FY11 Annual Report

July 2010 June 2011

Highlights of Our Year

Launched operations in Nairobi, Kenya. We are testing how to replicate our model, and particularly how DDD can be sustainable based on local sales in East Africa. Our team in Kenya has skills that enable us to offer new services to both local and international clients, such as support for Google AdWords campaigns. Based on our initial experience, we are very excited about the local markets potential in Kenya and optimistic about replicating our model elsewhere. Validated huge opportunity for continued growth. DDDs industry segment could reach $20 billion and employ 780,000 socio-economically disadvantaged youth by 2015 according to a June 2011 Monitor Group report. The report, prominently featuring DDD, branded the field we pioneered as Impact Sourcing. Strengthened our Senior Management Team. We created a Chief Sales Officer position and filled this role with an ambitious leader from a competitor ten times our size; we recruited a Chief Operating Officer who brings deep industry experience to our local team; a Lao staffer returned to become our Chief Financial Officer upon her completion of an MBA; we hired a native Kenyan entrepreneur from the Gates Foundation to lead our operations in Nairobi. Integrated online English language instruction into our training. We rolled out a program blending eLearning with classroom instruction to all our offices. More than 100 staff members are now using our tailored EnglishTown program, while also being tutored offline by instructors. Gained a deeper understanding of our impact. We surveyed trainees, operator staff and graduates to track our progress and continue improving our program. We designed the survey tool with the help of researchers from the University of Michigan, and an independent 3rd party firm collected baseline data. The results help us see the transformation our staff from trainee to graduate. We will learn more as we continue this measurement annually.

Impacting Lives
In FY11 our new impact measurement process captured richer detail about the socio-economic and personal development effect we are having on participants in our program. New trainees provide our baseline. An independent firm administered 45-minute structured interviews with: o 50 trainees o 327 operators o 164 graduates

DDD graduates report a Standard of Living score (6.2) significantly higher than new recruits (3.8). As illustrated above, DDD helped graduates raise their quality of life and standard of living significantly. Alumni report feeling significantly more confident in their abilities than current program participants. Alumni have a near perfect self-efficacy score, of 8.6 (out of 10), vs. 4.2 among trainees. 71% of alumni feel positive about themselves, while only 58% of new recruits do.

115 West 30th Street, Suite 400

New York, NY

10001

+1.212.461.3700

Increasing Incomes Monthly Income (USD)

DDD Graduate w/work experience DDD Recent Graduate DDD Operator Avg Cambodian w/University Degree Avg Cambodian w/High-School Degree $$50 $100 $150 $200 $250 $300 $350

Graduates right out of our program earn almost 25% more than university graduates from wealthier backgrounds. DDD participants come from rural poor families and have no other means of attending university. The income of DDD graduates grows over time. Those with a few years of experience make 4.5 times what they might have earned had they not entered our program.

DDD alumni save an average of $60/month, vs. $1.75 for trainees. 76% of DDD alumni report having income stability. 100% of DDD alumni are above the poverty line.

115 West 30th Street, Suite 400

New York, NY

10001

+1.212.461.3700

People
People
Staff Number of graduates People Trained (Cumulative)

FY10
540 49 1,809

Actuals FY11
888 96 2,138

In fiscal year 2011 we were able to impact 65% more people than in the previous year. Our headcount growth was driven largely by our expansion to Nairobi and a surge in demand towards the end of our fiscal year. More significantly we doubled our number of annual graduates in just one year. We launched an innovative new online New Trainees English training program donated and specially adapted for us by Staff enrolled in EnglishTown EnglishTown. Training in English helps our staff perform better at DDD, learn Staff enrolled in University more effectively while at university and become more attractive to other Income Graduates (Avg) employers. We make EnglishTown available to our staff free of charge, but they course is done on their time. We are thrilled at the level of participation and progress in this program. 119 113 313 $281

The Business
115 West 30th Street, Suite 400 New York, NY 10001 +1.212.461.3700

Sales
Bookings Backlog of work (12- mo. rolling) Project revenue/hour

Actuals YTD
3,386 1,735 $2.43

Budget FY11
3,500 1,714 $2.99

% Under/Over Budget
-3% 1% -18%

While we finished the year with a strong sales pipeline and a backlog of work that was on target, productivity was a challenge in FY11. We took on more complicated work, moving up the value chain to become more profitable and provide our trainees opportunities for global market engagement. We struggled with some more complex projects, and a careful analysis showed that we didnt have all the operational knowledge we needed to execute some types of work. We adjusted to minimize the impact on our business, and the challenge became an opportunity for organization development. Our Laotian Chief Operating Officer moved into the role of Chief People Officer. We recruited a new Chief Operating Officer from outside DDD, a seasoned veteran recruited form the Philippines, and restructured our production and project management teams.
FY11 Income Statement (in $K) FY11 (Actuals) Revenue Business Revenue Donations Total Revenue Expense Operating Expense DDD Level Expense Depreciation Expense Capacity Building Social Mission Expense Nonprofit Expenses Total Expense Net 2,440 1,630 4,070 FY11 (Budget) 2,744 1,440 4,184

1,867 823 140 146 254 755 3,985 85

1,694 860 143 212 257 751 3,917 267

Our income statement tells the same story. Operating costs were higher due to the more complex work in FY11. We were able to deliver less work than planned, slowing our productivity and decreasing earned revenue. Because we had budgeted for a net gain to build a reserve, the implications have been manageable. We simply have a smaller reserve moving into FY12. Weve made the appropriate changes to strengthen our business going forward.

115 West 30th Street, Suite 400

New York, NY

10001

+1.212.461.3700

What the Future Holds:

Weve set the following goals for our new fiscal year, starting July 1, 2011: 1. Deliver and earn $3.3 million of revenue in Cambodia/Laos, $225,000 in Vietnam and $450,000 in Kenya 2. Produce at overall operating margin of 36% (compared to 23% for FY11), including average increase of 10% margin on ongoing projects, resulting in positive net income after depreciation 3. Sell $4 million of new international and SE Asia bookings, and $1 million in Kenya 4. Strengthen the skills, personal development and socioeconomic growth of operators, with measurement of our progress by the end of FY12 and the ability to set specific targets for FY13 5. Modify our recruiting and training system to be more flexible so that we can add significant number of operators for a new job within 2 months 6. Raise $2 million in funds, including $800K for DDD global, $450K for SE Asia Social Mission, $350K for Kenya and Vietnam growth, and $400K for new initiatives 7. Expand successfully to Kenya and launch pilot in Vietnam: a. For Kenya, deliver $450K of revenue and sell $1 million locally in sales b. For Vietnam, launch joint project with the National Library, earning $250K of revenue 8. For service offerings, implement business plan to grow e-books and develop new business offerings outside our current ones, potentially creating a $2 million+ business

115 West 30th Street, Suite 400

New York, NY

10001

+1.212.461.3700