 issued 2010 issued 2009

Exercise price ...... $0.016281 $0.01551 $0.0163 Equityprice...... $0.1791 $0.1160 $0.1219 Volatility ...... 100% 100% 100% Dividend yield ...... 0% 0% 0% Riskfreeinterestrate...... 5% 5% 5% Expected life to exercise ...... 1.5years 2.5 years 3.5 years Number of shares exercised ...... 360,145 1,059,414 2,919,837

The fair value of each share was calculated as $0.1791 (2010 — $0.1160; 2009 — $0.1017).

F-134 22. PROVISIONS FOR OTHER LIABILITIES AND CHARGES

Property Other Total

$000 $000 $000 Balance at 1 September 2009 ...... 1,307 372 1,679 Provisions made during the year ...... 2,246 1,339 3,585 Provisions used during the year ...... (480) (80) (560) Exchange ...... (81) (23) (104)

2,992 1,608 4,600

Balance at 1 September 2010 ...... 2,992 1,608 4,600 Provisions made during the year ...... 4,535 2,112 6,647 Provisions used during the year ...... (1,152) (267) (1,419) Provisions reversed during the year ...... — (247) (247) Foreign exchange ...... 195 102 297

Balance at 31 August 2011 ...... 6,570 3,308 9,878

Non-current ...... 5,082 1,745 6,827 Current...... 1,488 1,563 3,051

6,570 3,308 9,878

Provisions for property at the beginning of the year related to lease dilapidations and also future lease costs resulting from the restructuring of the business within the Learning Services division. An element of the provision in excess of that utilised during the year has been released as a result of a settlement on one of these leases subsequent to the balance sheet date. Additional provisions have been made during the year in respect of the onerous lease on the building currently housing the head office function which will be relocated to Hong Kong during the coming fiscal year.

Other provisions relate to the additional costs associated with the relocation of the head office function noted above, costs related to overseas employees and an overseas legal claim.

23. CAPITAL AND RESERVES

Group and Company

Share capital

Redeemable preference shares of $1.00 each Ordinary shares

In thousands of shares 2011 2010 2009 2011 2010 2009 On issue at 1 September ...... — — — 103,843 102,920 100,000 Issued in consideration for business combination ...... 29,764 — — 37,137 923 2,920 Share premium used to issue preference shares ...... 35,482 —————

On issue at 31 August — fully paid . . 65,246 — — 140,980 103,843 102,920

F-135 In thousands of shares 2011

Number $000 Allotted,calledupandfullypaid...... A Ordinary shares of $0.016281/£0.01 each ...... 136,641 2,225 B Ordinary shares of $0.016281/£0.01 each ...... 842 14 C Ordinary shares of $0.016281/£0.01 each ...... 210 3 D Ordinary shares of $0.016281/£0.01 each ...... 273 4 E Ordinary shares of $0.016281/£0.01 each ...... 2,212 36 F Ordinary shares of $0.016281/£0.01 each ...... 802 13 Deferred shares of £0.00 each ...... — — Redeemable preference shares of $1.00 each...... 65,246 65,246

206,226 67,541

2010

Number $000 Allotted,calledupandfullypaid...... A Ordinary shares of £0.01 each ...... 99,864 1,550 B Ordinary shares of £0.01 each ...... 842 13 C Ordinary shares of £0.01 each ...... 210 3 D Ordinary shares of £0.01 each ...... 273 4 E Ordinary shares of £0.01 each ...... 2,054 32 F Ordinary shares of £0.01 each ...... 600 9 Deferred shares of £0.00 each ...... — —

103,843 1,611

2009

Number $000 Allotted,calledupandfullypaid...... A Ordinary shares of £0.01 each ...... 100,000 1,630 B Ordinary shares of £0.01 each ...... 842 13 C Ordinary shares of £0.01 each ...... 210 3 D Ordinary shares of £0.01 each ...... 273 4 E Ordinary shares of £0.01 each ...... 1,595 28 F Ordinary shares of £0.01 each ...... — — Deferred shares of £0.00 each ...... — —

102,920 1,678

2011 2010 2009

$000 $000 $000 Shares classified as liabilities ...... — — — Shares classified in shareholders’ funds ...... 67,541 1,611 1,678

67,541 1,611 1,678

All classes of ordinary shares were converted from a sterling par value to a US dollar par value during the year ended 31 August 2011. The US dollar rates shown in respect of shares issued at 31 August 2011 represent the rates at which the shares were converted.

The holders of A, B, C and D Ordinary shares are entitled to receive notice of, attend, speak and vote at any general meeting of the Company. The holders of E, F and deferred shares do not have any of the above entitlements.

The preference shares are redeemable at any time at the option of the Company. The amount payable on redemption is the “Aggregate Value”. For the purposes of the redemption or conversion of the preference shares, the term “Aggregate Value” has the meaning given to it by the current articles of association of the Company.

The holders of the preference shares are not entitled to receive dividends and are not entitled to vote at meetings of the Company. The preference shares are convertible at the option of the Company into such number of A ordinary shares in the Company as have a market value equal to the “Aggregate Value”.

F-136 On 14 September 2010, 201,505 F Ordinary shares were issued at a nominal value of £0.01 each for a consideration of £2,015 ($3,280).

On 14 January 2011, 24,353,362 A Ordinary shares were issued as consideration for a business combination at a nominal value of £0.01 each ($396,497) with a premium of £21,812,917 ($35,271,487) attached to them. This premium along with the rest of the Groups share premium, at that time £130,502 ($211,020), was used to issue 35,482,509 preference shares.

Of these A Ordinary shares issued on 14 January 2011, 21,062,172 issued at a nominal value of £0.01 each ($327,517) with a premium of £18,865,052 ($29,335,155) attached to them related to the acquisition of College Alpin Beau Soleil s.a.r..l.

On 25 February 2011, 12,423,954 A Ordinary shares were issued at a nominal value of £0.01 each for a consideration of £124,240 ($202,275). On the same day, 29,763,547 preference shares were issued at a nominal value of $1.00 each. Both of these were as consideration for a business combination.

On 1 July 2011, 158,641 E Ordinary shares were issued at a nominal value of £0.01 each for a total consideration of £45,115 ($73,451).

Currency translation reserve

The currency translation reserve comprises all foreign exchange differences arising since 1 September 2009, the transition date to Adopted IFRSs, from the translation of the financial statements of foreign operations.

Other reserves

Other reserves comprise of fair value adjustments on the initial recognition of loan notes issued to the parent company and senior management and the recognition of derivative financial instruments.

Other comprehensive income/(loss)

2011

Share Share Translation Other Shareholders’ capital premium reserve reserves deficit Total

$000 $000 $000 $000 $000 $000 Other comprehensive income/(loss) Foreign exchange translation differences — foreign operations ...... 79 9 8,032 326 776 9,222 Actuarial gains on defined benefit pension plans ...... ————(1,078) (1,078)

Total other comprehensive income/(loss) ...... 79 9 8,032 326 (302) 8,144

2010

Total Total Other Share Share Trans-lation Other Shareholders’ parent Non-controlling comprehensive capital Premium reserve reserves deficit equity interest (loss)/income

$000 $000 $000 $000 $000 $000 $000 $000 Other comprehensive income/(loss) Foreign exchange translation differences — foreign operations . . (81) (9) 5,011 (334) (16,289) (11,702) (106) (11,808) Actuarial losses on defined benefit pension plans . . ————(2,265) (2,265) — (2,265)

Total other comprehensive income/(loss) ...... (81) (9) 5,011 (334) (18,554) (13,967) (106) (14,073)

F-137 24. FINANCIAL INSTRUMENTS

24 (a) Fair values of financial instruments

Trade and other receivables

The fair value of trade and other receivables, is estimated as the present value of future cash flows, discounted at the market rate of interest at the balance sheet date if the effect is material.

Trade and other payables

The fair value of trade and other payables is estimated as the present value of future cash flows, discounted at the market rate of interest at the balance sheet date if the effect is material.

Cash and cash equivalents

The fair value of cash and cash equivalents is estimated as its carrying amount where the cash is repayable on demand. Where it is not repayable on demand then the fair value is estimated at the present value of future cash flows, discounted at the market rate of interest at the balance sheet date.

Interest-bearing borrowings

Fair value is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the balance sheet date. For finance leases the market rate of interest is determined by reference to similar lease agreements.

Derivative financial instruments

The fair value of interest rate swaps is determined through the use of valuation techniques which maximise observable market data as the instruments are not traded in an active market.

F-138 Fair values

The fair values of all financial assets and financial liabilities by class together with their carrying amounts shown in the balance sheet are as follows:

Carrying Carrying Carrying amount Fair value amount Fair value amount Fair value

2011 2011 2010 2010 2009 2009

$000 $000 $000 $000 $000 $000 IAS 39 categories of financial instruments Financial assets held for trading (including all derivatives) Derivative financial instruments . . 162 162 391 391 — —

Total financial assets at fair value through profit or loss...... 162 162 391 391 — — Loans and receivables Cash and cash equivalents (note18)...... 87,968 87,968 81,826 81,826 66,499 66,499 Other loans and receivables (note17)...... 58,742 58,742 35,475 35,475 33,517 33,517

Total loans and receivables .... 146,710 146,710 117,301 117,301 100,016 100,016

Total financial assets ...... 146,872 146,872 117,692 117,692 100,016 100,016

Financial liabilities designated as fair value through profit or loss Financial liabilities held for trading (including all derivatives) Derivative financial instruments . . (6,463) (6,463) (5,342) (5,342) (4,947) (4,947)

Total financial liabilities at fair value through profit or loss . . . (6,463) (6,463) (5,342) (5,342) (4,947) (4,947) Financial liabilities measured at amortised cost Other interest-bearing loans and borrowings(note19)...... (208,475) (208,475) (218,902) (218,902) (210,233) (210,233) Trade and other payables (note20)...... (180,744) (180,744) (146,232) (146,232) (107,979) (107,979) Loan notes owed to parent company ...... (323,945) (326,289) (221,771) (226,261) (208,344) (215,466) Loan notes owed to senior management ...... (2,961) (2,961) (2,071) (2,071) (1,257) (1,257) Loan notes owed to related party. (1,828) (1,828) (1,187) (1,187) — —

Total financial liabilities measured at amortised cost ...... (717,953) (720,297) (590,163) (594,653) (527,813) (534,935)

Total financial liabilities ...... (724,416) (726,760) (595,505) (599,995) (532,760) (539,882)

Total financial instruments ..... (577,544) (579,888) (477,813) (482,303) (432,744) (439,866)

F-139 Fair value hierarchy

The table below analyses financial instruments measured at fair value, into a fair value hierarchy based on the valuation technique used to determine fair value.

• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities

• Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices)

• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

2011 Level 1 Level 2 Level 3 Total

$000 $000 $000 $000 Financial liabilities designated at fair value through profit and loss Derivative financial assets ...... — 162 — 162 Derivative financial liabilities...... — (6,463) — (6,463)

— (6,301) — (6,301)

2010 Level 1 Level 2 Level 3 Total

$000 $000 $000 $000 Financial liabilities designated at fair value through profit and loss Derivative financial assets ...... — 391 — 391 Derivative financial liabilities...... — (5,342) — (5,342)

— (4,951) — (4,951)

2009 Level 1 Level 2 Level 3 Total

$000 $000 $000 $000 Financial liabilities designated at fair value through profit and loss Derivative financial liabilities...... — (4,947) — (4,947)

— (4,947) — (4,947)

The fair value of interest rate swaps is determined through the use of valuation techniques which maximise observable market data as the instruments are not traded in an active market.

24 (b) Credit risk

Financial risk management

Exposure to credit risk

The carrying amount of financial assets represents the maximum credit exposure. Therefore, the maximum exposure to credit risk at the balance sheet date was $146.710m (2010 - $117.301m) being the total of the carrying amount of financial assets, excluding equity investments, shown in the table above.

F-140 Trade receivables

The maximum exposure to credit risk for trade receivables at the balance sheet date by currency was:

2011 2010 2009

$000 $000 $000 Sterling ...... 2,741 3,091 8,812 Dollar and dollar peg currencies ...... 2,399 7,847 5,355 Chinese renminbi ...... 14 — 15 European currencies (excluding sterling) ...... 4,683 4,047 2,970 Malaysian ringett...... 3,369 886 — Swissfranc...... 10,336 — —

23,542 15,871 17,152

The maximum exposure to credit risk for trade receivables at the balance sheet date by type of counterparty was:

2011 2010 2009

$000 $000 $000 School fees ...... 15,034 4,301 5,551 Amounts receivable through learning services contracts...... 8,497 11,570 11,588 Other...... 11 — 13

23,542 15,871 17,152

Credit quality of financial assets and impairment losses

The aging of trade receivables at the balance sheet date was:

Net after Net after Net after Gross impairment Gross impairment Gross impairment

2011 2011 2010 2010 2009 2009

$000 $000 $000 $000 $000 $000 Not past due ...... 6,485 6,485 14,498 11,896 12,310 11,508 Less than 1 month past due. 10,013 10,013 3,543 3,543 7,936 5,278 1 — 3 months past due . . . 6,108 5,919 50 50 387 366 More than 3 months past due...... 2,056 1,125 649 382 55 —

24,662 23,542 18,740 15,871 20,688 17,152

The movement in the allowance for impairment in respect of trade receivables during the year was as follows:

2011 2010

$000 $000 Balance at 1 September ...... 2,869 3,536 Impairment loss recognised ...... 836 2,744 Impairment loss reversed ...... (2,635) (3,202) Effect of foreign exchange movements ...... 50 (209)

Balance at 31 August ...... 1,120 2,869

F-141 24(c) Liquidity risk

Financial risk management Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group aims to maintain a flexible borrowing structure by combining committed bank borrowing facilities and the parent company loan note with additional overdraft and capital facilities. The Group monitors its future funding requirements over the medium term such that it can take actions to supplement its operating cash flows to service future debt obligations where appropriate. Management monitors rolling forecasts of the Group’s liquidity resources (comprising the undrawn borrowing facility, and cash and cash equivalents) on the basis of expected cash flow. This is generally carried out at both Group level and local level in the operating companies of the Group in accordance with practice and limits set by the Group. These limits vary by location to take into account the liquidity of the market in which the entity operates. In addition, the Group’s liquidity management policy involves projecting cash flows in major currencies and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements, and maintaining debt financing plans. The table below analyses the Group’s financial liabilities and net-settled derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant. The financial statements are prepared on the going concern basis. The balance sheet shows that liabilities exceed assets by $124.750m. The directors have considered the future forecasts and ongoing strategy when assessing the needs of the Group and consider the Group has adequate resources at its disposal to continue its operations for the foreseeable future. Further details are included in note 1. The Group has complied with all covenants included in the various debt facilities and instruments.

Borrowing facilities The Group has $10.0m borrowing facilities of which $2.5m was drawn down as overdraft facilities and $7.5m was undrawn borrowing facilities at the balance sheet date (2010 - nil). For the year ended 31 August 2011, the Group was committed to a $31.0m (2010 - $31.0m) cap-ex facility and utilised $nil (2010 - $6.6m) of the revolving line of credit. In the period ended 31 August 2008, the Group committed to a $40.0m cap-ex facility and a $10.0m revolver. The cap-ex facility was subsequently reduced to $31.0m during the year ended 31 August 2009. During the year ended 31 August 2009, the Group drew the whole of the $31.0m cap-ex facility and utilised $6.6m of the revolving line of credit. At 31 August 2010 all of the Groups facilities were fully drawn. The terms of the cap-ex facility carry an interest rate of US LIBOR plus 3% and require fixed bi-annual payments of $4.4m between 31 May 2012 and 30 November 2014 with a payment of $4.4m on the termination date. The terms of the revolver line of credit are US LIBOR plus 3%.

Liquidity risk — Group The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the effect of netting agreements:

2011

Carrying amount of contractual 1 year or 5 years and cashflows less 1 to 2 years 2 to 5 years over

$000 $000 $000 $000 $000 Non-derivative financial liabilities Borrowings...... 234,822 27,166 30,251 177,405 — Finance lease liabilities...... 35 33 2 — — Trade and other payables ...... 24,715 18,729 5,986 — — Loan notes owed to parent company .... 6,906,992 — — — 6,906,992 Loan notes owed to senior management . . 63,143 — — — 63,143 Loan notes to related party ...... 38,982 — — — 38,982 Other loans due to parent company ..... 17,247 — 17,247 — — Derivative financial liabilities ...... Interest rate swap ...... 6,463 — — 6,463 —

7,292,399 45,928 53,486 183,868 7,009,117

F-142 2010 2009

Carrying Carrying amount of amount of contractual 1 year or 1to2 2to5 5 years contractual 1 year or 1to2 2to5 5 years cashflows less years years and over cashflows less years years and over

$000 $000 $000 $000 $000 $000 $000 $000 $000 $000 Non-derivative financial liabilities Borrowings...... 256,578 27,419 23,792 205,367 — 296,496 26,849 21,815 102,821 145,011 Finance lease liabilities . . . 38 33 5 — — 157 112 45 — — Trade and other payables . . 17,966 17,796 170 — — 12,944 12,681 263 — — Loan notes owed to parent company ...... 5,403,032 — — — 5,403,032 5,763,701 — — — 5,763,701 Loan notes owed to senior management ...... 49,463 — — — 49,463 33,625 — — — 33,625 Loan note owed to related party...... 28,350 28,350 Other loans due to related party...... 9,035 — 9,035 — — — — — — — Other loans due to related party...... 6,203 6,203 — — — — — — — — Derivative financial liabilities Interestrateswap..... 5,342 — — — 5,342 4,947 — — — 4,947

5,776,007 51,451 33,002 205,367 5,486,187 6,111,870 39,642 22,123 102,821 5,947,284

24 (d) Market risk

Financial risk management

Market risk — Foreign currency risk

The Group’s exposure to foreign currency risk is as follows. This is based on the carrying amount for monetary financial instruments except derivatives when it is based on notional amounts.

F-143 31 August 2011

US dollar European and US Chinese Swiss Malaysian Sterling currencies dollar peg renminbi franc ringett Total

$000 $000 $000 $000 $000 $000 $000 Cash and cash equivalents...... (39,044) 40,717 7,943 50,676 26,595 1,081 87,968 Trade receivables ...... 2,741 4,683 2,399 14 10,336 3,369 23,542 Other non-current receivables ...... — — — 10,096 1,474 — 11,570 Secured bank loans and overdrafts ...... — (152) (181,765) (10,103) — — (192,020) Net obligations under finance leases...... (32) ———— (32) Trade and other payables . (11,671) (34,623) (3,684) (87,296) (42,622) (848) (180,744) Derivative financial instruments ...... — — (6,301) — — — (6,301) Loan notes owed to parent undertaking, senior management and related parties ...... — — (328,734) — — — (328,734) Other loans due to parent company ...... — — (8,903) — (7,520) — (16,423)

Balance sheet exposure . . (48,006) 10,625 (519,045) (36,613) (11,737) 3,602 (601,174)

31 August 2010

US dollar European and US Chinese Swiss Malaysian Sterling currencies dollar peg renminbi franc ringett Total

$000 $000 $000 $000 $000 $000 $000 Cash and cash equivalents...... (5,051) 12,426 19,444 54,957 — 50 81,826 Trade receivables ...... 3,091 4,047 7,847 — — 886 15,871 Secured bank loans and overdrafts ...... — — (204,332) — — — (204,332) Net obligations under finance leases...... (34) —————(34) Trade and other payables . (32,511) (28,696) (5,161) (79,211) — (653) (146,232) Derivative financial instruments ...... — — (4,951) — — — (4,951) Loan notes owed to parent undertaking, senior management and related parties ...... (225,029) —————(225,029) Other loans due to related party...... — — (8,600) — — — (8,600) Other loans due to related party...... ————(5,936) — (5,936)

Balance sheet exposure . . (259,534) (12,223) (195,753) (24,254) (5,936) 283 (497,417)

F-144 31 August 2009

US dollar European and US Chinese Sterling currencies dollar peg renminbi Total

$000 $000 $000 $000 $000 Cash and cash equivalents ...... (11,992) 17,839 13,963 46,689 66,499 Trade receivables...... 8,812 2,970 5,355 15 17,152 Secured bank loans ...... — — (210,094) — (210,094) Net obligations under finance leases . . (124) (15) — — (139) Trade and other payables...... (70,914) (10,655) (25,264) (1,146) (107,979) Derivative financial instruments ..... — — (4,947) — (4,947) Loan notes owed to parent undertaking and senior management ...... (209,601) — — — (209,601)

Balance sheet exposure...... (283,819) 10,139 (220,987) 45,558 (449,109)

Sensitivity analysis

A 1% strengthening of the following currencies against the US dollar at 31 August would have increased/(decreased) equity and profit or loss by the amounts shown below. This calculation assumes that the change occurred at the balance sheet date and had been applied to risk exposures existing at that date.

This analysis assumes that all other variables, in particular other exchange rates and interest rates, remain constant. The analysis is performed on the same basis for the year ended 31 August 2010.

Equity Profit or loss

2011 2010 2011 2010

$’000 $’000 $’000 $’000 Sterling ...... (1,494) (1,834) (173) 579 Swissfranc...... (66) — (307) — Chinese renminbi ...... (40) 23 (331) (71) Polishzloty...... (80) (35) (59) (63) ArabEmiratesdirham...... (94) (52) (42) (46)

Market risk — Interest rate risk

Profile

At the balance sheet date the interest rate profile of the Group’s interest-bearing financial instruments was:

2011 2010 2009

$’000 $’000 $’000 Fixed rate instruments Financial liabilities ...... 347,684 244,093 216,953

347,684 244,093 216,953

Variable rate instruments Financial liabilities ...... 195,202 208,709 216,074

195,202 208,709 216,074

The Group does not apply hedge accounting for any of its derivative financial instruments. As such the Group recognises changes in fair value in respect of any of its derivatives immediately in its income statement. The valuations of the interest rate swap and interest rate cap are sensitive to changes in future interest rates. If interest rates increased by 1% the interest rate swap would be valued at $(4,203)k and the interest rate cap at $520k and if interest rates decreased by 1% then the interest rate swap would be valued at $(8,263)k and the interest rate cap at $nil.

F-145 Two interest rate derivative financial instruments were established in October 2008 and were held over the Group’s US dollar loan facility. The hedging instruments fixed the US$ LIBOR rates that the Group could experience in relation to its US$ loans. The two interest rate instruments had a penalty free break clause that was exercisable on or before 31 August 2010 which the Group elected to utilise. On 15 July 2010, the Group restructured its existing agreements into one swap and into one cap agreement effective from 15 July 2010. The swap agreement extends to 28 February 2015 and provides the Group with a series of fixed US$ LIBOR rates on its US$ loans across the life of the agreement. The cap agreement extends to 31 August 2015 and places a cap of 3.00% on the US$ LIBOR rate the Group can experience on a secondary portion of the value of the loans. Both the swap and the cap agreements have cancellation provisions to accommodate the elimination of potential future excess hedge positions. The nominal value of the swap and the cap agreements at 31 August 2011 were $73.750m and $49.228m respectively. The life and nominal value of the derivative financial instruments is consistent with the amortisation schedule attached to the US dollar loans. At 31 August 2011, 66.4% of the US dollar loans was sheltered by the hedging instruments (2010 — 64.8%). The Group’s interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. Group policy is to maintain approximately 66.67% of its borrowings in senior and mezzanine debt in a position which is shielded by the swap and cap arrangements. During 2011 and 2010, the Group’s borrowings at variable rate were denominated in sterling and the US dollar. The interest periods on the Senior A and B facilities, the Working Capital facility and Mezzanine facility are selected by the borrower and may be a period of one, two or three months, or any other period agreed between the borrower and the lenders. The interest rate is set at the beginning of the interest period. The Group analyses its interest rate exposure systematically. In view of the fact that two fixed rate interest rate instruments were in place until 31 August 2010, no sensitivity analysis was performed on interest rates to this date. Likewise, in view of the fact that the new derivative arrangements provide the Group with a series of fixed US$ LIBOR rates on a portion of the US$ loans and a capped rate on a secondary potion of the US$ loans, no sensitivity analysis has been carried out in respect of interest rate exposure to or at the current year end. The impact of a 1% increase in interest rates on the Group’s variable interest rate debt not covered by the derivative financial instruments would be to increase the Group’s interest charge by approximately $0.8m. Under the terms of the loan note agreements the interest rate of 12%, 4% or 2.5% is fixed throughout the duration of the agreement. The effective interest of the loan notes is being recognised in the income statement over four years at an additional cost of interest of 1.25% per annum. Interest was added to the principal of the loan notes in arrears on 30 July 2011 and if not settled in cash will be added on that same date of each subsequent year.

24(e) Capital management The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may issue new shares or sell fixed assets to reduce debt. The Group monitors capital on the basis of the debt:equity ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including ‘current and non-current borrowings’ as shown in the consolidated balance sheet) less cash and cash equivalents. Total capital is calculated as ‘equity’ as shown in the consolidated balance sheet plus net debt. During 2011, the Group’s strategy was to monitor its debt:equity ratio, as well as to ensure in respect of each quarter ending, that cash flow cover to total debt servicing was not less than the ratio of 1.1. The debt equity ratios at 31 August 2011, 2010 and 2009 were as follows:

2011 2010 2009

$’000 $’000 $’000 Totalborrowings...... 537,209 443,931 419,834 Less cash and cash equivalents ...... (87,968) (81,826) (66,499)

Net debt ...... 449,241 362,105 353,335 Totalequity...... (124,750) (158,024) (37,635)

Totalcapital...... 324,491 204,081 315,700

Net debt to total equity ratio...... 3.6:1 2.3:1 9.4:1

In common with private equity funded acquisitions, management expects this ratio to widen in the initial years post acquisition when the focus of management will be EBITDA. However, management will continue to monitor the Group’s debt levels in order that it can act accordingly.

F-146 25. OPERATING LEASES

Future aggregate minimum lease payments are as follows:

2011 2010

$000 $000 Land and Buildings Less than one year ...... 25,847 11,521 Between one and five years ...... 97,912 41,663 More than five years ...... 335,700 121,040

459,459 174,224 Other Less than one year ...... 885 71 Between one and five years ...... 542 77 More than five years ...... — —

1,427 148

460,886 174,372

26. COMMITMENTS

Capital commitments

2011 2010

$000 $000 Contractedbutnotprovidedfor...... 2,658 200 Authorisedbutnotcontractedorprovidedfor...... 38 5,759

2,696 5,959

All capital commitments relate to tangible assets.

27. CONTINGENCIES

In 2011 all borrowings are secured by a debenture creating fixed and floating charges over Group assets and by a fixed charge over specified Group bank accounts. In addition, specific registered pledges have been made by certain overseas subsidiaries (see note 19 for further details of these arrangements). On 15 July 2010, the Group restructured its existing agreements into one swap agreement and into one cap agreement. These agreements extend to 28 February 2015 for the swap and 28 August 2015 for the cap and, as the cap agreement is cancellable, the Group has retained flexibility to allow it to best coordinate its derivative arrangements to match the requirements of the new banking facilities.

The Group has provided the following bank guarantees:

To SCTAI Anglo Iskola KFT for= C0.318m ($0.4m) in respect of a 30 year lease of school premises in Budapest. The annual payments under this lease are= C0.44m ($0.6m) and the guarantee expires on 18 January 2012.

To the United Arab Emirates Ministry of Labour for $0.2m (AED 720,000) in respect of the opening of the Abu Dhabi branch office. These bonds are open-ended bonds.

To King Abdulaziz and his Companions Foundation for Giftedness and Creativity for SAR 4,999,718 ($1.3m) in respect of bids for a contract in the Kingdom of Saudi Arabia. This guarantee will expire on 31 December 2011.

To Abu Dhabi Education Council for AED 868,848 ($0.2m) expiring 30 June 2013, AED 807,021 ($0.2m) expiring 30 June 2012, AED 1,275,124 ($0.3m) expiring 15 July 2012, AED 591,427 ($0.2m) expiring 15 July 2012 and AED 100,000 ($0.03m) expiring 30 November 2011.

F-147 28. RELATED PARTY TRANSACTIONS

Included within loans and borrowings are the following inter-company balances resulting from transactions with Premier Education Holdings s.a.r.l., the immediate parent company of Premier Education (UK) Holdco Limited:

Balance at Balance at Balance at 31 August Interest 31 August Interest 31 August Loan type 2011 New loans charge 2010 charge 2009

($’000) ($’000) ($’000) ($’000) ($’000) ($’000) Senior and Junior loan notes...... 323,945 55,636 35,032 221,771 24,446 208,344 Loans to parent undertaking. 16,423 16,423 513 — — —

Included within amounts owed to Parent undertaking is an amount of $0.486m due to Premier Education Holdings s.a.r.l.

The immediate parent company also has the following shareholdings in Premier Education (UK) Holdco Limited:

Number of Shares Number of Shares shares held issued shares held disposed of at 31 August during the at 31 August during the 2011 year Value 2010 year Value

($’000) ($’000) Ordinary ‘A’ shares ...... 136,640,737 36,777,316 2,225 99,863,421 (136,579) 1,550 Preference shares ...... 65,246,056 65,246,056 65,246 — — —

Also included in the consolidated financial statements are the following balances resulting from transactions with Senior Management of Premier Education (UK) Holdco Limited and shareholdings held by Senior Management:

Balance at Balance at Balance at 31 August Interest 31 August Interest 31 August Loans 2011 New loans charge 2010 charge 2009

($’000) ($’000) ($’000) ($’000) ($’000) ($’000) Senior and Junior loan notes...... 2,961 539 260 2,071 187 1,257

Number of Number of Number of shares held Shares shares held Shares shares held at 31 issued at 31 issued at 31 August during the August during the August Shareholdings 2011 year Value 2010 year Value 2009

($’000) ($’000) Ordinary ‘B’ shares . 841,623 — 14 841,623 — 13 841,623 Ordinary ‘C’ shares. 210,406 — 3 210,406 — 3 210,406 Ordinary ‘D’ shares. 273,527 — 4 273,527 — 4 273,527 Ordinary ‘E’ shares . 1,213,746 366,287 20 847,459 136,579 13 558,272

Remuneration of senior management is disclosed in note 8 of the consolidated financial statements.

Included within loans and borrowings are the following balances resulting from transactions with the Parthenon Group LLC, an entity in which a director of Premier Education (UK) Holdco Limited has a shareholding. Details of the shareholdings held by the this related party are also detailed below.

Balance at Balance at Balance at 31 August Interest 31 August Interest 31 August Loans 2011 New loans charge 2010 charge 2009

($’000) ($’000) ($’000) ($’000) ($’000) ($’000) Junior loan notes ...... 1,828 386 193 1,187 91 —

F-148 Number of Shares Number of Shares shares held issued shares held issued of at 31 August during the at 31 August during the Shareholdings 2011 year Value 2011 year Value

($’000) ($’000) Ordinary ‘F’ shares ...... 801,653 201,505 13 600,148 — 9

At the 31 August 2009 $0.528m was owed to The Parthenon Group LLC. On 19 November 2009 this loan was converted to 272,336 F ordinary shares and junior loan notes, the nominal value of which were $0.003m and $0.523m respectively.

Included within amounts due from related undertakings is the following balances resulting from transactions with The British International School Abu Dhabi LLC, an entity held under common control and Lesolais SA, an entity owned by a member of senior management:

Balance at 31 August Counterparty 2011

($’000) Nord Anglia Middle East Holdings S.p.c (Abu Dhabi branch) ...... 3,957 College Alpin Beau Soleil ...... 1,412

5,369

Within the amount owed to Nord Anglia Middle East Holdings S.p.c (Abu Dhabi) is a fee of $1.800m in respect of management charges made to The British International School Abu Dhabi LLC. The amount owed to College Alpin beau Soleil relates to fees collected by Lesolais SA on behalf of College Alpin beau Soleil for the school term.

Up to 26 August 2010, The British International School Abu Dhabi LLC was a wholly owned subsidiary of Premier Education (UK) Holdco Limited. At this date the entity was sold to the immediate parent company of Premier Education (UK) Holdco Limited — Premier Education Holdings s.a.r.l.. Consideration of $0.740m was received in respect of the subsidiary’s net liabilities, including goodwill held at Group, resulting in a profit on disposal of $1.855m.

The Group holds a 50% shareholding in Eduaction Waltham Forest Limited through its 100% owned subsidiary Nord Anglia Education Limited. At the balance sheet date the jointly controlled entity was owed an amount of $1.140m (2010 — $1.086m; 2009 — nil) by the Group which is included within other creditors due less than one year, and interest of $0.010m (2010 — $0.149m) had been charged on this balance during the year.

On 25 February 2011 the Group acquired College Champittet from Premier Education Holdings s.a.r.l. through the purchase of its parent company Premier Education Luxco II s.a.r.l.. Prior to the date of acquisition both entities were held under common control, the school having been sold to a subsidiary of the Group’s ultimate controlling party Premier Education Holdings s.a.r.l. by a private vendor “the vendor” on 2 October 2009.

At 31 August 2010 Premier Education (UK) Holdco Limited owed College Champittet $8.600m and $5.936m respectively. These amounts include annual interest charges of $0.108m. At the same time, College Champittet owed the Group $5.936m. In the prior year, other operating income related to income of $1.951m arising from the provision of educational and commercial services by the Group to Cime Services SA, and a fee of $0.936m for due diligence services performed by Nord Anglia Education Limited (a Group subsidiary) in relation to the acquisition of the company during that year by the immediate parent undertaking of Premier Education (UK) Holdco Limited, Premier Education Holdings s.a.r.l..

Premier Education Luxco II s.a.r.l. was liquidated on 27 April 2011. Prior to that date, Premier Education Luxco II s.a.r.l. received $0.206m in interest from College Champittet which was paid directly to Premier Education Holdings s.a.r.l..

On 14 January 2011, the Group acquired College Alpin Beau Soleil from Premier Education Holdings s.a.r.l. Premier Education Holdings s.a.r.l. had previously purchased this school from the same vendor as for College Champittet.

F-149 Following these acquisitions, the vendor became a shareholder of Premier Education Holdings s.a.r.l. and has taken on a key management role within the business. At the same time both schools continue to rent the premises from companies which the vendor controls. As such, included within trade creditors are the following balances resulting from transactions that have occurred during the year with entities in which the vendor has an existing shareholding.

Balance at Rental 31 August charge for 2011 the period

($’000) ($’000) Lesolais SA ...... nil 1,965 Hunters SA ...... nil 466 Toumim SA ...... nil 205 DelphimSA...... nil 1,711

In addition to the above, the vendor was also paid a consultancy fee of $0.250m during the year.

Included within other creditors due in less than one year is an amount of $1.360m and included in other creditors due in greater than one year is an amount of $1.500m relating to deferred consideration due to the vendor for the initial purchase of College Champittet by Premier Education Holdings s.a.r.l.. The repayment dates for this deferred consideration are 1 September 2011 and 1 September 2013. These amounts relate to the original purchase of the trade and assets of College Champittet by the corporate vehicle (Cime Services SA) used to purchase College Champittet.

Included within exceptional items for the year ended 31 August 2010 is an amount of $28.173m incurred as a result of the Group purchasing any past and all future rights under a profit share agreement.

On 23 December 2009, Nord Anglia Education Limited, the British International School Shanghai, Ms. Tang and her affiliates entered into an agreement in respect of the purchase of any past and all future rights under the profit share agreement among those parties. This agreement was amended by the parties on August 23, 2010. Under the amended profit share buyout agreement, the Group agreed to purchase any such past and all future rights under the profit share agreement and that payment for these rights would be made in two tranches. The first payment tranche of $9.436m (Rmb 64,031m) was made on 1 September 2010. The Group had accrued a further $7.500m for final payment on 31 December 2010. Thus an amount of $16.936m was included in exceptional items. However, the payment was delayed until 12 January 2011 thus incurring a late penalty fee and uplift in the exchange rate between the Rmb and US $, therefore the amount paid was $8.243m.

A completion fee was also paid to Ms Tang and her affiliates and to Ms Tang under each of the profit share agreement respectively, which was equal to the amount of profit share due under each such agreement for the fiscal year ending August 31, 2010 less any amounts that had been paid before completion. A charge equal to the completion fees totalling $2.995m was made to the consolidated income statement in 2010.

In addition to the above, the Group is obliged to pay deferred consideration in respect of the second tranche to the value of $1.300m, of which 50% was payable within 30 days after 31 August 2011 and 50% is payable 30 days after 31 August 2012. Each of these payments is conditional upon Ms Tang still being employed by the British International School Shanghai at the relevant date. Ms Tang will however be entitled to the deferred consideration in the event the British International School Shanghai terminates her employment (other than for serious or gross misconduct or wilful neglect) at any time prior to 31 August 2012. The deferred consideration component can also be adjusted for specified variations in the $/Chinese renminbi exchange rate between 23 August 2010 and the date the payments are made. Thus for 31 August 2011, the actual payment made was $0.682m which is reflected in exceptional items.

During the year ended 31 August 2011, a consultancy fee of $0.272m (2010 - $0.261m) was paid to a close family member of senior management for consultancy purposes.

An amount of $0.313m was paid to a former member of senior management during the year for compensation for loss of office and this amount is included within the disclosures at note 8, Key management personnel.

29. ULTIMATE PARENT COMPANY

Premier Education (UK) Holdco Limited is controlled by its immediate parent company Premier Education Holdings s.a.r.l..

Premier Education (UK) Holdco Limited is the smallest and largest Group for which consolidated financial statements are prepared.

The ultimate controlling party is Baring Private Equity Asia.

F-150 30. SUBSEQUENT EVENTS On 21 September 2011, the Group acquired Le Cote International School (a Premium school operating in Switzerland), from Premier Education Holdings s.a.r.l for consideration of CHF3.5m, satisfied in cash. The fair value exercise is at an early stage and it is impracticable to determine appropriate fair values at this stage.

31. EXPLANATION OF TRANSITION TO ADOPTED IFRSs As stated in note 1, these are the Group’s first consolidated financial statements prepared in accordance with Adopted IFRSs. The accounting policies set out in note 1 have been applied in preparing the financial statements for the year ended 31 August 2011, the comparative information presented in these financial statements for the year ended 31 August 2010 and in the preparation of an opening IFRS balance sheet at 1 September 2009 (the Group’s date of transition). In preparing its opening IFRS balance sheet, the Group has adjusted amounts reported previously in financial statements prepared in accordance with its old basis of accounting (UK GAAP). An explanation of how the transition from UK GAAP to Adopted IFRSs has affected the Group’s financial position, financial performance and cash flows is set out in the following tables and the notes that accompany the tables.

Reconciliation of equity

1 September 2009 31 August 2010

Effect of Effect of transition transition to to UK Adopted Adopted UK Adopted Adopted Note GAAP IFRSs IFRSs GAAP IFRSs IFRSs

$000 $000 $000 $000 $000 $000 Non-current assets Property, plant and equipment . . . a 36,579 (1,841) 34,738 19,981 (1,337) 18,644 Goodwill & intangible assets .... a,b 372,034 1,841 373,875 304,234 10,507 314,741 Investments in joint venture .... 370 — 370 511 — 511 Derivative financial instruments . . ————391391 Deferred tax assets ...... c 1,338 1,385 2,723 2,719 1,337 4,056

410,321 1,385 411,706 327,445 10,898 338,343

Current assets Inventories...... 376 — 376 71 — 71 Tax receivable...... 85 — 85 — — — Trade and other receivables .... 33,517 — 33,517 35,475 — 35,475 Cash and cash equivalents..... 66,499 — 66,499 81,826 — 81,826

100,477 — 100,477 117,372 — 117,372

Total assets ...... 510,798 1,385 512,183 444,817 10,898 455,715

Current liabilities Other interest-bearing loans and borrowings...... (16,307) — (16,307) (31,430) — (31,430) Trade and other payables ...... (107,716) — (107,716) (146,062) — (146,062) Provisions for liabilities and charges. (584) — (584) (1,691) — (1,691) Current tax liabilities ...... (2,990) — (2,990) (3,060) — (3,060)

(127,597) — (127,597) (182,243) — (182,243)

Non-current liabilities Other interest-bearing loans and borrowings...... d (410,649) 7,122 (403,527) (416,991) 4,490 (412,501) Other payables...... (263) — (263) (170) — (170) Derivative financial instruments .... e — (4,947) (4,947) — (5,342) (5,342) Retirement benefit obligations..... (7,804) — (7,804) (9,362) — (9,362) Provisions for liabilities and charges. (1,095) — (1,095) (2,909) — (2,909) Deferred tax liabilities...... f — (1,994) (1,994) — (1,212) (1,212)

(419,811) 181 (419,630) (429,432) (2,064) (431,496)

F-151 1 September 2009 31 August 2010

Effect of Effect of transition transition to to UK Adopted Adopted UK Adopted Adopted Note GAAP IFRSs IFRSs GAAP IFRSs IFRSs

$000 $000 $000 $000 $000 $000 Total liabilities ...... (547,408) 181 (547,227) (611,675) (2,064) (613,739)

Net liabilities ...... (36,610) 1,566 (35,044) (166,858) 8,834 (158,024)

Equity attributable to equity holders of the parent Share capital ...... 1,678 — 1,678 1,611 — 1,611 Share premium ...... 197 — 197 202 — 202 Other reserves ...... — 6,879 6,879 4,630 1,915 6,545 Currency translation reserve .... 7,575 — 7,575 4,852 7,734 12,586 Retainedearnings...... (48,651) (5,313) (53,964) (178,153) (815) (178,968)

(39,201) 1,566 (37,635) (166,858) 8,834 (158,024)

Non-controlling interest ...... 2,591 — 2,591 — — —

Total shareholder deficit ...... (36,610) 1,566 (35,044) (166,858) 8,834 (158,024)

Notes to the reconciliation of equity a) The Group’s IT software assets were classified as property, plant and equipment under UK GAAP and have been reclassified as intangible assets for the purposes of IFRS reporting, both at the date of transition and the following year end; b) The Group have applied the transitional relief available under IFRS 1 in respect of the application of IFRS 3 and recognised the goodwill balance previously held under UK GAAP within the transition date balance sheet. For the year ended 31 August 2010, amortisation charged under UK GAAP and the foreign exchange movement associated with this balance has been written back; c) A deferred tax asset has been recognised in respect of the Groups derivative financial instruments being measured at fair value under International Standards; d) The loan notes, for the purposes of IFRS reporting, have been recognised at fair value on initial recognition. The adjustment for the year ended 31 August 2010 reduces the liability by the fair value amount — as recognised at the date of transition — less the value unwound during the year. The fair value discount will be unwind fully over the period to the date of maturity of the loan notes, hence the split of the discount between current and non-current liabilities; e) The derivative financial instruments used to mitigate the Groups exposure to interest rate risk, previously held off balance sheet under UK GAAP, have been recognised at fair value under IFRS. The fair value of these instruments is the market value at the balance sheet date; f) A deferred tax liability has been recognised in respect of the loan note fair value adjustment detailed above.

F-152 Reconciliation for year ended 31 August 2010

2010

Effect of transition to Adopted Adopted Note UK GAAP IFRSs IFRSs

$000 $000 $000 Revenue ...... 182,971 — 182,971 Other income ...... 2,887 — 2,887

185,858 — 185,858 Direct educational costs ...... a (68,454) (4,159) (72,613) Property costs ...... (18,291) — (18,291) Management, administrative and support staff expense . (26,708) — (26,708) Consultancy costs ...... (8,409) — (8,409) Other costs ...... a (27,639) 4,159 (23,480) Depreciation ...... b (8,702) 773 (7,929) Amortisation...... c (19,284) 18,511 (773) Impairment ...... d (40,293) (1,037) (41,330) Exceptional costs ...... e (44,707) 4,231 (40,476)

Total expenses ...... (262,487) 22,478 (240,009)

Operating loss before financing ...... (76,629) 22,478 (54,151) Financial income...... 701 — 701 Financial expenses ...... f (42,390) (13,365) (55,755)

Net financing expense ...... (41,689) (13,365) (55,054) Share of profit in joint venture ...... 149 — 149

Loss before tax ...... (118,169) 9,113 (109,056) Taxation...... g (7,392) 709 (6,683)

Loss for the year ...... (125,561) 9,822 (115,739)

Attributable to: Equityholdersoftheparent...... (126,199) 9,822 (116,377) Non-controlling interest ...... 638 — 638

Loss for the year ...... (125,561) 9,822 (115,739)

Notes to the reconciliation of loss a) For the purposes of reporting under IFRS, costs related to transportation and catering for pupils within the Premium schools division have been classified as direct costs. Under UK GAAP these items were treated as administrative costs rather than costs of sale; b) The depreciation charge recognised on the tangible asset category of IT software under UK GAAP has been reclassified as amortisation in line with the asset Group’s designation as intangible under IFRS; c) The amortisation charge has increased as per (b) and goodwill amortisation recognised under UK GAAP has been written back in line with International Standards; d) The impairment charge has increased as a result of no amortisation being charged in the year to 31 August 2010 and hence the carrying value of goodwill on which the impairment review was carried out being higher under IFRS than previously recognised under UK GAAP; e) The Group recognised a loss on disposal of a subsidiary during the year ended 31 August 2010 under UK GAAP. The transaction results in the recognition of a profit under IFRS as net liabilities are disposed of rather than net assets in respect of this entity. The principle factor affecting the disposal is the revaluation of foreign currency goodwill. Under UK GAAP a revaluation gain had been recognised in reserves as a result of the assets being part of a SSAP 20 hedge however the hedge of investments in foreign operations does not exist under UK GAAP and hence this movement was recognisable in the income statement;

F-153 f) The interest charge for the year under International Reporting Standards includes both the recognition of the movement on the derivative financial instruments previously unrecognisable under UK GAAP and the unwinding of the fair value of the loan notes owed to the parent company and senior management. In addition to this the movements on US dollar borrowings are recognised in the income statement under IFRS, as opposed to reserves under UK GAAP, again as a result of the hedging of foreign operations ceasing to exist under IFRS;

g) The Group’s tax charge for the year is impacted by the GAAP differences identified above and within the balance sheet reconciliation.

Explanation of material adjustments to the cash flow statement for 31 August 2010

There are no material differences between the cash flow statement presented under Adopted IFRSs and the cash flow statement presented under UK GAAP.

32. NOTES TO THE COMPANY FINANCIAL STATEMENTS

32(i) Principal accounting policies of the Company

(a) Accounting principles

The Company balance sheet has been prepared on the going concern basis under the historical cost convention in accordance with applicable United Kingdom accounting standards and the Companies Act 2006.

(b) Basis of preparation

No profit and loss account is presented for the Company as permitted by Section 408(2) of the Companies Act 2006. The loss recognised in the accounts of the Company was $34.319m (2010: $22.407m).

On 31 August 2011, Premier Education (UK) Holdco Limited converted the junior and senior loan notes owed to its parent undertaking from sterling to US dollars. This triggered a change in the functional currency of Premier Education (UK) Holdco Limited to US dollars. The exchange rate used to convert all sterling balances at this date was £1:$1.6281.

The Company does not have any employees other than 2 directors (2010 — 2).

(d) Investments

Investments in subsidiaries are carried at historical cost less provision for impairment. Impairment reviews are performed by the directors when there has been an indication of potential impairment.

(e) Cash flow statement

As the parent Company of the Group and therefore included in the consolidated financial statements which are publicly available, the Company has relied upon the exemption in FRS 1 (Revised 1996) not to present a cash flow statement as part of its financial statements.

(f) Related parties

Under FRS 8 “Related party disclosures” the Company is exempt from the requirement to disclose related party transactions with other Group undertakings as they are all wholly owned within the Group and are included in the Premier Education (UK) Holdco Limited consolidated financial statements.

(g) Directors remuneration

No directors received or were entitled to any emoluments during the year (2010 - $nil).

(h) Foreign currency

Money assets and liabilities expressed in foreign currencies are translated into sterling at rates of exchange ruling at the date of the balance sheet or at an agreed contractual rate. These were then subsequently translated into dollars at the rate of £1:$1.6281. Transactions in foreign currency are converted to sterling at the rate ruling at the date of the transaction. These were subsequently translated into dollars at the average rate for the year £1:$1.606.

All exchange differences are taken to the profit and loss account.

F-154 32(ii) Investments

Shares in Group undertakings

$000 Cost At 1 September 2010 ...... 187,017 250,660 Additions Disposals ...... (125,330) Foreign exchange movements ...... 9,296

At 31 August 2011 ...... 321,643

The directors believe that the carrying value of the investments is supported by their underlying net assets.

On 14 January 2011, the Company acquired 100% of the share capital of College Alpin Beau Soleil and on 25 February 2011 acquired 100% of the share capital of College Champittet. These subsidiaries were subsequently disposed of to Premier Education (UK) Midco Limited, a subsidiary of the Company in exchange for additional shares in Premier Education (UK) Midco Limited.

Details of investments indirectly held by the Company are disclosed in note 13 of the consolidated financial statements.

32(iii) Debtors

2011 2010

$000 $000 Amounts owed by group undertakings...... 13,214 232 Other debtors...... 137 —

13,351 232

Amounts owed by group undertakings are unsecured, interest free and repayable on demand.

32(iv) Creditors: Amounts falling due within one year

2011 2010

$000 $000 Amounts owed to parent undertaking ...... 16,422 16 Othercreditors...... 6 —

16,428 16

Amounts owed to group undertakings are unsecured, incur interest at either 4.5% or 2.5% (2010 — interest free) and are repayable on demand.

32(v) Creditors: Amounts falling after more than one year

2011 2010

$000 $000 Amounts owed to parent undertaking ...... 326,289 226,261 Othercreditors...... 4,789 3,259

331,078 229,520

Amounts owed to parent undertaking consist of secured loan notes repayable in 2038 which bear interest at a rate of 12%, 4% or 2.5% (2010 — 12%) per annum. Other creditors relate to loan notes owed to senior management which are repayable in 2038 and bear interest at a rate of 12%.

F-155 32(vi) Share based payments

Details of share based payments are disclosed in note 21 of the consolidated financial statements.

32(vii) Share capital

Details of share capital are disclosed in note 23 of the consolidated financial statements.

32(viii)Profit and loss account

2011 2010

$000 $000 Opening balance for the year ...... (45,388) (23,445) Loss for the financial year ...... (34,319) (22,407) Share based payments ...... 455 464

Closing balance for the year...... (79,252) (45,388)

32(ix) Reconciliation of movement in total shareholders’ deficit

2011 2010

$000 $000 Opening balance for the year ...... (42,267) (21,660) Loss for the financial year ...... (34,319) (22,407) New shares issued in the year ...... 65,851 28 Conversion of share premium to preference shares ...... (104) — Foreign exchange movement on shares ...... 88 — Share based payments ...... 455 464 Foreign exchange movement ...... (2,216) 1,308

Closing balance for the year...... (12,512) (42,267)

F-156 DIRECTORS’ REPORT FOR THE YEAR ENDED 31 AUGUST 2010 The directors present their report and the audited consolidated financial statements of the group and the company for the year ended 31 August 2010.

Principal activities The principal activities of the group and its subsidiaries are the operation of international schools worldwide and the delivery of a wide range of education and training contracts both in the UK and overseas. The principal activity of the company is that of a holding company.

Business review and future developments The group’s results reflect a year of continued strong trading, most notably in its International School’s division. The group’s profit before depreciation and amortisation, impairment charges and exceptional items was £23.356m (2009 - £16.002m). The loss on ordinary activities before interest and taxation and before exceptional items was £20.329m (2009 - profit of £1.705m). Exceptional administrative costs incurred in the year are detailed in note 6, Exceptional Items, of which the key component is the buy-out of two profit sharing arrangements currently held by Ms Tang, the regional director of the group’s Far East division, and her associates. The financial impact of the buyouts will be progressively positive to the group as the group both develops its existing International School’s division in the Far East and expands this division in future years. Full details of the two buy-outs are also presented in note 36, Related Party Transactions. Included within administrative expenses are costs totalling £2.835m (2009 - £3.286m) which the directors believe are not related to the normal trading of the group. These costs include start-up costs in relation to the new Beijing school and to certain Learning Services contracts, final closure costs of the group’s nursery in Korea and lease termination costs in the UK. These costs fall outside the definition of exceptional costs for statutory purposes but it is the view of the directors that these costs should be highlighted in order that the underlying profit of the group can be fully evaluated.

International Schools In the year ended 31 August 2010, the results of the International School’s division benefited from a full year of trading of the British School Beijing which was a new subsidiary acquired in June 2009. This was, however, offset by losses made in the first year of trading of The British International School Abu Dhabi, a new school established by the group on 1 September 2009. Full-time equivalent pupil numbers increased to 5,299 during the year, from 4,381 at 31 August 2009. The increase in pupil numbers in 2010 reflects the positive impact of the addition of two new schools, along with the effects of management’s decision to drive the maximisation of classroom space through architectural-based initiatives and from continued and targeted marketing. At the close of August 2010 consolidated school occupancy rates were 51% compared to 65% in 2009. The 2010 occupancy rate was influenced by the additional capacity available through the new Beijing and Abu Dhabi schools which, in common with most newly opened schools, had lower occupancy rates than those of more mature schools. On 25 February 2010, an agreement was reached with the minority shareholder in The British School Warsaw for the group to acquire their 25% equity interest. The transaction was completed on 1 March 2010. As a result of this transaction, the group recognised additional goodwill of £6.102m in its investment in its Polish school. The details of this acquisition are shown in note 38, Acquisitions. During the academic year, the group noted an underperformance of its Abu Dhabi School against business plan. The under-performance gave rise to an impairment review and, as a consequence, goodwill held in relation to the Abu Dhabi school was written-down to its recoverable level. An impairment charge of £12.887m was made to the profit and loss account at the end of the academic year.

F-157 In July 2010, the group commenced discussions with Premier Education Holdings s.a.r.l. (its immediate holding company) in respect of the proposed sale of its subsidiary, The British International School Abu Dhabi LLC. The group subsequently sold its investment in this subsidiary on 26 August 2010 to its immediate parent company and wrote-off the residual goodwill relating to this investment. A loss of £1.520m was made in relation to the disposal of the school, the details of which are documented in note 39, Disposals. In September 2009, an affiliated company of the group acquired all of the outstanding shares of Cime Services SA, a Swiss corporation located in Lausanne, Switzerland. A fee of £0.599m for due diligence services performed by Nord Anglia Education Limited in relation to the acquisition of this Swiss corporation was paid by the affiliate to Nord Anglia Education Limited. Subsequent to the acquisition, the group has provided educational and commercial services to the value of £1.248m to Cime Services SA. Both of the above amounts are recorded as other operating income in the year ended 31 August 2010.

Learning Services In the year ended 31 August 2010, the results of the Learning Services division were impacted by two compensating trends. Firstly, the group benefited from the development of its contract base in the Middle East with the expansion of its school management programme in Abu Dhabi and the annexation of a Saudi Arabia-based contract providing services to develop gifted and talented students. In contrast, the group experienced a reduction in the pipeline of new contracts being released into the UK market as the government contracting bodies reacted to the likely impact of policy change due to an impending general election. In May 2010, the new UK government announced its intention to dramatically reduce government spending from previous levels. The budget published by the new government contemplates sizable reductions in spending across all government sectors in the remaining months of the fiscal year ending 31 March 2011 and beyond, including expenditure for outsourced educational services. Although the details of which national and local government authorities’ programmes will be affected are not yet known, the directors predict a substantial decline in the pipeline of revenues from the UK portion of its Learning Services division in the year ending 31 August 2011 and possibly beyond. Based on the latest available forecasts, the directors have identified that an impairment adjustment of £12.894m is required in respect of the goodwill held in relation to its UK Learning Services division. An impairment charge of £12.894m has accordingly been made to the group’s profit and loss account and against the goodwill held for this business in the year ended 31 August 2010.

Corporate developments The group remains committed to both the expansion of its International Schools’ base and to the development of its existing schools. Within the Learning Services division, the group has significant international development opportunities both in its existing Middle East markets and in new and opening territories, including Indonesia. The group is committed to the long term development of its UK-based Learning Services business, but recognises that the UK based business is likely to be impacted in the short term by UK governmental changes.

Debt The acquisition of the entire share capital of Nord Anglia Education Limited by Baring Private Equity Asia via Premier Education (UK) Bidco Limited on 28 August 2008 was financed by the issue of private equity loan notes and by the injection of bank debt comprising senior and mezzanine debt, as well as working capital facilities and financing for capital investment. The total value of the loan notes, including accrued interest at 31 August 2010, is £148.0m (2009 - £133.0m) and the total value of bank debt is $204.3m (2009 - $231.3m). The banking facilities are supported by a syndicated arrangement led by Credit Suisse (Singapore).

Strategy The group will continue to promote its strategy of growth across each of its business streams where strong expansion opportunities exist in markets where the group has good knowledge and reputation. Both the quality of educational delivery and the quality of people resources are at the core of the group’s performance and provide the foundation for expansion.

F-158 Financial outlook Whilst the impact of international recessionary pressures have still to permeate all markets, the prospects for the group remain good. The group has been internationally established for a number of years and in recent years has added to its international base. The multi-territory trading base provides the group with the ability to balance its trading risks and to manage the impact of individual territory recessionary measures and governmental changes within the education sector.

Results and dividends The loss for the year, after taxation and minority interests, amounted to £80.742m (15 month period to 31 August 2009 - £34.652m). During the year no interim dividend was paid (15 month period to 31 August 2009 - £nil). The directors do not recommend the payment of a final dividend (2009 - £nil).

Directors The directors who served during the period and up to the date of the signing of the financial statements were: K Kalliarekos J Hennessy

Principal risks and uncertainties The board is responsible for establishing a coherent framework for the group to manage risk, which is designed to identify, manage and mitigate business risk. Summarised below are what the board consider to be potential risks to the group.

Corporate reputation and brand recognition The diversification of brands and products within the operating divisions mitigates the potential exposure the group may have as a result of adverse effects on consumer confidence and continuity of supply.

Overseas operations Some of the group’s operations are domiciled in global overseas economies and are therefore subject to local legislative and taxation risks and regulatory development. Such operations are closely monitored enabling the group to respond and adapt the business to address local issues.

Government contracts The Learning Services division has many contracts working in partnership with government bodies. These contracts have strict guidelines and clauses which, if not adhered to, may result in the cancellation of such agreements or the application of financial penalties. The group mitigates these risks by effective project management of agreed KPI’s, regular internal audit of operations and review of procedures to ensure compliance.

Health and safety Due to the nature of the group’s operations, health and safety is subject to regular internal audit and external review, which assess and monitor health and safety risks related to customers and staff and ensures that government and group guidelines on such policies are adhered to. Where necessary the group also engages the services of independent parties to advise on such matters. The board reviews health and safety performance within the group at each board meeting and has a health and safety committee which places great importance on health and safety matters.

F-159 Staff The group aims to recruit and retain high calibre staff to ensure that corporate business objectives are delivered. Procedures are in place to ensure that Criminal Record Bureau reports are obtained for all members of staff having exposure to children during the course of business. In respect of overseas employees, such checks, equivalent to those performed in the UK, are obtained from relevant local authorities. These checks are audited annually by internal audit.

Key performance indicators Key measures used by the board to measure performance within the group include turnover and EBITDA. On a divisional basis measures include pupil numbers and occupancy rates for International Schools and contract wins for Learning Services. These are discussed throughout this report.

Financial risk management The group assesses and manages its potential exposure to financial risks, including interest rate volatility, foreign currencies and exchange control restrictions, counterparty performance, liquidity risk and going concern as follows:

Cash flow and interest rate risks Two interest rate hedging instruments were established in October 2008 and were held over the group’s US dollar borrowings facility. The hedging instruments placed an upper limit on the US dollar LIBOR rate that the group could experience. The fixed weighted average interest rate of the two hedging instruments for the period ended 31 August 2009 was 4.33%. The two interest rate hedges had a penalty-free break clause exercisable on or before 31 August 2010. On 15 July 2010, the group restructured its existing hedge agreements into one swap and one cap agreement effective from 1 June 2010. These agreements extend to 28 August 2015. As the cap agreement is cancellable, the group has retained flexibility to allow it to best match the hedging requirements of its senior and mezzanine debt going forward. The life and value of the new hedging instruments is consistent with the amortisation profile attached to the US dollar borrowings. At 31 August 2010, 64.8% of US dollar borrowings were hedged by the new instruments (2009 — 79.7% of US dollar borrowings were hedged by the previous instruments).

Price risk The group is not exposed to commodity price risk as a result of its operations. The company has no exposure to equity securities price risk as it holds no listed or other equity investments.

Credit risk The group has implemented policies that ensure appropriate credit checks on potential customers. The amount of any exposure to any individual counter party is subject to a limit which is assessed regularly by the board.

Foreign currency and exchange controls The group has significant and expanding international operations trading in non-sterling currencies. Movements in global exchange rates can cause currency exposures to the group’s consolidated sterling financial results. Where stable currencies exist trade is conducted in local currencies and, where appropriate, borrowings are matched in that currency to mitigate the risk of exposure to the group’s assets and liabilities from exchange rate movements. In countries of operation where currency trading zones are considered to be weaker, some transactions are conducted in US dollars and Euros to try to minimise exchange fluctuation risks.

F-160 In consideration of benefits against cost, the group does not hedge its translational exposure. The group will consider managing transactional exposures by using forward cover instruments where significant transactions are involved. The group’s International Schools division holds significant non-sterling cash balances in overseas operations which arise from fee income and represent a combination of working capital and trading profits. These monies are held in operations in countries which include those where exchange control restrictions may prevent full repatriation of funds to the UK parent undertaking. The group utilises these funds through a combination of reinvestment in the expansion or improvement of overseas operations, or by repatriation to the UK through management contracts, including royalty agreements, management charges and dividends. Through these means the directors believe that satisfactory distribution of these funds can be achieved.

Counterparty risk The group employs local advisers in each of its major countries of operation to provide professional advice and enhance local business knowledge in understanding compliance with local operating laws and regulations. The group acknowledges that there are risks of ownership and in the control and safeguarding of assets in operations outside the European zone and has taken measures to reduce these risks by ensuring cash held, particularly in China, is deposited with secure national institutions that are also favoured by other western companies. Increasing the number of overseas countries in which the group operates should reduce reliance on any one significant country of operation going forward.

Liquidity risk The group aims to maintain a flexible borrowing structure by combining committed bank borrowing facilities with additional leasing and credit facilities. The group monitors its future funding requirements over the medium term such that it can take actions to supplement its operating cash flows to service future debt obligations where appropriate. Following the acquisition of the entire share capital of the group by Baring Private Equity Asia, the group entered into a set of committed banking facilities. The key components of these facilities are senior and mezzanine loans, capital project facilities and overdraft facilities. The values and repayment dates of these loans are disclosed in note 18, Loans and Other Borrowings, of these financial statements. The new banking facilities are provided by a syndicate of bankers led by Credit Suisse (Singapore). Under the new committed facilities the group must comply with a set of three covenants each quarter from 28 February 2009. These covenants are monitored on a regular basis by the board.

Going concern The directors have reviewed the latest guidance relating to going concern, and having made all relevant enquiries, have formed a judgement at the date of the approval of the financial statements that the group has adequate resources at its disposal to continue its operations for the foreseeable future. In December 2010, the group entered into a share purchase agreement to acquire the entire share capital of a European school. The target completion date is early January 2011. The acquisition of this school will have a significant impact on the group’s future trading and cash performance. In December 2010, the group also received written agreement from its external lenders in respect of some positive changes to its existing facilities agreement. The changes are conditional on the successful completion of the aforementioned acquisition, which, at the date of these accounts, is now only subject to minor administrative procedures which are fully within the control of the group to satisfy and the vendor implementing legal procedures prescribed in the sale and purchase agreement. These changes have been assumed as part of the directors forming their judgments on going concern as they consider the risk of the acquisition not completing is remote.

F-161 Qualifying third party indemnity A qualifying third party indemnity provision is in place for the directors of the company. This covers liability for the actions of directors and officers of the company and associated costs, including legal costs.

Employees The directors recognise the benefits that accrue from keeping employees informed of the progress of the business and involving them in the group’s performance. Each company within the group adopts such employee consultation as is appropriate in individual circumstances and the executive directors make presentations to the divisional staff following annual announcements. The group gives consideration to applications for employment from disabled persons where the requirements of the job may be adequately covered by a disabled person. Disabled employees are employed under the normal terms and conditions and are given the same access to training, career development and promotion as able-bodied employees. In the event of a staff member becoming disabled every effort is made to ensure that their employment with the company continues and the appropriate training is arranged. The group strives towards achieving equality of opportunity in all of its employment practices and service provision. The executive board is committed to ensuring that every employee is treated fairly and consistently in respect of day to day work activity. The group aims to eliminate inadvertent and unlawful discrimination practices in order to enable all employees to have access to opportunities to realise their own potential and to build a diverse and socially inclusive workforce that is responsive and appropriate to all our service users. The group takes the necessary steps to ensure all employees are aware of the financial and economic factors affecting the group’s performance and also encourages employee participation in the group’s performance by way of remuneration and for selected employees a cash bonus scheme. All employees in the group are expected to avoid personal activities and financial interests which could conflict with their responsibilities to the group. Employees must not seek gain for themselves or others through misuse of their positions.

Donations Charitable donations made in the year totalled £8,399 (15 month period to 31 August 2009 - £7,019). There were no political donations (2009 - £nil).

Payment of suppliers The group’s policy is, wherever practical, to:- i) negotiate terms of payment with suppliers up front; ii) ensure that the suppliers are made aware of the terms of payment; and iii) abide by the terms of payment. The group’s average creditor payment period at 31 August 2010 was 75 days (2009 — 23 days). The company had no trade creditors at 31 August 2010 (2009 - £nil).

Statement of directors’ responsibilities The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have prepared the group and parent company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and company and of the profit or loss of the group for that period.

F-162 In preparing those financial statements, the directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and accounting estimates that are reasonable and prudent;

• state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and the group and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Statement of disclosure of information to auditors

In the case of each director in office at the date the directors’ report is approved, the following applies:

• so far as the director is aware, there is no relevant audit information of which the company’s auditors are unaware; and • they have taken all the steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the company and group auditors are aware of that information. On behalf of the Board,

J Hennessy Director Date: 23 December 2010

F-163 INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF PREMIER EDUCATION (UK) HOLDCO LIMITED

We have audited the group and company financial statements of Premier Education (UK) Holdco Limited for the year ended 31 August 2010 which comprise the group Profit and Loss Account, group Statement of Total Recognised Gains and Losses, the group and company Balance Sheets, the group Cash Flow Statement, the group Reconciliation of Net Cash Flow to Movements in Net Debt and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

Respective responsibilities of Directors and Auditors

As explained more fully in the Statement of directors’ responsibilities set out on page 8, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

This report, including the opinions has been prepared for and only for the company’s members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Opinion on the financial statements In our opinion the financial statements: • give a true and fair view of the state of the group’s and the company’s affairs as at 31 August 2010 and of the group’s loss and cash flows for the year then ended; • have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and • have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other matter prescribed by the Companies Act 2006 In our opinion the information given in the Directors’ Report for the financial period which the financial statements are prepared is consistent with the financial statements.

F-164 Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

• adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received from branches not visited by us; or

• the company financial statements are not in agreement with the accounting records and returns; or

• certain disclosures of directors’ remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit.

Andrew Lyon BSc FCA (Senior Statutory Auditor) For and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors East Midlands

Date: 23 December 2010

F-165 GROUP PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 AUGUST 2010

15 month period to 31 August Note 2010 2009

£’000 £’000 TURNOVER Group and share of joint venture turnover...... 2 117,064 118,930 Less: share of joint venture turnover ...... — (963) Group turnover ...... 117,064 117,967 Cost of sales ...... (42,681) (49,802) GROSS PROFIT ...... 74,383 68,165 Administrative expenses before exceptional items...... (70,873) (66,702) Exceptional administrative expenses ...... 6 (27,083) (2,943) Impairment of goodwill ...... 10 (25,781) — Total administrative expenses ...... (123,737) (69,645) Other operating income...... 3 1,847 — GROUP OPERATING LOSS ...... 3 (47,507) (1,480) Share of profit in joint venture ...... 95 242 TOTAL OPERATING LOSS: GROUP AND SHARE OF PROFIT FROM JOINT VENTURE (47,412) (1,238) Exceptional loss on disposal of subsidiary ...... 39 (1,520) — Exceptional loss on disposal of fixed assets ...... 6 — (1,263) LOSS ON ORDINARY ACTIVITIES BEFORE INTEREST AND TAXATION...... (48,932) (2,501) Interest receivable and similar income ...... 7 445 912 Interest payable and similar charges...... 8 (26,989) (26,873) Other finance costs ...... 22 (129) (450) LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION. . (75,605) (28,912) Taxation on loss on ordinary activities...... 9 (4,729) (5,258) LOSS ON ORDINARY ACTIVITIES AFTER TAXATION . . . (80,334) (34,170) Minority interests ...... 27 (408) (482) LOSS FOR THE FINANCIAL YEAR/PERIOD ...... 25 (80,742) (34,652)

All amounts in the current year relate to continuing operations that were acquired during the prior period. There is no material difference between the loss on ordinary activities before taxation and the loss for the financial year stated above and their historical cost equivalents.

F-166 GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES FOR THE YEAR ENDED 31 AUGUST 2010

15 month period to 31 August Note 2010 2009

£’000 £’000 LOSS FOR THE FINANCIAL YEAR/PERIOD Group ...... (80,435) (34,528) Joint venture ...... 101 358 (80,334) (34,170) Currency translational adjustments offset in reserves ..... 25 (1,662) 4,647 Actuarial (loss)/gain recognised in the pension scheme . . . 22 (1,448) 4,576 TOTAL RECOGNISED LOSS RELATING TO THE YEAR/PERIOD...... (83,444) (24,947)

- Group ...... (83,545) (25,305) - Joint venture ...... 101 358 (83,444) (24,947)

F-167 GROUP BALANCE SHEET AS AT 31 AUGUST 2010 (Company number 6590752)

Note 2010 2009 £’000 £’000 £’000 £’000 FIXED ASSETS Intangible assets ...... 10 196,153 228,226 Tangible assets ...... 11 12,883 22,439 Investment in joint venture ...... 13 - share of gross assets ...... 1,828 2,410 - share of gross liabilities ...... (1,499) (2,182) 329 228 209,365 250,893 CURRENT ASSETS Stock...... 14 46 230 Debtors ...... 15 24,625 21,434 Cash at bank and in hand ...... 19 52,757 40,794 77,428 62,458 CREDITORS: Amounts falling due within one year ...... 16 (117,137) (77,917) NET CURRENT LIABILITIES ...... (39,709) (15,459) TOTAL ASSETS LESS CURRENT LIABILITIES ...... 169,656 235,434 CREDITORS: Amounts falling due after more than one year ...... 17 (268,964) (252,075) Provisions for liabilities ...... 20 (2,239) (1,030) NET LIABILITIES EXCLUDING PENSION LIABILITY ...... (101,547) (17,671) Pension liability ...... 22 (6,035) (4,788) NET LIABILITIES INCLUDING PENSION LIABILITY ...... (107,582) (22,459) CAPITAL AND RESERVES Called up share capital ...... 23 1,038 1,029 Share premium account ...... 24 131 121 Profit and loss account ...... 25 (108,751) (25,198) TOTAL SHAREHOLDERS’ DEFICIT . . . 26 (107,582) (24,048) Minority interests ...... 27 — 1,589 CAPITAL EMPLOYED...... (107,582) (22,459)

The financial statements on pages 11 to 56 were approved by the board of directors on 23 December 2010 and were signed on its behalf by:

J Hennessy K Kalliarekos Director Director

F-168 COMPANY BALANCE SHEET AS AT 31 AUGUST 2010 (Company number 6590752)

Note 2010 2009

£’000 £’000 £’000 £’000 FIXED ASSETS Investments...... 12 120,578 119,566 CURRENT ASSETS Debtors ...... 15 140 — Cash at bank and in hand ...... 13 150 153 150 CREDITORS: Amounts failing due within one year ...... 16 — — NET CURRENT ASSETS ...... 153 150 TOTAL ASSETS ...... 120,731 119,716 CREDITORS: Amounts falling due after more than one year ...... 17 (147,982) (132,950) NET LIABILTIES ...... (27,251) (13,234)

CAPITAL AND RESERVES Called up share capital ...... 23 1,038 1,029 Share premium account ...... 24 131 121 Profit and loss account ...... 25 (28,420) (14,384) TOTAL SHAREHOLDERS’ DEFICIT . . . 26 (27,251) (13,234)

The financial statements on pages 11 to 56 were approved by the board of directors on 23 December 2010 and were signed on its behalf by:

J Hennessy K Kalliarekos Director Director

F-169 GROUP CASH FLOW STATEMENT FOR THE YEAR ENDED 31 AUGUST 2010

15 month period to 31 August Note 2010 2009

£’000 £’000 Net cash inflow from operating activities ...... 29 39,729 24,455 Returns on investments and servicing of finance ...... 30 (9,389) (8,604) Taxation...... (5,114) (5,457) Capital expenditure and financial investment...... 30 (6,439) (7,187) Acquisitions and disposals ...... 30 (1,340) (188,331) Cash inflow/(outflow) before financing ...... 17,447 (185,124) Financing...... 30 (6,720) 225,918 Increase in cash in the year/period ...... 10,727 40,794

F-170 GROUP RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT FOR THE YEAR ENDED 31 AUGUST 2010

15 month period to 31 August Note 2010 2009

£’000 £’000 Increase in cash in the year/period ...... 10,727 40,794 Cash outflow/(inflow) from decrease/(increase) in debt and lease financing...... 30 6,739 (224,768) Change in net debt resulting from cash flows ...... 31 17,466 (183,974) Other non-cash changes ...... 31 (17,647) (17,059) Borrowing acquired with subsidiaries...... 31 — (9,139) Exchange movement ...... 31 (5,685) (10,951) Movement in net debt in the year/period ...... (5,866) (221,123) Net debt at beginning of year/period ...... (221,123) — Net debt at end of year/period ...... 31 (226,989) (221,123)

F-171 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2010

1. ACCOUNTING POLICIES

1.1 Basis of preparation

The accounts are prepared on the going concern basis, under the historical cost convention and in accordance with the Companies Act 2006 and consistently applied accounting standards in the United Kingdom.

In December 2010, the group entered into a share purchase agreement to acquire the entire share capital of a European school. The target completion date is early January 2011. The acquisition of this school will have a significant impact on the group’s future trading and cash performance. In December 2010, the group also received written agreement from its external lenders in respect of some positive changes to its existing facilities agreement. The changes are conditional on the successful completion of the aforementioned acquisition, which, at the date of these accounts, is now only subject to minor administrative procedures which are fully within the control of the group to satisfy and the vendor implementing legal procedures prescribed in the sale and purchase agreement. These changes have been assumed as part of the directors forming their judgments on going concern as they consider the risk of the acquisition not completing is remote.

The balance sheet shows that the group’s liabilities exceeded its assets at the year end. The directors have considered the future forecasts and ongoing strategy when assessing the needs of the group and consider the group has adequate resources at its disposal to continue its operations for the foreseeable future.

The consolidated accounts reflect the state of affairs of Premier Education (UK) Holdco Limited, its subsidiaries and the investors share of profits in the joint venture as at 31 August 2010 and the consolidated results of those undertakings for the year to that date. In the case of acquisitions and disposals the results, from or to the date control passes or ceases, are included.

The joint venture has an accounting year end which is coterminous with the group. However, due to timing of statutory accounts preparation management accounts are used at 31 August for consolidation purposes. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the group.

No profit and loss account is presented for the company as permitted by Section 408 of the Companies Act 2006. Company loss is disclosed in note 25, Profit and Loss Account.

Intercompany transactions, balances and unrealised gains or losses on transactions between group companies are eliminated on consolidation.

The financial statements have been prepared in sterling which is the currency of the primary economic environment in which the group operates.

1.2 Goodwill and intangible fixed assets

In accordance with FRS 10 ‘Goodwill and Intangible Assets’, purchased or consolidated goodwill is capitalised in the year in which it arises and amortised on a straight line basis over its estimated useful life up to a maximum of 20 years.

Goodwill arising on consolidation represents the excess of the cost of acquisitions over the group’s interest in the fair value of the identifiable assets and liabilities at the date of acquisition. Fair values are attributed to the identifiable assets, liabilities and contingent liabilities that existed at the date of acquisition, reflecting their condition at that date. Goodwill is recognised as an asset.

1.3 Tangible fixed assets and depreciation

Tangible fixed assets are stated at their cost, plus any incidental costs of acquisition, less accumulated depreciation and any provision for impairment in value. Depreciation is provided at rates calculated to write-off the cost, less the estimated residual value, of tangible fixed assets over their estimated useful lives. Estimated useful lives and depreciation rates are as follows:

Freehold and long leasehold buildings 2% straight line Short leasehold land and buildings The unexpired term of the lease on a straight line basis

Computer equipment 162⁄3%-331⁄3% straight line Motor vehicles 20% - 25% on reducing balance

Fixture and fittings 15% on reducing balance / 141⁄2%-331⁄3% straight line

Depreciation is not provided on freehold and long leasehold land.

F-172 1.4 Impairment of fixed assets and goodwill

Where it is established that an asset has been impaired, an amount equal to the impairment is charged to the profit and loss in the period of the impairment. In accordance with FRS 11 ‘Impairment of Fixed Assets and Goodwill’, the group performs impairment reviews whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. An impairment loss is recognised for the amount by which an asset’s carrying amount exceeds its recoverable amount. The asset’s recoverable amount is the higher of post tax net realisable value and value-in-use.

When testing for impairment the group assesses the discount rate applicable to each cash generating unit. In the testing performed as at 31 August 2010, the group considered a discount rate of 12% appropriate for all of the cash generating units. In addition, as part of the group’s assessment of goodwill, the group performs sensitivity analyses of its discounted cash flow calculations by either applying discount rates of up to 3% in excess of the rate adopted, or by holding operating cash flows constant at the levels forecast for 2010.

The group treats goodwill as a monetary asset and any foreign exchange differences arising on the revaluation of goodwill at the period end is taken to reserves.

1.5 Investments

(i) Subsidiary undertakings

Investments in subsidiaries are valued at cost less provision for impairment.

(ii) Joint venture undertakings

In accordance with FRS 9 ‘Associates and Joint Ventures’, joint ventures are included in the financial statements under the gross equity method of accounting. The results and assets and liabilities are stated in accordance with group accounting policies. Where joint ventures do not adopt group accounting policies, their reported results are restated to comply with these policies.

1.6 Assets held under finance and operating leases

Where assets are financed by leasing agreements and the risks and rewards of ownership are substantially transferred to the group (“finance leases”), the assets are treated as if they had been purchased outright and are depreciated over the shorter of the lease term and the useful life of the asset in accordance with the tangible fixed asset policy relevant to that class of asset. The assets which are held under finance leases and similar hire purchase contracts have been included at their fair value in the balance sheet as tangible fixed assets and the obligation to pay future rentals has been shown as a liability. The interest charged on finance leases is charged to the profit and loss account using the sum of the digits method.

Rentals applicable to operating leases, where substantially all the benefits and risks of ownership remain with the lessor, are recognised in the profit and loss account using the straight line basis over the lease term.

1.7 Stocks

Stocks, comprising educational books and materials, are stated at the lower of cost and net realisable value. The cost basis used within the group is a ‘First In, First Out’, or FIFO, basis. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.

1.8 School set up costs

The group expenses all school set up costs in the year in which the expenses are incurred.

1.9 Turnover

Turnover represents the value of services provided during the period and is stated net of sales taxes and discounts.

School fee income

School fee income comprises tuition fees and income from ancillary sources, including registration fees for examinations, school trips, bus transportation, lunch fees and the tuition fee refund scheme.

School fee income is recognised over the school terms; Term 1 being September to December, Term 2 January to March and Term 3 April to June. School fees are payable in advance on or before the first day of each term and are recognised across the months of each term. Where fees are received in advance for more than one term, the income is recognised over the months in the terms for which payment has been made.

F-173 Service contracts

Sales of services within the Learning Services division are recognised in line with the value of the work completed to date. The assessment of the stage of completion is based on either costs incurred to date or the proportion of work delivered, depending on the nature of the contract. When the outcome of the contract can be assessed with reasonable certainty, attributable profit, based on the stage of completion, is recognised in the profit and loss account. Under certain contracts, the revenue, or an element of the revenue, is only receivable if Key Performance Indicator’s (“KPI’s”) built into the contract terms have been met and the services have been delivered in line with the contract terms.

A KPI is a measurable performance condition, for which documentary evidence can be supplied, agreed between the group and its customers, and which is used as a basis to recognise income. Therefore revenue is only recognised as and when services are performed, if the group can estimate that it is probable that KPI’s and contract deliverables have been met. Where it has not been determined whether KPI’s have been met, the element of the revenue relating to meeting these terms, is deferred. Contract revenue and performance are continually monitored over the term of the contract and are subject to revision as each contract progresses. KPI’s are such that they can be measured internally, although in certain cases may require validation by the customer. When revisions in estimated contract revenue are determined, such adjustments are recorded in the period in which they are identified.

Services which have been invoiced but not yet provided are included on the balance sheet as deferred income and accounted for within trade creditors and accruals.

Amounts recoverable on contracts, disclosed within trade debtors and prepayments, is the amount by which revenue recognised exceeds payments on account received.

Turnover for International Schools is recognised over the school terms and is matched to costs incurred and accrued on the same basis.

1.10 Foreign exchange

Overseas transactions carried out by UK group companies are generally denominated in US dollars or local currency and are converted at the rate of exchange ruling at the date of the transaction, or valuation where items are remeasured. Foreign exchange gains or losses arising from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the profit and loss account. The net assets of the overseas subsidiaries are translated, for consolidation purposes, using the rate of exchange ruling at the balance sheet date and the results are translated at the monthly average exchange rate during the period. Exchange differences arising on consolidation are taken to reserves and are reported in the statement of total recognised gains and losses.

1.11 Pension costs

The group operates three defined benefit pension schemes which are reported under FRS 17 ‘Retirement Benefits’. The main fund is valued on a triennial basis by professionally qualified independent actuaries who determine the rates of contributions payable. In the intervening years the actuaries review the continuing appropriateness of these rates.

The liability recognised in the balance sheet in respect of the schemes is the present value of the defined obligation at the balance sheet date less the fair value of plan assets, together with adjustments for unrecognised past-service costs. The defined benefit obligation is calculated annually by independent actuaries. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high quality corporate bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating to the terms of the related pension liability.

The size of the deficit is sensitive to the market value of the assets held by the scheme and to actuarial assumptions which include price inflation, pension and salary increases, the discount rate used in assessing actuarial liabilities, mortality and other demographic assumptions and the level of contributions, further details of which are included in note 22, Pension Schemes. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in the statement of total recognised gains and losses in the period in which they arise.

The group also provides defined contribution pension schemes for its employees. Payment to the group’s defined contribution schemes are charged as an expense in the profit and loss account as they fall due.

1.12 Financial instruments

The group uses financial instruments to manage its exposure to fluctuations in interest rates and foreign currency exchange rates. As a condition to entering into the committed borrowing facilities following the acquisition of the entire share capital of the group by Baring Private Equity Asia via Premier Education (UK) Bidco Limited, the group was obliged to establish an interest rate hedging mechanism to protect against fluctuations in US dollar LIBOR movements. Accordingly, the group established two interest rate hedging instruments which placed an upper limit on the US dollar LIBOR rate that the group could experience. The hedging instruments had a penalty-free break clause exercisable on or before 31 August 2010 and on 15 July 2010, the group restructured its existing hedge agreements into one swap and one cap agreement. These agreements extend to 28 August 2015 and, as the cap agreement is cancellable, the group has retained flexibility to allow it to best match the hedging requirements of its senior and mezzanine debt going forward.

F-174 1.13 Exceptional items Exceptional items are those significant items which are separately disclosed by virtue of their size or incidence to enable a full understanding of the group’s financial performance. Transactions which may give rise to exceptional items are principally gains or losses on disposal of fixed assets, early termination of debt instruments, restructurings and other significant transactions not expected to occur as part of normal operating activities.

1.14 Taxation The taxation charge is based on the group’s profit or loss for the period and takes into account current and deferred taxation. Current taxation is calculated on the basis of the tax laws enacted, or substantially enacted, and relates to the amounts payable to tax authorities in respect of the group’s taxable profits and is based on an interpretation of these laws. United Kingdom corporation tax at the rate for the period is provided on the profit/(loss) as adjusted for disallowable items and timing differences. Deferred taxation, measured on an undiscounted basis and calculated on the liability basis, is provided in respect of all timing differences where a liability is expected to arise in the foreseeable future. Deferred tax liabilities are not provided for in respect of the distribution of profit retained by overseas subsidiary undertakings and joint ventures. Deferred tax assets are recognised only to the extent that it is considered more likely than not that there will be suitable taxable profits from which the future reversal of underlying timing differences can be deducted.

1.15 Share based payments In the period ended 31 August 2009 shares were issued to management, the grant date for which was 1 September 2008. Additional shares were issued to management and to The Parthenon Group in the year ended 31 August 2010. The vesting date for all of the shares issued is the earlier of 31 August 2012, or when a 100% change in ownership occurs. Fair value is calculated using the Black Scholes Option Pricing Model, the details of which are disclosed in note 28, Share Based Payments.

1.16 Cash Cash, for the purpose of the cash flow statement, comprises cash in hand and deposits repayable on demand, less overdrafts payable on demand.

1.17 Provisions Provisions are recognised when the company has a present obligation as a result of a past event, it is probable that a transfer of economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

2. SEGMENTAL ANALYSIS

15 month period to 31 August 2010 2009

£’000 £’000 Turnover By class of business International Schools ...... 74,843 59,182 Learning Services ...... 42,221 58,785 Learning Services — joint venture ...... — 963

117,064 118,930

By geographical area United Kingdom ...... 22,328 48,231 Europe...... 25,327 16,187 Middle East ...... 22,609 17,865 Asia...... 46,800 36,647

117,064 118,930

Turnover is disclosed on the basis of origin. There is no material difference between the origin and destination basis of disclosure.

F-175 15 month period to 31 August 2010 2009

£’000 £’000 Loss on ordinary activities before taxation By class of business International Schools ...... (18,983) 813 Learning Services ...... (11,328) 5,626

(30,311) 6,439 Head Office ...... (45,294) (35,351)

(75,605) (28,912)

15 month period to 31 August 2010 2009

£’000 £’000 By geographical area United Kingdom ...... (56,235) (30,487) Europe...... 4,145 214 Middle East ...... (11,444) (4,352) Asia...... (12,071) 5,713

(75,605) (28,912)

Details of profit on ordinary activities before taxation for the joint venture are given in note 13, Investment in Joint Venture.

15 month period to 31 August 2010 2009

£’000 £’000 Net liabilities By class of business International Schools ...... (182,752) 210,641 Learning Services ...... 3,266 42,140

(179,486) 252,781 Head Office ...... 71,904 (275,240)

(107,582) (22,459)

15 month period to 31 August 2010 2009

£’000 £‘000 By geographical area United Kingdom ...... (297,544) (258,855) Europe...... 45,745 46,879 Middle East ...... 11,331 26,050 Asia...... 132,886 163,467

(107,582) (22,459)

Details of net assets for the joint venture are given in note 13, Investment in Joint Venture.

F-176 3. OPERATING LOSS Operating loss is stated after charging/(crediting):

15 month period to 31 August 2010 2009

£’000 £’000 Staff costs (note 4) ...... 50,374 52,650 Amortisation — goodwill ...... 12,338 10,758 Depreciation of tangible fixed assets — owned by the group ...... 5,050 3,539 — leased assets ...... 516 — Loss/(profit) on disposal of fixed assets (Excluding sale of Limanowskiego campus detailedinnote6)...... 31 (4) Operating lease rentals — plant and machinery ...... 202 91 —other...... 10,995 7,449 Hire of plant and machinery ...... 183 21 Exceptional administrative expenses (note 6) ...... 27,083 2,943 Other operating income ...... (1,847) — Foreign exchange gain ...... (319) (677)

Other operating income relates to income of £1.248m arising from the provision of educational and commercial services by the group to Cime Services SA, and a fee of £0.599m for due diligence services performed by Nord Anglia Education Limited in relation to the acquisition of this company during the year. Included within administrative expenses is auditors’ remuneration, including expenses for audit and non-audit services, as follows:

15 month period to 31 August 2010 2009

£’000 £’000 Audit services Audit of parent company and consolidated accounts ...... 40 40 Non-audit services Audit of the company’s subsidiaries pursuant to legislation ...... 143 153 Taxationservices...... 83 169 Services relating to corporate finance transactions ...... 2,151 171 Otherservices...... 67 37

2,484 570

4. STAFF COSTS

Group

15 month period to 31 August 2010 2009

£’000 £’000 Wages and salaries ...... 46,047 47,674 Social security costs ...... 3,730 3,738 Other pension costs...... 597 1,238

50,374 52,650

F-177 In addition, an amount of £18.026m (2009 - £nil) for costs incurred as a result of the group purchasing any past and all future rights under a profit sharing agreement and under an employment profit sharing agreement has been included as an exceptional item. Further detail is provided in note 6, Exceptional Items.

The group has recognised an expense relating to pension schemes of £0.597m (2009 - £1.23m) which includes £0.3m (2009 - £0.3m) relating to money purchase pension schemes.

The average number of employees, including directors, during the period was as follows:

Group

15 month period to 31 August 2010 2009

Number Number Administration and management ...... 650 657 Teaching...... 893 903 Advisers and guidance officers ...... 137 149

1,680 1,709

5. DIRECTORS’ REMUNERATION

No directors received or were entitled to any emoluments during the period (2009 - £nil). No directors received any compensation for loss of office (2009 - £nil).

6. EXCEPTIONAL ITEMS

15 month period to 31 August 2010 2009

£’000 £’000 Exceptional administrative expenses a Banking fees ...... — 255 b Professional fees relating to restructuring of the group ...... 8,468 1,955 c Nursery division lease exit costs ...... 155 — d (i) Beijing restructuring costs ...... — 733 e Profitonsaleoflandandbuildings...... (355) — f Corporate restructure ...... 659 — g Profit share buy-out ...... 18,026 — h Legal costs ...... 130 —

27,083 2,943 Other exceptional items d (ii) Exceptional loss on disposal of fixed assets ...... — 1,263 Exceptional loss on disposal of subsidiary (note 39) ...... 1,520 —

28,603 4,206

a The group incurred banking fees of £0.255m for the period ended 31 August 2009 post the incorporation of Premier Education (UK) Holdco Limited in order to conclude negotiation of arrangements related to the refinancing of the group as a result of the acquisition by Baring Private Equity Asia.

b Costs of £7.305m were incurred in the year ended 31 August 2010 in relation to the review of potential exit routes and related advisers fees.

The group also incurred professional fees of £1.163m (2009 - £1.955m) arising from the research and implementation of commercial initiatives resulting from the restructuring and re-focus of the new group following the acquisition by Baring Private Equity Asia.

c During the year ended 31 August 2010, the group was required to add £0.155m to its provisions in respect of the lease costs attached to a vacant property relating to its former Nursery division following a re-appraisal of the expected surrender date of the lease.

F-178 d (i) In the period ended 31 August 2009, restructuring costs were incurred relating to the purchase of a new subsidiary and the subsequent relocation of the premises to a new school in Beijing. Included within this figure is an amount of £0.435m for exit costs and £0.298m start-up costs incurred as a result of moving to new premises.

d (ii) Exceptional loss on disposal of fixed assets of £1.263m disclosed below prior year operating profit relates to the write off of fixed assets which could not be transferred to the new school premises in Beijing.

e On 25 February 2010, an agreement was reached with the minority shareholder in The British School Warsaw for the group to acquire their 25% equity interest in the school. Under this agreement, the group acquired the remaining 25% equity interest in exchange for the transfer of the school’s Limanowskiego campus to the former minority shareholder and £0.668m of cash. The property disposed of through the share redemption was formally valued by a firm of independent surveyors and a gain of £0.753m has been recognised in respect of the disposal of this property. Offset against this profit are the legal costs of £0.398m associated with the acquisition of the 25% equity interest in the British School Warsaw. The transaction was completed on 1 March 2010.

f In the year ended 31 August 2010, the group incurred redundancy and lease exit costs totalling £0.659m as a result of the termination of a number of its Learning Services contracts and the related scale reductions in its central service functions.

g In the year ended 31 August 2010, costs of £18.026m were incurred as a result of the group purchasing any past and all future rights under a profit sharing agreement and under an employment profit share agreement.

Full details of this arrangement are documented in note 36, Related Party Transactions.

h During the year, the group incurred £0.130m costs relating to a provision in respect of an overseas legal claim.

7. INTEREST RECEIVABLE AND SIMILAR INCOME

15 month period to 31 August 2010 2009

£’000 £’000 Bank interest receivable ...... 439 796 Share of joint venture interest receivable ...... 6 116

445 912

8. INTEREST PAYABLE AND SIMILAR CHARGES

15 month period to 31 August 2010 2009

£’000 £’000 On bank loans and overdrafts...... 10,763 11,516 Finance lease interest ...... 999 — On inter-company loan notes due to parent company and senior management.... 14,325 14,384 Amortisation of debt issue costs ...... 898 973 Otherinterest...... 4 —

26,989 26,873

F-179 9. TAXATION ON LOSS ON ORDINARY ACTIVITIES

15 month period to 31 August 2010 2009

£’000 £’000 Current taxation: PriorperiodUKcorporationtaxcredit...... (44) — Current overseas taxation ...... 5,185 5,277 Prior period overseas taxation ...... 18 —

5,159 5,277 Deferred taxation: Priorperiodcredit...... (6) — Origination and reversal of timing differences ...... (424) (19)

Totaldeferredtaxation(note21)...... (430) (19)

Taxation on loss on ordinary activities...... 4,729 5,258

Factors affecting taxation charge for the year/period

The taxation assessed for the year/period differs from the standard rate of corporation tax in the UK of 28% as per the explanation below:

15 month period to 31 August 2010 2009

£’000 £’000 Loss on ordinary activities before taxation ...... (75,605) (28,912)

Loss on ordinary activities before taxation at the standard rate of corporation tax intheUKof28%...... (21,169) (8,095) Effects of: Overseas losses not deductible...... 393 957 Overseas group dividends ...... — 2,988 Overseas branch taxation paid ...... 125 25 Withholding taxation ...... 1,083 1,023 Joint venture profit ...... (28) (100) Schedule 23 deduction ...... — (1,439) Loss on sale of fixed assets...... 91 — Loss on disposal of subsidiary ...... 426 — Expenses not deductible for taxation purposes ...... 5,553 (2,615) Adjustment to prior period taxation charge ...... (26) — Deferred taxation not recognised ...... 4,499 8,911 Lower rates on overseas earnings ...... (1,566) 591 Effect of rate change ...... 167 — Deferred taxation charge for the year/period ...... 424 19 Impairment and amortisation of goodwill ...... 10,673 3,012 Exceptional expenses not deductible for taxation purposes ...... 4,514 —

Current taxation charge for the year/period...... 5,159 5,277

Factors affecting future tax charges

The Emergency Budget on 22 June 2010 announced that the UK corporation tax rate will reduce from 28% to 24% over a period of 4 years from 2011. The first reduction in the UK corporation tax rate from 28% to 27% was substantively enacted on 20 July 2010 and will be effective from 1 April 2011. This will reduce the group’s future current tax charge.

F-180 10. INTANGIBLE ASSETS

Goodwill

£’000 Group Cost At 1 September 2009 ...... 238,984 Additions...... 6,102 Disposals ...... (19,860) Adjustment for foreign exchange ...... 5,981

At 31 August 2010...... 231,207

Accumulated amortisation At 1 September 2009 ...... 10,758 Charge for the year ...... 12,338 Impairment ...... 25,781 Disposals ...... (14,597) Adjustment for foreign exchange ...... 774

At 31 August 2010...... 35,054

Net book value At 31 August 2010...... 196,153

At 31 August 2009...... 228,226

During the academic year the group witnessed an under-performance against its business plan of its Abu Dhabi school which was operated through its subsidiary the British International School LLC. The under- performance gave rise to an impairment review and as a consequence goodwill, in relation to the Abu Dhabi school, was written down to its recoverable level. The impairment charge made to the profit and loss account in the year ended 31 August 2010 was £12.887m.

In July 2010, the group commenced discussions with Premier Education Holdings s.a.r.l., its immediate holding company, in respect of a proposed sale of its subsidiary, The British International School Abu Dhabi LLC, to Premier Education Holdings s.a.r.l.. The group subsequently sold its investment in this subsidiary on 26 August 2010 and wrote-off the residual goodwill relating to this investment. The details of this sale are documented in note 39, Disposals.

In May 2010, the new UK government announced its intention to dramatically reduce government spending from previous levels. The budget published in July 2010 by the government contemplates sizable reductions in spending by the government across all of its sectors in the remaining months of the current fiscal year ending 31 March 2011 and beyond, including expenditures for outsourced educational services. Although the details of which national and local government authorities’ programmes will be affected by these spending cuts are not yet known, the directors predict a substantial decline in the pipeline of revenues from the UK portion of its Learning Services business in the year ending 31 August 2011 and possibly beyond. Based on the latest available forecasts for the UK portion of the group’s Learning Services business, the directors have identified that an impairment adjustment of £12.894m is required in respect of the goodwill held for this business. A charge of £12.894m has accordingly been made to the group’s profit and loss account and against goodwill in the year ended 31 August 2010.

Other than the above, no impairment charges were required to be made to the carrying value of the group’s investments.

The company has no intangible assets.

F-181 11. TANGIBLE ASSETS

Land and Fixtures and Computer Motor Group buildings fittings equipment vehicles Total £’000 £’000 £’000 £’000 £’000 Cost or valuation At 1 September 2009 ...... 16,822 4,602 3,985 173 25,582 Additions...... 26,060 1,205 1,028 — 28,293 Disposals ...... (31,645) (2,895) (798) (53) (35,391) Transfer of assets ...... (104) (110) 214 — — Adjustment for foreign exchange . . 1,185 20 75 (12) 1,268 At 31 August 2010...... 12,318 2,822 4,504 108 19,752

Accumulated depreciation At 1 September 2009 ...... 1,661 682 800 — 3,143 Charge for the period ...... 2,880 1,182 1,459 45 5,566 On disposals ...... (877) (908) (322) (18) (2,125) Adjustment for foreign exchange . . 295 118 (112) (16) 285 At 31 August 2010...... 3,959 1,074 1,825 11 6,869

Net book value At 31 August 2010...... 8,359 1,748 2,679 97 12,883

At 31 August 2009...... 15,161 3,920 3,185 173 22,439

Net book value includes an amount of £nil (2009 - £1.778m) in respect of land that is not depreciated.

Assets held under finance leases and similar hire purchase contracts have a £nil (2009 - £nil) net book value.

Included within additions is an amount of £21.725m for a new finance lease in respect of a new campus in Shunyi, Beijing, entered into on 1 September 2009 for the British School Beijing. The group initially operated under 30 year lease terms for the Beijing campus from 1 September 2009. The terms were revised with the landlord in April 2010, to cover a 20 year period, with an option to extend for a further 10 years. The group commissioned a review of market rentals and available property in the Beijing area, which was finalised in May 2010. Following a review of this data, management concluded that they should not include the extension period in assessing the substance of the revised lease agreement, as it was inconclusive at the time of signing as to whether the option to extend would be exercised by the group. Management consequently concluded that the ongoing classification of this lease based on the new terms in place should be that of an operating lease, similar to the other school leases in the group’s portfolio. Included within disposals therefore, is an amount of £22.344m together with a related adjustment for foreign exchange of £0.619m to reflect the reclassification of the finance lease to an operating lease on 30 April 2010.

The net book value of land and buildings comprises:

2010 2009

£’000 £’000 Freehold...... — 6,911 Long leasehold...... 305 319 Short leasehold ...... 8,054 7,931

8,359 15,161

The company has no tangible assets.

F-182 12. INVESTMENTS

Shares in group Company undertakings

£’000 Cost At 1 September 2009 ...... 119,566 Additions...... 1,012

At 31 August 2010...... 120,578

The directors believe that the carrying value of the investments is supported by the recoverable amount of underlying net assets.

The principal subsidiary undertakings, which are incorporated in the UK unless stated otherwise, are as follows:

% of voting rights and shares held Holding

Holding Companies Premier Education (UK) Bidco Limited1 ...... 100 OrdinaryShares Premier Education (UK) Midco Limited ...... 100 OrdinaryShares Nord Anglia Education Limited1 ...... 100 OrdinaryShares International Schools Nord International Schools Limited 1...... 100 OrdinaryShares ABET — Access to British Education & Training Limited1 ...... 100 OrdinaryShares ABET International Limited 1 ...... 100 OrdinaryShares English International School Prague School (incorporated in the Czech Republic) 2...... 100 OrdinaryShares The British School SpZo.o (incorporated in Poland)1 ...... 100 OrdinaryShares The British International School Bratislava (incorporated in Slovakia) 1 ...... 100 OrdinaryShares The British International School Budapest (a Hungarian Foundation) 1 ...... 100 OrdinaryShares The British International School Shanghai (incorporated in China) 1...... 100 OrdinaryShares Ningbo Nord Anglia Consulting Limited (incorporated in China) 1 ...... 100 OrdinaryShares Nord Anglia (Beijing) Consulting Limited (incorporated in China) 1 ...... 100 OrdinaryShares The British School Beijing (incorporated in China) 1 ...... 100 OrdinaryShares Learning Services Nord Anglia Lifetime Development North East Limited 1 ...... 100 OrdinaryShares Nord Anglia Lifetime Development North West Limited 1 ...... 100 OrdinaryShares Nord Anglia Lifetime Development London & South East Limited 1 ...... 100 OrdinaryShares Nord Anglia Lifetime Development South West Limited 1 ...... 100 OrdinaryShares Nord Anglia Vocational Education and Training Services Limited 1 ...... 100 OrdinaryShares Nord Anglia eLearning Limited 1 ...... 100 OrdinaryShares Nord Anglia Education Improvement Services Limited 1 ...... 100 OrdinaryShares Nord Anglia Recruitment Limited 1 ...... 100 OrdinaryShares Nord Anglia Education Partnerships Limited 1 ...... 100 OrdinaryShares Nord Anglia Education Development Services Limited 1 ...... 100 OrdinaryShares Nord UK Limited 1 ...... 100 OrdinaryShares Nord Anglia Middle East Holdings SPC (incorporated in Bahrain) 1 ...... 100 OrdinaryShares Nord Anglia Middle East Holdings SPC (Abu Dhabi Branch) 1 ...... Nord Anglia Middle East Holdings SPC (Qatar Branch) 1 ......

1 held by a 100% owned subsidiary.

2 80% held by company, remaining 20% held by a 100% owned subsidiary.

A full listing of all subsidiaries is disclosed on the company’s annual return.

On 26 August 2010, the group disposed of a 100% shareholding in The British International School Abu Dhabi LLC.

F-183 Joint venture undertaking incorporated in the UK

13. INVESTMENT IN JOINT VENTURE

Group

2010 2009

£’000 £’000 Turnover...... — 963 Interest receivable and similar income ...... 6 116 Profit on ordinary activities before and after taxation ...... 101 358

The amounts included in respect of the joint venture comprise:

2010 2009

£’000 £’000 Share of gross assets: Share of current assets...... 1,828 2,410

Share of gross liabilities: Due within one year...... (1,499) (2,182)

Share of net assets ...... 329 228

The investment in the joint venture is for 5,000 A ordinary shares valued at £1 each. This equates to the full amount of A ordinary shares authorised and represents 50% of the share capital authorised and issued — the other shares being 5,000 B ordinary shares valued at £1 each. Both sets of shares carry the same rights attached to them.

The company does not have any investments in joint ventures.

14. STOCK

Group Company

2010 2009 2010 2009

£’000 £’000 £’000 £’000 Goods for resale ...... 46 230 — —

15. DEBTORS

Group Company

2010 2009 2010 2009

£’000 £’000 £’000 £’000 Due within one year Trade debtors ...... 10,232 10,522 — — Amounts owed by parent undertaking ...... 11 14 140 — Amounts owed by related undertaking...... 3,827 — — — Deferred tax asset...... 1,753 821 — — Other debtors...... 1,180 1,765 — — Prepayments and accrued income ...... 7,622 8,312 — —

24,625 21,434 140 —

All amounts owed by the parent undertaking and a related undertaking are unsecured, interest free and repayable on demand.

F-184 16. CREDITORS — AMOUNTS FALLING DUE WITHIN ONE YEAR

Group Company

2010 2009 2010 2009

£’000 £’000 £’000 £’000 Bank loans (note 18) ...... 16,415 9,941 — — Net obligations under finance leases and hire purchase contracts (note 18)...... 22 62 — — Amounts owed to related undertaking ...... 3,827 — — — Tradecreditors...... 1,964 2,116 — — Other taxation and social security ...... 754 1,369 — — Othercreditors...... 9,510 5,663 — — Accruals and deferred income ...... 82,672 56,932 — — Corporationtax...... 1,973 1,834 — —

117,137 77,917 — —

All amounts owed to a related undertaking are repayable on demand and incur interest at 2.5%.

17. CREDITORS — AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR

Group Company

2010 2009 2010 2009

£’000 £’000 £’000 £’000 Bank loans (note 18) ...... 115,322 118,941 — — Net obligations under finance leases and hire purchase contracts (note 18)...... 5 23 — — Amounts owed to parent undertaking ...... 145,881 132,179 145,881 132,179 Amounts owed to related undertaking ...... 5,546 — — — Othercreditors...... 2,210 932 2,101 771

268,964 252,075 147,982 132,950

Amounts owed to the parent undertaking consist of loan notes repayable in 2038, which bear interest at 12%. Other creditors include £2.101m of loan notes due to senior management and a third party (2009 - £0.771m due to senior management) which are repayable in 2038 and bear interest at a rate of 12%. Amounts due to a related undertaking bear interest at 3.0%.

18. LOANS AND OTHER BORROWINGS

Group Company

2010 2009 2010 2009

£’000 £’000 £’000 £’000 Bank loans Falling due: In one year or less or on demand ...... 16,415 9,941 — — In more than one year but not more than two years ...... 11,135 5,846 — — In more than two years but not more than five years ...... 104,187 35,743 — — In more than five years...... — 77,352 — —

131,737 128,882 — —

UK borrowings are secured by a debenture creating fixed and floating charges over group assets and by a fixed charge over specified group bank accounts. In addition specific registered pledges have been made by certain overseas subsidiaries. A loan with the Korean Exchange Bank in Korea was repaid in the year ended 31 August 2010.

F-185 The bank loans are denominated in US dollars and are converted at the closing exchange rate between dollars and sterling of $1.551/ £1 at the year end date and bear interest at the following rates : -

Working capital facilities US$ LIBOR plus 3.0% margin or UK LIBOR plus 3.0% margin Capital investment facilities US$ LIBOR plus 3.0% margin A Loan US$ LIBOR plus 3.0% margin B Loan US$ LIBOR plus 3.25% margin Mezzanine debt US$ LIBOR plus 10.0% margin of which 4.5% is paid and 5.5% rolled

In the year ended 31 August 2010, the group experienced average US $LIBOR rates as follows: -

Working capital facilities ...... 0.358% 1 Sep 2009 to 31 Aug 2010 Capital investment facilities ...... 0.369% 1 Sep 2009 to 31 Aug 2010 A Loan ...... 4.332% 1 Sep 2009 to 31 May 2010 0.536% 1 Jun 2010 to 31 Aug 2010 B Loan ...... 4.332% 1 Sep 2009 to 31 May 2010 0.536% 1 Jun 2010 to 31 Aug 2010 Mezzanine debt ...... 4.332% 1 Sep 2009 to 31 May 2010 0.536% 1 Jun 2010 to 31 Aug 2010

The rate of 4.332% represents the weighted average rate on the interest rate hedging instruments which were in place until 31 May 2010 prior to their replacement with the new hedging arrangements. Additionally, for the element of working capital facilities extended in sterling, the group experienced UK LIBOR of 0.55% throughout the year. At 31 August 2010, the US dollar LIBOR 3 month rate was 0.252% and the UK LIBOR 1 month rate was 0.5%.

Group Company

2010 2009 2010 2009

£’000 £’000 £’000 £’000 Finance leases Falling due: Within one year ...... 22 62 — — In more than one year but not more than two years ...... 5 23 — —

27 85 — —

19. FINANCIAL INSTRUMENTS

Treasury policy and financial risk management The group’s financial instruments comprise bank deposits, overdrafts, long term loans and trade debtors which arise directly from its operations. The board reviews and agrees policies for managing financial risks faced by the group which primarily arise from interest and currency risks. These policies are summarised below:

i) Liquidity risk The group aims to maintain a flexible borrowing structure by combining committed bank borrowing facilities with additional overdraft and capital facilities. The group monitors its future funding requirements over the medium term such that it can take actions to supplement its operating cash flows to service future debt obligations where appropriate.

ii) Interest rate risk Two interest rate hedging instruments were established in October 2008 and were held over the group’s US dollar loan facility. The hedging instruments placed an upper limit on the US dollar LIBOR rate that the group could experience. The weighted average interest rate of the two hedging instruments was 4.332%. The two interest rate hedges had a penalty-free break clause exercisable on or before 31 August 2010. On 15 July 2010, the group restructured its existing hedge agreements into one swap and one cap agreement effective from 1 June 2010. These agreements extend to 28 August 2015. As the cap agreement is cancellable, the group has retained flexibility to allow it to best match the hedging requirements of its senior and mezzanine debt going forward.

F-186 The life and value of the hedging instruments is consistent with the amortisation profile attached to the US dollar loan. At 31 August 2010 64.8% of the US dollar borrowings were hedged by the new instruments (2009 — 79.7% of US dollar borrowings were hedged by the previous instruments). iii) Foreign currency risk and controls

The group has significant and expanding international operations trading in non-sterling currencies. Movements in global exchange rates can cause currency exposures to the group’s consolidated sterling financial results. Where stable currencies exist, trade is conducted in local currencies and where appropriate, borrowings are matched in that currency to mitigate the risk of exposure to the group’s assets and liabilities from exchange rate movements. In countries of operation where currency trading zones are considered to be weaker, some transactions are conducted in US dollars and Euros to try to minimise exchange fluctuation risks.

In consideration of benefits against cost, the group does not hedge its translation exposure but will consider managing transactional exposures by using forward cover instruments where significant transactions are involved.

The group’s International Schools division holds significant non-sterling cash balances in overseas operations which arise from fee income and represent a combination of working capital and trading profits. These balances are held in operations which include currencies where exchange control restrictions may prevent full repatriation of funds to the UK parent undertaking. The group utilises these funds through a combination of reinvestment in the expansion and improvement of overseas operations, or by repatriation to the UK through management contracts, management charges and dividends. Through these means the directors believe that satisfactory distribution of these funds can be achieved.

2010 2009

£’000 £’000 Interest rate and currency profile of borrowings Amounts falling due less than one year Sterling finance leases ...... 22 62 US dollar loans...... 16,415 9,885 Koreanwonloan...... — 56

16,437 10,003

Amounts falling due after one year Sterling finance leases ...... — 14 Hungarian forint finance lease ...... 5 9 US dollar loans...... 115,322 118,941

115,327 118,964

Financial liabilities represent floating rate bank borrowings and finance leases of £131.764m (2009 - £128.967m). The interest rates applicable to the bank borrowings are disclosed in note 18, Loans and Other Borrowings.

As at 31 August 2010 all of the group’s facilities were fully drawn (2009 - £0.614m undrawn).

Interest rate and currency profile of financial assets

Other group financial assets consist of cash deposits only as follows:

2010 2009

£’000 £’000 Sterling ...... (3,257) (7,357) USdollar...... 10,583 7,907 European currencies ...... 8,012 10,943 Chinese renminbi ...... 35,433 28,642 Middle East currencies ...... 1,942 616 Koreanwon...... 2 43 Malaysian ringitt ...... 32 — Hong Kong dollar ...... 10 —

52,757 40,794

Within the UK banking facilities, there is a right off set off between sterling, US dollars and Euros that gives rise to an overall asset at the balance sheet date.

F-187 20. PROVISIONS FOR LIABILITIES

Group

Property Other Total

£’000 £’000 £’000 At 1 September 2009 ...... 802 228 1,030 Charged to the profit and loss account ...... 1,437 130 1,567 Utilised during the year...... (307) (51) (358)

At 31 August 2010 ...... 1,932 307 2,239

Provisions for property relate to lease dilapidations and also future lease costs resulting from the restructuring of the business within the Learning Services division. Other provisions relate to costs provided for in respect of an overseas legal claim. The company had no provisions at 31 August 2010 (2009 - £nil).

21. DEFERRED TAXATION

Group

2010 2009

£’000 £’000 At beginning of year/period ...... 821 — Acquired...... — 802 Credited to the profit and loss account ...... 424 19 Prior period adjustment...... 6 — Foreign exchange movement ...... (29) — Disposal of Polish property ...... 410 — Other adjustment ...... 121 —

At end of year/period ...... 1,753 821

The deferred tax asset is made up as follows:

2010 2009

£’000 £’000 Cumulative capital allowances in excess of depreciation ...... — (350) Short term timing differences ...... 1,753 1,171

At end of year/period ...... 1,753 821

As a result of the group’s funding structure, losses have been incurred relating to loan interest arising on its debt and loan notes. These losses are available for offset against future non-trading income. A deferred tax asset has not been recognised in respect of these losses as the group does not anticipate non-trading income will arise within the immediate future in the companies which have incurred the losses. Unrecognised deferred tax assets in relation to losses acquired in the prior period amounted to £2.127m. In the current period a further asset of £4.333m (2009 - £8.846m) has arisen to give a total unrecognised deferred tax asset of £15.306m (2009 - £10.973m) at the balance sheet date. An unprovided deferred tax asset has also arisen in respect of timing differences and accelerated capital allowances of £0.9m (2009 - £0.2m). An additional deferred tax asset of £1.571m (2009 - £1.341m) arising on the pension scheme deficit has not been recognised as the entity generating the asset, being a holding company, is not expected to generate sufficient profits to utilise this asset in the immediate future. The company has neither a deferred tax asset nor liability.

22. PENSION SCHEMES The group operates three defined benefit pension schemes. In each case the assets of the scheme are held separately from those of the group in independently administered funds. Contributions to the scheme are charged to the profit and loss account so as to spread the cost of pensions over the employees’ working lifetimes with the group.

F-188 A defined benefit scheme was established for Lifetime Careers employees (employed by a group subsidiary). Contributions are determined by independently professionally qualified actuaries on the basis of triennial valuations. The most recent formal actuarial valuation of the scheme was performed at 31 August 2008. Expected employer’s contribution for 2010/2011 has yet to be determined by the trustees and employers, but is expected to be in line with 2009/2010. The Nord Anglia Joint Pension Scheme is a closed scheme and therefore under the projected unit method the current service costs will increase as members of the scheme approach retirement. The most recent formal actuarial valuation of the scheme was performed at 1 September 2004 using the aggregate method which assesses the adequacy of the fund to meet the minimum funding requirement and calculates contributions on the level of pensionable payroll to provide the retirement benefits for the members. The Wyburn School Limited Pension and Life Assurance Scheme (1985) is a closed scheme and therefore under the projected unit method the current service costs will increase as the members of the scheme approach retirement. The most recent actuarial valuation of the scheme was performed at 1 September 2004 using the aggregate method which assesses the adequacy of the fund to meet the minimum funding requirement and calculates contributions on the level of pensionable payroll to provide the retirement benefits for the members. Actuarial valuation reports have been requested by the group for both the Nord Anglia Joint Pension Scheme and The Wyburn School Limited Pension and Life Assurance Scheme (1985). Given the underlying size of these schemes (5.1% of net pension liabilities), any movement as a result of changes reported in the actuarial valuation is unlikely to be material. Further details of the three defined benefit schemes are set out below. The most recent formal actuarial valuations for each scheme have been updated at 31 August 2010 using the projected unit basis. Under FRS 17 the net pension deficit has been recognised in the financial statements. There were no pension schemes in the group until the date of the acquisition of Nord Anglia Education Limited. The weighted average (based on the actuarial value of liabilities) of the principal assumptions used by the actuaries were:

2010 2009

Pensionable salary increases ...... 3.1% 3.4% Pension payment increases ...... 2.6% 2.7% Investment /discount rate ...... 5.1% 5.6% Inflation...... 2.6% 2.9%

The mortality assumptions used are as follows:

2010 2009

Longevity at age 65 for current pensioners Men...... 22.1years 22.1 years Women ...... 25.0years 25.0 years Longevity at age 65 for future pensioners Men...... 22.1years 22.1 years Women ...... 25.0years 25.0 years

The total assets in the schemes and the expected rates of return are:

Expected Expected long term 2010 long term 2009 Market value of assets at 31 August rate of return Market Value rate of return Market Value

% £’000 % £’000 Equities ...... 6.40 14,427 6.90 12,960 Property...... — — 5.90 614 Corporate bonds ...... 5.10 1,360 5.60 499 Fixed interest and index linked gilts ...... 3.40 680 3.90 1,865 Cash ...... 0.50 1,031 0.50 100 Withprofitfund...... — 329 — 275

Fair value of scheme assets ...... 17,827 16,313

The expected return on scheme assets is determined by considering the expected returns on the assets underlying the current investment policy. Expected returns on equity investments reflect long-term real rates of return experienced in the respective markets. The funds invested in by the scheme do not provide a bid offer spread and therefore there is no difference between the mid-price valuation and the bid price valuation required under FRS17 (amended).

F-189 Retirement benefit obligations: liability recognised on the balance sheet:

2010 2009

£’000 £’000 Total fair value of assets ...... 17,827 16,313 Present value of liabilities ...... (23,862) (21,101)

Deficit in the schemes ...... (6,035) (4,788) Related deferred tax asset...... — —

Net pension liability ...... (6,035) (4,788)

Reconciliation of present value of scheme liabilities

2010 2009

£’000 £’000 Opening present value of scheme liabilities ...... (21,101) — Acquired...... — (24,810) Current service cost...... (297) (936) Interest cost ...... (1,180) (1,614) Benefits paid ...... 567 469 Employee contributions...... (215) (357) Actuarial (losses)/gains...... (1,636) 6,147

Closing present value of scheme liabilities ...... (23,862) (21,101)

Reconciliation of fair value of scheme assets

2010 2009

£’000 £’000 Opening fair value of scheme assets ...... 16,313 — Acquired...... — 16,208 Expected return on scheme assets ...... 1,051 1,164 Actuarial gains/(losses)...... 188 (1,571) Benefits paid ...... (567) (469) Contributions made by employer ...... 627 624 Contributions made by employees ...... 215 357

Closing fair value of scheme assets ...... 17,827 16,313

The actual return on scheme assets in the year was £1.239m (2009 — (£0.406m)).

Analysis of amounts charged to profit and loss account

15 month period to 31 August 2010 2009

£’000 £’000 Current service cost...... (297) (936)

Charge within administrative costs ...... (297) (936) Expected return on assets ...... 1,051 1,164 Interest on liabilities...... (1,180) (1,614)

Net return on assets — Other finance costs ...... (129) (450)

Charge through the profit and loss account ...... (426) (1,386)

F-190 The following amounts have been recognised in the Statement of Total Recognised Gains and Losses:

15 month period to 31 August 2010 2009

£’000 £’000 Actual return less expected return on pension scheme assets ...... 188 (1,571) Experience (losses)/gains on scheme liabilities ...... (81) 1,565 Changes in assumptions ...... (1,555) 4,582

Actuarial (loss)/gain ...... (1,448) 4,576

The cumulative amount of gains and losses recognised in the Statement of the Recognised Gains and Losses is a gain of £3.128m (2009 - £4.576m gain).

2010 2009

£’000 £’000 Present value of defined benefit obligations ...... (23,862) (21,101) Fair value of scheme assets...... 17,827 16,313

Deficit in schemes ...... (6,035) (4,788)

Experience adjustments on scheme assets ...... 188 (1,571) Percentage of scheme assets...... 1.1% (9.6%)

Experience adjustments on scheme liabilities ...... (81) 1,565 Percentage of the present value of scheme liabilities ...... (0.3%) 7.4%

The group also operates defined contribution pension schemes, the assets of which are held separately from those of the group. The costs relating to these schemes are disclosed in note 4, Staff Costs.

The company had no pension scheme liabilities as at 31 August 2010 (2009 - £nil).

23. CALLED UP SHARE CAPITAL

31 August 31 August Group and company Number 2010 Number 2009

£’000 £’000 Authorised: A Ordinary shares of £0.01 each ...... 495,685,196 4,957 495,685,196 4,957 B Ordinary shares of £0.01 each ...... 841,623 8 841,623 8 C Ordinary shares of £0.01 each ...... 210,406 2 210,406 2 D Ordinary shares of £0.01 each ...... 273,527 3 273,527 3 E Ordinary shares of £0.01 each ...... 2,187,495 22 2,187,495 22 F Ordinary shares of £0.01 each ...... 801,653 8 801,653 8 Deferred shares of £0.01 each ...... 100 — 100 —

500,000,000 5,000 500,000,000 5,000

F-191 31 August 31 August Number 2010 Number 2009

£’000 £’000 Allotted and fully paid: A Ordinary shares of £0.01 each ...... 99,863,421 998 100,000,000 1,000 B Ordinary shares of £0.01 each ...... 841,623 8 841,623 8 C Ordinary shares of £0.01 each ...... 210,406 2 210,406 2 D Ordinary shares of £0.01 each ...... 273,527 3 273,527 3 E Ordinary shares of £0.01 each ...... 2,053,547 21 1,594,281 16 F Ordinary shares of £0.01 each ...... 600,148 6 — — Deferred shares ...... 100 — — —

103,842,772 1,038 102,919,837 1,029

During the year the following shares were issued:-

Nominal Consideration No of shares issued Class value received

322,687 ...... EOrdinary £3,227 £12,907 600,148 ...... FOrdinary £6,001 £6,001 100...... Deferred — —

In addition to the above, 136,579 A Ordinary shares were converted and redesignated into 136,579 E Ordinary shares. The holders of A, B, C and D Ordinary shares are entitled to receive notice of, attend, speak at or vote at any General Meeting of the company. The holders of E, F and deferred shares do not have any of the above entitlements. Dividends are paid pro-rata to shareholders commencing from A Ordinary shares. On winding-up of the company, the assets and profits will be distributed in a way that A to F Ordinary share holders will receive amounts credited as paid-up on their shares, following that £0.01 will be paid to holders of each deferred share. The balance will then be paid to holders of A to F Ordinary shares following operation of the ratchet set out in the articles. 24. SHARE PREMIUM ACCOUNT Group and company

2010 2009

£’000 £’000 Arising on issue of shares: A Ordinary shares ...... — — B Ordinary shares ...... 46 46 C Ordinary shares ...... 11 11 D Ordinary shares ...... 16 16 E Ordinary shares ...... 58 48 F Ordinary shares ...... — —

At 31 August ...... 131 121

25. PROFIT AND LOSS ACCOUNT

2010 2009

£’000 £’000 Group Opening balance for the year/period...... (25,198) — Loss for the financial year/period ...... (80,742) (34,652) Share based payments ...... 299 231 Currency translation adjustments...... (1,662) 4,647 Actuarial (loss)/gain on retirement benefit obligations ...... (1,448) 4,576

Closing balance for the year/period ...... (108,751) (25,198)

F-192 2010 2009

£’000 £’000 Company Opening balance for the year/period...... (14,384) — Loss for the financial year/period ...... (14,335) (14,615) Share based payments ...... 299 231

Closing balance for the year/period ...... (28,420) (14,384)

26. RECONCILIATION OF MOVEMENT IN SHAREHOLDERS’ DEFICIT

2010 2009

£’000 £’000 Group Opening balance for the year/period...... (24,048) — Loss for the financial year/period ...... (80,742) (34,652) New shares issued during the period ...... 19 1,150 Share based payments ...... 299 231 Currency translation adjustments...... (1,662) 4,647 Actuarial (loss)/gain on retirement benefit obligations ...... (1,448) 4,576

Closing balance for the year/period ...... (107,582) (24,048)

2010 2009

£’000 £’000 Company Opening balance for the year/period...... (13,234) — Loss for the financial year/period ...... (14,335) (14,615) New shares issued in the year/period ...... 19 1,150 Share based payments ...... 299 231

Closing balance for the year/period ...... (27,251) (13,234)

27. MINORITY INTERESTS

2010 2009

£’000 £’000 Opening balance for the year/period...... 1,589 — Acquired...... — 1,107 Minority interests in profit for the financial year/period ...... 408 482 Acquisition of minority interest ...... (1,964) — Foreign exchange ...... (33) —

Closing balance for the year/period ...... — 1,589

F-193 28. SHARE BASED PAYMENTS

In the period ended 31 August 2009 shares were issued to management, the grant date for which was 1 September 2008. Additional shares were issued to management and to The Parthenon Group in the year ended 31 August 2010. The earliest date the shares will vest is 31 August 2012, or when a 100% change in ownership occurs. A fair value for the awards was calculated using the Black Scholes Model incorporating the following assumptions:

Share Issues Share Issues 2010 2009

19 November 2009 to 01 03 March September Date of Issue 2010 2008

Exercise price ...... £0.01 £0.01 Equityprice...... £0.0748 £0.068 Volatility ...... 100% 100% Dividend yield ...... 0% 0% Riskfreeinterestrate...... 5% 5% Expected life to exercise ...... 2.5years 4 years Number of shares issued ...... 1,059,414 2,919,837 Number of employees ...... 4 22

The fair value of each share was calculated as £0.0748 (2009 - £0.06237).

None of the awards forfeited in the year/period.

The total charge for the year was £0.299m (2009 - £0.231m) all of which related to equity share based payment transactions.

The risk free rate of 5% is the yield on zero coupon UK Government bonds of a term consistent with the assumed life of the shares. The volatility rate adopted is due to the fact that the market rate and performance of the shares is not currently known.

29. NET CASH FLOW FROM OPERATING ACTIVITIES

15 month period to 31 August 2010 2009

£’000 £’000 Operating loss ...... (47,507) (1,249) Amortisation of intangible fixed assets ...... 12,338 10,758 Impairment of intangible fixed assets ...... 25,781 — Depreciation of tangible fixed assets ...... 5,566 3,539 Profit on disposal of tangible fixed assets ...... (722) (4) Share based payments ...... 299 231 Difference between pension charge and cash contribution ...... (330) 312 Decrease/(increase) in stocks...... 184 (58) Increase in debtors ...... (1,585) (1,899) Increase in creditors ...... 44,496 14,142 Increase/(decrease) in provisions ...... 1,209 (2,863) Other non-cash changes ...... — 1,546

Net cash inflow from operating activities ...... 39,729 24,455

F-194 Other non-cash changes relate to foreign exchange movements and share based payment charges as per note 28, Share Based Payments.

Operating cash flows include an outflow of £6.605m (2009 - £0.255m) which relates to exceptional items. The balance of £22.505m (2009 - £2.688m) was outstanding at 31 August 2010.

30. ANALYSIS OF CASH FLOWS FOR HEADINGS NETTED IN CASH FLOW STATEMENT

15 month period to 31 August 2010 2009

£’000 £’000 Returns on investments and servicing of finance Interest received ...... 445 796 Interestpaid...... (9,834) (9,400)

Net cash outflow from returns on investments and servicing of finance ..... (9,389) (8,604)

15 month period to 31 August 2010 2009

£’000 £’000 Capital expenditure and financial investment Purchase of tangible fixed assets ...... (6,568) (7,287) Sale of tangible fixed assets ...... 129 100

Net cash outflow from capital expenditure and financial investment ...... (6,439) (7,187)

15 month period to 31 August 2010 2009

£’000 £’000 Acquisitions and disposals Purchase of subsidiary undertakings ...... (668) (219,384) Cash acquired with subsidiary undertakings ...... — 31,053 Disposal of subsidiary undertakings ...... (672) —

Net cash outflow from acquisitions and disposals ...... (1,340) (188,331)

15 month period to 31 August 2010 2009

£’000 £’000 Financing Institutional loan notes ...... — 118,566 New secured bank loans ...... 539 126,758 Repayment of bank loans ...... (7,220) (20,448) Capital element of finance leases ...... (58) (108)

Net cash inflow from increase in debt and lease financing...... (6,739) 224,768 Issue of ordinary share capital ...... 19 1,150

Net cash (outflow)/inflow from financing ...... (6,720) 225,918

F-195 31. ANALYSIS OF CHANGES IN NET DEBT

Other 31 August non-cash Exchange 31 August Note 2009 Cash flow changes Movement 2010

£’000 £’000 £’000 £’000 £’000 Cash at bank and in hand .... 40,794 10,727 — 1,236 52,757

40,794 10,727 — 1,236 52,757 Debt due within one year Bank loans ...... 18 (9,941) (483) (5,395) (596) (16,415) Finance leases ...... 18 (62) 40 — — (22) Debt due after more than one year Bank loans ...... 18 (118,941) 7,164 2,780 (6,325) (115,322) Finance leases ...... 18 (23) 18 — — (5) Loan notes ...... 17 (132,950) — (15,032) — (147,982)

(221,123) 17,466 (17,647) (5,685) (226,989)

32. CONTINGENT LIABILITIES

Group bank borrowings are secured by a debenture creating fixed and floating charges over group assets and by a fixed charge over specified group bank accounts.

All borrowings were at a fixed US$ LIBOR rate of interest until August 2010. The two interest rate hedges had a penalty-free break clause exercisable on 31 August 2010. On 15 July 2010, the group restructured its existing hedge agreements into one swap agreement and one cap agreement effective from 15 July 2010. These agreements extend to 28 August 2015. As the cap agreement is cancellable, the group has retained flexibility to allow it to best co-ordinate its hedging arrangements to match the requirements of the new banking facilities.

The group has provided the following bank guarantees:

To SCTAI Anglo Iskola KFT for= C0.318m in respect of a 30 year lease of school premises in Budapest. The annual payments under this lease are £0.36m. This guarantee will expire on 18 January 2011.

To the United Arab Emirates Ministry of Labour for a total of AED 720,000 and to the United Arab Emirates Ministry of the Economy for a total of AED 50,000, both in respect of the opening of the Abu Dhabi branch office. These bonds are open-ended bonds.

To King Abdulaziz and his Companions Foundation for Giftedness and Creativity for SAR 4,999,718 in respect of bids for a contract in the Kingdom of Saudi Arabia. This guarantee will expire on 15 March 2011.

To Abu Dhabi Education Council for AED 868,848 expiring 30 June 2013, AED 807,021 expiring 30 June 2013, AED 1,275,124 expiring 30 June 2011, AED 591,427 expiring 30 June 2011, AED 1,584,195 expiring 9 November 2010 and AED 2,389,331 expiring 9 November 2010 in respect of performance related bonds.

33. OPERATING LEASES

As at the balance sheet date, the group had annual commitments in respect of non-cancellable operating leases as follows:

As restated Land and Land and buildings buildings As restated 2010 2009 Other 2010 Other 2009

£’000 £’000 £’000 £’000 Continuing activities Expiring within one year ...... 658 277 39 39 Expiring between one and five years ...... 598 704 61 133 Expiring in more than five years ...... 6,172 6,967 — —

7,428 7,948 100 172

F-196 34. CAPITAL COMMITMENTS

As at the balance sheet date the group had capital commitments as follows:

2010 2009

£’000 £’000 Contractedbutnotprovidedfor...... 129 136 Authorisedbutnotcontractedorprovidedfor...... 3,713 150

3,842 286

35. RESTRICTION ON DISTRIBUTION

The consolidated balance sheet and cash flow statement includes cash at bank and in hand at 31 August 2010 of £38.999m (2009 - £30.232m) held by group operations in countries where exchange control restrictions may prevent the full repatriation of this cash to the UK parent undertaking. A substantial proportion of this cash represents fees received in advance for the forthcoming year and will finance the operational working capital and investment requirements.

The directors believe that management contracts, management charges and dividends will enable satisfactory distribution of profits from these operations.

Although a loss has been recognised in these operations for the year ended 31 August 2010, the consolidated balance sheet includes non-current assets of £5.801m (2009 - £6.736m) in respect of these operations. These assets are currently integral to the performance of the business and are not considered to be impaired. However, if the assets were to be sold, it may not be possible to fully distribute the net proceeds to the UK parent undertaking.

36. RELATED PARTY TRANSACTIONS

On 23 December 2009, Nord Anglia Education Limited, the British International School Shanghai, Ms. Tang and her affiliates entered into an agreement in respect of the purchase of any past and all future rights under the profit share agreement among those parties. This agreement was amended by the parties on 23 August 2010. Under the amended profit share buyout agreement, the group agreed to purchase any such past and all future rights under the profit share agreement and that payment for these rights would be made in two tranches. The first payment tranche of £5.999m (RMB 64.031m) was made on 1 September 2010. The group intends to make the second payment tranche of £4.837m (US$ 7.500m) by 31 December 2010. The purchase price payable for the second tranche may be adjusted for specified variations in the US dollar/Chinese renminbi exchange rate between 23 August 2010 and the date of completion of the second tranche. The parties have also agreed that for each calendar month after 31 August 2010 that passes without completion of the second tranche, the group will pay a fee of £0.070m (US $0.110m) together with the second payment tranche. An exceptional charge totalling £10.836m was made to the profit and loss account for the year ended 31 August 2010 in respect of this agreement.

On 24 February 2010, Nord Anglia Education Limited, the British International School Shanghai and Ms. Tang entered into an agreement in respect of the buyout of any past and all future rights under her employment profit share agreement. This agreement was amended by the parties on 23 August 2010. Under the amended employment profit share buyout agreement, the group agreed to purchase any such past and all future rights under the employment profit share agreement and that payment should be made in two tranches. The first payment tranche of £2.919m (RMB 31.162m) was made on 1 September 2010. The group intends to make the second payment tranche of £2.354m (US$ 3.650m) by 31 December 2010. In addition to these amounts, the group is obliged to pay deferred consideration in respect of the second tranche to the value of £0.838 (US$ 1.3 million), of which 50% is payable within 30 days after 31 August 2011 and 50% is payable within 30 days after 31 August 2012. Each of the deferred payments is, however, conditional upon Ms. Tang still being employed by the British International School Shanghai at the relevant date. Ms Tang will, however, be entitled to the deferred consideration in the event that British International School Shanghai terminates her employment (other than for serious or gross misconduct or wilful neglect) at any time prior to 31 August 2012. The purchase price payable for the second tranche, including the deferred consideration component, may be adjusted for specified variations in the US dollar/Chinese renminbi exchange rate between 23 August 2010 and the date of completion of the second tranche and the dates of payment of the deferred consideration, as applicable. The parties have also agreed that for each calendar month after 31 August 2010 that passes without completion of the second tranche of the Employment Profit Share Buyout, the group will pay a fee of £0.03m (US$ 0.05m) together with the second payment tranche. An exceptional charge totalling £5.273m was made to the profit and loss account for the year ended 31 August 2010 in respect of this agreement.

A completion fee was also paid to Ms Tang and her affiliates and to Ms Tang under the profit share agreement and the employment profit share agreement respectively, which was equal to the amount of profit share due under each such agreement for the fiscal year ending 31 August 2010 less any amounts that had been paid before completion. An exceptional charge equal to the completion fees totalling £1.917m was made to the profit and loss account for the year ended 31 August 2010.

The full charge to exceptional items for the above agreements for the year ended 31 August 2010 was £18.026m as disclosed in note 6, Exceptional Items.

F-197 Following the incorporation of Premier Education (UK) Holdco Limited, the group received two loans in the form of senior and junior unsecured loan notes totalling £118.556m from its immediate parent company Premier Education Holdings s.a.r.l.. An amount of £0.748 in total of these loans was subsequently transferred to senior management during the period ended 31 August 2009, for a consideration of £0.748m in cash (with terms and conditions consistent with those found in third party loans) and an amount of £0.446m of these loans was further transferred to senior management during the year ended 31 August 2010 for a consideration of £0.446m. These transferred loans bear interest at 12% and resulted in total accrued interest of £0.142m at 31 August 2010 (2009 - £0.022m). The loan notes are repayable on 31 August 2038. As at 31 August 2010, £145.881m (2009 - £132.179m) is due to Premier Education Holdings s.a.r.l., including accrued interest of £28.508m (2009 - £14.361m). During the period ended 31 August 2009, the group issued B Ordinary shares, C Ordinary shares, D Ordinary shares and E Ordinary shares to senior management. 841,263 B Ordinary shares were issued for cash. The nominal value of these shares was £8,416 and the consideration received was £54,825. 210,406 C Ordinary shares were issued for cash. The nominal value of these shares was £2,104 and the consideration received was £13,354. 273,527 D Ordinary shares were issued for cash. The nominal value of these shares was £2,735 and the consideration received was £18,069. 236,960 E Ordinary shares were issued for cash. The nominal value of these shares was £2,369 and the consideration received was £7,109. During the year ended 31 August 2010, a further 322,687 E Ordinary shares were issued to senior management for cash. The nominal value of these shares was £3,227 and the consideration received was £12,907. During the year to 31 August 2010, 136,579 A Ordinary shares were converted and re-designated into 136,579 E ordinary shares, and issued to senior management. During the year to 31 August 2010 and the period to 31 August 2009, The Parthenon Group provided professional services in respect of the implementation of new commercial initiatives across the group, driven by the parent company, totalling £0.629m and £0.324m respectively. Pursuant to an option agreement dated 1 October 2009, £0.324m of these amounts were converted on 19 November 2009 to 272,336 F Ordinary shares, the nominal value of which was £2,723 and junior loan notes of £0.321m and on 22 January 2010 a further £0.390m of these amounts was converted to 327,812 F Ordinary shares, with a nominal value of £ 3,278, along with further junior loan notes of £0.386m. The loan notes bear interest at 12% and have resulted in accrued interest of £0.058m as at 31 August 2010. A total of £0.765m is included in other creditors at 31 August 2010 in respect of the capital and accrued interest due to The Parthenon Group LLC. The loans are repayable on 31 August 2038. The Parthenon call option agreement under the terms of this option provides for one further tranche of shares and loan notes issuable to Parthenon. On or after 31 August 2010, Parthenon may subscribe for 201,505 F Ordinary shares at an aggregate subscription price of £2,015 and £0.237m of fixed rate unsecured junior loan notes due 2038. During the year ended 31 August 2010, a consultancy fee of £0.167m (2009 - £0.162m was paid to a close family member of senior management for consultancy services. Additionally, in an unrelated transaction, 51,599 E Ordinary shares were issued to the same close family member of senior management for a consideration of £2,064 in the period ended 31 August 2009. Through an affiliated company of the group all the outstanding shares of Cime Services SA, a Swiss corporation located in Lausanne, Switzerland, were acquired in September 2009. A fee of £0.599m for due diligence services performed by Nord Anglia Education Limited, in relation to the acquisition of the Swiss corporation, was paid by the affiliate to Nord Anglia Education Limited and is included in the consolidated profit and loss account for the year ended 31 August 2010. Cime Services SA changed its name to College Champittet SA on the closing of the acquisition. Subsequent to this acquisition, £1.248m has been recorded in the profit and loss account in respect of educational and commercial services provided by the group to College Champittet SA. This amount is disclosed as other operating income. As at 31 August 2010, an amount of £3.827m is due to College Champitttet SA by Nord Anglia Education Limited and an amount of £3.827m is owed to Nord Anglia Education Limited by College Champittet SA. A right of set-off exists between the two companies but for the purposes of the statutory accounts, these balances are shown gross in amounts owed to related undertakings and due from related undertakings respectively. As at 31 August 2010 an amount of £5.546m (2009 - £nil) is due to Premier Education Holdings s.a.r.l., the parent company, via Champittet College SA (2009 - £nil). This amount is included within amounts owed to related undertakings due after more than one year. As at 31 August 2010 an amount of £0.700m is due to Eduaction Waltham Forest Limited, a company owned 50% by Nord Anglia Education Limited. This amount is included in other creditors. On 26 August 2010, the group disposed of one of its subsidiaries, The British International School Abu Dhabi LLC, to its immediate parent company Premier Education Holding s.a.r.l. Consideration of £0.048m was received in respect of the subsidiary’s net assets, including goodwill held at group of £1.568m at the date of sale, resulting in a loss on disposal of £1.520m.

F-198 37. IMMEDIATE PARENT COMPANY AND ULTIMATE CONTROLLING PARTY

Premier Education (UK) Holdco Limited is controlled by its immediate parent company Premier Education Holdings s.a.r.l..

Premier Education (UK) Holdco Limited is the smallest and largest group for which consolidated financial statements are prepared.

The ultimate controlling party is Baring Private Equity Asia.

38. ACQUISITIONS

On 1 March 2010, the group acquired the 25% equity interest of the minority shareholder in The British School Warsaw and incorporated a new entity to house its investment.

The consideration for the 25% equity interest and the resulting goodwill are detailed as follows :-

2010

£’000 Carrying value of Minority interest ...... (1,964) Consideration: - Fair value of freehold property (less associated deferred tax) ...... 7,398 Cash ...... 668

Goodwill arising on acquisition ...... 6,102

39. DISPOSALS

On 26 August 2010, the group disposed of its entire shareholding in The British International School Abu Dhabi LLC to its parent company, Premier Education Holdings s.a.r.l. as follows:

2010

£’000 Consideration...... 48 Net assets disposed of including goodwill ...... (1,568)

Loss on disposal ...... (1,520)

40. POST BALANCE SHEET EVENTS

In December 2010, the group entered into a share purchase agreement to acquire the entire share capital of a European school for cash consideration of £33.2m and £12.9m of shares in Premier Education Holdings s.a.r.l., the immediate holding company of the group.

In December 2010, the group also received written agreement from its external lenders in respect of some positive changes to its existing facilities agreement. The changes are conditional on the successful completion of the aforementioned acquisition, which, at the date of these accounts, is now only subject to minor administrative procedures which are fully within the control of the group to satisfy and the vendor implementing legal procedures prescribed in the sale and purchase agreement. These changes have been assumed as part of the directors forming their judgments on going concern as they consider the risk of the acquisition not completing as remote.

F-199 WCL GROUP LIMITED UNAUDITED INTERIM FINANCIAL STATEMENTS FOR THE PERIOD ENDED 28 FEBRUARY 2013

PRINCIPAL ACCOUNTING POLICIES

Basis of accounting

The unaudited financial statements have been prepared under the historical cost convention and in accordance with applicable UK accounting standards. The principal accounting policies of the group are set out below.

Basis of consolidation

The consolidated financial statements incorporate the results of WCL Group Limited and its subsidiary undertakings for all periods presented using the acquisition method of accounting.

Investment in subsidiary undertakings comprises a 100% holding in WCL Intermediate Holdings Limited, which in turn holds 100% of WCL Services Limited, which in turn holds 100% of Fieldwork Education Limited (“FEL”), WCL School Management Services Limited (“WCL SMS”), British Schools of America LLC (“BSA”), 49% of Education Overseas Qatar LLC (“EOQ”) and 100% of WCL Intermediate Holdings Spain (“IHS”), S.L. WCL Intermediate Holdings Spain (“IHS”), S.L. in turn holds 100% of International College 2, S.L. (“IC2”) which in turn holds 100% of International College Spain, S.A. (“ICS”). WCL Intermediate Holdings Limited, WCL Services Limited, WCL SMS and FEL are registered in England and Wales. EOQ is registered in Qatar, IC2, IHS and ICS are registered in Spain and BSA is registered in the USA. The subsidiaries are wholly-owned with the exception of EOQ where a 49% holding is recognised to comply with regulations in Qatar. Notwithstanding the 49% shareholding EOQ is consolidated as a wholly-owned subsidiary undertaking as the group considers that it has effective control through a formal shareholder agreement and majority Board representation. BSA is a limited liability corporation and under US law does not have share capital. The interest in BSA represents funds transferred to the subsidiary treated as capital contributions. The group is deemed to have de facto control over the assets and liabilities of an employee benefit trust and, as such, the results of this entity and the period-end position are recognised in these group financial statements.

Goodwill Goodwill is the difference between the cost of an acquired entity and the aggregate of the fair value of that entity’s identifiable assets and liabilities. Positive goodwill is capitalised, classified as an asset on the balance sheet and amortised over its useful economic life of 20 years on a straight-line basis. It is reviewed for impairment at the end of the first full financial year following the acquisition and in other periods if events or changes in circumstances indicate that the carrying value may not be recoverable.

Operating lease agreements Rentals applicable to operating leases where substantially all of the benefits and risks of ownership remain with the lessor are charged against profits on a straight line basis over the period of the lease.

F-200 School tuition fee and related income is recognised on a straight line basis over the academic year, which runs from September to August. School registration fees and other fees, which are non-refundable and which relate principally to enrolling students at a school, are recognised after school registration and enrolment is completed. Turnover represents amounts earned by the group for third party sales of goods supplied and services provided during the period excluding trade discounts and VAT and similar taxes. Where fees are invoiced in advance of the supply of services, such revenue is deferred within creditors and the corresponding debtor is included in current assets. Where the outcome of a long-term contract can be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the contract activity at each reporting date, as measured by the proportion that contract costs incurred for work performed to date bear to the estimated total contract costs. Variations in contract work, claims and incentive payments are included to the extent that they have been agreed with the customer.

Tangible fixed assets All fixed assets are initially recorded at cost. Product development costs are capitalised where the directors believe that the associated asset is technically feasible, the group intends to use or sell it and has the capacity to do so, the asset will generate future economic benefits, there are adequate resources to complete the asset and the expenditure can be measured reliably.

Depreciation Depreciation is calculated so as to write off the cost of an asset, less its estimated residual value, over the useful economic life of that asset as follows:

Freehold buildings ...... 40years Leasehold improvements...... Thelife of the lease Office equipment, fixtures and fittings ...... 2 - 7 years Motor vehicles ...... 6years Computer hardware and software ...... 3years Product development costs ...... 3years

Assets under the course of construction are not depreciated until they are brought into use. Freehold land is not depreciated.

Finance lease agreements Where the group enters into a lease which entails taking substantially all the risks and rewards of ownership of an asset, the lease is treated as a finance lease. The asset is recorded in the balance sheet as a tangible fixed asset and is depreciated in accordance with the above depreciation policies. Future instalments under such leases, net of finance charges, are included within creditors. Rentals payable are apportioned between the finance element, which is charged to the profit and loss account on a straight line basis, and the capital element which reduces the outstanding obligation for future instalments.

Deferred taxation Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events have occurred at that date that will result in an obligation to pay more, or a right to pay less or to receive more tax, with the following exceptions: — Deferred tax assets are recognised only to the extent that the directors consider that it is more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted.

F-201 Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which timing differences reverse, based on tax rates and laws enacted or substantively enacted at the balance sheet date.

Finance costs

Finance costs on the loan instruments are capitalised and amortised over the life of the loan.

Foreign Currency

The consolidated financial statements are stated in British pounds which is the functional currency of WCL Group Limited.

For individual group entities, transactions denominated in foreign currencies are translated into the functional currency of the entity at the rates ruling at the dates of the transactions. Outstanding balances in foreign currencies at period end are translated at period end exchange rates for monetary items. Non-monetary items are carried forward at the original translated rate. The resulting exchange differences are recorded in the profit & loss statement.

On consolidation, the profit & loss and cashflow statements of the entities whose functional currency is not denominated in British pounds are translated into the presentation currency of WCL Group Limited (British pounds) on a monthly basis using the average rate of exchange for each month. The balance sheets are translated using the exchange rates prevailing at the balance sheet date. Translation exchange differences on consolidation are recognised in equity within the profit and loss account and are shown as a movement on reserves.

Financial instruments Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the entity after deducting all of its financial liabilities. Where the contractual obligations of financial instruments (including share capital) are equivalent to a similar debt instrument, those financial instruments are classed as financial liabilities. Financial liabilities are presented as such in the balance sheet. Finance costs and gains or losses relating to financial liabilities are included in the profit and loss account. Finance costs are calculated so as to produce a constant rate of return on the outstanding liability. Where the contractual terms of share capital do not have any terms meeting the definition of a financial liability then this is classed as an equity instrument. Dividends and distributions relating to equity instruments are debited direct to equity. The group uses derivative financial instruments to hedge the exposure to interest rate risk on its loan finance liabilities. Gains and losses on these instruments are recognised when the group has a commitment to settle with the issuer.

Pensions The group operates various defined contribution pension schemes on behalf of its employees. Contributions payable for the period are charged to the profit and loss account.

F-202 UNAUDITED GROUP PROFIT AND LOSS ACCOUNT

1 Sept 2012 27 Aug 2011 27 Aug 2011 to 28 Feb to 31 Aug to 29 Feb Note 2013 2012 2012

£’000 £’000 £’000

Turnover ...... 1 32,193 57,470 28,744 Cost of sales ...... (25,007) (46,771) (23,045) Gross profit ...... 7,186 10,699 5,699 Administrative expenses ...... 2 (4,534) (7,859) (4,696) Operating profit ...... 2,652 2,840 1,003 Exceptional profit arising on disposal of land and buildings ...... 3 — 1,213 1,213 Interest payable and similar charges...... 4 (4,073) (8,291) (4,099) Interest receivable...... 7 11 4 Loss on ordinary activities before taxation. (1,414) (4,227) (1,879) Tax on loss on ordinary activities ...... 5 (911) (796) (1,145) Loss for the financial period ...... 14 (2,325) (5,023) (3,024)

The accompanying accounting policies and notes form an integral part of these financial statements.

F-203 UNAUDITED GROUP BALANCE SHEET

Note 28 Feb 2013 31 Aug 2012 29 Feb 2012

£’000 £’000 £’000 Fixed assets Goodwill ...... 6 38,032 39,219 40,615 Tangible assets ...... 7 24,392 23,203 21,749 62,424 62,422 62,364 Current assets Debtors ...... 8 8,016 10,794 7,774 Cash at bank and in hand ...... 12,459 13,247 8,471 20,475 24,041 16,245 Creditors: amounts falling due within one year ...... 10 (50,142) (51,611) (41,432) Net current liabilities...... (29,667) (27,570) (25,187) Total assets less current liabilities ...... 32,757 34,852 37,177 Creditors: amounts falling due after more than one year ...... 11 (54,009) (53,577) (54,627) Provisions for liabilities ...... 12 (628) (455) (561) Net liabilities ...... (21,880) (19,180) (18,011)

Capital and reserves Called-up equity share capital ...... 13 16 16 16 Share premium account ...... 391 391 391 Other reserves ...... (104) (277) (315) Profit and loss account ...... (22,183) (19,310) (18,103) Shareholders’ deficit ...... 14 (21,880) (19,180) (18,011)

The accompanying accounting policies and notes form an integral part of these financial statements.

F-204 UNAUDITED GROUP CASH FLOW STATEMENT

1 Sept 2012 27 Aug 2011 27 Aug 2011 to 28 Feb to 31 Aug to 29 Feb Note 2013 2012 2012

£’000 £’000 £’000 Net cash inflow from operating activities . . 15 2,411 15,793 1,161 Returns on investments and servicing of finance Interest received ...... 7 11 4 Other financing costs...... (46) 25 — Interest paid ...... (97) (3,983) (923) Net cash (outflow) from returns on investments and servicing of finance.... (136) (3,947) (923) Taxation ...... (44) (1,584) (378) Capital expenditure and financial investment Proceeds from the sale of tangible fixed assets ...... — 2,371 2,371 Purchase of tangible fixed assets ...... (2,222) (6,868) (3,334) Net cash (outflow) from capital expenditure and financial investment.... (2,222) (4,497) (963) Acquisitions and disposals Payment of deferred consideration ...... — (908) — Net cash (outflow) from acquisitions and disposals ...... — (908) — Financing Repayment of finance ...... (404) (4,527) (2,743) Issue of shares ...... 173 38 — Net cash (outflow) from financing ...... (231) (4,489) (2,743) (Decrease)/increase in cash ...... 16 (222) 368 (3,842)

The accompanying accounting policies and notes form an integral part of these financial statements.

F-205 UNAUDITED GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES

1 Sept 2012 27 Aug 2011 27 Aug 2011 to 28 Feb to 31 Aug to 29 Feb 2013 2012 2012

£’000 £’000 £’000 Loss attributable to members of the parent company . (2,325) (5,023) (3,024) Exchange differences on retranslation of net assets of overseas subsidiary undertakings ...... (548) 1,522 730 Total recognised gains and losses related to the period ...... (2,873) (3,501) (2,294)

The accompanying accounting policies and notes form an integral part of these financial statements.

F-206 NOTES TO THE UNAUDITED FINANCIAL STATEMENTS

1 Turnover

Geographical analysis

Turnover is attributable to the following geographical markets:

1 Sept 2012 27 Aug 2011 27 Aug 2011 to 28 Feb to 31 Aug to 29 Feb 2013 2012 2012

£’000 £’000 £’000 United Kingdom ...... 1,639 5,633 2,419 NorthAmerica...... 19,067 33,681 17,178 Middle East ...... 7,079 9,407 4,694 Europe...... 4,408 8,749 4,453

32,193 57,470 28,744

2 Administrative expenses

The following non-recurring expenditure is included within administrative expenses:

1 Sept 2012 27 Aug 2011 27 Aug 2011 to 28 Feb to 31 Aug to 29 Feb 2013 2012 2012

£’000 £’000 £’000 Property tax costs relating to prior years ...... — 251 251 Transaction costs incurred for aborted acquisition ...... — 280 238 Other non-recurring costs ...... 47 16 —

47 547 489

3 Exceptional profit arising on disposal of land and buildings

The group disposed of freehold land and buildings during the six month period ended 29 February 2012, the land and buildings being surplus to the group’s requirements. The profit arising on disposal, after deduction of directly attributable disposal costs, was £1.213 million.

4 Interest payable and similar charges

1 Sept 2012 27 Aug 2011 27 Aug 2011 to 28 Feb to 31 Aug to 29 Feb 2013 2012 2012

£’000 £’000 £’000 Interest payable on bank loans ...... 1,583 3,419 1,730 Interest payable on other loans ...... 2,186 4,264 2,064 Finance costs amortised ...... 304 608 305

4,073 8,291 4,099

F-207 5 Tax on loss on ordinary activities

The tax charge is based on the loss for the period and represents:

1 Sept 2012 27 Aug 2011 27 Aug 2011 to 28 Feb to 31 Aug to 29 Feb 2013 2012 2012

£’000 £’000 £’000 (a) Analysis of tax charge United Kingdom corporation tax — current period ...... — 1 — United Kingdom corporation tax — over-provision in prior periods. . — (68) (68) UnitedStatescorporationtax—currentperiod...... 461 685 732

Totalcurrenttax(note5b)...... 461 618 664

Net deferred tax charge in the period ...... 450 178 481

Total deferred tax movement ...... 450 178 481

Total tax charge on loss on ordinary activities ...... 911 796 1,145

(b) Factors affecting current tax charge Loss on ordinary activities before tax ...... (1,414) (4,227) (1,879)

Loss on ordinary activities multiplied by standard rate of corporation tax in the United Kingdom of 26% ...... (368) (1,099) (489) Effect of: Expenses not deductible for tax purposes ...... 114 1,294 695 Capital allowances in excess of depreciation ...... (7) (621) (301) Other timing differences ...... 495 250 472 Utilisation of trade losses ...... 555 789 290 Difference in tax rates, UK and overseas ...... (328) 73 65 Prior year adjustment ...... — (68) (68)

Current tax charge for year ...... 461 618 664

The Group has unrecognised tax losses arising in the United Kingdom of approximately £3.626m at 29 February 2012, £3.84m at 31 August 2012 and £1.635m at 28 February 2013. It is anticipated that these tax losses will be available to set against future taxable profits, however the associated potential deferred tax asset has not been recognised as there is uncertainty as to the timing of recoverability.

F-208 6 Intangible fixed assets : Goodwill

Acquired goodwill

£’000 Cost At 27 August 2011 and 29 February 2012 ...... 47,706 Adjustment ...... (216)

At 31 August 2012 and 28 February 2013 ...... 47,490

Amortisation At 27 August 2011...... 5,898 Providedduringtheperiod...... 1,193

At 29 February 2012 ...... 7,091 Providedduringtheperiod...... 1,180

At 31 August 2012...... 8,271 Providedduringtheperiod...... 1,187

At 28 February 2013 ...... 9,458

Net book value At 28 February 2013 ...... 38,032

At 31 August 2012...... 39,219

At 29 February 2012 ...... 40,615

The adjustment to the goodwill during the period ended 31 August 2012 relates to the group’s acquisition of International College Spain SA and its holding company IC2 SL on 4 August 2011. The original purchase price included approximately £1.744m of deferred consideration, to be paid in future accounting periods. The value of the deferred consideration payable was reduced by £216,000 with a corresponding reduction in the value of goodwill arising on acquisition.

F-209 7 Tangible fixed assets

Tangible fixed assets

£’000 Cost At 27 August 2011...... 28,972 Currency retranslation ...... 737 Additions...... 3,333 Disposals ...... (1,549)

At 29 February 2012 ...... 31,493 Currency retranslation ...... (448) Additions...... 3,535 Disposals ...... (88)

At 31 August 2012...... 34,492 Currency retranslation ...... 1,469 Additions...... 2,222

At 28 February 2013 ...... 38,183

Depreciation At 27 August 2011...... 8,309 Currency retranslations...... 244 Additions...... 1,582 Disposals ...... (391)

At 29 February 2012 ...... 9,744 Currency retranslations...... (193) Additions...... 1,823 Disposals ...... (85)

At 31 August 2012 ...... 11,289 Currency retranslations...... 663 Additions...... 1,839

At 28 February 2013 ...... 13,791

Net book value At 28 February 2013 ...... 24,392

At 31 August 2012...... 23,203

At 29 February 2012 ...... 21,749

8 Debtors

28 Feb 2013 31 Aug 2012 29 Feb 2012

£’000 £’000 £’000 Trade debtors ...... 5,000 7,517 4,854 Prepayments and accrued income ...... 1,821 1,873 1,788 Other taxation and social security ...... 118 190 226 Other debtors...... 1,077 937 826 Deferred tax asset (note 9) ...... — 277 80

8,016 10,794 7,774

Included within trade debtors is £363k at 29 February 2012, £535k at 31 August 2012 and £562k at 28 February 2013 which falls due for payment in more than one year.

F-210 9 Deferred tax asset

Deferred tax asset

£’000 As at 27 August 2011 ...... — Profit and loss account movement arising during the period ...... 80 As at 29 February 2012 ...... 80

Profit and loss account movement arising during the period ...... 197 As at 31 August 2012 ...... 277 Profit and loss account movement arising during the period ...... (277)

As at 28 February 2013 ...... —

The deferred tax asset at each reporting date shown above relates to trading tax losses arising overseas which, based on current management forecasts, will be utilised against future taxable profits.

10 Creditors: amounts falling due within one year

28 Feb 2013 31 Aug 2012 29 Feb 2012

£’000 £’000 £’000 Bank overdrafts ...... — 566 — Bank loans ...... 8,266 3,319 4,138 Tradecreditors...... 1,386 1,488 1,450 Corporationtax...... 744 327 1,578 Other taxation and social security ...... 720 317 1,640 Othercreditors...... 317 381 481 Deferred consideration due to vendor ...... 701 639 1,693 Payments on account...... 4,175 3,724 3,000 Accruals and deferred income ...... 33,833 40,850 27,452

50,142 51,611 41,432

11 Creditors: amounts falling due after more than one year

28 Feb 2013 31 Aug 2012 29 Feb 2012

£’000 £’000 £’000 Bank loans ...... 21,269 23,303 26,217 Other loans ...... 32,740 30,274 28,410

54,009 53,577 54,627

28 Feb 2013 31 Aug 2012 29 Feb 2012

£’000 £’000 £’000 Within one year Bank and other borrowings ...... 8,266 3,319 4,138 After one and within two years Bank and other borrowings ...... 7,563 6,851 4,921 After two and within five years Bank and other borrowings ...... 46,446 46,726 49,706

62,275 56,896 58,765

F-211 The Group has a number of long-term facilities in place as follows:

British School of Washington LLC

The British School of Washington LLC took out a US$2,000,000 Mortgage on its Washington property on 14 July 2004. The Washington property was sold in October 2011 and the mortgage was settled in full at the time of the property disposal. The outstanding balance at 29 February 2012, 31 August 2012 and 28 February 2013 is US$Nil.

The British School of Washington LLC entered into a US$2m Letter of Credit with its landlord providing security against future rent payments. The value of the Letter of Credit reduced by 20% each year from 31 December 2007 until its expiry on 31 December 2011. The Letter of Credit was secured as part of the Ares Revolving Cash Facility.

WCL Services Limited i) WCL Services Limited entered into a Unitranche and Revolving Facilities Agreement comprising of a Unitranche A Facility of U$22,425,000 and a Revolving Cash Facility of US$5,520,000 with Ares Capital Europe Limited on 10 March 2009. This agreement expires on 31 August 2015. The Unitranche A Facility was drawn down in full on the same date. The facility was amended during the financial year ended 31 August 2012 such that the payment due on 31 August 2012 and 28 February 2013 were deferred to 31 August 2015. The table below sets out the repayment schedule at 31 August 2012 and 28 February 2013.

This Unitranche and Revolving Facilities with Ares Capital Europe were repaid in full in May 2013 as part of the entire share capital of the Group being acquired by Nord Anglia Education PLC. ii) WCL Services Limited extended the Unitranche and Revolving Facilities Agreement with Ares Capital Europe on 28 May 2010 to add a further Unitranche B Facility of US$3,000,000 for the purpose of fitting out the Group’s new school in New York. US$1,200,000 was drawn down on 22 October 2010 and the remaining balance was drawn down on 28 February 2011. The facility was amended during the financial year ended 31 August 2012, for the purpose of providing additional working capital to invest in new projects, such that the payment due on 31 August 2012 and 28 February 2013 were deferred to 31 August 2015. The table below sets out the amended repayment schedule at 31 August 2012 and 28 February 2013.

This Unitranche and Revolving Facilities with Ares Capital Europe were repaid in full in May 2013 as part of the entire share capital of the Group being acquired by Nord Anglia Education PLC.

F-212 WCL Intermediate Holdings Spain, S.L. iv) WCL Services Limited extended the Unitranche and Revolving Facilities Agreement with Ares Capital Europe on 3 August 2011 to add a further Unitranche D Facility of= C19,380,000.= C17,511,244 was drawn down on 4 August 2011 and loaned directly to WCL Intermediate Holdings (Spain) S.L. which in turn used the proceeds to acquire the International College Spain S.A. (ICS) in Madrid. The balance of the facility remains undrawn. The facility was amended during the financial year ended 31 August 2012 such that the payment due on 31 August 2012 and 28 February 2013 were deferred to 31 August 2015. The table below sets out the repayment schedule at 31 August 2012 and 28 February 2013.

28 February 2012 ...... 3.75% 31August 2014 ...... 16.02% 14 September 2012 ...... 1.39% 28February 2015 ...... 17.25% 31 August 2013 ...... 12.32% 31August 2015 ...... 33.25% 28 February 2014 ...... 16.02%

The rate of interest payable on the outstanding amount at each repayment date for each of the Unitranche A, B, C and D loans is the aggregate of the Applicable Margin, LIBOR (or if greater 2%) and a Mandatory Cost. The Applicable Margin operates on a sliding ratchet between 6.5% and 8.0% depending on the outcome of certain financial ratio tests. The mandatory cost is calculated to compensate the lenders for the cost of their compliance with certain United Kingdom and European banking arrangements. vi) The Revolving Cash Facility is an overdraft facility which remains in place in full until expiry on 31 August 2015. As amounts drawn down are continually repaid and redrawn every six months on either 28 February or 31 August the principal is classified as falling due within one year. Interest is calculated as the aggregate of the Applicable Margin and LIBOR (or if greater 2%) and Mandatory Cost. The mandatory cost is calculated to compensate the lenders for the cost of their compliance with certain United Kingdom and European banking arrangements. The facility was extended to $8.5m on 13 September 2012 with the applicable margin being increased from 3% to 5%. The revolving cash facility was not drawn down at 29 February 2012, 31 August 2012 or 28 February 2013.

The Unitranche Facility and the Revolving Cash Facility are jointly secured by a fixed and floating charge over the assets of the group and a first lien over the group’s Houston property. The Revolving Cash Facility was also previously secured on a second lien over the group’s Washington property until its disposal in October 2011.

The outstanding principal at 29 February 2012 was £30,873,814, at 31 August 2012 was £28,039,603 and at 28 February 2013 was £29,475,046. The outstanding interest payable at 29 February 2012 was £1,578,581, at 31 August 2012 was £nil and at 28 February 2013 was £1,452,846.

WCL Group Limited

Fixed Rate Unsecured Notes 2015

‘A-1’ Loan Notes with a face value of £19,000,000 were issued on 4 April 2008, bearing an interest rate of 15%. The Notes have a maturity date of 5 April 2015. The outstanding principal at 29 February 2012, 31 August 2012 and 28 February 2013 was £18,315,368. The outstanding interest payable at 29 February 2012 was £4,594,475, at 31 August 2012 was £6,327,913 and at 28 February 2013 was £8,089,094.

‘A-2’ Loan Notes with a face value of £15,500,000 were issued on 4 April 2008, bearing an interest rate of 15%. The Notes have a maturity date of 5 April 2015. The outstanding principal at 29 February 2012, 31 August 2012 and 28 February 2013 was £4,037,646. The outstanding interest payable at 29 February 2012 was £926,201, at 31 August 2012 was £1,303,758 and at 28 February 2013 was £1,686,967.

‘B’ Loan Notes with a face value of £450,000 were issued on 4 April 2008, bearing an interest rate of 15%. The face value was amended by a deed of variation on 10 March 2009 to £1,000,000. The Notes have a maturity date of 5 April 2015. The outstanding principal at 29 February 2012, at 31 August 2012 and at 28 February 2013 was £421,864 and the outstanding interest payable at 28 February 2012 was £114,298, at 31 August 2012 was £147,244 and at 28 February 2013 was £189,303.

Under the terms of the Ares Unitranche and Revolving Facilities Agreement interest on each of the ‘A-1’, ‘A-2’ and ‘B’ Loan Notes may only be paid after satisfying certain tests. The interest due is currently being rolled-up and has been treated as falling due after more than one year.

F-213 The ‘A-1’, ‘A-2’ and ‘B’ Loan Notes have been issued to a combination of management, Sovereign Capital Partnership II LP and employees of Sovereign Capital Partners LLP. The ‘A-1’, ‘A-2’ and ‘B’ Loan Notes were repaid in full in May 2013 as part of the entire share capital of the Group being acquired by Nord Anglia Education PLC.

12 Provisions for liabilities Provisions for liabilities relates to deferred taxation. The movement in the deferred taxation liability during the period is as follows:

Provisions for liabilities

£’000 As at 27 August 2011 ...... — Profit and loss account movement arising during the period ...... (561) As at 29 February 2012 ...... (561) Profit and loss account movement arising during the period ...... 106 As at 31 August 2012 ...... (455) Profit and loss account movement arising during the period ...... (173)

As at 28 February 2013 ...... (628)

The deferred taxation provision carried forward at each balance sheet date relates principally to the excess of taxation allowances over depreciation.

13 Share capital

28 Feb 2013 31 Aug 2012 29 Feb 2012

£££ Allotted, called up and fully paid 879,277 Ordinary ‘A’ shares of £0.00067 ...... 590 590 590 50,152 Ordinary ‘A’ Convertible shares of £0.10 ...... 5,015 5,015 5,015 97,656 Ordinary ‘B’ shares of £0.00625...... 610 610 610 93,750 Ordinary ‘B’ Convertible shares of £0.10 ...... 9,375 9,375 9,375

15,590 15,590 15,590

All shares are irredeemable. The rights attaching to each class of shares can be summarised as follows:

‘A’ Ordinary Shares • One vote per share.

‘A’ Convertible Shares • One vote per share. • Any holder may give the company written notice to convert their shares into ‘A’ Ordinary shares at the relevant conversion rate.

‘B’ Ordinary Shares • One vote per share.

‘B’ Convertible Shares • No voting rights. • On Exit (Sale, Flotation or Liquidation), as set out by the articles of the company, convert to ‘B2’ Ordinary shares. • Any holder may give the company written notice to convert their shares into ‘B2’ Ordinary shares at the relevant conversion rate.

‘B2’ Ordinary Shares • One vote per share. • Identical in all respects to ‘B’ Ordinary shares. Denoted ‘B2’ for identification purposes when issued upon conversion of ‘B’ Convertible shares.

F-214 14 Reconciliation of movements in shareholders’ funds

1 Sept 2012 27 Aug 2011 27 Aug 2011 to 28 Feb to 31 Aug To 29 Feb 2013 2012 2012

£’000 £’000 £’000 Loss for the financial period ...... (2,325) (5,023) (3,024) Sale of shares in WCL Employee Benefit Trust ...... 173 38 — Exchange differences on retranslation...... (548) 1,522 730 Opening shareholders’ deficit ...... (19,180) (15,717) (15,717)

Closing shareholders’ deficit...... (21,880) (19,180) (18,011)

15 Net cash inflow from operating activities

1 Sept 2012 27 Aug 2011 27 Aug 2011 to 28 Feb to 31 Aug to 29 Feb 2013 2012 2012

£’000 £’000 £’000 Operating profit ...... 2,652 2,840 1,003 Depreciation (including loss on disposal of fixed asset) ...... 1,839 3,405 1,582 Amortisation of goodwill ...... 1,187 2,373 1,193 Exchange adjustments ...... 561 567 689 Decrease/(increase) in debtors ...... 2,501 (1,307) 1,516 (Decrease)/increase in creditors ...... (6,329) 7,915 (4,822)

Net cash inflow from operating activities ...... 2,411 15,793 1,161

16 Analysis of changes in net debt

At 27 Aug Non cash At 29 Feb 2011 Cash flow Additions movement 2012

£’000 £’000 £’000 £’000 £’000 Cash in hand ...... 12,313 (3,842) — — 8,471

12,313 (3,842) — — 8,471 Loans ...... (57,810) 2,743 (3,200) (498) (58,765)

(45,497) (1,099) (3,200) (498) (50,294)

At 27 Aug Non cash At 31 Aug 2011 Cash flow Additions movement 2012

£’000 £’000 £’000 £’000 £’000 Cash in hand ...... 12,313 934 — — 13,247 Bank overdrafts ...... — (566) — — (566)

12,313 368 — — 12,681 Loans ...... (57,810) 7,938 (7,174) 150 (56,896)

(45,497) 8,306 (7,174) 150 (44,215)

F-215 At 1 Sept Non cash At 28 Feb 2012 Cash flow Additions movement 2013

£’000 £’000 £’000 £’000 £’000 Cash in hand ...... 13,247 (788) — — 12,459 Bank overdrafts ...... (566) 566 — — —

12,681 (222) — — 12,459 Loans ...... (56,896) (404) (3,550) (1,425) (62,275)

(44,215) (626) (3,550) (1,425) (49,816)

The amount disclosed for loans includes accrued loan interest payable. Additions relates to interest accrued during the period under review. Non-cash movements relate principally to foreign exchange differences arising on re-translation of loans denominated in foreign currencies as well as the loan arrangement fee amortisation expense.

17 Post balance sheet events

Nord Anglia Education PLC acquired the entire issued share capital of WCL Group Limited in May 2013.

F-216 WCL GROUP LIMITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2012 REPORT OF THE DIRECTORS

The directors present their report together with the audited financial statements of the group for the period ended 31 August 2012. The comparative period is for the period from 28 August 2010 to 26 August 2011.

Principal activities and business review

The principal activities of the group have been to operate private schools overseas and the supply of educational products and services to the UK and international schools market.

Business review

The results of the group for the period ended 31 August 2012 show a pre-tax loss of £4,227,000 (2011: £4,094,000) and turnover of £57,470,000 (2011: £41,706,000). The group has achieved year on year EBITDA growth since its inception. The underlying EBITDA of the group, before the Al Khor and New York school’s start-up losses, grew by £4,042,000 (2011: £1,397,000) to £11,220,000 (2011: £7,178,000). The directors expect to see further organic growth in EBITDA, as defined below, in the year ahead. Overall EBITDA for the year, analysed between established business and school start-ups, is as follows:

2012 2011

£’000 £’000 Established business...... 11,221 7,178 School start-ups ...... (1,283) (1,778) EBITDA...... 9,938 5,400

EBITDA, calculated as profit on ordinary activities before charging interest, taxation, depreciation, amortisation, non-recurring and exceptional gains/losses and foreign exchange gains/losses, is analysed as follows:

2012 2011

£’000 £’000 EBITDA...... 9,938 5,400 Exceptional profit arising on disposal of land and buildings...... 1,213 — Non-recurring costs ...... (547) (316) Exchange (loss)/gain ...... (772) 1,071 Interest on loans to shareholders ...... (4,264) (3,743) Net interest on loans to third parties ...... (4,017) (2,401) Taxation...... (796) (291) Depreciation ...... (3,405) (2,339) Amortisation ...... (2,373) (1,766) Loss for the financial year ...... (5,023) (4,385)

F-217 Future outlook The external commercial environment is expected to remain buoyant but competitive in the coming year and the group will respond to this by continuing to strengthen and invest in the quality of its offering.

Principal risks and uncertainties The management of the group’s business and the execution of the group’s strategy are subject to a number of risks. The key business risks affecting the group are considered to relate to competition from international schools located in the vicinity of the Group’s own schools, along with the potential impact of the current global economic uncertainty on the overall international private schools market.

Going Concern The group maintains a five year forecast model which enables it to ensure that it has sufficient cash to meet its projected needs and is compliant with its third party bank covenants. The directors continuously monitor both the cash and bank covenant position within the group. Consequently the directors are of the view that the group has sufficient cash to settle its liabilities as they fall due and for the year ahead. The group has complied with its bank covenants historically and expects to continue to do so for the year ahead. In addition to the above, the group has been provided with a formal letter of support from its principal shareholder, Sovereign Capital Limited Partnership II LP, confirming its continuing support of the group for at least twelve months from the signing date of these financial statements. Accordingly, the directors consider it appropriate to prepare the financial statements on a going concern basis.

Key performance indicators (KPIs) The group’s directors consider a range of KPIs to measure the performance of the business. The set of KPls is constantly reviewed and changes over time with the development of the business. The range of measures includes but is not limited to academic performance and other quality ratings, numbers of students, student to teacher ratios, student number churn, contractual performance levels, numbers of assessment and curriculum products sold, health and safety, equal opportunities and a range of financial measures. The directors believe that because of the nature of the business, disclosing further KPIs is not necessary for an understanding of the group’s development, performance or position.

Directors The directors who served on the Board of the company during the period under review and up to the date of this report are: S D R Brown J Alexandre (appointed 31 March 2012) A D Gleave (resigned 11 May 2012) H MacPherson (appointed 15 October 2012) A F McPhee P D Brett (resigned 31 December 2011) RJHRobson (resigned 31 March 2012) J J Rodriguez-Cesenas M J Skelton C Wright (appointed 1 October 2012)

Employees The group recognises the value of employee involvement in its activities and encourages both formal and informal routes of communication between management and employees. The group is an equal opportunities employer. Full and fair consideration is given to applications for employment from disabled persons, and to their training, career development and promotion.

F-218 Financial risk management objectives and policies The group uses various financial instruments which include cash, trade debtors, trade creditors and both long and short term loans. The purpose of these financial instruments is to raise finance for the group’s operations. The main risks arising from the group’s financial instruments are currency risk, interest rate risk, credit risk and liquidity risk. The directors review and agree policies for managing each of these risks which are summarised below.

Currency risk The group is exposed to translation and transaction foreign exchange risk. Approximately 90% of the group’s revenue and 81% of expenditure is generated and incurred in the group’s overseas subsidiaries, the fundamental currencies for which are the US dollar, currencies linked to the US dollar and the Euro. Acquisition financing for overseas subsidiaries is denominated in matching currencies wherever possible, the aim being to achieve a balanced currency hedging position. Each of the subsidiaries has minimal currency risk of their own, relating to small amounts of expenditure in currencies other than their functional currency.

Liquidity risk The group seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably. The group’s policy has been to achieve this objective through management’s day to day involvement in business decisions and through continuous monitoring of cash and forward cash requirements.

Interest rate risk The group finances its operations through short and long term loan facilities. The interest rate exposure of the financial assets and liabilities of the group as at 31 August 2012 is shown in note 15 to the accounts.

Credit risk The group’s principal financial assets are cash and trade debtors. The credit risk associated with cash is limited as the counterparties have high credit ratings assigned by international credit-rating agencies. The principal credit risk arises, therefore, from trade debtors. In order to manage credit risk, the group has clearly defined debt collection procedures in place. Credit limits are reviewed by the financial controllers on a regular basis in conjunction with debt ageing and collection history.

Statement of directors’ responsibilities The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). Company law requires the directors to prepare financial statements for each financial period which give a true and fair view of the state of affairs of the company and the group and of the profit or loss of the group for that period. In preparing those financial statements, the directors are required to: • select suitable accounting policies and then apply them consistently • make judgements and estimates that are reasonable and prudent • state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group will continue in business. In so far as the directors are aware: • there is no relevant audit information of which the group’s auditors are unaware; and • the directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information.

F-219 The directors are responsible for keeping adequate accounting records that disclose with reasonable accuracy at any time the financial position of the company and the group and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the group’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Director liability insurance

During the financial period, director liability insurance for the benefit of the directors was in force.

Auditors

Grant Thornton UK LLP, having expressed their willingness to continue in office, will be deemed reappointed for the next financial year in accordance with Section 487(2) of the Companies Act 2006 unless the Company receives notice under Section 488(1) of the Act.

ON BEHALF OF THE BOARD

SDRBrown Director 19 April 2013

F-220 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF WCL GROUP LIMITED We have audited the financial statements of WCL Group Limited for the period ended 31 August 2012 which comprise the principal accounting policies, the group profit and loss account, the group and company balance sheets, the group cash flow statement, the group statement of total recognised gains and losses and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of the directors and auditor As explained more fully in the Directors’ Responsibilities Statement set out on page 5, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.

Scope of the audit of the financial statements A description of the scope of an audit of financial statements is provided on the APB’s website at www.frc.org.uk/apb/scope/private.cfm.

Opinion on financial statements In our opinion the financial statements: • give a true and fair view of the state of the group’s and the parent company’s affairs as at 31 August 2012 and of the group’s loss for the period then ended; • have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and • have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other matter prescribed by the Companies Act 2006 In our opinion the information given in the Directors’ Report for the financial period for which the financial statements are prepared is consistent with the financial statements.

Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: • adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or • the parent company financial statements are not in agreement with the accounting records and returns; or • certain disclosures of directors’ remuneration specified by law are not made; or • we have not received all the information and explanations we require for our audit Harold C Wilson Senior Statutory Auditor For and on behalf of Grant Thornton UK LLP Statutory Auditor, Chartered Accountants London 19 April 2013

F-221 PRINCIPAL ACCOUNTING POLICIES

Basis of accounting The financial statements have been prepared under the historical cost convention and in accordance with applicable UK accounting standards. The company has taken advantage of S408 of the Companies Act 2006 not to publish its own profit and loss account. The principal accounting policies of the group are set out below.

Basis of consolidation The consolidated financial statements incorporate the results of WCL Group Limited and its subsidiary undertakings as at 31 August 2012 using the acquisition method of accounting. The subsidiaries are wholly owned with the exception of Education Overseas Qatar Limited (EOQ) where the group’s shareholding is limited to 49% to comply with regulations in Qatar. Notwithstanding the 49% shareholding EOQ is consolidated as a wholly-owned subsidiary undertaking as the group considers that it has effective control through a formal shareholder agreement and majority Board representation. The group is deemed to have de facto control over the assets and liabilities of an employee benefit trust and, as such, the results of this entity and the period-end position are recognised in these group financial statements. Further details are provided in note 26 of these financial statements.

Going concern At 31 August 2012 the group had net liabilities of £19,180,000 (2011: net liabilities £15,717,000). Cash flow forecasts have been prepared which show that the group will be able to meet its financial obligations for at least twelve months from the date of signing the financial statements. Further, the group has been provided with a formal letter from its principal shareholder, Sovereign Capital Limited Partnership II LP, confirming its continuing support of the group for at least twelve months from the signing date of these financial statements. Accordingly, the directors consider it is appropriate to prepare the financial statements on a going concern basis.

Turnover The Group’s turnover is principally derived from tuition fees in respect of its schools, sales of curriculum and assessment products and long-term contract income in respect of its consultancy and school management services. Turnover represents amounts earned by the group for third party sales of goods supplied and services provided during the year excluding trade discounts and VAT and similar taxes. Where fees are invoiced in advance of the supply of services, such revenue is deferred within creditors and the corresponding debtor is included in current assets. Where the outcome of a long-term contract can be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the contract activity at each reporting date, as measured by the proportion that contract costs incurred for work performed to date bear to the estimated total contract costs. Variations in contract work, claims and incentive payments are included to the extent that they have been agreed with the customer.

Fixed asset investments Fixed asset investments are shown at cost less provision for impairment.

F-222 Tangible fixed assets All fixed assets are initially recorded at cost. Product development costs are capitalised where the directors believe that the associated asset is technically feasible, the group intends to use or sell it and has the capacity to do so, the asset will generate future economic benefits, there are adequate resources to complete the asset and the expenditure can be measured reliably.

Depreciation Depreciation is calculated so as to write off the cost of an asset, less its estimated residual value, over the useful economic life of that asset as follows:

Freehold buildings 40 years Leasehold improvements The life of the lease Office equipment, fixtures and fittings 2 - 7 years Motor vehicles 6 years Computer hardware and software 3 years Product development costs 3 years

Assets under the course of construction are not depreciated until they are brought into use. Freehold land is not depreciated.

Finance lease agreements Where the company enters into a lease which entails taking substantially all the risks and rewards of ownership of an asset, the lease is treated as a finance lease. The asset is recorded in the balance sheet as a tangible fixed asset and is depreciated in accordance with the above depreciation policies. Future instalments under such leases, net of finance charges, are included within creditors. Rentals payable are apportioned between the finance element, which is charged to the profit and loss account on a straight line basis, and the capital element which reduces the outstanding obligation for future instalments.

Deferred taxation Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events have occurred at that date that will result in an obligation to pay more, or a right to pay less or to receive more tax, with the following exceptions: - Deferred tax assets are recognised only to the extent that the directors consider that it is more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted. Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which timing differences reverse, based on tax rates and laws enacted or substantively enacted at the balance sheet date.

Finance costs Finance costs on the loan instruments are capitalised and amortised over the life of the loan.

Foreign Currency The consolidated financial statements are stated in British pounds which is the functional currency of WCL Group Limited.

F-223 For individual group entities, transactions denominated in foreign currencies are translated into the functional currency of the entity at the rates ruling at the dates of the transactions. Outstanding balances in foreign currencies at year end are translated at year end exchange rates for monetary items. Non-monetary items are carried forward at the original translated rate. The resulting exchange differences are recorded in the profit & loss statement and are shown as Foreign exchange gains/(losses).

Financial instruments

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the entity after deducting all of its financial liabilities.

Where the contractual obligations of financial instruments (including share capital) are equivalent to a similar debt instrument, those financial instruments are classed as financial liabilities. Financial liabilities are presented as such in the balance sheet. Finance costs and gains or losses relating to financial liabilities are included in the profit and loss account. Finance costs are calculated so as to produce a constant rate of return on the outstanding liability. Where the contractual terms of share capital do not have any terms meeting the definition of a financial liability then this is classed as an equity instrument. Dividends and distributions relating to equity instruments are debited direct to equity. The group uses derivative financial instruments to hedge the exposure to interest rate risk on its loan finance liabilities. Gains and losses on these instruments are recognised when the group has a commitment to settle with the issuer.

Pensions The group operates various defined contribution pension schemes on behalf of its employees. Contributions payable for the period are charged to the profit and loss account.

F-224 GROUP PROFIT AND LOSS ACCOUNT

27 Aug 2011 28 Aug 2010 to 31 Aug to 26 Aug Note 2012 2011

£’000 £’000 Turnover...... 1 57,470 41,706 Cost of sales ...... (46,771) (35,461) Gross profit ...... 10,699 6,245 Administrative expenses ...... (7,859) (4,195) Operating profit ...... 2 2,840 2,050 Exceptional profit arising on disposal of land and buildings.... 3 1,213 — Interest payable and similar charges...... 4 (8,291) (6,158) Interest receivable...... 5 11 14 Loss on ordinary activities before taxation...... (4,227) (4,094) Tax on loss on ordinary activities ...... 7 (796) (291) Loss for the financial year ...... 20 (5,023) (4,385)

All transactions arose from continuing operations in both the current period and prior year. The exception to this is the acquisition of International College Spain S.A. which took place in the prior year and which was included within continuing operations in that year as its results were immaterial to the group financial statements. Further details are provided in note 11 to these financial statements. The accompanying accounting policies and notes form an integral part of these financial statements.

F-225 GROUP BALANCE SHEET

Note 2012 2011

£’000 £’000 Fixed assets Goodwill ...... 9 39,219 41,808 Tangible assets ...... 10 23,203 20,663 62,422 62,471

Current assets Debtors ...... 12 10,794 9,210 Cash at bank and in hand ...... 13,247 12,313 24,041 21,523

Creditors: amounts falling due within one year ...... 14 (51,611) (47,052)

Net current liabilities...... (27,570) (25,529)

Total assets less current liabilities ...... 34,852 36,942

Creditors: amounts falling due after more than one year . . 15 (53,577) (52,659)

Provisions for liabilities ...... 16 (455) — Net liabilities ...... (19,180) (15,717)

Capital and reserves Called-up equity share capital ...... 17 16 16 Share premium account ...... 18 391 391 Other reserves ...... 18 (277) (315) Profit and loss account ...... 19 (19,310) (15,809) Shareholders’ deficit ...... 20 (19,180) (15,717)

The financial statements were approved by the Board of Directors on 19 April 2013.

SDRBrown Director

The accompanying accounting policies and notes form an integral part of these financial statements.

F-226 COMPANY BALANCE SHEET

Note 2012 2011

£’000 £’000 Fixed assets Investments...... 11 1,365 1,365 1,365 1,365 Current assets Debtors ...... 12 30,238 30,239 Cash at bank and in hand ...... 31 282 30,269 30,521 Creditors: amounts falling due within one year ...... 14 (74) (94) Net current assets ...... 30,195 30,427 Total assets less current liabilities ...... 31,560 31,792 Creditors: amounts falling due after more than one year . . 15 (49,060) (44,797) Net liabilities ...... (17,500) (13,005)

Capital and reserves Called up equity share capital ...... 17 16 16 Share premium account ...... 18 391 391 Other reserves ...... 18 (277) (315) Profit and loss account ...... 19 (17,630) (13,097) Shareholders’ deficit ...... 20 (17,500) (13,005)

The financial statements were approved by the Board of Directors on 19 April 2013.

SDRBrown Director

The accompanying accounting policies and notes form an integral part of these financial statements.

F-227 GROUP CASH FLOW STATEMENT

27 Aug 2011 28 Aug 2010 to 31 Aug to 26 Aug Note 2012 2011

£’000 £’000 Net cash inflow from operating activities ...... 21 15,793 7,944 Returns on investments and servicing of finance Interest received ...... 11 14 Other financing credit/(costs)...... 25 (281) Interest paid ...... (3,983) (8,671) Net cash (outflow) from returns on investments and servicing of finance ...... (3,947) (8,938) Taxation ...... (1,584) 53 Capital expenditure and financial investment Proceeds from the sale of tangible fixed assets ...... 2,371 — Purchase of tangible fixed assets ...... (6,868) (3,885) Net cash (outflow) from capital expenditure and financial investment ...... (4,497) (3,885) Acquisitions and disposals Payment of deferred consideration ...... (908) (253) Acquisition of subsidiary ...... — (10,148) Net cash (outflow) from acquisitions and disposals ...... (908) (10,401) Financing Repayment of finance ...... (4,527) (2,424) Proceeds from loan finance...... — 22,456 Issue/(repurchase of shares) ...... 38 (315) Net cash (outflow)/inflow from financing...... (4,489) 19,717 Increase in cash ...... 22 368 4,490

The accompanying accounting policies and notes form an integral part of these financial statements.

F-228 GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES

27 Aug 2011 28 Aug 2010 to 31 Aug to 26 Aug 2012 2011

£’000 £’000 Loss attributable to members of the parent company ...... (5,023) (4,385) Exchange differences on retranslation of net assets of overseas subsidiary undertakings ...... 1,522 (434) Total recognised gains and losses related to the period ...... (3,501) (4,819)

The accompanying accounting policies and notes form an integral part of these financial statements.

F-229 NOTES TO THE FINANCIAL STATEMENTS

1 TURNOVER

Geographical analysis

Turnover is attributable to the following geographical markets:

27 Aug 2011 28 Aug 2010 to 31 Aug to 26 Aug 2012 2011

£’000 £’000 United Kingdom ...... 5,633 4,988 NorthAmerica...... 33,681 28,842 Middle East ...... 9,407 7,283 Europe...... 8,749 593

57,470 41,706

2 OPERATING PROFIT

Operating profit is stated after charging:

27 Aug 2011 28 Aug 2010 to 31 Aug to 26 Aug 2012 2011

£’000 £’000 Auditor’s remuneration: - fees payable to the company’s auditor for the audit of the company’s financial statements ...... 20 20 - fees payable to the company’s auditor and its associates for other services . . - the audit of the company’s subsidiaries ...... 153 168 -taxservices...... 108 78 - other services pursuant to legislation...... — 17 Depreciation of owned fixed assets ...... 3,405 2,339 Amortisation of goodwill ...... 2,373 1,766 Loss on disposal of fixed assets ...... — 10 Operating lease rentals -landandbuildings...... 7,351 7,187 -other...... 212 146 Net loss/(profit) on foreign currency translation ...... 772 (1,071) Non-recurring costs: - property tax costs relating to prior years...... 251 — - transaction costs in relation to the acquisition of ICS (seenote11)...... — 316 - transaction costs incurred on aborted acquisition ...... 280 — - other non-recurring costs ...... 16 —

Fees payable to Grant Thornton UK LLP and its associates for non-audit services to the company itself are not disclosed in the individual accounts of WCL Group Limited because the company’s consolidated accounts are required to disclose such fees on a consolidated basis.

F-230 3 EXCEPTIONAL PROFIT ARISING ON DISPOSAL OF LAND AND BUILDINGS

The group disposed of freehold land and buildings during the period under review, the land and buildings being surplus to the group’s requirements. The profit arising on disposal, after deduction of directly attributable disposal costs, was £1.213 million.

4 INTEREST PAYABLE AND SIMILAR CHARGES

27 Aug 2011 28 Aug 2010 to 31 Aug to 26 Aug 2012 2011

£’000 £’000 Interest payable on bank loans ...... 3,419 2,159 Interest payable on other loans ...... 4,264 3,743 Finance costs amortised ...... 608 256

8,291 6,158

5 INTEREST RECEIVABLE AND SIMILAR INCOME

27 Aug 2011 28 Aug 2010 to 31 Aug to 26 Aug 2012 2011

£’000 £’000 Bank interest receivable ...... 11 14

6 DIRECTORS AND EMPLOYEES

Staff costs during the year were as follows:

27 Aug 2011 28 Aug 2010 to 31 Aug to 26 Aug 2012 2011

£’000 £’000 Wages and salaries ...... 21,664 16,146 Social security costs ...... 2,251 1,226 Other pension costs...... 233 374

24,148 17,746

The average number of employees of the group during the year was:

27 Aug 2011 28 Aug 2010 to 31 Aug to 26 Aug 2012 2011

Number Number Teachers...... 511 459 Administrative staff ...... 183 164

694 623

F-231 Remuneration in respect of directors was as follows:

27 Aug 2011 28 Aug 2010 to 31 Aug to 26 Aug 2012 2011

£’000 £’000 Emoluments ...... 644 803 Compensation for loss of office ...... 49 — Other pension costs...... 28 33

721 836

The amounts set out above include remuneration in respect of the highest paid director as follows:

27 Aug 2011 28 Aug 2010 to 31 Aug to 26 Aug 2012 2011

£’000 £’000 Emoluments ...... 190 257 Other pension costs...... 12 7

202 264

Retirement benefits for 3 directors (2011: 4) are accruing under money purchase pension schemes.

7 TAX ON LOSS ON ORDINARY ACTIVITIES

The tax (charge) is based on the loss for the period and represents:

27 Aug 2011 28 Aug 2010 to 31 Aug to 26 Aug 2012 2011

£’000 £’000 (a) Analysis of tax charge United Kingdom corporation tax — current year...... 1 291 United Kingdom corporation tax — over-provision in prior years ...... (68) — United States corporation tax — current year ...... 685 —

Totalcurrenttax(note7b)...... 618 291

Net deferred tax charge in the year ...... 178 —

Total deferred tax movement ...... 178 —

Total tax charge on loss on ordinary activities ...... 796 291

b) Factors affecting current tax charge Loss on ordinary activities before tax ...... (4,227) (4,094)

Loss on ordinary activities multiplied by standard rate of corporation tax in the United Kingdom of 25.19% (2011: 27.19%) ...... (1,065) (1,113) Effect of: Expenses not deductible for tax purposes ...... 1,265 1,067 Capital allowances in excess of depreciation ...... (602) 17 Other timing differences ...... 252 (188) Utilisation of trade losses ...... 765 399 Difference in tax rates, UK and overseas ...... 71 75 Prior year adjustment ...... (68) 34

Current tax charge for year ...... 618 291

F-232 2012 2011

£’000 £’000 Unrecognised deferred tax assets: Other short term differences...... — 356 Tax losses...... 968 1,555 Depreciation in excess of capital allowances...... 91 52

1,059 1,963

The Group has unrecognised tax losses arising in the United Kingdom of approximately £3.84m (2011: £6.0m). It is anticipated that these tax losses will be available to set against future taxable profits, however the associated potential deferred tax asset has not been recognised as there is uncertainty as to the timing of recoverability.

8 LOSS ATTRIBUTABLE TO MEMBERS OF THE PARENT COMPANY

The loss dealt with in the accounts of the parent company was £4.533m (2011: loss £3.840m). As permitted by section 408 of the Companies Act 2006, no separate profit and loss account is presented in respect of the parent company.

9 INTANGIBLE FIXED ASSETS

Group

Acquired Goodwill

£’000 Cost At 26 August 2011...... 47,706 Adjustment ...... (216)

At 31 August 2012...... 47,490

Amortisation At 26 August 2011...... 5,898 Providedduringtheperiod...... 2,373

At 31 August 2012...... 8,271

Net book value At 31 August 2012...... 39,219

At 26 August 2011...... 41,808

The adjustment to the goodwill relates to the group’s acquisition of International College Spain SA and its holding company IC2 SL on 4 August 2011. The original purchase price included approximately £1.744m of deferred consideration, to be paid in future accounting periods. During the financial period under review, the value of the deferred consideration payable was reduced by £216,000 with a corresponding reduction in the value of goodwill arising on this acquisition.

Further information on the group’s investment in International College Spain SA is provided in Note 11 to these financial statements.

F-233 10 TANGIBLE FIXED ASSETS

Group

Office equipment Assets Computer Freehold Leasehold fixtures under the hardware Product land and improve and Motor course of and Develop- buildings -ments fittings vehicles construction software ment Total

£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 Cost At 26 August 2011 .... 6,845 10,188 6,548 23 3,333 1,914 121 28,972 Currency retranslation . . 239 38 26 3 — (17) — 289 Reclassifications ..... — 3,161 37 — (3,198) — — — Additions...... — 395 1,652 5 3,402 914 500 6,868 Disposals...... (1,549) — (86) — — (2) — (1,637)

At 31 August 2012 .... 5,535 13,782 8,177 31 3,537 2,809 621 34,492

Depreciation At 26 August 2011 .... 1,032 2,642 3,364 — — 1,255 16 8,309 Currency retranslation . . 38 9 14 — — (10) — 51 Charged in the year . . . 141 1,163 1,571 6 — 351 173 3,405 Disposals...... (391) — (84) — — (1) — (476)

At 31 August 2012 .... 820 3,814 4,865 6 — 1,595 189 11,289

Net book value At 31 August 2012 .... 4,715 9,968 3,312 25 3,537 1,214 432 23,203

At 26 August 2011 .... 5,813 7,546 3,184 23 3,333 659 105 20,663

Construction in progress assets relate to enhancements to the group’s school buildings and premises.

Product development costs represent expenditure attributable to the development of the group’s education software suite as well as development of the group’s education curriculum modules.

Company

The company does not hold any fixed assets and therefore the net book value of fixed assets at year end was £nil (2011: £nil).

11 INVESTMENTS

Company

Group Companies

£’000 Cost at 31 August 2012 and 26 August 2011 ...... 1,365

WCL Intermediate Holdings Limited, WCL Services Limited, WCL SMS and FEL are registered in England and Wales. EOQ is registered in Qatar, IC2, IHS and ICS are registered in Spain and BSA is registered in the USA. The subsidiaries are wholly-owned with the exception of EOQ where a 49% holding is recognised to comply with regulations in Qatar. Notwithstanding the 49% shareholding EOQ is consolidated as a wholly-owned subsidiary undertaking as the group considers that it has effective control through a formal shareholder agreement and majority Board representation.

BSA is a limited liability corporation and under US law does not have share capital. The interest in BSA represents funds transferred to the subsidiary treated as capital contributions.

F-234 International College Spain S.A.

On 4 August 2011, the group purchased International Colllege Spain SA (“ICS”), which operates a private school based in Madrid, Spain. The contribution of ICS to the group profit and loss account is set out below.

27 Aug 2011 28 Aug 2010 to 31 Aug to 26 Aug 2012 2011

£’000 £’000 Turnover...... 8,749 593 Operating profit ...... 1,009 98 Profitbeforetax...... 1,050 69 Taxation charge ...... — (30)

Profitaftertax...... 1,050 39

12 DEBTORS

Group Company Group Company

At 31 August At 26 August

2012 2012 2011 2011

£’000 £’000 £’000 £’000 Trade debtors ...... 7,517 — 7,444 — Amounts owed by group undertakings...... — 30,238 — 30,239 Prepayments and accrued income ...... 1,873 — 888 — Other taxation and social security ...... 190 — — — Other debtors...... 937 — 878 — Deferred tax asset (note 13)...... 277 — — —

10,794 30,238 9,210 30,239

Included within trade debtors is £535k (2011: £328k) which falls due for payment in more than one year. Amounts owed by group undertakings to the Company are not expected to be fully settled within one year.

13 DEFERRED TAX ASSET

Group

At 31 August At 26 August 2012 2011

£’000 £’000 As at 26 August 2011 ...... — — Profit and loss account movement arising during the year ...... 277 —

As at 31 August 2012...... 277 —

The deferred tax asset carried forward at 31 August 2012 relates to trading tax losses arising overseas which, based on current management forecasts, will be utilised against future taxable profits.

F-235 14 CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

Group Company Group Company

At 31 August At 26 August

2012 2012 2011 2011

£’000 £’000 £’000 £’000 Bank overdrafts ...... 566 — — — Bank loans ...... 3,319 — 5,151 — Tradecreditors...... 1,488 — 2,708 — Corporationtax...... 327 — 1,293 — Other taxation and social security ...... 317 — 301 — Othercreditors...... 381 74 2,084 — Deferred consideration due to vendor ...... 639 — 1,763 — Payments on account...... 3,724 — 2,129 — Accruals and deferred income ...... 40,850 — 31,623 94

51,611 74 47,052 94

15 CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR

Group Company Group Company

At 31 August At 26 August

2012 2012 2011 2011

£’000 £’000 £’000 £’000 Bank loans ...... 23,303 — 26,257 — Other loans ...... 30,274 30,121 26,402 25,879 Amounts owed to other group companies ...... — 18,939 — 18,918

53,577 49,060 52,659 44,797

Group Company Group Company

At 31 August At 26 August

2012 2012 2011 2011

£’000 £’000 £’000 £’000 Within one year Bank and other borrowings ...... 3,319 — 5,151 — After one and within two years Bank and other borrowings ...... 6,851 — 6,762 — After two and within five years Bank and other borrowings ...... 46,726 30,121 45,897 25,879

56,896 30,121 57,810 25,879

The Group has a number of long-term facilities in place as follows:

British School of Washington LLC

The British School of Washington LLC took out a US$2,000,000 Mortgage on its Washington property on 14 July 2004 - details of the repayment terms and finance charges are disclosed in the prior year group financial statements, which are publicly available. The Washington property was sold in October 2011 and the mortgage was settled in full at the time of the property disposal. The outstanding balance at 31 August 2012 is US$Nil (2011 :US $1,701,993).

F-236 WCL Services Limited i) WCL Services Limited entered into a Unitranche and Revolving Facilities Agreement comprising of a Unitranche A Facility of U$22,425,000 and a Revolving Cash Facility of US$5,520,000 with Ares Capital Europe Limited on 10 March 2009. This agreement expires on 31 August 2015. The Unitranche A Facility was drawn down in full on the same date. The facility was amended during the financial year under review such that the payment due on 31 August 2012 and 28 February 2013 were deferred to 31 August 2015. The table below sets out the repayment schedule at 31 August 2012.

31 August 2009 ...... 7.50% 14 September 2012 ...... 0.81% 28 February 2010 ...... 6.25% 31 August 2013 ...... 7.21% 31 August 2010 ...... 6.25% 28 February 2014 ...... 7.21% 28 February 2011 ...... 7.50% 31 August 2014 ...... 7.21% 31 August 2011 ...... 7.50% 28 February 2015 ...... 7.21% 12 October 2011 ...... 1.64% 31 August 2015 ...... 26.40% 28 February 2012 ...... 7.31% ii) WCL Services Limited extended the Unitranche and Revolving Facilities Agreement with Ares Capital Europe on 28 May 2010 to add a further Unitranche B Facility of US$3,000,000 for the purpose of fitting out the Group’s new school in New York. US$1,200,000 was drawn down on 22 October 2010 and the remaining balance was drawn down on 28 February 2011. The facility was amended during the financial year under review, for the purpose of providing additional working capital to invest in new projects, such that the payment due on 31 August 2012 and 28 February 2013 were deferred to 31 August 2015. The table below sets out the amended repayment schedule at 31 August 2012.

28 February 2011 ...... 3,75% 31 August 2013 ...... 9.68% 31 August 2011 ...... 10.08% 28 February 2014 ...... 9.68% 12 October 2011 ...... 2.17% 31 August 2014 ...... 9.68% 28 February 2012 ...... 9.38% 28 February 2015 ...... 9.68% 14 September 2013 ...... 1.07% 31 August 2015 ...... 34.39% iii) WCL Services Limited extended the Unitranche and Revolving Facilities Agreement with Ares Capital Europe on 8 November 2010 to add a further Unitranche C Facility of US$8,672,480. The full amount of the facility was drawn down on the same date and was used to repay interest arising on the Group’s A-1, A-2 and B Loan Notes (see below). The Unitranche C Facility is repayable on 31 August 2015.

WCL Intermediate Holdings Spain, S.L. iv) WCL Services Limited extended the Unitranche and Revolving Facilities Agreement with Ares Capital Europe on 3 August 2011 to add a further Unitranche D Facility of= C19,380,000.= C17,511,244 was drawn down on 4 August 2011 and loaned directly to WCL Intermediate Holdings (Spain) S.L. which in turn used the proceeds to acquire the International College Spain S.A. (ICS) in Madrid. The balance of the facility remains undrawn. The facility was amended during the financial year under review such that the payment due on 31 August 2012 and 28 February 2013 were deferred to 31 August 2015. The table below sets out the repayment schedule at 31 August 2012.

28 February 2012 ...... 3.75% 31 August 2014 ...... 16.02% 14 September 2012 ...... 1.39% 28 February 2015 ...... 17.25% 31 August 2013 ...... 12.32% 31 August 2015 ...... 33.25% 28 February 2014 ...... 16.02% v) Interest

F-237 The Unitranche Facility and the Revolving Cash Facility are jointly secured by a fixed and floating charge over the assets of the group and a first lien over the group’s Houston property. The Revolving Cash Facility was also previously secured on a second lien over the group’s Washington property until its disposal in October 2011.

The outstanding principal at the year end was £28,039,603 (2011: £32,448,664) and the outstanding interest payable was £nil (2011: £393,467).

WCL Group Limited

Fixed Rate Unsecured Notes 2015

‘A-1’ Loan Notes with a face value of £19,000,000 were issued on 4 April 2008, bearing an interest rate of 15%. The Notes have a maturity date of 5 April 2015. The outstanding principal at year end was £18,315,368 (2011: £18,315,368) and the outstanding interest payable was £6,327,913 (2011: £3,003,917).

‘A-2’ Loan Notes with a face value of £15,500,000 were issued on 4 April 2008, bearing an interest rate of 15%. The Notes have a maturity date of 5 April 2015. The outstanding principal at year end was £4,037,646 (2011: £4,037,646). This included an additional subscription of £1,378,618 on 15 March 2011 being the second and final tranche received for the purpose of fitting out the group’s new school in New York. The first tranche of £2,500,000 was drawn down on 20 April 2010. The outstanding interest payable was £1,303,758 (2011: £538,441).

‘B’ Loan Notes with a face value of £450,000 were issued on 4 April 2008, bearing an interest rate of 15%. The face value was amended by a deed of variation on 10 March 2009 to £1,000,000. The Notes have a maturity date of 5 April 2015. The outstanding principal at year end was £421,864 (2011: £421,864) and the outstanding interest payable was £147,244 (2011: £84,700).

The A-1, A-2 and B Loan Notes have been issued to a combination of management, Sovereign Capital Partnership II LP and employees of Sovereign Capital Partners LLP.

16 PROVISIONS FOR LIABILITIES

Provisions for liabilities relates to deferred taxation. The movement in the deferred taxation liability during the period is as follows:

Group

At 31 August At 26 August

2012 2011

£’000 £’000 As at 26 August 2011 ...... — — Profit and loss account movement arising during the year ...... 455 —

As at 31 August 2012...... 455 —

The deferred taxation provision carried forward at 31 August 2012 relates principally to the excess of taxation allowances over depreciation.

17 SHARE CAPITAL

2012 2011

££ Allotted, called up and fully paid 879,277 Ordinary ‘A’ shares of £0.00067 ...... 590 590 50,152 Ordinary ‘A’ Convertible shares of £0.10 ...... 5,015 5,015 97,656 Ordinary ‘B’ shares of £0.00625...... 610 610 93,750 Ordinary ‘B’ Convertible shares of £0.10 ...... 9,375 9,375

15,590 15,590

F-238 All shares are irredeemable. The rights attaching to each class of shares can be summarised as follows:

‘A’ Ordinary Shares • One vote per share.

‘A’ Convertible Shares • One vote per share. • Any holder may give the company written notice to convert their shares into ’A’ Ordinary shares at the relevant conversion rate.

‘B’ Ordinary Shares • One vote per share.

‘B’ Convertible Shares • No voting rights. • On Exit (Sale, Flotation or Liquidation), as set out by the articles of the company, convert to ’B2’ Ordinary shares. • Any holder may give the company written notice to convert their shares into ’B2’ Ordinary shares at the relevant conversion rate.

‘B2’ Ordinary Shares • One vote per share. • Identical in all respects to ’B’ Ordinary shares. Denoted ’B2’ for identification purposes when issued upon conversion of ’B’ Convertible shares.

18 OTHER RESERVES

Group

Share Capital Premium Reserve

£’000 £’000 At 26 August 2011...... 391 (315) Sale of shares in company from WCL Employee Benefit Trust ...... — 38

At 31 August 2012...... 391 (277)

As disclosed in note 26, the group has de facto control over the assets and liabilities of the WCL Employee Benefit Trust.

Company

Share Capital Premium Reserve

£’000 £’000 At 26 August 2011...... 391 (315) Sale of shares in company from WCL Employee Benefit Trust ...... — 38

At 31 August 2012...... 391 (277)

19 RESERVES

Group

Profit and loss account

2012 2011

£’000 £’000 At 26 August 2011...... (15,809) (10,990) Loss for the financial year ...... (5,023) (4,385) Exchange differences on retranslation...... 1,522 (434)

At 31 August 2012...... (19,310) (15,809)

F-239 Company

Profit and loss account

2012 2011

£’000 £’000 At 26 August 2011...... (13,097) (9,257) Loss for the financial year ...... (4,533) (3,840)

At 31 August 2012...... (17,630) (13,097)

20 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDS

Group

27 Aug 2011 28 Aug 2010 to 31 Aug to 26 Aug 2012 2011

£’000 £’000 Loss for the financial year ...... (5,023) (4,385) Purchase of shares in WCL Employee Benefit Trust ...... — (315) Sale of shares in WCL Employee Benefit Trust ...... 38 — Exchange differences on retranslation...... 1,522 (434) Shareholders’ deficit at 26 August 2011...... (15,717) (10,583)

Shareholders’ deficit at 31 August 2012...... (19,180) (15,717)

Company

27 Aug 2011 28 Aug 2010 to 31 Aug to 26 Aug 2012 2011

£’000 £’000 Loss for the financial year ...... (4,533) (3,840) Purchase of shares in WCL Employee Benefit Trust ...... — (315) Sale of shares in WCL Employee Benefit Trust ...... 38 — Shareholders’ deficit at 26 August 2011...... (13,005) (8,850)

Shareholders’ deficit at 31 August 2012...... (17,500) (13,005)

21 NET CASH INFLOW FROM OPERATING ACTIVITIES

27 Aug 2011 28 Aug 2010 to 31 Aug to 26 Aug 2012 2011

£’000 £’000 Operating profit ...... 2,840 2,050 Depreciation (including loss on disposal of fixed asset) ...... 3,405 2,339 Amortisation of goodwill ...... 2,373 1,766 Exchange adjustments ...... 567 (149) (Increase) in debtors ...... (1,307) (2,095) Increase in creditors ...... 7,915 4,033

Net cash inflow from operating activities ...... 15,793 7,944

F-240 22 ANALYSIS OF CHANGES IN NET DEBT

At 26 August Non cash At 31 Aug 2011 Cash flow Additions movement 2012

£’000 £’000 £’000 £’000 £’000 Cash in hand ...... 12,313 934 — — 13,247 Bank overdrafts ...... — (566) — — (566)

12,313 368 — — 12,681 Loans ...... (57,810) 7,938 (7,174) 150 (56,896)

(45,497) 8,306 (7,174) 150 (44,215)

23 CAPITAL COMMITMENTS

Group

The group had outstanding capital commitments at 31 August 2012 of £695,123 (26 August 2011 : £421,458). Outstanding capital commitments relate to contracted works at the group’s various academic facilities.

24 CONTINGENT LIABILITIES

Group and Company

There were no material contingent liabilities at 31 August 2012 or 26 August 2011.

25 LEASING COMMITMENTS

At 31 August 2012 the group had annual commitments under non-cancellable operating leases as follows:

Group

At 31 August 2012 At 26 August 2011

Land and Land and Buildings Other Buildings Other

£’000 £’000 £’000 £’000 Within one year ...... 1,419 32 — 9 Between two and five years ...... 524 165 746 468 Over five years...... 4,803 2 4,159 —

6,746 199 4,905 477

Company

The company does not have any leasing commitments as at 31 August 2012 or at 26 August 2011.

F-241 26 EXTENDED EQUITY ACCOUNTING

Employee Benefit Trust

WCL Group Limited is deemed to have de facto control over the assets and liabilities of the WCL Employee Benefit Trust, which was established on 28 February 2011. As such, the results and period end position are recognised within these consolidated financial statements.

The WCL Employee Benefit Trust had no income or expenditure in the year. The year-end balance sheet position was as follows:

2012 2011

££ Investments...... 276,931 315,000 Current assets ...... 100 100 Total assets ...... 277,031 315,100 Creditors — amounts falling due within one year ...... — (94,253) Creditors — amounts falling due after one year ...... (276,931) (220,747) Total liabilities ...... (276,931) (315,000)

Assets less liabilities ...... 100 100

Net equity ...... 100 100

27 FINANCIAL INSTRUMENTS

The group uses derivative financial instruments to hedge the exposure to interest rate risk on its loan finance instrument should the LIBOR rate exceed 4% per annum. The instrument expired during the year under review. The unrecognised gain on this instrument at 31 August 2012 was £nil (2011: £98,436).

28 RELATED PARTY TRANSACTIONS

The company has taken advantage of the exemption in Financial Reporting Standard No 8 “Related party disclosures” and has not disclosed transactions with undertakings considered under the group’s accounting policies to be subsidiaries.

Sovereign Capital Partners LLP is considered to be a related party by virtue of it being the ultimate controlling party. The group paid £400,000 (2011: £nil) to Sovereign Capital Partners LLP as an arrangement fee in relation to the refinancing of the group on 28 September 2011 and £27,694 (2011: £107,582) in relation to monitoring costs and expenses. During the year the group was invoiced £181 (2011: £23,207) by Sovereign Capital Partners LLP in respect of travel expenses incurred by directors.

P Brett was considered to be a related party up until his resignation as a director of the company during the financial period. P Brett received £23,333 (2011: £33,334) in respect of services provided to the group in this period.

The ‘A-1’ and ‘A-2’ Loan Notes issued by the group are held by Sovereign Capital Partnership II LP, management and employees of Sovereign Capital Partners LLP. The total interest expense in the year on ‘A-1’ Loan Notes and ‘A-2’ Loan Notes amounted to £4,089,313 (2011: £3,542,466). The amounts of outstanding principal and interest on these Loan Notes are disclosed in note 15.

29 ULTIMATE CONTROLLING PARTY

The directors consider that the controlling related parties are the shareholders of the company, being Sovereign Capital Partnership II LP and employees of Sovereign Capital Partners LLP.

F-242 WCL GROUP LIMITED REPORT OF THE DIRECTORS FOR THE YEAR ENDED 26 AUGUST 2011 The directors present their report together with the audited financial statements of the group for the year ended 26 August 2011.

Principal activities and business review The principal activities of the group have been to operate private schools overseas and the supply of educational products and services to the international schools market.

Business review The results of the group for the year ended 26 August 2011 show a pre-tax loss of £4,094,000 (2010: £4,850,000) and turnover of £41,706,000 (2010: £38,718,000). The group has achieved year on year EBITDA growth since its inception in 2008. The underlying EBITDA of the group, before the New York school’s start-up losses, grew by £1,397,000 to £7,178,000. The directors expect to see further organic growth in EBITDA in the year ahead. Overall EBITDA for the year analysed between established business and school start-ups as follows:

2011 2010

£’000 £’000 Established business ...... 7,178 5,781 School start-ups ...... (1,778) (454) EBITDA ...... 5,400 5,327

EBITDA, calculated as profit on ordinary activities before charging interest, taxation, depreciation and amortisation is analysed as follows:

2011 2010

£’000 £’000 EBITDA ...... 5,400 5,327 Exceptional costs ...... (316) (4) Exchange gain/(loss) ...... 1,071 (967) Interest on loans to shareholders ...... (3,635) (3,700) Net interest on loans to third parties...... (2,509) (2,048) Taxation ...... (291) (432) Depreciation ...... (2,339) (1,748) Amortisation ...... (1,766) (1,710) Loss for the financial year ...... (4,385) (5,282)

The group is committed to a strategy of growth through progressively investing in existing operations as well as developing new business. In the Schools Division this strategy takes the form of a combination of expansion of capacity in its existing schools, new school start-ups, acquisitions and winning school management contracts. In the Educational Services Division the strategy is focussed on a combination of development of new products and synergistic acquisitions. Since last year’s report the following key developments have taken place: 1. In August 2011, the group purchased the International College Spain S.A. in Madrid, a leading Spanish international private school. The results of the group for the year ended 26 August 2011 include EBITDA of £0.1m (2010: £nil) generated by the school. The acquisition was financed by a new loan from Ares Capital Europe Limited. The acquisition is expected to generate a positive contribution to EBITDA in the year ahead.

F-243 2. The group successfully opened its New York school in September 2011. The results for the year ended 26 August 2011 include losses in relation to this start-up activity of £1.8m (2010: £0.5m). This loss is expected to significantly reduce in the year ahead as the school builds up its enrolment numbers.

3. The group has signed up to a five year contract with Qatar Shell GTL Limited to operate a new school in Al Khor. Qatar Shell GTL Limited have provided the school building and guaranteed a number of student places over the life of the contract. The school became operational in January 2012. The contract is expected to break-even in the first year of operation.

4. The group, through its subsidiary Fieldwork Education Limited, is launching a new product called the International Middle Years Curriculum in the coming year. This is an exciting development for the group as it builds on its established presence in the primary age curriculum market by expanding its curriculum offering and market reach into the 11 to 14 age range.

Future outlook

The external commercial environment is expected to remain competitive in the coming year, however the group is looking forward to strengthening further the performance and quality of its operations in order to retain existing work and secure new business.

Principal risks and uncertainties The management of the group’s business and the execution of the group’s strategy are subject to a number of risks. The key business risks affecting the group are considered to relate to competition from international schools located in the vicinity of the Group’s own schools along with the potential impact of the current economic downturn on the overall international private schools market.

Going Concern The group maintains a three year forecast model which enables it to ensure that it has sufficient cash to meet its projected needs and is compliant with its third party bank covenants. The directors continuously monitor both the cash and bank covenant position within the group. Consequently the directors are of the view that the group has sufficient cash to settle its liabilities as they fall due and for the year ahead and that the group complies with its bank covenants historically and is expected to continue to do so for the year ahead. In addition, the majority shareholder of WCL Group Limited, Sovereign Capital Limited Partnership II LP, which is a fund administered by Sovereign Capital Partners LLP, is fully committed as to its on-going support and development of the group.

Key performance indicators (KPIs) The group’s directors consider a range of KPls to measure the business. The set of KPls is constantly reviewed and changes over time with the development of the business. The range of measures includes but is not limited to academic performance and other quality ratings, numbers of students, student to teacher ratios, student number churn, contractual performance levels, numbers of assessment and curriculum products sold, health and safety, equal opportunities and a range of financial measures. Management also regularly reviews the profitability of its long term contracts in line with SSAP 9 guidelines. The directors believe that because of the nature of the business, disclosing further KPls is not necessary for an understanding of the group’s development, performance or position.

F-244 Directors The directors who served on the Board of the company during the year were as follows: P D Brett (resigned 31 December 2011) S D R Brown A D Gleave (appointed 31 May 2011) A F McPhee RJHRobson J J Rodriguez-Cesenas M J Skelton M Van Miert (resigned 31 January 2011)

Employees The group recognises the value of employee involvement in its activities and encourages both formal and informal communication between management and employees. The group maintains a training plan which is reviewed annually and provides employees with the opportunity to develop their skills. Full and fair consideration is given to applications for employment from disabled persons, and to their training, career development and promotion. The group is an equal opportunities employer.

Financial risk management objectives and policies The group uses various financial instruments which include cash, trade debtors, trade creditors and both long and short term loans. The main purpose of these financial instruments is to raise finance for the company’s operations. The existence of these financial instruments exposes the group to a number of financial risks, which are described in more detail below. The main risks arising from the group’s financial instruments are currency risk, interest rate risk, credit risk and liquidity risk. The directors review and agree policies for managing each of these risks and they are summarised below.

Currency risk The group is exposed to translation and transaction foreign exchange risk. Approximately 88% of the group’s revenue and 81% of expenditure is generated and incurred in the group’s overseas subsidiaries, the fundamental currencies for which are the US dollar, currencies linked to the US dollar and the Euro. Acquisition financing for overseas subsidiaries is denominated in matching currencies wherever possible aiming to achieve a balanced currency hedging position. Each of the subsidiaries has minimal currency risk of their own, relating to small amounts of expenditure in other currencies other than their fundamental currency.

Interest rate risk The group finances its operations through short and long term loan facilities. The interest rate exposure of the financial assets and liabilities of the group as at 26 August 2011 is shown in note 14 to the accounts.

Credit risk The group’s principal financial assets are cash and trade debtors. The credit risk associated with cash is limited as the counterparties have high credit ratings assigned by international credit-rating agencies. The principal credit risk arises, therefore, from trade debtors. In order to manage credit risk, the group sets limits for customers based on a combination of payment history and third party credit references. Further the group has clearly defined debt collection procedures in place. Credit limits are reviewed by the financial controllers on a regular basis in conjunction with debt ageing and collection history.

F-245 Statement of directors’ responsibilities

The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

Company law requires the directors to prepare financial statements for each financial period which give a true and fair view of the state of affairs of the company and the group and of the profit or loss of the group for that period. In preparing those financial statements, the directors are required to:

• select suitable accounting policies and then apply them consistently

• make judgements and estimates that are reasonable and prudent

• state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group will continue in business.

In so far as the directors are aware:

• there is no relevant audit information of which the group’s auditors are unaware; and • the directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information. The directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the company and the group and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The directors are responsible for the maintenance and integrity of the corporate and financial information included on the group’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Donations There were no charitable or political donations made during the period.

Auditors Grant Thornton UK LLP, having expressed their willingness to continue in office, will be deemed reappointed for the next financial year in accordance with Section 487(2) of the Companies Act 2006 unless the Company receives notice under Section 488(1) of the Act.

ON BEHALF OF THE BOARD

SDRBrown Director

22 February 2012

F-246 REPORT OF THE INDEPENDENT AUDITOR TO THE MEMBERS OF WCL GROUP LIMITED We have audited the financial statements of WCL Group Limited for the period ended 26 August 2011 which comprise the accounting policies, the group profit and loss account, the group and company balance sheets, the group cash flow statement, the group statement of total recognised gains and losses, and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of the directors and auditor As explained more fully in the Directors’ Responsibilities Statement set out on page 4, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.

Scope of the audit of the financial statements A description of the scope of an audit of financial statements is provided on the APB’s website at www.frc.org.uk/apb/scope/private.cfm

Opinion on financial statements In our opinion the financial statements: • give a true and fair view of the state of the group’s and the parent company’s affairs as at 26 August 2011 and of the group’s loss for the period then ended; • have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and • have been prepared in accordance with the requirements of the Companies Act 2006.

Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: • adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or • the parent company financial statements are not in agreement with the accounting records and returns; or • certain disclosures of directors’ remuneration specified by law are not made; or • we have not received all the information and explanations we require for our audit Harold Wilson (Senior Statutory Auditor) For and on behalf of Grant Thornton UK LLP Registered Auditor, Chartered Accountants London

22 February 2012

F-247 WCL GROUP LIMITED PRINCIPAL ACCOUNTING POLICIES FOR THE YEAR ENDED 26 AUGUST 2011

Basis of consolidation The consolidated financial statements incorporate the results of WCL Group Limited and its subsidiary undertakings as at 26 August 2011 using the acquisition method of accounting. The subsidiaries are wholly owned with the exception of Education Overseas Qatar Limited (EOQ) where the group’s shareholding is limited to 49% to comply with regulations in Qatar. Notwithstanding the 49% shareholding EOQ is consolidated as a subsidiary undertaking as the group considers that it has effective control through a formal shareholder agreement and majority Board representation. The group is deemed to have de facto control over the assets and liabilities of an employee benefit trust, WCL Employee Benefit Trust, and as such the results of this entity and the period-end position are recognised in these group financial statements. Further details are provided in note 26 of these financial statements.

Going concern At 26 August 2011 the group had net liabilities of £15,717,000 (2010: net liabilities £10,583,000). Cash flow forecasts have been prepared which show that the group will be able to meet its financial obligations for at least twelve months from the date of signing the financial statements. Further, the group has been provided with a formal letter from its principal shareholder, Sovereign Capital Limited Partnership II, confirming its continuing support of the group for at least twelve months from the signing date of these financial statements. Accordingly, the directors consider it is appropriate to prepare the financial statements on a going concern basis.

Turnover The Group’s turnover is principally derived from tuition fees in respect of its schools, sales of curriculum and assessment products and long-term contract income in respect of its consultancy and school management services. Turnover represents amounts earned by the group for third party sales of goods supplied and services provided during the year excluding trade discounts and VAT and similar taxes. Where fees are invoiced in advance of the supply of services such revenue is deferred within creditors and the corresponding debtor is included in current assets. Where the outcome of a long-term contract can be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the contract activity at each reporting date, as measured by the proportion that contract costs incurred for work performed to date bear to the estimated total contract costs. Variations in contract work, claims and incentive payments are included to the extent that they have been agreed with the customer.

F-248 Fixed asset investments Fixed asset investments are shown at cost less provision for impairment.

Tangible fixed assets All fixed assets are initially recorded at cost.

Depreciation Depreciation is calculated so as to write off the cost of an asset, less its estimated residual value, over the useful economic life of that asset as follows:

Freehold buildings 40 years Leasehold improvements The life of the lease Office equipment, fixtures and fittings 2 - 7 years Motor vehicles 6 years Computer hardware and software 3 years

Assets under the course of construction are not depreciated until they are brought into use.

Deferred taxation Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events have occurred at that date that will result in an obligation to pay more, or a right to pay less or to receive more tax, with the following exceptions: Deferred tax assets are recognised only to the extent that the directors consider that it is more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted. Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which timing differences reverse, based on tax rates and laws enacted or substantively enacted at the balance sheet date.

Finance costs Finance costs on the loan instruments are capitalised and amortised over the life of the loan.

Foreign Currency The consolidated financial statements are stated in British pounds which is the functional currency of WCL Group Limited. For individual group entities, transactions denominated in foreign currencies are translated into the functional currency of the entity at the rates ruling at the dates of the transactions. Outstanding balances in foreign currencies at year end are translated at year end exchange rates for monetary items. Non-monetary are carried forward at the original translated rate.

F-249 The resulting exchange differences are recorded in the profit & loss statement and are shown as Foreign exchange gains/(losses).

Translation exchange differences on consolidation are recognised in equity within the profit and loss account and are shown as a movement on reserves.

Financial instruments

Where the contractual terms of share capital do not have any terms meeting the definition of a financial liability then this is classed as an equity instrument. Dividends and distributions relating to equity instruments are debited direct to equity. The group uses derivative financial instruments to hedge the exposure to interest rate risk on its loan finance liabilities. Gains and losses on these instruments are recognised when the group has a commitment to settle with the issuer.

Liquid resources For the purposes of the cash flow statement, liquid resources are defined as short term deposits which may not be accessed without penalty at less than 24 hours’ notice.

Pensions The group operates various defined contribution pension schemes on behalf of its employees. Contributions payable for the period are charged to the profit and loss account.

Share-based payments The company has de facto control over the Employee Benefit Trust, further details of which are disclosed in Note 25 to these financial statements.

F-250 WCL GROUP LIMITED GROUP PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 26 AUGUST 2011

Note 2011 2010

£’000 £’000 Turnover...... 1 41,706 38,718 Cost of sales ...... (35,461) (31,674) Gross profit ...... 6,245 7,044 Administrative expenses ...... (4,195) (6,146) Operating profit ...... 2 2,050 898 Interest payable and similar charges...... 3 (6,158) (5,763) Interest receivable...... 4 14 15 Loss on ordinary activities before taxation...... (4,094) (4,850) Tax on loss on ordinary activities ...... 6 (291) (432) Loss for the financial year ...... 18 (4,385) (5,282)

All transactions arose from continuing operations with the exception of the acquisition described in note 24 which had an immaterial impact on the results for the year or the prior year.

The accompanying accounting policies and notes form an integral part of these financial statements.

F-251 WCL GROUP LIMITED GROUP BALANCE SHEET AT 26 AUGUST 2011

Note 2011 2010

£’000 £’000 Fixed assets Goodwill ...... 8 41,808 30,063 Tangible assets ...... 9 20,663 18,128 62,471 48,191 Current assets Debtors ...... 11 9,210 8,014 Cash at bank and in hand ...... 12,313 7,823 21,523 15,837 Creditors: amounts falling due within one year ...... 13 (47,052) (42,136) Net current liabilities...... (25,529) (26,299) Total assets less current liabilities ...... 36,942 21,892 Creditors: amounts falling due after more than one year . 14 (52,659) (32,475) Net liabilities ...... (15,717) (10,583)

Capital and reserves Called-up equity share capital ...... 16 16 16 Share premium account ...... 391 391 Other Reserves ...... 17 (315) — Profit and loss account ...... 18 (15,809) (10,990) Shareholders’ deficit ...... 19 (15,717) (10,583)

The financial statements were approved by the Board of Directors on 22 February 2012. SDRBrown Director Company number: 06547748

The accompanying accounting policies and notes form an integral part of these financial statements.

F-252 Note 2011 2010

£’000 £’000 Fixed assets Investments...... 10 1,365 1,365 Current assets Debtors ...... 11 30,239 30,244 Cash at bank and in hand ...... 282 832 30,521 31,076 Creditors: amounts falling due within one year ...... 13 — (5,501) Net current assets ...... 30,521 25,575 Total assets less current liabilities ...... 31,886 26,940 Creditors: amounts falling due after more than one year . 14 (44,576) (35,790) Net liabilities ...... (12,690) (8,850)

Capital and reserves Called up equity share capital ...... 16 16 16 Share premium account ...... 17 391 391 Profit and loss account ...... 18 (13,097) (9,257) Shareholders’ deficit ...... 19 (12,690) (8,850)

The financial statements were approved by the Board of Directors on 22 February 2012. SDRBrown Director Company number: 06547748

F-253 WCL GROUP LIMITED GROUP CASH FLOW STATEMENT FOR THE YEAR ENDED 26 AUGUST 2011

Note 2011 2010

£’000 £’000 Net cash inflow from operating activities ...... 20 7,944 9,350 Returns on investments and servicing of finance Interest received ...... 14 15 Other financing costs...... (281) — Interest paid ...... (8,671) (1,927) Net cash outflow from returns on investments and servicing of finance ...... (8,938) (1,912) Taxation ...... 53 400

Capital expenditure and financial investment Purchase of tangible fixed assets ...... (3,885) (4,461) Net cash outflow from capital expenditure and financial investment ...... (3,885) (4,461) Acquisitions and disposals Payment of deferred consideration ...... (253) (647) Acquisition of subsidiary ...... (10,148) — Net cash outflow from acquisitions and disposals...... (10,401) (647) Financing Repayment of finance ...... (2,424) (2,895) Proceeds from loan finance...... 22,456 1,811 Repurchase of shares ...... (315) — Net cash inflow/(outflow) from financing...... 19,717 (1,084) Increase in cash ...... 4,490 1,646

The accompanying accounting policies and notes form an integral part of these financial statements.

F-254 WCL GROUP LIMITED OTHER PRIMARY STATEMENTS FOR THE YEAR ENDED 26 AUGUST 2011

GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES

2011 2010

£’000 £’000 Loss attributable to members of the parent company ..... (4,385) (5,282) Exchange differences on retranslation ...... (434) 71 Total recognised gains and losses related to the year ..... (4,819) (5,211)

The accompanying accounting policies and notes form an integral part of these financial statements.

F-255 WCL GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 26 AUGUST 2011

1 TURNOVER

Geographical analysis Turnover is attributable to the following geographical markets:

2011 2010

£’000 £’000 United Kingdom ...... 4,988 4,326 NorthAmerica...... 28,842 28,026 Middle East ...... 7,283 6,366 Europe...... 593 —

41,706 38,718

2 OPERATING PROFIT Operating profit is stated after charging:

2011 2010

£’000 £’000 Auditor’s remuneration: - audit services — United Kingdom ...... 85 65 - taxation services — United Kingdom...... 32 48 - other services ...... 17 88 - audit services — Overseas ...... 103 60 - taxation services — Overseas...... 46 21 Depreciation of owned fixed assets ...... 2,339 1,748 Amortisation of goodwill ...... 1,766 1,710 Loss on disposal of Fixed Assets ...... 10 — Operating lease rentals -landandbuildings...... 7,187 4,557 -other...... 146 80 Net (profit)/loss on foreign currency translation ...... (1,071) 967 Exceptional Costs - Transaction costs in relation to the acquisition of ICS (see note 25) . . 316 4

3 INTEREST PAYABLE AND SIMILAR CHARGES

2011 2010

£’000 £’000 Interest payable on bank loans...... 2,159 1,738 Interest payable on other loans ...... 3,743 3,802 Finance costs amortised...... 256 223

6,158 5,763

4 INTEREST RECEIVABLE AND SIMILAR INCOME

2011 2010

£’000 £’000 Bank interest receivable ...... 14 15

F-256 5 DIRECTORS AND EMPLOYEES

Staff costs during the year were as follows:

2011 2010

£’000 £’000 Wages and salaries...... 12,459 11,724 Social security costs ...... 1,194 1,057 Other pension costs ...... 342 251

13,995 13,032

The average number of employees of the group during the year was:

2011 2010

Number Number Teachers ...... 459 354 Administrative staff ...... 164 108

623 462

Remuneration in respect of directors was as follows:

2011 2010

£’000 £’000 Directors’ remuneration ...... 836 683

The amounts set out above include remuneration in respect of the highest paid director as follows:

2011 2010

£’000 £’000 Emoluments ...... 257 237 Other pension costs ...... 7 14

264 251

Retirement benefits for 4 directors (2010: 3) are accruing under money purchase pension schemes.

F-257 6 TAX ON LOSS ON ORDINARY ACTIVITIES

The tax credit/(charge) is based on the loss for the year and represents:

2011 2010

£’000 £’000 (a) Analysis of tax charge Totalcurrenttax(note6b)...... (291) 152

Deferred tax (released) in the year ...... — (584)

Total deferred tax movement ...... — (584)

Total tax charge on loss on ordinary activities...... (291) (432)

b) Factors affecting current tax charge Loss on ordinary activities before tax ...... (4,094) (4,618)

Loss on ordinary activities multiplied by standard rate of corporation tax in the United Kingdom of 27.19% (2010: 28%) ...... (1,113) (1,293) Effect of: Expenses not deductible for tax purposes ...... 1,067 1,113 Capital allowances in excess of depreciation ...... 17 124 Other timing differences ...... (188) (93) Utilisation of trade losses ...... 399 149 Difference in tax rates & foreign tax rates ...... 75 30 Prior year adjustment ...... 34 (182)

Current tax charge/(credit) for year ...... 291 (152)

2011 2010

£’000 £’000 Unrecognised deferred tax assets: Other short term differences ...... 356 719 Tax losses ...... 1,555 1,150 Depreciation in excess of capital allowances ...... 52 25

1,963 1,894

The Group has tax losses of approximately £6.0m (2010: £4.1m). These tax losses will be available to set against future taxable profits. These potential deferred tax assets have not been recognised as there is uncertainty as to the timing of their recoverability.

7 LOSS ATTRIBUTABLE TO MEMBERS OF THE PARENT COMPANY

The loss dealt with in the accounts of the parent company was £3,839,344 (2010: loss £4,651,000). As permitted by section 408 of the Companies Act 2006, no separate profit and loss account is presented in respect of the parent company.

F-258 8 INTANGIBLE FIXED ASSETS

Group

Acquired Goodwill

£’000 Cost At 27 August 2010 ...... 34,195 Addition (see note 25) ...... 13,511

At 26 August 2011 ...... 47,706

Amortisation At27Aug2011...... 4,132 Provided during the year...... 1,766

At 26 August 2011 ...... 5,898

Net book value At 26 August 2011 ...... 41,808

At 27 August 2010 ...... 30,063

9 TANGIBLE FIXED ASSETS

Group

Office equipment Assets Computer Freehold Leasehold fixtures under the hardware land and improve- and Motor course of and buildings ments fittings vehicles construction software Total

£’000 £’000 £’000 £’000 £’000 £’000 £’000 Cost At 27 August 2010 ..... 6,369 8,393 5,150 30 2,992 1,495 24,429 Currency retranslation . . . (321) (401) (201) 1 — (74) (996) Additions...... 797 1,152 1,203 11 341 458 3,962 Acquisitions ...... — 1,044 402 5 — 156 1,607 Disposals ...... — — (6) (24) — — (30)

At 26 August 2011 ..... 6,845 10,188 6,548 23 3,333 2,035 28,972

Depreciation At 27 August 2010 ..... 903 1,906 2,463 7 — 1,022 6,301 Currency retranslation . . . (48) (101) (116) 4 — (50) (311) Charged in the year .... 177 837 1,017 9 — 299 2,339 Disposals ...... — — — (20) — — (20)

At 26 August 2011 ..... 1,032 2,642 3,364 — — 1,271 8,309

Net book value At 26 August 2011 ..... 5,813 7,546 3,184 23 3,333 764 20,663

At 27 August 2010 ..... 5,466 6,487 2,687 23 2,992 473 18,128

Construction in progress principally related to renovation works relating to the building for the New York school. This was opened in September 2011 at which point the costs were reclassified under the relevant fixed asset categories and begun to be depreciated.

Company

The company does not hold any fixed assets and therefore the net book value of fixed assets at year end was £nil (2010: £nil).

F-259 10 INVESTMENTS

Company

Group Companies

£’000 Cost at 26 August 2011 and 27 August 2010 ...... 1,365

WCL Intermediate Holdings Limited, WCL Services Limited, WCL SMS and FEL are registered in England and Wales. EOQ is registered in Qatar, ICS is registered in Spain and BSA is registered in the USA. The subsidiaries are wholly owned with the exception of EOQ where a 49% holding is recognised to comply with regulations in Qatar. Notwithstanding the 49% shareholding EOQ is consolidated as a subsidiary undertaking as the group considers that it has effective control through a formal shareholder agreement and majority Board representation.

The BSA is a limited liability corporation and under US law does not have share capital. The interest in BSA represents funds transferred to the subsidiary treated as capital contributions.

WCL Services Limited subscribed to 100% of the ordinary share capital of WCL SMS of 2 £1 ordinary shares on 5 May 2010, its date of incorporation.

The company subscribed to 100% of the ordinary share capital of WCL Intermediate Holdings Spain S.L. of 3,600 =C1 ordinary shares on 27 June 2011, its date of incorporation. 4 August 2011 WCL Intermediate Holdings Spain S.L. acquired a 100% interest in the International College Spain S.A. and its holding company IC2 S.L. The details of the transaction are set out in note 25.

11 DEBTORS

Group Company Group Company

At 26 August At 27 August

2011 2011 2010 2010

£’000 £’000 £’000 £’000 Trade debtors ...... 7,444 — 5,506 — Amounts owed by group undertakings...... — 30,239 — 30,239 Prepayments and accrued income ...... 888 — 1,387 — Other debtors...... 878 — 1,121 5

9,210 30,239 8,014 30,244

Included within trade debtors is £328k which falls due for payment in more than one year.

12 DEFERRED TAX ASSET

Group

At 26 August At 27 August

2011 2010

£’000 £’000 As at 27 August 2010 ...... — 584 (Released)/provided in the year ...... — (584)

As at 26 August 2011 ...... — —

F-260 13 CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

Group Company Group Company

At 26 August At 27 August

2011 2011 2010 2010

£’000 £’000 £’000 £’000 Bank loans ...... 5,151 — 3,080 — Other loans ...... — — 5,501 5,501 Tradecreditors...... 2,708 — 1,952 — Corporationtax...... 1,293 — — — Other taxation and social security ...... 301 — 230 — Othercreditors...... 2,084 — 318 — Payments on account...... 3,892 — 1,995 — Accruals and deferred income ...... 31,623 — 29,013 — Amounts due under finance leases ...... — — 47 —

47,052 — 42,136 5,501

14 CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR

Group Company Group Company

At 26 August At 27 August

2011 2011 2010 2010

£’000 £’000 £’000 £’000 Bank loans ...... 26,257 — 9,851 — Other loans ...... 26,402 25,879 22,576 22,576 Amounts owed to other group companies ...... — 18,697 — 13,214 Amounts due under finance leases ...... — — 48 —

52,659 44,576 32,475 35,790

Group Company Group Company

At 26 August At 27 August

2011 2011 2010 2010

£’000 £’000 £’000 £’000 Within one year Bank and other borrowings ...... 5,151 — 8,581 5,501 After one and within two years Bank and other borrowings ...... 6,762 — 3,038 — After two and within five years Bank and other borrowings ...... 45,897 25,879 29,388 22,576 After five years Bank and other borrowings ...... ————

57,810 25,879 41,007 28,077

The Group has a number of long-term facilities in place as follows:

British School of Washington LLC

The British School of Washington LLC took out a US$2,000,000 Mortgage on its Washington property on 14 July 2004. This is repayable over a 10 year period with interest accruing at 6.25%. Principal and interest payments are due monthly and total US$13,034, with a balloon payment at maturity in August 2014. The Mortgage is secured on the property. The outstanding liability at year end was $1,701,993. The Washington Property was sold on the 12 October 2011 for US$3,900,000.

F-261 The British School of Washington LLC has entered into a US$2m Letter of Credit with its landlord providing security against future rent payments. The value of the Letter of Credit reduces by 20% each year from 31 December 2007 until expiry on 31 December 2011. The Letter of Credit is secured as part of the Ares Revolving Cash Facility.

WCL Services Limited i) WCL Services Limited entered into a Unitranche and Revolving Facilities Agreement comprising of a Unitranche A Facility of $22,425,000 and a Revolving Cash Facility of US$5,520,000 with Ares Capital Europe Limited on 10 March 2009. This agreement expires on 31 August 2015. The Unitranche A Facility was drawn down in full on the same date and is repayable in 13 instalments as follows:

31 August 2009 ...... 7.50% 28 February 2013 ...... 7.50% 28 February 2010 ...... 6.25% 31 August 2013 ...... 7.50% 31 August 2010 ...... 6.25% 28 February 2014 ...... 7.50% 28 February 2011 ...... 7.50% 31 August 2014 ...... 7.50% 31 August 2011 ...... 7.50% 28 February 2015 ...... 7.50% 28 February 2012 ...... 7.50% 31 August 2015 ...... 12.50% 31 August 2012 ...... 7.50% ii) WCL Services Limited extended the Unitranche and Revolving Facilities Agreement with Ares Capital Europe on 28 May 2010 to add a further Unitranche B Facility of $3,000,000 for the purpose of fitting out the Group’s new school in New York. $1,200,000 was drawn down on 22 October 2010 and the remaining balance was drawn down on 28 February 2011. The Unitranche B Facility is repayable in 10 instalments as follows:

28 February 2011 ...... 9.38% 31 August 2013 ...... 9.38% 31 August 2011 ...... 9.38% 28 February 2014 ...... 9.38% 28 February 2012 ...... 9.38% 31 August 2014 ...... 9.38% 31 August 2012 ...... 9.38% 28 February 2015 ...... 9.38% 28 February 2013 ...... 9.38% 31 August 2015 ...... 15.63% iii) WCL Services Limited extended the Unitranche and Revolving Facilities Agreement with Ares Capital Europe on 8 November 2010 to add a further Unitranche C Facility of $8,672,480. The full amount of the facility was drawn down on the same date and was used to repay interest on the Group’s A-1, A-2 and B Loan Notes (see below). The Unitranche C Facility is repayable on 31 August 2015. iv) WCL Services Limited extended the Unitranche and Revolving Facilities Agreement with Ares Capital Europe on 3 August 2011 to add a further Unitranche D Facility of= C19,380,000.= C17,511,244 was drawn down on 4 August 2011 and loaned directly to WCL Intermediate Holdings (Spain) S.L. (a newly incorporated 100% owned Spanish entity) which in turn used the proceeds to acquire the International College Spain S.A. (ICS) in Madrid. The balance of the facility remains undrawn. The Unitranche D Facility is repayable in 8 instalments as follows:

28 February 2012 ...... 3.75% 28 February 2014 ...... 16.25% 31 August 2012 ...... 3.75% 31 August 2014 ...... 16.25% 28 February 2013 ...... 12.50% 28 February 2015 ...... 17.50% 31 August 2013 ...... 12.50% 31 August 2015 ...... 17.50% v) Interest

The rate of interest payable on the outstanding amount at each repayment date for each of the Unitranche A, B, C and D loans is the aggregate of the Applicable Margin, LIBOR (or if greater 2%) and a Mandatory Cost. The Applicable Margin operates on a sliding ratchet between 6.5% and 8.0% depending on the outcome of certain financial ratio tests. The mandatory cost is calculated to compensate the lenders for the cost of their compliance with certain United Kingdom and European banking arrangements. vi) The Revolving Cash Facility is an overdraft facility which remains in place in full until expiry on 31 August 2015. As amounts drawn down are continually repaid and redrawn every six months on either 28 February or 31 August the principal is classified as falling due within one year. Interest is calculated as the aggregate of the Applicable Margin (3%) and LIBOR (or if greater 2%) and Mandatory Cost. The mandatory cost is calculated to compensate the lenders for the cost of their compliance with certain United Kingdom and European banking arrangements.

The Unitranche Facility and the Revolving Cash Facility are jointly secured on a fixed and floating charge over the assets of the group and a first lien over the group’s Houston property. The Revolving Cash Facility was also previously secured on a second lien over the group’s Washington property until its disposal on 12 October 2011.

The outstanding principle at period end was £32,448,664 and the outstanding interest payable was £393,467.

F-262 WCL Group Limited

Fixed Rate Unsecured Notes 2015 ‘A-1’ Loan Notes with a face value of £19,000,000 were issued on 4 April 2008, bearing an interest rate of 15%. The Notes have a maturity date of 5 April 2015. The outstanding principal at year end was £18,315,368 and the outstanding interest payable was £3,003,917. ‘A-2’ Loan Notes with a face value of £15,500,000 were issued on 4 April 2008, bearing an interest rate of 15%. The Notes have a maturity date of 5 April 2015. The outstanding principal at year end was £4,037,646. This included an additional subscription of £1,378,618 on 15 March 2011 being the second and final tranche received for the purpose of fitting out the group’s new school in New York. The first tranche of £2,500,000 was drawn down in the prior year on 20 April 2010). The outstanding interest payable was £538,441. ‘B’ Loan Notes with a face value of £450,000 were issued on 4 April 2008, bearing an interest rate of 15%. The face value was amended by a deed of variation on 10 March 2009 to £1,000,000. The Notes have a maturity date of 5 April 2015. The outstanding principal at year end was £421,864 and the outstanding interest payable was £84,700. Under the terms of the Ares Unitranche and Revolving Facilities Agreement interest on each of the ‘A-1’, ‘A-2’ and ‘B’ Loan Notes may only be paid after satisfying certain tests. The interest due is currently being rolled-up and has been treated as falling due after more than one year. The A-1, A-2 and B Loan Notes have been issued to a combination of management, Sovereign Capital Partnership II LLP and employees of Sovereign Capital Partners LLP.

15 FINANCIAL INSTRUMENTS The group uses derivative financial instruments to hedge the exposure to interest rate risk on its loan finance instrument should the LIBOR rate exceed 4% per annum. The instrument in place is effective from 10 March 2009 to 31 August 2015. The unrecognised gain on this instrument at 26 August 2011 was £98,436 (2010: £175,937).

16 SHARE CAPITAL

2011 2010

££ Allotted, called up and fully paid 879,277 Ordinary ‘A’ shares of £0.00067 ...... 590 590 50,152 Ordinary ‘A’ Convertible shares of £0.10 ...... 5,015 5,015 97,656 Ordinary ‘B’ shares of £0.00625 ...... 610 610 93,750 Ordinary ‘B’ Convertible shares of £0.10 ...... 9,375 9,375

15,590 15,590

All shares are irredeemable. The rights attaching to each class of shares can be summarised as follows:

‘A’ Ordinary Shares • One vote per share.

‘A’ Convertible Shares • One vote per share. • Any holder may give the company written notice to convert their shares into ’A’ Ordinary shares at the relevant conversion rate.

‘B’ Ordinary Shares • One vote per share.

F-263 17 OTHER RESERVES

Capital Reserve

£’000 At 27 August 2010 ...... — Purchase of shares ...... (315)

At 26 August 2011 ...... (315)

As discussed in note 26 the group has de facto control over the assets and liabilities of the WCL Employee Benefit Trust. During the year the EBT acquired shares in WCL Group Limited from a director. 18 RESERVES Group

Profit and loss account

2011 2010

£’000 £’000 At 27 August 2010 ...... (10,990) (5,779) Loss for the financial year...... (4,385) (5,282) Exchange differences on retranslation ...... (434) 71

At 26 August 2011 ...... (15,809) (10,990)

Company

Profit and loss account

2011 2010

£’000 £’000 At 27 August 2010 ...... (9,257) (4,606) Loss for the financial year...... (3,840) (4,651)

At 26 August 2011 ...... (13,097) (9,257)

19 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDS Group

2011 2010

£’000 £’000 Loss for the financial year...... (4,385) (5,282) Purchase of shares in WCL EBT...... (315) — Exchange differences on retranslation ...... (434) 71 Shareholders’ deficit at 27 August 2010 ...... (10,583) (5,372)

Shareholders’ deficit at 26 August 2011 ...... (15,717) (10,583)

20 NET CASH INFLOW FROM OPERATING ACTIVITIES

2011 2010

£’000 £’000 Operating profit ...... 2,050 898 Depreciation (including loss on disposal of fixed asset) ...... 2,339 1,748 Amortisation of goodwill ...... 1,766 1,710 Exchange adjustments ...... (149) 368 Increase in debtors ...... (2,095) (1,836) Increase in creditors ...... 4,033 6,462

Net cash inflow from operating activities ...... 7,944 9,350

F-264 21 ANALYSIS OF CHANGES IN NET DEBT

At 27 August Non cash At 26 Aug 2010 Cash flow movement 2011

£’000 £’000 £’000 £’000 Cash in hand...... 7,823 4,490 — 12,313 Loans ...... (41,007) (16,385) (418) (57,810)

(33,184) (11,895) (418) (45,497)

22 CAPITAL COMMITMENTS

Group and Company The Group had outstanding capital commitments at 26 August 2011 of US$689,000 in respect of works being carried out by WCL Academy of New York LLC.

23 CONTINGENT LIABILITIES

Group and Company There were no material contingent liabilities at 26 August 2011 (2010: £Nil).

24 LEASING COMMITMENTS At 26 August 2011 the group had annual commitments under non-cancellable operating leases as follows:

Group

At 26 August 2011 At 27 August 2010

Land and Land and Buildings Other Buildings Other

£’000 £’000 £’000 £’000 Within one year ...... — 9 — 3 Between two and five years ...... 746 468 602 44 Over five years...... 4,159 — 3,972 9

4,905 477 4,574 56

Company The company does not have any leasing commitments as at 26 August 2011 or at 2010.

25 ACQUISITION On 4 August 2011 the group purchased the International College Spain S.A. (“ICS”) and its holding company IC2 S.L. (“IC2”), for a total consideration of £15,234,000. ICS is a private school based in Madrid, Spain. The total adjustments required to the book values of the assets and liabilities of the company acquired in order to present the net assets of the company at fair value in accordance with group accounting principles were £1,309,000. During the period ICS contributed £98,800 to the group’s net operating cashflows, after it paid £105,000 in respect of taxation and utilised £8,900 for capital expenditure. In its last financial year to 31 August 2010 ICS made a made a profit after tax of £829,083. For the period from the date of acquisition to year end, ICS management accounts show the following.

£’000

Turnover ...... 593 Operating Profit ...... 98 Profitbeforetax...... 69 Taxation...... (30)

Profit attributable to shareholders ...... 39

F-265 The following tables sets out the net assets acquired, total consideration and net cash outflow for the transaction.

Consistency of accounting Provisional Book Value policy Fair Value

£’000 £’000 £’000 Tangible Fixed Assets ...... 1,898 (291) 1,607 Debtors ...... 594 — 594 Creditors...... (2,180) (577) (2,757) Taxation -Current...... (77) (441) (518) -Deferred...... (547) — (547) Cash ...... 3,342 — 3,342

Net assets acquired ...... 3,032 (1,309) 1,723 Goodwill ...... 12,202 1,309 13,511

Consideration ...... 15,234 — 15,234

Satisfied by: Cash paid ...... 13,490 — 13,490 Deferred Consideration ...... 1,744 — 1,744

Consideration ...... 15,234 — 15,234

Net Cash Movement on Acquisition: Cash Acquired ...... (3,342) — (3,342) Cash Amount Paid ...... 13,490 — 13,490

Net Cash Outflow ...... 10,148 — 10,148

Fair Value Adjustments

1. Tangible Fixed Assets (£291,000):

ICS normally account for depreciation charges at the end of each financial year. This adjustment has been booked in order to fairly reflect the depreciation charge that should have been included in the books of account at the acquisition date.

2. Creditors - (Deferred Revenue - £577,000):

WCL Group releases deferred income relating to tuition fees to the profit and loss account evenly over the full twelve months in an accounting period. In contrast, ICS releases such deferred income over the first ten months of a financial year. This adjustment brings ICS’s revenue recognition policy into line with WCL.

3. Taxation (£441,000)

ICS normally accounts for corporation tax charges at the end of each financial year. This adjustment has been booked in order to fairly reflect the corporation tax charges that should have been included in the books of account at the acquisition date.

26 EXTENDED EQUITY ACCOUNTING

Employee Benefit Trust

WCL Group Limited is deemed to have de facto control over the assets and liabilities of the Employee Benefit Trust, which was established on 28 February 2011. As such, the results and period end position are recognised within these consolidated financial statements.

F-266 The WCL Employee Benefit Trust’s had no income or expenditure in the year. The year-end balance sheet position was as follows:

Balance Sheet

2011

£ Cash ...... — Total assets ...... 397,504 Current liabilities...... (94,253) Total liabilities ...... (397,404)

Assets less liabilities ...... 100

Net equity ...... 100

27 RELATED PARTY TRANSACTIONS

The group paid £nil (2010: £80,000) to Sovereign Capital Partners LLP as an arrangement fee in relation to the refinancing of the group.

The group paid £107,582 (2010: £102,208) in relation to monitoring costs and expenses to Sovereign Capital Partners LLP.

The total interest expense in the year on ‘A-1’ Loan Notes and ‘A-2’ Loan Notes amounted to £3,542,466 (2010: £3,617,585). The amounts of outstanding principal and interest on these Loan Notes are disclosed in note 14.

In the prior year the group took over Sovereign Capital Partners LLP’s remaining property lease commitment of £850,200 expiring on 19 December 2013 at 25 Buckingham Gate, London, SW1E 6LD. In addition the group paid a first instalment of £110,000 to Sovereign Capital Partners LLP in relation purchase of fixtures and fittings as part of this transaction. The second and final instalment of £100,000 was paid on 1 March 2010.

During the year the group was invoiced £23,207 (2010: £44,305) by Sovereign Capital Partners LLP in respect of travel expenses incurred by directors.

Sovereign Capital Limited Partnership II LP is the majority shareholder of WCL Group Limited, a fund administered by Sovereign Capital Partners LLP, hence making them a related party by virtue of their shareholding.

During the year the Chairman received £33,334 (2010: £44,009) in respect of services provided to the group.

28 ULTIMATE CONTROLLING PARTY

The directors consider that the controlling related parties are the shareholders of the company, being Sovereign Capital Partnership II LP and employees of Sovereign Capital Partners LLP.

F-267 REGISTERED OFFICE

Nord Anglia Education (UK) Holdings plc The Old Vicarage, Market Street Castle Donington Derbyshire DE74 2JB United Kingdom

TRUSTEE

Citicorp International Limited Floor 56, One Island East 18 Westlands Road Island East, Hong Kong

PRINCIPAL PAYING AGENT AND TRANSFER AGENT

Citibank, N.A., London Branch 21st Floor, Citigroup Centre Canada Square, Canary Wharf London E14 5LB

REGISTRAR

Citigroup Global Markets Deutschland AG Reuterweg 16 60323 Frankfurt, Germany

OUR LEGAL ADVISORS

as to US law As to English law Latham & Watkins Latham & Watkins 18th Floor, One Exchange Square 99 Bishopsgate 8 Connaught Place, Central London EC2M 3XF Hong Kong United Kingdom

as to PRC Law as to Swiss Law Han Kun Law Offices Schellenberg Wittmer Zu¨ rich Suite 906, Office Tower C1 Lo¨wenstrasse 19 Oriental Plaza, No. 1 8021 Zu¨rich East Chang An Avenue Switzerland Beijing, China

LEGAL ADVISORS TO THE INITIAL PURCHASERS

as to US law as to PRC Law Milbank, Tweed, Hadley & McCloy Grandall Law Firm (Beijing) 30/F Alexandra House 9th Floor, Taikang Financial Tower 18 Chater Road No. 38 North Road East Third Ring Central, Hong Kong Chaoyang District Beijing 100026 China

INDEPENDENT AUDITORS

PricewaterhouseCoopers LLP Donington Court Castle Donington, East Midlands DE74 2UZ United Kingdom

Grant Thornton UK LLP Grant Thornton House Melton Street, Euston Square London NW1 2EP United Kingdom US$165,000,000 Nord Anglia Education (UK) Holdings PLC 10.25% Senior Secured Notes due 2017

OFFERING MEMORANDUM 27 June 2013

Joint Bookrunners and Lead Managers

Goldman, Sachs & Co. Credit Suisse HSBC