contents · 05 06 ly hour microfinance institution plc,. received license from national bank of...
TRANSCRIPT
CONTENTSCorporate Information Financial Highlight
Business of Company
General Information
Key Figure
Tax Paid
Milestones
Vision and Mission
Products and Services
Message from the Chairman of the Board
Remarks of Chief Executive Officer
Board of Directors
Member, Board of Directors
Managerment
Organizational Chart
Operatinal Areas
Human Resources
Risk Management
01
02
03
04
05
07
09
11
12
15
25
26
27
29
Successful Customers In Business
Financial Performance
31
33
Financial Statements 35-80
Published News
Address and Contact Detail
81
83
01
Net Profit
Gross Loan Outstanding
Total Assets
Share Captial
Total Equity
Loan Grow Rate
PAR >30days
Return on assets (ROA)
Return on equity (ROE)
Solvency Ratio (NBC+15%)
Yield Ratio
Operating Expenses Ratio
Number of Offices (branches)
Number of active clients
Number of Credit Officer (CO)
Total Staff
Average Loan Size
CO Productivity
Operating Provinces
Operating Districts
Operating Villages
KEY FIGURE
US $
US $
US $
US $
US $
%
%
%
%
%
%
%
US $
US $
1,061,904
41,105,614
47,546,926
16,000,000
18,271,895
19%
0.25%
2.45%
5.99%
39.13%
20.51%
11.11%
26
12,376
123
371
3,723
334,192
15
88
2,364
Measure 2016
2,010,543
49,656,058
54,562,115
16,000,000
20,282,438
21%
0.29%
3.94%
10.43%
37.94%
20.17%
9.60%
26
11,333
130
385
4,884
381,970
15
92
2,387
2017
1,045,569
34,503,876
39,261,075
16,000,000
17,209,991
22%
0.12%
2.90%
6.27%
44.80%
21.69%
11.78%
25
11,387
136
406
3,427
253,705
14
83
2,199
2015
02
Patent Tax
Signboard Tax
Value added Tax (VAT)
Prepayment of profit tax (1%)
Annual Profit Tax
Tax on Salary
Withholding tax on rental
Withholding tax on local services
Withholding tax on overseas services
Withholding tax on interest (resident)
Withholding tax on interest (non-resident)
Tax Paid
708
1,061
-
10,725
-
36,896
9,504
1,996
9,843
6,911
26,659
2013 1,694
1,820
-
40,144
-
81,907
22,973
6,182
13,500
36,478
114,563
2014 2,808
3,399
1,072
68,273
236,200
112,518
41,113
5,901
7,356
25,268
-
2015 7,895
4,225
6,340
78,387
260,114
150,842
54,148
3,856
9,956
4,468
7,939
2016 9,147
10,557
7,699
92,853
395,574
151,648
55,638
7,945
6,630
5,494
75,390
2017
MILESTONES
03
2016
2014
2012
2015
2013
201701
02
04
05
06Ly Hour Microfinance Institution Plc,. received license from National Bank of Cambodia to operate finance services and also celebrated formal inauguration ceremo-ny on 9 October 2012.
Following the continuous support from the clients, Ly Hour Microfinance Institution Plc,. has gradually expanded its operation to 9 branches mainly in Phnom Penh , Kompong Cham,Battambong, Takeo , Kandal and Prey Veng province.
Bavil Branch, Kampong Speu Branch, Tram-kak Branch, Bakan Branch, Preah Sdach Branch, Kampong Trabaek Branch and Tboung Khmum Branch are being operated to provide financial services more closely and widely to customers.
Ly Hour Microfinance Institution PLc., has got 2 international awards : International Star for Quality from Business Initiative Directions and The Best Enter-prise Award from Europe Business Assembly.
Due to the increasing financial service demand from customer, Ly Hour Microfi-nance Institution Plc,. expanded operational location such as Svay Antor Branch, Somrong Tong Branch.
Ly Hour Microfinance Institution PLc., has piloted customer loan payments through Ly Hour Veluy
03
To provide an opportunity with Cambodian people to start up and expand their businesses in order improve the standard of living through obtaining the appropriate microfinance services
Be a leading microfinance institution in providing financial services in Cambodia
Mission
Vision
04
Products and ServicesDo you own a small & medium business and want to make it work better for you and make more profit? The small & medium loan of Ly Hour Microfinance Plc., can offer you the best solution on purpose to access to new business, to improve existing business, working capital, and to buy equipment or products, etc. We offer you the refinance service for payoff the currently debt to switch to a better loan with Ly Hour Microfinance Plc.
Long Term Loan
Revolving Term Loan
Working Capital Loan
Auto Loan
Benefit of Small and Medium Enterprise Loan
Low Interest Rate & Long-Term Facility
Quick Assessment and Disbursement
Loan up to USD 200,000
Keep confidential information of our client
Provide professional consultant to our client
Loan Collection thru LY HOUR Paypro (LY HOUR Veluy) without fee of charge
Financing to pay-off other loans
Product
05
06
All Customer can repay laon for FREE via LY HOUR Pay Pro agents across the
country
All Customer can repay laon for FREE ustomer can repay laon for FREEAll Customer can repay laon for FREEvia LY HOUR Pay Pro agents across the via LY HOUR Pay Pro agents across t evia LY HOUR Pay Pro agents across the
country
All Customer can repay laon for FREE via LY HOUR Pay Pro agents across the
country
This economic growth was mainly contributed by the key sectors such as garment, construction and tourism, commerce and agriculture. Indeed, the microfinance sector has also significantly contributed to the economic growth through the provision of affordable financial services to support economic activities nationwide.
Message from the Chairman of the Board
Ly Hour Microfinance Institution Plc., (hereinafter referred to as “MFI”) was duly incorporated under the laws of the Kingdom of Cambodia in 2012 to provide microfinance services for clients, especially semi-urban and rural people with low-middle income. The MFI is a member of the Ly Hour Group, a company based in Cambodia since 1986, which now consists of 8 member companies as follows:
(1) Ly Hour Exchange and Jewelry Co., Ltd;
(2) Ly Hour Pawn Shop Co., Ltd;
(3) Borey Vimean Phnom Penh;
(4) Ly Hour Microfinance Institution Plc;
(5) Tepi Agro Co., Ltd;
(6) Ly Hour Leasing Plc;
(7) Ly Hour Pay Pro Plc;
(8) Ly Hour Insurance Plc;
The year 2017 remained the good year for banking and financial industry in Cambodia, with the safe social security and economic growth of 7%.
07
In the subsequent coming years, the MFI will continue to serve customers with a transparent and responsible manner. We will also seek to raise funds to support operation, devel-op new products and services in response to customers’ demand and evolving financial market, expand operation network by opening new offices, and place focus on risk management with prudential and proactive approach.
On behalf of the shareholders and the Board of Directors, I would like to recognize the achievements in 2017 which come from the strong support from all stakeholders includ-ing lenders, customers, the external auditor and govern-ment officials, especially the National Bank of Cambodia. These accomplishments would not be made possible without your support. In this regard, I would like to extend my profound thanks to all of you. Finally I would also express my heartfelt gratitude to the management and staff for great effort and hard work for the MFI.
Chairman of the Board of Director
Oknha Ly Hour
08
The Ly Hour Microfinance Institution Plc., has become one of the outstanding microfinance institutions in Cambodia, and that it has served over 11,333 clients from its 26 branches, with the total loan outstanding USD 49.66 million by the end of the year which increased 21% if compared to the total loan portfolio of USD 41.10 million at the end of 2016. Moreover, in order to make its service easier and save some cost for customers, the MFI has success-fully launched the loan repayment through registered agents of Ly Hour Pay Pro or Ly Hour Veluy, a third-party proces-sor.
On credit risk management, the MFI has promoted the strong risk management culture and internal control within institution by setting up the business auto-control team, risk management team and internal audit team. More impor-tantly, the Audit Committee and Risk Oversight Commit-tee, the specialized committees of the Board, were also created to strengthen the MFI’s governance in accordance with the regulatory requirement of the National Bank of Cambodia. With the strong risk management structure, risk management policy and adequate resources, the MFI has excellently maintained its good portfolio quality at which the portfolio at risk (PAR) over 30 days was only 0.29% of the total loan outstanding at the end of the year.
On financial performance, the financial result was the total asset of USD 54.56 million, an after-tax profit of USD 2.01 million, return on equity of 10.43% and return on asset of 3.94%. In addition, the MFI has raised fund from both local and oversea lenders to finance its operations and portfo-lio growth, and that the total fund raised in 2017 was USD 25 million.
institution. Ly Hour Microfinance Institution Plc., had expanded the operational areas by building infrastructure, a total of 26 branch offices in 12 provinces and cities, includ-ing: (1) Phnom Penh (2) Kampong Cham (3) Tboung Khmum (4) Prey Veng (5) Kandal (6) Kampong Speu (7) Takeo (8) Battambong (9) Pursat (10) Ratanakiri (11) Kampong Chhnang (12) Svay Rieng. In order to reach our goal and plan efficiently in the upcoming 2018, Ly Hour Microfinance Institution Plc., has established key strategic initiatives to be implemented as below:
Remarks of Chief Executive Officer
As of 2017, the institution employs a total of 394 staffs, including 79 professional staffs at the head office and more than 315 employees who work in different branches of the
Ly Hour Microfinance Institution Plc., is publicly provid-ing financial service to customers after obtaining a microfi-nance license from National Bank of Cambodia in October 2012. Currently, Ly Hour Microfinance Institution Plc., is considered to be the fastest growing Microfinance Institu-tion among almost 60 institutions in Cambodia in terms of registered capital of USD 16 Million. Ly Hour Microfi-nance Institution Plc., is the most prominent and trusty micro-finance because of the shareholders’ reputation, operational activity, and its strategic plan and high credit quality in Cambodia microfinance industry.
According to the implementation of the 5 years’ business plan and the growth of credit operation by 2017, the institu-tion had almost USD 50 Million of total loan portfolio by maintaining good credit quality with only 0.3% of Portfo-lio at Risk which led Ly Hour Microfinance Institution Plc., to be one of 10 biggest microfinance institutions in Cambodia with lowest Portfolio at Risk rate.
In 2017, the year that the economy in the country was a bit tough, especially on the banking and financial sector, making the institution difficult to increase its loan portfo-lio, however, the institution was able to continue to increase its loan portfolio with good quality and high efficiency and because of these achievements, the institution attracts both domestic and foreign banks to make confident investment and provide funding. By the end of 2017, the institution has a total funding from 8 local banks and 4 international banks of more than USD 30 million.
This increase reflects the success of the institution, which has gained strong consumer confidence and the scope of its credit operations in the current competitive market. In addition, the net profit of the institution had increased from USD 1 million in 2016 to more than USD 2 million in 2017.
09
1. The institution will continue to expand its operational areas in the new provinces: (1)Siem Reap (2), Svay Rieng (3) Kampot (4) Banteay Meanchey and (5) Kampong Thom.2. The institution will continue to strengthen and further expand the operations of 10 branch back offices, including (1) Somroang Branch, Takeo (2) Mesang Branch, Prey Veng (3) Kamrieng Branch, Battambong (4) Sampov Loun Branch, Battambong (5) Phnom Sruoch Branch, Kampong Speu (6) Krang Chek Branch, Kampong Speu (7) Ponhea Krek Branch, Tbaung Khmom (8) Pursat Branch, Pursat (9) Preychhor Branch, Kampong Cham (10) Bar Kaev Branch, Ratanakiri.3. Hiring new staff in addition to existing staff up to 478 totally in which there are around 91 of them are critical and skill staff working in a support function at Head Quarter and the rest deploying across the branch networks to ensure the effective and sustainable operation of the institution.4. Disbursing quality loan amount to at least USD 75 Million and 17,111 Clients in 2018 based on the highest alert principle.
5. Generating more than USD 3 Million of net profit in 2018 and maintain its return of equity higher than 19% every year.6. Providing customer service by professional and ethical staff and treats each customer as long term business partner. 7. Increase the amount of repayment and disbursement via Ly Hour Paypro by issuing Ly Hour Veluy Membership Card and regularly promoting this new service to all clients.8. Provide micro insurances to all existing and new clients with the compensation up to USD10,000 per person.
Finally, on behalf of management and staff, I would like to thank our shareholders, Chairman, and Board of Directors for leading and supporting to the operation of Ly Hour Microfinance Plc., and also express my thankfulness to government, National Bank of Cambodia, creditors, and customers that have provided good cooperation and support to Ly Hour Microfinance Institution Plc.
Chief Executive Officer
Mr. Uth Soeurng
10
Chief Executive Officer
Mr.Uth Soeurng
Board Of Directors
Chairman of the Board of Directors
Oknha Ly Hour
Oknha Ly Hour, born in January 1, 1954 in Kampong Cham province. The incipient stage of his business derived from 0.25 ounce of gold in the early 1980s, which has enabled him to become a leading money exchange and successful businessman in Cambodia over two decades.
Within the last three decades, Oknha Ly Hour has expand-ed his businesses into different sectors of growth stipulating experience investment to invest most of his capital in various kinds of investments such as Real Estate, Construc-tion and Financial Sectors.
His successful investments lead him to establish a strong conglomerate in investment and development in Cambodia which is called LY HOUR GROUP Co., Ltd.
With variety of businesses, LY HOUR GROUP has several subsidiaries including Money Exchange &Jewelry Compa-ny, Microfinance Institution, Construction Company, Pawn shop, Consulting Company, Rubber Plantation, Leasing Company, Money Transfer Company and many others. Oknha Ly Hour has contributed plenty of his personal properties for community development.
His great contributions to the country’s economic develop-ment and the improvement of educational standard have resulted in numerous letters of recognition, awards and medal.
11
Oknha Ly Sopheark
Okhna Ly Sopheark, Cambodian, born in 1978 from Kompong Cham Province. Oknha Ly Sopheark is a dynamic and charismatic business-man with more than 10 years of professional experiences in the Kingdom of Cambodia. He has been expanding his business through various kinds of investments in many different sectors significantly in the construc-tion as well as the financial sectors.
He has been devoting substantial efforts in strengthening private sectors by enabling steady and sustainable growth of local investment in the Kingdom of Cambodia. Oknha Ly Sopheark has been appointed as Vice President of Ly Hour Group in 2004, a member of Board of Directors of Ly Hour Microfinance Institution Plc., since 2012 and also has served as the Chairman of Ly Hour Leasing Plc., since 2015.
Ms. Liao Xi
Ms. Liao Xi, born in 1977, is a Taiwanese successful businesswom-an. In 2012, she joined Ly Hour Microfinance Institution Plc., as a shareholder and member of the Board of Directors. Since 2012, she has invested in various kinds of businesses with Ly Hour Group particularly in the construction and financial sector and contributes to the success of Ly Hour Microfinance Institution Plc., as a well-known and top ten institution in Cambodia. As a potential investor, shareholder, and a long-term partner of Ly Hour Group, she is ready and confident to take part in any business need for development and growth of Ly Hour Microfinance Institution Plc.
Mr.Tsai Ching Cheng
Born in 1980, Mr. Tsai Ching-Cheng, Taiwanese, is a shareholder and member of the Board of Directors of Ly Hour Microfinance Institution Plc. Ching-Cheng earned a Bachelor of Art, major in Economics from University of Toronto. Since arriving in Cambodia, he has made various kinds of investments with Ly Hour Group, a parent company of Ly Hour Microfinance Institution Plc., in construction and financial sector. As a true potential investor of Ly Hour Group, Ching-Cheng possess-es a strong commitment to enhanc-ing, maintaining, protecting, and developing Ly Hour Microfinance’s vision and mission and contributes a remarkable developments of Cambo-dia.
12
Member, Board of Directors
Member, Board of Directors Member, Board of Directors Member, Board of Directors
Working together for community growth
13
Mr. Touk Khy
Mr. Touk Khy, born in 1980, is an Independent Member of Board of Directors of Ly Hour Microfinance Institution Plc. He graduated from Royal University of Law and Economic in 2001. In 2002, he obtained a Master of Business Administration (MBA) from Centre Franco-Vietnamien De Forma-tion A La Gestion (CFVG) in Ho Chi Minh, Vietnam. Then in 2003, he obtained another Master Degree from Asian Institute of Technology (AIT) in Bangkok, Thailand majored in Interna-tional Business. In 2003, He started his first career with Economic Institute of Cambodia (EIC) as an Economist. He moved to International Finance Corpora-tion as an Operations Analyst working within the Business Enabling Environ-ment Program (BEE) till 2009. Then from 2009 to present, he has been working with International Finance Corporation as an Associate Operations Officer.
Mr. Horng Vuthy
Mr. Horng Vuthy, is an Independent Member of Board of Directors of Ly Hour Microfinance Institution Plc. He graduated from National Institute of Management, majored in Accounting in 2000. Then in 2003, he went to Arizona State University, USA to pursuit his Master Degree in Public Administration, Fulbright Scholarship. He started his first career as a Tax Consultant from 2000 to 2001. Then in 2003, he joined Prince George’s County Government, Maryland, USA as a Management Analyst in Budget Management Depart-ment. In 2004, He moved to Cambodia Development Resource Institute as a Researcher – Good Governance Reform Unit. In 2008, he joined ANZ Royal Bank (Cambodia) Ltd as a Senior Manag-er of Risk Management. Then from 2010-2014, he joined Australian and New Zealand Banking Group – Singapore Branch as a Manager, Lending Services Asia. From 2014 to Present, he has worked with Manulife (Cambodia) Plc as a Head of Partnership Distribu-tion.
Mr. Sok Keoreaksmey
Mr. Sok Keo Reaksmey, born in 1978, is from Kandal Province. He is an Independent Member of Board of Directors of Ly Hour Microfinance Institution Plc. He graduated from National Institute of Management, Cambodia in 1998. Then in 2005, he received his Master of Business Adminis-tration specializing in Finance from Charles Sturt University, Australia. From 2002 to 2009, he was a Freelance Consultant in Financial Management, Auditing and Procurement. Then in 2010, he became a Deputy Project Manager at German International Cooperation. From 2012 to present, he has worked with World Bank Cambodia as a Financial Management Specialist (consultant) to provide supports to various World Bank financed operations in Cambodia.
Independent DirectorMember of Board of Directors
Independent DirectorMember of Board of Directors
Independent DirectorMember of Board of Directors
Independent DirectorMember of Board of Directors
14
Mr. Uth Soeurng
Chief Executive Officer
Management
Mr. Uth Soeurng, 38 years old, from Kampong Thom Province. In term of education, he obtained a Master’s Degree majored in Accounting & Finance in 2002 from a French School in Vietnam (CFVG) and is currently pursuing qualifica-tions as a Charter Financial Analyst (CFA). For his professional career, he spent more than 15 years of services in several senior management functions in different business entities both in commercial banks and microfinance institutions for instance Prasac MFI Ltd., Hattha Kasekar Ltd., and ANZ Royal Bank (Cambodia) Ltd. He has proven skills in leasing, commercial & corporate lending, portfolio management, credit & risk management, finance, IT & MIS, and electronic banking. During his time with ANZ Royal, he won the 1st Corporate Sales Awards in 2009 during the global financial crisis, and held a Credit Approval Discretion (CAD) of up to USD 2 million while exercising his commercial CAD as Credit Risk Manager in late 2010. Prior moving to Ly Hour Microfinance Institution Plc., He successfully led the ATM & Mobile Banking project at Hattha Kaksekar Limited using the newest technology. He has led Ly Hour Microfinance Institution to stand strong in N#8 of Cambodia’s leading Microfinance Institution after 12 months of operation. Recently, he initiated two remarkable projects inclusive of Ly Hour Leasing and Ly Hour Pay Pro Plc., to be officially launched and become recognized rapidly by the public.
Mrs. Sok Sophorn
Deputy Chief Executive Officer and Chief Operating Officer,
Ms. Sok Sophorn, Deputy Chief Executive Officer & Chief Operating Officer, born in July, 4th, 1967. She obtained a Bachelor Degree in Accounting from National University of Management in 1991. She has attended numerous courses on management. She had more than 20 years experiences with banking industry like Foreign Trade Bank, Cambodian Commercial Bank, Credit Agricole Indosuez, Maybank and ANZ Royal Bank. While she was working with ANZ Royal Bank,she had received the First Place Award of Customer Service. She joined with Ly Hour Microfinance plc since Jan 2012 as Head of Operations. Based on her seniority and capability, she then was promoted to be Deputy Chief Execu-tive Officer and Chief Operating Officer in March 2013 where she has a broader and majored responsibility in all strategic and technical aspects related to the general management, operations, information technology, human resource, adminis-tration and marketing of the institution.
15
Mr. Kim Bunnavuth
Chief Intertnal Audit Officer
Kim Bunnavuth joined Ly Hour Microfinance Institution Plc., in September 2012 as Head of Internal Audit and has been promoted to Chief Internal Audit Officer (“CIAO”) in Novem-ber 2013 by Oknha Ly Hour, the Chairman of Ly Hour Microf-inance Institution Plc. Kim has completed his Bachelor of Business Administrative in Accounting at National University of Management in 1995 and a Master of Business Administra-tive in Finance at Charles Sturt University, Australia in 2005. Kim was admitted as a full membership of the Institution of Certified Management Accountant, Australia in February 2017 and full membership of the Institution of Public Account-ant, Australia in January 2017. More than 23 years, Kim earned more experience from the big 4 audit firms (KPMG & Coopers &Lybrand and later known as PricewaterhouseCoop-ers, “PWC”) as Senior Auditor, manufacturing as an Internal Audit Manager and many different multinational companies/ firms as Finance Manager and/or Financial Controller. Kim has possessed a strong background in Accounting, Finance and Auditing as demonstrated through his past leadership roles in multinational companies and solid experience with profession-al accounting firms. Kim has participated successfully in the development of policies and procedures for companies he served under which resulted in better internal controls and increased growth.
Mr. Mao Polo
Deputy Chief Executive Officerand Chief Risk Officer
Joined Ly Hour Microfinance Institution Plc., as Deputy Chief Executive Officer and Chief Risk Officer in 2012. He was a scholarship student from National University of Management. He graduated his Bachelor of Business Administration (BBA), majored in Accounting and Finance in 1999. Then in 2004, he obtained a Master of Business Administration (MBA), majored in General Management from Preston University, United State of America. He got some 20 years experiences in administrative management, accounting, finance, credit portfolio and risk management across international none governmental organiza-tions and also in banking sectors. Prior to this, he was a Credit Risk Manager with ANZ Royal Bank (Cambodia) Limited where he held the Credit Approval Discretion – CAD to approve loan request for a single customer up to USD 2 Million before promoting to Head of Retail Lending where he looked after the whole retail lending portfolio including SMEs & Home Loans.
16
17
18
Mr. Ven Ronn
Head of Risk and Compliance Dept
He obtained Master of Management at Build Bright University in 2012, and he also obtained BBA of Accounting and Finance at the same university in 2008. He joined Ly Hour Microfinance Institu-tion Plc., as Branch Manager since 2012, was promoted as Regional Manager in 2013, and was appointed to be Head of Risk and Compliance department in September 2013. Before joining with Ly Hour Microfinance Institution Plc., he had worked at Microfinance Institution Amret as Credit Officer, Specialize Credit Officer, Deputy Branch Manager, and Branch Manager from 2006 until 2011.
Mr. Heng Chan Virotha
Head of Business Development Dept
He was born on September 13th, 1982. He obtained Bachelor Degree in Finance and Banking in 2005 and received the degree in 2007 from Norton University. He has over 7 years working experience in Financial Institutions with credit operations and people management. Before joining Ly Hour Microfinance Institution Plc., Mr. Rotha previously served as high potential staff in Prasac Microfinance Institution from 2006 to 2013 in many positions including Credit Officer, Chief Service Post, and Branch Manager with the extensive experiences. He has been working for Ly Hour Microf-inance Institution Plc., since 2013, initial-ly as Branch Manager and was promoted to Regional Manager in June 2013. Then he was appointed as Head of Business Support Department in November 2014.
Mr. Chamnap Chap
Head of Information Technology Dept
CHAMNAP CHAP is the Head of Information Technology. He has over 14 years experience in information technolo-gy including IT infrastructure, system development, project management, core banking system, mobile banking system and leadership role. He enjoys in creativi-ty work and new technology. CHAM-NAP earned an MBA and two bachelor degrees in computer science and account-ing.
19
Mr. San Riphin
Head of Administration Dept
Born in 1985, Riphin Joined Ly Hour Microfinance Institution Plc. as Head of Administration Department in Feb 2015. He has a Bachelor of Education in English obtained in year 2006 from Institute of Foreign Languages, Royal University of Phnom Penh, and he is pursuing his Master Degree specializing in Management at National University of Management. Riphin spent more than 9 years working in several functions in microfinance, construction projects, and educational institutions.
Mr. Heng Pros
Head of Branch Supervision Dept
He obtained Bachelor Degree in Account-ing and Finance in 2006 and Master Degree majored in Finance and Bank in 2013 from Western University. He has over 5 years working experience in Financial Institutions with credit operations and people management. Prior to joining Ly Hour Microfinance Institution Plc., Mr. Heng Pros previous-ly served as high potential staff in Cambo Six Co., Ltd from 2006 to 2009 as Assistant of Customer Service Manager. He has been working for Ly Hour Microf-inance Institution Plc., since 2012, initial-ly as Credit Supervisor and was promoted to Branch Manager and was promoted to Regional Manager in 2014. Then he was appointed as Head of Branch Supervision in 2015.
Mr. Chea Seangly
Head of Credit Department
Mr. Chea Seangly was born in 1987 in Battambang Province. He graduated a Bachelor Degree of Management from Build Bright University in 2009. Then in 2014, he obtained a Master Degree of Finance from National University of Management. He started his first job with HATTHA KAKSEKAR LIMITED as Credit officer at Battambang branch in 2008 and then he was moved to Head Office as Credit Analysis Officer in 2011. He has joined with Ly Hour Microfi-nance Institution Plc., since May 2013 as Credit Control Officer. Then in 2013, he was promoted to Credit Risk Manager. According to his ability and experience of credit sector plus his effort, Mr. Chea Seangly was promoted to Head of Credit Risk in 2014 that has main responsibility to Credit Risk Management. Further-more, he oversees Ly Hour Microfinance Institution Plc.’s business operation including control, evaluation and quality guarantee of loan product.
20
Ms. Chea Tieng Chanvathna
Head of Human Resources Dept
Ms. Chea Tieng Chanvathna, received Bachelor degree in Finance and Banking at National University of Management in 2004. She has had various experiences with different positions in human resourc-es in microfinance since 2004. After that she joined with Ezecom as HR Executive in ISP sector. As career growth, she moved to be part of Ly Hour Microfi-nance Plc. with HR fields.
Ms. San Somany
Head of Finance Department
Born on 05 May 1971, Ms. Somany graduated Master Degree of financial management from National University of Management in 2007. She has more than 15 years of working experience of credit and accounting management in microfi-nance institution. From 1996 to 1998, she worked as credit officer for EMT (Gret) and from 1998 to 2012, she had worked for Amret Microfinance Institu-tion Plc., with different positions such as treasury officer, accountant, and senior accountant, cost controller. She also had attended many training courses which are related to financial management with many different institutions. She joined Ly Hour Microfinance Institution Plc., as accounting manager in August 2012. With her hard work and achievement, she was offered a chance to be an Acting Head of Finance Department in Feb 2013 and then in Jan 2014, she was officially promoted to be Head of Finance Department.
21
Mr. Than vitouHead of Treasury Department
He hold master of Finance and Banking at Norton University. He is responsible for leading Treasury Department which is in charge for managing fund for support-ing business operation, managing on assets and liability for maximizing net interest margin, preparing annual budget and financial projection, training and coaching cash management to relevant staffs at branches, and participating with all related projects such as core banking product/service enhancement. He joined Ly Hour MFI since early 2014 as Senior Accountant with achieving outstanding performance, then he was promoted as Deputy Head of Finance in early 2016 and promoted as Head of Treasury at June 2017. Before working at Ly Hour Microfinance Institution Plc., He had worked in Accounting field for 4years at Microfinance Institution Amret.
Mr. Kim Sopheaktra
Deputy Head of Business Development Dept
Mr. Sopheaktra holds a Master's Degree of General Management in 2011 at National University of Management. He has over 18 years of experience in manag-ing credit and human capital operations in the microfinance sector. Prior to starting work with Ly Hour Microfinance Institution Plc., he worked for several positions: Credit Officer and Branch Manager at Amret from 2000 to 2012. He started working with Ly Hour Microf-inance Institution Plc., As a Branch Manager in 2013, He was appointed Regional Manager in early 2014 and was re-appointed as Deputy Head of Business in February 2015 until now.
Mr. Huy Vanna
Deputy Head of Business Development Dept
Joined Ly Hour Microfinance Institution Plc., In 2014 as Deputy Head Business Development Department. He graduat-ed his Bachelor of Business Administra-tion (BBA), majored in Law in 2004. He got some 8 years experiences in Credit, Saving Transfer, Exchange, Trad Finance and Internal Auditor in banking sectors. Prior to this, he was a Internal Auditor Manager with ACLEDA Bank Plc., in 2004, Personal Secretary to President of Ly Hour Group in 2013, Director of Public Relationship and Administration of Borey Vimean Phnom Penh in 2014.
22
Chy Sarath, a native of Kompong Cham province, graduated with a Master's Degree in Banking and Finance at Western University, 2014. He started his career with Ly Hour Microfinance Institu-tion Plc., in 2012 until present, with a number of key roles, such as Credit Officer, Branch Manager and Regional Manager. Based on his experience in this field of expertise, he has been appointed as Senior Credit Officer at the Headquar-ters responsible for approving credit, monitoring and evaluating credit risk, assessing the credibility of credit approval and quality management effectively.
Mr Nhet Rith
Senior Branch Supervision ManagerBranch Supervision Department
Mr. Neth Rith graduated with a bachelor degree in finance and banking in 2006 and got a diploma in 2007 at Build Bright University (PP). He has over 18 years of experience in managing credit and human capital operations in the microfinance sector. Prior to starting work with Ly Hour Microfinance Institu-tion Plc., he worked in various positions such as Credit Officer, Sub Branch Manager and Branch Manager at PRASAC MFI since 1995 to 2013. He has extensive experience in managing credit operations and human resource management. He started working with Ly Hour Microfinance Institution Plc., as a Branch Manager and was appointed as Regional Manager in October 2015 until 08, 2017. He was promoted to the position of a Senior Branch Supervision Manager in the Branch Supervision Department at the Headquarter.
Mr. Ken Malen
Senior Lending Service Unit ManagerCredit Department
Ken Malen was born in the Kampong Cham Province (now becomes a Tbong Khmum) holds a BA in Finance and Banking from the University of Technol-ogy and Management in November the year 2005. He started his career with the first Prasac MFI in February 2006, working there for the past 6 years he was promoted as Branch Manager at Dom Dek branch in Siem Reap. Then, he decided to move to Ly Hour Microfi-nance Institution Plc., in 2013, where he was promoted to be the Branch Manager of Cheung Prey district, and he was promoted to Regional Manager. Current-ly, He serves as Senior Lending Service Unit Manager, primarily responsible for resolving outstanding loans and manag-ing credit at risk to en sure the credit quality of the Institution.
Mr. Chy Sarat
Senior Credit ManagerCredit Department
23
Mr. Moeng Sarong
Deputy Head of Finance Department
Joined Lyhour Microfinance Plc., as Accounting Manager on February 2015 and has been promoted to Deputy Head of Finance on July 2017. Prior to this, he had been working in accounting and finance field for 5 years, mostly with leading MFIs in Cambodia, which grant him with extensive experiences in financial reporting, financial planning and analysis, financial performance management, and Cambodian Taxation. He is holding two bachelor degrees from Norton University in Accounting and English. Furthermore, he has successfully completed 13 out of 14 papers in ACCA program.
Mr. Sok Kimsen
Senior SME Lending Manager Branch Supervision Department
Mr. Sok Kimsen was born in 1988 in Preyveng Province. He gratuated Bache-lor Degree in General Management in 2010 from Build Bright University (BBU) and then in 2016, he obtained Master Degree from Norton Universi-ty(NU) in Business Administration. He has over 8 years working experience in credit operation and people manage-ment. Mr. Sok Kimsen has worked through many positions in microfinance sector such as credit officer, senior credit officer, credit supervisor, branch manager at Angsnoul branch and then moved to Batheay branch as branch manager. Then he was promoted as Seinor SME Lending Manager in March 2017.
24
Org
aniz
atio
n C
hart
25
CH
AIR
MA
N
DC
EO &
CH
IEF
RIS
K O
FFIC
ERC
HIE
F FI
NA
NC
IAL
OFF
ICER
HEA
D O
F R
ISK
AN
D C
OM
PLIA
NC
EH
EAD
OF
FIN
AN
CE
HEA
D O
F A
DM
IN
HEA
D O
F TR
EASU
RY
AU
DIT
CO
MM
ITTE
ER
ISK
OVE
RSI
GH
T C
OM
MIT
TEE
CH
IEF
EXC
UTI
VE O
FFIC
ER
CH
IEF
INTE
RN
AL
AU
DIT
OFF
ICER
HEA
D O
F H
UM
AN
RES
OU
RC
ES
HEA
D O
F IN
FOR
MAT
ION
TEC
HN
OLO
GY
HEA
D O
F C
OM
PAN
Y SE
CR
ETA
RY
DC
EO &
CH
IEF
OPE
RAT
ION
OFF
ICER
HEA
D O
F B
USI
NES
S D
EVEL
OPM
ENT
HEA
D O
F B
RA
NC
H S
UPE
RVIS
ION
HEA
D O
F C
RED
IT
Branch N
etwork
26
Oddar M
eanchey
Banteay Meanchey
Poipet
Siem R
eap
Stung Treng
Preah Vihear
RatanakiriM
ondulkiriKratie
Kampong C
ham
Tboung Khmum
Kampong C
hhnang
Phnom Penh
Kampong Speu
Prey VengKandal
Svay Rieng
Takeo
Shihanuk Village
Koh Kong
Pursat
Kampong Thom
Battam Bang
Pailin
Kep
Kampot
Bakan
Mourng R
ussey
Ratanak M
ondol
Bavil
Head O
ffice
OuR
ussey
Samrang Tong
Kampong Speu
Pea Raing
Tboung Khmum
Kampong C
ham
Cheung Prey
Ratanakiri
Phnom Proek
Batheay
Svay Anthor
BatiKoh Andet
Prey KabasC
hbar Ampov
Kampong Trabek
Ang Snoul
KiriovongPreash Sdach
Office
Note
Operating Area
Target AreaN
on
BattamBang
Tram Kok
Kandal Steung
Human Resources
Lyhour Microfinance Institution Plc. has vital roles to Human Resource develop-ment providing the equal opportunities to all of potential and qualified candidates to compete with no discrimi-nation related to race, religion, or color. As of 31 Dec, 2017, Lyhour strongly contributed the employment of 385 staff that is very encouraging to 95 female office staff. This shows how Lyhour enhances gender.
Thoroughly motivated by our top Senior Management, Lyhour developed policies to comply with Cambodian Labor Law and both financial and non- financial tools to retain our potential staff to feel at ease with friendly working environ-ment. Internal promotion is very consid-erate to all of staff by making sure the fairness and transparency.
For long term sustainability, Lyhour has set up five core values to implement as the following:
•Integrity: Be loyal and honest
•Leadership: Everyone is a leader
•Customer- Focus: We commit to the best service •Accountability: My actions are my responsibilities
•Collaboration: We work as a team to reach our goal
Ly Hour has been gradually growing and expanding its business by a strong team with both management and staff. We implement win-win strategy and develop young leaders to fulfill new vacancies to support the needs. To ensure that our staff is capable enough to hold their jobs, we set up training program with both internal and external providers.HR Department achievements in year 2017 were listed as below:
1.Introduced to HRMIS to manage Staff data.
2.Committed to fair recruitment process.
3.Provided bonus and increment with transparency and fair view.
27
28
29
Risk management plays a very significant part within Ly Hour Microfinance Institution Plc in which the management team is focusing and prioritizing because it’s a catalyst that helps bringing the whole institution towards success as well as maintaining its long term sustainability. Therefore, in order to ensure that there is an effective and efficient risk management, Ly Hour Microfinance Institution Plc uses a key principle to early prevent any unexpected risk from happening.
Technically, to ensure the best practice of risk management framework in place, Ly Hour Microfinance Institution Plc has determined the scope of work/responsibility and segregated it into 3 core components as below arrangement:
(1) Business function: 1st level of risk control consists of auto-controls within the business hierarchy(2) Risk function: 2nd level of risk control via field inspectors and risk analysts by Risk & Compliance Department, who are deployed throughout the organization and (3) Audit function: 3rd level is constituted by the all-encom-passing control mandate of the Internal Audit.
It means that each individual function is independently performing their duties and also accountable for what they have done. Currently,
Ly Hour Microfinance Institution Plc is working on an establishment of some risk management policy including operational risk, financial risk as well as credit risk. In addition to this, to ensure that there is a systematic approach to manage risk and assist the management team to find proper solutions in a timely manner, Ly Hour Microfinance Institution Plc also introduces 4 critical processes to be followed within the institu-tion such as identify /categorize, assess, manage and monitor. Ideally, Risk Department plays an active part in identifying any possible risk involving with staff’s implementation as well as processes and procedures of other relevant departments. After risk is identified then assessment will also be made to under-stand its possibility to incur as well as any impacts that may have. Practically, it requires all the risk including its risk level to be registered into a risk registered tool for a tracking purpose. Ly Hour Microfinance Institution Plc, more importantly, develops an appropriate approach /strategy to resolve and/or reduce such an impact for instance mitigate, reduce, transfer or transform the risk. Last but not least, Ly Hour Microfinance Institution Plc will strictly monitor all the risk to ensure that they have been properly managed and resolved in an effective way and to some extents of new action plans should be taken into account should the risk be still at a high attention.
Risk Management
30
Successful customers in business
Mr. Meas Mak, whose wife is Mrs. Vong Sary, they both live in Popel village, Popel Commune, Ponhea Krek District, and Tbong Khmom Province. He is a pepper and cassava farmer, and he also has a rubber plantation. He has known Ly Hour Microfinance Plc. via our existing customers and Credit officers who went to promote the products and services of Ly Hour Microfinance Plc. in the villages. In the first cycle, Mr. Mak was offered a loan of USD7,000 by Ly Hour Microfinance Plc. and used it to expand a rubber plantation from 70A to 2 hectares. The loan was essential to fully support and help his grow his farm. With the extra yield from his rubber plantation, his family finances have been improved over the last few years. If he has the chance to purchase a piece of land next to his farm, he will consider applying for an additional loan from Ly Hour Microfinance to expand his farm as well. He said his life was much better than before and thanks so much to Ly Hour Microf-inance Plc. for consistent supporting his family. Moreover, he will spread these good words related to the products and services of Ly Hour Microfinance Plc. to his villagers.
31
Mrs. Chhen Sokchea and her husband is Mr. Chun Hat, a taxi driver in Pnov Kert Village, Prey Cha Communt, CherngPrey Distirct, and Kompong Cham Province. She knows Ly Hour Microfinance Plc through our existing customer and credit officers. Before getting the loan from Ly Hour Microfinance Plc, her family was shortage of cash in buying a pick-up truck to transport cassava, rice, and animals’ feed from her clients to earn more wages. However, she decided to borrow USD20,000 to purchase a pick-up truck to support her business operations. After having gotten the loan from Ly Hour Microfinance Plc., she has ability to buy a bigger pick-up truck and can earn more profit than before and has a lot of orders from her clients. Moreover, during the period of getting the loan from Ly Hour Microfinance Plc., her family can save a lot of income and use an addition loan of USD7,000 from Ly Hour Microfinance Plc. to buy another pick-up truck to suit the incremental demands from her clients. She honestly thanks to Ly Hour Microfinance Plc. for providing the loan with her family in order to purchase a pick-up truck. Without loan from Ly Hour Microfinance Plc., she would be not have had everything today.
32
Financial Performance
33
16,164 17,210 18,272 20,288
32,877
39,261
47,527
54,636
3.3%
6.3% 6.0%
10.5%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
-
10,000
20,000
30,000
40,000
50,000
60,000
2014 2015 2016 2017
Total Asset/Shareholders' Equity Vs. Return on Equity
Shareholders's Equity (US$ Thousand) Total Assets (US$ Thousand) Return on Equity (%)
805411,387 12,376 11,333
28,172
34,491
41,002
49,511
0.22%
0.12%
0.25%
0.29%
0.00%
0.05%
0.10%
0.15%
0.20%
0.25%
0.30%
0.35%
0
10000
20000
30000
40000
50000
60000
2014 2015 2016 2017
Active Borrower/Loan Outstanding Vs. PAR 30days
No. of Active Borrowers Loan Outstanding (US$ Thousand) PAR 30days
34
19.5%
21.6%20.5% 20.2%
10.7%11.8% 11.1%
9.6%
5.0%
7.5%
10.0%
12.5%
15.0%
17.5%
20.0%
22.5%
25.0%
2014 2015 2016 2017
Yield Vs. Operating Expense
Yield Operating Expense
FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017
LY HOUR Microfinance Institution Plc.
35
CONTENTS
PageDirectors’ report
Independent auditor’s report
Financial statements:
Balance sheet
Income statement
Statement of changes in equity
Cash flow statement
Notes to the financial statements
APPENDIX: Notes on requirement of the Central Bank’s Prakas *
37 – 39
40 – 42
43
44
45
46
47 - 80
i - vii
* The Appendix does not form part of the audited financial statements.
___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________g
___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
36
DIRECTORS’ REPORT
The Board of Directors (the Directors) hereby submits its report together with the audited financial statements of Ly Hour Microfinance Institution Plc (the Company) for the year ended 31 December 2017.
THE COMPANY
The Company was incorporated as public limited company in the Kingdom of Cambodia under registration number 00001313 dated 06 August 2012 with the Ministry of Commerce. On 02 October 2012, the Company obtained license from the National Bank of Cambodia (the Central Bank) to operate as a micro-fi-nance institution.
PRINCIPAL ACTIVITIES
The Company is principally engaged in providing micro financial services and other related financial services within the scope of micro-finance license in Cambo-dia.
FINANCIAL PERFORMANCE
The financial performance of the Company for the year ended 31 December 2017 is set out in the income statement on page 8 of the financial statements.
SHARE CAPITAL
As at 31 December 2017, the paid-up share capital of the Company is US$16,000,000 (US$1 par value per share). There was no change in shares during the year.
PROVISIONS
There were no material movements to or from provisions during the year other than those disclosed in the financial statements.
BAD AND DOUBTFUL LOANS
Before the financial statements of the Company were drawn up, the 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 bad and doubtful loans, and satisfied themselves that all known bad loans had been written off and that adequate allowance had been made for bad and doubtful loans.
At the date of this report, the Directors are not aware of any circumstances that 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 material extent.
___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
37
ASSETS
Before the financial statements of the Company were drawn up, the Directors took reasonable steps to ensure that any assets that were unlikely to be realised in the ordinary course of business at their values as shown in the accounting records of the Company have been written down to an amount which they might be expect-ed to realise.
At the date of this report, the Directors are not aware of any circumstances that would render the values attributed to the assets in the financial statements of the Company misleading in any material respect.
CONTINGENT AND OTHER LIABILI-TIES
At the date of this report, there is:(a)no charge on the assets of the Company that has arisen since the end of the year that secures the liabilities of any other person; and
(b)no contingent liability in respect of the Company that has arisen since the end of the year other than in the ordinary course of business.
No contingent or other liability of the Company has become enforceable, or is likely to become enforceable within the year of 12 months after the end of the year that, in the opinion of the Directors, will or may have a material effect on the ability of the Company to meet its obligations as and when they become 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 the financial statements of the Company that would render any amount stated in the financial statements misleading in any material respect.
ITEMS OF AN UNUSUAL NATURE
The results of the performance of the Company for the year were not, in the opinion of the Directors, materially 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 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 year in which this report is made.
THE BOARD OF DIRECTORS The members of the Board of Directors during the year and as at the date of this report are:
Oknha Ly Hour
Oknha Ly Sopheark
Mrs. Liao Xi
Mr. Tsai Ching Cheng
Mr. Touk Khy
Mr. Horng Vuthy
Mr. Sok Keoreaksmey
Chairman
Member
Member
Member
Independent member
Independent member
Independent member
38
RESPONSIBILITIES OF THE BOARD OF DIRECTORS IN RESPECT OF THE FINANCIAL STATEMENTS
The Directors are responsible for ensuring that the financial statements are properly drawn up so as to present fairly, in all material respects, the financial position of the Company as at 31 December 2017 and its financial performance and cash flows for the year ended 31 December 2017. In preparing these financial statements, the Directors are required to:
i) adopt appropriate accounting policies that are supported by reasonable and prudent judgements and estimates, and then apply them consistently;
ii) comply with the disclosure requirements and the guidelines issued by the National Bank of Cambodia and Cambodian Accounting Standards or, if there has been any departure from such standards in the interest of fair presenta-tion, ensure that this has been appropriate-ly 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 Compa-ny will continue operations in the foreseea-ble future; and
v) effectively control and direct the Company and be involved in all material decisions affecting its operations and performance and ascertain that such matters 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.
APPROVAL OF THE FINANCIAL STATEMENTS
The accompanying financial statements, together with the notes thereto, present fairly, in all material respects, the financial position of the Company as at 31 December 2017 and its financial performance and cash flows for the year ended 31 December 2017 in accordance with the guidelines issued by the National Bank of Cambodia and Cambodi-an Accounting Standards, were approved by the Board of Directors.
On behalf of the Board of Directors.
________________________ Oknha Ly Hour Chairman
Phnom Penh, Kingdom of CambodiaDate: 19 Mar 2018
39
INDEPENDENT AUDITOR’S REPORT
To the Shareholders of Ly Hour Microfinance Institution Plc.
OUR OPINION In our opinion, the financial statements present fairly, in all material respects, the financial position of Ly Hour Microfi-nance Institution Plc (the Company) as at 31 December 2017, and of their financial performance and cash flows for the year then ended in accordance with the guidelines issued by the National Bank of Cambodia and Cambodian Accounting Standards.
WHAT WE HAVE AUDITED The financial statements comprise: • Balance sheet as at 31 December 2017;• Income statement for the year then ended;• Statement of changes in equity for the year then ended;• Cash flow statement for the year then ended; and• The notes to the financial statements, which include a summary of significant accounting policies
BASIS FOR OPINION
We conducted our audit in accordance with Cambodian International Standards on Auditing (CISAs). 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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. INDEPENDENCE We are independent of the Company accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) and the requirements of Kampuchea Institute of Certified Public Accountant and Auditors’ Code of Ethics for Certified Public Accountants and Auditors (KICPAA Code). We have fulfilled our other ethical responsibilities in accordance with the IESBA Code and ethical requirements of KICPAA Code.
40
OTHER INFORMATION
Management is responsible for the other information. The other information comprises appendix notes on requirement of the Central Bank’s Prakas but does not include the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstat-ed. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE FINANCIAL STATEMENTS
Management is responsible for the preparation and fair presentation of the financial statements in accordance with guidelines issued by the National Bank of Cambodia and Cambodian Accounting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Company’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 manage-ment either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Company’s financial reporting process.
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 CISAs 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 CISAs, we exercise professional judgment and maintain professional scepticism 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 respon-sive 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.
41
• 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 Company’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 Compa-ny’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 Company to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
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.
For PricewaterhouseCoopers (Cambodia) Ltd.
By Lang Hy Partner
Phnom Penh, Kingdom of CambodiaDate: 19 Mar 2018
42
For PricewaterhouseCoopers (Cambodia) L
By Lang Hy
ASSETSCash on handBalance with central bankBalance with other banksLoans to customersOther assetsProperty and equipmentIntangible assetsDeferred tax assets TOTAL ASSETS
LIABILITIES AND EQUITY
LIABILITIESBorrowingsCurrent income tax liabilitiesDeferred tax liabilitiesProvident fundOther liabilities
TOTAL LIABILITIES
EQUITYShare capitalLegal reserveRetained earnings
TOTAL EQUITY
TOTAL LIABILITIES AND EQUITY
BALANCE SHEETAS AT 31 DECEMBER 2017
KHR’000
200,1343,240,116
13,089,157165,527,076
6,356,647 2,602,589
852,28778,931
191,946,937
113,551,2061,077,847
-943,879
2,610,365
118,183,297
64,592,000458,583
8,713,057
73,763,640
191,946,937
US$
49,575802,605
3,242,29841,002,4961,574,596
644,684211,11919,552
47,546,925
28,127,621266,992
-233,807646,610
29,275,030
16,000,000113,595
2,158,300
18,271,895
47,546,925
Note
45678910
1121
1213
1415
31 December 2016
KHR’000
1,177,1573,248,7318,920,769
199,874,676 4,437,987 1,863,604
744,338-
220,267,262
132,981,9571,626,814
35,2711,200,551
2,542,462
138,387,055
64,592,000864,411
16,423,796
81,880,207
220,267,262
US$
291,592804,739
2,209,75249,510,695 1,099,328
461,631184,379
-
54,562,116
32,940,787402,976
8,737297,387
629,790
34,279,677
16,000,000214,122
4,068,317
20,282,439
54,562,116
31 December 2017
43
INCOME STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2017
Interest incomesInterest expensesNet interest income
Fee and commission incomeFee and commission expenseNet fee and commission income
Other operating incomesTotal operating income Personnel expensesDepreciation and amortisation chargesGeneral and administrative expensesNet foreign exchange lossProfit before provision for loan losses
Provision for loan losses
Profit before income tax
Income tax expenses
Net profit for the year
KHR’000
31,019,057(8,293,254)22,725,803
314,486(504,556)(190,070)
308,35822,844,091
(9,568,013)(1,265,285)(6,128,659)
(47,015)5,835,119
(363,745)
5,471,374
(1,184,464)
4,286,910
US$
7,683,690(2,054,311)
5,629,379
77,901(124,983)(47,082)
76,3835,658,680
(2,370,080)(313,422)
(1,518,122)(11,646)
1,445,410
(90,103)
1,355,307
(293,402)
1,061,905
Note
1617
181920
7(a)
21
31 December 2016
KHR’000
34,060,706 (9,829,183)24,231,523
2,909,785 (524,604)
2,385,181
437,029 27,053,733
(10,086,356)(1,236,190)(6,366,470)1,005,544
10,370,261
(170,543)
10,199,718
(2,083,153)
8,116,565
US$
8,437,133 (2,434,774)6,002,359
720,779
(129,949) 590,830
108,256
6,701,445
(2,498,478) (306,215)
(1,577,030)249,082
2,568,804
(42,245)
2,526,559
(516,015)
2,010,544
31 December 2017
44
For the year ended 31 December 2016
Balance as at 01 January 2016 Transfer to legal reserveNet profit for the year
Balance as at 31 December 2016
In KHR’000 equivalent
For the year ended 31 December 2017
Balance as at 01 January 2017 Transfer to legal reserveNet profit for the year
Balance as at 31 December 2017
In KHR’000 equivalent
STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 DECEMBER 2017
US$
17,209,990-
1,061,905
18,271,895
73,763,640
18,271,895 -
2,010,544
20,282,439
81,880,207
US$
1,149,490(53,095)
1,061,905
2,158,300
8,713,057
2,158,300 (100,527)
2,010,544
4,068,317
16,423,796
US$
60,50053,095
-
113,595
458,583
113,595 100,527
-
214,122
864,411
US$
16,000,000--
16,000,000
64,592,000
16,000,000 - -
16,000,000
64,592,000
Sharecapital
RetainedearningsLegal reserve Total
45
CASH FLOW STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2017
Cash flows from operating activitiesCash used in operating activities Cash flows from investing activitiesPurchases of property and equipmentProceed from disposal of property and equipmentNet cash used in investing activities Cash flows from financing activitiesProceeds from borrowingsRepayments of borrowingsNet cash generated from financing activities Net increase in cash and cash equivalentsCash and cash equivalents at the beginning of the yearTranslation differences
Cash and cash equivalents at end of the year
KHR’000
(18,785,384)
(666,141)
35,170(630,971)
81,345,550(53,348,378)
27,997,172
8,580,817
4,734,186(15,196)
13,299,807
US$
(4,653,303)
(165,009)
8,712(156,297)
20,150,000(13,214,857)
6,935,143
2,125,543
1,168,935-
3,294,478
Note
22
9
23
31 December 2016
KHR’000
(22,288,314)
(393,684)
68,499 (325,185)
101,722,308(82,291,559)
19,430,749
(3,182,750)
13,299,807-
10,117,057
US$
(5,521,009)
(97,519)
16,968 (80,551)
25,197,500(20,384,335)
4,813,165
(788,395)
3,294,478-
2,506,083
31 December 2017
46
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
1. BACKGROUND INFORMATION
Ly Hour Microfinance Institution Plc (the Company) was incorporated as public limited company in the Kingdom of Cambodia under registration number 00001313 dated 06 August 2012 with the Ministry of Commerce. On 02 October 2012, the Company obtained license from the National Bank of Cambodia (the Central Bank) to operate as a micro-fi-nance institution.
The Company is principally engaged in providing micro financial services and other related financial services within the scope of micro-finance license in Cambo-dia.
The registered office of the Company is located at No. 85-86-87-88, Kim Ilsong Boulevard (289), Sangkat Boeng Kak II, Khan Toul Kork, Phnom Penh, Kingdom of Cambodia.
The financial statements were authorised by the Board of Directors on 19 March 2018.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consist-ently applied to all the years presented, unless otherwise stated.
2.1 Basis of preparation
The Company’s financial statements have been prepared using the historical cost convention, in accordance with the Cambodian Accounting Standards (CAS) and guidelines of the Central Bank. In applying CAS, the Company also applies Cambodian International Financial Reporting Standard (CIFRS) 7: Financial Instruments: Disclosures.
The accounting principles applied may differ from generally accepted accounting princi-ples adopted in other countries and jurisdictions. The accompanying financial statements are therefore not intended to present the financial position and results of operations and cash flows in accordance with jurisdictions other than the Cambodia. Consequently, these financial statements are addressed only those who are informed about Cambodian accounting principles, procedures and practices.
The preparation of financial statements in accordance with CAS and the guidelines of the Central Bank requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting year. Although these estimates are based on management’s best knowledge of current events and actions, actual results may ultimately differ from those estimates. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 3.
2.2 New financial reporting framework
On 28 August 2009, the National Accounting Council of the Ministry of Economy and Finance (“the National Accounting Council”) announced the adoption of Cambodian International Financial Reporting Standards (CIFRS) which are based on all standards published by the International Accounting Standard Board (IASB), including the related interpretations and amendments. Public accountable entities are required to prepare their financial statements in accordance with CIFRS for accounting year beginning on or after 1 January 2012.
Circular 058 MoEF.NAC dated 24 March 2016 issued by the National Accounting Council of the Ministry of Economy and Finance allowed banks and financial institu-tions to delay adoption of CIFRS until years beginning on or after 1 January 2019.
CAS, the current accounting standard used, is different to CIFRS in many areas. Hence, the adoption of CIFRS will have some impacts on the financial statements of the Compa-ny.
2.3 Foreign currencies (a) Functional and presentation currency
Items included in the financial statements are measured using the currency of the prima-ry economic environment in which the Company operates (the functional currency). The financial statements are presented in US dollars (US$), which is the Company’s functional and presentation currency.
(b) Transactions and balances
Transactions in currencies other than US$ are translated into US$ at the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in currencies other than US$ at the year-end exchange rates, are recognised in the income statement. 47
(c) Presentation in Khmer Riel
For the sole regulatory purpose of comply-ing with Prakas No. B7-07-164 dated 13 December 2007 of the Central Bank, a translation into Khmer Riel (KHR) is provided for the balance sheet, the income statement, the statement of changes in equity, the cash flow statement and the notes to the financial statements as at and for the year ended 31 December 2017 using the closing official exchange rate published by the Central Bank as at the reporting date, which was US$1 equal to KHR 4,037 (31 December 2016: US$1 equal to KHR 4,037). Such transla-tion amounts are unaudited and should not be construed as representations that the US$ amounts represent, or have been or could be converted into KHR at that or any other rate.
2.4 Cash and cash equivalents
For the purposes of the cash flow statement, cash and cash equivalents comprise balances with original maturity of three months or less from the date of acquisition, including cash on hand, the non-restricted balances with the Central Bank and balances with banks and other financial institutions.
2.5 Loans to customers
All loans to customers are stated in the balance sheet at outstanding principal, less any amounts written off and provision for loan losses.
Loans are written off when there is no realistic prospect of recovery. Recovery of loans previously written-off or provided for are recognised in the income statement.
2.6 Provision for loan losses
The Company follows the mandatory credit classification and provisioning as required by the Central Bank’s Prakas B7-02-186 dated 13 September 2002.
The Prakas requires microfinance institutions to classify their loan portfolio into the following four classifications based on the number of days past due of the principal and/or interest repayment and ensure that the minimum mandatory level of specific provisioning, unless other information is available to indicate worsening.
The table below shows loan classifications and minimum provisioning requirements:
(*) This is additional provision provided by the Company effective from 30 December 2016.
ClassificationShort-term loans (less than one year)
Standard
Substandard
Doubtful
Loss
Long-term loans (more than one year)
Standard
Substandard
Doubtful
Loss
0%
90%
70%
0%
0%
90%
70%
0%
0%
10%
30%
100%
0%
10%
30%
100%
Definition
Good financial condition and punctual payment of principal and interestSome payments of principal and/or interest are overdue by 30 days or moreSome payments of principal and/or interest are overdue by 60 days or more Some payments of principal and/or interest are overdue by 90 days or more
Good financial condition and punctual payment of principal and interestSome payments of principal and/or interest are overdue by 30 days or moreSome payments of principal and/or interest are overdue by 180 days or more Some payments of principal and/or interest are overdue by 360 days or more
Minimumprovision by
National Bankof Cambodia
Additionalprovision by the Company
(*)
48
2.7 Property and equipment
Property and equipment are stated at historical cost less accumulated deprecia-tion and impairment loss, if any. Histori-cal cost includes expenditure that is directly attributable to the acquisition of the items.
Subsequent expenditure relating to an item of property and equipment are included in the asset’s carrying amount or recognised as an asset, as appropriate, only when it is probable that the future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the year in which they are incurred.
Depreciation of property and equipment is charged to the income statement on a straight-line basis over the estimated useful lives of the individual assets at the following annual rates:
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.
Gains or losses on disposals are determined by comparing proceeds with carrying amount and recognised in the income statement.
Fully depreciated property and equipment are retained in the financial statements until they are disposed of or written-off.
2.8 Intangible assets
Intangible assets consist of computer software and are stated at cost less accumulated amortisation and accumulated impairment losses. Acquired computer software is capital-ised on the basis of the cost incurred to acquire the specific software and bring it into use. Intangible assets are amortised over their estimated useful lives of ten years using the straight-line method.
2.9 Impairment of non-financial assets
Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation or depreciation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use.
Any impairment loss is charged to income statement in the year in which it arises. Reversal of impairment loss is recognised in the income statement to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation and amortisation, had no impairment loss been recognised.
2.10 Borrowings
Borrowings are stated at the amount of the principal outstanding.
2.11 Provisions
Provisions are recognised when the Company has a present legal or constructive obliga-tion as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated.
When there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
Provisions are re-measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognised as interest expense.
2.12 Interest income and expenses
Interest income on loans to customers, balances with the Central Bank and balances with banks are recognised on an accrual basis. Where a loan becomes non-performing, the recording of interest income on loans to customers is suspended until it is realised on a cash basis.
Interest expenses are recognised on an accrual basis.
Leasehold improvements
Motor vehicles
Office equipment
Computer equipment
Furniture and fittings
5 years
4 years
4 years
3-5 years
4 years
Useful life
49
2.13 Fee and commission income
Fees and commissions represent for loan processing fees that are recognised as income when loan is disbursed.
2.14 Leases
Leases in which a significant portion of risks and rewards of ownership of assets are retained by the leaser are classified as operating leases. Payments made under operating leases are charged to the income statement on a straight-line basis over the year of the leases.
2.15 Provident funds
The Company provides its employees with benefits under the staff provident funds policy which is contributed by employees and the Company.
i) Employees’ contribution
The Company withhold 5% of employees’ monthly salary effective from 1 January 2015. The Company also provides interest on this employees’ contribution at 8% per annum and will pay to employees upon resignation of their employment. The interest on employees’ contribution is accrued and charged to the income statement on monthly basis.
ii) Company’s contribution
The Company provides provident fund to employees upon resignation of their employment based on the following rates and conditions. This provident fund is accrued and charged to the income statement on monthly basis.
2.16 Current and deferred income tax
The current income tax charge is calculated on the basis of the tax law enacted or substan-tively enacted at the reporting date in country where the Company operates and generates taxable income.
Deferred tax is provided using the balance sheet liability method, providing for tempo-rary differences between the carrying amounts of assets and liabilities for financial report-ing purposes and the amounts used for taxation purposes. Deferred tax is measured at the tax rates expected to be applied to temporary differences when they reverse, based on laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets and they relate to income taxes levied by the same tax authority on the same taxable entity.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
Less than 18 months
From 18 months to three years
From three years to five years
From five years to ten years
More than ten years
0%
50% of accumulated 5% employee’s contribution
100% of accumulated 5% employee’s contribution
150% of accumulated 5% employee’s contribution
200% of accumulated 5% employee’s contribution
Years of services Payable
50
2.17 Related party transactions
Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions, or where the Company and the other party are subject to common control or significant influence. Related parties may be individuals or corporate entities and include close family members of any individual considered to be a related party.
In accordance with the Law on Banking and Financial Institutions, related parties are defined as parties who hold, directly or indirectly, at least 10% of the capital of the Company or voting rights and include any individual who participates in the administration, direction, management or internal control of the Company.
3. CRITICAL ACCOUNTING ESTIMATES, ASSUMPTIONS AND JUDGEMENTS
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Company makes estimates and judgements concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and judgements that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
(a) Impairment losses on loans to customers
The Company is required to follow the mandatory credit classification and provisioning in accordance with the Prakas No. B7-02-186 dated 13 September 2002 on the classifica-tion and provisioning for bad and doubtful debts. The Central Bank requires microfi-nance institutions to classify their loan portfolios into four classes and ensure that the minimum mandatory level of specific provision is made depending on the classification concerned and regardless of the assets (except for cash) pledged as collateral. For the purpose of loan classification, the Company is required to take into account the borrow-er’s historical payment experience and financial condition.
(b) Taxes
Taxes are calculated on the basis of current interpretations of the tax regulations. Howev-er, these regulations are subject to periodic variation and the ultimate determination of tax expenses will be made following inspection by the General Department of Taxation.
Where the final tax outcome is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the year in which such determination is made.
51
4. CASH ON HAND
5. BALANCES WITH THE CENTRAL BANK
(i) Capital guarantee
In compliance with Prakas B7-06-209 dated 13 September 2006 on the licensed microfinance institutions, the Company is required to maintain a statutory capital deposit with the Central Bank at 5% of paid-up capital. This deposit is refundable should the Company voluntarily liquidate and bears annual interest rate of 0.36% (2016: 0.20% per annum).
(ii) Current accounts
Current accounts are non-interest bearing.
6. BALANCES WITH OTHER BANKS
Current accounts are non-interest bearing. Annual interest rates on savings accounts are between 1% and 2% (2016: between 1% and 2% per annum).
Head officeBranches
KHR’000
123,46476,670
200,134
US$
30,58318,992
49,575
31 December 2016
KHR’000
48,0561,129,101
1,177,157
US$
11,904279,688
291,592
31 December 2017
Capital guarantee (i)Current accounts (ii)
KHR’000
3,229,60010,516
3,240,116
US$
800,0002,605
802,605
31 December 2016
KHR’000
3,229,60019,131
3,248,731
US$
800,0004,739
804,739
31 December 2017
Local banks:Current accountsSavings accounts
KHR’000
11,385,1681,703,989
13,089,157
US$
2,820,205422,093
3,242,298
31 December 2016
KHR’000
8,437,136483,633
8,920,769
US$
2,089,952119,800
2,209,752
31 December 2017
52
7. LOANS TO CUSTOMERS
(a) Provision for loan lossesThe movements in provision for loan losses are as follows:
(b) Analysis by classification
Individual loans: Instalment End of term Staff loansGroup loans: Instalment End of term
Provision for loan losses: Provision required by National Bank of CambodiaAdditional provision provided by the Company
Net loans to customers
KHR’000
164,077,926 1,359,024182,836
1,667321,910
165,943,363
(192,040)
(224,247)(416,287)
165,527,076
US$
40,643,529 336,64245,290
41379,740
41,105,614
(47,570)
(55,548)(103,118)
41,002,496
31 December 2016
KHR’000
198,655,0531,608,264
149,163
-49,025
200,461,505
(295,815)
(291,014)(586,829)
199,874,676
US$
49,208,584398,38136,949
-12,144
49,656,058
(73,276)
(72,087)(145,363)
49,510,695
31 December 2017
At the beginning of the year Provision during the year Translation differences At the end of the year
KHR’000
(52,711)(363,746)
170
(416,287)
US$
(13,015)(90,103)
-
(103,118)
31 December 2016
KHR’000
(416,287)(170,542)
-
(586,829)
US$
(103,118)(42,245)
-
(145,363)
31 December 2017
Standard loans: Secured UnsecuredSub-standard loans: Secured Unsecured Doubtful loans: Secured Unsecured Loans loss: Secured Unsecured
KHR’000
165,527,075 -
199,432 -
63,938-
152,918-
165,943,363
US$
41,002,496 -
49,401 -
15,838-
37,879-
41,105,614
31 December 2016
KHR’000
199,874,678-
169,352-
197,991-
219,484-
200,461,505
US$
49,510,696-
41,950-
49,044-
54,368
-
49,656,058
31 December 2017
53
(c) Analysis by maturity
(d) Analysis by currency
(e) Analysis by industry
(f) Analysis by residency status
Less than one monthOne month but less than three monthsThree months but less than one yearOne year but less than five yearsMore than five years
KHR’000
5,874,352 14,771,835 49,757,180 94,416,127 1,123,869
165,943,363
US$
1,455,128 3,659,112
12,325,286 23,387,696
278,392
41,105,614
31 December 2016
KHR’000
5,333,20813,691,91347,323,914
133,047,5381,064,932
200,461,505
US$
1,321,0823,391,606
11,722,54532,957,032
263,793
49,656,058
31 December 2017
US Dollars Khmer Riel Thai Baht
KHR’000
140,122,40418,072,1557,748,804
165,943,363
US$
34,709,5384,476,6301,919,446
41,105,614
31 December 2016
KHR’000
168,836,13220,593,64911,031,724
200,461,505
US$
41,822,1785,101,2262,732,654
49,656,058
31 December 2017
Agriculture Trade and commerceHousehold/familyServices Construction Transportation Other categories
KHR’000
51,304,82816,870,99084,685,2687,066,4331,516,4383,888,987
610,419
165,943,363
US$
12,708,6524,179,091
20,977,2771,750,417
375,635963,336151,206
41,105,614
31 December 2016
KHR’000
53,974,74121,532,696
110,425,5398,030,994
849,6635,322,135
325,737
200,461,505
US$
13,370,0135,333,836
27,353,3661,989,347
210,4691,318,339
80,688
49,656,058
31 December 2017
Residents
KHR’000
165,943,363
165,943,363
US$
41,105,614
41,105,614
31 December 2016
KHR’000
200,461,505
200,461,505
US$
49,656,058
49,656,058
31 December 2017
54
9. PROPERTY AND EQUIPMENT
For the year ended 31 December 2017CostAt 01 January 2017AdditionsTransfersDisposals
At 31 December 2017
Accumulated depreciationAt 01 January 2017Depreciation charge Disposals
At 31 December 2017
Net book value
In KHR’ 000 equivalent
US$
1,323,14397,519
-(38,346)
1,382,316
678,459279,475(37,249)
920,685
461,631
1,863,604
US$
7,82215,896
(22,037)-
1,681
---
-
1,681
6,786
US$
225,500--
(32,000)
193,500
151,43340,930
(30,903)
161,460
32,040
129,345
US$
284,07445,173
-(2,249)
326,998
169,61763,986(2,249)
231,354
95,644
386,115
TotalWork inprogress
Motorvehicles
Computerequipment
US$
137,5282,686
-(2,547)
137,667
66,03930,286(2,547)
93,778
43,889
177,180
Furnitureand fittings
US$
281,60112,124
- (1,550)
292,175
139,62662,517(1,550)
200,593
91,582
369,717
Officeequipment
US$
386,61821,640
22,037 -
430,295
151,74481,756
-
233,500
196,795
794,461
Leaseholdimprovements
For the year ended 31 December 2016CostAt 01 January 2016AdditionsTransfersDisposals
At 31 December 2016
Accumulated depreciationAt 01 January 2016Depreciation charge Disposals
At 31 December 2016
Net book value
In KHR’ 000 equivalent
US$
1,194,638165,009
-(36,504)
1,323,143
416,915286,609(25,065)
678,459
644,684
2,602,589
US$
1,8317,822
(1,831)-
7,822
---
-
7,822
31,578
US$
230,76521,100
-(26,365)
225,500
114,43453,885
(16,886)
151,433
74,067
299,008
US$
265,84619,806
-(1,578)
284,074
103,89766,733(1,013)
169,617
114,457
462,063
TotalWork inprogress
Motorvehicles
Computerequipment
US$
117,04520,483
--
137,528
34,44531,594
-
66,039
71,489
288,601
Furnitureand fittings
US$
255,35528,442
-(2,196)
281,601
77,37164,451(2,196)
139,626
141,975
573,153
Officeequipment
US$
323,79667,3561,831
(6,365)
386,618
86,76869,946(4,970)
151,744
234,874
948,186
Leaseholdimprovements
56
10. INTANGIBLE ASSETS
For the year ended 31 December 2017CostAt 01 January 2017Additions
At 31 December 2017
Accumulated depreciationAt 01 January 2017Amortisation charge
At 31 December 2017
Net book value
In KHR’ 000 equivalent
For the year ended 31 December 2016CostAt 01 January 2016Additions
At 31 December 2016
Accumulated depreciationAt 01 January 2016Amortisation charge
At 31 December 2016
Net book value
In KHR’ 000 equivalent
267,386-
267,386
56,26726,740
83,007
184,379
744,338
267,386-
267,386
29,45426,813
56,267
211,119
852,287
US$
Net book value 184,379
Net book value 211,119
Computersoftware
57
Related parties: Key management Individual
Banks and financial institutions: ACLEDA Bank Plc. Advanced Bank of Asia Limited Canadia Bank Plc. First Commercial bank Sathapana Bank Plc. Phillip Bank Plc. Union Commercial Bank Plc. Taiwan Cooperative Bank Guevoura Fund LTD Arbor FS LTD Wallberg Invest S.A
KHR’000
259,224
807,400
1,066,624
9,527,320 4,709,835
24,370,336 43,397,750 8,074,000 6,257,350
- 9,083,241 4,037,000 2,018,500 1,009,250
112,484,582
113,551,206
US$
64,212
200,000
264,212
2,360,000 1,166,667 6,036,744
10,750,000 2,000,000 1,550,000
- 2,249,998 1,000,000
500,000 250,000
27,863,409
28,127,621
31 December 2016
KHR’000
242,220
2,422,200
2,664,420
12,151,3702,018,500
25,752,50742,994,0508,746,8353,835,150
20,185,0008,074,0004,037,0002,018,500
504,625
130,317,537
132,981,957
US$
60,000
600,000
660,000
3,010,000500,000
6,379,12010,650,0002,166,667
950,0005,000,0002,000,0001,000,000
500,000125,000
32,280,787
32,940,787
31 December 2017
11. BORROWINGS
(a) By relationship
Borrowings from banks and financial institutions are unsecured.
(b) By currency
US dollarKhmer riel
KHR’000
93,217,87020,333,336
113,551,206
US$
23,090,8775,036,744
28,127,621
31 December 2016
KHR’000
107,229,45025,752,507
132,981,957
US$
26,561,6676,379,120
32,940,787
31 December 2017
58
(c) By maturity
(d) Interest rate (per annum)
12. PROVIDENT FUND
Provident fund movement:
13. OTHER LIABILITIES
All of the above liabilities are expected to be settled within one year after the year-end.
Less than one yearMore than one year
KHR’000
45,569,006 67,982,200
113,551,206
US$
11,287,839 16,839,782
28,127,621
31 December 2016
KHR’000
2,664,420130,317,537
132,981,957
US$
660,00032,280,787
32,940,787
31 December 2017
Opening balanceEmployer's contributionEmployee's contributionInterest earned on savingsInterest paymentPayments during the period Closing balance
KHR’000
335,043330,579373,69435,758(4,361)
(126,834)
943,879
US$
82,99381,88892,5678,857
(1,080)(31,418)
233,807
31 December 2016
KHR’000
943,87943,696
400,93956,679
(618)(244,024)
1,200,551
US$
233,80710,82499,31614,040
(153)(60,446)
297,387
31 December 2017
Interest payablesAccrued expensesOther payablesOther tax payable
KHR’000
559,464696,419
1,212,073142,409
2,610,365
US$
138,584172,509300,24135,276
646,610
31 December 2016
KHR’000
649,856511,980
1,254,042 126,584
2,542,462
US$
160,975126,822
310,637 31,356
629,790
31 December 2017
US dollarKhmer riel
31 December 2016
6.15% - 9.50%9.00% - 10.00%
6.03%-9.41%9.00%-10.00%
31 December 2017
59
ShareholdersOknha Ly HourOknha Ly SophearkMrs. Liao XiMr. Tsai Ching Cheng
KHR’000
16,793,92016,148,00016,148,00015,502,080
64,592,000
US$
4,160,0004,000,0004,000,0003,840,000
16,000,000
31 December 2016
KHR’000
16,793,92016,148,00016,148,00015,502,080
64,592,000
US$
4,160,0004,000,0004,000,0003,840,000
16,000,000
31 December 2017
Loans to customersBalance with the Central BankBalances with other banks
KHR’000
30,980,6536,468
31,936
31,019,057
US$
7,674,1771,6027,911
7,683,690
31 December 2016
KHR’000
34,043,940 6,459
10,307
34,060,706
US$
8,432,980 1,600 2,553
8,437,133
31 December 2017
ShareholdersOknha Ly HourOknha Ly SophearkMrs. Liao XiMr. Tsai Ching Cheng
# of Shares
4,160,0004,000,0004,000,0003,840,000
16,000,000
Ownership
26%25%25%24%
100%
31 December 2016
# of Shares
4,160,0004,000,0004,000,0003,840,000
16,000,000
Ownership
26%25%25%24%
100%
31 December 2017
14. SHARE CAPITAL
The total authorised number of shares of the Company as at 31 December 2017 was 16,000,000 shares with a par value of US$1 per share. All authorised shares have been issued and fully paid up.
Ownership and number of shares are presented as below:
15. LEGAL RESERVE
The legal reserve, as stated in the Company’s memorandum of article and association, is maintained by allocating 5% of the Company’s annual net profit after deduction of prior year’s losses. This allocation shall cease when the total legal reserve reached 10% of the Compa-ny’s registered capital.
16. INTEREST INCOME
60
17. INTEREST EXPENSES
18. PERSONNEL EXPENSES
19. DEPRECIATION AND AMORTISATION CHARGES
Borrowings: Banks and financial institutions Individual Related parties
KHR’000
8,177,041115,147
1,066
8,293,254
US$
2,025,52428,523
264
2,054,311
31 December 2016
KHR’000
9,641,583 187,600
-
9,829,183
US$
2,388,30446,470
-
2,434,774
31 December 2017
Salary and wages expensesOther benefitsProvident fund
KHR’000
8,819,109380,080 368,824
9,568,013
US$
2,184,57094,149 91,361
2,370,080
31 December 2016
KHR’000
9,569,159 412,892 104,305
10,086,356
US$
2,370,364102,27725,837
2,498,478
31 December 2017
Depreciation charges (note 9)Amortisation charges (note 10)
KHR’000
1,157,041108,244
1,265,285
US$
286,60926,813
313,422
31 December 2016
KHR’000
1,128,241 107,949
1,236,190
US$
279,47526,740
306,215
31 December 2017
61
Income tax expense: Current income tax Deferred tax
KHR’000
1,384,554 (200,090)
1,184,464
US$
342,966 (49,564)
293,402
31 December 2016
KHR’000
1,968,950114,203
2,083,153
US$
487,72628,289
516,015
31 December 2017
Rental expensesTransportation costsRepair and maintenanceUtilitiesOffice supplies and equipmentCommunicationsLoan losses written offLicense feesProfessional fees(Gain)/loss on assets disposalOther expenses
KHR’000
2,197,2301,500,819
386,438295,440323,335248,461
-135,873167,57211,009
862,482
6,128,659
US$
544,273371,76695,72473,18380,09361,546
-33,65741,5092,727
213,644
1,518,122
31 December 2016
KHR’000
2,279,3751,515,219
398,678377,128337,885258,316173,543148,210133,237(64,067)808,946
6,366,470
US$
564,621375,333
98,75693,41883,69763,98742,98836,71333,004
(15,870)200,383
1,577,030
31 December 2017
As at the beginning of the yearCurrent income tax expenseIncome tax paid
As at the end of the year
KHR’000
977,8541,384,554
(1,284,561)
1,077,847
US$
242,223342,966
(318,197)
266,992
31 December 2016
KHR’000
1,077,8471,968,950
(1,419,983)
1,626,814
US$
266,992487,726
(351,742)
402,976
31 December 2017
20. GENERAL AND ADMINISTRATIVE EXPENSES
21. INCOME TAX EXPENSES
(a) Current income tax liabilities
62
(b) Reconciliation between accounting profit and income tax expense
Under the Cambodian tax regulations, the Company is subject to 20% Income Tax .
Profit before income tax
Tax calculated at a rate of 20%
Tax effects of reconciling items:Expenses not deductible for tax purposes
KHR’000
5,471,374
1,094,275
90,189
1,184,464
US$
1,355,307
271,061
22,341
293,402
31 December 2016
KHR’000
10,199,718
2,039,944
43,209
2,083,153
US$
2,526,559
505,312
10,703
516,015
31 December 2017
63
Cash on hand (note 4)Balances with the Central Bank Current accounts (note 5)Balances with other banks: Current accounts (note 6) Savings deposits (note 6)
KHR’000
200,134
10,516
11,385,1681,703,989
13,299,807
US$
49,575
2,605
2,820,205422,093
3,294,478
31 December 2016
KHR’000
1,177,157
19,131
8,437,136483,633
10,117,057
US$
291,592
4,739
2,089,952119,800
2,506,083
31 December 2017
Profit before income taxAdjustments for: Provision for loan losses (note 7) Depreciation and amortisation (note 9 and 10) (Gain)/loss on disposals of property and equipment Net interest incomeOperating loss before changes in working capital
Change in working capital:Loans to customersOther assetsProvident fundOther liabilitiesCash used in operations
Interest received Interest paid Income tax paid
Net cash flow used in operating activities
KHR’000
5,471,374
363,746
1,265,285
11,008(22,725,803)
(15,614,390)
(26,651,224)1,150,404
608,836371,444
(40,134,930)
30,720,569(8,086,462)(1,284,561)
(18,785,384)
US$
1,355,307
90,103
313,422
2,727(5,629,379)
(3,867,820)
(6,601,740)284,965 150,81492,010
(9,941,771)
7,609,752(2,003,087)
(318,197)
(4,653,303)
31 December 2016
KHR’000
10,199,718
170,543
1,236,190
(64,067)(24,231,523)
(12,689,139)
(34,518,142)1,937,732
256,672 (158,295)
(45,171,172)
34,041,631 (9,738,790)(1,419,983)
(22,288,314)
US$
2,526,559
42,245
306,215
(15,870)(6,002,359)
(3,143,210)
(8,550,444)479,993 63,580
(39,211)(11,189,292)
8,432,408 (2,412,383)
(351,742)
(5,521,009)
31 December 2017
22. NET CASH FLOW USED IN OPERATING ACTIVITIES
23. CASH AND CASH EQUIVALENTS
64
24. RELATED PARTY TRANSACTIONS AND BALANCES
The Company entered into a number of transactions with related parties in the normal course of business. The volumes of related-par-ty transactions, outstanding balances at the year end, and related expense and income for the year are as follows:
(a) Related parties and relationship
The related parties of, and their relationship with the Company are as follows:
(b) Due to related party balances and its transactions
Relationship
Shareholders
Related company
Key management personnel
Related party
Oknha Ly Hour – 26%Oknha Ly Sopheark – 25%Mrs. Liao Xi – 25%Mr. Tsai Ching Cheng – 24%(including their closed family members)
Entity under the same ultimate shareholders
Chief Executive Officer (CEO), Chief Operating Officer (COO), Chief Risk Officer (CRO), Chief Financial Officer (CFO) and Chief Internal Audit Officer (CIAO) (includ-ing their closed family members).
Key management (note 11,a)
KHR’000
259,224
US$
64,212
31 December 2016
KHR’000
242,220
US$
60,000
31 December 2017
Interest expenses
KHR’000
25,210
US$
6,245
31 December 2016
KHR’000
19,380
US$
4,791
31 December 2017
65
Amount due from fellow subsidiary
KHR’000
2,243,498
US$
555,734
31 December 2016
KHR’000
214,652
US$
53,171
31 December 2017
Other income: Fellow subsidiary (office rental income)
Expenses:Fellow subsidiary (staff insurance expense)Fellow subsidiary (car rental expense)
KHR’000
199,832
108,967266,054
375,021
US$
49,500
26,99265,904
92,896
31 December 2016
KHR’000
242,220
103,178315,819
418,997
US$
60,000
25,55878,231
103,789
31 December 2017
Key management personnel Salaries and bonuses Provident fund
KHR’000
1,663,28886,778
1,750,066
US$
412,01121,496
433,507
31 December 2016
KHR’000
1,601,377242,281
1,843,658
US$
396,67560,015
456,690
31 December 2017
375,02192,896418,997103,789
1,750,066433,5071,843,658456,690
Interest income
KHR’000
144,860
US$
35,883
31 December 2016
KHR’000
-
US$
-
31 December 2017
(c) Due from related party balances and its transactions
(d) Transactions with related party during the year
(e) Key management personnel compensation
66
25. COMMITMENTS
a) Loan commitments
The Company had the contractual amounts of the Company’s off-balance sheet financial instruments that commit it to extend credit to customers as follows:
b) Operating lease commitments – The Company as lessee
These operating leases mainly relate to the office rental of head office and its branches. Where the Company is the lessee, the future minimum lease payments under non-cancellable operating leases are as follows:
c) Guarantor
Ly Hour Leasing PLC, a related party which is under the same shareholder, signed loan facility agreements with commercial banks and Ly Hour Microfinance Institution Plc acts as guarantor. The details are as follows:
Management expects no significant loss from being as guarantor of the above arrangement because they believe that Ly Hour Leasing PLC will fulfil their obligation given the current financial position and financial performance of the company.
Unused portion of loans Short-term loans Long-term loans
KHR’000
-708,921
708,921
US$
-175,606
175,606
31 December 2016
KHR’000
3,896818,005
821,901
US$
965202,627
203,592
31 December 2017
Not later than one yearLater than one year and not later than five yearsLater than five years
KHR’000
1,690,510
6,929,0066,079,912
14,699,428
US$
418,754
1,716,3751,506,047
3,641,176
31 December 2016
KHR’000
1,756,164
6,864,1804,388,570
13,008,914
US$
435,017
1,700,3171,087,087
3,222,421
31 December 2017
Period of term loanPrincipal amountDate of facility agreementBorrowerGuarantor
Advanced Bank of Asia Limited
36 monthsUS$ 1,000,000
23 May 2016Ly Hour Leasing PLCLy Hour Microfinance
Institution Plc
Phillip Bank Plc
36 months US$ 1,000,00004 August 2016
Ly Hour Leasing PLCLy Hour Microfinance
Institution Plc
67
Financial assetsCash on handBalance with central bankBalance with other banksLoans to customersOther assetsTotal financial assets
Financial liabilitiesBorrowingsOther liabilitiesTotal financial liabilities
Net financial assets
KHR’000
200,13410,516
13,089,157165,527,076
4,074,641 182,901,524
113,551,2062,766,475
116,317,681
66,583,843
US$
49,5752,605
3,242,29841,002,4961,009,324
45,306,298
28,127,621685,280
28,812,901
16,493,397
31 December 2016
KHR’000
1,177,1573,248,731 8,920,769
199,871,099 4,437,987
217,655,743
132,981,9572,542,462
135,524,419
82,134,901
US$
291,5924,739
2,209,75249,509,809 1,099,328
53,115,220
32,940,787517,195
33,457,982
19,658,124
31 December 2017
26. FINANCIAL RISK MANAGEMENT
The Company’s activities expose it to a variety of financial risks: credit risk, market risk (including currency risk, interest rate risk and price risk), and liquidity risk. Taking risks is core to the financial business, and the operational risks are an inevitable consequence of being in business.
The Company does not use derivative financial instruments such as foreign exchange contract and interest rate swaps to manage their risk exposure.
The Company holds the following financial assets and financial liabilities:
26.1 Credit risk
The Company takes on exposure to credit risk, which is the risk that counterparties will cause a financial loss to the Company by failing to discharge an obligation. Credit risk is the most important risk for the Company’s business. Credit exposure arises principally in lending activities that lead to loans to customers. There is also credit risk in off-balance sheet financial instruments, such as loan commit-ments. The credit risk management is carried out by the Company’s credit committee.
The lending activities are guided by the Company’s credit policy to ensure that the overall objectives in the area of lending are achieved; i.e., that the loan portfolio is strong and healthy and credit risks are well diversified. The credit policy documents the lending policy, collateral policy, and credit approval processes and procedures implemented to ensure compliance with Central Bank guidelines.
68
(a) Credit risk measurement
The Company assesses the probability of default of counterparties by focusing on borrowers’ forecast profit and cash flow. The credit committee is responsible for approving loans to customers.
(b) Risk limit control and mitigation policies
The Company operates and provides loans to individuals within the Kingdom of Cambodia. The Company manages limits and controls the concentration of credit risk whenever it is identified.
The Company employs a range of policies and practices to mitigate credit risk. The most traditional of these is the taking of security in the form of collateral in exchange for loans to customers. The Company also assess the individual cash flow to ensure the repayment capacity.
(c) Provision for loan losses polices
The Company is required to follow the mandatory credit classification and provisioning in accordance with Prakas B7-02-186 dated 13 September 2002 on loan classification and provisioning. The Central Bank requires microfinance institutions to classify their loan portfo-lio into four classes and ensure that the minimum mandatory level of specific provision is made depending on the classification concerned and regardless of the assets (except for cash) pledged as collateral.
ClassificationShort-term loans (less than one year)
Standard
Substandard
Doubtful
Loss
Long-term loans (more than one year)
Standard
Substandard
Doubtful
Loss
0%
90%
70%
0%
0%
90%
70%
0%
0%
10%
30%
100%
0%
10%
30%
100%
Definition
Good financial condition and punctual payment of principal and interestSome payments of principal and/or interest are overdue by 30 days or moreSome payments of principal and/or interest are overdue by 60 days or more Some payments of principal and/or interest are overdue by 90 days or more
Good financial condition and punctual payment of principal and interestSome payments of principal and/or interest are overdue by 30 days or moreSome payments of principal and/or interest are overdue by 180 days or more Some payments of principal and/or interest are overdue by 360 days or more
Minimumprovision by
National Bankof Cambodia
Additionalprovision by the Company
(*)
69
Credit exposures relating to on-balance sheet assets:Balances with other banksLoans to customersOther assets
Credit risk exposures relating to off-balance sheet items: Short-term loans Long-term loans
KHR’000
13,089,157165,527,076
4,074,641
182,690,874
-708,921
708,921
183,399,795
US$
3,242,29841,002,4961,009,324
45,254,118
-175,606
175,606
45,429,724
31 December 2016
KHR’000
8,920,769199,874,676
4,437,987
213,233,432
3,896818,005
821,901
214,055,333
US$
2,209,75249,510,695 1,099,328
52,819,775
965202,627
203,592
53,023,367
31 December 2017
(d) Maximum exposure to credit risk before collaterals held or other credit enhancements
The above table represents a worst case scenario for credit risk exposure to the Company at 31 December 2017, without taking into account any collateral held or other credit enhancement attached. For on-balance sheet assets, the exposure set out above is based on net carrying amounts.
As shown above, 94% (2016: 91%) of total maximum exposure is derived from loans to customers.
Management is confident in its ability to continue to control and sustain minimal credit risk exposure to the Company relating to its loans to customers on the following bases:
• 99.64% of the loans in the portfolio are considered to be neither past due nor impaired, and the Company has introduced a more stringent selection and collection process for granting loans to customers• Balances with banks were held with local banks and management has done proper risk assessment and believe there will be no material loss from these banks.
70
Loans to customers neither past due nor impairedLoans to customers past due but not impairedLoans to customers individually impairedGross loans
Provision for loan losses: Provision required by National Bank of CambodiaAdditional provision provided by the Company
Net loans to customers
KHR’000
165,239,447
287,628
416,288165,943,363
(192,040)
(224,247)(416,287)
165,527,076
US$
40,931,248
71,248
103,11841,105,614
(47,570)
(55,548)(103,118)
41,002,496
31 December 2016
KHR’000
199,147,159
740,681
573,665 200,461,505
(295,815)
(291,014)(586,829)
199,874,676
US$
49,330,483
183,473
142,102 49,656,058
(73,276)
(72,087)(145,363)
49,510,695
31 December 2017
(e) Credit quality of financial assets
Loans to customers are summarised as follows:
For the purpose of loan provisioning, the expected recovery from collateral (except cash) is not taken into consideration, in accordance with the Central Bank’s requirements and the Company’s policy. The total provision for loan losses is US$ 146,248 which represents the specific provision of US$ 74,718 required by the Central Bank. Furthermore, additional provision of US$ 71,530 was provided by the Company.
(i) Loans to customers neither past due nor impaired
Loans to customers’ not past due are not considered impaired, unless other information is available to indicate the contrary. The gross amount of loans to customers that were neither past due nor impaired are as follows:
Neither past due nor impaired
KHR’000
165,239,448
US$
40,931,248
31 December 2016
KHR’000
199,147,159
US$
49,330,483
31 December 2017
71
Good financial condition and punctual payment of principal and interest
KHR’000
287,628
US$
71,248
31 December 2016
KHR’000
740,681
US$
183,473
31 December 2017
Overdue by 30 days or moreOverdue by 60 days or moreOverdue by 90 days or moreOverdue by 180 days or moreOverdue by 360 days or more
KHR’000
46,51057,067
105,57364,810
142,328
416,288
US$
11,52114,13626,15116,05435,256
103,118
31 December 2016
KHR’000
47,79856,80978,366
204,268186,424
573,665
US$
11,84014,07219,41250,59946,179
142,102
31 December 2017
(ii) Loans to customers past due but not impaired
Loans to customers less than 30 days past due are not considered impaired, unless other information is available to indicate the contrary. The gross amount of loans to customers that were past due but not impaired is as follows:
(iii) Loans to customer individually impaired
In accordance with Prakas B7-02-186 dated 13 September 2002 on loan classification and provisioning, loans overdue by 30 days or more are considered impaired and a minimum level of specific provision and general provision for impairment is made depending on the classification concerned, unless other information is available to indicate the contrary.
(iv) Loans to customers renegotiated
Restructuring activities include extended payment arrangements, modification and deferral of payments. Following restructuring, the loan is still kept in its current classification unless there is strong evidence of improvement in the customer’s financial condition.
There is no renegotiated loan and advances as at 31 December 2017.
(f) Repossessed collateral
Repossessed properties have to be sold within one year as required by the Central Bank. Repossessed property is classified in the balance sheet as foreclosed properties, if any.
For the year ended 31 December 2017, the Company did not obtain any assets by taking possession of collateral held as security.
72
31 December 2017Balances with other banksLoans to customersOther assets
As at 31 December 2017
In KHR’000 equivalent
US$
2,209,75249,510,695 1,099,328
52,819,775
213,233,432
US$
-641,013
641,013
2,587,769
US$
49,510,695 458,315
49,969,010
201,724,893
US$
2,209,752--
2,209,752
8,920,769
Financialinstitution
Household/family Others Total
31 December 2016Balances with other banksLoans to customersOther assets
As at 31 December 2016
In KHR’000 equivalent
US$
3,242,29841,002,4961,009,324
45,254,118
182,690,874
US$
--
555,734
555,734
2,243,498
US$
-41,002,496
453,590
41,456,086
167,358,219
US$
3,242,298--
3,242,298
13,089,157
Financialinstitution
Household/family Others Total
(g) Concentration of financial assets with credit risk exposure
(i) Geographical sector
The credit exposure of the Company is wholly derived from Cambodia based on the country of domicile of the counterparties.
(ii) Industry sector
The following table breaks down the Company’s main credit exposure at their carrying amount less provision for loan losses, as catego-rised by the industry sectors of its counterparties.
73
26.2 Market risk
The Company takes on exposure to market risk, which is the risk that the fair value or future cash flow of financial instruments will fluctuate because of changes in market prices. Market risk arises from open positions in interest rates, currency and equity products, all of which are exposed to general and specific market movements and changes in the level of volatility of market rates or prices such as interest rates, credit spreads, foreign exchange rates and equity prices.
The Company does not use derivative financial instruments such as foreign exchange contract and interest rate swaps to hedge its risk exposure as at 31 December 2017.
(a) Foreign exchange risk
Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Company’s functional currency.
The Company mainly transacts in US$, which is the Company’s functional currency, and the Company does not have exposure to foreign exchange risk.
Management monitors its foreign exchange risk against functional currencies through monitoring the foreign exchange risk by using the absorbed risk of 20% of the net worth required by the Central Bank.
The table below summarises the Company’s exposure to foreign currency exchange rate risk at 31 December 2017 and 31 December 2016. It includes the Company’s financial instruments at the carrying amount by currency in US$ equivalent.
31 December 2017Financial assetsCash on handBalance with central bankBalance with banksLoans to customersOther assetsTotal financial assets
Financial liabilitiesBorrowingsOther liabilitiesTotal financial liabilities
Net financial assets
Total
291,592 4,739
2,209,752 49,510,695 1,099,328
53,116,106
32,940,787 517,195
33,457,982
19,658,124
KHR
68,682 -
258,915 5,073,013
115,700 5,516,310
6,379,120 83,008
6,462,128
(945,818)
In USD equivalent
THB
2,785-
94,0122,723,046
32,4042,852,247
-26,05626,056
2,826,191
US$
220,125 4,739
1,856,825 41,714,636
951,224 44,747,549
26,561,667 408,131
26,969,798
17,777,751
74
31 December 2016Financial assetsCash on handBalance with central bankBalance with banksLoans to customersOther assetsTotal financial assets
Financial liabilitiesBorrowingsOverdraftOther liabilitiesTotal financial liabilities
Net financial assets
Total
49,5752,605
3,242,29841,002,4961,009,324
45,306,298
28,127,621-
685,28028,812,901
16,493,397
KHR
16,957-
507,9174,473,160
621,0565,619,090
5,036,744-
53,9535,090,697
528,393
In USD equivalent
THB
171-
114,3831,918,681
26,8932,060,128
--
8,4428,442
2,051,686
US$
32,4472,605
2,619,99834,610,655
361,37537,627,080
23,090,877-
622,88523,713,762
13,913,318
(b) Price risk
The Company is not exposed to a securities price risk because it does not have any investment held and classified on the balance sheet either as available for sale or at fair value through profit or loss. The Company does not currently have a policy to manage its price risk.
(c) Interest rate risk
Interest rates present several risks. There is a risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The value of a financial instrument will fluctuate in this same way. Interest margins may increase as a result of chang-es but may reduce losses in the event that unexpected movements arise. The Company at this stage does not have a policy to set limits on the level of mismatch of interest rate re-pricing that may be undertaken; however, management regularly monitors the mismatch.
The table below summarises the Company’s exposure to interest rate risks. It includes the Company’s financial instruments at the carrying amounts, categorised by the earlier of either their contractual re-pricing or their maturity dates.
75
As at 31 December 2017Financial assetsCash on handBalance with central bankBalance with other banksLoans to customersOther assetsTotal financial assets
Financial liabilitiesBorrowingsOther liabilities Total financial liabilities
Total interest repricing gap In KHR’000 equivalent
US$
291,5924,739
2,209,75249,510,695 1,099,328
53,116,106
(32,940,787)(517,195)
(33,457,982)-
19,658,124 -
79,359,846
US$
291,5924,739
2,089,952-
1,099,328 3,485,611
- (517,195)(517,195)
2,968,416
11,983,495
US$
-263,021
-263,021
---
263,021
1,061,816
US$
-32,860,554
- 32,860,554
(17,517,124)-
(17,517,124)
15,343,430
61,941,427
TotalNon-interestbearing
Over 5years
1 – 5years
US$
-11,688,228
- 11,688,228
(11,826,306)-
(11,826,306)
(138,078)
(557,421)
3 – 12months
US$
-3,381,677
-3,381,677
(2,319,647)-
(2,319,647)
1,062,030
4,287,415
1 – 3month
US$
119,8001,317,215
-1,437,015
(1,277,710)-
(1,277,710)
159,305
643,114
Up to1 month
As at 31 December 2016Financial assetsCash on handBalance with central bankBalance with other banksLoans to customersOther assetsTotal financial assets
Financial liabilitiesBorrowingsOther liabilities Total financial liabilities
Total interest repricing gap In KHR’000 equivalent
US$
49,5752,605
3,242,29841,002,496 1,009,324
45,306,298
(28,127,621)(685,280)
(28,812,901)
16,493,397
66,583,844
US$
49,5752,605
2,820,205-
1,009,3243,881,709
-(685,280)(685,280)
3,196,429
12,903,984
US$
---
277,694-
277,694
---
277,694
1,121,051
US$
---
23,329,025-
23,329,025
(16,839,781)-
(16,839,781)
6,489,244
26,197,078
TotalNon-interestbearing
Over 5years
1 – 5years
US$
---
12,294,367-
12,294,367
(9,046,516)-
(9,046,516)
3,247,851
13,111,574
3 – 12months
US$
---
3,649,933-
3,649,933
(1,496,945)-
(1,496,945)
2,152,988
8,691,613
1 – 3month
US$
--
422,0931,451,477
- 1,873,570
(744,379)-
(744,379)
1,129,191
4,558,544
Up to1 month
76
26.3 Liquidity risk
Liquidity risk is the risk of the Company being unable to meet the payment obligations associated with its financial liabilities when they fall due or to replace funds when they are withdrawn. The consequence of this may be the failure to meet obligations to repay creditors or fulfil commitments to lender or lessor.
(a) Liquidity risk management process
The Company’s management monitors balance sheet liquidity and manages the concentration and profile of debt maturities. Monitor-ing and reporting take the form of the reviewing of the daily cash position and projections for the next day, week and month, as these are key years for liquidity management. Management monitors the movement of the main lenders and payable terms.
(b) Funding approach
The Company’s main sources of liquidity are from the shareholders’ paid-up capital and borrowings. The sources of liquidity are regular-ly reviewed through management’s review of the maturity of borrowings.
(c) Non-derivative cash flows
The table on the following page presents the cash flows payable by the Company under non-derivative financial liabilities by remaining contractual maturities at the balance sheet date. The amounts disclosed in the table are the contractual undiscounted cash flows, whereas the Company manages the inherent liquidity risk based on the expected undiscounted cash flows.
As at 31 December 2017Financial liabilities BorrowingsOther liabilitiesTotal financial liabilities (contractual maturing dates) In KHR’000 equivalent
Assets held for managing liquidity risk (contractual maturity dates)
In KHR’000 equivalent
US$
(37,640,564)(517,195)
(38,157,759)
(154,042,873)
70,008,507
282,624,343
US$
- -
-
-
283,900
1,146,104
US$
(19,715,498)-
(19,715,498)
(79,591,465)
42,309,180
170,802,160
TotalOver 5years
1 – 5years
US$
(13,668,401)-
(13,668,401)
(55,179,335)
16,973,898
68,523,626
3 – 12months
US$
(2,758,711)-
(2,758,711)
(11,136,916)
4,767,739
19,247,362
1 – 3month
US$
(1,497,954)(517,195)
(2,015,149)
(8,135,157)
5,673,790
22,905,090
Up to1 month
77
As at 31 December 2016Financial liabilities BorrowingsOther liabilitiesTotal financial liabilities (contractual maturing dates) In KHR’000 equivalent
Assets held for managing liquidity risk (contractual maturity dates)
In KHR’000 equivalent
US$
(33,043,030)(685,280)
(33,728,310)
(136,161,188)
46,469,406
187,596,992
US$
--
-
-
280,855
1,133,811
US$
(19,489,122)-
(19,489,122)
(78,677,586)
23,836,490
96,227,911
TotalOver 5years
1 – 5years
US$
(10,736,863)-
(10,736,863)
(43,344,716)
12,764,636
51,530,836
3 – 12months
US$
(1,880,759)-
(1,880,759)
(7,592,624)
3,770,543
15,221,681
1 – 3month
US$
(936,286)(685,280)
(1,621,566)
(6,546,262)
5,816,882
23,482,753
Up to1 month
(d) Off-balance sheet items
Loan commitments
Where the Company is the lender, the future loan disbursements to customers under approved loans but not yet disbursed as at 31 December 2017 are as disclosed in Note 24(a).
Operating lease commitments
Where the Company is the lessee, the future minimum lease payments under non-cancellable operating leases are as disclosed in Note 24 (b).
78
26.4 Fair value of financial assets and liabilities
(a) Financial instruments measured at fair value
The Company does not have any financial instruments measured at fair value.
(b) Financial instruments not measured at fair value
(i) Balances with the Central Bank
Balances with the Central Bank include current accounts. The fair value of balances with the Central Bank approximates the carrying amount.
(ii) Balances with other banks
Balances with banks include non-interest bearing current accounts and savings deposits. The fair value of balances with banks approxi-mates the carrying amount. (iii) Loans to customers
Loans to customers are net of provisions for loan losses and their carrying value approximates fair value. The provisions for loan losses made under the requirements of the Central Bank’s Prakas.
(iv) Other financial assets and other financial liabilities
The carrying amounts of other financial assets and other financial liabilities are assumed to approximate their fair values as these are not materially sensitive to the shift in market interest.
79
26.5 Capital management
The Company’s objectives when managing capital, which is a broader concept than the ‘equity’ on the face of the balance sheet, are:
• To comply with the capital requirements set by the Central Bank;• To safeguard the Company’s ability to continue as a going concern so that it can continue to provide returns for shareholders and benefits for other stakeholders; and• To maintain a strong capital base to support the development of the business.
The table below summarises the composition of regulatory capital:
Tier 1 CapitalShare capitalLegal reserveRetained earningsLess: Loans and advances to related parties
KHR’000
64,592,000458,583
8,713,057(2,243,498)
71,520,142
US$
16,000,000113,595
2,158,300(555,734)
17,716,161
31 December 2016
KHR’000
64,592,000864,411
16,423,796(214,652)
81,665,555
US$
16,000,000214,122
4,068,317(53,171)
20,229,268
31 December 2017
80
PUBLISHED NEWS
81
82
Address and Contact Detail
Head Office (Phnom Penh)
No. 85-88, St. Kim il Sung (289), Sangkat Boeng
Kak Ti Pir, Khan Tuol Kouk, Phnom Penh
Tel 023 980 888 / 023 999 368
Email [email protected]
Website www.lyhourmfi.com.kh
Ou Ruessei branch (Phnom Penh)
No 314, Sangkat Ou Ruessei 2, Khan 7 Meakkakra
Tel 095 666 304 / 099 333 465
Chbar Ampov branch (Phnom Penh)
No 1, Sangkat Kbal Kaoh, Khan Chbar Ampov
Tel 085 444 002 / 017 651 028
Ang Snuol branch (Kandal)
St. 4, Svay Chrum Village, Baek Chan Commune
Tel 078 222 305 / 078 222 387
Kandal Stueng branch (Kandal)
St. 3, Daeum Trang Village, Anlong Romiet Commune
Tel 095 666 201 / 078 222 303
Somrong Tong branch (Kompong Speu)
Trapeang Ampel Village Trapeang Kong Commune
Tel 095 777 463 / 089 666 467
Kompong Speu branch (Kompong Speu)
St. 4, Krang Pol Tep Village, Sangkat Rokar Thum
Tel 095 666 249 / 095 666 240
Kompong Cham branch (Kompong Cham)
St. 7, Boeng Snay Village, Sangkat Sambuor Meas
Tel 089 666 813 / 078 222 374
Cheung Prey branch (Kompong Cham)
St. 6A, Ta Saen Village, Soutib Commune, Cheung Prey Distric
Tel 078 222 305 / 078 222 375
Batheay branch (Kompong Cham)
Ph’av Village, Ph’av Commune, Batheay District
Tel 085 444 008 / 078 444 721
Tbong Khmum Branch (Tbong Khmum)
Trapaing Kou Village, Sralap Commune, Tbong Khmum District
Tel 089 666 815 / 095 777 432
Bati Branch (Takeo)
No 2. Borcham Village, Chambak Commune, Bati District
Tel 089 666 489 / 089 666 413
Tramkak Branch (Takeo)
No.3, Yeay Lor Village, Tramkak Commune, Tramkak District
Tel 095 666 204 / 095 666 421
Koh Andaet Branch (Takeo)
Romenh Khang Cheung, Romenh, Koh Andaet
Tel 089 995 828 / 095 333 454
Prey Kabas Branch(Takeo)
Phsa Chre Village, Angkanh Communce, Prey Kabas
Tel 089 666 832 / 089 995 816
Kirivong Branch (Takeo)
Kompong Village, Prasbat ChornChom Commune,
Tell 095 333 465 / 089 995 841
Battambang Branch (Battambang)
No 5, Rumchek 4 Village, Sangkat Ratanak
Tel 078 222 371 / 095 666 420
Moung Russey Branch (Battambang)
No 5, kansay banteay village,Moung Commune
Tel 089 666 419 / 089 666 450
Bavel Branch (Battambang)
Spean Kondoul Village, Bavel Communce, Bavel District
Tel 089 666 474 / 095 666 940
Ratanak Mondul Branch(Battambang)
Banang village,Sduo, Ratanak Mondul District
Tel 089 666 408 / 078 444 725
Phnom Prek Branch(Battambang)
Phnom Touch village, Pech Chenda Commune
Tel 017 659 668 / 017 654 839
Bakan Branch (Pursat)
Khnach Romeas Village, Boeng Khnar Commune
Tel 095 666 451 / 095 666 206
Pea Reang Branch(Prey Veng)
Snay Pol Village, Roka Commune, Pea Reang District
Tel 089 666 465 / 095 266 180
Kompong Trobek Branch (Prey Veng)
Brasat Village, Brasat Commune, Kompong Trobek
Tel 092 766 868 / 095 666 942
Preah Sdach Branch (Prey Veng)
KraSangTong Village, Angkor Reach Commune
Tel 095 444 189 / 095 444 190
Svay Antor Branch (Prey Veng)
Ratanakiri Branch(Ratanakiri)
Phum Chey Chomneas, Sangkat Laban Seak,
Tel 095 333 480 / 099 333 475
1
2
3
4
5
6
7
8
9
10
11
12
13 27
26
25
24
23
22
21
20
19
18
17
16
15
14
83
Siem Reap Branch (Siem Reap)
kok tnaot Village, Kandaek Commune, Prasat Bakong District
Tel 089 666 819 / 023 980 888
Bavet Branch(Bavet)
Bavet Leu Village, Bavet Communce, Svay Rieng Province
Tel 089 666 821 / 023 980 888
29
28
84