CITY MICROFINANCE INSTITUTION PLC ANNUAL REPORT

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1 CITY MICROFINANCE INSTITUTION PLC ANNUAL REPORT

Company : CITY MICROFINANCE INSTITUTION PLC

Tek Thla Khan Sen Sok Phnom Penh Kingdom of Cambodia.

Chairman Ly Kunthai, CEO Liong Chai Yin, Fiona,

2 Company : CITY MICROFINANCE INSTITUTION PLC Registration No. : Co E/2012 Registered office : No , Street Confederation de la Russie (110) Sangkat Tek Thla Khan Sen Sok Phnom Penh Kingdom of Cambodia. Shareholders : Sino Tac Group PTE Ltd 70% Lork Oknha LY Kunthai 20% Ms. Ang Guan Cheng 10% Board of Directors : Neo Tiam Boon, Chairman Ly Kunthai, CEO Liong Chai Yin, Fiona, Independent Director Principal Banks : National Bank of Cambodia Cambodian Public Bank Shinhan Khmer Bank RHB Indochina Bank Auditors : BDO (Cambodia) Limited

3 CITY MICROFINANCE INSTITUTION PLC ANNUAL REPORT 2015 Contents Page BACKGROUND, TARGET MARKET, OPERATING GROWING 1 OUR VISION AND MISSION 2 OPERATION HIGHLIGHT 3 FINANCIAL HIGHLIGHT 4 GOVERNANCE & LEGAL STRUCTURE 5 BOARD OF DIRECTORS 6 EXECUTIVE MANAGEMENTS 7 PRODUCTS AND SERVICES 8 TRAINING AND ACTIVITIES 9 INDEPENDENT AUDITOR'S REPORT FOR THE YEAR ENDED 31 DECEMBER DIRECTOR S REPORT 12 INDEPENDENT AUDITOR'S REPORT 16 BALANCE SHEET 18 STATEMENT OF INCOME 19 STATEMENT OF CHANGES IN EQUITY 20 CASH FLOWS STATEMENT 21

4 Background City Microfinance institution PLC Being taking part into Government s Contribution and improving the living standard of populations, the shareholders of City Microfinance is an institution provides loan service which has been licensed No.36 on Aug 21th, 2012 by The National Bank of Cambodia signed by Governor (H.E CHEA CHANTO), and registered with Ministry of Commerce on June 20th, After receiving the license, the company has operated its head office location in Building No.95-97, Russian Federation, Khan Sen Sok, Phnom Penh, Cambodia. Target Market Our target market to provide loan services to Cambodian people who have willing to create new business or expand their business which aims to take part into social economic development and promote the standard of living in rural and urban area. Operating growing Audited Audited Audited Audited Loan portfolio (US$) 141, ,209 2,130,714 4,193,453 Client populations Staffing Branch Offices Net Profit (after tax) US$ (19,832) 16, , ,818 Page 1

5 Our Vision City Microfinance institution PLC s vision is to be the leading Financial Institution in Cambodia. To provide strengthen and expand healthy microfinance services to the Cambodian people and to participate in the healthy development of micro and small enterprises, and to boost the growth of Cambodian's economy. Our Mission is providing loan service to consumers who have willing to create or expand the small/medium sized businesses, small/medium sized enterprises, rural agriculture to ensure long term sustainability for customer and institutions. Page 2

6 Operation Highlight CITY MFI Plc, has been operating successfully for over 3 years and has established a very good track recorded. Credit Operation / Yearly Audited Audited Audited Audited Loan portfolio (US$) 141, ,209 2,130,714 4,193,453 Client populations Staff Offices Branches Operating areas Province Districts Communes Villages Page 3

7 Financial Highlight FINANCIAL RESULT (US$) Audited Audited Audited Audited Profit before income tax (19,832) 20, , ,450 Profit after income tax (19,832) 16, , ,818 KEY BALANCE SHEET (US$) Total Assets 987,989 1,989,293 3,133,412 5,430,986 Loans and advances 141, ,525 2,130,714 4,193,453 Total Liabilities 7,822 5,005 1,045,008 3,107,764 Paid -up Capital 1,000,000 1,000,000 2,000,000 2,000,000 Shareholder's Equity 980, ,001 2,088,404 2,323,222 FINANCIAL RATIO (%) Return on Assets (ROA) -3% 1% 3% 4% Return on Equity (ROE) -237% 2% 5% 10% Profit Margin (%) - 14% 37% 43% Gross Yield (%) - 8% 9% 10% Page 4

8 Governance & Legal Structure re D. Page 5

Board of Directors Mr. Neo Tiam Boon Chairman - Bachelor of Science in Business Administration (Banking Finance). University of Arkansas at United States of America.

9 Board of Directors Mr. Neo Tiam Boon Chairman - Bachelor of Science in Business Administration (Banking Finance). University of Arkansas at United States of America to Present: Executive Director at Tiong Aik to Present: Executive Director at Sino Tac Group PTE Ltd. Lok Oknha Ly Kunthai Deputy Board Director - Bachelor of Management at AEU University to Present: Chairman of Alpha property Construction. - Present: Deputy Director of Association of Commerce. Ms. Liong Chai Yin, Fiona Independent Director - Bachelor of Commerce (Major in Accounting and Marketing) at Curtin University of Technology Western Australia : Director of Crosswords Holding PTE Ltd investment Holding Company : Director of Edgewell investment PTE Ltd investment Holding Company. - Present: Financial Manager of Sino Tac Group PTE Ltd. Page 6

10 Executive Managements Lok Oknha Ly Kunthai CEO Bachelor of Management at AEU University 2008 to Present: Chairman of Alpha property Construction. Present: Deputy Director of Association of Commerce. Mr. Ouk Torona Deputy General Manager Mr. Ouk Torona was appointed to be Deputy General Manager of CITY MFI Plc, on August He holds Master Degree in Financial Management and Bachelor Degree major of Accounting, from Royal University of Law and Economics. He is currently pursing ACCA qualification from CamEd Business School. Previously he worked as CFO and Assistant CEO of Green MFI for over 3 years, Senior Auditor of external audit firm (Certified Public Accountant Firm), from 2006 to June He accomplished over 3 years in Management role relating MFI such credit operation and financial monitoring. Also has about 6 years experience in the field auditing, taxation, finance and accounting management relating to financial institutions such as Micro Finance, Commercial banks, specialized banks and compliance as well. Ms. Kao So Ann Finance Manager & Assistant CEO Bachelor of Management at Regent College Assistant of Manager at Phnom Penh City Bank Nov-2006 Interpreter of International Parliamentarians Conference on the Implementation of the ICPD and IPDI Programme Action at UN (Bankok, Thailand) May 2010 Assistant of Director at Tong Fang Microfinance. Jan-Oct 2011 Operation Manager at Camma Microfinance Ltd Interpreter of Chairman RDB (Interpreter,Thai) 2007-Present Board of Director at Capital Groth Import Export. Page 7

11 Products and Service It is according to the consumer s needed in different area. The service of City Microfinance are General Loan, Group Loan, and Loan for Purchasing Motorbike & Car and Home Loan. 1. GENERAL LOAN 2. GROUP LOAN 3. CAR-MOTORBIKE LOAN 4. HOME LOAN 8 Page 8

Training and ACTIVITIES CITY MFI Plc, staff training and

internal training (usually on Saturday (1/ month) 3- Credit

12 Training and ACTIVITIES CITY MFI Plc, staff training and meeting schedule: Attend training for 3 days for new comer staff at Head Office. Internal training: 1- Annual refreshment training 2- Monthly internal training (usually on Saturday (1/ month) 3- Credit Officer monthly best performance review External training Weekly operation meeting Monthly management meeting Page 9

13 Other Activities Photo of activity of advertising and opening branches office Page 10

14 Independent Auditor s Report for the year ended 31 December 2015 Page 11

15 DIRECTORS REPORT The Directors have pleasure in submitting their report and the audited financial statements of City Microfinance Institution Plc ( the Company ) for the financial year ended 31 December Principal activity The principal activity of the Company is in microfinance operation. There have been no significant changes in the nature of this activity during the financial year. Results of operations US$ KHR 000 Profit for the financial year 234, ,013 Dividends The Directors do not recommend the payment of any dividend for the current financial year. Reserves and provisions There were no material transfers to or from reserves or provisions during the current financial year. Bad and doubtful loans Before the income statement and balance sheet were made out, the Directors took reasonable steps to ascertain that action had been taken in relation to the writing off of bad loans and the making of allowance for doubtful loans, and satisfied themselves that there are no known bad loans and adequate allowance have been made for doubtful loans. At the date of this report, the Directors are not aware of any circumstances which would render it necessary to write off bad loans or to make allowance for doubtful loans in the financial statements of the Company inadequate to any material extent. Current assets Before the income statement and balance sheet were made out, the Directors took reasonable steps to ensure that for any current assets which were unlikely to be realised in the ordinary course of business, their values as shown in the accounting records of the Company have been written down to an amount expected if realised. At the date of this report, the Directors are not aware of any circumstances which would render the values attributed to the current assets in the financial statements of the Company misleading. Valuation methods At the date of this report, the Directors are not aware of any circumstances, which have arisen and which may render adherence to the existing method of valuation of assets or liabilities of the Company misleading or inappropriate. Page 12

16 DIRECTORS REPORT (continued) Contingent and other liabilities At the date of this report, there does not exist: (i) (ii) 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, or any contingent liability of the Company which has arisen since the end of the financial year. No contingent or other liability has become enforceable, or is likely to become enforceable, within the period of 12 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 when they fall due. Change of circumstances At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or in the financial statements of the Company, which would render any amount stated in the financial statements as misleading. Items of an unusual nature The results of the operations of the Company during the financial year were not, in the opinion of the Directors, substantially affected by any item, transaction or event of a material and unusual nature. There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors, to affect substantially the results of the operations of the Company for the financial year for which this report is made. Share capital The Company did not issue any shares during the current financial year. No option to take up unissued shares in the Company was granted during the financial year and there were no shares under options at the end of the financial year in respect of shares in the Company. Page 13

17 DIRECTORS REPORT (continued) Directors The Directors who have held for office since the date of the last report are: Mr. Neo Tiam Boon Mr. Ly Kunthai Ms. Liong Chai Yin, Fiona Directors benefits During and at the end of the financial year, no arrangements subsisted to which the Company is a party, with the object or objects of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other corporate body. Since the end of previous financial period, the Directors have not received or become entitled to receive any benefit by reason of a contract made by the Company or a related corporation with the Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest. Directors responsibility in respect of the financial statements The Directors are responsible to ascertain that the financial statements give a true and fair view of the financial position of the Company as at 31 December 2015, and of its financial performance and cash flows for the financial year then ended. In preparing these financial statements, the Directors are required to: (a) (b) (c) (d) (e) adopt appropriate accounting policies which are supported by reasonable judgements and estimates and then apply them consistently; comply with the disclosure requirements of the Cambodian Accounting Standards ( CASs ) and the guidelines issued by the National Bank of Cambodia relating to the preparation and presentation of financial statements or, if there have been any departures in the interest of true and fair presentation, ensure that these have been appropriately disclosed, explained and quantified in the financial statements; maintain adequate accounting records and an effective system of internal controls; Prepare the financial statements on a going concern basis unless it is inappropriate to assume that the Company will continue its operations in the foreseeable future; and control and direct effectively the Company in all material decisions affecting its operations and performance and ascertain that such decisions and/or instructions have been properly reflected in the financial statements. The Directors confirm that the Company has complied with the above requirements in preparing the financial statements. Page 14

DIRECTORS REPORT (continued) Statement by the Directors In the opinion of the Directors, the financial statements set out on pages 18 to 21 have been drawn up in accordance with Cambodian Accounting

18 DIRECTORS REPORT (continued) Statement by the Directors In the opinion of the Directors, the financial statements set out on pages 18 to 21 have been drawn up in accordance with Cambodian Accounting Standards and the guidelines issued by the National Bank of Cambodia so as to give a true and fair view of the financial position of the Company as at 31 December 2015, and of its financial performance and cash flows for the financial year then ended. Signed on behalf of the Board, Ly Kunthai Chief Executive Officer Phnom Penh, Cambodia Date: 27-April-2016 Page 15

19 INDEPENDENT AUDITORS REPORT TO THE SHAREHOLDERS OF CITY MICROFINANCE INSTITUTION PLC (Incorporated in Cambodia) (Registration No: Co E/2012) Report on the Financial Statements We have audited the accompanying financial statements of City Microfinance Institution Plc ( the Company ), which comprise balance sheet as at 31 December 2015, and income statement, statement of changes in equity and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 18 to 21. Directors Responsibility for the Financial Statements The Directors of the Company are responsible for the preparation and fair presentation of these financial statements in accordance with Cambodian Accounting Standards and the guidelines issued by the National Bank of Cambodia, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Cambodian International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Page 16

20 INDEPENDENT AUDITORS REPORT TO THE SHAREHOLDERS OF CITY MICROFINANCE INSTITUTION PLC (Incorporated in Cambodia) (Registration No: Co E/2012) Report on the Financial Statements (continued) Opinion In our opinion, the financial statements give a true and fair view of the financial position of the Company as at 31 December 2015, and of its financial performance and cash flows for the year then ended in accordance with Cambodian Accounting Standards and the guidelines issued by the National Bank of Cambodia relating to the preparation and presentation of financial statements. Page 17

21 BALANCE SHEET AS AT 31 DECEMBER 2015 Note US$ KHR'000 US$ ASSETS Cash on hand 7 6,835 27,682 8,988 Balances with National Bank of Cambodia 8 115, , ,430 Balances with other banks 9 837,683 3,392, ,460 Loans to customers 10 4,193,453 16,983,485 2,093,163 Other receivables 11 58, ,119 35,499 Deferred tax assets 12 6,350 25,717 5,563 Property, plant and equipment , , ,957 Intangible asset 14 8,340 33,777 11,352 TOTAL ASSETS 5,430,986 21,995,494 3,133,412 LIABILITIES AND EQUITY LIABILITIES Other payables 15 32, ,856 5,169 Amounts owing to shareholders 16 3,013,225 12,203,562 1,004,542 Current tax liabilities 61, ,027 35,297 TOTAL LIABILITIES 3,107,764 12,586,445 1,045,008 EQUITY Share capital 17 2,000,000 8,100,000 2,000,000 Retained earnings 323,222 1,309,049 88,404 TOTAL EQUITY 2,323,222 9,409,049 2,088,404 TOTAL LIABILITIES AND EQUITY 5,430,986 21,995,494 3,133,412 Page 18

22 INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2015 Note US$ KHR'000 US$ Interest income ,170 2,228, ,038 Other operating income 19 83, ,337 36,967 Total operating income 633,710 2,566, ,005 Other operating expenses 20 (341,260) (1,382,103) (178,996) Profit before tax 292,450 1,184, ,009 Tax expense 21 (57,632) (233,410) (32,894) Profit for the financial year 234, , ,115 Page 19

23 STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2015 Share Capital (Accumulated losses)/retained earnings Total US$ US$ US$ Balance as at 1 January ,000,000 (15,711) 1,984,289 Profit for the financial year - 104, ,115 Balance as at 31 December ,000,000 88,404 2,088,404 Profit for the financial year - 234, ,818 Balance as at 31 December ,000, ,222 2,323,222 (KHR 000 equivalent) 8,100,000 1,309,049 9,409,049 Page 20

24 CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER N US$ KHR'000 US$ Cash flows from operating activities Profit before tax 292,450 1,184, ,009 Adjustments for: Allowance for doubtful loans 1 6,643 26,904 22,866 Amortisation of intangible asset 1 4,112 16,654 3,892 Depreciation of property, plant and equipment 1 38, ,285 39,169 Written-off of property, plant and equipment 890 3,605 - Operating profit before working capital changes 342,190 1,385, ,936 Changes in working capital Loans to customers (2,106,93 (8,533,079) (1,267,504) Other receivables (22,802) (92,348) (16,536) Other payables 27, , Cash used in operations (1,760,15 (7,128,635) (1,080,940) Income tax paid (31,734) (128,523) (3,160) Net cash used in operating activities (1,791,89 (7,257,158) (1,084,100) Cash flows from investing activities Purchase of property, plant and equipment 1 (72,562) (293,876) (1,836) Purchase of intangible asset 1 (1,100) (4,455) - Advances from shareholders 2,008,683 8,135,166 1,004,542 Net cash from investing activities 1,935,021 7,836,835 1,002,706 Net increase/(decrease) in cash and cash equivalents 143, ,677 (81,394) Cash and cash equivalents at beginning of financial year 716,878 2,903, ,272 Cash and cash equivalents at end of financial year 860,008 3,483, ,878 Cash on hand 7 6,835 27,682 8,988 Balances with National Bank of Cambodia 8 15,490 62,735 15,430 Balances with other banks 9 837,683 3,392, ,460 Page 21

25 1. Head Office 2. Takhmao Branch 3. Ang Snuol Branch

26 Contact Info: Tel: #470, Monivong Blvd, Sangkat Tonle Basak, Khan Chamkar Morn, Phnom Penh, Cambodia

Financial Statements for the year ended 31 December 2015 and Report of the Independent Auditors

Financial Statements for the year ended 31 December 2015 and Report of the Independent Auditors MAXIMA MICROFINANCE PLC. Financial Statements and Report of the Independent Auditors Corporate Information Company Maxima Microfinance Plc. Registration No Co. 7897E/2005 Registered office #21AB, Street