THANEAKEA PHUM (CAMBODIA), LTD. Annual Report. A Licensed Microfinance Institution in Cambodia.

Transcription

1 THANEAKEA PHUM (CAMBODIA), LTD. Annual Report 11 A Licensed Microfinance Institution in Cambodia

2 TPC empowers communities through microfinance loans.

3 Social Performance Report Card Social Performance Report Card / Annual Report 2011 Vision Mission Poor rural Cambodian families are empowered to live their lives with dignity, social and economic security and justice The Thaneakea Phum (Cambodia), Ltd. (TPC) is a microfinance institution with a social vision and a business orientation 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. SOCIAL GOALS Borrower s from rural areas OUTREACH TYPES OF CLIENTS NUMBER 95,100 LOAN PORTFOLIO IN KHMER RIEL 126,661,008,635 AMOUNT PERCENT TO TOTAL PORTFOLIO 94.58% Borrowers from upland communities 94, ,420,475, % Borrowers from coastal communities 2,588 3,493,890, % Borrowers involved in agricultural activities 82,678 80,987,936, % Borrowers below Poverty Line (new clients) 16,862 - * 40.42% Women borrowers 86, ,825,330, % Group borrowers 79,251 66,801,309, % Unsecured borrowers 79,251 66,801,309, % A. Poverty Targeting and Monitoring Poverty Line definition Poverty assessment/ measurement SOCIAL PERFORMANCE TOOLS AND MECHANISMS In TPC s Poverty Progress Index (PPI), we define as clients who are in level of poorest and poor Poverty Progress Index (PPI) used to assess new client s poverty level Poverty tracking Social performance reporting B. Customer Care and Product Enhancement Transparent pricing Client satisfaction study Client feedback system Market research for product development Number of credit bureau checks Code of ethics for staff C. Non-Financial Services Social responsibility activities Financial literacy program Linkage with other development organization D. Personnel Policies Employees satisfaction study Poverty Progress Index (PPI) Once per annum 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 Twice-a-year conduct Comments box set-up at all branches Direct phone access to the BM and SBM via phone number attached in the repayment schedule Before new products are developed, market research is conducted Credit bureau will launch its operations in March TPC going to apply credit bureau check in loan process for all clients. Stated in personnel policy & procedure manual on page 3-4; TPC will print and frame and display on all offices All branches had arranged community event such as blood donation, planting tree, road improvement etc. Non-financial financial literacy service to clients PlaNet Finance & USAID-DCA. Currently, TPC is also working on possible partnerships with Good Return Australia and Habitat for Humanity 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 1

4 Community Event Overview Community Event Highlight School Activities Blood Donation A 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 authorities, and the local people. Road Improvement BLOOD DONATION 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 nonfinancial 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 Kohdach school. A total of 268 participants joined the activity. The activity aims to help improve the educational facility, and subsequently, the quality of learning in that school. The teachers and parents of students expressed their appreciation to TPC. 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. 2 Thaneakea Phum (Cambodia), Ltd.

5 Community Event / Annual Report 2011 Summary 2011 The main goal in arranging the community events is to generally support the people in the communities 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 , the Phnom Penh Branch and Odongk Subbranch arranged to hold such event on October 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: Awarding of outstanding students, cleaning and organizing school parks, planting of trees, hanging 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. 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 appreciation 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. Month October No. of Events 5 No. of Participant TPC Community Sub-total ,047 November December ,144 1,405 Grand-total 2,772 3

6 Operational & Financial Highlight ( ) Unit by thousand Riel Change (%) Number of branches Number of subbranches Number of service posts Number of staff Number of operating provinces Number of operating villages Total borrowers % of women borrowers Loan outstanding Average loan outstanding per borrower PAR > 30 days Assets Liabilities Equity Total income Profit before tax Net profit after tax ,692 96, % 133,914,366 1, % 185,559, ,993,607 32,565,827 38,795,843 7,420,847 5,891, ,946 87, % 90,230,031 1, % 127,663, ,816,776 24,846,746 26,873,121 4,396,294 3,489, % 0.00% % 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% 4 Thaneakea Phum (Cambodia), Ltd.

7 Institutional Profile Vision, Mission, and Goal Statement V Vision Statement Poor, rural Cambodian families who are empowered to live their lives with dignity, social and economic security and justice. M Mission Statement Thaneakea 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. 5 Thaneakea Phum (Cambodia), Ltd.

8 Vision, Mission, and Goal Statement / Annual Report 2011 G 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. 6

9 Message from Chairman of the Board 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 achievements. 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 working 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 investment 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 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. 7 Thaneakea Phum (Cambodia), Ltd.

10 Message from Chairman of the Board / Annual Report 2011 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 international accounting firm as Senior Auditor for more than three years; wherein she led audit teams and completed statutory and compliances audit for various industries including Banks and MFIs. foundations and a clear vision of its role as a responsible and professional financial institution, acting for the benefit of our valued clients in the years to come. Michael Spingler Chairman of the Board 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 8

11 Message from CEO It gives me great pleasure to present to you Thaneakea Phum (Cambodia) Ltd s annual report and financial statement for the year 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 Indicators Financial 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 Efforts of microfinance 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 decreasing 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 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 Performance For 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, especially 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 Milestones We opened 4 new offices in 2011 which are located in Dangkar; 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 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 We are committed to developing our human capital. To this end, the company has continued to enhance its human 9 Thaneakea Phum (Cambodia), Ltd.

12 Message from CEO / Annual Report 2011 capital through training and leadership development for its staff, and where necessary, had complemented existing talent pool with additional new hires. In addition, we continued to invest in communities in which we operate. We have delivered numerous community events, which include repainting of classrooms, tree planting activities, blood donation 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) Forecast We have a very bullish outlook for TPC expects to enhance its market share through geographical expansion by opening more offices. We plan to rollout the Home Improvement 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 deposittaking 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 management. We will also continue to be committed to social performance management, especially in the areas of client protection principles, women economic empowerment, and agricultural development. Lastly, we will also continue to support the activities of the National Bank of Cambodia (NBC). We recognize the importance of the role of NBC in nation-building, and very specifically, in advancing the development of the microfinance 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. Conclusion I 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 overwhelming support to TPC that has been the reason for an excellent performance for I also wish to thank our Board of Directors 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 Sadava Chief Executive Officer 10

13 TPC Overview 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 responsibility 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 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 microfinance institutions to promote economic and social development. It has close to USD $800 million in assets under management. For more information, see 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 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, development organizations and most importantly clients to develop new products to meet the everincreasing 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. 11 Thaneakea Phum (Cambodia), Ltd.

14 Shareholders Shareholders / Annual Report 2011 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: SHAREHOLDERS DWM TPC-ESOP Total SHARE BY PERCENTAGE 89.82% 10.18% 100% 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 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) 89.82% 12

15 Organizational Chart Board of Directors Remuneration & Recruitment Committee Risk Committee Audit Committee Company Secretary CEO Internal Audit Department Credit Committee ALCO Committee Executive Committee Chief Operations Officer Chief Finance Officer Marketing Department Loan Recovery Department Regional Manager Human Resources Department Risk & Compliance Department Finance Department Information Technology Department Admin & Procurement Department Branch Office Branch Office Branch Office Post Office Post Office Post Office 13 Thaneakea Phum (Cambodia), Ltd.

16 Operating Areas Organizational Chart / Annual Report 2011 Thailand Laos Otdar Meanchey Banteay Meanchey Preah Vihear Rattanak Kiri Stung Treng Siem Reap Battambang Pailin Kratie Cambodia Pursat Kampong Thom Mondul Kiri Koh Kong Kampong Chhnang Kampong Cham Phnom Penh Kampong Prey Veng Speu Kandal Svay Rieng Vietnam Kampot Takeo Sihanoukvill Kep Operating Areas North # of Branches # of Subbranches # of Service Posts Operating Provinces Operating Villages ,692 14

17 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 assistance 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, strategic, 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 He was the Chief Operating Officer of TPC from (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 analytical and project management roles, including the launch of two direct sales units to distribute insurance and investments 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. 15 Thaneakea Phum (Cambodia), Ltd.

18 Board of Directors Profile / Annual Report (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. 16

19 Management Team Profile Mrs. Nurhayrah SADAVA Chief Executive Officer Mr. Sok Voeurn Chief Operations Officer Mr. Sok Sophal Chief Finance Officer Mr. Teng Pheap Internal Audit Manager Mr. Chea Sophal Admin & Procurement Manager 17 Thaneakea Phum (Cambodia), Ltd.

20 Management Team Profile / Annual Report 2011 Ms. Phoeuk Sokha Human Resource Manager Mr. Eng Bunthach Information Technology Manager Mr. Loung Phealin Finance Manager Mr. Kong Kosal Loan Recovery Manager Mrs. SVOEUY Sodyna Senior Risk Officer 18

21 Mrs. Nurhayrah SADAVA Chief Executive Officer Mrs. Nurhayrah 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, prior to joining TPC in October She worked as a microfinance specialist and Regional Manager for the Microenterprise Access to Banking Services (MABS) Program in Philippines from 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 International 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 Mozambique. 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). Mr. Sok Voeurn Chief 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 He received a Bachelor degree in Economic Science at the faculty of Law and Economic Science in He has attended microfinance training program at the Boulder Microfinance in Italy, and other pertinent training in USA, South Africa, India, Bangladesh and Thailand. He has also received training in Cambodia on credit management, financial management, asset liability management, trade finance, human resource management, risk management, communication and coaching skill, banking, good governance and leadership and office management, among others. He served in ACLEDA Bank Plc. as Credit Officer from and he was promoted to Head of Credit Control Unit in Head Office from 2001 to 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 Thaneakea Phum (Cambodia), Ltd.

22 Management Team Profile / Annual Report 2011 Mr. Sok Sophal Chief Finance Officer Mr. Sok Sophal, TPC s Chief Finance Officer studied for his Master of Finance at the National University of Management in He received his Bachelor degree in Economics with a major in Enterprise Management at the Faculty of Law and Economics in 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 Marketing. He served in ACLEDA Bank Plc. as an Assistant Manager of the Management Accounting Unit ( ) and Manager of the Management Accounting Unit ( ). He was promoted to the Assistant Senior Vice President (responsible for Investment) of the Legal and Corporate Affairs Division in ACLEDA Bank Plc. in Hereafter January 2009, he was the Deputy Head of Capital Market Division of ACLEDA Bank Plc. He started working for TPC in August Mr. Teng Pheap Internal Audit Manager Mr. Teng Pheap is TPC s Internal Audit Manager studied for his MBA of Accounting at the Western University. He received a Bachelor Degree of accounting from National Institute of Management. Prior to rejoining TPC he worked for Angkor Mikroheranh Votho Kapuchea (AMK) as an internal auditor and internal audit team leader from From 2007 to 2008 he was a regional manager for AMK. He was a former internal auditor with TPC from 2001 to He started working for TPC as Internal Audit Manager in December Mr. Chea Sophal Admin & Procurement Manager Mr. Chea Sophal is TPC s Admin & Procurement Manager, graduated from high school in He worked for Private Agency for Collaborating Together/John Snow Inc. (PACT/JSI) from 1993 to He attended Regent College for two years taking up accounting courses. He joined CRS as Grant Officer in July As part of TPC s staff development, he participated in the following training courses: Poverty Lending Principles, Governance, Management and Leadership, a microfinance training program at the Microenterprise Development Institute in Manchester, New Hampshire, USA, and Business Planning and Managing Growth course in the Philippines. From , he attained Master program in CUP University with a major in Political Science and Public Administration and obtained his Master degree of Public Administration hereafter. 20

23 Ms. Phoeuk Sokha Human Resource Manager 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 Business Administration Program in She started working with TPC in 2001 as Branch Management 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 Business 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 Products, Contract Law, Labor Law, National Social Security Fund, Advocacy, TOT Start Your Business, General Management, Operational Risk Management, Women in Leadership, The Effectiveness in Monitoring Staff Performance Appraisal, Compensation and Procedure in Ending Staff Contract with Fix Duration and Staff Retaining Strategy and so forth. Mr. Eng Bunthach Information Technology Manager Mr. Eng Bunthach, TPC s Information Technology Manager studied for his Bachelor of Computer Science and Engineering from the Royal University of Phnom Penh in He obtained Master Degree in Information Technology from Norton University in 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 development 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 Mr. Loung Phealin Finance Manager Mr. Loung Phealin, TPC Finance Manager, obtained his master degree in Financial Management from Royal University of Law and Economics in 2008 and bachelor degree of business administration in Accounting from former Maharishi Vedic University in He attended numerous professional courses including financial management, the measurement of financial performance, assets and liabilities management, strategic planning and other microfinancerelated courses. He started working for TPC since 2005 with a position as Head Office Accountant ( ) and was promoted as Chief Accountant in Sept 2007 and then promoted as Finance Manager in May 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 stakeholders. 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 ( ). 21 Thaneakea Phum (Cambodia), Ltd.

24 Management Team Profile / Annual Report 2011 Mr. Kong Kosal Loan Recovery Manager 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 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, compliance, 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 Mrs. SVOEUY Sodyna Senior 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 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 statutory and compliances audit for various industries included Banks and MFIs. She started working with TPC in May

25 Board Committee The Board Committees provide recommendations to the Board of Directors and Management of TPC. TPC Board Committees consist of the followings: Audit Committee Risk Committee Nomination and Remuneration Committee Audit Committee Scope and Purpose The Audit Committee is a standing committee of the Board of Directors. The purpose of the Committee 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 independent 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 Committee 1 Mr. Christophe Forsinetti Independent Board Member Chair 2 Mr. Michael Spingler Chairman of Board Member 3 Ms. Fernanda Lima Board Member Member 4 Mr. Teng Pheap Internal Audit Manger Visitor 5 Ms. Nurhayrah Sadava Chief Executive Officer Visitor 6 Mr. Sok Sophal Chief Finance Officer Visitor 7 Mr. Sok Voeurn Chief Operations Office Visitor 8 Ms. Kang Sokkhim Company Secretary Minutes Taker Duties and Responsibilities Review interim and annual financial statements to ensure the integrity and credibility of the company's financial reporting system and process 23 Thaneakea Phum (Cambodia), Ltd.

26 Board Committee / Annual Report 2011 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 independent 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 performance 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, including a clear understanding of the disclosure requirements Exercise an active oversight role over internal auditors, including reviewing their mandate, staffing, 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. 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 analysis on multiple loans, work environment, and client resignations. Significant agenda discussed in 2011 include as follows: Audit Work plan 2011 Internal Audit Findings and Closures from previous quarter Work Environment, Resignations, and /or Multiple Loan Surveys and Analysis NBC Assessment Visits, On Site Inspection Recommendations and Closure of Findings External Audit 24

27 Risk Committee Scope and Purpose The Risk Committee is a standing committee of the Board of Directors. The purpose of the Committee 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 strategies. Composition The committee shall be chaired by an independent board member. It shall include at least an independent 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 Committee 1 Mr. Chandula Palith Abeywickrema Independent Board Member Chair 2 Mr. Michael Spingler Chairman of Board Member 3 Ms. Fernanda Lima Board Member Member 4 Ms. Jessica Moffett-Rose Board Member Member 5 Ms. Nurhayrah Sadava Chief Executive Officer Visitor 6 Mr. Sok Sophal Chief Finance Officer Visitor 7 Mr. Sok Voeurn Chief Operations Officer Visitor 8 Ms. Svoeuy Sodyna Senior Risk Officer Visitor 9 Ms. Kang Sokkhim Company Secretary Minutes Taker Duties and Responsibilities 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 TPC Supervise management team s approach to developing strategies to measure and manage risk Oversee 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 auditors Discuss any reported weaknesses in the internal control structure with the internal and independent auditors and review management actions taken in response to the auditors' recommendations as presented in the management letter 25 Thaneakea Phum (Cambodia), Ltd.

28 Board Committee / Annual Report 2011 Provides management team with recommendations and guidance on how to remedy internal and external audit findings to mitigate risks 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" Be prepared to discuss any risk of fraud brought to the committee's attention by the independent 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. Frequency of Meeting 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: Liquidity Risk Credit Risk and Multiple Loan Analysis Interest Rate Risk Regulatory Risk FX Exposure Risk (NBC/FTB agreements) Reputational Risk (PR) Human Resources Risk Lender Compliance Anti Money Laundering Policy Risk Assessment Matrix SMART CAMPAIGN Compliance Internal Control Prakas Compliance and Action Plans 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 compensation policies and practices. Its primary responsibility will include reviewing, monitoring and making recommendations to the Board of Directors. 26

29 Composition HR and Remuneration Committee shall be chaired by an independent member of Board of Directors. 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 Committee 1 Christophe Forsinetti Independent Board Member Chair 2 Michael Spingler Chairman of Board Member 3 Jessica Moffett-Rose Board Member Member 4 Ms. Nurhayrah Sadava Chief Executive Officer Visitor 5 Ms. Phoeuk Sokha Human Resource Manger Visitor 6 Ms. Kang Sokkhim Company Secretary Minutes Taker Duties and Responsibilities 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. Frequency of Meeting During year 2011, Risk Committee met six times in January, May, July, September (twice) and October. 27 Thaneakea Phum (Cambodia), Ltd.

30 Board Committee / Annual Report 2011 Comment Agenda Comment agenda of HRR Committee focuses on staff related matters such as recruitment, incentives, compensation, satisfaction, performance evaluation, and training to ensure an effective organizational structure is in operation. Significant agenda discussed in 2011 include as follows: PEP Process and Results Profit Sharing Annual Salary Increase Staff Recruitment 2011 Plan Personnel Policies/ Issues Training Effectiveness and New Staff Performance Salary Survey Work Environment Survey and Improvement Strategies 28

31 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 opportunities. 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 Lastly, TPC is pilot testing the Home Improvement Loan (HIL) product in 3 locations starting in December This product aims to meet the demand in the market for financing home improvement 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. TPC TPL SGL IL MBE SNL 29 Thaneakea Phum (Cambodia), Ltd.

32 Our Clients Organizational Chart / Annual Report 2011 Mrs. Man Mon Mrs. Man Mon 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; hoever, 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 Institution 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 year which 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. 30

33 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 Membership TPC 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 Appreciation Actively 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. Certificate of Charity Appreciation TPC 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. 31 Thaneakea Phum (Cambodia), Ltd.

34 AUDITED FINANCIAL STATEMENTS Report of the Board of Directors Report of the independent auditors Balance sheet Income statement Statement of changes in equity Statement of cash flows Notes to the financial statements

35 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 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: Profit before income tax 7,420,847 Income 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 reasonable 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. 33 Thaneakea Phum (Cambodia), Ltd.

36 Report of the Board of Directors / Annual Report 2011 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 The share capital structure and the details of authorised and registered shareholding are as follows: % of Number of Amount % of Number of Amount Ownership shares Ownership shares DWM Funds S.C.A. -SICAV SIF ,474 5,547, ,134 3,513,400 TPC-ESOP Co., Ltd , , , , ,764 6,176, ,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 Current assets Before the financial statements of the Company were prepared, the Board of Directors took reasonable 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. 34

37 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 opinion 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 significant events occurring after the balance sheet date which would require adjustments or disclosures to be made in the financial statements. 35 Thaneakea Phum (Cambodia), Ltd.

38 Report of the Board of Directors / Annual Report 2011 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 judgments and estimates and then apply them consistently; 36

39 Responsibilities of the Board of Directors in respect of the financial statements (continued) (ii) (iii) (iv) (v) comply with Cambodian Accounting Standards and the guidelines of the National Bank of Cambodia 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; maintain adequate accounting records and an effective system of internal controls; 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. 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 Forsinetti Director Date: 37 Thaneakea Phum (Cambodia), Ltd.

40 Report of the independent auditors Report of the independent auditors / Annual Report 2011 To the shareholders Thaneakea 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 Cambodia 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 disclosures 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 effectiveness 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. 38

41 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 McDonald Audit Partner Phnom Penh 29 March Thaneakea Phum (Cambodia), Ltd.

42 Balance sheet Balance sheet / Annual Report 2011 As at 31 December 2011 ASSETS Note Cash on hand 4 474, ,678 Deposits and placements with banks 5 45,292,288 34,946,852 Statutory deposits 6 324, ,200 Loans to customers 7 133,743,863 88,459,910 Other receivables 8 3,874,124 2,364,604 Property and equipment 9 1,532,569 1,199,820 Intangible assets 10 7,409 14,819 Long term investment 11 60,585 - Deferred tax assets , ,639 TOTAL ASSETS 185,559, ,663,522 LIABILITIES AND EQUITY LIABILITIES Deposits from customers , ,981 Borrowings ,713,373 99,081,495 Other liabilities 15 3,664,036 2,705,933 Deferred grant income 12,224 16,298 Current income tax liability 12 1,311, ,069 TOTAL LIABILITIES 152,993, ,816,776 EQUITY Share capital 16 6,176,400 4,000,000 Reserves 1,955,663 1,373,211 Retained earnings 24,433,764 19,473,535 TOTAL EQUITY 32,565,827 24,846,746 TOTAL LIABILITIES AND EQUITY 185,559, ,663,522 The accompanying notes form an integral part of these financial statements. 40

43 Income statement for the year ended 31 December Note 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 , ,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, ,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 The accompanying notes form an integral part of these financial statements. 41 Thaneakea Phum (Cambodia), Ltd.

44 Statement of changes in equity Statement of changes in equity / Annual Report 2011 for the year ended 31 December 2011 Share Retained capital Reserves earnings Total Balance as at 1 January ,000, ,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 ,000,000 1,373,211 19,473,535 24,846,746 Additional share capital issued 2,176, ,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 ,176,400 1,955,663 24,433,764 32,565,827 The accompanying notes form an integral part of these financial statements. 42

45 Statement of cash flows for the year ended 31 December 2011 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, ,344 Grant income (4,075) (10,328) Reversals of allowance for bad and doubtful loans (60,019) (378,277) Changes in: 8,050,017 4,599,033 Deposits and placements with banks (4,450,932) 3,280,236 Statutory 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, ,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 71,142,366 Repayments 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, Thaneakea Phum (Cambodia), Ltd.

46 Statement of cash flows / Annual Report 2011 for the year ended 31 December 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: Cash on hand (Note 4) 474, ,678 Deposit 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 The accompanying notes form an integral part of these financial statements. 44

47 Notes to the financial statements for the year ended 31 December Background and principal activities Thaneakea Phum (Cambodia), Ltd. ( the Company or TPC ), a licensed micro-finance institution, 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 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 Cambodia, 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 February On 20 January 2006, the NBC extended this licence for another three-year period commencing from 12 February 2006 to 12 February 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 employees). 2. (a) 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 (b) Basis of measurement The financial statements have been prepared on the historical cost basis. 45 Thaneakea Phum (Cambodia), Ltd.

48 Notes to the financial statements / Annual Report 2011 for the year ended 31 December (c) 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 majority 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. (d) 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. 3. 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. (a) 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. 46

49 for the year ended 31 December (b) 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. (c) 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. (d) Deposit and placements with banks Deposits and placements with banks are carried at cost. (e) 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. (f) 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 provision Short-term loans (less than one year): Sub-standard days 10% Doubtful days 30% Loss 90 days or more 100% Long-term loans (more than one year): Sub-standard days 10% Doubtful days 30% Loss 360 days or more 100% 47 Thaneakea Phum (Cambodia), Ltd.

50 Notes to the financial statements / Annual Report 2011 for the year ended 31 December (f) Significant accounting policies (continued) 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 management. 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. (g) 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. (h) Other receivables Other receivables are carried at estimated realisable value. 48

51 for the year ended 31 December (i) (i) Significant accounting policies (continued) 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. (ii) (iii) (j) 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 amortisation rate, useful life or residual value of an intangible asset, the amortisation is revised prospectively to reflect the new expectations. 49 Thaneakea Phum (Cambodia), Ltd.

52 Notes to the financial statements / Annual Report 2011 for the year ended 31 December (k) (i) Significant accounting policies (continued) 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 characteristics. 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. (ii) 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 generates 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. 50

53 for the year ended 31 December (l) Significant accounting policies (continued) Deposits from customers Deposits from customers are stated at placement value. (m) Borrowings Borrowings are stated at the amount of the principal outstanding. Fees paid on the establishment of borrowing facilities are capitalised and amortised over the period of the borrowings using the straight-line method. (n) 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. (o) 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 microfinance 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 (p) 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. 51 Thaneakea Phum (Cambodia), Ltd.

54 Notes to the financial statements / Annual Report 2011 for the year ended 31 December (p) Significant accounting policies (continued) 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 therefore, or who participates in the administration, direction, management or the design and implementation of the internal controls of the Company. (q) Income and expense recognition Interest income on loans is recognised on an accruals basis. Where a loan becomes nonperforming, 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. (r) 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 unamortised grants are shown as deferred grant income. (s) 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. (t) 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. 52

55 for the year ended 31 December (t) Significant accounting policies (continued) 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. (u) New standards and interpretations not yet adopted The National Accounting Council of Cambodia, as mandated by Prakas (Circular) No 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 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 comprehensive income. 53 Thaneakea Phum (Cambodia), Ltd.

56 Notes to the financial statements / Annual Report 2011 for the year ended 31 December (u) Significant accounting policies (continued) New standards and interpretations not yet adopted (continued) 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 Measurement 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 financial 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 transaction costs. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses. Impairment of financial assets: the Company currently follows the mandatory credit classification and provisioning as required by Prakas No. B 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. 54

57 for the year ended 31 December (u) Significant accounting policies (continued) 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 similar 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. 4. Cash on hand Head office 2,000 2,000 Branches 472, ,678 The above amounts are analysed as follows: 474, , Khmer Riel 261, ,654 US Dollars 187, ,798 Thai Baht 24,340 9, , , Thaneakea Phum (Cambodia), Ltd.

58 Notes to the financial statements / Annual Report 2011 for the year ended 31 December Deposits and placements with banks Current 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 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: (a) By maturity: 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 (b) By currency: Khmer Riel 5,695,258 1,398,375 US Dollars 39,537,959 33,096,412 Thai Baht 59, ,065 45,292,288 34,946,852 56

59 for the year ended 31 December Deposits and placements with banks (continued) Deposits and placements with banks are analysed as follows (continued) : (c) By interest rate (per annum): Bank inside Cambodia 0.03%- 5% 0.05% % 6. Statutory deposits Statutory deposits on: Registered share capital 308, ,000 Customers deposits 15,200 15, , ,200 The statutory deposits are maintained with the NBC in compliance with Prakas No. B and B on the Licensing of Micro-Finance Institutions, the amounts of which are determined 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. 57 Thaneakea Phum (Cambodia), Ltd.

60 Notes to the financial statements / Annual Report 2011 for the year ended 31 December Loans to customers Thaneakea Phum loans: Fixed terms 9, ,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, ,184 Allowance for bad and doubtful loans 133,914,366 90,230,031 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 3,565,892 Reversals 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 58

61 for the year ended 31 December Loans to customers (continued) Loans to customers are analysed as follows: (a) By 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 56,871,370 More than 12 months 15,240,642 8,070, ,914,366 90,230,031 (b) By currency: Khmer Riel 74,463,012 59,146,888 US Dollars 50,179,292 22,044,789 Thai Baht 9,272,062 9,038, ,914,366 90,230,031 (c) By economic sector: Agriculture 7,786,272 59,554,061 Trade and commerce 26,913,289 19,935,362 Services 11,401,533 4,466,992 Household/family 12,590,277 3,128,689 Construction 1,194, ,230 Transportation 547, ,548 Other categories 3,480,618 1,814, ,914,366 90,230,031 (d) (e) By resident status: Residents 133,914,366 90,230,031 By relationship: External customers 132,950,690 89,232,847 Staff loans 963, , ,914,366 90,230, Thaneakea Phum (Cambodia), Ltd.

62 Notes to the financial statements / Annual Report 2011 for the year ended 31 December (f) Loans to customers (continued) By location: Head office 111, ,613 Branches: 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, ,914,366 90,230,031 (g) By performance: Standard loans: Secured 67,039,274 32,341,402 Unsecured 66,704,589 56,118,508 Sub-standard loans: Secured 37,194 4,210 Unsecured 18,456 36,114 Doubtful loans: Secured 15,443 6,972 Unsecured 8,657 39,592 Loss loans: Secured 23, ,579 Unsecured 67,607 1,308, ,914,366 90,230,031 (h) By interest rate (per month): Loans in Khmer Riel 2.50% % 3.00% Loans in US Dollars 1.80% % 2.00% % Loans in Thai Baht 2.50% % 3.00% 60

63 for the year ended 31 December Other receivables Interest receivable 2,760,273 1,766,578 Prepayments and deposits 760, ,217 Others 353, ,809 3,874,124 2,364, Property and equipment Cost Office furniture Motor and equipment vehicles Computers Total At 1 January ,043 2,562,289 1,160,876 3,915,208 Additions 84, , ,116 1,018,603 Written off - (236,891) - (236,891) At 31 December ,507 2,999,421 1,420,992 4,696,920 Less: Accumulated depreciation At 1 January ,587 1,705, ,998 2,715,388 Depreciation for the year 40, , , ,854 Written off - (236,891) - (236,891) At 31 December ,317 1,851,539 1,158,495 3,164,351 Carrying amounts At 31 December ,190 1,147, ,497 1,532,569 At 31 December , , ,878 1,199, Thaneakea Phum (Cambodia), Ltd.

64 Notes to the financial statements / Annual Report 2011 for the year ended 31 December Intangible assets Cost Computer software At 1 January/31 December 160, ,567 Accumulated amortisation At 1 January 145, ,929 Amortisation for the year 7,410 14,819 At 31 December 153, ,748 Carrying amounts At 31 December 7,409 14, 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 Understanding was signed on 29 January 2010 between the ABC, Cambodia Microfinance Association ( CMA ) and International Finance Corporation ( IFC ). 12. Income tax (a) 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. 62

65 for the year ended 31 December Income tax (continued) (b) Current income tax liability Balance at beginning of year 618, ,132 Charge to income statement 1,639, ,129 Income tax paid (946,440) (399,192) Balance at end of year 1,311, ,069 (c) Deferred tax assets Deferred tax assets 250, ,550 Deferred tax liabilities - (6,911) 250, ,639 Deferred tax assets/(liabilities) are attributable to the following: Provisions 245, ,237 Depreciation Unrealised exchange loss/(gain) 4,463 (6,911) 250, , Thaneakea Phum (Cambodia), Ltd.

66 Notes to the financial statements / Annual Report 2011 for the year ended 31 December Income tax (continued) (c) Deferred tax assets (continued) Movement of deferred tax, net is as follows: At beginning of the year 139, ,937 Reversal from/(charge to) profit or loss 110,723 (44,298) At end of the year 250, ,639 (d) Income tax expense Current income tax 1,639, ,129 Deferred tax (110,723) 44,298 1,529, ,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: % % Profit before income tax 7,420,847 4,396,294 Income tax using applicable income income tax rate 20 1,484, ,259 Effect of non-deductible expenses , ,168 Effective income tax rate ,529, ,427 The calculation of income tax is subject to the review and assessment of the tax authorities. 64

67 for the year ended 31 December Deposits from customers Compulsory deposits 156, ,354 Staff and other deposits 136, , , ,981 (a) Deposits from customers are analysed as follows: By maturity: Within 1 month 201, ,596 >1 to 3 months 1,113 2,533 >3 to 12 months 3,654 5,113 More than 12 months 85,881 83, , ,981 (b) By currency: Khmer Riel 142, ,886 US Dollars Thai Baht 150, , , ,981 (c) By interest rate (per annum): Compulsory deposits - - Staff and other deposits 5.00% % 5.00% % 65 Thaneakea Phum (Cambodia), Ltd.

68 Notes to the financial statements / Annual Report 2011 for the year ended 31 December Borrowings Related parties: DWM Funds S.C.A.-SICAV SIF (i) 8,176,000 - Non-related parties: Alterfin (ii) 4,039,000 2,026,500 BlueOrchard - 4,590,000 Calvert Foundation (iii) 8,078,000 4,053,000 Grameen Credit Agricole (iv) 5,588,000 4,050,000 Instituto de Credito Oficial (v) 16,641,488 16,699,171 Novib Fonds (vi) 17,297,688 9,232,645 Oikocredit (vii) 8,959,000 8,200,000 PlaNet Finance/PlaNIS (viii) 18,104,497 14,386,500 Symbiotics (ix) 12,117,000 11,145,750 Foreign Trade Bank of Cambodia (x) 20,825,000 17,912,765 National Bank of Cambodia (xi) 6,520,000 6,520,000 Acleda 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 (i) (ii) (iii) 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 Two loans from Alterfin are unsecured. Interest is due on a semi-annual basis while the principal 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

69 for the year ended 31 December Borrowings (continued) (iv) (v) (vi) 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 Loans from Novib Fonds are unsecured. Interest is due on a semi-annual basis while the principal 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 (vii) 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 (viii) 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. (ix) (x) (xi) 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. (xii) Loans from Acleda Bank Plc are unsecured. Interest is due on a monthly basis while the principal of US$150,000 each are to be repaid on 27 April 2012 and 27 April 2013 respectively. 67 Thaneakea Phum (Cambodia), Ltd.

70 Notes to the financial statements / Annual Report 2011 for the year ended 31 December Borrowings (continued) (xiii) 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. (xiv) 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 (xv) 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: (a) By maturity: 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 46,042,005 1 to 5 years 79,105,409 42,631,576 Over 5 years 16,641, ,713,373 99,081,495 (b) By currency: Khmer Riel 44,441,000 34,640,265 US Dollars 95,735,876 53,573,730 Thai Baht 7,536,497 10,867,500 (c) By interest rate (per annum): 147,713,373 99,081, Borrowings 5.50% % 5.50% % 68

71 for the year ended 31 December Other liabilities Interest payables 1,958,184 1,625,307 Staff incentive (Year-end bonus) 589, ,987 Staff bonus 731, ,196 Withholding tax payable 195, ,413 Other payables 190, ,030 3,664,036 2,705, 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 The share capital structure and the details of authorised and registered shareholding are as follows: % of Number of Amount % of Number of Amount Ownership shares Ownership shares DWM Funds S.C.A. -SICAV SIF ,474 5,547, ,134 3,513,400 TPC-ESOP Co., Ltd , , , , ,764 6,176, ,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 Thaneakea Phum (Cambodia), Ltd.

72 Notes to the financial statements / Annual Report 2011 for the year ended 31 December Interest income Loan to customers 34,629,104 25,794,752 Placements with banks 909, ,782 35,538,246 26,546, Interest expense Borrowings 11,351,118 9,375,381 Customers deposits 14,165 21,079 11,365,283 9,396, Other operating income Foreign exchange (loss)/gains (69,907) 39,128 Recovery from loans written off 557, ,356 Penalty income 7,365 20,680 Other income 9,224 15, , , 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. 70

73 for the year ended 31 December Personnel expenses Salaries and wages 10,553,963 8,026,458 Other short-term benefits 668, ,055 11,222,570 8,665, Administrative expenses Travelling expenses 1,037, ,879 Rental expenses 907, ,584 Professional services 211, ,977 Bank and service charges and other fees 566, ,629 Office supplies and equipment 465, ,517 Utilities 343, ,486 Communications 292, ,334 Photocopies and printing 150, ,563 Other expenses 1,003, , Related party transactions and balances 4,977,612 3,736,556 (a) Related party transactions: Key management Salary and other benefits 1,953,204 1,858,613 Interest income 1,033 11,783 Interest expense Mr. Michael John Spingler 6,293 18,490 DWM Funds S.C.A.-SICAV SIF 757, Thaneakea Phum (Cambodia), Ltd.

74 Notes to the financial statements / Annual Report 2011 for the year ended 31 December Related party transactions and balances (continued) (b) Related party balances: Key management loans - 66,667 Borrowing from Mr. Michael John Spingler (Repaid on 29 April 2011) - 157,500 Borrowing from DWM Funds S.C.A. -SICAV SIF (Note 14) 8,176, Commitments and contingencies (a) Lease commitments The Company has lease commitments for the lease of its headquarters and provincial offices as follows: Within one year 659, ,498 Two to five years 359, ,975 1,018,569 1,050,473 (b) 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 countries. Management believes that it has adequately provided for tax liabilities based on its interpretation of tax legislation. However, the relevant authorities may have differing interpretations and the effects since the incorporation of the Company could be significant. 72

75 for the year ended 31 December 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: (a) 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 activities. 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 overall 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 compliance 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: (i) 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 traditional 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. (ii) Impairment and provisioning policies The Company is required to follow the mandatory credit classification and provisioning in accordance with Prakas No. B dated 13 September 2002 on the classification and provisioning for bad and doubtful debts of the National Bank of Cambodia. Refer to separate accounting policy stated in Notes 3(e) and 3(f). 73 Thaneakea Phum (Cambodia), Ltd.

76 Notes to the financial statements / Annual Report 2011 for the year ended 31 December Financial risk management (continued) (a) (iii) Credit risk (continued) Exposure to credit risk: Loans 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, ,914,366 90,230,031 Allowance 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 determines 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 customers with payment overdue more than 30 days. A minimum level of specific provision for impairment 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 principal payments are past due less than 30 days, unless other information is available to indicate otherwise. 74

77 for the year ended 31 December Financial risk management (continued) (b) 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 implemented. 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. (c) 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 positions against their predetermined market risk limits. (i) 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 instruments outweighs the potential risk of exchange rate fluctuations. 75 Thaneakea Phum (Cambodia), Ltd.

78 Notes to the financial statements / Annual Report 2011 for the year ended 31 December Financial risk management (continued) (c) (i) 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: ( equivalent) Total 2011 KHR US$ THB Assets Cash on hand 261, ,891 24, ,214 Deposits and placements with banks 5,695,258 39,537,959 59,071 45,292,288 Statutory deposits 324, ,020 Loans to customers 74,381,225 50,115,861 9,246, ,743,863 Other receivables 1,631,600 2,082, ,998 3,874,124 Total financial assets 82,294,086 91,924,237 9,490, ,708,509 Liabilities Deposits from customers 142, , ,456 Borrowings 44,441,000 95,735,876 7,536, ,713,373 Other liabilities 2,061,074 1,419, ,189 3,664,036 Deferred grant income 12, ,224 Current income tax liability 1,311, ,311,518 Total financial liabilities 47,967,918 97,155,924 7,869, ,993,607 Net asset/(liability) position 34,326,168 (5,231,687) 1,620,421 30,714, Total financial assets 60,812,884 55,908,468 9,587, ,309,244 Total financial liabilities 36,747,196 54,643,599 11,425, ,816,776 Net asset/(liability) position 24,065,688 1,264,869 (1,838,089) 23,492,468 76

79 for the year ended 31 December Financial risk management (continued) (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 interest 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. 77 Thaneakea Phum (Cambodia), Ltd.

80 78

81 79 Thaneakea Phum (Cambodia), Ltd.

82 Notes to the financial statements / Annual Report 2011 for the year ended 31 December Financial risk management (continued) (c) (ii) 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 31 December 2011 Variable rate instruments (130,960) 130,960 Cash flow sensitivity (130,960) 130,960 (d) Liquidity risk Liquidity risk relates to the ability to maintain sufficient liquid assets to meet its financial commitments 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. 80

83 81 Thaneakea Phum (Cambodia), Ltd.

84 Notes to the financial statements / Annual Report 2011 for the year ended 31 December (e) (i) Notes to the financial statements / Annual Report 2011 Financial risk management (continued) Capital management Regulatory capital The Company s lead regulator, the National Bank of Cambodia ( NBC ), sets and monitors capital 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 shareholders 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. (ii) 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. 26. 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

85 Contact Us HEAD OFFICE #94, Street 360, Sangkat Boeung Keng Kang III, Khan Chamkarmon, Phnom Penh, Cambodia. Tel: (855) Fax: (855) TRAMKAK BRANCH Road Nº25, Ang Ta Saom Village, Ang Ta Saom Commune, Tramkak District, Takeo Province. Tel: (855) / tramkok@tpc.com.kh KIRI VONG SUBBRANCH Group 7, Kampong Village, Preahbath Chan Chum Commune, Kiri Vong District, Takeo Province. Tel: (855) / kirivong@tpc.com.kh 2-CHHUK BRANCH Sat Pong Village, Sat Pong Commune, Chhuk District, Kampot Province. Tel: (855) / chhouk@tpc.com.kh KAMPOT SUBBRANCH #166, National Road Nº3, Svay Thum Village, Sangkat Kraing Ampil, Kampot Municipality, Kampot Province. Tel: (855) / kampot@tpc.com.kh ANGKOR CHEY SUBBRANCH Road Nº31, Poh Village, Phnom Kong Commune, Angkor Chey District, Kampot Province. Tel: (855) / angkorchey@tpc.com.kh 3-SIEM REAP BRANCH #323, Street Lork Ta Khoeuv Neuy, Wat Bo Village, Sangkat Sala Kamraeuk, Siem Reap Municipality, Siem Reap Province. Tel: (855) / siemreap@tpc.com.kh CHI KRAENG SUBBRANCH #03, National Road Nº6, Kampong Kdei II Village, Kampong Kdei Commune, Chi kraeng District, Siem Reap Province. Tel: (855) / chikraeng@tpc.com.kh PUOK SUBBRANCH # 2709, Group 02, Kouk Chuon Village, Puok Commune, Puok District, Siem Reap Province. Tel: (855) / puok@tpc.com.kh SOUTR NIKOM SUBBRANCH # 033, Damdaek Thmei Village, Damdaek Commune, Soutr Nikom District, Siem Reap Province. Tel: (855) / soutrnikom@tpc.com.kh 4-KAMPONG CHAM BRANCH #73, Road Preah Angdoung, Ti Muoy Village, Sangkat Veal Vong, Kampong Cham Municipality, Kampong Cham Province. Tel: (855) / kampongcham@tpc.com.kh CHEUNG PREY SUBBRANCH Skon Village, Soutip Commune, Cheung Prey District, Kampong Cham Province. Tel: (855) / cheungprey@tpc.com.kh 5-SVAY RIENG BRANCH Phum Kien Saing, Sangkat Svay Rieng, Svay Rieng Municipality, Svay Rieng Province. Tel: (855) / svayrieng@tpc.com.kh CHI PHU SERVICE POST National Road Nº1, Kampout Pras Village, Sangkat Chrorkmates, Bavet Municipality, Svay Rieng province. Tel: (855) / chiphu@tpc.com.kh KAMPONG TRABAEK SUBBRANCH Porn Wat Village, Prasat Commune, Kampong Trabaek District, Prey Veng Province. Tel: (855) / kampongtrabaek@tpc.com.kh PREY VENG SUBBRANCH # 67, Bei Village, Sangkat Kampong Leav, Prey Veng Municipality, Prey Veng Province. Tel: (855) / preyveng@tpc.com.kh 6-BATI BRANCH National Road Nº2, Borcham Village, Chambak Commune, Bati District, Takeo Province. Tel: (855) / bati@tpc.com.kh 7-KANDAL BRANCH #205, National Road Nº2, Ta Kdol Village, Sangkat Ta Kdol, Ta Khmau Municipality, Kandal Province. Tel: (855) / takmau@tpc.com.kh S ANG SUBBRANCH #615, National Road Nº21B, Praek Run Village, Preaek Koy Commune, S ang District, Kandal Province. Tel: (855) / saang@tpc.com.kh 8-BANTEAY MEANCHEY BRANCH National Road #06, Kampong Svay Village, Sangkat Kampong Svay, Serei Saophoan Municipality, Banteay Meanchey Province. Tel: (855) / sisophon@tpc.com.kh 83 Thaneakea Phum (Cambodia), Ltd.

86 Contact Us / Annual Report 2011 OTDAR MEANCHEY SUBBRANCH Samraong Village, Sangkat Samraong, Samraong Municipality, Otdar Meanchey Provicnce. Tel: (855) / samraong@tpc.com.kh THMA PUOK SUBBRANCH Kasen Village, Thma Puok Commune, Thma Puok District, Banteay Meanchey Provicnce. Tel: (855) / thmapuok@tpc.com.kh 9-BATTAMBANG BRANCH #317, National Road Nº5, O Kycheay Village, Sangkat Prek Preah Sdach, Battambang Municipality, Battambang Province. Tel: (855) / battambang@tpc.com.kh ROTONAK MONDOL SUBBRANCH #491, Group 1, Sdao Village, Sdao Commune, Rottonak Mondol District, Battambang Province. Tel: (855) / rattanakmondol@tpc.com.kh MOUNG RUESSEI SUBBRANCH Konsay Banteay Village, Moung Commune, Moung Ruessei District, Battambang Province. Tel: (855) / moungbtb@tpc.com.kh BAVEL SUBBRANCH # 105, Group 7, Spean Kandal Village, Bavel Commune, Bavel District, Battambang Province. Tel: (855) / bavel@tpc.com.kh 10-PHNOM PENH BRANCH #A81, Street 271, Sangkat Tumnub Teuk, Khan Chamkarmon, Phnom Penh Tel: (855) / phnompenh@tpc.com.kh ODONGK SUBBRANCH National Road Nº5, Mlu Meun Village, Phsar Daek Commune, Ponhea Lueu District, Kandal Province. Tel: (855) / odongk@tpc.com.kh DANGKOR SERVICE POST # A-21, Confederation de la Russie Blvd., Sangkat Chom chao, Khan Dangkor, Phnom Penh Tel: (855) / dangkor@tpc.com.kh TOUL KORK SERVICE POST # 15D, Street 70, Group 242, Sangkat Srah Chork, Khan Daun Penh, Phnom Penh Tel: (855) / toulkok@tpc.com.kh KAMPONG SPEU SUBBRANCH # 116, Group 2, Angk Serei Village, Sangkat Rokar Thom, Chbar Mon Municipality, Kampong Speu Province. Tel: (855) / kampongspeu@tpc.com.kh 11-PAOY PAET BRANCH National Road Nº5, Kilo Lek Buon Village, Sangkat Paoy Paet, Paoy Paet Municipality, Banteay Meanchey Province. Tel: (855) / poipet@tpc.com.kh SAMPOV LUN SUBBRANCH # 844, Group 9, Trapeang Prolit Village, Santepheap Commune, Sampov Lun District, Battambang Province. Tel: (855) / sampovlun@tpc.com.kh KAMRIENG SERVICE POST Doung Village, Boeng Reang Commune, Kamrieng District, Battambang Province. Tel: (855) / kamrieng@tpc.com.kh 12-SUONG BRANCH Cheung Lorng Village, Sangkat Suong, Suong Municipality, Kampong Cham Province. Tel: (855) / suong@tpc.com.kh OU REANG OV SUBBRANCH Svay Ta Thorm Village, Ampil Tapouk Commune, Ou Reang Ov District, Kampong Cham Province. Tel: (855) / oureangov@tpc.com.kh 13-KRATIE BRANCH National Road Nº7, Phsar Veng Village, Sangkat Kratie, Kratie Municipality, Kratie Province. Tel: (855) / kracheh@tpc.com.kh CHHLOUNG SUBBRANCH Street #2, Chruoy Thma Kroam Village, Chhloung Commune, Chhloung District, Kratie Province. Tel: (855) / chhloung@tpc.com.kh 14-PREY KABBAS BRANCH Prey Lvea Koeut Village, Prey Lvea Commune, Prey Kabbas District, Takeo Province. Tel: (855) / preykabas@tpc.com.kh 15-ROMEAS HAEK BRANCH Kampong Trach Village, Kampong Trach Commune, Romeas Haek District, Svay Rieng Province. Tel: (855) / romeashaek@tpc.com.kh 84

87 Contact Us / Annual Report 2011 Contact Person in Head Office Mrs. Nurhayrah SADAVA, Chief Executive Officer arahsadava@tpc.com.kh Mr. SOK Voeurn, Chief Operations Officer sokvoeurn@tpc.com.kh Mr. SOK Sophal, Chief Finance Officer soksophal@tpc.com.kh Mr. TENG Pheap, Internal Audit Manager teng.pheap@tpc.com.kh Mr. CHEA Sophal, Admin. and Procurement Manager chea@tpc.com.kh Mrs. PHOEUK Sokha, Human Resource Manager hrd@tpc.com.kh Mr. ENG Bunthach, Information Technology Manager bunthach@tpc.com.kh Mr. LOUNG Phealin, Finance Manager phealin@tpc.com.kh Mr. KONG Kosal, Loan Recovery Manager kkosal@tpc.com.kh Mrs. SVOEUY Sodyna, Senior Risk Officer ssodyna@tpc.com.kh Mr. TUN Korng, Regional Manager korng@tpc.com.kh Mr. YUORNG Setha, Regional Manager setha@tpc.com.kh Mr. GNOEUP Sakoeun, Regional Manager sakoeun@tpc.com.kh Miss. KANG Sokkhim, Company Secretary sokkhim@tpc.com.kh PLANT A TREE AND GET AIR FOR FREE 85 Thaneakea Phum (Cambodia), Ltd.