ABOUT PRASAC 2 OWNERSHIP AND GOVERNANCE 12

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2 ABOUT PRASAC 2 Vision and Mission 3 Background 4 Our Challenges 6 Business Objectives 7 Clients and Client Highlights 8 Financial Products and Eligible Criteria 11 OWNERSHIP AND GOVERNANCE 12 Organizational Structure 13 Shareholders 14 Board Committee 15 Board of Directors 16 Management 18 Operational HIGHLIGHTS 22 Remark From Chairman 23 Remark From General Manager 25 Financial Performance Highlights 28 Operational Highlights 30 Staffing and Capacity Building 32 Internal Control and Risk Management 34 Marketing and Social Activities 36 Audited Financial Statements 40 Report of the Board of Directors 41 Report of the Independent Auditors 46 Balance Sheet 47 Income Statement 48 Statement of Changes In Equity 48 Statement of Cash Flows 49 Contact US 50 Office Network with Contact Address 51 Outreach Highlights with Operational Map 62 1

3 ABOUT PRASAC VISION AND MISSION 3 FINANCIAL PRODUCTS AND ELIGIBLE CRITERIA 11 BACKGROUND 4 CLIENTS AND CLIENT HIGHLIGHTS 8 OUR CHALLENGES 6 BUSINESS OBJECTIVES 7 2

4 VISION To improve the living standards of the rural people contributing to sustainable economic development by being a financially viable microfinance institution. MISSION To provide sustainable access to financial services for rural communities and micro-enterprises. 3

5 BACKGROUND PRASAC was a former credit component of PRASAC s project funded by the European Union and implemented by three ministries of the Royal Government of Cambodia. The project started in 1995 to rehabilitate and support agricultural sector in six provinces around Phnom Penh i.e. Kompong Cham, Kompong Chhnang, Kompong Speu, Takeo, Prey Veng, and Svay Rieng. PRASAC s project phased out in December To ensure the access to financial services to rural communities and micro-enterprises,prasac s Project Steering Committee made a strategic decision to transform its credit component into a licensed MFI. In March 2002, the transformation was started by creating PRASAC Credit Association as credit operator registered with the National Bank of Cambodia (NBC). In 2003, a trust fund called Cambodia Rural Development Foundation (CRDF) and PRASAC Staff Company were established to facilitate the transformation. With two initial shareholders, PRASAC was established by registering with the Ministry of Commerce as a private limited liability company in August 2004 and got its license from the NBC in November 2004 to legally provision financial services to rural communities and micro-enterprises. To finalize its transformation, PRASAC started to identify and negotiate with investors since 2005 in order to replace the temporary shareholders i.e. CRDF. In 2007, PRASAC completed its transformation by replacing CRDF with new five shareholders such as BIO (Belgian Investment Company for Developing Countries), DGC (Dragon Capital Group Limited), FMO (The Netherlands Development Finance Company), LOLC (Lanka ORIX LEASING Company Ltd), and Oikocredit. Particularly, PRASAC received a permanent license from NBC in December

6 MILESTONE : PRASAC I, three EU funded rural development projects in six provinces, with three different credit components. 2005: The credit fund was transferred from EC to the government and finally to PRASAC MFI Ltd as Subordinated Debt : Extension as PRASAC II, combined to one project, one credit component. 2000: First strategic decision to create a sustainable institution beyond the closure of PRASAC II project. 2001: HO and branch offices separated from PRASAC II, with separate management but still as a part of the project. 2002: Creation of PCA (PRASAC Credit Association), registered with the NBC in March 2002 as Rural Credit Operator. 2003: Two initial shareholders were created, a Trust Fund called CRDF created by PRASAC II and PRASAC Staff Company created by staff members. 2006: The commercialization process was to seek for equity investment participation from commercial and social investors. 2007: PRASAC completed its transformation by replacing CRDF with new five shareholders, BIO, DGC, FMO, LOLC, and Oikocredit. And, PRASAC received a permanent license from NBC in December : PRASAC increased its capital to 15 billion riels from six shareholders. PRASAC was extending its financial services throughout the country. 2009: PRASAC selected Oracle FLEXCUBE Universal Banking to modernize its MIS to build competitive advantages, offer more diversified ranges of products and prepare for the next level. 2004: Registered as PRASAC MFI Ltd with Ministry of Commerce as a private limited liability company and received license from NBC. 5

7 OUR CHALLENGES 1. To continue serving the rural poor under high professional and moral standards implementing transparency and good governance on all operational levels 2. To enforce credit discipline among staffs and clients by strengthening internal control system 3. To diversify loan portfolio and review financial products and services to be competitive and suit clients demands, and to look for external funding to safeguard funds and plan expansion 6

8 BUSINESS OBJECTIVES The business objectives of the Company are to carry out activities of microfinance by providing financial services to rural households and small and medium enterprises, such as: 1. Credit services in the form of group and individual loans 2. Savings and money transfer services 3. To raise funds or borrow money in such manner as the company shall think fit and to secure the repayment of any money borrowed, raised or owed to creditors 4. Do all such other things as incidental or which the Company may think fit and conducive to the attainment of the above objectives. The objectives shall be achieved by strict adherence of high professional and moral standards, transparency, and good governance. 7

9 CLIENTS AND CLIENT HIGHLIGHTS a. PRASAC s Client: Rural Community Clients are the rural village households that have repayment capacity residing in rural areas outside the urban areas of all provincial towns. Microenterprise Clients are microenterprises that have number of employees less than 11 and or assets less than USD50,000. 8

10 b. Client Highlight: Sorn Sokha, 38, Cake Baker, Pursat MRS. DAM TOCH, 35, Raising Pig, Kampong Speu MRS. DAM TOCH, 35 years old, is PRASAC s client who is successfulin her business with PRASAC s loan. Presently, she is living in Sdok Slart village, Phnom Touch commune,udong district, Kampong Speu province. She spends most of her daily time on raising pigs and doing housework. She and her husband, MR. SENG THAN, a wine producer, wanted to raise more pigs to extend their business. After getting advice from their sister, they decided to request for USD 2,000 loan for 21 months from PRASAC to support their limited capital. After selling some pigs, Mrs. Dam Toch had got better living standards and was able to repair her house and buy more furniture. Mrs. Dam Touch becomes our potential client; she repays regularly and will pay-off soon. She said with smiling face and hope that, I m really thankful to PRASAC that always provides me both financial supports and motivation and advice to do business so that I can get more incomes. Mrs. Sokha, 38 years old, a cake baker living in Bambekleach village, Roleab commune, Sampov Meas district, Pursat province, described her business story that she s been baking egg-powder cake for four years. Previously, her business was not running well due to the shortage of capital. Later, after discussing with her husband, in 2008 she decided to request for USD 5,000 loan for 24 months from PRASAC to buy more equipment and materials for baking the cake. After seeing that her business getting better with PRASAC s loan, recently, she was able to pay-off and request for USD 4,800 loan from PRASAC for the second time to buy an electronic oven so that she can increase her productivities to respond to her clients needs. Mrs. Sokha said that, I am very happy that my business goes well. I also would like to thank to PRASAC that provided me financial resource to extend my business. Moreover, what I like the most is that PRASAC staffs are friendly and polite, and the loan assessment is also easy and fast; that is the reason why I can trust in PRASAC. 9

11 Mr. Lun Chhun Hort, 39, Brick Maker, Kratie Mr. Lun Chhun Hort, 39, living in Russey Jar village, Thmoh Kreih commune, Chet Borey district, Kratie province, is another successful client of PRASAC. His main business is producing brick. Previously, he used to borrow money from other money lenders and institution, but since it was too difficult with their lending process and high interest rates, he decided to choose PRASAC as his business partner with financial support. He requested for USD8,000 loan from PRASAC for the first time in 2008 for 24 months by repaying every month. After seeing fast growth of his business, Mr. Hort made up his mind to pay off the first loan and requested for USD10,000 loan for second time to construct a new brick kiln so that he could increase his productivities to respond to his customers needs and increase more incomes. Nowadays, Mr. Hort s business is growing bigger. He also bought a new truck for transporting his products, and his living standard also get improved. He said that, PRASAC is a good business partner in which I can trust. PRASAC provides both good service and capital for doing business with low interest rate. In the future, I plan to borrow more money from PRASAC to extend my business. 10

12 FINANCIAL PRODUCTS AND ELIGIBLE CRITERIA a. Financial Products b. Eligible Criteria Group Loan: Group loan is used in which the group members are self-selected between 2 to 5 members with one group leader. Each member can borrow amount of money ranging from KHR 50,000 to KHR 1,000,000 or USD 15 to USD 250 within 12 months loan period. Group Loan: - Group member: 2-5 members, and one is selected as a group leader - One member from each household - Permanent residents in the village - Similar loan purposes (not homogeneous) - Age between years Individual Loan: The target clienteles are micro and small enterprises. The clients can borrow either in Riel or Dollar with the amount ranging from KHR 300,000 to KHR 100,000,000 or USD 75 to USD 25,000 with the period up to 26 months. The monthly interest rate is 2.7% to 1.6%. Individual Loan: - Permanent resident in the village - Aged between years - Have/show profitable business - Contribute 20% of their own capital into the business activity - Have physical collateral and personal guarantee 11

13 OWNERSHIP AND GOVERNANCE ORGANIZATIONAL STRUCTURE 13 MANAGEMENT 18 SHAREHOLDERS 14 BOARD OF DIRECTORS 16 BOARD COMMITTEE 15 12

14 13 ORGANIZATIONAL STRUCTURE

15 SHAREHOLDERS The share capital of the Company as at December 2009 was KHR 15 Billion (Fifteen billion Khmer Riel) distributed among the five shareholders 18% each BIO, Dragon Capital Group (DCG), The Netherlands Development Finance Company (FMO), Lanka Orix Leasing Company (LOLC), Oikocredit, and 10% for PRASAC Staff Company (PS Co.). SHAREHOLDERS % SHAREHOLDING BIO 18% DCG 18% FMO 18% LOLC 18% Oikocredit 18% PSCo 10% BIO is a member of EDFI, the Association of European Development Finance Institutions. BIO participates in European Financing Partners / EFP, a co-financing facility established by ten of the EDFI-members. Its purpose is to facilitate the financing of private sector projects in the ACP states in collaboration with the European Investment Bank. Dragon Capital Group (DCG) is a diversified investment banking institution offering traditional financial products and services with an exclusive focus on Vietnamese capital markets. The firm is known both within Vietnam and international financial circles as one of the premier Vietnam focused financial institutions. Dragon Capital Group serves the investment banking needs of international and domestic businesses to enable them to realize their investment goals in Vietnam. The Netherlands Development Finance Company (FMO) supports the private sector in developing countries and emerging markets in Asia, Africa, Latin America and Central and Eastern Europe. We do this with loans, participations, guarantees and other investment promotion activities. Lanka Orix Leasing Company strives to deliver financial services to its customers with both corporate and rural grass roots level, in every region where it operates in Sri Lanka. Since its inception in 1980, it has been working with small and medium size entrepreneurs, which represents over 80% of its client portfolio. The Company innovates continuously in providing adapted financial solutions such as leasing products, factoring services, savings and deposit products, small loans and insurance broking services. Lanka Orix Leasing Company strives to deliver financial services to its customers with both corporate and rural grass roots level, in every region where it operates in Sri Lanka. Since its inception in 1980, it has been working with small and medium size entrepreneurs, which represents over 80% of its client portfolio. The Company innovates continuously in providing adapted financial solutions such as leasing products, factoring services, savings and deposit products, small loans and insurance broking services. Oikocredit started as a pioneer in the field of development financing. Today, it is one of the largest financiers of the microfinance sector worldwide. Oikocredit is one of the few ethical investment funds, which finances development projects in the South benefiting disadvantaged and marginalized people. Privately owned, Oikocredit is a unique cooperative society, which encourages investors to invest their funds in a socially responsible manner. PRASAC Staff Company (PSCo.) was established under the law and general provisions of Kingdom of Cambodia and has the following objectives: To make equity investments in PRASAC MFI Ltd and to manage the investments in accordance to high moral and professional standards, with transparency and good governance. The company might be engaged in any other capital and asset management, investment and trading and other financial or other activities and services which relate directly or indirectly to the above objectives or similar purposes, and are characteristic of the development of the company s operations. 14

16 BOARD COMMITTEE Board of Director Committee: With full capacity of the Board of Directors, the two initial committees were created in order to support the management in operations. Audit Committee: The audit committee comprises of two Board of Directors, i.e. Mr. Michael Temple and Mr. Ranjit Fernando and Internal Audit Department Manager. The duties of the audit committee are to review the report of the internal and external audit reports, monitor the integrity of the financial statements, compliance of the policies and procedures, review the internal control system and risk management of PRASAC, and provide recommendations for implementation. In addition, the non-executive members will meet the external auditors twice a year i.e. in September before the external audit starts and in March after the completion of the external audit assignment. The committee will meet at every three months. HR and Remuneration Committee: The key role of this committee is to evaluate the performance of the top management and determine remuneration for the top management. The committee is composed of Mr. Stefan Harpe and Ms. Anne Demeuse. 15

17 BOARD OF DIRECTORS MR. MichAel TEMPLE, Director, Chairman of the Board, Representative of DCG MichaEl was educated in both Hong Kong and Scotland and joined the HSBC Group as an International Manager in He worked for HSBC in a number of areas primarily in the corporate banking and risk management in Germany, Brunei, Hong Kong, India, Indonesia, Bahrain and Vietnam. His last role in the HSBC Group was Chief Operating Officer in Vietnam where he worked for 6 years. He was also the project leader in evaluating the potential of Vietnam as a site for an HSBC Data Processing and Call Center site. He s retired from the HSBC Group in 2005 and became a Director of Dragon Capital, a UK based Investment Bank and Fund Management Company whose main focus of business is in Vietnam. He is the Group COO and is part of the committee that evaluates the Groups private investments. PRASAC is the Dragon Capital Groups first investment in Cambodia. MR. STEFAN HARPE, DIRECTOR, Member of the Board, Representative of Oikocredit STEFAN is Manager Equity Investments, Oikocredit, Amersfoort, Netherlands; working with Oikocredit s local managers in 28 country offices in Africa, Latin America, Asia and Eastern Europe to manage the private equity investment portfolio i) financial (mostly microfinance); ii) non-financial (businesses with high development impact); iii) specialized equity funds. Oikocredit is a global development finance institution with about 340 million total assets, funded by individuals (26,000 shareholders), churches, and institutional investors. While not profit-maximizing, and balancing dual objectives of development impact and investment return, Oikocredit is sustainable and generates a healthy surplus on the total portfolio (loans and equity). Previously, Stefan was Fund Manager, AfriCap Microfinance Fund, based in, Senegal, and prior to that Director International Operations, Calmeadow, Toronto, Canada. His formal education includes - MBA, University of Western Ontario, Canada, and B.Sc (Econ), LSE, England. MR. ISHARA C. NANAYAKKARA, Director, Member of the Board, Representative of LOLC Ishara is the Deputy Chairman of Lanka ORIX LEASING Company Ltd. He is the Managing Director of Ishara Traders, the pioneering importer of reconditioned motor vehicles in Sri Lanka. Having obtained a diploma in Business Accounting from Australia, he worked in Japan for two years with the largest exporter of reconditioned motor vehicles Yamagin Corporation, Tokyo. Ishara is a Director of Ishara Plantations (Pvt) Ltd, and Ishara Property Development (Pvt) Ltd. Mr. I C Nanayakkara also serves as a director on the boards of all LOLC subsidiaries. 16

18 MS. ANNE DEMEUSE, Director, Member of the Board, Representative of BIO ANNE has been active within BIO nearly since its inception in July She initiated BIO s first investments, mainly in the microfinance sector and SME funds, and held the position of Senior Investment Officer Asia until the end of Later in 2006, she changed to the position of Portfolio Controler, responsible for the monitoring of BIO s investments. Before joining BIO, Ms. Demeuse worked in the banking sector, and more specifically in commercial banking and corporate finance where she advised for IPOs and trade sale transactions. She also gained audit experience within Ernst and Young after her graduation. Ms DEMEUSE holds a degree of Management Engineer from the Solvay Business School. MR. OUM SAM OEUN, DIRECTOR, Member of the Board, Representative of PSCo. SAM OEUN used to work as chief accounting officer in Takeo Province commerce department. Since 1995, he has worked with PRASAC credit program, and he has attended several training courses related to microfinance operations. He was elected as Chairman of Board of Director of PRASAC Staff Company (PSCo., Ltd) since 2003, and he was re-elected as the chairman PS Co., Ltd until now. He holds Master Degree of Business Administration, Bachelor degree in Business Management and obtained a Diploma in Accounting and Commerce in MR. RANJIT MICHAEL SAMUEL FERNANDO, Director, Member of the Board, Representative of FMO RANJIT is Team Leader ICT Capacity Building Program, implemented by the Government of Sri Lanka and funded by the World Bank. He is also a team leader in consultancy assignment funded by the World Bank for the setting up of the Housing FinanceCorporation in the Maldives. He is an expert in Project / SME / Microfinance Financing Specialist, Development Banking, Legal Aspects relating to credit and Banking, Institutional Development and Strategic Planning, and Corporate Governance. He holds Attorney at Law (1st Class Honours), Ceylon Law College, Sri Lanka; Bachelor of Laws (Hons), University of Sri Lanka; Fellow of the Chartered Institute of Bankers, United Kingdom; Fellow of the Chartered Institute of Management Accountants, United Kingdom. 17

19 MANAGEMENT MR. SIM SENACHEERT, General Manager Senacheert holds Master and Bachelor Degrees in Business Administration and obtained Diploma in Accounting and Finance in Since 1995, he has attended several training courses related to microfinance operations and management. He is also an accredited Microfinance Training of Trainer certified by ADBI, TDLC of the WB, and UNCDF. He used to work in banking sector, and he started working with PRASAC since 1995 as Credit Officer and was promoted to various positions such as accountant, Branch Manager, MB Trainer and Supervisor, Finance Manager. From mid 2002, he used to hold positions of Branch Manager, Operation Manager, and Deputy CEO with another MFI before joining PRASAC as General Manager in late MR. OUM SAM OEUN, Deputy General Manager, Chief Operations Officer Sam Oeun accredited Micro Finance Training of Trainer certified by ADBI, TLDC of the WB, and UNCDF, holding MBA of Banking and FinanceHe obtained a Diploma in Accounting and Commerce in 1988 and holds a Bachelor degree in Business Management. He used to work as chief accounting office in Takeo Province commerce department. Since 1995, he has worked with PRASAC credit program, and he has attended several training courses related to microfinance operations. He was promoted as Deputy General Manager of PRASAC MFI in early MR. OUM SOPHAN, Deputy General Manager, Chief Finance Officer Sophan obtained his Bachelor s Degree in economics, specializing in banking and finance from the Royal University of Laws and Economics and holds a Master Degree in Business Administration from Norton University in Before joining PRASAC s team, Sophan had many years of experience in the field of accounting, banking, and finance. For instance, he used to hold CFO position at TPC Microfinance Institution from 2003 to He worked for the National Bank of Cambodia in various supervisory positions, including credit, planning, and accounting from 1981 to He joined Thai Farmers Bank where he served as Finance and Accounting Supervisor from 1992 to He also used to work as Accounting Manager of various private companies. He is currently holding the position of deputy general manager, chief finance officer. 18

20 MR. YANG KIMSRENG, Finance Manager Kimsreng holds MBA in Finance and Banking, BA in the field of Accounting in 2003 and obtained Associates degree Specialized in Banking in 1998 at the Center for Banking Study. Also,he has more than ten-year experiences with Micro-banker system as well as finance and banking. Since 1998, he participated in several training courses related to microfinance. He joined PRASAC in 1998, and he was promoted to be senior staff in 2001 and to be Deputy Finance Manager in October 2007 and Finance Manager in April MR. NEANG SOKHIM, Credit Manager Sokhim is an accredited Micro Finance Training of Trainer certified by ADBI, TLDC of the WB, and UNCDF. He holds Master Degree in Business Administration and obtained bachelor degree of science in Agronomy in 1997, and he studied two years of BBA. He has attended many courses related to micro finance operations and other courses. He started working in micro finance sector in 1998 as Credit officer, and then he was promoted to be a Junior Internal Auditor, Senior Internal Auditor, Deputy Operation Manager, Deputy Credit Manager. Currently, he is holding the position of Credit Manager. MR. SAY SONY, Marketing Manager Sony is an accredited Microfinance Training of Trainer certified by ADBI, TDLC of the WB, and UNCDF. He holds master of business administration and bachelor degree in Marketing Management. Since 2005, he has attended numerous local and international training courses in Asia and Europe related to micro finance operations, products development, research and marketing. He has more than seven-year experiences in project management as well as marketing coordination in both social and private sector. He joining PRASAC MFI in early 2005 as chief marketing, he was promoted to be a Marketing Manager of PRASAC MFI in

21 MR. OUK SAROEUNG, Internal Audit Manager Saroeung holds Master degree of Business Administration and obtained a Bachelor degree in Banking in Since 1995, he participated in several training courses both in local and international including in Asia, Africa and Europe related to Audit, Finance, Management, and Microfinance. He used to work in banking sector. Also,he worked for the National Bank of Cambodia at Branch Svay Rieng in various supervisory positions, including credit and planning from 1983 to He has more than ten-year experiences in microfinance. He joined PRASAC in 1995; he was promoted to be Audit Manager in MR. LY SOPHEAKTRA, IT Manager Sopheaktra holds M.Sc. IT and MBA of Finance & Banking; He obtained B.Sc. of IT in 2002 and BA of Accounting & Finance in Since 2002, he has attended numerous local and international training courses in Asia and Europe related to IT/MIS technology, Management, and Microfinance. He has more than eight-year experience in IT/MIS Management, Database Design & Report Writing, Financial Accounting, and Microfinance operations. Prior to joining PRASAC, He used to work for a private construction company. He joined PRASAC in 2002 as MIS Officer, moving on to be senior staff in 2003 as MIS Unit Manager, and he was promoted to be IT Department Manager in early MR. SUM SINATH, Branch Support Manager Sinath accredited Microfinance Training of Trainer certified by ADBI, TDLC of the WB, and UNCDF, obtained associate degree in Accounting and Finance, bachelor degree in Business Administration and holds Master degree of Business Administration. Moreover, he participated in several training course in career development of Microfinance skills both in local and oversea courses. He has more than seven-year experiences in Microfinance sector. He joined PRASAC in 2002 as credit officer; he was promoted to be branch manager, Regional Manager and was promoted to be Branch Support Manager in early

22 Mr. Sou Vanthan Human Resourse Manager Vanthan with more than twenty-year experiences in Microfinance and banking sectors since 1982 from various positions with PRASAC, NBC, and another MFI such as credit officer, accountant, micro banker and teller, internal auditor and field supervisor, district bank manager, provincial credit coordinator, vice-credit department manager, branch manager, area manager, and regional manager. Vanthan also participated in many training courses such as TOT Principles of MFIs and Delinquency Management certified by CGAP & EDA Rural Systems Pvt Ltd, staff supervision and motivation, Goal Oriented Project planning and other training courses. Vanthan is a rare resource with deep root of experiences in human resource management and aspects especially for microfinance institution. Based on his commitment and management skill, he was promoted from a low level status to a highly-recognized and appreciative position, and he is currently holding the position of Human Resourse Manager of PRASAC, standing as a good model for other staffs. 21

23 Operational HIGHLIGHTS Internal Control and Risk Management 34 Marketing and Social Activities 36 Staffing and Capacity Building 32 Remark from Chairman Operational HighlightS Remark from General Manager 25 financial performance highlights 28 22

24 Remark from Chairman 2009 was a challenging year for Cambodia, as it was for all economies around the world. The country encountered economic slowdown and GDP growth was estimated to be stagnant at 0%. The slowdown impacted all the main sectors of the economy including agriculture, garments and tourism. However, in late 2009 positive signs emerged with agribusiness export more than doubling, year-on-year air tourist arrival stop declining, and domestic credit and inflow of foreign direct investment began to bounce back. The government also started to diversify the export market. Economic growth in 2010 is forecast to reach around 4%. By anticipating the impact of the global economic downturn early, more stringent measures were put in place to screen out unqualified clients as much as possible to ensure that we provided credit only to existing and established clients so that we were able to manage the risks for ourselves and our clients. Portfolio quality took priority over portfolio growth. As a result, in spite of turbulent economic environment, PRASAC s Portfolio at Risk was the lowest among major microfinance institutions in Cambodia, even though the number of clients decreased. Though there has been some improvement in the economic environment, the current issues in the international market place means that we will have to continue in our vigilance and though we anticipate PRASAC increasing its loan portfolio this year it will not be as rapid growth as previously. One of the major issues that came out of the economic environment in 2009 was over indebtedness. This has caused a general rise in the MFI sectors PAR figures and is a concern. PRASAC together with the Cambodian Microfinance Association is discussing ways that this can be managed with the National Bank Of Cambodia until such a time the proposed Credit Bureau is up and running. 23

25 To serve more clients and reduce costs for the clients, we have expanded into new areas by opening new offices. To be a more responsible lender, to improve client satisfaction and loyalty, reputation and brand value, PRASAC also established Client Protection Policy, which educates our staff on ethical behavior in dealing with clients. In addition to the office network expansion and the strict measures to maintain good quality of loan portfolio, efficiency and productivity remain a major challenge. In 2009, the implementation of the new Flexcube Core Banking system started and it proved to be a challenging task. Our staffs have worked hard in setting up the new system, and a lot of training courses were conducted on the new software. We believe that this new technology base will allow the company to further grow and enhance its products and service, and enhance customer satisfaction. We anticipate switching over to this new system by the end of Founded in 1995 as a small rural project, and transformed into a financially viable commercial company offering microfinance services, PRASAC currently operates through 134 offices and growth in offices will continue as we move into new provinces and areas. PRASAC has a long history of investing in our communities through charitable contributions, sponsorships, and workplace giving. PRASAC has sponsored public events or organizations relating to improving microfinance practice in Cambodia. PRASAC aimed to be a sustainable company that conducts its business in ways that benefits extend naturally to all stakeholders, including employees, customers, business partners, the communities in which it operates, and, of course, shareholders. We believe that our business operation is not only profitable, but also sustainable. We are currently looking at various options to give back to the communities where we operate and the focus of this will be finalized with the Board by the middle of Our past is defined by adherence to our core values. Our future will be determined by the same commitment to these values and the solid execution of our strategies. On behalf of the Board of Directors of PRASAC MFI, I wish to thank PRASAC s management and staffs for their hard work and dedication to our customers. I also wish to thank Board of Directors, shareholders, customers, suppliers, the Royal Government of Cambodia, and especially the National Bank of Cambodia for their continued support and advice. MichaEl A. Temple, Chairman 24

26 Remark from General Manager From financial year 2004 to 2008 were considered as good period which allowed PRASAC to expand its operations and grow portfolio rapidly from USD6.6 Million to USD60.0 Million by end of 2003 and 2008 respectively. But, due to the global financial crisis and the economic downturn, the operations of PRASAC during 2009 were also affected and it was considered as a difficult period which we had never faced this kind of difficult external environment during the past five years. Although, we could not escape from the impacts of the global financial crisis and economic downturn, but we still could manage our operations with remarkable achievements. And the followings are the highlights of our achievements. From January to September of 2009, loan portfolio was lower than 2008 portfolio and the disbursement was slowdown impacted by several factors such as global financial crisis, economic downturn, the multiple loans / overlapping loans with other MFIs, decrease of portfolio quality, and so on. But the portfolio started picking up again during the last quarter of 2009 and as a result portfolio growth by 11% to KHR267 Billion from KHR240 Billion by end of 2009 and 2008 respectively. Portfolio in agricultural decreased from 37% in 2008 to 29% in 2009 while portfolio in trading increased from 33% to 36% and personal loans increased from 12% to 14% at end of 2008 and The portfolio in agriculture sector was decreased due to the decrease of group loans. During 2009, in order to avoid overlapping loans, group loan disbursements were reduced. As part of our social objectives by cooperation with the National Biodigester Project (NBP), we also provided 1213 loans (about USD700,260) to the farmers for renewable energy in 2009 in accumulated there were 2,559 loans provided to this purpose since November 2007 to December 2009 and PRASAC also contract with ECOSORN in order to contribute to poverty reduction through the improvement of physical access to financial services such as credit and savings. PRASAC reaching 13,962 beneficiaries, in which 4,577 borrows, 3,248 savers with KHR2,780,975,500 of disbursement from November 2007 to December 2009 and PRASAC have established 19 offices in these three provinces ( Siem Reap, Battambang, and Banteay Meanchey ) and operating in 14 districts 40 communes and 91 villages. 25

27 It was observed that 2009 the portfolio quality of the whole sector was deteriorated due to the financial crisis, economic downturn, and over indebtedness caused by the overlapping or multiple loans from different MFIs and banks. Thank to our professional and discipline staffs and our proactive measures we could maintain our portfolio at-risk ratio below the sector rate. However, our nonperformance loans increased from 0.23% (end of 2008) to 1.66% (end of 2009). The number of active clients decreased by 12% from 100,116 to 87,945 at the end of 2008 and The decrease of number of clients due to the decrease of group loans in order to avoid overlapping loans with other MFIs during the crisis period. As a result, the group loans decreased by 50% from 19,179 to 9,634 as end of 2008 and In addition, the individual loans also decreased by 3% in Total revenue for 2009 was 12% lower than projections due to the decrease of portfolio and decrease of interest rate to attract good clients. It increased by 19% compared with Yield on gross portfolio decreased from 30.2% to 27% due the increase of larger loans with lower interest rate. The financial expenses increased by 70% compared with 2008 from 2.6MUSD to 4.5MUSD due to the increase of borrowing rate during late The operating increased by 14% and 5.7% higher than projections. The actual higher than projections caused by the set-up new offices in new area. However, the operating costs decreased to 13.4% from 15.5% and to 12.5% from 14.8% compared with gross portfolio and total assets respectively. Net profit was 6% lower than last year. Similar to revenue, the net profit decrease due to slowdown disbursements and lowering interest rate. Risk coverage ratio decreased from 717% to 128% due to the increase of non-performing loans during But, it still could cover this risk. The equity increased by 29% and the capital was still adequate (CAR was 23.6%). By taking the opportunity of the slowdown period, we spent our resources to strengthen our institutional capacity such as increase number of offices from 90 (2008) to 116 (2009) in order to increase clients convenience and cut costs to the clients, increased number of staff from 1,024 to 1,246 by end of 2008 and 2009, selection and implementing new core banking system and as a result there were four offices running new system parallel with the legacy system. During 2009, the second credit rating was undertook by Microfinanza rating agency (First rating undertook by the agency) with the rate of BBB+ and stable outlook. At the same time the first social rating was also undertook by Microfinanza with rate of BB. Although, the rating was not good, but there were some strengths and opportunities explored by Microfinanza during the rating. Strengths - Ownership structure defined - Good geographic coverage in the whole country - Rather good standardization of processes - Strong and successful relationship with many stakeholders (donors, investors, technical assistance providers, etc.) - Good capitalization Opportunities - Expansion into untapped markets of the country - Transformation into a deposit-taking institution - Adoption of the new MIS - Focus on capacity building given the significant market share - New financial products such as social loans (educational, housing products) 26

28 By adopting the prudential strategy for 2010, PRASAC will not prioritize on portfolio growth, but will focus on improving portfolio quality, strengthen management and staff capacity, strengthening management control, rolling out core banking system to all offices, and introducing new services. Finally, on behalf of management and staff, I would like to express my sincere thanks to all stakeholders that always support us and hoping that all stakeholders will continue supporting and help developing PRASAC to become an institution that will continue provide more benefits to all stakeholders. Sincerely yours, Sim Senacheert, General manager 27

29 financial performance highlights Productivities and efficiency Portfolio per credit officer increased from 91,127USD in 2007 to 111,353USD in 2008 and increase to 116,384 USD per credit officer in Number of active client per credit officer decreased from 189 clients in 2008 to 163 clients in Portfolio at Risk (30days) increased from 0.23% in 2008 to 1.66% in Exchange rate 4,003 4,081 4,169 Currency USD USD USD Total loan outstanding 32,988,091 57,950,559 62,730,902 Total Number of CO Outstanding per CO 91, , ,384 Active client 94, ,116 87,945 Active client per CO Portfolio at Risk 0.22% 0.23% 1.66% 140, , ,000 80,000 60,000 40,000 20,000 Outstanding per CO Portfolio at Risk 111, ,384 91, % 1.60% 1.40% 1.20% 1.00% 0.80% 0.60% 0.40% 0.20% 0.00% Active client per CO Profitability The yield on portfolio decreased from 30.2% in 2008 to 27.0% in Funding costs increased from 5.5% in 2008 to 6.9% in Yield on portfolio Financial Expense Ratio 32% 31% 30% 29% 28% 27% 26% 25% 24% 32% 30% 27% % 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 6.9% 5.5% 4.4%

30 Operating expenses deceased from 14.8% in 2008 to 12.5 in 2009 compared with average total assets. Operating Expense Ratio Return on Assets decreased from 5.8% in 2008 to 4.1% in Return On Assets (ROA) 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 15.8% 14.8% 12.5% % 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 6.0% 5.8% 4.1% Admin Expenses decreased from 5.5% in 2008 to 3.7% in Administrative Expense Ratio 6.0% 5.0% 4.0% 5.5% 5.5% 3.0% 3.7% 2.0% 1.0% 0.0% In order to improve the efficiency, the plan is to increase the productivity of credit officers (revised incentive) and offices through the increasing of loan officers who will work with the clients. 29

31 Operational HighlightS Loan Portfolio By the end of 2009, the PRASAC s loan portfolio reached KHR 267,183 million, increased percent over the previous year. Loan has been classified as group loan and individual loan that can be disbursed in KHR and USD currency. The group loan represented 2.45 % where as individual loan represented 97.55% of total portfolio outstanding. The group loan portfolio outstanding decreased by 5.48% with amount of KHR6,816 million and individual loan increased by percent with amount of KHR 260,367 million compared to previous year. Loan portfolio in KHR currency grew by 1.87 percent with amount of KHR107,569 million and loan portfolio in USD currency grew by percent with amount of KHR159,614 million. Loan Portfolio (Figures are in KHR Millions) Key indicators December December December Changed Changed Amount % Total loan portfolio 134, , ,183 26, % Portfolio in group loan 5,491 7,267 6,816 (451) -6.21% Portfolio in individual loan 128, , ,367 27, % Portfolio loan in KHR 68, , ,569 1, % Portfolio loan in USD(000) 65, , ,614 24, % Borrowers By the end of 2009, the number of active borrowers was 87,945 a decrease of percent compared to previous year. In term of product types, group loan borrowers decreased by 49.77%, and individual loan borrowers decreased by 3.24%. In term of gender. Female borrowers increased by 0.56% while male borrowers decreased by 22.99% compare to previous year. Key indicators December December December Changed Changed Amount % Total Number of Borrower 94, ,116 87,945 (12,171) % Group Loan Borrowers 27,237 19,179 9,634 (9,545) % Individual Loan Borrowers 67,318 80,937 78,311 (2,626) -3.24% Female 43,555 46,053 46, % Male 51,000 54,064 41,634 (12,430) % 30

32 Loan Disbursement In 2009, PRASAC disbursed loan with total amount of KHR 346,313 million an increase of 5.69 percent over previous year. The total number of loans disbursed in 2009 was 88,735 a decrease of 5.69 percent compared to previous year. The average disbursed loan size was KHR 3.90 million. Loan Disbursed (Amounts are in KHR Millions) Key indicators December December December Changed Changed Amount % Total Disbursed Amount 200, , ,313 18, % Total Number of Loans Disbursed 89,010 95,732 88,735 (6,997) -7.31% Avg Loan Amount Disbursed % Operation Area and branch network By the end of 2009, PRASAC operated in 21 provinces, 131districts, 1,256 communes, and 8,098 villages, an increase of 4 provinces, 5 districts, 76 communes, 623 villages compared to previous year. In term of office net work, there were an increase of 3 branches, 13 sub branches, and 12 service offices compared to previous year. Key indicators December December December Changed Changed Amount % Total Number of province % Total Number of District % Total Number of Commune 941 1,180 1, % Total Number of Village 6,210 7,475 8, % Loan Portfolio Quality At the end of 2009, Portfolio at risk ratio was 1.66% and repayment ratio 97.45%. The good loan portfolio comes from good portfolio monitoring from all staff level, well trained staff, especially, credit officers, well established credit policy, and procedures and clear loan work out policy. Staff motivation, such as incentive that link with loan quality is also a tool for maintaining good portfolio quality. Besides these, the current MIS system can provide data and information that make availability for staffs to monitor and follow up and analyze portfolio well. (PAR amount and principal past due is in Millions) Key indicators December December December Changed Changed Amount % PAR Amount (30days) ,437 3, % Principal Past Due ,004 2, % PAR Ratio (30days) 0.22% 0.23% 1.66% 1.43% % PAR Ratio (30 days) Group Loan 0.90% 0.01% 3.54% 3.53% % PAR Ratio (30 days) individual Loan 0.19% 0.23% 1.66% 1.43% % Repayment Ratio 99.30% 99.30% 97.45% -1.85% -1.86% 31

33 Staffing and Capacity Building Staffing and Employment trend Staff Training and Development - Currently, PRASAC has employed 1,246 staffs comprised of 967 males and 279 females. - In 2009, through this figure, we could also say that PRASAC s turnover rate was improved since it was lower than the past years PRASAC needs skillful and knowledgeable staffs that can carry out their tasks and understand about micro-finance or banking environment. With this intention, PRASAC has 24 staffs who hold Associate Degree, 424 Bachelor Degree, and 18 Master Degree. Moreover, most of them are improving their education background by pursuing another degree including 14 in Associate Degree, 417 in Bachelor Degree, 93 in Master Degree, 4 in CPA and 3 PhD Degree Turn Over Recruitment Total Staff To assure the quality of services, PRASAC pays more attention to staff development and training since they started their careers with PRASAC. The in-house trainings are regularly organized and provided. PRASAC occasionally provides the chances to many staffs to participate in the in-country and oversea courses to gain knowledge of microfinance development in Cambodia as well as in global contexts, microfinance management skills, related technical skills and regulation of National Bank of Cambodia. As a result, in the year 2009: - PRASAC trained 332 new staff - There were 2,461 participants in refreshment training in which some of them attended more than one course during this year. - For oversea courses, participated by 10 professional staff. 32

34 Job Opportunity Benefits Highlight PRASAC welcomes people who are interested in joining a diverse, talented, professional, and extremely committed team. Every position at PRASAC, from the bottom to the top, contributes to understanding of vision and mission. PRASAC gives opportunity for those who are interested in a career dedicated to the poverty alleviation and an institute promoting the transparency, challenging working condition and working environment; providing fairness and accuracy benefit package; and fully following or extra the Labor Law of Cambodia. PRASAC offers a competitive benefit pacages as following: - Competitive Salary and annually increased - Working days: 5 days or 40 hours / week - Education support and facilitation - Bonus during traditional events (Khmer NewYear, Pchum Ben) - 18 days of Annual Leave - Public holiday as determined by AKNUKRET of the government - Maternity Leave and allowance - Variable salary depending on performance - Severance Pay - Annual Incentive at year end up to three months of current salary - Insurance on Accident & Health Care program and indemnity payment for all staff - Non-financial recognition - And more 33

35 Internal Control and Risk Management To minimize the risk factor, PRASAC s management has linked Internal Control to risk management. Risk management is the process of assessment of relative risk and ensuring that controls are present and effective. It covers prevention of potential problems and the early detection of actual problems when they occur. Internal Control is a set of integrated methods and procedures translated into regular and periodic activities that preserves safety of asset, improves client service, ensure reliability of financial information and staff adherence to management policies and guidelines. PRASAC s management uses Internal Control to ensure a system of accountability along with prevention of errors and irregularities, Internal Audit department is an independent appraisal function under the control of the board of the directors of PRASAC, the audit committee. Internal auditing is essential for ensuring the operations, appropriateness of control and ensuring the reliability and integrity of financial management system of keeping record and reporting. Internal Audit department was started in 2001 with a clear roles and responsibilities to improve the internal control and analysie risk related to the operations as well as the compliance by producing accurate reports on time to branch management and executive management to take actions. The internal audit reports are issued monthly based on each branch with recommendations to respond to the real cases and findings. Additionally, the summary of significant findings are issued monthly bases to Audit Committee as well as the management to understand the current business situation and trends. At the beginning of the internal audit role, the internal control policy and procedures have been developed and updated accordingly and particularly with professional staff. As at December 2009 the total staff of internal audit department consist of one internal Audit manager, one Deputy Internal Audit manager, three Audit Unit managers one Senior Auditor and 13 Audit Assistants working in three main units such as Operations Internal Audit Unit, Finance and Admin Internal Audit Unit and IT/ MIS Internal Audit Unit. As at December 2009, there were 16,098 loan accounts audited, 20 reports related to Finance, Human Resource and Admin Department, and 174 reports related to operations. Through the findings of internal audit assignment in the full year of 2009, we noticed that the trend of errors and frauds decreased, and most field staff shown stronger commitments to comply with institutional policies and procedures. Moreover, most of clients are not only satisfied with PRASAC s services but also appreciated with our professional staff with customer care minded. PRASAC has designed Risk Management tools and approaches that respond to their specific clients, lending methodologies, operating environments, financial and social performance objectives. Each Department has identified risks by themselves with mitigation measures in place, but we are in process of doing. 34

36 The effective approaches to managing credit risks in PRASAC are included as the following: Well-designed screening form for borrowers, careful loan assessment, close monitoring, clear collection procedures, and active oversight by senior management. Delinquency is understood and addressed promptly to avoid its rapid spread and potential for significant loss. Good portfolio reporting that accurately reflects the status and monthly trends in delinquency, including a portfolio-at-risk aging schedule and separate reports by loan product. 35

37 Marketing and Social Activities Market and Clients PRASAC is the largest MFI in Cambodia in terms of number of staffs, loan portfolio, office networks, and coverage areas. By end of 2009, PRASAC had 1,246 staff, 114 offices in 17 provinces/towns, 131 districts, 1,256 communes, 8,098 villages, 87,945 borrowers, total assets 295 billion KHR, and 267 billion KHR loan outstanding about 22% of total microfinance market shares. Our clients are village households with repayment capacity that constitutes up to 90% of all households located in rural areas where bad roads and absence of facilities and utilities prevail. Apart from rural people who generate income from rice production as well as from farming, PRASAC also targets micro-enterprises that produce or/and offer services predominantly to the market. Branding and Communications PRASAC is continuously building up its corporate brand image as well as its products via effective communication strategy and approach. It has developed a clear communication strategy with division of internal and external audiences by different communication tools such as website, annual reports, newsletters, brochures, calendars, leaflets, posters, T-shirts, banners, and other mass media communication via Radio and TV. As a result, PRASAC had defined its current positioning in good client perception as a well managed and reliable MFI as a neighborhood MFI with deep roots in which communities it operates. PRASAC MFI goes out of its way to serve its customers with respect and friendly service. As mentioned, PRASAC is serving about 11% of total microfinance clients which 49.5% of those clients used loans for agricultural livelihoods; particularly, rice production and other multi-cultivations including buying seeds, animals, biogas and other agricultural equipments while 50.5% of loans utilized for services and trade activities. 36

38 Environmental and Social Ethics As a deep rooted MFI in community, PRASAC is intending to stand as a combined social and commercial oriented company which is to continue focusing on poverty reduction in Cambodia with sustainable financial returns. Environment: PRASAC s credit policy does not allow any involvements with environmental pollutions such as toxic gas, polluted water, chemical residue, etc. and it also limits itself not to provide its services to any activity that may negatively effect to the environment. However, PRASAC has been joining a national biodigester program to take part in forest protection as well as community sanitation. In this regard, PRASAC provided loans to 1,346 households out of 2,200 plants; it s about 61% of total plants constructed by the program as at December 31, Social Ethics: Apart from commercial and environmental protection, Social Ethics is another concerning issue. PRASAC enforces ethical practice not only to field staffs but also to management levels by creating an internal rule together with a revised personnel policy, customer care and service policy to ensure that all staffs are treated fairly, and to enforce a common relationship among staffs as well as towards clients and community as a whole. Particularly a simple client protection principle was also set to keep client s satisfaction and sharing our social ethics to Cambodian people. Social Activities PRASAC provides loans to beneficiaries of ECOSORN project PRASAC contracted with ECOSORN project in order to contribute to poverty reduction through the improvement of physical access to financial services such as credit and savings. At the same time, the project helps increasing the household income; particularly, through increasing agricultural productivity and local community empowerment in selected rural areas of Cambodia. PRASAC reaches the expected results of the contract with remarkable achievements, by established 19 offices in 14 districts 40 communes and 91 villages in three provinces, Siem Reap, Battambang and Banteay Meanchey. As a result of the cooperation, PRASAC targeted 13,962 beneficiaries in which 4,577 borrowers, 3,248 savers with KHR2,780,975,500 of disbursement amount from November 2007 to December31, 2009 in ECOSORN target communes. 37

39 At the same time, PRASAC also provides financial literacy to the poor Besides credit operations, under the support of ECOSORN project, PRASAC also provides financial literacy training to the households in three provinces. Particularly, this training focused on two modules such as Savings and Budgeting for the purpose of increasing the household s understanding on households savings and savings disciplines on how to set savings goal and make savings plan, and how to analyze their family s financial situation. As a result, in 2009, we organized 74 courses conducted in three provinces, Battambang, Banteay Meanchey and Siem Reap with total of 3,467 participants in which 74% are women. From this social commitment, we hope that the household living standards will get more improvement, the rate of migration from remote areas will be reduced and there will be more saving increment and alleviation of high risk from emergency expense. PRASAC s provide loan for Biodigester Production Relation to the Millennium Development Goals, PRASAC has been collaborating with the National Biodigester Programme (NBP) since 30th November In terms of social responsibility, the collaboration is not only for poverty reduction but also environment protection since it can save on traditional energy sources, fossil energy sources and improving soil fertility. To comply with the partnership goal, PRASAC has formed the new biogas loan product to serve the people who plan to buy the biogas production in 8 biodigester programme provinces, Prevey Veng, Svay Rieng, Kadal, Takeo, Kampong Speu, Kampot, Kampong Cham, and Kampong Chhnanng. As a result, by December 2009, PRASAC served 2,559 clients with convenience services, low interest rate with total of USD1,450,670 loan disbursement. Moreover, besides getting easier with renewal energy resource especially the use of biogas cooker instead of firewood, the biogas also help protect human health as well as reduce indoor environmental pollution with the improvement of hygienic circumstances and dung management. 38

40 PRASAC Sponsors Buy Cambodian Products Campaign PRASAC contributes to build youth capacity and career development The Phnom Penh Small and Medium Industry Association (PSMIA) organized a trade fair Buy Cambodian Products on the occasion of Water Festival in As the main sponsor of this event, PRASAC objectively expects to take part in promoting the campaign in order to improve the quality of local products to be more standardized and competitive if compared to the imported products. This is expected that Cambodian people will change their habits for consuming or buying our local products instead. Concerning with this, PRASAC is willing to promote Small and Medium Enterprise (SME) for better competitive position in the market. PRASAC s Presence at Banking and Microfinance Events As an active microfinance practitioner, PRASAC joins in many microfinance and banking events as a contribution sponsor as well as to expose itself to the government, all banking and microfinance sectors and other private companies and NGOs. PRASAC joined in a Baking Exhibition 2009 organized by NiDA and IDG, Modernization of the Banking and Microfinance Industry in Cambodia hosted by the NBC, the Cambodia Microfinance Conference by MoEF and IDG and PRASAC was also present at the Cambodia s Microfinance amid the Global Crisis by focusing on how microfinance institution could boost the country s economy, promote financial inclusion and enhance customer protection. Within the hard time of economic crisis, PRASAC is not only a key financial service provider but also a good protector for its clients in terms of interest rate reduction and careful client assessment preventing from over indebtedness. As always being part of building quality of education as well as growing human roots of Cambodia, PRASAC has actively joined as co-sponsor for various educational events such as Career Guidance for the Future, Outstanding Student Talk Program, and Student Best Speakers Program prepared by The Cambodian Mekong University for improving the quality of education in Cambodian and developing their critical thinking and understanding through multiple perspectives. PRASAC also joined as co-sponsor for Life Preparation for Success seminar which was organized by Help Our Homeland Association for building youth capacity and competency especially leading them to be ready for decision making and preparation for their life and growth for the future. All Cambodian students are the significant human capital for fueling the economic growth and moving the country out of the poverty trap. Consequently, PRASAC is always willing to provide support in such meaningful events to produce more challenging output and increase more economic growth and poverty reduction through PRASAC social contribution. 39

41 Audited Financial Statements Report of the Board of Directors 41 Statement of cash flows 49 Report of the independent auditors 46 Statement of changes in equity 48 Balance sheet 47 Income statement 48 40

42 REPORT OF THE BOARD OF DIRECTORS The Board of Directors have pleasure in submitting their report together with the audited financial statements of PRASAC Microfinance Institution Limited ( the Company or PRASAC ) for the year ended 31 December PRINCIPAL ACTIVITY PRASAC is engaged primarily in the provision of micro-finance services to the rural population of Cambodia through its headquarters in Phnom Penh and various provincial offices in the Kingdom of Cambodia. FINANCIAL RESULTS The financial results of the Company for the year ended 31 December 2009 were as follows: BAD AND DOUBTFUL LOANS Before the income statement and balance sheet 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. KHR 000 Profit before income tax 14,708,981 Income tax expense (3,551,075) Profit for the year 11,157,906 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. 41

43 CURRENT ASSETS VALUATION METHODS Before the income statement and balance sheet of the Company were prepared, the Board of Directors took reasonable steps to ensure that any current assets, other than debts, 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. 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. 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 Board of 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. 42

44 CONTINGENT AND OTHER LIABILITIES THE BOARD OF DIRECTORS 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; (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. The members of the Board of Directors during the year and at the date of this report are: MR. MICHAEL A. TEMPLE, representing Dragon Capital Group Limited, (Chairman) MRS. ANNE DEMEUSE, representing Belgian Investment Company for Developing Countries SA, (Director) 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. EVENTS SINCE THE BALANCE SHEET DATE No significant events occurred after the balance sheet date that requires disclosure or adjustment other than those already disclosed in the accompanying notes to the financial statements. MR. RANJIT FERNANDO, representing the Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V., (Director) MR. ISHARA C. NANAYAKKARA, representing Lanka ORIX LEASING Company Ltd, (Director) MR. STEFAN A.V. HARPE, representing Oikocredit, Ecumenical DevelopmentCooperative Society, U.A., (Director) MR. OUM SAM OEUN, representing PRASAC Staff Company Ltd., (Director) All members are non-executive board members, except Mr. Oum Sam Oeun, who holds the position of Deputy General Manager. 43

45 DIRECTORS INTERESTS The Directors are representing the interests of shareholders of PRASAC during the year and at the date of this report are as follows: SHAREHOLDER REPRESENTED BY HOLDING % NUMBER OF SHARES KHR 20,000 EACH Dragon Capital Group Limited MR. MICHAEL A. TEMPLE 18% 138,626 Belgian Investment Company for Developing Countries SA (BIO) The Nederlandse Financierings Maatschappij voor Ontwikkelingslanden N.V.(FMO) Lanka ORIX LEASING Company Ltd (LOLC) Oikocredit, Ecumenical Development Cooperative Society, U.A. MRS. ANNE DEMEUSE MR. RANJIT FERNANDO MR. ISHARA C. NANAYAKKARA MR. STEFAN A. V. HARPE 18% 138,626 18% 138,626 18% 138,626 18% 138,626 PRASAC Staff Company Ltd. MR. OUM SAM OEUN 10% 77, % 770,150 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 body corporate. 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. 44

46 RESPONSIBILITIES OF THE BOARD OF DIRECTORS IN RESPECT OF THE FINANCIAL STATEMENTS The Board of Directors is responsible for ascertaining that the financial statements are properly drawn up so as to give a true and fair view of the financial position of the Company as at 31 December 2009, and of the results of its operations 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; (ii) comply with Cambodian Accounting Standards and the guidelines issued by the National Bank of Cambodia 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; (iii) maintain adequate accounting records and an effective system of internal controls; (iv) 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 (v) 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 the PRASAC has complied with the above requirements in preparing the financial statements. On behalf of the Board of Directors Michael A. Temple, Chairman 17 March

47 REPORTOF THE INDEPENDENT AUDITORS TO THE SHAREHOLDERS KPMG Cambodia Ltd No 2 Street 208 sangkat Beoung Prolit Khan 7 Makara Phnom Penh Kingdom of Cambodia Telephone +855 (23) Fax +855 (23) internet REPORT OF THE INDEPENDENT AUDITORS To the shareholders PRASAC Microfinance Institution Limited We have audited the accompanying financial statements of PRASAC Microfinance Institution Limited ( the Company or PRASAC ), which comprise the balance sheet as at 31 December 2009, and the income statement, statement of changes in equity and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes as set out on pages 8 to 65. Management s Responsibility for the Financial Statements The Company s 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 the financial statements. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with relevant ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free of 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 principles 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 opinion. Opinion In our opinion, the financial statements give a true and fair view of the financial position of PRASAC as at 31 December 2009, and of 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. The accompanying financial statements have been translated into United States Dollars solely for presentation purposes. We have audited the translation and, in our opinion, the financial statements expressed in Khmer Riel have been translated into United States Dollars on the basis as set forth in Note 4 to the financial statements. For KPMG Cambodia Ltd Craig McDonald Audit Partner Phnom Penh 17 March

48 BALANCE SHEET AS AT 31 DECEMBER NOTE KHR 000 US$ KHR 000 US$ ASSETS Cash on hand 5 1,923, ,488 1,870, ,462 Deposits and placements with banks 6 18,198,317 4,365, , ,704 Placement with other financial institution 15,743 3, Statutory deposits 7 830, , , ,007 Loans to customers 8 261,525,129 62,730, ,496,230 57,950,559 Other assets 9 5,406,607 1,296,859 6,009,722 1,472,610 Deferred tax assets , , ,822 99,932 Intangible assets 11 3,946, , Property and equipment 12 3,071, ,858 1,610, ,586 Total assets 295,525,038 70,886, ,014,041 60,772,860 LIABILITIES AND SHAREHOLDERS EQUITY LIABILITIES Deposits from customers 13 2,006, , ,872 62,453 Borrowings ,696,755 45,981, ,973,112 38,464,375 Other liabilities 15 3,872, ,995 4,669,225 1,144,137 Provision for income tax 10 3,109, ,790 3,427, ,951 Provision for retirement benefits 16 3,531, ,141 2,365, ,754 Share subscription received in advance ,897 42,366 Total liabilities 204,217,011 48,984, ,863,920 41,133,036 SHAREHOLDERS EQUITY Share capital 18 15,403,000 3,694,651 15,403,000 3,774,320 Other reserves 5,216,423 1,251,241 2,282, ,392 Retained earnings 25,031,027 6,004,084 16,806,665 4,118,271 Net shareholders equity 45,650,450 10,949,976 34,492,544 8,451,983 Subordinated debt 19 45,657,577 10,951,686 45,657,577 11,187,841 Total shareholders funds 91,308,027 21,901,662 80,150,121 19,639,824 Total liabilities and shareholders equity 295,525,038 70,886, ,014,041 60,772,860 The accompanying notes form part of these financial statements. 47

49 INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER NOTE KHR 000 US$ KHR 000 US$ Interest income 20 68,130,025 16,342,055 55,810,063 13,675,585 Interest expenses 21 (15,952,420) (3,826,438) (10,724,492) (2,627,908) Net interest income 52,177,605 12,515,617 45,085,571 11,047,677 Other operating income , , , ,993 Operating income 52,704,451 12,641,989 46,077,227 11,290,670 Fee and commission expenses 23 (189,722) (45,508) (118,317) (28,992) Operating and other expenses 24 (36,878,729) (8,845,941) (29,337,352) (7,188,765) Provision for bad and doubtful loans 8 (2,116,245) (507,615) (1,830,417) (448,522) Profit from operations 13,519,755 3,242,925 14,791,141 3,624,391 Grant income 25 1,189, , , ,306 Profit before income tax 14,708,981 3,528,180 15,278,030 3,743,697 Income tax expense 10 (3,551,075) (851,781) (3,787,266) (928,024) Net profit for the year 11,157,906 2,676,399 11,490,764 2,815,673 The accompanying notes form part of these financial statements. STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2009 SHARE CAPITAL KHR 000 SUBORDINATED DEBT KHR 000 OTHER RESERVES KHR 000 RETAINED EARNINGS KHR 000 TOTAL KHR 000 Balance as at 1 January ,408,000 45,657,577-7,598,780 58,664,357 Issuance of share capital 9,995, ,995,000 Transfers of special reserve - - 2,282,879 (2,282,879) - Net profit for the year ,490,764 11,490,764 Balance as at 31 December ,403,000 45,657,577 2,282,879 16,806,665 80,150,121 Net profit for the year ,157,906 11,157,906 Transfers of special reserve * - - 2,282,879 (2,282,879) - Transfers of ICO loan reserve ** ,665 (650,665) - Balance as at 31 December ,403,000 45,657,577 5,216,423 25,031,027 91,308,027 (US$ equivalents) 3,694,651 10,951,686 1,251,241 6,004,084 21,901,662 * Special reserve represents reserves transferred from net profit which are calculated based on 5% of subordinated debt. The amount is non-distributable. ** ICO loan reserve represents reserves transferred from net profit for the year which are calculated based on 3.5% of outstanding principal of loan obtained from Instituto De Crédito Oficial of the Kingdom of Spain. The amount is non-distributable. The accompanying notes form part of these financial statements. 48

50 STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER NOTE KHR 000 US$ KHR 000 US$ CASH FLOWS FROM OPERATING ACTIVITIES Net cash used in operating activities 26 (10,857,637) (2,604,374) (92,919,092) (22,768,707) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of intangible assets (3,948,331) (947,069) - - Purchase of property and equipment (2,351,330) (564,003) (761,987) (186,716) Proceeds from disposals of property and equipment 78,985 18,946 58,579 14,354 Net cash used in investing activities (6,220,676) (1,492,126) (703,408) (172,362) CASH FLOWS FROM FINANCING ACTIVITIES Proceed from issue share capital - - 9,337,445 2,288,029 Proceeds from borrowings 50,707,141 12,162,902 96,568,200 23,662,877 Repayments of borrowings (15,983,498) (3,833,893) (20,444,268) (5,009,622) (Repayment)/receipt of share subscription received in advance (172,897) (41,472) 172,897 42,366 Net cash generated from financing activities 34,550,746 8,287,537 85,634,274 20,983,650 Net increase / (decrease) in cash and cash equivalents 17,472,433 4,191,037 (7,988,226) (1,957,419) Cash and cash equivalents at beginning of year 2,665, ,166 10,653,797 2,661,453 Translation difference (13,787) - (50,868) Cash and cash equivalents at end of year 27 20,138,004 4,830,416 2,665, ,166 The accompanying notes form part of these financial statements. Net cash flows from operating activities KHR 000 US$ KHR 000 US$ Profit before income tax 14,708,981 3,528,180 15,278,030 3,743,697 Adjustments for: Retirement benefits 1,241, ,680 1,022, ,544 Depreciation and amortisation 854, , , ,581 Provision for bad and doubtful loans 2,116, ,615 1,830, ,522 Gain on disposals of property and equipment (42,767) (10,259) (38,905) (9,533) Property and equipment written off 1, Operating profit before changes in operating assets and liabilities 18,878,871 4,528,393 18,621,740 4,563,033 Decrease/(increase) in operating assets: Statutory deposits (5,902) (1,416) (499,750) (122,458) Loans to customers (27,145,144) (6,511,188) (106,275,319) (26,041,490) Other assets 603, ,666 (2,500,682) (612,762) Increase/(decrease) in operating liabilities: Deposits from customers 1,751, ,119 (760,774) (186,418) Other liabilities (796,246) (190,992) 936, ,571 Cash used in operations (6,713,831) (1,610,418) (90,477,907) (22,170,524) Retirement benefits paid (75,273) (18,055) (174,905) (42,858) Income tax paid (4,068,533) (975,901) (2,266,280) (555,325) Net cash used in operating activities (10,857,637) (2,604,374) (92,919,092) (22,768,707) 49

51 contact us OFFICE NETWORK WITH CONTACT ADDRESS 51 OUTREACH HIGHLIGHTS WITH OPERATIONAL MAP 62 50

52 OFFICE NETWORK WITH CONTACT ADDRESS Head Office Nº 25, St 294& 57, Boeung Kengkang1, Chamkarmon, Phnom Penh, Cambodia. P.O.Box : 2412 Tel : / Fax : info.pp@prasac.com.kh Website : Branch TuOl KoRk Nº , Road Nº 273, 14 Village, Sangkat Boeng Kak Muoy, Khan Tuol Kork, Phnom Penh. Contact Person : Mr. Pheng Chantivea Contact Phone : / prasac026@prasac.com.kh Sub Branch Baek Chan Chong Bangkoul Village, Baek Chan Commune, Angk Snuol District, Kandal Province. Contact Person : Mr. Luch ChamRoeurn Contact Phone : / prasac044@prasac.com.kh Sub Branch Prek Kdam Tuol Ngouk Village, Kampong Luong Commune, Ponhea Lueu District, Kandal Province. Contact Person : Mr. San Sovuthy Contact Phone : / prasac024@prasac.com.kh Sub Branch Prek Anchanh Kraom Village, Prek Anchanh Commune, MukhKampul District, Kandal Province. Contact Person : Mr. Heng Khunthy Contact Phone : / prasac025@prasac.com.kh Service Office Roka Kaong Roka Kaong Village, Roka Kaong 1 Commune, Mukh Kampul District, Kandal Province. Contact Person : Mr. Lim Ratanak Contact Phone : / Sub Branch Kampong Popil Kampong Popil Village, Kampong Popil Commune, Pea Reang District, Prey Veng Province. Contact Person : Mr. San Pheakdei Contact Phone : / prasac053@prasac.com.kh Service Office Pea Reang Snay Pol Village, Roka Commune, Pea Reang District, Prey Veng Province. Contact Person : Mr. Ok Sorphea Contact Phone : / Service Office Tuek Khleang Tuek Khleang Village, Tuek Khleang Commune, Lvea Aem District, Kandal Province. Contact Person : Mr. Chheng Rithy Contact Phone : / Sub Branch PreaekTaKov Leu Village, Svay Chrum Commune, Khsach Kandal District, Kandal Province. Contact Person : Mr. Chum Rithy Contact Phone : / Sub Branch PochenTong PorProkCheung Village, Kakab Commune, Dangkao District, PhnomPenh. Contact Person : Mr. Ek Sophal Contact Phone : /

53 Branch Takhmao Krapeu Ha Village, Preaek Ruessei Commune, Ta Khmao District, Kandal Province. Contact Person : Mr. Em Samnga Contact Phone : / prasac046@prasac.com.kh Service Office Phsar Daeum Thkov No 457EoE1, St 271 number1 Village, Sangkat Phsar Daeum Thkov, Khan Chamkar Mon, Phnom Penh. Contact Person : Mr. Ly Kimhom Contact Phone : / prasac048@prasac.com.kh Sub Branch Koh Thom Kampong Svay Kraom Village, Preaek Thmei Commune, Koh Thom District, Kandal Province. Contact Person : Mr. Dop Phirum Contact Phone : / prasac036@prasac.com.kh Service Office Kampong Kong Kampong Kong Village, Kampong Kong Commune, Koh Thom District, Kandal Province. Contact Person : Mr. Tech Menghor Contact Phone : / Sub Branch Kandal Stueng Svay Ming Village, Barku Commune, Kandal Stueng District, Kandal Province. Contact Person : Mr. Kong Ty Contact Phone : / prasac045@prasac.com.kh Sub Branch Kien Svay Tuol Tnaot Village, Kokir Commune, Kien Svay District, Kandal Province. Contact Person : Mr. Va Rithy Contact Phone : / prasac054@prasac.com.kh Service Office Chheu Teal Chheu Teal Village, Chheu Teal Commune, Kien Svay District, Kandal Province. Contact Person : Mr. San Sen Contact Phone : / Sub Branch Sampov Poun Kaoh Tiev (Ka) Village, Sampov Poun Commune, Kaoh Thom District, Kandal Province. Contact Person : Mr. Ly MengHong Contact Phone : / prasac029@prasac.com.kh Sub Branch Saang Preaek Run Village, Preaek Koy Commune, Saang District, Kandal Province. Contact Person : Mr. Heng Chantra Contact Phone : / prasac034@prasac.com.kh Service Office Prek Ambel Traeuy Troeng Village, Preaek Ambel Commune, Saang District, Kandal Province. Contact Person : Mr. San Chheang Contact Phone : / Branch Kamopong Speu Mukh Khett Village, Roka Thum Commune, Chbar Mon District, Kampong Speu Province. Contact Person : Mr. Im Buntha Contact Phone : / prasac041@camintel.com Sub Branch Chbar Mon Mukh Khett Village, Roka Thum Commune, Chbar Mon District, Kampong Speu Province. Contact Person : Mr. Em Sokha Contact Phone : /

54 Sub Branch PhnomSrouch Phsar Trapeang Kraloeng Village, Kiri Voan Commune, Phnum Sruoch District, Kampon Speu Province. Contact Person : Mr. Ouk sovatheapheap Contact Phone : / prasac047@prasac.com.kh Sub Branch Odong Bat Doeng Village, Khsem Khsan Commune, Odong District, Kampong Speu Province. Contact Person : Mr. Ten Eath Contact Phone : / prasac043@prasac.com.kh Service Office SamRaong Monourom Village, Monourom Commune, Thpong District, Kampong Speu Province. Contact Person : Mr. Tol Men Contact Phone : / Sub Branch Kong Pisei Tram Khnar Village, Snam Krapeu Commune, Kong Pisei District, Kampong Speu Province. Contact Person : Mr. Hun Bunrith Contact Phone : / prasac042@prasac.com.kh Sub Branch Slab Leaeng Phsar Slab Leaeng Village, Svay Rumpea Commune, Basedth District, Kampong Speu Province. Contact Person : Mr. Muy Thet Contact Phone : / prasac049@prasac.com.kh Sub Branch Thnal TorTeung Thnal Totueng Village, Damnak Ampil Commune, Angk Snuol District, Kandal Province. Contact Person : Mr. Yun Sopheak Contact Phone : / prasac040@prasac.com.kh Branch Takeo Thnal Baek Village, Roka Krau Commune, Doun Keo City, Takeo Province. Contact Person : Mr. Sras Pheakdey Contact Phone : / prasac031@camintel.com Sub Branch Daun Keo Thnal Baek Village, Roka Krau Commune, Doun Keo City, Takeo Province. Contact Person : Mr. Em Pheng Contact Phone : / prasac031@camintel.com Sub Branch Ang Tasom Angk Ta Saom Village, Angk Ta Saom Commune, Tram Kak District, Takeo Province. Contact Person : Mr. Suon Yon Contact Phone : / prasac038@prasac.com.kh Sub Branch Kiri Vong Kampong Village, Preah Bat Choan Chum Commune, Kiri Vong District, Takeo Province. Contact Person : Mr. Prak Lon Contact Phone : / prasac035@prasac.com.kh Service Office Phsakiri Dei Kraham Village,Prey Rumdeng Commune, Kiri Vong District, Takeo Province. Contact Person : Mr. Chab Camreun Contact Phone : / prasac035@prasac.com.kh Sub Branch Kampong Chrey Kampong Chrey Village,Smaong Commune, Treang District, Takeo Province. Contact Person : Mr. Chuong Sam Oeun Contact Phone : / prasac033@prasac.com.kh 53

55 Sub Branch Prey Kabbas Prey Lvea Kaeut Village, Prey Lvea Commune, Prey Kabbas District, Takeo Province. Contact Person : Mr. Y Yoeun Contact Phone : / prasac032@prasac.com.kh Sub Branch Chhuk Sat Pong Village, Sat Pong Commune, Chhuk District, Kampot Province. Contact Person : Mr. Kun Sokhornpagna Contact Phone : / prasac073@prasac.com.kh Service Office Angkor Borei Kampong Luong Village, Angkor Borei Commune, Angkor Borei District, Takeo Province. Contact Person : Mr. Neak Bunthan Contact Phone : / Sub Branch Bati Seiha Village, Chambak Commune, Bati District, Takeo Province Contact Person : Mr. Chhun Bunna Contact Phone : / prasac037@prasac.com.kh Sub Branch Romenh Chambak Ph aem Village,Romenh Commune, Kaoh Andaet District, Takeo Province. Contact Person : Mr. Khat Nel Contact Phone : / prasac039@prasac.com.kh Sub Branch Kampong Trach Kampong Trach Ti Muoy Village, Kampong Trach Khang Kaeut Commune, Kampong Trach District, Kampot Province. Contact Person : Mr. Suth Samnang Contact Phone : / prasac075@prasac.com.kh Sub Branch Angkor Chey Pral Village, Tany Commune, Angkor Chey District, Kampot Province. Contact Person : Mr. Tith Sok Chea Contact Phone : / Sub Branch Prey Nop Group5, Samrong Krom Village, Samrong Commune, Prey Nop District, Shihanouk Province. Contact Person : Mr. San Tha Contact Phone : / prasac074@prasac.com.kh Branch Kampot Nº149, Kampong Bay Khang Cheung Village, Kampong Bay Commune, Kampot City, Kampot Province. Contact Person : Nhet Rith Contact Phone : / prasac072@prasac.com.kh Branch Preah Sihanouk Nº145, Street, Mittapheap Street, Village1, Sangkat 2, Preah Sihanouk City, Preah Sihanouk Province. Contact Person : Mr. Lim Lakg Contact Phone : / prasac096@prasac.com.kh Sub Branch Banteay Meas Prey Krala Khang Lech Village, Tuk Meas Khang Lech Commune, Banteay Meas District, Kampot Province. Contact Person : Mr. Sam Try Contact Phone : / prasac071@prasac.com.kh Sub Branch Steung Hav Village 2, Ou Treh Commune, Stueng Hav District, Preah Sihanouk Province. Contact Person : Mr.Sean Mon Contact Phone : /

56 Branch Koh Kong Ti 1 Village, Sangkat Smach Mean Chey, Khem Marak Phoumin City, Koh Kong Province. Contact Person : Mr. Phat Pheth Contact Phone : / prasac095@prasac.com.kh Branch Prey Veng Prampir Village, Kampong Leav Commune, Kampong Leav District, Prey Veng Province. Contact Person : Mr. Path Reasmey Contact Phone : / prasac051@camintel.com Sub branch Svay Antor Pou Chendam Village, Svay Antor Commune, Prey Veng District, Prey Veng Province. Contact Person : Mrs. Em Sophal Contact Phone : / Sub Branch Kam ChaI MeaR Chou Ti 3 Village, Kranhung Commune, Kam Chai Mear District, Prey Veng Provice. Contact Person : Mr. Ros Chim Contact Phone : / prasac055@camshin.com.kh Service office Kanhchriech Prasrae Mukh Village, Kanhchriech Commune, Kanhchriech District, Prey Veng Province. Contact Person : Mr. Heng Toeurn Contact Phone : / Sub Branch Neak Loeang Buon Village, Preaek Khsay Kha Commune, Peam Ro District, Prey Veng Province. Contact Person : Mr. Sim Mongkul Contact Phone : / prasac052@camshin.com.kh Sub Branch Baphnum Chheu Kach Village, Chheu Kach Commune, Ba Phnum, Prey Veng Province. Contact Person : Mr. Um Aun Contact Phone : / prasac056@camshin.com.kh Post Service MeSang Veang Village, Chi Phoch Commune, Me Sang District, Prey Veng Province. Contact Person : Mr. Sok Sopheak Contact Phone : / prasac056@camshin.com.kh Sub Branch Preah Sdach Prey Meas Village, Angkor Reach Commune, Preah Sdach District, Prey Veng Province. Contact Person : Mr. Eang Kimsan Contact Phone : / prasac056@camshin.com.kh Service office Ta Huy Ta Huy Village, Kampong Prasat Commune, Peam Chor District, Prey Veng Province. Contact Person : Mr. Khim Taing Contact Phone : / prasac056@camshin.com.kh Sub Branch Kampong Trabaek Kampong Trabaek Village, Kampong Trabaek Commune, Kampong Trabaek District, Prey Veng Province. Contact Person : Mr. Khy Sean Contact Phone : / prasac057@camintel.com Sub Branch Leuk Daek Kampong Chamlorng Village, Praek Tunloip Commune, Leuk Daek Districk, Kandal Province. Contact Person : Mr. Hay BunSrean Contact Phone : / prasac051@camintel.com 55

57 Branch Svay Reing Kien Sang Village, Svay Rieng Commune, Svay Rieng Town, Svay Rieng Province. Contact Person : Mr. Preap Hor Contact Phone : / prasac061@camintel.com Sub Branch Kraol Kou Thlok Village, Kraol Kou Commune, Svay Chrum District, Svay Rieng Province. Contact Person : Mr. Lim ChamRoen Contact Phone : / Service Office Svay Chrum Tapor Village, Ta Suos Commune, Svay Chrum District, Svay Rieng Province. Contact Person : Mr. Chun Mahun Contact Phone : / Sub Branch Chan Trea Kampout Chruk Village, Prey AngkunhCommune, Bavet City, Svay Rieng Province. Contact Person : Mr. Som Sotha Contact Phone : / Service Office BroSot Sameakki Village, Svay Toea Commune, Svay Rieng City, Svay Rieng Province. Contact Person : Mr. San Tito Contact Phone : / Service Office Kampong Rou Svay Anat Village, Nhor Commune, Kampong Rou District, Svay Rieng Province. Contact Person : Mr. Neang Chhorn Contact Phone : / Sub Branch Romeas Haek Kampong Trach Village, Kampong Trach Commune, Romeas Haek District, Svay Rieng Province. Contact Person : Mr. Nuth Theng Contact Phone : / Service Office Chann Trei Chantrei Village, Chantrei Commune, Romeas Haek District, Svay Rieng Provice. Contact Person : Mr. Chhum Sokha Contact Phone : / Kampong Thom Branch Achar Leak Village, Achar Leak Commune, Steung Sen District, Kampong Thom Province. Contact Person : Mr. Nhek Poly Contact Phone : / prasac091@camintel.com Service Office Sambo Kampong Chheuteal Village, Sambo Commune, Prasat Sambo District, Kampong Thum Province. Contact Person : Mr. Than Sam Ath Contact Phone : / Service Office Staung Chheuteal Village, Kampong Chen Tbong Commune, Staung District, Kampong Thom Province. Contact Person : Mr. Hem Sok Hoeun Contact Phone : / prasac092@camshin.com.kh Sub Branch Kampong Thmar Prey Tatrav Village, Balang Commune, Baray District, Kampong Thom Province. Contact Person : Mr. Chim Serey Contact Phone : / prasac015@camshin.com.kh Service Office Krava Slaket Village, Krava Commune, Baray District, Kampong Thom Province. Contact Person : Mr. Chhun Raksmey Contact Phone : / Sub Branch Rumlong Sala Khum Village, Treal Commune, Baray District, Kampong Thom Province. Contact Person : Mr. Touch Vimean Contact Phone : /

58 Branch Kratie Wat Village, Kratie Commune, Kratie City, Kratie Province. Contact Person : Mr. Pel TaingEng Contact Phone : / prasac067@prasac.com.kh Sub Branch Chhloung Chrouy Thmor Village, Chhloung Commune, Chhloung District, Kratie Province. Contact Person : Mr. Khuon Vannak Contact Phone : / prasac097@prasac.com.kh Sub Branch Steung Treng Thmor Leat Village, Sraoh Ruessey Commune, Steung Treng District, Steung Treng City, Steung Treng Province. Contact Person : Mr. Ngen Sothy Contact Phone : / prasac097@prasac.com.kh Branch Kampong Cham Prampir Village, Kampong Cham Commune, Kampong Cham District, Kampong Cham Province. Contact Person : Mr. Lim Thy Contact Phone : / prasac011@camintel.com Sub Branch Kampong Siem Prampir Village, Kampong Cham Commune, Kampong Cham District, Kampong Cham Province. Contact Person : Mr. Leng Pengsean Contact Phone : / prasac011@camintel.com Sub Branch Chamkar Leu Thnal Beak Village, Svay Teap Commune, Chamkar leu District, Kampong Cham Province. Contact Person : Mr. Pin Nim Contact Phone : / prasac017@prasac.com.kh Sub Branch Stueng Trang Boeng Daeng Village,Preaek Kak Commune, Stueng Trang District, Kampong Cham Province. Contact Person : Mr. Dyna Ponnrak Contact Phone : / prasac066@prasac.com.kh Sub Branch Prey Chhor Slaeng Village, Chrey Vien Commune, Prey Chhor District, Kampong Cham Province. Contact Person : Mr. Khut Sophea Contact Phone : / prasac068@prasac.com.kh Sub Branch Kaoh Soutin Daeum Sdau Village, Pongro Commune, Kaoh Soutin District, Kampong Cham Province. Contact Person : Mr. Chann Ratha Contact Phone : / prasac069@prasac.com.kh Service Office Sithor Kandal Preaek Sandaek Village, Preaek Changkran Commune, Sithor Kandal District, Prey Veng Province. Contact Person : Mr. Moa Naren Contact Phone : / Sub Branch Cheung Prey Skon Village, Soutip Commune, Cheung Prey District, Kampong Cham Province. Contact Person : Mr. Eav Sophin Contact Phone : / prasac012@prasac.com.kh Sub Branch Batheay Phaov Village, Phaov Commune, Batheay District, Kampong Cham Province. Contact Person : Mr. Rann Vannak Contact Phone : / prasac014@prasac.com.kh Sevice Office Prey Kry Prey Kry Village, Prey Kry Cheung Commune, Chol Kiri District, Kampong Chhnang Province. Contact Person : Mr. Rann Vannak Contact Phone : /

59 Sub Branch Srey Santhor Santey Village, Prek Pou Commune, Srey Santhor District, Kampong Cham Province. Contact Person : Mr. Chea Sophorn Contact Phone : / prasac016@prasac.com.kh Service Office Thlok Chrov Thlok Chrov Village, Khchau Commune, Kang Meas District, Kampong Cham Province. Contact Person : Mr. Heng Chanvirotha Contact Phone : / Service Office DamBae DamBae Village, DamBae Commune, DamBae District, Kampong Cham Province. Contact Person : Mr. Kong Sokharith Contact Phone : / Sub Branch Memot Memot Village, Memot Commune, Memot District, Kampong Cham Province. Contact Person : Mr. Tith Kamrong Contact Phone : / prasac019@prasac.com.kh Sub Branch Kang Meas Peam Chi Kang Village, Peam Chi Kang Commune, Kang Meas District, Kampong Cham Province. Contact Person : Mr. Heng Chanvirotha Contact Phone : / Branch Tboung Khmum Cheung Lang Village, Suong Commune, Tboung Khmum, Kampong Cham Province. Contact Person : Mr. Sok Theavy Contact Phone : / prasac013@prasac.com.kh Service Office Trapeang Ruessei Trapeang Ruessei Village, Roka Po Pram Commune, Tboung Khmum District, Kampong Cham Province. Contact Person : Mr. Sarun Dara Contact Phone : / Sub Branch Ou Reang Ov Lekh Bei Village, Ampil Ta Pok Commune, Ou Reang Ov District, Kampong Cham Province. Contact Person : Mr. Chhay Vandet Contact Phone : / Sub Branch Ponhea Kraek Pou Srok Village, Kaong Kang Commune, Ponhea Kraek District, Kampong Cham Province. Contact Person : Mr. Phin Sary Contact Phone : / prasac019@prasac.com.kh Branch Kampong Chhnang Tuol Kralanh Village, Kampong Chhnang Commune, Kampong Chhnang District, Kampong Chhang Province. Contact Person : Mr. Sok Piseth Contact Phone : / prasac021@camintel.com Sub Branch Roleaphie Tuol Kralanh Village, Kampong Chhnang Commune, Kampong Chhnang District, Kampong Chhang Province. Contact Person : Mr. Pa Muny Contact Phone : / Service Office Tuek Phos Srae Ta Chey Village.Akphivoadth Commune, Tuek Phos District, Kampong Chhnang Province. Contact Person : Mr. Men Samnang Contact Phone : / Service Office Kampong Leaeng Kampong Boeng Village, Kampong Hau Commune, Kampong Leaeng District, Kampong Chhnang Province. Contact Person : Mr. Phal Sokchamreun Contact Phone : /

60 Sub Branch Baribour Ponley Village, Ponley Commune, Baribour District, Kampong Chhnang Province. Contact Person : Mr. Ung Cheav Kong Contact Phone : / prasac023@camshin.com.kh Sub Branch Kampong Tralach Daeum Popel Village, Thma Edth Commune, Kampong Tralach District, Kampong Chhnang Province. Contact Person : Mr. Heng Sovanna Contact Phone : / prasac022@camshin.com.kh Branch Pursat Thnal Bambaek Village, Roleab Commune, Sampov Meas District, Pursat Province. Contact Person : Mr. Neang Sinarann Contact Phone : / prasac081@camitel.com Sub Branch Sam Pao Meas Thnal Bambeaek Village, Roleab Commune, Sampov Meas District, Pursat Province. Contact Person : Mr. Khlaing Sunhong Contact Phone : / prasac081@camitel.com Service office Kandieng Boeng Kranh Village, Svay Luong Commune, Kandieng District, Pursat Province. Contact Person : Mr. Long Punleu Contact Phone : / prasac081@camitel.com service office Chheu Tom Kapas Village, Chheu Tom Commune, Krakor District, Pursat Province. Contact Person : Mr. Seth Vichet Contact Phone : / Sub Branch Bakan Boeng Khnar Village, Boeng Khnar Commune, Bakan District, Pursat Province. Contact Person : Mr. Lem Sina Contact Phone : / prasac083@camshin.com.kh Service Office Autapoang Ou Ta Paong Village, Autapong Commune, Bakan District, Pursat Province. Contact Person : Mr. Kol Chamnab Contact Phone : / Sub Branch Moang Rusey Kansai Banteay Village, Moung Commune, Moung Russie District, Battombong Province. Contact Person : Mr. Mom Rithy Contact Phone : / prasac084@camshin.net Service office Koas Kror Lor Toulbalaing Village, Koas Krolor Commune, Koas Krolor District, Battambang Province. Contact Person : Mr. Aoeun Saroeub Contact Phone : / Sub Branch Phnom Kravanh Kroch Chrar Village, Leach Commune, Phnom Kravanh District, Pursat Province. Contact Person : Mr. Houn Soaret Contact Phone : / Sub Branch Krakor Phsar Village, Anlong Tnaot Commune, Krakor District, Pursat Province. Contact Person : Mr. In ChanChulsa Contact Phone : / prasac082@camshin.com.kh Service office Ta Lor Ta Lor Village, Ta Lor Commune, Bakan District, Pursat Province. Contact Person : Mr. Phang Sereivathnak Contact Phone : /

61 Branch Banteay MeanChey Ou Ambel Village, Ou Ambel Commune, Serei Sophorn District, Banteay Meanchey Province. Contact Person : Mr. thay socheat Contact Phone : / prasac086@comintel.com Sub Branch Sereisophorn Ou Ambel Village, Ou Ambel Commune, Serei Sophorn District, Banteay Meanchey Province. Contact Person : Mr. Pol Vuthyrirth Contact Phone : / prasac086@comintel.com Sub Branch Poi Pet Kbal Spean Village, Sangkat Poipet, Poipet City, Banteay Meanchey Province. Contact Person : Mr. Tep Sokheng Contact Phone : / prasac089@prasac.com.kh Branch BattamBang Aukhcheay Village, PrekPreahSdach Commune, Battambang District, Battambang Province. Contact Person : Mr. Ouk Ry Contact Phone : / prasac085@camintel.com Sub Branch Thmor Pourk Kumru Village, Kumru Commune, Thmar Puok District, Banteay Meanchey Province. Contact Person : Mr. Morn sinsarin Vichet Contact Phone : / Sub Branch Bavel Spean Kandal Village, Bavel Commune, Bavel District, Battambang Province. Contact Person : Mr. Soan Seth Contact Phone : / Service Office Svay Chek Rolous Village, Rolous Commune, Svay Chek District, Banteay Meanchey Province. Contact Person : Mr. Phauk Vina Contact Phone : / Service Office Thmor Korl Koktrab Village, Tameun commune, Tmor Korl District, Battambang Province. Contact Person : Mr. Viech Kimsan Contact Phone : / Sub Branch Praoh Netpraoh Chub Village, Chub Vary Commune, PraohNet Preah District, Banteay Meanchey Province. Contact Person : Mr. Nhem Retha Contact Phone : / prasac088@prasac.com.kh Service office Phnom Srok Sraoh Chik Village, Sraoh Chik Commune, Phnom Sruk District, Banteay Meanchey Province. Contact Person : Mr. Preah Hokly Contact Phone : / Service Office Sam Pov Loun Trapaing Bralit Village, Santepheap Commune, SamPov Loun District, Battambang Province. Contact Person : Mr.Khut Kisaing Contact Phone : / Sub Branch Banon Snoeung Boeng Village, Snoeung Commune, Banon District, Battambang Province. Contact Person : Mr. Phlay Tola Contact Phone : /

62 Branch Siem Reap Vihea Chen Village, Sangkat Svay Dang Kum, Krong Siem Reap, Siem Reap Province. Contact Person : Mr. Tea Vanna Contact Phone : / prasac093@camintel.com Sub Branch Siem Reap Vihea Chen Village, Sangkat Svay Dang Kum, Krong Siem Reap, Siem Reap Province. Contact Person : Mr. Path Sokha Contact Phone : / Sub Branch Dam Dek Dam Dek Thmey Village, Dam Dek Commune, Soutr Nikum District, Siem Reap Province. Contact Person : Mr. Seung Sathya Contact Phone : / Service Office Chi Kraeng Kampong Kdey 2 Village, Kampong Kdey Commune, Chi Kraeng District, Siem Reap Province. Contact Person : Mr. Meas Sitha Contact Phone : / Sub Branch Kralanh Kampong Thkuv 2 Village, Kampong Thkuv Commune, Kralanh District, Siem Reap Province. Contact Person : Mr.Pek Bunratna Contact Phone : / prasac094@prasac.com.kh Service Office Srey Snam Chroy Neangnoun Village, Chroy Neangnoun Commune, Srey Snum District, Seam Reab Province. Contact Person : Mr. Mao Rath Contact Phone : / Head Office Nº25, St 294& 57, Boeung Kengkang1, Chamkarmon, Phnom Penh, Cambodia P.O.Box : 2412 Tel : : Fax : info.pp@prasac.com.kh Website : 61

63 OUTREACH HIGHLIGHTS WITH OPERATIONAL MAP December 31, 2009 Coverage Provinces : 17 Districts : 131 Communes : 1,256 Villages : 8,098 Borrowers : 87,945 Staffs : 1,246 Total Assets : KHR 295B Outstanding : KHR 267B Branch Network Branches : 18 Sub Branches : 84 Service Offices : 32 62

64 Annual Report 2009 PRASAC MICROFINANCE INSTITUTION LIMITED Head Office: Address: Nº 25, St 294& 57, Boeung Kengkang1, Chamkarmon, Phnom Penh, Cambodia P.O.Box: 2412 Tel: (855) / Fax: (855)