Ahead of the Learning CurveAhead of the Learning Curve

Investor Presentation

Credit Suisse First Boston Conference

Chuck Moran, President and CEO

Tom McDonald, CFO

March 15, 2004

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Safe Harbor Safe Harbor

This presentation will contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding financial projections of SkillSoft, revenues and profits, customer renewals, the return on training investments for the company’s customers, industry ranking, execution of integration plans, management and organizational structure. All forward-looking statements in this release are subject to risks, uncertainties and assumptions that could cause actual results or events to differ materially from those contained in the forward-looking statements. The factors that could cause actual results or events to differ include, but are not limited to, the possibility that the market for the sale of certain products and services may not develop as expected, that development of these products and services may not proceed as planned, or that the parties are unable to transition customers, successfully execute their integration strategies, or achieve planned synergies. Additional factors that could cause actual results or events to differ materially from those in the forward-looking statements are included in SkillSoft’s filings with the Securities and Exchange Commission, specifically SkillSoft’s annual report on Form 10-K for the year ended 1/31/03 and quarterly report on Form 10-Q for the quarter ended 10/31/03. The forward-looking information provided by us in this presentation represents our view as of 3/15/03. We anticipate that subsequent events and developments may cause these views to change. While we may elect to update this forward-looking information at some point in the future, we specifically disclaim any obligation to do so. This forward-looking information should not be relied upon as representing our views at any date subsequent to the date of this presentation.

This presentation will contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding financial projections of SkillSoft, revenues and profits, customer renewals, the return on training investments for the company’s customers, industry ranking, execution of integration plans, management and organizational structure. All forward-looking statements in this release are subject to risks, uncertainties and assumptions that could cause actual results or events to differ materially from those contained in the forward-looking statements. The factors that could cause actual results or events to differ include, but are not limited to, the possibility that the market for the sale of certain products and services may not develop as expected, that development of these products and services may not proceed as planned, or that the parties are unable to transition customers, successfully execute their integration strategies, or achieve planned synergies. Additional factors that could cause actual results or events to differ materially from those in the forward-looking statements are included in SkillSoft’s filings with the Securities and Exchange Commission, specifically SkillSoft’s annual report on Form 10-K for the year ended 1/31/03 and quarterly report on Form 10-Q for the quarter ended 10/31/03. The forward-looking information provided by us in this presentation represents our view as of 3/15/03. We anticipate that subsequent events and developments may cause these views to change. While we may elect to update this forward-looking information at some point in the future, we specifically disclaim any obligation to do so. This forward-looking information should not be relied upon as representing our views at any date subsequent to the date of this presentation.

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SkillSoft Overview• SkillSoft is one of the largest public companies in the world with a SkillSoft is one of the largest public companies in the world with a

sole focus on e-Learning, and is uniquely positioned to help global sole focus on e-Learning, and is uniquely positioned to help global enterprises leverage e-Learning for maximum impact over the long-enterprises leverage e-Learning for maximum impact over the long-termterm

• Dual excellenceDual excellence in e-learning in e-learning contentcontent & technology & technology• 60,000+ hours of high-quality e-learning content in 15 languages

• e-Learning delivery, management & reporting platform technology

• Approximately 18% + of revenue invested annually in R&D

• Largest direct sales & support organization in e-learning industry Largest direct sales & support organization in e-learning industry with approximately 200 quota carrying direct sales reps with approximately 200 quota carrying direct sales reps

• Serving Global 5000 customer baseServing Global 5000 customer base• also serving end-user market through SmartCertify Directalso serving end-user market through SmartCertify Direct

• Over 5 million registered learnersOver 5 million registered learners

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SkillSoft Overview (Continued)SkillSoft Overview (Continued)

Content:Content:• Over 2,200 soft skills course and simulation titles Over 2,200 soft skills course and simulation titles

encompassing:encompassing:• Professional effectiveness, management/leadership, project

management, sales and customer-facing skills, business strategy and operations, finance, human resources, health and safety, and financial services

• More than 2,100 IT course titles encompassing:More than 2,100 IT course titles encompassing:• Software development, operating systems and server technologies, Software development, operating systems and server technologies,

Internet and network technologies, enterprise database systems, Web Internet and network technologies, enterprise database systems, Web design, and desktop computer skillsdesign, and desktop computer skills

• One of the world’s largest providers of One of the world’s largest providers of Referenceware™ • Over 5,300 unabridged IT and business books and reports are available Over 5,300 unabridged IT and business books and reports are available

to online subscribers through SkillSoft’s subsidiary Books24x7.to online subscribers through SkillSoft’s subsidiary Books24x7.

• 68% of titles are IT related and 32% are business related68% of titles are IT related and 32% are business related

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Informal Learning Represents 70% of Learning that Occurs in the Workplace

FormalFormalLearningLearning

30%30% InformalInformalLearningLearning

70%70%

Informal Informal LearningLearning

More than 70% of the More than 70% of the learning that occurs in the learning that occurs in the workplace, accordingworkplace, accordingto the U.S. Bureau of to the U.S. Bureau of Statistics, is “informal Statistics, is “informal learning”, i.e., thelearning”, i.e., the““improvised, unplanned, improvised, unplanned, instructional efforts that instructional efforts that are part of the everyday are part of the everyday fabric of business fabric of business operations.”operations.”

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Reference Reference MaterialMaterial• BooksBooks• ManualsManuals• ReportsReports

Ask OthersAsk Others• Experts & mentorsExperts & mentors• Managers & Managers & coachescoaches• PeersPeers

Practice & UsePractice & Use• Practice new skills on-Practice new skills on-the-jobthe-job• Learning from experienceLearning from experience & refining skills over time& refining skills over time

… … and Formal Learningand Formal Learning• To pursue certification, To pursue certification, credentialcredential or degreeor degree• To learn a major new skill setTo learn a major new skill set

How Business Professionals Naturally Learn On-the-JobHow Business Professionals Naturally Learn On-the-Job

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SkillSoft Solution = Multi-Modal Learning™ SkillSoft Solution = Multi-Modal Learning™

                 

A comprehensive set of e-learning tools and delivery technologies designed for the full spectrum of enterprise

learning needs, both formal and informal.

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Courseware & Simulations

Large, up-to-date library of courseware on today’s relevant business and IT skills• Thousands of hours of interactive

course content

• Over 72 major IT certification exams covered

• Content partnerships with Cisco, Microsoft, Oracle, Project Management Institute, Wharton, and many more

Hands-on simulations & labs for real-world practice of business & IT skills

Our continued investment in R&D allows us to expand coverage of Learning Assets

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SkillSoft employees provide online mentoring service in e-learning industry• 50+ SkillSoft-employed mentors on staff

• carrying several hundred current certifications

Mentoring available for 72 major certifications exams in IT and project management

24x7 online mentoring through live chat & email

Mentored exercises

24x7 Live Online Mentoring24x7 Live Online Mentoring

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Prescriptive Assessment

• Over 45 TestPrep exams for major technology certifications from Microsoft, Cisco, CompTIA, Oracle, PMI, etc. Accurately simulate actual “high

stakes” certification exams Mapped to SkillSoft IT content for

immediate reinforcement

SkillMatch™ Job Role Competency Assessment Tool• Competency models for 20 functional

area job roles

• Mapped to SkillSoft Business content

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Leveraging the Combined Assetsthru Multi-Modal Learning VisionLeveraging the Combined Assetsthru Multi-Modal Learning Vision

An approach to e-learning that:

• Fully integrates company-owned, best-of-breed learning assets

• Recognizes how people actually learn, within the process of getting their jobs done

• Leverages SkillSoft’s real-life experience with learning technologies

• Enables customer and learner self-service

• Plays to SkillSoft’s Strengths = e-Learning Assets

…..and changes the rules of the game as to how SkillSoft competes

An approach to e-learning that:

• Fully integrates company-owned, best-of-breed learning assets

• Recognizes how people actually learn, within the process of getting their jobs done

• Leverages SkillSoft’s real-life experience with learning technologies

• Enables customer and learner self-service

• Plays to SkillSoft’s Strengths = e-Learning Assets

…..and changes the rules of the game as to how SkillSoft competes

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SkillSoft: A Market LeaderSkillSoft: A Market Leader

Thousands of Global Customers

Balanced Sector Representation

Cross Industry Appeal

No Significant Customer Concentration

Thousands of Global Customers

Balanced Sector Representation

Cross Industry Appeal

No Significant Customer Concentration

TechnologyTechnology

Financial Services

Financial Services

Aerospace / Defense

Aerospace / Defense

SoftwareSoftware

Professional Services

Professional Services

InsuranceInsurance

Health CareHealth Care

TransportationTransportation

GovernmentGovernment

ManufacturingManufacturing

IT End UserIT End User

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Financial HighlightsFinancial Highlights

• Cash of $86 million at 1/31/2004

• Guaranteed Revenue Backlog at 1/31/2004 for FY 2005 of approximately $170 mm

• Guaranteed Revenue Backlog of approximately 76% FY2005 target midpoint revenue of $223 million

• Costs to support SEC investigation and 2002 class action litigation ongoing at $2.5 – 3.0 million for FY2005

• 65% renewal rate FY2004/CY2003 compared to previous year at 55%

• 121% Upgrade Rate FY 2004/CY 2003 compared to previous year at 128% due to extending some SmartForce contracts from a short-term commitment to a longer term commitment

• Reseller revenue recognition based on sell through seasonality was skewed to the 4th quarter

• Well Positioned for Future Free Cash Flow Generation and Profitability

• Cash of $86 million at 1/31/2004

• Guaranteed Revenue Backlog at 1/31/2004 for FY 2005 of approximately $170 mm

• Guaranteed Revenue Backlog of approximately 76% FY2005 target midpoint revenue of $223 million

• Costs to support SEC investigation and 2002 class action litigation ongoing at $2.5 – 3.0 million for FY2005

• 65% renewal rate FY2004/CY2003 compared to previous year at 55%

• 121% Upgrade Rate FY 2004/CY 2003 compared to previous year at 128% due to extending some SmartForce contracts from a short-term commitment to a longer term commitment

• Reseller revenue recognition based on sell through seasonality was skewed to the 4th quarter

• Well Positioned for Future Free Cash Flow Generation and Profitability

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FY2005 Cash Operating ModelFY2005 Cash Operating Model

Cash Balance 1/31/2004 $86.0 Million

Working Capital ($8.0 Million)Capital Expenditures ($6.0 Million)NETg Settlement ($22.0 Million)1998 Class Action Settlement ($6.0 Million)

($42.0) Million

GAAP Net Income (total range midpoint) $21.5 MillionNon-Cash Tax (range midpoint) $9.5 MillionAmortization $11.0 Million

$42.0 Million

Cash Balance 1/31/2005 $86.0 Million

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Fiscal 2005 TargetFiscal 2005 Target

Midpoint % RangeRevenue $223.0 M 100% $221.0 - 225.0 MGross Profit $200.8 M 90% $196.7 - 204.8 MResearch and Development $39.0 M 17.5% $38.0 - 40.0 MSales and Marketing $92.5 M 41.5% $91.5 - 93.5 MGeneral and Administrative $27.0 M 12% $26.0 - 28.0 M*Amortization (non-cash) $11.0 M 5% $11.0 MOther Income $1.0 M - $0.8 - 1.2 MCash Tax $1.3 M - $1.0 - 1.5 M*Tax (non-cash) $8.5 M 4% $8.0 - 9.0 MNet Income $21.5 M 10% $20.0 - 23.0 M

EPS GAAP $0.21 $0.20 - $0.22*Pro Forma Cash EPS (non-GAAP) $0.38 $0.37 - $0.40Diluted Shares Outstanding 110 M 108 -112 M

*Pro forma cash EPS (non-GAAP) represents GAAP Net Income without amortization and non-cash tax expense

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Fiscal 2005 Tax ProvisionFiscal 2005 Tax Provision

Highlights: SkillSoft strategy is to maximize cash by minimizing the CASH effective

tax rate

Acquired NOL (SmartForce) are the oldest and must be used first (FIFO)

and have an annual limitation cap

Tax benefit for acquired NOL’s utilized reduces Goodwill

For financial statement purposes SkillSoft will provide full tax expense

(non-cash) on any profit sheltered by acquired NOL

Limitations on utilization of acquired NOL per year

NOL generated as SkillSoft standalone and as a combined company

after 9/6/2002 can be used against income to reduce tax expense

Highlights: SkillSoft strategy is to maximize cash by minimizing the CASH effective

tax rate

Acquired NOL (SmartForce) are the oldest and must be used first (FIFO)

and have an annual limitation cap

Tax benefit for acquired NOL’s utilized reduces Goodwill

For financial statement purposes SkillSoft will provide full tax expense

(non-cash) on any profit sheltered by acquired NOL

Limitations on utilization of acquired NOL per year

NOL generated as SkillSoft standalone and as a combined company

after 9/6/2002 can be used against income to reduce tax expense

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Estimated Tax ScheduleEstimated Tax Schedule

NOL Utilization

2005 2006 2007Effective Cash Tax Rate 3 - 4% 3 - 4% 3 - 4%

* Effective Non - Cash Tax Rate 25 - 28% 15 - 18% 5 - 8%

Effective EPS Tax Rate 30% 20% 10%* Reduction of Goodw ill

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EPS: Diluted Shares OutstandingEPS: Diluted Shares Outstanding

Weighted Avg. Basic Shares Outstanding 1.31.2004 100,119,931

Avg Share Price * Diluted (Incremental) Shares Outstanding$10.00 8,461,168

Estimated Fully Diluted Sharecount @ $10.00 108,581,099

$12.00 9,896,007Estimated Fully Diluted Sharecount @ $12.00

110,015,938

$15.00 11,456,889

Estimated Fully Diluted Sharecount @ $15.00 111,576,820

* Based on Company estimates

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SkillSoft: Operating Model Poised for Cash Earnings GrowthSkillSoft: Operating Model Poised for Cash Earnings Growth

Revenue 100 % 100 %

GM 89-91 % 89-91 %

R&D 17-18% 17-18 %

S&M 41- 42 % 40-42 %

G&A 11- 12% 10-11 %

G&A† 1%†

*Cash Op. Income 16 - 21% 18-24%* Excluded amortization of intangibles and deferred compensation

†Litigation and Legal Settlement

Revenue 100 % 100 %

GM 89-91 % 89-91 %

R&D 17-18% 17-18 %

S&M 41- 42 % 40-42 %

G&A 11- 12% 10-11 %

G&A† 1%†

*Cash Op. Income 16 - 21% 18-24%* Excluded amortization of intangibles and deferred compensation

†Litigation and Legal Settlement

CurrentCY04 / FY05

% (est)

CurrentCY04 / FY05

% (est)

Target Long-term

% (est)

Target Long-term

% (est)

• Approx. Revenue Growth Target: 15% Annually

• Approx. EPS Growth Target: 30% Annually

• Approx. Revenue Growth Target: 15% Annually

• Approx. EPS Growth Target: 30% Annually

Ahead of the Learning Curve Ahead of the Learning Curve