1. 0 Financials – Snapshot Incorporation: Progressive Education Network (“PEN”) has been incorporated under Section 42 of the Companies Ordinance, 1984. PEN is regulated by the Securities and Exchange Commission of Pakistan. Financial Statements: ADP has received financial statements as of FY 2012. PEN is preparing latest financial statements. Auditor: The financials have been audited by M. Yousuf Adil Saleem & Co., Chartered Accountants, a member of Deloitte Touche Tohmatsu Limited, one of the top auditors in Pakistan. Source: ADP research, Management estimates Note: Financial year for PEN ends on June 30.

2. 1 Based on PEN’s financials, it appears that PEN would continue to meet its recurring expenses (~PKR 9 mn) because 1) donations from outsiders have increased consistently over the last 3 years and 2) PEN is sponsored by Pakistan’s blue chip companies, which would continue to meet funding shortfall. Income PEN has three sources of income: 1) Donations, 2) Profit from bank deposits and 3) Exchange rate gain on foreign currency accounts Predominantly Donations: Donations represent 98% of PEN’s income. Its share has remained between 98-100%. Funding by Directors: Funding from directors grew from PKR 67k in FY 09 to PKR 3.9 mn in FY 11. However, it dropped by 36% in FY 12. ADP does not know the reason for this drop as of now. Funding by Others: Donations from outsiders have grown from 0 in FY 09 to PKR 6.6 mn in FY 12. Currently it represents 70% of PEN’s income. Expenses Financials – Income and Expenses PEN has three major expenses that represent 86% of total expenses: 1) School Running Expenses, 2) Staff Salaries and 3) Training Expenses School running expenses represent 47% of the total expenses. They have remained almost constant during FY11-12. Staff Salaries represent a third of PEN’s cost. Staff cost increased by 19% in FY 12, which is in line the salary increments in government schools. Training Expenses represent 6% of the total expenses. These expenses almost doubled in FY 12. It is unclear if the training expenses will continue to grow at this rate. Source: ADP research, Audited Financials

3. 2 Financials – Comps Comparable Schools: PEN has been compared with Mianwali Education Trust, Army Public School, Bunyad Foundation and TEDDS – The Trust School. All of these schools have received funding from ADP in the past. Expense per student / month: PEN is spending least amount of money per month per student. This is explained by XYZ. (high student to teacher ratio? Salaries as a % of expenses: Staff Salaries is the biggest expense for comparable schools. However, salaries represent merely a third of PEN’s expenses. The low ratio indicates that PEN’s overheads (school running costs) are substantially higher than comparable schools’ overheads. Private funding as a % of total funding: PEN’s income is primarily represented by donations. This is explained by the difference in business models. PEN adopts government schools, which do not charge fee to the students, unlike comparable schools that charge fee from their students. Source: ADP research, Audited Financials

4. 3 Financials – Budget Verification (1/2) Coverage: ADP has been able to verify 78% of the project cost. Verification source: 70% of the project cost was verified by examining ADP’s prior grants and secondary research. While remaining 8% of the project cost was verified by getting cost estimate from a computer vendor. Variance: Overall, it appears that PEN’s cost estimates are in line with cost estimates of projects approved by ADP. It is noteworthy that those projects were approved last year and construction cost has increased by ~12%. This implies that PEN’s construction cost estimates are highly competitive. Next Steps: ADP should verify the PEN’s cost estimates w.r.t roof’s construction and UPS. The following table analyzes cost estimates provided by ADP (excluding the cost of computer equipment): Source: ADP research, Management Estimates

5. 4 Financials – Budget Verification (2/2) Computer Lab Equipment represents 8% of the total cost. In order to verify PEN’s budget, ADP obtained cost estimates from Al-Qaim Corporation, a leading computer vendor. From the variance analysis below, it appears that PEN’s overall cost estimate is less than Al-Qaim’s cost estimate. Although PEN’s cost estimate for monitors and recycle toners are significantly higher than Al-Qaim’s estimate, the variance is merely PKR 7,150, which is <1% of the total project cost. Source: ADP research, Management Estimates