THANEAKEA PHUM (CAMBODIA), LTD. Annual Report 11 Annual Report 2011_eng.pdf · Social Performance Report Card Social Performance Report Card / Annual Report 2011 1 Vision Poor rural

Annual Report

11THANEAKEA PHUM (CAMBODIA), LTD.

w w w . t p c . c o m . k h

A Licensed Microfinance Institution in Cambodia

TPC empowers communitiesthrough microfinance loans.

Social Performance Report CardSocial Performance Report Card / Annual Report 2011

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Poor rural Cambodian families are empowered to live their lives with dignity, social and economic security and justiceVision

The Thaneakea Phum (Cambodia), Ltd. (TPC) is a microfinance institution with a social vision and a business orienta-tion that focuses on providing rural poor women with the economic opportunities to transform the quality of their lives and their communities through the provision of effective and sustainable client empowering financial services.

Mission

Borrower s from rural areas

Borrowers from upland communities

Borrowers from coastal communities

Borrowers involved in agricultural activities

Borrowers below Poverty Line (new clients)

Women borrowers

Group borrowers

Unsecured borrowers

95,100

94,085

2,588

82,678

16,862

86,323

79,251

79,251

126,661,008,635

130,420,475,614

3,493,890,406

80,987,936,869

-

113,825,330,191

66,801,309,016

66,801,309,016

94.58%

97.39%

2.61%

60.48%*40.42%

85.00%

49.99%

49.99%

SOCIAL GOALSOUTREACH

TYPES OF CLIENTS NUMBER LOAN PORTFOLIOIN KHMER RIEL

PERCENT TO TOTALPORTFOLIO

AMOUNT

SOCIAL PERFORMANCE TOOLS AND MECHANISMSA. Poverty Targeting and Monitoring

B. Customer Care and Product Enhancement

Poverty Line definition In TPC’s Poverty Progress Index (PPI), we define as clients who are in level ofpoorest and poor

Poverty assessment/ measurement Poverty Progress Index (PPI) used to assess new client’s poverty level

Poverty tracking Poverty Progress Index (PPI)

Social performance reporting Once per annum

Transparent pricing• Set up Productions Board at all branches,• Disclosure of interest rate in the website (note: TPC does not charge other fees)• Participate in the Mix Market• Printing of detail information of loan facility and attach with repayment schedule

Client satisfaction study Twice-a-year conduct

Client feedback system• Comments box set-up at all branches• Direct phone access to the BM and SBM via phone number attached in

eludehcs tnemyaper eht

Market research for product development Before new products are developed, market research is conducted

Number of credit bureau checks Credit bureau will launch its operations in March 2012. TPC going to applycredit bureau check in loan process for all clients.

Code of ethics for staff Stated in personnel policy & procedure manual on page 3-4; TPC will print andframe and display on all offices

C. Non-Financial Services

Social responsibility activities All branches had arranged community event such as blood donation, planting tree, road improvement etc.

D. Personnel Policies

Financial literacy program Non-financial “financial literacy” service to clients

Linkage with other development organization PlaNet Finance & USAID-DCA. Currently, TPC is also working on possiblepartnerships with Good Return Australia and Habitat for Humanity

Employees satisfaction study Annual conduct by the HR department

Personnel policy & procedure manual Approved by BoD since January 2003 and was updated in March 2012

Other policies Whistle Blowing, Conflict of interest, National Social Security Fund, Group Personnel Accident Insurance (FORTE)

(* percentage of TPC’s client below poverty line) Prepared with technical assistance from PlaNet Finance, funded by European Union and Agence Française Développement

Community Event

Thaneakea Phum (Cambodia), Ltd.2

Road Improvement

Blood DonationA total of 39 Staff from TPC’s Siem Reap Branch, Soutr Nikom Subbranch, Chi Kraeng Subbranch, Puok Subbranch, and Otdar Meanchey Subbrach donated blood to the Komar Angkor Hospital in Siem Reap province under a title named “I donate blood to save your life even though you do not know me”. Around 121 people participated in this event, including Dr. Haut Chhat and Dr. Hon Seng-Hab representing Komar Angkor Hospital, as well as the representatives of village, district authori-ties, and the local people.

Last year’s flood caused damages to many infrastructures in Cambodia, especially on the road network. These subsequently affected the local economy. Thus, in December 2011, TPC’s Kandal Branch and S´ang Subbranch prepared community event to improve the roads, damaged by the flood, located in Chhmar Puon village. TPC filled in 5 containers of land and planted 43 trees on both sides of the road with the participation of 33 staff of Kandal branch and S´ang Subbranch. Fifty five other people also assisted. They include the commune chief, village chief and villagers.

Overview

School Activities

Community Event Highlight

To contribute in developing community as well as to response to TPC’s vision, all TPC’s offices are allowed to prepare community events twice a year. This events allow TPC’s staff to contribute non-financial support to their communities as well as to establish good relationship with local authorities, clients, and the public. Through this event, TPC is able to increase its reputation as not only a customer-oriented financial institution, but also a community-oriented organization.

In November 2011, Kratie Branch and Chhloung Subbranch worked together one community event. The staff hang Khmer slogan, planted trees, and cleaned the school campus at Chrova Kohdach primary school. The staff also invited the School Principal, teachers and students of Chrova Koh-dach school. A total of 268 participants joined the activity. The activity aims to help improve the edu-cational facility, and subsequently, the quality of learning in that school. The teachers and parents of students expressed their appreciation to TPC.

BLOOD DONATION

Community Event / Annual Report 2011

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Month No. of EventsNo. of Participant

TPC Community Sub-total

October

November

December

5

2

9

179

55

261

868

265

1,144

1,047

320

1,405

2,772Grand-total

Summary 2011

The main goal in arranging the community events is to generally support the people in the communi-ties that TPC serves, and to specifically, allow the staff to contribute and take part in social activities as good citizen. In line with the Board and management’s goal to do several community events in 2011-2012, the Phnom Penh Branch and Odongk Subbranch arranged to hold such event on Octo-ber 15, 2011 at KbalOr Primary School, located in KbalOr village, Preah Srah commune, Odongk district, Kompong Speu province. Other branches also held community event one after another, which include:

By the end of December, 2011, 16 different community events were prepared at various locations by the 13 branches of TPC. These events are successful in helping to improve the quality of life of people living in various rural communities. TPC has received a lot of congratulations and apprecia-tion from clients, the public, teachers, commune-district chief and authority. Furthermore, all TPC staff participating in the events are very happy and proud that they were able to contribute to TPC in its efforts to achieve its mission-vision.

Awarding of outstanding students, cleaning and organizing school parks, planting of trees, hang-ing of educational slogan, and providing equipment to schools i.e. Teacher’s table and chair, board, student’s table and seats for relaxing and others.Road filling in certain rural communities. These are roads which were affected by the flood. TPC staff also did some tree planting on road sides to prevent land erosion caused by the rain.Volunteering to donate blood at hospitals which is in need of blood supply for their patients.

Operational & Financial Highlight

( ) Unit by thousand Riel

2011 2010 Change (%)

11160

45716

3,94687,195

90.42%90,230,031

1,0341.96%

127,663,522102,816,77624,846,74626,873,1214,396,2943,489,867

13162

54517

4,69296,673

89.33%133,914,366

1,3850.13%

185,559,434152,993,60732,565,82738,795,8437,420,8475,891,681

15.38%0.00%

-16.15%

5.88%15.90%

9.80%-1.22%32.62%25.34%

-1,407.69%31.20%32.80%23.70%30.73%40.76%40.77%

Number of branchesNumber of subbranchesNumber of service postsNumber of staffNumber of operating provincesNumber of operating villagesTotal borrowers% of women borrowersLoan outstandingAverage loan outstanding per borrowerPAR > 30 daysAssetsLiabilitiesEquityTotal incomeProfit before taxNet profit after tax


Institutional Profile

V i s i o n , M i s s i o n , a n d G o a l S t a t e m e n t


Vision StatementPoor, rural Cambodian families who are empowered to live their lives with dignity, social and economic security and justice.

Mission StatementThaneakea Phum Cambodia (TPC) is a microfinance institution (MFI) with a social vision and a business orientation that provides poor, rural men and women with the economic opportunities to transform thequality of their lives and their communities through the provision of effective and sustainable client empowering financial services.

M

V

Vision, Mission, and Goal Statement / Annual Report 2011

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Goal Statement

To reduce poverty and improve the standard and quality of life for the poor, TPC shall provide men and women with reliable access to microfinance services that address their needs, build their capacity and engender mutual guarantees, group cohesion and individual loan.

G


I am delighted to report that 2011 is yet another year that Thaneakea Phum (Cambodia) Ltd. ended with such staggering results. The Company has continued to strengthen its positioning among low income, rural households, especially among Cambodian women. TPC was able to serve more micro, small, and medium enterprises and farmers interested in being long-term financial partners. This is one of the many reasons why TPC remains to be one of the strong performers in the industry.

I am pleased to report to you some of our key achieve-ments. At the Board of Directors level, the shareholders were able to interest 2 new members. Strong corporate governance is a key component of our business model. Ms. Jessica Moffett-Rose is a Vice President- Private Equity at Developing World Markets. She has gained six years of experience in development finance work-ing with ProCredit Holding in Germany, a nonprofit loan fund focused on community development and

microfinance in Washington DC, and a village banking program in Nepal. Mr. Christophe Forsinetti is the Vice President at DEVENCO, a private equity and invest-ment consulting company in Cambodia, where he is responsible for identification, assessment, structuring and setting up of investment projects, acquisition and startups. He has over 10 years experience setting up and running operations in both Europe and emerging markets and microfinance experience with Microcred and Planet Finance.

In 2011, our shareholders—DWM and ESOP— injected additional capital raising our total equity to US$1.5 million. This enabled the Company to keep an adequate capital as the portfolio grew. TPC posted a 27% increase in net income compared to the prior year, and for the first time, declared dividends. The loan portfolio almost doubled compared to the end of 2009- which was only 2 years ago. TPC posted a 27% increase in net income compared to the prior year, and for the first time, declared dividends.

Message from Chairman of the Board

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Toward the latter part of the year, the Board was able to find a suitable Chief Executive Officer. Arah Sadava has over 14 years of experience in managing, and in extending advisory services to microfinance institutions and rural banks in Philippines, Uganda, Tanzania, Mozambique, Ghana, and Ethiopia. We were also able to identify an experienced Sr. Risk Officer. Mrs. Svoeuy Sodyna has worked with one of the “big four” interna-tional accounting firm as Senior Auditor for more than three years; wherein she led audit teams and com-pleted statutory and compliances audit for various industries including Banks and MFIs.

With a robust and diverse Board of Directors and a complete senior management team, it is expected that TPC will continue to do better and better each year. I am convinced that TPC has all the ingredients required for a successful, sustainable development: strong

foundations and a clear vision of its role as a respon-sible and professional financial institution, acting for the benefit of our valued clients in the years to come.

Michael SpinglerChairman of the Board

Message from Chairman of the Board / Annual Report 2011

It gives me great pleasure to present to you Thaneakea Phum (Cambodia) Ltd’s annual report and financial state-ment for the year 2011. We have continued to live up to our purpose of transforming lives and livelihoods of Cambodian communities socially and economically by availing to them appropriate, inclusive financial services.

Key Performance IndicatorsFinancial Performance

Two years after the global recession, Cambodia has quickly turned around and achieved a very good level of stability, with the economic growth improving from negative 2% in 2009, to 5.9% in 2010 and then to about 7% in 2011. Efforts of microfi-nance institutions played a great role in helping the country achieve remarkable growth. TPC, being one of the industry leaders, continued to do its share in increasing financial inclusion in Cambodia. TPC’s total assets increased by 46% from US$31.5 Million (2010) to US$45.9 Million; which is mainly brought about by the 49% increase in loan portfolio from US$22.3 Million (2010) to US$33.16 Million (2011). At the same time, portfolio quality continued to improve with the PAR > 30 days decreas-ing to 0.13% by the end of the year. In 2011, we managed to reach 96,542 active borrowers.Given TPC’s significant growth, we were able to achieve 21.1% ROE in 2011- a big leap from 2010’s 15% end-of-year ROE. Similarly, our ROA increased from 2.9% (2010) to 3.9% (2011). Thus, by the end of the year, TPC was able to achieve an unprecedented level of income; which enabled the Company to maximize shareholder returns.

Social PerformanceFor the first time, TPC is presenting in its annual report the social performance card. The Company continues to be true to its mission of serving rural low income communities, espe-cially their women members. Eighty five (85%) of the total borrowers are women; 94.5% are coming from rural areas and over 60% are engaged in agricultural activities. Almost 50% of the total borrowers were into group loans. These demonstrate our commitment to continue bringing financial services to underserved portions of the population, while at the same time, strengthening our partnerships with the small entrepreneurs in urban centers.

Qualitative MilestonesWe opened 4 new offices in 2011 which are located in Dang-kar; Tuol Kork Chloung and Sotrnikom. We introduced the Poverty Progress Indexed (PPI) which helped us in defining new clients’ poverty level. Also, we introduced the Risk Management Department which strengthened TPC’s ability to mitigate and address various types of risks. In addition, we started pilot testing the Home Improvement Loan (HIL) product in 3 locations on the latter part of 2011. The objective is to help low income households improve the quality of their living condition without using much of their business capital for loan repayment. We also expanded our Loan Recovery Unit and assigned new recovery staff to our offices in different locations. Our loan recovery unit has been delivering very promising results since the beginning of 2011.We are committed to developing our human capital. To this end, the company has continued to enhance its human


Message from CEO

capital through training and leadership development for its staff, and where necessary, had complemented existing talent pool with additional new hires. In addition, we contin-ued to invest in communities in which we operate. We have delivered numerous community events, which include repainting of classrooms, tree planting activities, blood dona-tion efforts, among others. We also believe in supporting organizations that aim to help disadvantaged youth in gaining skills and know-how. Thus, we have trained and absorbed interns from Don Bosco technical school, as well as from PSE (Pour Un Sourire d Enfant).

2012 ForecastWe have a very bullish outlook for 2012. TPC expects to enhance its market share through geographical expansion by opening more offices. We plan to rollout the Home Improve-ment Loan (HIL) product, as well as continue to expand our portfolio in agriculture. Most importantly, however, we will start the process of transforming TPC to become a deposit-taking institution. We believe in the importance of becoming a full financial service intermediary in order to achieve our vision-mission.In 2012, we shall continue to strengthen our business model while paying special attention to continuous improvement of our asset quality through prudent lending and risk manage-ment. We will also continue to be committed to social perfor-mance management, especially in the areas of client protec-tion principles, women economic empowerment, and agricul-tural development. Lastly, we will also continue to support the activities of the National Bank of Cambodia (NBC). We recog-

nize the importance of the role of NBC in nation-building, and very specifically, in advancing the development of the microfi-nance industry. We also recognize the major impact of the Cambodia Microfinance Association (CMA), our funders, our technical partners (such as Planet Finance, Good Return Australia, etc), and our industry peers.

ConclusionI do not wish to take much credit for TPC’s accomplishments for 2011, as I started serving as the CEO in the last quarter of the year. Nevertheless, I, in behalf of the management of TPC, would like to express my sincere gratitude to you—our customers, our shareholders, development and strategic partners and strategic business partners for your overwhelm-ing support to TPC that has been the reason for an excellent performance for 2011. I also wish to thank our Board of Direc-tors for your oversight and guidance. I would also like to appreciate the management and staff for your passion, focus, and dedicated contribution to the continued success of TPC. We intend to harness all our human and material resources in order to meet the day to day challenges that may confront us as we strive to achieve our vision of contributing to the social and economic prosperity of the people of the Kingdom of Cambodia.

Thank you.

Nurhayrah SadavaChief Executive Officer

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Message from CEO / Annual Report 2011

TPC Overview


Thaneakea Phum (Cambodia) Ltd. ‘TPC’ is a rapidly growing regulated microfinance institution with a focus on serving low-income women in the rural areas of Cambodia. As the 5th largest MFI in terms of number of borrowers in Cambodia, TPC focuses on group lending with a social responsibil-ity focus that is stronger than most others in the market. As of December 31, 2011, TPC had a total equity of USD $8 million, total assets of USD $45.9 million, gross loan portfolio of USD $33.15 million, average loan size of $343 and an annualized ROE of 21.1%. TPC currently ranks 5th in number of borrowers serving 96,542 clients, an estimated 5% of market, through 545 dedicated management and staff.

TPC is majority-owned by Developing World Markets (DWM). It acquired ownership from Catholic Relief Services (CRS) through a secondary share purchase in early 2010. TPC was established by CRS in 1994 to enable rural women to gain access to financial services that they could use to finance their microenterprises. At present, DWM owns 89.82% of total shares and the remaining shares are owned by the TPC staff through the TPC Employee Stock Ownership Plan (ESOP). DWM is a US-based socially responsible financial services group that primarily invests in microfi-nance institutions to promote economic and social development. It has close to USD $800 million in assets under management. For more information, see www.dwmarkets.com. DWM has brought a fresh outlook and additional expertise, as well as a continued commitment to TPC’s social mission, enabling TPC to expand with confidence and further broaden its outreach.

Originally launched as part of the Small Enterprise Development Program of Catholic Relief Services (CRS) in 1994, TPC grew steadily through the support of organizations such as USAID and McKnight Foundation until 2001. In 2002, it officially incorporated to become ThaneakeaPhum (Cambodia) Ltd. (meaning Village Bank Cambodia), and in 2003, it received its license from the National Bank of Cambodia. TPC has been regulated by the National Bank of Cambodia since 1999 and is one of twenty-five licensed MFIs in Cambodia.

From 2002 through to 2009, TPC continued to expand its operations across Cambodia in many areas that had never had access to financial services. TPC worked with a variety of staff, develop-ment organizations and most importantly clients to develop new products to meet the ever-increasing needs of its rural client base. Its wide network of 32 office locations, fair and transparent product pricing, and determination to serve the very poor have made TPC a favorite amongst rural clients.

TPC OVERVIEW

ShareholdersShareholders / Annual Report 2011

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Shareholders are the owner of the company. Two main Shareholders of Thaneakea Phum (Cambodia) Ltd. are Development World Market (DWM) and TPC Employee Stock Ownership Plan (TPC-ESOP) with their shareholding structure as follows:

Developing World Market (DWM): is a US-based socially responsible financial services group that primarily invests in microfinance institutions to promote economic and social development. It has close to USD $800 million in assets under management. For more information, see www.dwmarkets.com. DWM has brought a fresh outlook and additional expertise, as well as a continued commitment to TPC’s social mission, enabling TPC to expand with confidence and further broaden its outreach.

TPC-ESOP: is a company hold by TPC staff through the TPC Employee Stock Ownership Plan (TPC-ESOP). The exclusive objective of TPC-ESOP is to provide to the Eligible Employees of THANEAKEA PHUM CAMBODIA LTD (“TPC”) a benefit associated with their employment and to serve as a vehicle through which the Eligible Employees of TPC may share in the long-term future of TPC.

Development World Markets(DWM)

TPC Employee Stock Ownership Plan(TPC-ESOP)

10.18%

89.82%

DWM

TPC-ESOP

Total

89.82%

10.18%

100%

SHAREHOLDERS SHARE BY PERCENTAGE

Organizational Chart


Board ofDirectors

RiskCommittee

AuditCommittee

Chief OperationsOfficer

Chief FinanceOfficer

Risk &ComplianceDepartment

FinanceDepartment

InformationTechnologyDepartment

Admin &ProcurementDepartment

MarketingDepartment

HumanResourcesDepartment

Regional Manager

Branch Office

Branch Office Branch Office

Post OfficePost OfficePost Office

LoanRecovery

Department

ALCOCommittee

CEO

CreditCommittee

CompanySecretary

ExecutiveCommittee

Remuneration& Recruitment

Committee

Internal AuditDepartment

Operating AreasOrganizational Chart / Annual Report 2011

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C a m b o d i a

T h a i l a n d L a o s

Phnom Penh

Kandal

Takeo

Kep

Koh KongKampong

Chhnang

Battambang

BanteayMeanchey

Otdar Meanchey

Preah Vihear

Kampong Cham

Kratie

Mondul Kiri

Stung Treng

Rattanak Kiri

Prey Veng

Svay Rieng

Siem Reap

Pailin

Kampong

Speu

Sihanoukvill

Kampot

V i et n

am

Pursat

Kampong Thom

# of Branches

# of Subbranches

# of Service Posts

Operating Provinces

Operating Villages

13

16

2

17

4,692

Operating Areas

North

Board of Directors Profile


(1) Mr. Michael Spingler is the Chairman of the Board, a microfinance specialist with 18 years of development experience providing strategic advisory, technical assis-tance and capacity strengthening services to microfinance institutions (MFIs), banks and/ or credit unions in Egypt and Southeast Asia and Ghana. Advisory, technical and training assistance have focused on governance, strate-gic, business and operational planning, operations, human resources, marketing, and financial management and product development and service delivery.Most recently, he was based full time in TPC acting as a senior management consultant (January 2010 – January 2012) and interim CEO from February – October 2011. He was the Chief Operating Officer of TPC from 1996 – 2003.

(2) Ms. Fernanda Lima is a Board Member at TPC in Cambodia and Board Member at Microcred China in Sichuan, China. She joined DWM in 2008, where she is responsible for originating, underwriting, and closing equity transactions and manages an equity portfolio of approximately $30 million. She takes the lead on equity investments in East Asia, Southeast Asia and Brazil and has a combined fifteen years of experience with major private equity firms in the US, Europe, and South America. Earlier, Ms. Lima worked for AIG Global Investment Group in London, conducting equity transactions in Scandinavia and Eastern and Southern Europe, and with AFLA/Citicorp Venture Capital in Sao Paulo, Brazil. She started her career with Brazil-based Unibanco/ITAU, where her first assignment after completing a leadership trainee program was as a relationship manager for mid-cap companies, moving on to assume several analyti-cal and project management roles, including the launch of two direct sales units to distribute insurance and invest-ments products to Brazil’s emerging middle class. She has an MSc in Environment and Development from the London School of Economics and an MBA from the University of London. She is also a British Chevening Scholar, with funding by UK’s Foreign & Commonwealth Office, and speaks fluent Portuguese and Spanish.

Board of Directors Profile / Annual Report 2011

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(3) Mr. Chandula Abeywickrama is the Deputy General Manager – Development Banking of Hatton National Bank in Sri Lanka where he is responsible for the bank’s overall Development Banking and Microfinance operations. Apart from his responsibilities at HNB, he is also Chairman of the Banking With The Poor Network and Lanka Financial Services for the Underserved Settlements (LFSUS), Splendor Media (Pvt) Ltd. He is also a Director of Vision Fund and a member of the Advisory Board of YouthSave Consortium (USA) and Makingcents International (USA). Further, he participates in other several initiatives in the field of “financial services with social impact” globally.

(4) Mr. Christophe Forsinetti is Co-founder and CEO at DEVENCO, a leading venture capital and investment consulting firm in Cambodia. Prior to DEVENCO, he was responsible for the set up of a microfinance institution in Madagascar and participated in the development of another MFI in Mexico for MicroCred. He has over 10 years experience setting up and running operations in emerging markets including greenfield, acquisitions and joint ventures. He holds a BA in Management from IPAG (Institut de Préparation a l’administration et la gestion) and a Research master in Geopolitics from the University of Paris 8.

(5) Ms. Jessica Moffett-Rose is Vice President within the Private Equity team at Developing World Markets, a socially responsible fund manager and investment bank. She has gained eight years of experience in development finance, including work with ProCredit Holding in Germany, a nonprofit loan fund focused on community development and microfinance in Washington DC, and a village banking program in Nepal. Ms. Moffett-Rose holds a Masters degree from Harvard University’s Kennedy School and a B.A. from Princeton University.

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Management Team Profile


Mr. Sok SophalChief Finance Officer

Mrs. Nurhayrah SADAVAChief Executive Officer

Mr. Teng PheapInternal Audit Manager

Mr. Sok VoeurnChief Operations Officer

Mr. Chea SophalAdmin & Procurement Manager

Management Team Profile / Annual Report 2011

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Ms. Phoeuk SokhaHuman Resource Manager

Mr. Eng BunthachInformation Technology Manager

Mr. Loung PhealinFinance Manager

Mr. Kong KosalLoan Recovery Manager

Mrs. SVOEUY SodynaSenior Risk Officer

Mrs. Nurhayrah SADAVA has over 14 years of experience in managing, and in extending advi-sory services to microfinance institutions and rural banks in Philippines, Uganda, Tanzania, Mozambique, Ghana, and Ethiopia, prior to joining TPC in October 2011. She worked as a microfinance specialist and Regional Manager for the Microenterprise Access to Banking Services (MABS) Program in Philippines from 1998-2004. While still with MABS, she did a short term work for the SPEED Project in Uganda. This later gave her the opportunity to lead the transformation of Faulu Uganda Ltd. to become a licensed financial intermediary. In 2006, she moved to Tanzania to manage the transformation of the Small Enterprise Development Agency (SEDA) to qualify for the micro-deposit taking license. Arah joined Opportunity Interna-tional in 2008, and served as the Chief Operations Officer of Faulu Tanzania Ltd. (now called Opportunity International Tanzania), and for a short while, of Banco Oportunidade de Mozam-bique. In 2009, she accepted the CEO post for a licensed non-bank financial institution in Ghana called Adehyeman Savings and Loans. Arah later on moved to Ethiopia to serve as the Transformation Manager for East Africa for VisionFund International (VFI).


Mrs. Nurhayrah SADAVAChief Executive Officer

Mr. Sok VoeurnChief Operations Officer

Mr. Sok Voeurn, TPC’s Chief Operations Officer obtained for his Master degree in Business Administration with the major Finance and Banking at the Build Bright University in Cambodia in 2005. He received a Bachelor degree in Economic Science at the faculty of Law and Eco-nomic Science in 2000. He has attended microfinance training program at the Boulder Microfi-nance in Italy, and other pertinent training in USA, South Africa, India, Bangladesh and Thai-land. He has also received training in Cambodia on credit management, financial manage-ment, asset liability management, trade finance, human resource management, risk manage-ment, communication and coaching skill, banking, good governance and leadership and office management, among others. He served in ACLEDA Bank Plc. as Credit Officer from 2000-2001 and he was promoted to Head of Credit Control Unit in Head Office from 2001 to 2005. From 2005 to 2010 he was the Operations Manager in SATHAPANA Ltd. (MFI) in charge of day-to-day operations which included managing loans, savings, money transfers transactions and market expansion. He started working for TPC in April 2010.


20

Mr. Sok SophalChief Finance Officer

Mr. Teng PheapInternal Audit Manager

Mr. Chea SophalAdmin & Procurement Manager

Mr. Sok Sophal, TPC’s Chief Finance Officer studied for his Master of Finance at the National University of Management in 2007. He received his Bachelor degree in Economics with a major in Enterprise Management at the Faculty of Law and Economics in 2000. He has attended numerous training courses in the areas of Securities Markets in South Korea and locally. He also attended several other courses related to Financial Analysis, Accounting, Taxes, and Mar-keting. He served in ACLEDA Bank Plc. as an Assistant Manager of the Management Account-ing Unit (2003 – 2007) and Manager of the Management Accounting Unit (2007 – 2008). He was promoted to the Assistant Senior Vice President (responsible for Investment) of the Legal and Corporate Affairs Division in ACLEDA Bank Plc. in 2008. Hereafter January 2009, he was the Deputy Head of Capital Market Division of ACLEDA Bank Plc. He started working for TPC in August 2010.

Mr. Teng Pheap is TPC’s Internal Audit Manager studied for his MBA of Accounting at the West-ern University. He received a Bachelor Degree of accounting from National Institute of Manage-ment. Prior to rejoining TPC he worked for Angkor Mikroheranh Votho Kapuchea (AMK) as an internal auditor and internal audit team leader from 2004 -2007. From 2007 to 2008 he was a regional manager for AMK. He was a former internal auditor with TPC from 2001 to 2004. He started working for TPC as Internal Audit Manager in December 2008.

Mr. Chea Sophal is TPC’s Admin & Procurement Manager, graduated from high school in 1975. He worked for Private Agency for Collaborating Together/John Snow Inc. (PACT/JSI) from 1993 to 1997. He attended Regent College for two years taking up accounting courses. He joined CRS as Grant Officer in July 1997. As part of TPC’s staff development, he participated in the following training courses: Poverty Lending Principles, Governance, Management and Leader-ship, a microfinance training program at the Microenterprise Development Institute in Man-chester, New Hampshire, USA, and Business Planning and Managing Growth course in the Philippines. From 2005-2007, he attained Master program in CUP University with a major in Political Science and Public Administration and obtained his Master degree of Public Adminis-tration hereafter.

Ms. Phoeuk Sokha, TPC’s Human Resource Manager studied her Business Management at the University of Cambodia in Phnom Penh in 2006 and obtained her Bachelor Degree of Busi-ness Administration Program in 2009. She started working with TPC in 2001 as Branch Man-agement Support Manager. In 2003, she was appointed as Branch Manager. She worked with CRS from 1995 to 2003 in various roles in project management with her last position as Project Officer in the TPC credit program. In 1994, she worked for Hotel Sofitel Cambodiana as Busi-ness Center Clerk. She has attended the microfinance training program at the Microenterprise Development at Southern New Hampshire University in Manchester, USA, as well as other training programs in the Philippines, Indonesia, and India. She also participated in several trainings in Cambodia related to Microfinance such as National Research on Savings Prod-ucts, Contract Law, Labor Law, National Social Security Fund, Advocacy, TOT Start Your Busi-ness, General Management, Operational Risk Management, Women in Leadership, The Effec-tiveness in Monitoring Staff Performance Appraisal, Compensation and Procedure in Ending Staff Contract with Fix Duration and Staff Retaining Strategy and so forth.


Ms. Phoeuk SokhaHuman Resource Manager

Mr. Eng BunthachInformation Technology Manager

Mr. Loung PhealinFinance Manager

Mr. Loung Phealin, TPC Finance Manager, obtained his master degree in Financial Manage-ment from Royal University of Law and Economics in 2008 and bachelor degree of business administration in Accounting from former Maharishi Vedic University in 2004. He attended numerous professional courses including financial management, the measurement of financial performance, assets and liabilities management, strategic planning and other microfinance-related courses. He started working for TPC since 2005 with a position as Head Office Accoun-tant (2005-2007) and was promoted as Chief Accountant in Sept 2007 and then promoted as Finance Manager in May 2010. He plays a significant role in the overall financial management of TPC, working extensively with BOD Chairman, Chief Executive Officer, Chief Operation Officer, Chief Finance Officer, Department Managers, all TPC staffs and other relevant stake-holders. He is well able to cope with the changes in government laws and regulations. Prior to this, he served as Assistant Station Manager at Kampuchea Tela Co.; Ltd (2004-2005).

Mr. Eng Bunthach, TPC’s Information Technology Manager studied for his Bachelor of Com-puter Science and Engineering from the Royal University of Phnom Penh in 2003. He obtained Master Degree in Information Technology from Norton University in 2011. He started work with ACLEDA Bank Plc, as a programmer in early 2004 and worked on the software development, analysis and design of loan and savings system, training management system, human resource system, budgeting system etc. In 2007, he was promoted as Assistant Vice President and Manager of Software Development Unit where managed and led the software develop-ment unit and managed various IT projects in coordination with other unit managers and also worked with many outside vendors (Locally & Globally). He started working for TPC in July 2010.

Mr. Kong Kosal, TPC’s Loan Recovery Manager obtained a Bachelors degree in Management from the University of Management and Economics, Cambodia in 2004 and studied for a Masters degree in Laws (LLM) from Build Bright University in 2007. He has close to 11 years of experience working with banks and financial institutions in Cambodia including Hattha Kaksekar Limited, PengHeng SME Bank Ltd, VIP Bank Ltd, OSK Indochina Bank Ltd, LLKG (Cambodia) Chartered Accountants and Thaneakea Phum (Cambodia), Ltd. where he has held senior positions in audit, tax, compli-ance, and branch and loan management. Mr. Kosal has continued to hone his skillset through executive courses in management and leadership, banking and microfinance, SME banking, accounting, tax and audit in the Philippines, Singapore, Malaysia, Vietnam and Cambodia. He has also attended seminars and training sessions on advanced auditing methodologies, Operacy, success mindset mastery, managing people, leadership development and other accounting-related skills conducted by KPMG, PwC and other professionals from the UK, India, Singapore, Philippines, Malaysia, Korea and Japan. Before being promoted to be his current position in late 2010 he was employed as the Manager of TPC’s Phnom Penh branch since early 2009.


22

Mr. Kong KosalLoan Recovery Manager

Mrs. SVOEUY SodynaSenior Risk Officer

Mrs. Svoeuy Sodyna, TPC’s Senior Risk Officer is pursuing for ACCA Qualification from the largest professional accounting institute in the United Kingdom. She received her Bachelor degree in National University of Management in 2006. She attended numerous professional courses including risk management, financial management, strategic planning and other microfinance-related courses. She worked with one of the “big four” international accounting firm as Audit Senior for more than 3 years in which the responsibility included leading the audit teams and completing the statu-tory and compliances audit for various industries included Banks and MFIs. She started working with TPC in May 2011.

Board Committee

Thaneakea Phum (Cambodia), Ltd.

The Board Committees provide recommendations to the Board of Directors and Management of TPC. TPC Board Committees consist of the followings:

Audit Committee Scope and Purpose

The Audit Committee is a standing committee of the Board of Directors. The purpose of the Commit-tee is to assist the Board of Directors in fulfilling its oversight responsibility relating to (i) integrity of financial statements and financial reporting process and systems of internal accounting and financial controls; (ii) performance of the internal audit services function; (iii) annual independent audit of financial statements and the engagement of the Company’s external auditors; (iv) compliance with legal and regulatory requirements; and (v) the fulfilment of the other responsibilities set out herein.

In discharging its responsibilities, the Committee is not itself responsible for the planning or the conduct of audits or for any determination that the Company’s financial statements are complete and accurate or in accordance with generally accepted accounting principles. This is the responsibility of management and the independent auditors.

Composition

The committee shall be chaired by an independent board member. It shall include at least an inde-pendent member with expertise in finance, accounting, legal issues and/or banking. The committee should meet regularly in between board meetings. The Audit Committee consists of the following:

No. Name Position Role in Committee1 Mr. Christophe Forsinetti

2 Mr. Michael Spingler

3 Ms. Fernanda Lima 4 Mr. Teng Pheap 5 Ms. Nurhayrah Sadava 6 Mr. Sok Sophal

7 Mr. Sok Voeurn

8 Ms. Kang Sokkhim

Duties and Responsibilities

Independent Board MemberChairman of BoardBoard MemberInternal Audit MangerChief Executive OfficerChief Finance OfficerChief Operations OfficeCompany Secretary

ChairMemberMemberVisitor Visitor VisitorVisitorMinutes Taker

23

Audit CommitteeRisk CommitteeNomination and Remuneration Committee

Review interim and annual financial statements to ensure the integrity and credibility of the company's financial reporting system and process

Board Committee / Annual Report 2011

Frequency of Meeting

During year 2011, Audit Committee met eight times in January, April, May, June, July, October (twice), and December.

Comment Agenda

Comment agenda of Audit Committee focuses on the overall performance of audit team, findings and if the findings from previous audits were closed. The Committee also covers surveys and analy-sis on multiple loans, work environment, and client resignations. Significant agenda discussed in 2011 include as follows:

24

Assist the board in the development of financial policies and the internal control structure, and facilitate communication of these matters between the board, company management, the inde-pendent auditors, and the internal auditors Assess the company's internal control structure to assure operational effectiveness and efficiency, reduce the risk of unreliable financial reporting, protect the company's assets from misappropriation, and encourage legal and regulatory compliance Act as the primary liaison between the company's financial management and the independent auditors and serve as an intermediary when views differ on the accounting treatment Meet privately with management, the internal auditors, and the independent auditors at least once a year and also hold an executive session to discuss company management's perfor-mance Make recommendations to the board of directors for the selection of the company's independent auditors Know the scope of procedures performed by the independent auditors and their results, includ-ing a clear understanding of the disclosure requirements Exercise an active oversight role over internal auditors, including reviewing their mandate, staff-ing, budgets, and audit results and demanding a detailed annual presentation, plus ongoing updates Act as "watchdog" by establishing procedures for receiving and investigating whistle-blowers complaints and protecting them from reprisals. - a key deterrent to corporate improprieties Communicate regularly with the MFI's senior financial officer, especially to understand the corporate environment and culture and to evaluate top management's "corporate mentality" Reviews the proposed budget carefully and, in some cases, may make budget suggestions to the staff before the budget is considered by the full Board.

Audit Work plan 2011Internal Audit Findings and Closures from previous quarterWork Environment, Resignations, and /or Multiple Loan Surveys and AnalysisNBC Assessment Visits, On Site Inspection Recommendations and Closure of FindingsExternal Audit


Risk Committee

Scope and Purpose

The Risk Committee is a standing committee of the Board of Directors. The purpose of the Commit-tee is to monitor the implementation of risk management policies as defined by the board. This would include continuously assessing the effect of changes in operating and business environment of the TPC, formulating risk strategies to respond to changes and aligning risk strategies with TPC strate-gies.

Composition

The committee shall be chaired by an independent board member. It shall include at least an inde-pendent member with expertise in finance, accounting, legal issues and/or banking. The committee should meet regularly in between board meetings. The Risk Committee consists of the following:

No. Name Position Role in Committee1 Mr. Chandula Palith Abeywickrema2 Mr. Michael Spingler3 Ms. Fernanda Lima4 Ms. Jessica Moffett-Rose5 Ms. Nurhayrah Sadava6 Mr. Sok Sophal7 Mr. Sok Voeurn8 Ms. Svoeuy Sodyna9 Ms. Kang Sokkhim


Independent Board MemberChairman of BoardBoard MemberBoard MemberChief Executive OfficerChief Finance OfficerChief Operations OfficerSenior Risk OfficerCompany Secretary

ChairMemberMemberMemberVisitorVisitorVisitorVisitorMinutes Taker

25

Monitor system of risk assessment and risk management to safeguard the institution’s assets and financial resources Manages the identification, assessment and prioritization of risks to TPCSupervise management team’s approach to developing strategies to measure and manage riskOversee the company's internal control structure to assure operational effectiveness and efficiency, reduce the risk of unreliable financial reporting, protect the company's assets from misappropriation, and encourage legal and regulatory compliance Reviews testing and evaluation of risk management policies and procedures by management, internal audit and independent auditorsDiscuss any reported weaknesses in the internal control structure with the internal and indepen-dent auditors and review management actions taken in response to the auditors' recommenda-tions as presented in the management letter


Nomination and Remuneration Committee

Scope and Purpose

HR and Remuneration Committee is a means by which the Board can provide guidance on the human resources management of TPC. The purpose of the Committee is to ensure an effective organizational structure is in operation and there are competitive human resources and compensa-tion policies and practices. Its primary responsibility will include reviewing, monitoring and making recommendations to the Board of Directors.


During year 2011, Risk Committee met four times in January, May, July, and October.

Comment Agenda

Comment agenda of Risk Committee focuses on the overall risks related to TPC (liquidity, credit, HR, external, etc.) or compliance issues related to NBC or lenders. Significant agenda discussed in 2011 include as follows:

26

Provides management team with recommendations and guidance on how to remedy internal and external audit findings to mitigate risksCommunicate regularly with the MFI's senior financial officer, especially to understand the corporate environment and culture and to evaluate top management's "corporate mentality" Be prepared to discuss any risk of fraud brought to the committee's attention by the indepen-dent auditors and the auditors' recommendation for timely action Reviews the proposed budget carefully and, in some cases, may make budget suggestions to the staff before the budget is considered by the full Board.

Liquidity RiskCredit Risk and Multiple Loan AnalysisInterest Rate RiskRegulatory RiskFX Exposure Risk (NBC/FTB agreements)Reputational Risk (PR)Human Resources RiskLender ComplianceAnti Money Laundering PolicyRisk Assessment MatrixSMART CAMPAIGN ComplianceInternal Control Prakas Compliance and Action Plans


Composition

HR and Remuneration Committee shall be chaired by an independent member of Board of Direc-tors. The Committee shall be composed of at least one independent Board Member. The committee should meet regularly in between board meetings. The Audit Committee consists of the following:

No. Name Position Role in Committee1 Christophe Forsinetti2 Michael Spingler3 Jessica Moffett-Rose4 Ms. Nurhayrah Sadava5 Ms. Phoeuk Sokha6 Ms. Kang Sokkhim



During year 2011, Risk Committee met six times in January, May, July, September (twice) and Octo-ber.

Independent Board MemberChairman of BoardBoard MemberChief Executive OfficerHuman Resource MangerCompany Secretary

ChairMemberMemberVisitor VisitorMinutes Taker

27

Ensure that HR Policies, procedures and strategies are consistent with TPC business plan, long term goals and strategies.Recommend approval for appointment of senior management to the BOD.Recommend remuneration of Board members and senior management for BOD approval.Review, monitor and make recommendations to the Board of Directors on TPC’s human resources strategy and policies covering but not limit to recruitment, staffing, development, retention, compensation, and benefits.Guide TPC management on types of reports and information required to monitor effective implementation of HR policies and procedures.Review any external evaluations of TPC's human resources strategy and policies and report to the Board its findings and recommendations.Review other Board committees and Management recommendations and plans and determine how they will affect TPC's human resources strategy and policies and report to the Board its findings and recommendations.Provide recommendations to BOD on recruiting and changing Board members.Provide recommendations to BOD on individuals who shall become members of the committee.


Comment Agenda Comment agenda of HRR Committee focuses on staff related matters such as recruitment, incen-tives, compensation, satisfaction, performance evaluation, and training to ensure an effective orga-nizational structure is in operation. Significant agenda discussed in 2011 include as follows:

PEP Process and ResultsProfit SharingAnnual Salary IncreaseStaff Recruitment 2011 PlanPersonnel Policies/ IssuesTraining Effectiveness and New Staff PerformanceSalary SurveyWork Environment Survey and Improvement Strategies

28

Products and Services


TPC has two types of group loans: Thaneakea Phum Loans (TPL), which are disbursed directly in the villages with the principal repaid during or at the end of the loan term, and Solidarity Group Loans (SGL), which are disbursed at TPC branch or satellite offices with clients repaying the principal over the course of the loan.

To serve its secondary market, entrepreneurs in urban areas and provincial towns, TPC also provides a third type of product - individual loans (ILP) – which can accommodate larger amounts for the purpose of working capital or acquisition of fixed assets. These clients are important to the development of the community as they provide vital supplies, services and employment opportuni-ties.

In addition to these three core products, TPC has responded to customer demands by introducing a seasonal loan product to be used for animal raising, storage, or agricultural businesses. These loans are ideal for customers who do not receive a steady monthly income throughout the year, but who have a reliable and sustainable source of income.

In 2011, TPC pilot tested the microbusiness expansion loan (MBE). This product targets all types of businesses operated by an individual, company or enterprise to support economic activities in the trade, service, agri-business and production sectors. This product allows our current clients a chance to continue with TPC as their businesses grow as well as allows TPC to target clients that have businesses that provide needed support to the community either through employment creation or provision of needed supplies/materials for local businesses. The MBE loan will be rolled out in other locations in 2012.

Lastly, TPC is pilot testing the Home Improvement Loan (HIL) product in 3 locations starting in December 2011. This product aims to meet the demand in the market for financing home improve-ment projects which provide TPC with a potential growth opportunity. It also aims to build client loyalty through a multiple-product strategy. Home Improvement loans also expose TPC to less risk than other loans as generally, homeowners have a strong emotional attachment to their home and are thus easier to collect from. On the second quarter of 2012, TPC’s management will review and refine the HIL product in preparation for rollout.

29

TPC TPL SGL IL MBE SNL

Our ClientsOrganizational Chart / Annual Report 2011

30

is a farmer living in Chhmar Puon village, Cheung Kerb commune, Kandal Steung district, Kandal province which is an area that farmers are able to do farming twice a year. She has 8 children, amongst which only 2 of them are dependents that one of them is a hairdresser in Phnom Penh and another one is a year-4 student. In the past, she lived in a difficult living condition whose monthly household income was just sufficient to cover daily living expenses, leading to a difficulty in paying children’s school fees. She wished to farm twice a year in order to increase household income; ho-ever, she was short of money to pay for farming and harvest expenses such as purchasing seeds, fertilizers, pesticides, and pumping fee and worker wages during harvest. Her neighbor and village leader recommended her to apply for a loan from Microfinance Insti-tution to use for farming. She decided to apply for a loan amounting to 1 million riels from Thaneakea Phum (Cambodia) Ltd. “TPC” in which partially of the loan was used for buying the above farming materials and rest was used for family expense. After receiving the loan from TPC, She has a better living condition since the rice yield has increased and she is able to farm twice a yearwhich could generate 2 million riel per harvest.

“I am glad because I can farm twice a year. I would like to thank TPC for providing me the loan. Now, my family’s living condition is better and I can properly prepare a wedding for my daughter this year and send my son to study at the university. ” Man Mon said, at the middle of rice field.

Mrs. Man Mon

Mrs. Man Mon

Certificate & Appreciation Latter 2011


Certificate of Appreciation

Having submitted 2011 Institutional Action Plan and being an active member of Microcredit Summit Campaign, TPC received a Certificate of Appreciation for its commitment to the Summit’s goals ‘To ensure that poorest families, especially women are receiving credit support and moving above USD 1.25 per day threshold.

Certificate of MembershipTPC received a Certificate of Membership from Banking With The Poor Network as a registered member in Asia’s regional microfinance association. TPC has always had a good practice of providing financial support to poor rural people in Cambodia in correspondence with its social mission and vision.

Certificate of Charity AppreciationTPC received Certificate of Charity Appreciation from the Cambodia Red Cross for the donation of USD 1,000 during the 148th anniversary of Red Cross and Red Crescent Movement with the honor of Prime Minister Hun Sen.

Certificate of Charity AppreciationActively participated in social support, TPC received Certificate of Charity Appreciation from the National Bank of Cambodia as the appreciation of USD 1,200 donation for helping the flood victims at Stung District, Kampong Thom Province.

Report of the Board of DirectorsReport of the independent auditorsBalance sheetIncome statementStatement of changes in equityStatement of cash flowsNotes to the financial statements

33384041424345

AUDITED FINANCIAL STATEMENTS

Report of the Board of Directors


Report of the Board of Directors

The Board of Directors have pleasure in submitting their report together with the audited financial statements of Thaneakea Phum (Cambodia), Ltd. (“the Company” or “TPC”) for the year ended 31 December 2011.

Principal activity

The principal activity of TPC is to provide micro-finance services to the rural population of Cambodia through its head office in Phnom Penh and its various provincial offices in the Kingdom of Cambodia. Its corporate objective is to provide reliable and affordable access to financial services to poor men and women micro-entrepreneurs in rural areas and in the vicinity of Phnom Penh.

Financial results

The financial results of the Company for the year ended 31 December 2011 were as follows:

KHR’000

Profit before income tax 7,420,847Income tax expense (1,529,166) Net profit for the year 5,891,681

Reserves and provisions

There were no material movements to or from reserves and provisions during the financial year other than as disclosed in the financial statements.

Bad and doubtful loans

Before the financial statements of the Company were prepared, the Board of Directors took reason-able steps to ascertain that actions had been taken in relation to the writing off of bad loans and the making of allowance for doubtful loans, and satisfied themselves that all known bad loans had been written off and adequate allowance had been made for bad and doubtful loans.

At the date of this report, the Board of Directors is not aware of any circumstances, which would render the amount written off for bad loans, or the amount of allowance for doubtful loans in the financial statements of the Company, inadequate to any substantial extent.

Report of the Board of Directors / Annual Report 2011

34

Dividends

During the financial year, the Company declared and paid dividends of KHR349 million in respect of the prior year’s retained earnings.

Share capital

On 7 November 2011, the Company requested to the National Bank of Cambodia to increase its share capital to KHR6,176,400 thousand by injecting additional capital of KHR2,176,400 thousand from DWM Funds S.C.A.-SICAV SIF and TPC-ESOP Co., Ltd. The National Bank of Cambodia approved for the increase its share capital through a letter dated 30 November 2011.

The share capital structure and the details of authorised and registered shareholding are as follows:

2011 2010 % of Number of Amount % of Number of Amount Ownership shares KHR’000 Ownership shares KHR’000

DWM Funds S.C.A. -SICAV SIF 89.82 55,474 5,547,400 87.84 35,134 3,513,400TPC-ESOP Co., Ltd 10.18 6,290 629,000 12.16 4,866 486,600 100 61,764 6,176,400 100 40,000 4,000,000

The total number of shares registered, authorised and paid up is 61,764 shares (31 December 2010: 40,000 shares) with a par value of KHR100,000 per share (31 December 2010: KHR100,000).

The amendment on the Memorandum & Articles of Association of the Company was approved by the National Bank of Cambodia on 7 March 2012.

Current assets

Before the financial statements of the Company were prepared, the Board of Directors took reason-able steps to ensure that any current assets which were unlikely to be realised in the ordinary course of business at their value as shown in the accounting records of the Company had been written down to an amount which they might be expected to realise.

At the date of this report, the Board of Directors is not aware of any circumstances, which would render the values attributed to the current assets in the financial statements of the Company misleading.


Valuation methods

At the date of this report, the Board of Directors is not aware of any circumstances which have arisen which render adherence to the existing method of valuation of assets and liabilities in the financial statements of the Company as misleading or inappropriate.

Contingent and other liabilities

At the date of this report, there does not exist:

(a) any charge on the assets of the Company which has arisen since the end of the financial year which secures the liabilities of any other person; and

(b) any contingent liability in respect of the Company that has arisen since the end of the financial year other than in the ordinary course of its business operations.

No contingent or other liability of the Company has become enforceable, or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opin-ion of the Directors, will or may substantially affect the ability of the Company to meet its obligations as and when they fall due.

Change of circumstances

At the date of this report, the Board of Directors is not aware of any circumstances, not otherwise dealt with in this report or the financial statements of the Company, which would render any amount stated in the financial statements misleading.

Items of unusual nature

The results of the operations of the Company for the financial year were not, in the opinion of the Directors, substantially affected by any item, transaction or event of a material and unusual nature.

There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the Board of Directors, to affect substantially the results of the operations of the Company for the current financial year in which this report is made.

Events since the reporting date

At the date of this report, except as disclosed in the financial statements, there have been no signifi-cant events occurring after the balance sheet date which would require adjustments or disclosures to be made in the financial statements.

Report of the Board of Directors / Annual Report 2011

36

The Board of Directors

The members of the Board of Directors during the year and at the date of this report are:

• Mr. Michael John Spingler Chairman• Mrs. Fernanda Pecanha Lacerda De Lima Director• Mr. Ry Vanna Director, (resigned on 10 April 2011)• Mrs. Jessica Moffett-Rose Director, (appointed on 11 February 2011)• Mr. Chandula P.Abeywickrema Director• Mr. Christophe Forsinetti Director, (appointed on 11 February 2011)

Directors’ interests

No members held any interest in the equity of the Company. No arrangements existed to which the Company is a party with the object of enabling the members to obtain an interest in the Company or in any other corporate body.

Directors’ benefits

During and at the end of the financial year, no arrangements existed to which the Company is a party with the object of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other corporate body.

Since the end of the previous financial year, no Director of the Company has received or become entitled to receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by the Directors as disclosed in the financial statements) by reason of a contract made by the Company or a related corporation with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest other than as disclosed in the financial statements.

Responsibilities of the Board of Directors in respect of the financial statements

The Board of Directors is responsible for ascertaining that the financial statements present fairly, in all material respects, the financial position of the Company as at 31 December 2011, and its financial performance and its cash flows for the year then ended. In preparing these financial statements, the Board of Directors is required to:

(i) adopt appropriate accounting policies which are supported by reasonable and prudent judg-ments and estimates and then apply them consistently;


Responsibilities of the Board of Directors in respect of the financial statements (continued)

(ii)

(iii) (iv)

(v)

The Board of Directors confirms that they have complied with the above requirements in preparing the financial statements.

Signed in accordance with a resolution of the Board of Directors,

Mr. Christophe ForsinettiDirector

Date:

comply with Cambodian Accounting Standards and the guidelines of the National Bank of Cam-bodia relating to the preparation and presentation of the financial statements or, if there have been any departures in the interest of true and fair presentation, ensure that these have been appropriately disclosed, explained and quantified in the financial statements;

prepare the financial statements on a going concern basis unless it is inappropriate to assume that the Company will continue operations in the foreseeable future; and

control and direct effectively the Company in all material decisions affecting the operations and performance and ascertain that such have been properly reflected in the financial statements.

maintain adequate accounting records and an effective system of internal controls;

Report of the independent auditors / Annual Report 2011

38

To the shareholdersThaneakea Phum (Cambodia), Ltd.

We have audited the accompanying financial statements of Thaneakea Phum (Cambodia), Ltd. (“the Company” or “TPC”), which comprise the balance sheet as at 31 December 2011, and the income statement, the statement of changes in equity and the statement of cash flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information as set out on pages 8 to 50.

Management’s responsibility for the financial statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with Cambodian Accounting Standards and the guidelines of the National Bank of Cam-bodia relating to the preparation and presentation of financial statements, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Cambodian International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclo-sures in the financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effec-tiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Report of the independent auditors

Opinion

In our opinion, the financial statements present fairly, in all material respects, the financial position of Thaneakea Phum (Cambodia), Ltd. as at 31 December 2011, and its financial performance and its cash flows for the year then ended, in accordance with Cambodian Accounting Standards and the guidelines of the National Bank of Cambodia relating to the preparation and presentation of the financial statements.

For KPMG Cambodia Ltd

Craig McDonaldAudit Partner

Phnom Penh

29 March 2012


Balance sheet / Annual Report 2011

40

Balance sheet

As at 31 December 2011

2011 2010 Note KHR’000 KHR’000

ASSETS

Cash on hand 4 474,214 322,678Deposits and placements with banks 5 45,292,288 34,946,852Statutory deposits 6 324,020 215,200Loans to customers 7 133,743,863 88,459,910Other receivables 8 3,874,124 2,364,604Property and equipment 9 1,532,569 1,199,820Intangible assets 10 7,409 14,819Long term investment 11 60,585 -Deferred tax assets 12 250,362 139,639 TOTAL ASSETS 185,559,434 127,663,522 LIABILITIES AND EQUITY

LIABILITIES

Deposits from customers 13 292,456 394,981Borrowings 14 147,713,373 99,081,495Other liabilities 15 3,664,036 2,705,933Deferred grant income 12,224 16,298Current income tax liability 12 1,311,518 618,069 TOTAL LIABILITIES 152,993,607 102,816,776 EQUITY

Share capital 16 6,176,400 4,000,000Reserves 1,955,663 1,373,211Retained earnings 24,433,764 19,473,535 TOTAL EQUITY 32,565,827 24,846,746 TOTAL LIABILITIES AND EQUITY 185,559,434 127,663,522

The accompanying notes form an integral part of these financial statements.


Income statement

for the year ended 31 December 2011

2011 2010 Note KHR’000 KHR’000

Interest income 17 35,538,246 26,546,534

Interest expense 18 (11,365,283) (9,396,460) Net interest income 24,172,963 17,150,074

Other operating income 19 504,032 326,587 Operating income 24,676,995 17,476,661

Commission expenses 20 (426,796) (475,559)Personnel expenses 21 (11,222,570) (8,665,513) Depreciation and amortisation (693,264) (591,344)Administrative expenses 22 (4,977,612) (3,736,556)Reversals of allowance for bad and doubtful loans 60,019 378,277 Profit from operations 7,416,772 4,385,966

Grant income 4,075 10,328 Profit before income tax 7,420,847 4,396,294

Income tax expense 12 (1,529,166) (906,427) Net profit 5,891,681 3,489,867


Statement of changes in equity / Annual Report 2011

42

Statement of changes in equity


Share Retained capital Reserves earnings Total KHR’000 KHR’000 KHR’000 KHR’000

Balance as at 1 January 2010 4,000,000 788,740 16,568,139 21,356,879

Transfer to reserves - 584,471 (584,471) -

Net profit for the year - - 3,489,867 3,489,867 Balance as at 31 December 2010 4,000,000 1,373,211 19,473,535 24,846,746

Additional share capital issued 2,176,400 - - 2,176,400

Transfer to reserves - 582,452 (582,452) -

Net profit for the year - - 5,891,681 5,891,681

Dividends paid - - (349,000) (349,000) Balance as at 31 December 2011 6,176,400 1,955,663 24,433,764 32,565,827



Statement of cash flows


2011 2010 KHR’000 KHR’000

Cash flows from operating activities

Profit before income tax 7,420,847 4,396,294

Adjustments for non-cash income and expenses:Depreciation and amortisation 693,264 591,344Grant income (4,075) (10,328)Reversals of allowance for bad and doubtful loans (60,019) (378,277) 8,050,017 4,599,033Changes in:

Deposits and placements with banks (4,450,932) 3,280,236Statutory deposits (108,820) -Loans to customers (45,223,934) (19,207,734)Other receivables (1,509,520) (655,912)Deposits from customers (102,525) (27,611)Other liabilities 958,103 647,993 Cash used in operations (42,387,611) (11,363,995)

Income tax paid (946,440) (399,192)Grant received - 4,895 Net cash used in operating activities (43,334,051) (11,758,292) Cash flows from investing activities

Acquisition of property and equipment (1,018,603) (753,390)Investment (60,585) - Net cash used in investing activities (1,079,188) (753,390) Cash flows from financing activities

Proceeds from borrowings 111,246,435 71,142,366Repayments of borrowings (62,614,556) (65,114,563)Proceeds from issuance of share capital 2,176,400 -Dividends paid (349,000) - Net cash generated from financing activities 50,459,279 6,027,803

Statement of cash flows / Annual Report 2011

44

for the year ended 31 December 2011 2011 2010 KHR’000 KHR’000

Net increase/(decrease) in cash and cash equivalents 6,046,040 (6,483,879)

Cash and cash equivalents at beginning of the year 18,300,299 24,784,178 Cash and cash equivalents at end of the year 24,346,339 18,300,299

Cash and cash equivalents comprise:

2011 2010 KHR’000 KHR’000

Cash on hand (Note 4) 474,214 322,678Deposit and placements with banks (Note 5) (with original maturities of 3 months or less) 23,872,125 17,977,621 24,346,339 18,300,299



Notes to the financial statements


1.

2.

(a)

(b)

Background and principal activities

Thaneakea Phum (Cambodia), Ltd. (“the Company” or “TPC”), a licensed micro-finance institu-tion, was incorporated in Cambodia and registered with the Ministry of Commerce as a limited liability company under registration number Co. 1413/02E dated 23 May 2002.

TPC as a micro-finance institution will continue to be primarily, a rural-based credit institution with 31 locations (13 branches) and a head office in Phnom Penh. TPC’s corporate objective is to provide reliable and affordable access to financial services to poor micro-entrepreneurs in rural areas and in the vicinity of Phnom Penh. Out of a total of 24 provinces and cities in Cam-bodia, TPC is already operating in 16 provinces, namely Banteay Meanchey, Battambang, Kampong Cham, Kampong Chhnang, Kampong Speu, Kampong Thom, Kampot, Kandal, Kratie, Kep, Otdor Meanchey, Phnom Penh, Prey Veng, Siem Reap, Svay Rieng and Takeo.

The National Bank of Cambodia (“NBC”) granted TPC a licence to conduct business as a micro-finance institution for a three-year period commencing from 12 February 2003 to 12 Feb-ruary 2006. On 20 January 2006, the NBC extended this licence for another three-year period commencing from 12 February 2006 to 12 February 2009. On 14 January 2009, the Company obtained its indefinite licence from the NBC.

The registered office is located at House No. 94, Street 360, Sangkat Boeung Keng Kang III, Khan Chamkamon, Phnom Penh, Kingdom of Cambodia.

As at 31 December 2011, the Company had 545 employees (31 December 2010: 457 employ-ees).

Basis of preparation

Statement of compliance

These financial statements have been prepared in accordance with Cambodian Accounting Standards (“CAS”) and the guidelines of the National Bank of Cambodia (“NBC”) relating to the preparation and presentation of financial statements.

These financial statements were approved by the Board of Directors and authorised for issue on 29th March 2012.

Basis of measurement

The financial statements have been prepared on the historical cost basis.

Notes to the financial statements / Annual Report 2011

46


2.

(c)

(d)

3.

(a)

Basis of preparation (continued)

Functional and presentation currency

The Company transacts its business and maintains its accounting records in three currencies, Khmer Riel (“KHR”), United States Dollars (“US$”) and Thai Baht (“THB”). Management has determined the KHR to be the Company’s functional and presentation currency as it reflects the economic substance of the underlying events and circumstances of the Company as the major-ity of the loan transactions are in KHR.

Transactions in currencies other than KHR are translated into KHR at the exchange rates ruling at the dates of the transactions. Monetary assets and liabilities denominated in currencies other than KHR at the reporting date are translated into KHR at the rates of exchange ruling at that date. Exchange differences arising on translation are recognised in profit or loss.

Use of estimates and judgements

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

Significant accounting policies

The significant accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

Financial instruments

The Company’s financial assets and liabilities include cash and cash equivalents, originated loans and receivables, deposits and other receivables, borrowings and other payables. The accounting policies for the recognition and measurement of these items are disclosed in the respective accounting policies.



3.

(b)

(c)

(d)

(e)

(f)

Significant accounting policies (continued)

Basis of aggregation

The Company’s financial statements comprise the financial statements of the head office and its branches. All inter-branch balances and transactions have been eliminated.

Cash and cash equivalents

Cash and cash equivalents consist of cash and bank balances and deposits with banks with original maturities of three months or less and other highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value.

Deposit and placements with banks

Deposits and placements with banks are carried at cost.

Loans to customers

Loans to customers are stated in the balance sheet at the amount of principal outstanding less any amounts written off and specific and general allowance.

Allowance for bad and doubtful loans

In compliance with the NBC guidelines, a specific allowance for bad and doubtful loans is made on loans that are identified as non-performing as follows:

Classification Number of days past due Minimum provisionShort-term loans (less than one year):

Sub-standard 30 – 59 days 10%Doubtful 60 – 89 days 30%Loss 90 days or more 100%

Long-term loans (more than one year):

Sub-standard 30 – 179 days 10%Doubtful 180 – 359 days 30%Loss 360 days or more 100%


48


3.

(f)

(g)

(h)


Allowance for bad and doubtful loans (continued)

The specific allowance is calculated as a percentage of the loans outstanding at the time the loan is classified and is charged as an expense in the income statement. The Company provides for a 100% provision for any loan overdue more than 30 days. The amount of provision in excess of the defined percentages required by the National Bank of Cambodia (“NBC”) is shown as a general allowance.

The adequacy of the allowance for bad and doubtful loans is evaluated monthly by the manage-ment. Factors considered in evaluating the adequacy of the provision include the size of the portfolio, previous loss experience, current economic conditions and their effect on customers, the financial position of customers and the performance of loans in relation to contract terms.

Loans are written off when they are considered uncollectable. Loans written off are taken out of the outstanding loan portfolio and deducted from the allowance for loan loss.

Recoveries on loans previously written off and reversal of previous allowance are disclosed as other operating (loss)/income in the income statement.

Statutory deposits

Statutory deposits are maintained with the NBC in compliance with the Cambodian Law on Banking and Financial Institutions and are determined by defined percentages of minimum share capital and customers’ deposits as required by NBC.

Other receivables

Other receivables are carried at estimated realisable value.



3.

(i)

(i)

(ii)

(iii)

(j)


Property and equipment

Items of property and equipment are measured at cost less accumulated depreciation and accumulated impairment losses, if any. When an item of property and equipment comprise major components having different useful lives, the components are accounted for as separate items of property and equipment.

Depreciation is calculated over the depreciable amount, which is the cost of an asset, or other amount substituted for cost, less its residual value.

Depreciation of property and equipment is charged to the income statement on a declining balance basis using the net book value of the individual assets at the beginning of the year at the following rates:

Office furniture and equipment 25% Motor vehicles 25% Computers 50%

If there is an indication that there has been a significant change in depreciation rate, useful life or residual value of an asset, the depreciation of that asset is revised prospectively to reflect the new expectations.

Subsequent expenditure relating to an item of property and equipment that has already been recognised is added to the carrying amount of the asset when it is probable that future economic benefits, in excess of the originally assessed standard of performance of the existing asset, will flow to the Company. All other subsequent expenditure is recognised as an expense in the period in which it is incurred.

Gains or losses arising from the retirement or disposal of an item of property and equipment are determined as the difference between the estimated net disposal proceeds and the carrying amount of the assets and are recognised in the income statement on the date of retirement or disposal.

Intangible assets

Intangible assets are computer software that is stated at cost less accumulated amortisation and any accumulated impairment losses. It is amortised on a declining method at the rate of 50% per annum. If there is an indication that there has been a significant change in amortisa-tion rate, useful life or residual value of an intangible asset, the amortisation is revised prospec-tively to reflect the new expectations.


50


3.

(k)

(i)

(ii)


Impairment

Financial assets

A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset. This does not apply to loans to customers which has a separate accounting policy stated in Note 3(f). Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk char-acteristics.

All impairment losses are recognised in the income statement.

An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised.

Non-financial assets

The carrying amounts of the Company’s non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less cost to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that gener-ates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit”).

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount. Impairment losses are recognised in the income statement.



3.

(l)

(m)

(n)

(o)

(p)


Deposits from customers

Deposits from customers are stated at placement value.

Borrowings

Borrowings are stated at the amount of the principal outstanding. Fees paid on the establish-ment of borrowing facilities are capitalised and amortised over the period of the borrowings using the straight-line method.

Provisions

A provision is recognised if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect 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.

Reserves

This represents profits from the Thaneakeak Phum program. After deduction of previous loss, 5% of the net profit shall be transferred into the reserve fund. After NBC granted TPC a micro-finance institution license on 23 May 2002, such transfer was ceased since the reserve fund reached 10% of the registered capital of the Company.

From 31 December 2010, the Company is required to set up a reserve by a lender, Instituto de Credito Oficial (“ICO”), in accordance with the requirement set out in the loan agreement. The reserve is transferred annually from the retained earnings based on the rate of 3.5% of the outstanding loan from ICO at the end of each year until 31 December 2021.

Related parties

Parties are considered to be related to the Company if one party has the ability, directly or indirectly, to control the party or exercise significant influence over the other party in making financial and operating decisions, or where the Company and the other party are subject to common control or significant influence. Related parties may be individuals or corporate entities and include close family members of any individual considered to be a related party.


52


3.

(p)

(q)

(r)

(s)

(t)


Related parties (continued)

Under the Law on Banking and Financial Institutions, related parties include individuals who hold directly or indirectly a minimum of 10% of the capital of the Company or voting rights there-fore, or who participates in the administration, direction, management or the design and imple-mentation of the internal controls of the Company.

Income and expense recognition

Interest income on loans is recognised on an accruals basis. Where a loan becomes non-performing, the recording of interest as income is suspended until it is realised on a cash basis. Interest on loans is calculated using the declining balance method on monthly balances of the principal amount outstanding.

Expenses are recognised on an accrual basis.

Grants

Grants received to subsidise the Company’s operating expenses are recognised in the income statement on a systematic and rational basis, matching the related costs for which they are intended to compensate.

Grants received for the purchase of property and equipment are deferred and amortised in the income statement on a systematic and rational basis over the useful life of the asset. The unam-ortised grants are shown as deferred grant income.

Operating leases

Leases where substantially all the risks and rewards of ownership of assets remain with the leasing company are accounted for as operating leases. Payments made under operating leases are recognised in the income statement on a straight-line basis over the term of the lease. Lease commitments are not recognised as liabilities until the obligation to pay becomes due.

Income tax

Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised to equity.



3.

(t)

(u)


Income tax (continued)

Current tax is the expected tax payable on the taxable income for the year using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax is provided using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted at the balance sheet date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

New standards and interpretations not yet adopted

The National Accounting Council of Cambodia, as mandated by Prakas (Circular) No. 068-MEF-Pr dated 8 January 2009 issued by the Ministry of Economy and Finance of Cambodia on the adoption of Cambodian Financial Reporting Standards, has decided to adopt International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) effective for financial statements with periods beginning on or after 1 January 2012. The new standards will be referred to as “Cambodian International Financial Reporting Standards” (CIFRS). The following standards are expected to have an impact on the Company’s financial statements:

• CIAS 1 Presentation of Financial Statements introduces the term total comprehensive income, which represents changes in equity during a period other than those changes resulting from transactions with owners in their capacity as owners. Total comprehensive income may be presented in either a single statement of comprehensive income (effectively combining both the statement of income and all non-owner changes in equity in a single statement), or in a statement of income and a separate statement of compre-hensive income.


54


3.

(u)

CIAS 23 Borrowing Costs removes the option to expense borrowing costs and requires that an entity capitalise borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset.

Reclassification of Financial Assets (CIAS 39 Financial Instruments: Recognition and Mea-surement and CIFRS 7 Financial Instruments: Disclosures) permits the Company to reclassify non-derivative financial assets (other than those designated at fair value through profit or loss by the Company upon initial recognition) out of the fair value through profit or loss category in particular circumstances. The amendment also permits the Company to transfer from the available-for-sale category to the loans and receivables category a finan-cial asset that would have met the definition of loans and receivables if the Company has the intention and ability to hold that financial asset for the foreseeable future.

CIAS 39 Financial Instruments: Recognition and Measurement establishes principles for recognising and measuring financial assets, financial liabilities and some contracts to buy or sell non-financial items. Adoption of CIAS 39 will result in the following revisions to the accounting policies on financial instruments:

Loans to customers are currently stated in the balance sheet at the amount of principal outstanding less any amounts written off and specific and general provisions. Under CIAS 39, such assets are recognised initially at fair value plus any directly attributable transac-tion costs. Subsequent to initial recognition, loans and receivables are measured at amor-tised cost using the effective interest method, less any impairment losses.


New standards and interpretations not yet adopted (continued)

•

•

•

Impairment of financial assets: the Company currently follows the mandatory credit classifi-cation and provisioning as required by Prakas No. B7-02-186 dated 13 September 2002 issued by the NBC. CIAS 39 requires the Company to assess at each reporting date whether there is objective evidence that a financial asset or group of financial assets is impaired, either on an individual or collective assessment basis. An impairment loss is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance account against loans and receivables. When an event occurring after the impairment was recognised causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.



3.

(u)

4.


New standards and interpretations not yet adopted (continued)

Deposits from customers: the Company currently measures deposits from customers at placement value. CIAS 39, such liabilities are recognised initially at fair value less any directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the effective interest method.

Interest income and interest expense: the Company currently recognises interest income and expense on an accrual basis at contractual rates, except where serious doubt exists as to the collectability, in which case interest is suspended until it is realised on a cash basis. CIAS 39 requires interest income and expense for all interest-bearing financial instruments to be recognised using the effective interest method. In respect of a financial asset or a group of simi-lar financial assets which are impaired, interest income is to be recognised at the interest rate used in discounting future cash flows for the purpose of measuring the impairment loss.

Cash on hand

2011 2010 KHR’000 KHR’000

Head office 2,000 2,000Branches 472,214 320,678 474,214 322,678 The above amounts are analysed as follows:

2011 2010 KHR’000 KHR’000

Khmer Riel 261,983 182,654US Dollars 187,891 130,798Thai Baht 24,340 9,226 474,214 322,678


56


5.

(a)

(b)

Deposits and placements with banks 2011 2010 KHR’000 KHR’000Current accounts

National Bank of Cambodia 12,464,640 42,194 ACLEDA Bank Plc. 194,159 8,523,806 Foreign Trade Bank of Cambodia 321,831 - Maruhan Japan Bank Plc. 101,439 -

Savings accounts

ACLEDA Bank Plc. 3,101,882 1,990,429 Rural Development Bank of Cambodia 513 588

Fixed deposit accounts

National Bank of Cambodia * 6,583,570 6,606,390 Foreign Trade Bank of Cambodia * 22,524,254 17,783,445 45,292,288 34,946,852

*: These amounts were deposited as collateral to secure the borrowings as described in Note 14 (x) and 14 (xi).

Deposits and placements with banks are analysed as follows:

By maturity: 2011 2010 KHR’000 KHR’000

Within 1 month 16,184,465 10,557,017>1 to 3 months 7,687,660 7,420,604>3 to 60 months 21,420,163 16,969,231 45,292,288 34,946,852

By currency:Khmer Riel 5,695,258 1,398,375US Dollars 39,537,959 33,096,412Thai Baht 59,071 452,065 45,292,288 34,946,852



5.

(c)

6.

Deposits and placements with banks (continued)

Deposits and placements with banks are analysed as follows (continued) :

By interest rate (per annum):

Bank inside Cambodia 0.03%- 5% 0.05% - 4.00%

Statutory deposits 2011 2010 KHR’000 KHR’000

Statutory deposits on:Registered share capital 308,820 200,000Customers’ deposits 15,200 15,200 324,020 215,200 The statutory deposits are maintained with the NBC in compliance with Prakas No. B7-00-006 and B7-06-209 on the Licensing of Micro-Finance Institutions, the amounts of which are deter-mined by defined percentages of the Company’s registered share capital and customers’ deposits with the Company. The statutory deposit on registered share capital is refundable when the Company voluntarily liquidates and has no deposit liabilities. The statutory deposit on customers’ deposits fluctuates depending on the level of the customers’ deposits.

The statutory deposit on registered capital placed with NBC earns interest at the rate of 3% per annum. The statutory deposit relating to customers’ deposits does not earn interest.


58


7. Loans to customers 2011 2010 KHR’000 KHR’000

Thaneakea Phum loans:

Fixed terms 9,808 989,071 End of cycle 49,927,635 44,856,104

Solidarity group loans:

Fixed terms 16,863,865 11,476,159 End of cycle - 181,200

Individual loans:

Fixed terms 51,962,754 26,868,792 End of cycle 14,186,628 4,861,521 Staff loans 963,676 997,184 133,914,366 90,230,031

Allowance for bad and doubtful loans

Specific (103,548) (1,701,234) General (66,955) (68,887) (170,503) (1,770,121) 133,743,863 88,459,910 Movement in allowance for bad and doubtful loans is as follows:

At beginning of the year 1,770,121 3,565,892Reversals during the year (60,019) (378,277)Written off during the year (1,534,596) (1,427,638)(Loss)/gain on foreign exchange (5,003) 10,144 At end of year 170,503 1,770,121



7.

(a)

(b)

(c)

(d)

(e)

Loans to customers (continued)

Loans to customers are analysed as follows:

2011 2010 KHR’000 KHR’000By maturity:Within 1 month 9,337,413 9,204,928>1 to 3 months 22,877,718 16,083,189>3 to 12 months 86,458,593 56,871,370More than 12 months 15,240,642 8,070,544 133,914,366 90,230,031 By currency: Khmer Riel 74,463,012 59,146,888US Dollars 50,179,292 22,044,789Thai Baht 9,272,062 9,038,354 133,914,366 90,230,031 By economic sector:Agriculture 7,786,272 59,554,061Trade and commerce 26,913,289 19,935,362Services 11,401,533 4,466,992Household/family 12,590,277 3,128,689Construction 1,194,417 670,230Transportation 547,960 660,548Other categories 3,480,618 1,814,149 133,914,366 90,230,031 By resident status:Residents 133,914,366 90,230,031 By relationship:External customers 132,950,690 89,232,847Staff loans 963,676 997,184 133,914,366 90,230,031


60


7.

(f)

(g)

(h)

Loans to customers (continued)

2011 2010 KHR’000 KHR’000By location:Head office 111,613 195,613Branches: Banteay Meanchey 9,927,221 8,174,190 Battambang 15,661,717 9,955,717 Chhouk 10,237,155 5,755,918 Kampong Cham 7,834,392 3,810,641 Kandal 10,111,333 7,426,888 Phnom Penh 9,104,807 4,791,779 Poipet 5,863,696 5,144,272 Samroung Bati 11,151,944 8,206,523 Siem Reap 14,385,348 8,787,000 Svay Rieng 14,493,123 10,613,288 Tramkok 9,263,550 7,798,957 Suong 6,988,416 4,656,572 Kratie 8,780,051 4,912,673 133,914,366 90,230,031 By performance:Standard loans: Secured 67,039,274 32,341,402 Unsecured 66,704,589 56,118,508Sub-standard loans: Secured 37,194 4,210 Unsecured 18,456 36,114Doubtful loans: Secured 15,443 6,972 Unsecured 8,657 39,592Loss loans: Secured 23,146 374,579 Unsecured 67,607 1,308,654 133,914,366 90,230,031 By interest rate (per month):Loans in Khmer Riel 2.50% - 3.50% 3.00%Loans in US Dollars 1.80% - 3.50% 2.00% - 2.50%Loans in Thai Baht 2.50% - 3.50% 3.00%



8.

9.

Other receivables 2011 2010 KHR’000 KHR’000

Interest receivable 2,760,273 1,766,578Prepayments and deposits 760,835 356,217Others 353,016 241,809 3,874,124 2,364,604 Property and equipment

Office furniture Motor and equipment vehicles Computers Total KHR’000 KHR’000 KHR’000 KHR’000Cost

At 1 January 2011 192,043 2,562,289 1,160,876 3,915,208Additions 84,464 674,023 260,116 1,018,603Written off - (236,891) - (236,891) At 31 December 2011 276,507 2,999,421 1,420,992 4,696,920

Less: Accumulated depreciation

At 1 January 2011 113,587 1,705,803 895,998 2,715,388Depreciation for the year 40,730 382,627 262,497 685,854Written off - (236,891) - (236,891) At 31 December 2011 154,317 1,851,539 1,158,495 3,164,351

Carrying amounts At 31 December 2011 122,190 1,147,882 262,497 1,532,569 At 31 December 2010 78,456 856,486 264,878 1,199,820


62


10.

11.

12.

(a)

Intangible assets

Computer software 2011 2010 KHR’000 KHR’000Cost

At 1 January/31 December 160,567 160,567 Accumulated amortisation

At 1 January 145,748 130,929Amortisation for the year 7,410 14,819

At 31 December 153,158 145,748 Carrying amounts

At 31 December 7,409 14,819 Long term investment

This represents the investment in the Credit Bureau of Cambodia (“CBC”). CBC is a private entity created by the Association of Banks in Cambodia (“ABC”). Its Memorandum of Under-standing was signed on 29 January 2010 between the ABC, Cambodia Microfinance Associa-tion (“CMA”) and International Finance Corporation (“IFC”).

Income tax

Applicable tax rates

In accordance with Cambodian law, the Company has an obligation to pay corporate income tax of either the profit tax at the rate of 20% of taxable profits or the minimum tax at 1% of gross revenues, whichever is higher.



12.

(b)

(c)


Current income tax liability

2011 2010 KHR’000 KHR’000

Balance at beginning of year 618,069 155,132Charge to income statement 1,639,889 862,129Income tax paid (946,440) (399,192) Balance at end of year 1,311,518 618,069

Deferred tax assets 2011 2010 KHR’000 KHR’000

Deferred tax assets 250,362 146,550Deferred tax liabilities - (6,911) 250,362 139,639 Deferred tax assets/(liabilities) are attributable to the following:

2011 2010 KHR’000 KHR’000

Provisions 245,821 146,237Depreciation 78 313Unrealised exchange loss/(gain) 4,463 (6,911) 250,362 139,639


64


12.

(c)

(d)


Deferred tax assets (continued)

Movement of deferred tax, net is as follows:

2011 2010 KHR’000 KHR’000

At beginning of the year 139,639 183,937Reversal from/(Charge to) profit or loss 110,723 (44,298) At end of the year 250,362 139,639 Income tax expense 2011 2010 KHR’000 KHR’000

Current income tax 1,639,889 862,129Deferred tax (110,723) 44,298 1,529,166 906,427

The reconciliation of income tax computed at the statutory tax rate to the income tax expense as shown in the profit or loss is as follows:

2011 2010 % KHR’000 % KHR’000

Profit before income tax 7,420,847 4,396,294 Income tax using applicable income income tax rate 20 1,484,169 20 879,259Effect of non-deductible expenses 0.61 44,997 0.6 27,168 Effective income tax rate 20.61 1,529,166 20.6 906,427 The calculation of income tax is subject to the review and assessment of the tax authorities.



13.

(a)

(b)

(c)

Deposits from customers 2011 2010 KHR’000 KHR’000

Compulsory deposits 156,201 163,354Staff and other deposits 136,255 231,627 292,456 394,981 Deposits from customers are analysed as follows:

By maturity: 2011 2010 KHR’000 KHR’000Within 1 month 201,808 303,596>1 to 3 months 1,113 2,533>3 to 12 months 3,654 5,113More than 12 months 85,881 83,739 292,456 394,981 By currency:

Khmer Riel 142,102 197,886US Dollars 275 263Thai Baht 150,079 196,832 292,456 394,981 By interest rate (per annum):

2011 2010Compulsory deposits - -Staff and other deposits 5.00% - 8.00% 5.00% - 8.00%


66


14.

(i)

(ii)

(iii)

Borrowings 2011 2010 KHR’000 KHR’000Related parties:

DWM Funds S.C.A.-SICAV SIF (i) 8,176,000 -

Non-related parties:

Alterfin (ii) 4,039,000 2,026,500BlueOrchard - 4,590,000Calvert Foundation (iii) 8,078,000 4,053,000Grameen Credit Agricole (iv) 5,588,000 4,050,000Instituto de Credito Oficial (v) 16,641,488 16,699,171Novib Fonds (vi) 17,297,688 9,232,645Oikocredit (vii) 8,959,000 8,200,000PlaNet Finance/PlaNIS (viii) 18,104,497 14,386,500Symbiotics (ix) 12,117,000 11,145,750Foreign Trade Bank of Cambodia (x) 20,825,000 17,912,765National Bank of Cambodia (xi) 6,520,000 6,520,000Acleda Bank Plc (xii) 1,211,700 -Incofin (xiii) 8,039,000 -Maruhan Japan Bank Plc (xiv) 4,039,000 -Global Microfinance Facility (xv) 8,078,000 -Individual lenders - 265,164

Total 147,713,373 99,081,495 Loans from DWM Funds S.C.A.-SICAV SIF are unsecured. Interest is due on a quarterly basis while the principal is to be repaid in four equal instalments starting from 27 May 2013.

Two loans from Alterfin are unsecured. Interest is due on a semi-annual basis while the princi-pal is to be repaid in three instalments each of US$165,000, US$165,000 and US$170,000 starting from 4 October 2012 for the first loan and from 5 August 2013 for the second loan.

Loans from Calvert Foundation are unsecured. Interest is due on a quarterly basis while the principal is to be repaid at the end of the loan terms on 28 September 2013.



14.

(iv)

(v)

(vi)

(vii)

(viii)

(ix)

(x)

(xi)

(xii)

Borrowings (continued)

Loans from Grameen Credit Agricole are unsecured. Interest is due on a semi-annual basis while the principal is to be repaid in four and five instalments each starting from 15 April 2012 and 15 October 2012 respectively.

Loans from Instituto de Credito Oficial are unsecured. Interest is due on a quarterly basis while the principal is to be repaid in six instalments starting from 12 April 2017.

Loans from Novib Fonds are unsecured. Interest is due on a semi-annual basis while the princi-pal is to be repaid on 19 May 2012 amounting to US$500,000 and the remaining balance is to be repaid in four equal instalments of US$945,667 each from 15 January 2014.

Loans from Oikocredit are unsecured. Interest is due on a semi-annual basis while one of the principal is to be repaid in three equal instalments of KHR1,640 million each from 2 April 2012 and the other two principal are to be repaid in five equal instalments each of KHR404 million starting from 9 May 2012.

Loans from PlaNet Finance/PlaNIS are unsecured. Interest is due on a semi-annual basis while the principal is to be repaid at the end of the loan terms on 20 January 2012, 10 February 2012, 29 June and December 2012, 23 May 2013, and 23 September 2013 respectively.

Loans from Symbiotics are unsecured. Interest is due on a semi-annual and an annual basis while one of the principal is to be repaid on 21 April 2012, and the other four principal are to be repaid on 28 January 2013, 5 May 2013, 30 May 2013 and 7 November 2013 respectively.

Loans from Foreign Trade Bank of Cambodia are secured by a fixed deposit of KHR22,524 million (Note 5). Interest is due on a monthly basis while the principal is to be repaid at the end of the loan terms on 11 March 2012, 18 April 2012, 12 May 2012, 14 August 2012, 6 December 2012 and 21 December 2012 respectively.

Loans from National Bank of Cambodia are secured by a fixed deposit of KHR6,584 million (Note 5). Interest is due on a monthly basis while the principal is to be repaid on 16 February 2012, 15 March 2012, 19 April 2012 and 26 April 2012 respectively.

Loans from Acleda Bank Plc are unsecured. Interest is due on a monthly basis while the princi-pal of US$150,000 each are to be repaid on 27 April 2012 and 27 April 2013 respectively.


68


14.

(xiii)

(xiv)

(xv)

(a)

(b)

(c)

Borrowings (continued)

Loans from Incofin are unsecured. Interest is due on a quarterly and semi-annual basis while the principal is to be repaid at the end of the loan terms on 22 March 2013 and 24 March 2014 respectively.

Loans from Maruhan Japan Bank Plc are unsecured. Interest is due on a monthly basis while the principal is to be repaid in twelve quarterly equal instalments each of US$83,334 starting from 27 January 2012.

Loans from Global Microfinance Facility are unsecured. Interest is due on a quarterly basis while the principal of US$1,000,000 each are to be repaid on 13 January 2014 and 11 April 2014 respectively.

Borrowings are analysed as follows:

By maturity: 2011 2010 KHR’000 KHR’000

Within 1 month 2,356,085 2,492,664>1 to 3 months 9,548,498 7,915,250>3 to 12 months 40,061,893 46,042,0051 to 5 years 79,105,409 42,631,576Over 5 years 16,641,488 - 147,713,373 99,081,495 By currency:Khmer Riel 44,441,000 34,640,265US Dollars 95,735,876 53,573,730Thai Baht 7,536,497 10,867,500 147,713,373 99,081,495 By interest rate (per annum): 2011 2010 Borrowings 5.50% - 13.15% 5.50% - 12.00%



15.

16.

Other liabilities 2011 2010 KHR’000 KHR’000 Interest payables 1,958,184 1,625,307Staff incentive (Year-end bonus) 589,168 348,987Staff bonus 731,015 357,196Withholding tax payable 195,486 155,413Other payables 190,183 219,030 3,664,036 2,705,933 Share capital

On 7 November 2011, the Company requested to the National Bank of Cambodia to increase its share capital to KHR6,176,400 thousand by injecting additional capital of KHR2,176,400 thousand from DWM Funds S.C.A.-SICAV SIF and TPC-ESOP Co., Ltd. The National Bank of Cambodia approved for the increase its share capital through a letter dated 30 November 2011.

The share capital structure and the details of authorised and registered shareholding are as follows:

2011 2010 % of Number of Amount % of Number of Amount Ownership shares KHR’000 Ownership shares KHR’000

DWM Funds S.C.A. -SICAV SIF 89.82 55,474 5,547,400 87.84 35,134 3,513,400TPC-ESOP Co., Ltd 10.18 6,290 629,000 12.16 4,866 486,600 100 61,764 6,176,400 100 40,000 4,000,000 The total number of shares registered, authorised and paid up is 61,764 shares (31 December 2010: 40,000 shares) with a par value of KHR100,000 per share (31 December 2010: KHR100,000).

The amendment on the Memorandum & Articles of Association of the Company was approved by the National Bank of Cambodia on 7 March 2012.


70


17.

18.

19.

20.

Interest income 2011 2010 KHR’000 KHR’000

Loan to customers 34,629,104 25,794,752Placements with banks 909,142 751,782 35,538,246 26,546,534 Interest expense 2011 2010 KHR’000 KHR’000

Borrowings 11,351,118 9,375,381Customers’ deposits 14,165 21,079 11,365,283 9,396,460 Other operating income 2011 2010 KHR’000 KHR’000

Foreign exchange (loss)/gains (69,907) 39,128Recovery from loans written off 557,350 251,356Penalty income 7,365 20,680Other income 9,224 15,423 504,032 326,587 Commission expenses

Commission expenses represent payments to the Group Leaders (GLs), the Village Leaders (VLs) and key persons (including commune leaders, district leaders and other influential persons). The basis of the incentive is calculated at a maximum rate of 2%, 3% and 5% of the interest collected for key persons, GLs and VLs, respectively.



21.

22.

23.

(a)

Personnel expenses 2011 2010 KHR’000 KHR’000 Salaries and wages 10,553,963 8,026,458Other short-term benefits 668,607 639,055 11,222,570 8,665,513 Administrative expenses 2011 2010 KHR’000 KHR’000

Travelling expenses 1,037,213 727,879Rental expenses 907,295 696,584Professional services 211,833 166,977Bank and service charges and other fees 566,014 471,629Office supplies and equipment 465,422 374,517Utilities 343,142 231,486Communications 292,720 169,334Photocopies and printing 150,936 182,563Other expenses 1,003,037 715,587 4,977,612 3,736,556 Related party transactions and balances

Related party transactions:

2011 2010 KHR’000 KHR’000Key management

Salary and other benefits 1,953,204 1,858,613Interest income 1,033 11,783

Interest expense

Mr. Michael John Spingler 6,293 18,490DWM Funds S.C.A.-SICAV SIF 757,046 -


72


23.

(b)

24.

(a)

(b)

Related party transactions and balances (continued)

Related party balances:

2011 2010 KHR’000 KHR’000 Key management loans - 66,667Borrowing from Mr. Michael John Spingler (Repaid on 29 April 2011) - 157,500Borrowing from DWM Funds S.C.A. -SICAV SIF (Note 14) 8,176,000 - Commitments and contingencies

Lease commitments

The Company has lease commitments for the lease of its headquarters and provincial offices as follows:

2011 2010 KHR’000 KHR’000

Within one year 659,177 589,498Two to five years 359,392 460,975 1,018,569 1,050,473 Taxation contingencies

Taxes are subject to review and investigation by a number of authorities, who are enabled by law to impose severe fines, penalties and interest charges. The application of tax laws and regulations to many types of transactions are susceptible to varying interpretations.

These facts may create tax risks in Cambodia substantially more significant than in other coun-tries. Management believes that it has adequately provided for tax liabilities based on its inter-pretation of tax legislation. However, the relevant authorities may have differing interpretations and the effects since the incorporation of the Company could be significant.



25.

(a)

(i)

(ii)

Financial risk management

The guidelines and policies adopted by the Company to manage the risks that arise in the conduct of the business activities are as follows:

Credit risk

Credit risk is the potential loss of revenue and principal losses in the form of specific provisions as a result of defaults by the borrowers or counterparties through its lending and investing activi-ties.

The primary exposure to credit risk arises through its loans to customers. The amount of credit exposure in this regard is represented by the carrying amounts of the assets on the balance sheet. The lending activities are guided by the Company’s credit policy to ensure that the over-all objectives in the area of lending are achieved; i.e., that the loans portfolio is strong and healthy and credit risks are well diversified. The credit policy documents the lending policy, collateral policy and credit approval processes and procedures implemented to ensure compli-ance with NBC Guidelines.

The guidelines and policies adopted by the Company to manage the risks that arise in the conduct of their business activities are as follows:

Risk limit control and mitigation policies

The Company operates and provides loans to individual customers or group loans within the Kingdom of Cambodia. The Company manages limits and controls concentration of credit risk whenever it is identified.

The Company employs a range of policies and practices to mitigate credit risk. The most tradi-tional of these is the taking of security in the form of collateral for loans to individual customers and with group loans whereby members of the group can secure each other, which is common practice.

Management believes that the Company’s maximum exposure to credit risk is limited to the carrying amount of loans less provisions for doubtful loans. Loans are also provided to those borrowers that are deemed profitable.

Impairment and provisioning policies

The Company is required to follow the mandatory credit classification and provisioning in accor-dance with Prakas No. B7-02-186 dated 13 September 2002 on the classification and provision-ing for bad and doubtful debts of the National Bank of Cambodia. Refer to separate accounting policy stated in Notes 3(e) and 3(f).


74


25.

(a)

(iii)

Financial risk management (continued)

Credit risk (continued)

Exposure to credit risk:

2011 2010 KHR’000 KHR’000Loans to customers Neither past due nor impaired 133,716,928 88,434,820 Past due but not impaired 26,935 25,090 Individually impaired 170,503 1,770,121 133,914,366 90,230,031Allowance for bad and doubtful loans (170,503) (1,770,121) 133,743,863 88,459,910 Impaired loans and advances

Individually impaired loans to customers are loans to customers for which the Company deter-mines that there is objective evidence of impairment and it does not expect to collect all principal and interest due according to the contractual terms of the loans to customers. In compliance with NBC Guidelines, an allowance for doubtful loans to customers is made for loan to custom-ers with payment overdue more than 30 days. A minimum level of specific provision for impair-ment is made depending on the classification concerned, unless other information is available to substantiate the repayment capacity of the counterparty. Refer to separate accounting policy stated in Notes 3(f).

Past due but not impaired loans and advances

Past due but not impaired loans to customers are those for which contractual interest or princi-pal payments are past due less than 30 days, unless other information is available to indicate otherwise.



25.

(b)

(c)

(i)


Operational risk

The operational risk losses which would result from inadequate or failed internal processes, people and systems or from external factors is managed through established operational risk management processes, proper monitoring and reporting of the business activities by control and support units which are independent of the business units and oversight provided by the management.

The operational risk management entails the establishment of clear organisational structure, roles and control policies. Various internal control policies and measures have been imple-mented. These include the establishment of signing authorities, defining system parameters controls, streamlining procedures and documentation. These are reviewed continually to address the operational risks of its micro-finance business.

Market risk

Market risk is the risk of loss arising from adverse movement in the level of market prices or rates, the two key components being foreign currency exchange risk and interest rate risk.

Market risk arising from the trading activities is controlled by marking to market the trading posi-tions against their predetermined market risk limits.

Foreign currency exchange risk

The Company is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the United States Dollars and Thai Baht. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities. Management does not enter into any currency hedging transaction since it considers that the cost of such instru-ments outweighs the potential risk of exchange rate fluctuations.


76


25.

(c)

(i)

Financial risk management (continued) Market risk (continued)

Foreign currency exchange risk (continued)

Concentration of currency risk

The aggregate amounts of assets and liabilities, by currency denomination, are as follows: (KHR’000 equivalent) Total2011 KHR US$ THB KHR’000

AssetsCash on hand 261,983 187,891 24,340 474,214Deposits and placements with banks 5,695,258 39,537,959 59,071 45,292,288Statutory deposits 324,020 - - 324,020Loans to customers 74,381,225 50,115,861 9,246,777 133,743,863Other receivables 1,631,600 2,082,526 159,998 3,874,124 Total financial assets 82,294,086 91,924,237 9,490,186 183,708,509

LiabilitiesDeposits from customers 142,102 275 150,079 292,456Borrowings 44,441,000 95,735,876 7,536,497 147,713,373Other liabilities 2,061,074 1,419,773 183,189 3,664,036Deferred grant income 12,224 - - 12,224Current income tax liability 1,311,518 - - 1,311,518 Total financial liabilities 47,967,918 97,155,924 7,869,765 152,993,607 Net asset/(liability) position 34,326,168 (5,231,687) 1,620,421 30,714,902 2010

Total financial assets 60,812,884 55,908,468 9,587,892 126,309,244Total financial liabilities 36,747,196 54,643,599 11,425,981 102,816,776 Net asset/(liability) position 24,065,688 1,264,869 (1,838,089) 23,492,468


25.

(c)

(ii)


Market risk (continued)

Interest rate risk

Interest rate risk refers to the volatility in net interest income as a result of changes in the levels of interest rate and shifts in the composition of the assets and liabilities. The exposure to inter-est rate risk relate primarily to its loans, bank deposits and borrowings.

The following table indicates the effective interest rates at the reporting date and the periods in which the financial instruments re-price or mature, whichever is earlier.


78


80



25.

(c)

(ii)

(d)


Market risk (continued)

Interest rate risk (continued)

Fair value sensitivity analysis for fixed rate instruments

The Company does not account for any fixed rate financial assets and financial liabilities at fair value through profit or loss and equity. Therefore a change in interest rates at the reporting date would not affect profit or loss and equity.

Cash flow sensitivity analysis for variable-rate instruments

The change of 100 basis points (“bp”) in interest rates at the reporting date would have increased (decreased) equity and statement of comprehensive income by the amounts shown below. This analysis assumes that all other variables remain the same.

Income statement 100 bp 100 bp increase decrease KHR’000 KHR’00031 December 2011Variable rate instruments (130,960) 130,960 Cash flow sensitivity (130,960) 130,960 Liquidity risk

Liquidity risk relates to the ability to maintain sufficient liquid assets to meet its financial commit-ments and obligations when they fall due at a reasonable cost.

In addition to full compliance of all liquidity requirements, the management of the Company closely monitors all inflows and outflows and the maturity gaps through periodical reporting. Movements in loans and customers’ deposits are monitored and liquidity requirements adjusted to ensure sufficient liquid assets to meet its financial commitments and obligations as and when they fall due.

The following table provides an analysis of the financial assets and liabilities of the Company into relevant maturity groupings based on the remaining periods to repayment.


Note

s to

the

finan

cial

sta

tem

ents

/ An

nual

Repo

rt 20

11

82



25.

(e)

(i)

(ii)

26.


Capital management

Regulatory capital

The Company’s lead regulator, the National Bank of Cambodia (“NBC”), sets and monitors capi-tal requirements for the Company as a whole.

The Company’s policy is to maintain a strong capital base so as to maintain market confidence and to sustain further development of the business. The impact of the level of capital on share-holders’ return is also recognised and the Company recognised the need to maintain a balance between the higher returns that might be possible with greater gearing and advantages and security afforded by a sound capital position.

The Company and its individually regulated operations have complied with all externally imposed capital requirements throughout the year.

Capital allocation

The allocation of capital between specific operations and activities is, to a large extent, driven by optimisation of the return achieved on the capital allocated. The amount of capital allocated to each operation or activity is based primarily upon the regulatory capital.

Fair values of financial assets and liabilities

The aggregate fair values of financial assets and liabilities carried in the balance sheet are approximately equal to their carrying values as at 31 December 2011.

Contact Us


HEAD OFFICE#94, Street 360, Sangkat Boeung Keng Kang III, Khan Cham-karmon, Phnom Penh, Cambodia.Tel: (855) 23 220 641 Fax: (855) 23 220 642E-mail: [email protected]

1-TRAMKAK BRANCHRoad Nº25, Ang Ta Saom Village, Ang Ta Saom Commune, Tramkak District, Takeo Province.Tel: (855) 81 800 288 / E-mail: [email protected]

KIRI VONG SUBBRANCHGroup 7, Kampong Village, Preahbath Chan Chum Commune, Kiri Vong District, Takeo Province.Tel: (855) 81 800 289 / E-mail: [email protected]

2-CHHUK BRANCHSat Pong Village, Sat Pong Commune, Chhuk District, Kampot Province.Tel: (855) 81 800 290 / E-mail: [email protected]

KAMPOT SUBBRANCH#166, National Road Nº3, Svay Thum Village, Sangkat Kraing Ampil, Kampot Municipality, Kampot Province.Tel: (855) 81 800 291 / E-mail: [email protected]

ANGKOR CHEY SUBBRANCHRoad Nº31, Poh Village, Phnom Kong Commune, Angkor Chey District, Kampot Province.Tel: (855) 81 800 293 / E-mail: [email protected]

3-SIEM REAP BRANCH#323, Street Lork Ta Khoeuv Neuy, Wat Bo Village, Sangkat Sala Kamraeuk, Siem Reap Municipality, Siem Reap Province.Tel: (855) 81 800 294 / E-mail: [email protected]

CHI KRAENG SUBBRANCH#03, National Road Nº6, Kampong Kdei II Village, Kampong Kdei Commune, Chi kraeng District, Siem Reap Province.Tel: (855) 81 800 295 / E-mail: [email protected]

PUOK SUBBRANCH# 2709, Group 02, Kouk Chuon Village, Puok Commune, Puok District, Siem Reap Province.Tel: (855) 81 800 296 / E-mail: [email protected]

SOUTR NIKOM SUBBRANCH# 033, Damdaek Thmei Village, Damdaek Commune, Soutr Nikom District, Siem Reap Province.Tel: (855) 81 800 297 / E-mail: [email protected]

4-KAMPONG CHAM BRANCH#73, Road Preah Angdoung, Ti Muoy Village, Sangkat Veal Vong, Kampong Cham Municipality, Kampong Cham Province.Tel: (855) 81 800 298 / E-mail: [email protected]

CHEUNG PREY SUBBRANCHSkon Village, Soutip Commune, Cheung Prey District, Kampong Cham Province.Tel: (855) 81 800 301 / E-mail: [email protected]

5-SVAY RIENG BRANCHPhum Kien Saing, Sangkat Svay Rieng, Svay Rieng Munici-pality, Svay Rieng Province.Tel: (855) 81 800 302 / E-mail: [email protected]

CHI PHU SERVICE POST National Road Nº1, Kampout Pras Village, Sangkat Chrork-mates, Bavet Municipality, Svay Rieng province.Tel: (855) 81 800 783 / E-mail: [email protected]

KAMPONG TRABAEK SUBBRANCHPorn Wat Village, Prasat Commune, Kampong Trabaek District, Prey Veng Province.Tel: (855) 81 800 305 / E-mail: [email protected]

PREY VENG SUBBRANCH# 67, Bei Village, Sangkat Kampong Leav, Prey Veng Munici-pality, Prey Veng Province.Tel: (855) 81 800 781 / E-mail: [email protected]

6-BATI BRANCHNational Road Nº2, Borcham Village, Chambak Commune, Bati District, Takeo Province.Tel: (855) 81 800 307 / E-mail: [email protected]

7-KANDAL BRANCH#205, National Road Nº2, Ta Kdol Village, Sangkat Ta Kdol, Ta Khmau Municipality, Kandal Province.Tel: (855) 23 425 662 / E-mail: [email protected]

S’ANG SUBBRANCH#615, National Road Nº21B, Praek Run Village, Preaek Koy Commune, S’ang District, Kandal Province.Tel: (855) 81 800 314 / E-mail: [email protected]

8-BANTEAY MEANCHEY BRANCHNational Road #06, Kampong Svay Village, Sangkat Kampong Svay, Serei Saophoan Municipality, Banteay Meanchey Province.Tel: (855) 81 800 315 / E-mail: [email protected]

Contact Us / Annual Report 2011

84

OTDAR MEANCHEY SUBBRANCHSamraong Village, Sangkat Samraong, Samraong Municipal-ity, Otdar Meanchey Provicnce.Tel: (855) 81 800 316 / E-mail: [email protected]

THMA PUOK SUBBRANCHKasen Village, Thma Puok Commune, Thma Puok District, Banteay Meanchey Provicnce.Tel: (855) 81 800 595 / E-mail: [email protected]

9-BATTAMBANG BRANCH#317, National Road Nº5, O’Kycheay Village, Sangkat Prek Preah Sdach, Battambang Municipality, Battambang Province.Tel: (855) 81 800 317 / E-mail: [email protected]

ROTONAK MONDOL SUBBRANCH#491, Group 1, Sdao Village, Sdao Commune, Rottonak Mondol District, Battambang Province.Tel: (855) 81 800 318 / E-mail: [email protected]

MOUNG RUESSEI SUBBRANCHKonsay Banteay Village, Moung Commune, Moung Ruessei District, Battambang Province.Tel: (855) 81 800 319 / E-mail: [email protected]

BAVEL SUBBRANCH# 105, Group 7, Spean Kandal Village, Bavel Commune, Bavel District, Battambang Province.Tel: (855) 81 800 609 / E-mail: [email protected]

10-PHNOM PENH BRANCH#A81, Street 271, Sangkat Tumnub Teuk, Khan Chamkarmon, Phnom PenhTel: (855) 23 224 305 / E-mail: [email protected]

ODONGK SUBBRANCHNational Road Nº5, Mlu Meun Village, Phsar Daek Commune, Ponhea Lueu District, Kandal Province.Tel: (855) 81 800 321 / E-mail: [email protected]

DANGKOR SERVICE POST# A-21, Confederation de la Russie Blvd., Sangkat Chom chao, Khan Dangkor, Phnom PenhTel: (855) 81 800 340/ E-mail: [email protected]

TOUL KORK SERVICE POST# 15D, Street 70, Group 242, Sangkat Srah Chork, Khan Daun Penh, Phnom PenhTel: (855) 81 800 329 / E-mail: [email protected]

KAMPONG SPEU SUBBRANCH# 116, Group 2, Angk Serei Village, Sangkat Rokar Thom, Chbar Mon Municipality, Kampong Speu Province.Tel: (855) 81 800 769 / E-mail: [email protected]

11-PAOY PAET BRANCHNational Road Nº5, Kilo Lek Buon Village, Sangkat Paoy Paet, Paoy Paet Municipality, Banteay Meanchey Province.Tel: (855) 81 800 324 / E-mail: [email protected]

SAMPOV LUN SUBBRANCH# 844, Group 9, Trapeang Prolit Village, Santepheap Commune, Sampov Lun District, Battambang Province.Tel: (855) 81 800 585 / E-mail: [email protected]

KAMRIENG SERVICE POSTDoung Village, Boeng Reang Commune, Kamrieng District, Battambang Province.Tel: (855) 81 800 785 / E-mail: [email protected]

12-SUONG BRANCHCheung Lorng Village, Sangkat Suong , Suong Municipality, Kampong Cham Province.Tel: (855) 81 800 326 / E-mail: [email protected]

OU REANG OV SUBBRANCHSvay Ta Thorm Village, Ampil Tapouk Commune, Ou Reang Ov District, Kampong Cham Province.Tel: (855) 81 800 578 / E-mail: [email protected]

13-KRATIE BRANCHNational Road Nº7, Phsar Veng Village, Sangkat Kratie, Kratie Municipality, Kratie Province.Tel: (855) 81 800 327 / E-mail: [email protected]

CHHLOUNG SUBBRANCHStreet #2, Chruoy Thma Kroam Village, Chhloung Commune, Chhloung District, Kratie Province.Tel: (855) 81 800 328 / E-mail: [email protected]

14-PREY KABBAS BRANCHPrey Lvea Koeut Village, Prey Lvea Commune, Prey Kabbas District, Takeo Province.Tel: (855) 81 800 309 / E-mail: [email protected]

15-ROMEAS HAEK BRANCHKampong Trach Village, Kampong Trach Commune, Romeas Haek District, Svay Rieng Province.Tel: (855) 81 800 304 / E-mail: [email protected]

Contact Us / Annual Report 2011


Contact Person in Head Office

Mrs. Nurhayrah SADAVA, Chief Executive OfficerE-mail: [email protected]

Mr. SOK Voeurn, Chief Operations OfficerE-mail: [email protected]

Mr. SOK Sophal, Chief Finance OfficerE-mail: [email protected]

Mr. TENG Pheap, Internal Audit ManagerE-mail: [email protected]

Mr. CHEA Sophal, Admin. and Procurement ManagerE-mail: [email protected]

Mrs. PHOEUK Sokha, Human Resource ManagerE-mail: [email protected]

Mr. ENG Bunthach, Information Technology ManagerE-mail: [email protected]

Mr. LOUNG Phealin, Finance ManagerE-mail: [email protected]

Mr. KONG Kosal, Loan Recovery ManagerE-mail: [email protected]

Mrs. SVOEUY Sodyna, Senior Risk OfficerE-mail: [email protected]

Mr. TUN Korng, Regional ManagerE-mail: [email protected]

Mr. YUORNG Setha, Regional ManagerE-mail: [email protected]

Mr. GNOEUP Sakoeun, Regional ManagerE-mail: [email protected]

Miss. KANG Sokkhim, Company Secretary E-mail: [email protected]

PLANT A TREE AND GET AIR FOR FREE

Produced by Marketing Department

HEAD OFFICE

#94, Street 360, Sangkat Boeung Keng Kang III, Khan Chamkarmon, Phnom Penh, Cambodia.Tel: (855) 23 220 641 Fax: (855) 23 220 642E-mail: [email protected]

Documents

THANEAKEA PHUM (CAMBODIA), LTD. Annual Report 11 Annual Report 2011_eng.pdf · Social Performance Report Card Social Performance Report Card / Annual Report 2011 1 Vision Poor rural