TAL Education GroupInvestor Presentation

August 2013

2

Disclaimer

This presentation does not constitute an offer to sell or issue or the solicitation of an offer to buy or acquire securities of TAL Education Group (the “Company”) in any jurisdiction or an inducement to enter into investment activity, nor may it or any part of it form the basis of or be relied on in connection with any contract or commitment whatsoever.

This presentation does not contain all relevant information relating to the Company or its securities, particularly with respect to the risks and special considerations involved with an investment in the securities of the Company. No part of this document shall form the basis of or be relied upon in connection with any contract or commitment whatsoever.

This presentation has been prepared by the Company solely for use at this presentation. The information contained in this presentation has not been independently verified. No representation, warranty or undertaking, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained herein. None of the Company or any of its affiliates, advisors or representatives will be liable (in negligence or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection with the presentation.

This presentation contains statements that constitute forward-looking statements. These statements include descriptions regarding the intent, belief or current expectations of the Company or its officers with respect to the consolidated results of operations and financial condition of the Company. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ from those in the forward-looking statements as a result of various factors and assumptions. The Company or any of its affiliates, advisors or representatives has no obligation and does not undertake to revise forward-looking statements to reflect future events or circumstances.

THE INFORMATION CONTAINED IN THIS DOCUMENT IS HIGHLY CONFIDENTIAL AND MAY NOT BE FORWARDED OR DISTRIBUTED TO ANY OTHER PERSON AND MAY NOT BE REPRODUCED IN ANY MANNER WHATSOEVER. ANY FORWARDING, DISTRIBUTION OR REPRODUCTION OF THIS DOCUMENT IN WHOLE OR IN PART IS STRICTLY PROHIBITED.

By attending this presentation, participants agree not to remove this document, or any materials provided in connection herewith, from the conference room where such documents are provided. Participants agree further not to photograph, copy or otherwise reproduce these materials in any form or pass on these materials to any other person for any purpose, during the presentation or while in the conference room. Participants must return this presentation and all others materials provided in connection herewith to the Company at the completion of the presentation.

Company Overview

4

Overview of Xueersi

Note

“Student enrollments” refers to the total number of courses enrolled in and paid for by our students across each of our

business formats, comprised of small classes, personalized premium services, and online courses, including multiple

courses enrolled in and paid for by the same students

Leading K-12 after-school tutoring services provider in China

Student enrollments of approximately 192,650 in first fiscal quarter 2014, up by

17.1% YoY

Blended ASP of US$319 in first fiscal quarter 2014, up by 6.3% YoY

255 learning centers in 15 major cities in China as of May 31, 2013

Operates www.eduu.com, a leading online education platform in China

Revenue of US$61.4 million and net income of US$8.1 million in first fiscal

quarter 2014, representing a YoY growth of 24.5% and 62.7%, respectively

Cash, cash equivalents, and term deposits of US$271.1 million as of May

31, 2013

Outstanding admission rates to key schools and student performance on

selective competitions

High student retention rate and recurring revenue streams

Financial

Snapshot

Our

Results

Our

Network

Our

Business

5

Primary School Middle School High School

K 1 2 3 4 5 6 7 8 9 10 11 12

Mathematics

English

Chinese

Physics - - - - - - - -

Chemistry - - - - - - - - -

Biology - - - - - - - - - -

Comprehensive Tutoring Service Offerings

We Cover Core Subjects in the K-12 School Curriculum (1)

Offered Through Multiple Class Formats

Small Classes

- Launched in 2003

Personalized Premium Services

(1-on-1)

- Launched in 2007

Online Courses

- Launched in 2010

Note

1. • Denotes currently offered course

- Denotes not applicable for the grade level

Opportunity to develop multi-subject, multi-year relationships with our students

6

Why Is After-School Tutoring So Important In China

Source Ministry of Education in China

College Entrance

Examination – “Gao Kao”

Higher

Education

High School

Middle School

Primary School

High School Entrance

Examination –

“Zhong Kao”

Middle School Entry

Selection Process –

“Xiao Sheng Chu”

Examination-Focused Education System Fierce Competition to Enter Key Schools

Source iResearch, www.usnews.com, 2010

70%

30% 28%

5%

4-Year Degree

College (U.S.)

4-Year Degree

College

(China)

Top 100

Universities

(U.S.)

Top 100

Universities

(China)

College Admission Rate (1)

82%

30%23%

Regular HS Beijing Key HS Shanghai Key HS

High School Admission Rate in China (1)

(China National)

Note

1. “Admission rate” refers to the number of students admitted over the total examination takers in China or denoted cities; and

refers to the number of students admitted over the total application pool in the U.S.

Spending on Children’s Education Accounts for 30.1% of Total Household Income in Chinese Urban Families

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Source : China Youth & Children Research Center (中国青少年研究中心家庭教育研究所), 2011

National Bureau of Statistics of China

Since 1990, expenditure by Chinese families on education has been growing by an average of

29.3% each year, much faster than the growth of urban household income or China‟s GDP.

Urban Chinese parents spend 30.1% of their total household income on their children‟s

education during the time when their children are in primary and Junior high schools.

Average Growth of GDP 16.6%

Average growth of urban

household income 13.6%

Average Growth of education

expenditure29.3%

26.6% of Chinese families have made expenditures on education for the purpose of preparing

their children to have a better chance to be admitted to their school of choice.

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75%

55%

70%

89%

30%-35%

Primary

School

Middle

School

High School K-12

Average in

2009

Near Term

Potential in

Key Cities

27.9

33.6

40.2

47.6

56.0

65.7

2009E 2010F 2011F 2012F 2013F 2014F

Small Class Other Class Formats Combined

(US$Billon)

Source iResearch, July 2010 report

China vs. South Korea

(%)

South Korea

Penetration of Tutoring Services (1)Rapid K-12 Market Growth Led by Small Class

Highly fragmented market with no player with more than 1% market share

China

Huge, Fragmented and Underpenetrated Market

Note

1. Penetration rate refers to % of population in each corresponding school level enrolled in tutoring services

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StudentsTeachers

Content

High student retention rate

Ability to attract top-quality teachers

Self-Reinforcing Cycles

Xueersi’s Strong Brand Drives Competitive Advantage

Performance

High referral rate and low student

acquisition costs

Premium pricing power

Outstanding academic achievement of our students

Gold medal winners in 2012 at the 53rd International Mathematics Olympiad

Gold medal winners in 2012 at the 43rd International Physics Olympiad

Six of our students in Guangzhou were on the team that received the HuaLuoGeng Golden Cup for excellence in mathematics

Eight of our students in Beijing achieved the topscore in their city districts on Zhongkao, China’s high-school entrance exam

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Selective Hiring

Process

Comprehensive

Training

Rigorous

Evaluation Process

Proprietary Content Development

Review local

curriculum

requirements

Analyze latest

trends

Develop tailored

course materials

Collect teacher and

student feedback

Regular evaluation and improvement process

In-house content development

team of over 200 people

External education experts hired

as advisors

Optimized Teacher Management System

High Teaching Quality and Proprietary Content

Top university graduates

Rounds of tests and

interviews

Comprehensive new

teacher training

Regular ongoing training

Continuous evaluation

Performance based

compensation

IP transfer agreement with

leading international publisher

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Leading Platform of Education-Related Websites

Average of Over 3.6mm Daily Page Views (1)

Preparation for China's college entrance examination

Preparation for China's high school entrance examination

Mathematics, competitions, and preparation for middle school admissions

English language study and related examinations

Chinese composition

Preschool, kindergarten, and preparation for primary school admissions

Note

Based on company data of average daily page views in fiscal year 2013

A portal to Company’s education-related websites, which include the following:

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Opportunity to Further Penetrate Existing Markets

Open new learning centers and expand capacity of existing centers

Offer full range of subjects and grade levels in all cities

Significant Opportunities in Both Historical and Newly Entered Cities

CityRanking by

Population

Ranking by GDP

per Capita

# of Small

Class Centers

# of One-on-

One Centers

# of Total

Learning

Centers

Beijing #2 #2 78 44 122

Shanghai #1 #1 25 11 36

Shenzhen #40 #4 7 5 12

Guangzhou #6 #3 11 8 19

Tianjin #4 #6 10 6 16

Wuhan #5 #12 7 4 11

Xi‟an #11 #28 6 5 11

Chengdu #12 #13 3 5 8

Nanjing #9 #16 4 4 8

Hangzhou #15 #8 2 3 5

Taiyuan #17 #59 2 2

Chongqing #8 #7 1 1

Suzhou #34 #5 1 1

Zhengzhou #19 #22 2 2

Shenyang #7 #17 1 1

Total 160 95 255Source China Statistical Yearbook, Company data

Address existing

students' specific

academic requirements

Extend our service

offerings to new students

Continue to Roll Out Business Lines Complementary to Core

Premium

priced segment –

Hourly rate between

RMB 160 – 500+

Key Developments

Launched in Beijing in September 2007

Launched in Shanghai in second half of FY2011, and has covered 10 cities as of May

31, 2013

95 one-on-one learning centers in operation as of May 31, 2013

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The Role of Personalized Premium Services (One-on-One) In Our Business

Management Team

Bangxin Zhang: Chairman and CEO since our inception.

Mr. Zhang received his bachelor's degree in Life Sciences from Sichuan

University in 2001, was in the postgraduate program of the Life Science School

of Peking University from 2002 to 2007, and received an EMBA degree from

China Europe International Business School in 2009.

Joseph Kauffman: CFO since 2010, 3 years with TAL in June.

Mr. Kauffman received his bachelor„s degree from Williams College in 1999 and

an MBA degree from the Harvard Business School in 2006. Has deep industry

experience (EDU, 4 years) and multinational mindset (Coca-Cola, 5 years) .

Yachao Liu: Senior VP since 2011, 7+ years with TAL.

Dr. Liu received his bachelor´s degree in Mechanics from Peking University in

2003 and Ph.D. from the Institute of Mechanics of the Chinese Academy of

Science in 2008.

Yunfeng Bai: Senior VP since 2011, 7+ years with TAL.

Mr. Bai received his bachelor´s degree in Engineering Automation from Beijing

University of Aeronautics and Astronautics in 2003, attended the CEO class of

Guanghua Management School of Peking University between 2008 and 2009

and received an EMBA degree from China Europe International Business School

in 2012.

Distinguished Team of Independent Directors

•Serves as our Independent Director and audit committee financial expert since Oct. 2010

•Extensive experience in SEC reporting, finance and accounting

•COO of Ctrip.com International, Ltd, (NASDAQ: CTRP) since May 2012, CFO of Ctrip.com from 2005 to 2012

•Previously worked with KPMG LLP in Silicon Valley, CA, USA

•Member of the American Institute of Certified Public Accountants and a member of the State of California Certified Public Accountants

•Serves as our Independent Director since Jun. 2011

•Executive Vice President and Chief Editor of SINA Corporation (NASDAQ: SINA) , where he has worked in various senior management roles since 1997

•Independent director of Shenzhen-listed Beijing EnlightMedia Co., Ltd. since Feb. 2010

•Received his MBA degree from China-Europe International Business School

•Serves as our Independent Director since Jun. 2011

•Founder, chairman and CEO of Vancl Corporation

•Co-founded Joyo.com in 2000, which was later known as Amazon China

•Founded the Book Review in 1998 and co-founded the XishuBook Club, now Xishu Books, a major online book retailer, in 1997

16

Jane Jie Sun Tong Chen Wei Wang

Financial Overview

18

’000s (Fiscal Quarter Ended May 31)

Enrollments(1) ASP (2)

US$ (Fiscal Quarter Ended May 31)

Strong Enrollment Growth and Pricing Power

Note

1. Defined as total student enrollments of small class, personalized premium service (1-on-1) and online courses

2. Total revenue / total enrollments

131

174 182

227

257

277

300

319

68

215

383

486

690

816

165193

FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY13Q1 FY14Q1

19

US$MM

Revenue Gross Profit and Margin (1)

US$MM

Robust Top Line and Attractive Gross Margins

Note

1. Excluding share based compensation expenses of US$521 thousand, US$418 thousand ,US$106 thousand, US$51 thousand,

US$11 thousand, in cost of revenues for FY11, FY12, FY13, FY13 1Q and FY14 1Q, respectively

Margin: 50.8% 51.0% 46.0% 48.0%49.2% 47.7%46.2%

5

19

32

54

82

110

24 29

FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY13 Q1FY14 Q1

9

37

69

111

178

226

4961

FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY13 Q1 FY14 Q1

48.8%

20

% of Revenue

Operating Margins Reflect Business Investment

US$MM US$MM

Operating Income & Margin Net Profit & Margin

Margin: 17.0% 8.5% 20.6% 13.1%Margin: 18.8% 24.6% 22.2% 10.9% 10.0%12.2%23.1% 21.7%

Increased SG&A to Support Expansion

11.8% 13.7%

27.9%

15.8% 15.7% 17.3%21.3% 22.6% 23.2% 24.5%

4.2%6.3%

8.1% 9.0%13.0% 12.2% 12.4% 12.7%

FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY13 Q1 FY14 Q1

General & Administrative

Selling & Marketing

2

9

15

26 21

31

6 7

FY2008 FY2009 FY2010 FY2011 FY2012 FY2013FY13 Q1FY14 Q1

2 3

14

24 24

33

5 8

FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY13 Q1FY14 Q1

13.9% 14.8%

21

Deferred Revenues Cash, Cash Equivalents and Term Deposits

US$MM US$MM

Strong Balance Sheet

77 86

108 103 107 103

154

179 199

224 239

249

209

271

Dividend payment of US$39 mm

22

US$MM

Attractive Free Cash Flow

23 27

54

7365

5 4 5 12 70

20

40

60

80

FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

Cash Flow from Operations Capital Expenditure

Note: Capital expenditure in fiscal 2012 was US$74.3 million. The significant increase was primarily related to the

purchase of office space for headquarter in Beijing in the amount of $62.5 million. The capital expenditure of US$12

million in fiscal 2012 shown in the graph is excluding the impact from the purchase of this office space.

Based on market cap of US$800 million, TAL has a Free Cash Flow Yield of 7%

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Thank You

Investor Relations Contact:

ir@xueersi.com

+8610 5292 6658

12/F Danling SOHO, No. 6 Danling Street,

Haidian District, Beijing 100080