INDEPENDENT AUDITORS' REPORT

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Herbert Jefferson
6 years ago
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1 EY Building a better working world Ernst & Young Lao Limited Tel' th Floor. Capital Tower Fax Singha Road, Nongbone Village ey.com Saysetlha District Vientiane Capital, Lao PDR Reference: / INDEPENDENT AUDITORS' REPORT To: The Owner of Malayan Banking Berhad Nongduang Branch Opinion We have audited the financial statements of Malayan Banking Berhad Nongduang Branch ("the Branch"), which comprise the balance sheet as at 31, and the income statement, statement of changes in equity and cash flow statement for the period from 7 March 2016 (date of establishment) to 31, and notes to the financial statements, including a summary of significant accounting policies. In our opinion, the accompanying financial statements of the Branch are prepared, in all material respects, in accordance with Accounting Law of the Lao P.D.R and with the regulations stipulated by the Bank of Lao P.DR relevant to preparation and presentation of financial statements. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Branch in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code) and the ethical requirements that are relevant to our audit of the financial statements in Lao P.D.R ("Lao Ethical requirements"), and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code and Lao Ethical requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Emphasis of Matter We draw attention to Note 2 to the financial statements, which describes the accounting policies adopted by the Branch. These accounting policies are not intended to present the financial position, the results of operations and cash flows of the Branch in accordance with international generally accepted accounting principles. Our opinion is not modified in respect of this matter. Other Matter We draw attention to Note 2.2 to the financial statement on basis of preparation, which describes the purpose of presenting reference figures in USD in additions to. The equivalent amounts in USD are presented in the accompanying financial statements for the purpose of the Branch's internal use only and should not be used for any other purpose. Responsibilities of the Branch's Management for the Financial Statements The Branch's management is responsible for the preparation of the financial statements in accordance with the Accounting Law of the Lao P.D.R and with the regulations stipulated by the Bank of Lao P.D.R relevant to preparation and presentation of financial statements, and for such internal control as management determines is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Branch's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Branch or to cease operations, or has no realistic alternative but to do so. Amember firm of Ernst & Young Global limited

2 EY Building a better working world Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit 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 Branch's internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Branch's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Branch to cease to continue as a going concern. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.,64p(~ Vientiane Capital, Lao P.D.R A member firm of Ernst & Young Global limited

3 INCOME STATEMENT for the period from 7 March 2016 to 31 Code ITEMS Notes For the period from 7 March 2016 to 31 For the period from 7 March 2016 to 31 A OPERATING INCOME AND EXPENSES Interest and similar income Interest and similar income from 3 1,071, ,065 interbank transactions 291,883 35,696 Interest and similar income from loans to customers 779,832 95, Interest and similar expenses Interest and similar expenses for customer deposits 3 (207,466) (25,372) (207,466) (25,372) NET INTEREST AND SIMILAR I. INCOME 864, ,693 3 Fee and commission income 4 369,369 45,172 4 Fee and commission expense 4 (1,020) (125) 5 Net loss from dealing in foreign currencies 5 (40,496) (4,952) II. NET OPERATING INCOME 1,192, ,788 5

4 INCOME STATEMENT (continued) for the period from 7 March 2016 to 31 Code ITEMS Notes For the period from 7 March 2016 to 31 For the period from 7 March 2016 to 31 B OTHER INCOME AND EXPENSES 6 Other operating income 4, Administration expenses (1,228,908) (150,288) 7.1 Payroll and other staff costs 6 (503,008) (61,515) 7.2 Other administration expenses 7 (725,900) (88,773) Depreciation and amortization 8 charges 13 (1,556,189) (190,313) 9 Other operating expenses 8 (206,546) (25,259) III. TOTAL LOSS BEFORE TAX 10 Current profit tax 18 IV. LOSS AFTER TAX Prepared by: Reviewed by: Niphaphone Pholsyna Financial Officer Phengsomchith Phonphosy Branch Manager Vientiane Capital, Lao PD.R 6

5 BALANCE SHEET as at 31 Code ASSETS Notes I Cash and balances with the Bank of Lao P.D.R ("BOL") 75,476,116 9,230,294 1 Cash on hand 9 3,532, ,978 2 Balances with the BOL 10 71,943,835 8,798,316 II Due from other banks 11 16,000,000 1,956,708 1 Term deposits 16,000,000 1,956,708 III Loans and advances to customers, net of provision for nonperforming loans 12 41,154,017 5,032,899 IV Fixed assets 7,345, ,277 1 Tangible fixed assets 13,1 6,209, ,385 2 Intangible fixed assets ,135, ,892 V Other assets 1,196, ,303 1 Accrued interest receivables 572,460 70,009 2 Other assets ,858 76,294, J: I 1 )! TOTAL ASSETS 141,171,663 17,264,481 7

6 BALANCE SHEET (continued) as at 31 Code LIABILITIES AND CAPITAL Notes I Due to other banks 15 32,131,808 3,929,536 1 Demand deposits from other banks 32,131,808 3,929,536 II Due to customers 16 10,130,899 1,238,951 1 Demand deposits 590,367 72,199 2 Saving deposits 684,855 83,754 3 Fixed term deposits 8,855,677 1,082,998 III Other liabilities 376,595 46,056 1 Accrued interest payables 93,718 11,462 2 Taxes payable ,744 6,817 3 Other payables ,133 27,777 TOTAL LIABILITIES 42,639,302 5,214,541 IV Capital and reserves 1 Paidup capital ,121,729 12,244,311 2 Regulatory reserve fund 3 General provision for credit activities ,770 25,164 4 Accumulated losses TOTAL CAPITAL 98,532,361 12,049,940 TOTAL L1ABILITES AND CAPITAL 141,171,663 17,264,481 Prepared by: Reviewed by: Niphaphone Pholsyna Financial Officer Phengsomchith Phonphosy Branch Manager Vientiane Capital, Lao P.D.R 8

7 STATEMENT OF CHANGES IN EQUITY for the period from 7 March 2016 to 31 ITEMS Paidup capital General provision for credit activities Accumulated losses Total Balance as at 7 March 2016 Additional paidup capital in the period Net loss for the period Net general provision charged during the period 100,121, , ,121, ,770 Balance as at ,121, ,770 98,532,361 ITEMS Paidup capital General provision for credit activities Accumulated losses Total Balance as at 7 March 2016 Additional paidup capital in the period Net loss for the year Net general provision charged during the period 12,244,311 25,164 12,244,311 25,164 Balance as at 31 12,244,311 25,164 12,049,940 q Prepared by: Reviewed by: Niphaphone Pholsyna Financial Officer Vientiane Capital, Lao P.D.R 9 1 =._ n,, _ ~ =:...., J I

8 CASH FLOW STATEMENT for the period from 7 March 2016 to 31 ITEMS Notes For the period from 7 March 2016 to 31 For the period from 7 March 2016t031 Net loss before tax Adjustments for: Depreciation and amortization charges 1,556, ,313 Loan loss provision expenses ,770 25,164 Cash outflows from operating loss before changes in operating assets and liabilities (33,179) (4,058) (Increase)/Decrease in operating assets Balances with other banks (64,512,814) (7,889,546) Loans and advances to customers (41,154,017) (5,032,899) Accrued interest income (572,461) (70,009) Other assets (623,857) (76,294),(.' Increase/(decrease) in operating liabilities Due to other banks 32,131,808 3,929,535 Customer deposits and other amounts due to customers 10,130,899 1,238,951 Accrued interest expense 93,718 11,461 Other liabilities 282,877 34,595 Net cash flows used in operating activities INVESTING ACTIVITIES Payments to acquire property and equipment Net cash flows used in investing activities (64,257,026) (7,858,264) (8,901,401 ) (1,088,590) (8,901,401 ) (1,088,590) FINANCING ACTIVITIES Capital contribution ,121,729 12,244,311 Net cash flows from financing activities 100,121,729 12,244,311 Net change in cash and cash equivalents 26,963,302 3,297,457 10

9 CASH FLOW STATEMENT (continued) for the period from 7 March 2016 to 31 ITEMS Notes For the period from 7 March 2016 to 31 in For the period from 7 March 2016 to 31 Cash and cash equivalents at the beginning of the period Effect of foreign exchange difference Cash and cash equivalents at the end of the period 20 26,963,302 3,297,457 Prepared by: Reviewed by: I( ) " ) Niphaphone Pholsyna Financial Officer Phengsomchith Phonpho Branch Manager Vientiane Capital, Lao PD.R 11

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EY Building a better working world Ernst & Young Lao Co., Ltd. Tel: +856 21 455 077 6th Floor, Kolao Tower I Fax: +856 21 455 078 23 Slngha Road, Nongbone Village ey.com Saysettha District, Vientiane Capital,