+ Financial Statement for 2007 - Canadia Bank Plc.
+ Financial Statement for 2007 - Canadia Bank Plc.
+ Financial Statement for 2007 - Canadia Bank Plc.
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CANADIA BANK <strong>Plc</strong>.<br />
FINANCIAL STATEMENTS<br />
FOR THE YEAR ENDED 31 DECEMBER <strong>2007</strong>
CANADIA BANK <strong>Plc</strong>.<br />
FINANCIAL STATEMENTS<br />
FOR THE YEAR ENDED 31 DECEMBER <strong>2007</strong><br />
CONTENTS<br />
Page<br />
DIRECTORS’ REPORT 1 – 5<br />
INDEPENDENT AUDITOR’S REPORT 6 – 7<br />
FINANCIAL STATEMENTS<br />
Balance sheet 8<br />
Income statement 9<br />
<strong>Statement</strong> of changes in equity 10<br />
Cash flow statement 11<br />
Notes to the financial statements 12 – 44<br />
APPENDIX : NOTES ON COMPLIANCE WITH CENTRAL BANK PRAKAS* 45 – 55<br />
* Appendices do not <strong>for</strong>m part of the audited financial statements.
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CANADIA BANK PLC.<br />
No. 265 - 269<br />
Ang Duong Street<br />
Phnom Penh, Cambodia<br />
Tel<br />
Fax : (855) 23 - 427064<br />
Telex : CANADIA KA36188<br />
E-mail :canadia@camnet.conn.kgr<br />
SWIFT : CADI KH PP<br />
: (855) 23 - 2152E6 (9 Lines)<br />
DIRECTORS' REPORT<br />
The directors hereby submit their report and the audited financial statements of <strong>Canadia</strong> <strong>Bank</strong><br />
<strong>Plc</strong>. ("the <strong>Bank</strong>") <strong>for</strong> the year ended 31 December <strong>2007</strong>.<br />
CANADIA BANK PLC.<br />
The <strong>Bank</strong> was incorporated in 1991 under a joint venture between the National <strong>Bank</strong> of<br />
Cambodia ("the Central <strong>Bank</strong>") and certain overseas Cambodians. On 4 February 1998, the<br />
Central <strong>Bank</strong> disposed of all its shares to private investors.<br />
In 2001, the Overseas Cambodian lnvestment Corporation ("OClC"), a public limited company<br />
incorporated in the Kingdom of Cambodia, acquired '100% of the shares of the <strong>Bank</strong> and<br />
consequently became the holding company of the <strong>Bank</strong>.<br />
During the year, OCIC conducted a corporate restructuring whereby it has transferred its<br />
investment in the bank to <strong>Canadia</strong> Investment Holding <strong>Plc</strong> ("ClHP"), a newly established<br />
company. The restructuring was approved by the Central <strong>Bank</strong> and the Ministry of<br />
Commerce. Consequently, CIHP is now the new holding company of the <strong>Bank</strong>.<br />
PRINCIPAL ACTIVITIES<br />
The principal activities of the <strong>Bank</strong> are comprised of the operation of core banking business<br />
and the provision of related financial services through the <strong>Bank</strong>'s head office and various<br />
branches in Phnom Penh and the orovinces.<br />
There have been no significant changes in the nature of these principal activities during the<br />
year.<br />
RESULTS OF OPERATION AND DIVIDEND<br />
The results of operations <strong>for</strong> the year ended 31 December <strong>2007</strong> are set out in the income<br />
statement on page 9.<br />
There were no dividends (2006: US$10,545,000) declared or paid during the year ended 31<br />
December <strong>2007</strong>.<br />
RESERVES AND PROVISIONS<br />
There were no material movements to or from reserves and orovisions durinq the financial<br />
year other than those disclosed in the financial statements.
BAD AND DOUBTFUL LOANS<br />
Be<strong>for</strong>e the financial statements of the <strong>Bank</strong> were drawn up, the directors took reasonable<br />
steps to ascertain that action had been taken in relation to the writing off of bad loans and the<br />
making of provisions <strong>for</strong> doubtful loans, and satisfied themselves that all known bad loans had<br />
been written off and that adequate provisions have been made <strong>for</strong> bad and doubtful loans.<br />
At the date of this report, the directors are not aware of any circumstances which would render<br />
the amount written off <strong>for</strong> bad loans or the amount of the provision <strong>for</strong> bad and doubtful loans<br />
in the financial statements of the <strong>Bank</strong> inadequate to any material extent.<br />
CURRENT ASSETS<br />
Be<strong>for</strong>e the financial statements of the <strong>Bank</strong> were drawn up, the directors took reasonable<br />
steps to ensure that any current assets, other than loans, which were unlikely to be realised in<br />
the ordinary course of business at their value as shown in the accounting records of the <strong>Bank</strong>,<br />
have been written down to an amount which they might be expected to realise.<br />
At the date of this report, the directors are not aware of any circumstances which would render<br />
the values attributed to the current assets in the financial statements of the <strong>Bank</strong> misleading in<br />
any material respect.<br />
VALUATION METHODS<br />
At the date of this report, the directors are not aware of any circumstances that have arisen<br />
which would render adherence to the existing method of valuation of assets and liabilities in<br />
the financial statements of the <strong>Bank</strong> misleading or inappropriate in any material respect.<br />
CONTINGENT AND OTHER LIABILITIES<br />
At the date of this report, there does not exist:<br />
(a)<br />
(b)<br />
any charge on the assets of the <strong>Bank</strong> which has arisen since the end of the financial<br />
year which secures the liabilities of any other person, or<br />
any contingent liability in respect of the <strong>Bank</strong> that has arisen since the end of the<br />
financial year other than in the ordinary course of banking business.<br />
No contingent or other liability of the <strong>Bank</strong> has become en<strong>for</strong>ceable, or is likely to become<br />
en<strong>for</strong>ceable within the period of twelve months after the end of the financial year which, in the<br />
opinion of the directors, will or may have a material effect on the ability of the <strong>Bank</strong> to meet its<br />
obligations as and when they fall due.<br />
2
CHANGE OF CIRCUMSTANCES<br />
At the date of this report, the directors are not aware of any circumstances, not otherwise dealt<br />
with in this report or the financial statements of the <strong>Bank</strong>, which would render any amount<br />
stated in the financial statements misleading in any material respect.<br />
ITEMS OF AN UNUSUAL NATURE<br />
The results of the operations of the <strong>Bank</strong> <strong>for</strong> the financial year were not, in the opinion of the<br />
directors, materially affected by any items, transaction or event of a material and unusual<br />
nature. There has not arisen in the interval between the end of the financial year and the date<br />
of this report any item, transaction or event of a material and unusual nature likely, in the<br />
opinion of the directors, to substantially affect the results of the operations of the <strong>Bank</strong> <strong>for</strong> the<br />
year in which this report is made.<br />
THE BOARD OF DIRECTORS<br />
The members of the Board of Directors holding office during the year and as at the date of this<br />
report are:<br />
Mr Pung Kheav Se, General Manager (Executive)<br />
Mrs Lim Sophany, Director (Executive)<br />
Mr Pung Way, Director (Executive)<br />
Mr Jimmy Leow Min Fong , Chairman of Audit Committee (Non-executive)<br />
Mr Charles Vann, Deputy General Manager (Executive)<br />
Mrs Pung Carolyne, Assistant to General Manager (Executive),<br />
(appointed on 10 February <strong>2007</strong>)<br />
Mr Chen Lee Yiaw Hui, Senior Manager (Executive) (appointed on 10 February <strong>2007</strong>)<br />
Mr Shen Jie Qing, (Non-executive) (appointed on 23 March <strong>2007</strong>)<br />
Dr Sam Ghanty (resigned on 28 February <strong>2007</strong>)<br />
The appointment of Mr Shen Jie Qing as a Director of the <strong>Bank</strong> is pending approval from the<br />
Central <strong>Bank</strong> as at the date of this report.<br />
DIRECTORS' INTERESTS<br />
The <strong>Bank</strong>’s directors who hold shares in CIHP, the ultimate parent company of the <strong>Bank</strong> are:<br />
Mr Pung Kheav Se, Mr Pung Way and Mrs Lim Sophany.<br />
DIRECTORS' BENEFITS<br />
During and at the end of the financial year, no arrangements existed, to which the <strong>Bank</strong> was a<br />
party, with the object of enabling directors of the <strong>Bank</strong> to acquire benefits by means of the<br />
acquisition of shares in or debentures of the <strong>Bank</strong> or any other body corporate; and<br />
No director of the <strong>Bank</strong> has received or become entitled to receive any benefit by reason of a<br />
contract made by the <strong>Bank</strong> with the directors or with a firm of which the director is a member,<br />
or with a company which the director has a substantial financial interest other than those<br />
disclosed in the financial statements.<br />
3
RESPONSIBILITIES OF THE DIRECTORS IN RESPECT OF THE FINANCIAL<br />
STATEMENTS<br />
The Board of Directors is responsible to ensure that the financial statements are properly<br />
drawn up so as to present fairly, in all material respects, the financial position of the <strong>Bank</strong> as at<br />
31 December <strong>2007</strong> and of its financial per<strong>for</strong>mance and cash flows <strong>for</strong> the year then ended. In<br />
preparing these financial statements, the Board of Directors are required to:<br />
i) adopt appropriate accounting policies which are supported by reasonable and prudent<br />
judgements and estimates and then apply them consistently;<br />
ii) comply with the disclosure requirements and guidelines issued by the Central <strong>Bank</strong> and<br />
Cambodian Accounting Standards or, if there have been any departures in the interests<br />
of true and fair presentation, these have been appropriately disclosed, explained and<br />
quantified in the financial statements;<br />
iii)<br />
iv)<br />
v)<br />
maintain adequate accounting records and an effective system of internal controls;<br />
prepare the financial statements on a going concern basis unless it is inappropriate to<br />
assume that the <strong>Bank</strong> will continue operations in the <strong>for</strong>eseeable future; and<br />
effectively control and direct the <strong>Bank</strong> in all material decisions affecting the operations<br />
and per<strong>for</strong>mance and ascertain that such have been properly reflected in the financial<br />
statements.<br />
The Board of Directors confirm that the <strong>Bank</strong> has complied with the above requirements in<br />
preparing the financial statements.<br />
Signed in accordance with a resolution of the Board of Directors.<br />
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Mr Pung Kheav Se<br />
General Manager<br />
Date'.24 March 2008<br />
Mr Charles Vann<br />
Deputy General Manager<br />
Date:24 March 2008
APPROVAL OF THE FINANCIAL STATEMENTS<br />
The accompanying financial statements, present fairly, in all material respects, the financial<br />
position of the <strong>Bank</strong> as at 31 December <strong>2007</strong>, and of its financial per<strong>for</strong>mance and its cash<br />
flows <strong>for</strong> the year then ended in accordance with the guidelines issued by the Central <strong>Bank</strong><br />
and Cambodian Accounting Standards, were approved by the Board of Directors.<br />
Mr Pung Kheav Se<br />
General Manager<br />
DaIe:24 March 2008<br />
C\L\) -<br />
Mr Charles Vann<br />
Deputy General Manager<br />
Date:24 March 2008
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Phnom Penh<br />
Kingdom of Combodio.<br />
Iel :{855) 23218 A86<br />
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I ndependent auditor's report<br />
To the Shareholders of <strong>Canadia</strong> <strong>Bank</strong> <strong>Plc</strong>.<br />
We have audited the accompanying financial statements of <strong>Canadia</strong> <strong>Bank</strong> <strong>Plc</strong>. ("the <strong>Bank</strong>")<br />
which comprise the balance sheet as of 3'1 December <strong>2007</strong> and the income statement,<br />
statement of changes in equity and cash flow statement <strong>for</strong> the year then ended and a<br />
summary of significant accounting policies and other explanatory notes on pages 8to 44.<br />
Board's Responsibility <strong>for</strong> the <strong>Financial</strong> <strong>Statement</strong>s<br />
The Board of Directors is responsible <strong>for</strong> the preparation and fair presentation of these<br />
financial statements in accordance with guidelines issued by the Central <strong>Bank</strong> and Cambodian<br />
Accounting Standards. This responsibility includes: designing, implementing and maintaining<br />
internal control relevant to the preparation and fair presentation of financial statements that are<br />
free from material misstatement, whether due to fraud or error; selecting and applying<br />
appropriate accounting policies; and making accounting estimates that are reasonable in the<br />
circumstances.<br />
A u d itor's Re spo n si bil ity<br />
Our responsibility is to express an opinion on these financial statements based on our audit.<br />
We conducted our audit in accordance with International Standards on Auditing. Those<br />
Standards require that we comply with ethical requirements and plan and per<strong>for</strong>m the audit to<br />
obtain reasonable assurance whether the financial statements are free from material<br />
misstatement.<br />
An audit involves per<strong>for</strong>ming procedures to obtain audit evidence about the amounts and<br />
disclosures in the financial statements. The procedures selected depend on the auditor's<br />
judgment, including the assessment of the risks of material misstatement of the financial<br />
statements, whether due to fraud or error. In making those risk assessments, the auditor<br />
considers internal controls relevant to the entity's preparation and fair presentation of the<br />
financial statements in order to design audit procedures that are appropriate in the<br />
circumstances, but not <strong>for</strong> the purpose of expressing an opinion on the effectiveness of the<br />
entity's internal control. An audit also includes evaluating the appropriateness of accounting<br />
policies used and the reasonableness of accounting estimates made by management, as well<br />
as evaluating the overall presentation of the financial statements.<br />
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a<br />
basis <strong>for</strong> our audit ooinion.
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Opinion<br />
In our opinion, the accompanying financial statements present fairly, in all material respects,<br />
the financial position of the <strong>Bank</strong> as of 31 December <strong>2007</strong>, and of its financial per<strong>for</strong>mance<br />
and its cash flows <strong>for</strong> the year then ended in accordance with the guidelines issued by the<br />
Central <strong>Bank</strong> and Cambodian Accounting Standards.<br />
(Cambodia) Limited<br />
Penh, Kingdom of Cambodia<br />
Date:24 March 2008
CANADIA BANK <strong>Plc</strong>.<br />
BALANCE SHEET<br />
AS AT 31 DECEMBER <strong>2007</strong><br />
<strong>2007</strong> 2006<br />
Note US$ Riel Million US$ Riel Million<br />
(Unaudited)<br />
(Unaudited)<br />
ASSETS<br />
Cash on hand 27,501,166 110,087 25,141,461 101,998<br />
Balances with the Central <strong>Bank</strong> 3 71,056,749 284,440 52,690,857 213,767<br />
Balances with other banks and financial<br />
institutions 4 79,785,657 319,382 55,998,868 227,187<br />
Loans and advances to customers - net 5 332,403,990 1,330,613 205,407,545 833,338<br />
Other assets 6 5,853,530 23,432 3,609,634 14,644<br />
Investment in the Foreign Trade <strong>Bank</strong> 7 10,580,000 42,352 10,580,000 42,924<br />
Property and equipment 8 19,643,894 78,634 10,363,807 42,046<br />
Computer software 9 1,172,275 4,693 99,522 404<br />
Properties <strong>for</strong>eclosed 10 4,512,741 18,065 4,198,690 17,035<br />
Total assets 552,510,002 2,211,698 368,090,384 1,493,343<br />
LIABILITIES AND<br />
SHAREHOLDERS’ EQUITY<br />
LIABILITIES<br />
Deposits and balances of other banks 11 6,739,404 26,978 3,872,609 15,711<br />
Deposits from non-bank customers 12 451,570,063 1,807,635 289,458,459 1,174,333<br />
Current tax liabilities 13 4,421,143 17,698 2,786,518 11,305<br />
Other liabilities 14 5,143,666 20,590 4,524,432 18,356<br />
Borrowings 15 4,379,241 17,530 7,306,669 29,643<br />
Subordinated debt 16 7,080,000 28,341 7,080,000 28,724<br />
Total liabilities 479,333,517 1,918,772 315,028,687 1,278,072<br />
SHAREHOLDERS’ EQUITY<br />
Share capital 17 40,545,000 162,302 40,545,000 164,491<br />
Retained earnings 32,631,485 130,624 12,516,697 50,780<br />
Total shareholders’ equity 73,176,485 292,926 53,061,697 215,271<br />
Total liabilities and shareholders’<br />
equity 552,510,002 2,211,698 368,090,384 1,493,343<br />
The accompanying notes on pages 12 to 44 <strong>for</strong>m an integral part of these<br />
financial statements.<br />
8
CANADIA BANK <strong>Plc</strong>.<br />
STATEMENT OF INCOME<br />
FOR THE YEAR ENDED 31 DECEMBER <strong>2007</strong><br />
<strong>2007</strong> 2006<br />
Note US$ Riel Million US$ Riel Million<br />
(Unaudited)<br />
(Unaudited)<br />
Interest income 18 36,414,584 145,768 25,350,490 102,847<br />
Interest expense 19 (9,367,741) (37,499) (6,304,818) (25,579)<br />
Net interest income 27,046,843 108,269 19,045,672 77,268<br />
Fee and commission income 20 5,523,652 22,111 4,403,523 17,865<br />
Fee and commission expense (528,071) (2,114) (370,931) (1,505)<br />
Net fee and commission income 4,995,581 19,997 4,032,592 16,360<br />
Other operating income 1,690,935 6,768 1,171,273 4,752<br />
General administrative expenses 21 (7,449,198) (29,819) (6,313,951) (25,616)<br />
Operating income be<strong>for</strong>e<br />
extensions of credit 26,284,161 105,215 17,935,586 72,764<br />
Provision <strong>for</strong> loan losses - net 22 (1,140,676) (4,566) (2,254,535) (9,146)<br />
Profit be<strong>for</strong>e income tax 25,143,485 100,649 15,681,051 63,618<br />
Income tax expense 23 (5,028,697) (20,130) (3,164,356) (12,838)<br />
Net income 20,114,788 80,519 12,516,695 50,780<br />
The accompanying notes on pages 12 to 44 <strong>for</strong>m an integral part of these<br />
financial statements.<br />
9
CANADIA BANK <strong>Plc</strong>.<br />
STATEMENT OF CHANGES IN EQUITY<br />
FOR THE YEAR ENDED 31 DECEMBER <strong>2007</strong><br />
Share Retained<br />
capital earnings Total<br />
US$ US$ US$<br />
Balance as at 1 January 2006 26,000,000 10,585,002 36,585,002<br />
Net profit <strong>for</strong> the year - 12,516,695 12,516,695<br />
Payment to the Board of Directors - (40,000) (40,000)<br />
Proceeds from issue of shares 4,000,000 - 4,000,000<br />
Dividends paid - (10,545,000) (10,545,000)<br />
Dividends reinvested in share capital 10,545,000 - 10,545,000<br />
Balance as at 31 December 2006 40,545,000 12,516,697 53,061,697<br />
In million Riel equivalents (Unaudited) 164,491 50,780 215,271<br />
Balance as at 1 January <strong>2007</strong> 40,545,000 12,516,697 53,061,697<br />
Net profit <strong>for</strong> the year - 20,114,788 20,114,788<br />
Balance as at 31 December <strong>2007</strong> 40,545,000 32,631,485 73,176,485<br />
In million Riel equivalents (Unaudited) 162,302 130,624 292,926<br />
The accompanying notes on pages 12 to 44 <strong>for</strong>m an integral part of these<br />
financial statements.<br />
10
CANADIA BANK <strong>Plc</strong>.<br />
CASH FLOW STATEMENT<br />
FOR THE YEAR ENDED 31 DECEMBER <strong>2007</strong><br />
<strong>2007</strong> 2006<br />
US$ Riel Million US$ Riel Million<br />
(Unaudited)<br />
(Unaudited)<br />
Cash flows from operating activities<br />
Cash used in operations (note 24) 65,641,330 262,763 18,912,187 76,720<br />
Income tax paid (3,394,072) (13,587) (1,635,851) (6,637)<br />
Net cash generated from operating<br />
activities 62,247,258 249,176 17,276,336 70,083<br />
Cash flows from investing activities<br />
Statutory deposits and reserve account<br />
with the Central <strong>Bank</strong> (11,500,017) (46,035) (7,354,516) (29,837)<br />
Investment in securities - - 2,214,014 8,982<br />
Proceeds from sale of property and<br />
equipment 90,146 361 735,469 2,984<br />
Purchases of property and equipment (10,079,408) (40,348) (3,638,297) (14,761)<br />
Purchases of computer software (1,162,108) (4,652) (7,144) (29)<br />
Net cash generated from investing<br />
activities (22,651,387) (90,674) (8,050,474) (32,661)<br />
Cash flows from financing activities<br />
Proceeds from issue of shares - - 14,545,000 59,009<br />
Dividends paid - - (10,545,000) (42,781)<br />
Proceed from borrowing - KfW - - 1,814,669 7,362<br />
Repayment of borrowed funds – KfW (427,429) (1,710) - -<br />
Repayments of borrowed funds – IFC (2,500,000) (10,008) - -<br />
Net cash generated from financing<br />
activities (2,927,429) (11,718) 5,814,669 23,590<br />
Net changes in cash and cash equivalents 36,668,442 146,784 15,040,531 61,019<br />
Cash and cash equivalents:<br />
At beginning of year 103,219,382 413,187 88,178,851 357,742<br />
At end of year (Note 25) 139,887,824 559,971 103,219,382 418,761<br />
The accompanying notes on pages 12 to 44 <strong>for</strong>m an integral part of these<br />
financial statements.<br />
11
CANADIA BANK <strong>Plc</strong>.<br />
NOTES TO THE FINANCIAL STATEMENTS<br />
FOR THE YEAR ENDED 31 DECEMBER <strong>2007</strong><br />
1. BACKGROUND INFORMATION<br />
<strong>Canadia</strong> <strong>Bank</strong> <strong>Plc</strong>. was incorporated in 1991 under a joint venture between the National <strong>Bank</strong> of<br />
Cambodia ("the Central <strong>Bank</strong>") and certain overseas Cambodians. On 4 February 1998, the<br />
Central <strong>Bank</strong> disposed of all its shares to private investors.<br />
In 2001, the Overseas Cambodian Investment Corporation ("OCIC"), a public limited company<br />
incorporated in the Kingdom of Cambodia, acquired 100% of the shares of the <strong>Bank</strong> and<br />
consequently became the holding company of the <strong>Bank</strong>.<br />
During the year, OCIC conducted a corporate restructuring whereby it has transferred its<br />
investment in the <strong>Bank</strong> to <strong>Canadia</strong> Investment Holding <strong>Plc</strong> (“CIHP”), a newly established<br />
company. The restructuring was approved by the Central <strong>Bank</strong> and the Ministry of Commerce.<br />
Consequently, CIHP is now the new holding company of the <strong>Bank</strong>.<br />
The principal activities of the <strong>Bank</strong> comprise the operations of core banking business and the<br />
provision of related financial services through its head office and various branches in Phnom<br />
Penh and the provinces. The <strong>Bank</strong> holds a commercial banking license which was renewed <strong>for</strong><br />
an indefinite period on 18 October 2006. There have been no significant changes in the nature<br />
of these principal activities during the year.<br />
The registered office of the <strong>Bank</strong> is currently located at No. 265-269 Ang Duong Street, Phnom<br />
Penh, Kingdom of Cambodia.<br />
As at 31 December <strong>2007</strong>, the <strong>Bank</strong> has 602 employees (31 December 2006: 460 employees).<br />
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES<br />
The significant accounting policies adopted in the preparation of these financial statements are<br />
set out below. These policies have been consistently applied to all the years presented, unless<br />
otherwise stated.<br />
2.1 Basis of preparation<br />
The financial statements have been prepared in accordance with the guidelines issued by the<br />
Central <strong>Bank</strong> and Cambodian Accounting Standards. The financial statements have been<br />
prepared under the historical cost convention, as modified by the revaluation of properties<br />
<strong>for</strong>eclosed. The accompanying financial statements are prepared <strong>for</strong> jurisdiction of Cambodia<br />
and are not intended to present the financial position, financial per<strong>for</strong>mance and cash flows in<br />
accordance with generally accepted accounting principles and practice in other countries and<br />
those who are not in<strong>for</strong>med about Cambodia's accounting principles, procedures and practices.<br />
For the sole purpose of complying with Announcement No. B795-139-AN dated 5 December<br />
1995 of the Central <strong>Bank</strong>, a translation to Khmer Riel is provided <strong>for</strong> the balance sheet, the<br />
income statement, the statement of changes in equity, the cash flow statement and the notes to<br />
the financial statements as of and <strong>for</strong> the year ended 31 December <strong>2007</strong> using the official rate of<br />
exchange regulated by the Central <strong>Bank</strong> as at the reporting date, which was US$1 to Riel 4,003<br />
(31 December 2006: US$1 to Riel 4,057). Such translation amounts are unaudited and should<br />
not be construed as representations that the US$ amounts represent, or have been or could be,<br />
converted into Khmer Riel at that or any other rate.<br />
12
CANADIA BANK <strong>Plc</strong>.<br />
NOTES TO THE FINANCIAL STATEMENTS<br />
FOR THE YEAR ENDED 31 DECEMBER <strong>2007</strong><br />
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)<br />
2.2 Foreign currency transactions<br />
Items included in the financial statements of the <strong>Bank</strong> are measured using United States dollars<br />
(US$). The financial statements are presented in US$, a widely accepted currency in Cambodia.<br />
Transactions in currencies other than US$ are translated into US$ at the exchange rate<br />
prevailing at the date of transaction. Foreign exchange gains and losses resulting from the<br />
settlement of such transactions and from the translation at the year end exchange rate from<br />
monetary assets and liabilities denominated in currencies other than US$, are recognised in the<br />
income statement.<br />
The principal rates used to translate monetary assets and liabilities at the balance sheet date<br />
are:<br />
<strong>2007</strong> 2006<br />
Khmer Riel RIEL 4,003 4,057<br />
Euro EUR 0.68 0.76<br />
<strong>Canadia</strong>n dollars CAD 0.97 1.16<br />
Great British Pound GBP 0.50 0.51<br />
Hong Kong dollars HKD 7.69 7.69<br />
Japanese Yen JPY 100.00 125.00<br />
Thai Baht THB 40.00 40.00<br />
Australian dollars AUD 1.12 1.27<br />
2.3 Cash and cash equivalents<br />
Cash and cash equivalents includes cash on hand and deposits and placements with the<br />
Central <strong>Bank</strong>, other banks and other financial institutions with original maturities of three months<br />
or less.<br />
2.4 Statutory deposits with the Central <strong>Bank</strong><br />
Statutory deposits represent mandatory reserve deposits and cash maintained with the Central<br />
<strong>Bank</strong> in compliance with the Law on <strong>Bank</strong>ing and <strong>Financial</strong> Institutions and are not available to<br />
finance the <strong>Bank</strong>’s day-to-day operations. These statutory deposits are not considered as part of<br />
cash and cash equivalents <strong>for</strong> the purpose of the cash flow statement.<br />
13
CANADIA BANK <strong>Plc</strong>.<br />
NOTES TO THE FINANCIAL STATEMENTS<br />
FOR THE YEAR ENDED 31 DECEMBER <strong>2007</strong><br />
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)<br />
2.5 Loans and advances to customers<br />
All loans and advances to customers are stated in the balance sheet as the amount of principal,<br />
less any amounts written off and the provision <strong>for</strong> loan losses. Short term loans are those with a<br />
repayment date within one year of the date the loan was advanced. Long term loans are those<br />
with a final repayment date of more than one year of the date the loan was advanced.<br />
Loans are written off when there is no realistic prospect of recovery. Recoveries of loans and<br />
advances previously written off or provided <strong>for</strong> decrease the amount of the provision <strong>for</strong> losses<br />
on loans and advances in the income statement.<br />
2.6 Provision <strong>for</strong> loan losses<br />
The <strong>Bank</strong> is required to follow the mandatory credit classification and provisioning as required<br />
by Prakas B7-02-145 dated 7 June 2002 issued by the Central <strong>Bank</strong>. The Prakas requires<br />
commercial banks to classify their loan portfolio into four classes and the mandatory level of<br />
specific provisioning is provided, depending on the classification concerned and regardless of<br />
the assets (except cash) pledged as collateral as following:<br />
Rate of provision<br />
Standard 0%<br />
Substandard 10%<br />
Doubtful 30%<br />
Loss 100%<br />
2.7 Foreclosed properties<br />
Foreclosed properties are carried at the lower of the outstanding balance of the related loan or<br />
advance and the estimated net realisable value of the property at the date of <strong>for</strong>eclosure.<br />
Gains/losses are recognised in the statement of income at the date of disposal.<br />
2.8 Investment in Foreign Trade <strong>Bank</strong> of Cambodia<br />
The <strong>Bank</strong> entered into a sale and purchase agreement on 28 October 2005 with the<br />
Privatisation Committee (acting on behalf of the Royal Government of Cambodia), to acquire<br />
46% of the share capital of Foreign Trade <strong>Bank</strong> of Cambodia (“FTB”). This investment was<br />
recognised at cost and accounted <strong>for</strong> using the accounting <strong>for</strong> investments in accordance with<br />
the Cambodia Accounting Standard (“CAS”) 25. The dividend income received from the<br />
investment in FTB is credited to the income statement.<br />
2.9 Other credit related commitments<br />
In the normal course of business, the <strong>Bank</strong> enters into other credit related commitments<br />
including loan commitments, letters of credit and guarantees. The accounting policy and<br />
provision methodology are similar to those <strong>for</strong> originated loans as noted above. Specific<br />
provisions are raised against other credit related commitments when losses are considered<br />
probable.<br />
14
CANADIA BANK <strong>Plc</strong>.<br />
NOTES TO THE FINANCIAL STATEMENTS<br />
FOR THE YEAR ENDED 31 DECEMBER <strong>2007</strong><br />
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)<br />
2.10 Interest income and expenses<br />
Interest earned on loans and advances to customers, deposits with the Central <strong>Bank</strong> and other<br />
banks are recognised on a daily accruals basis, except where serious doubt exists as to the<br />
collectibility of loans and advances to customers, in which case, no interest income is<br />
recognised. The policy on the suspension of interest is in con<strong>for</strong>mity with the Central <strong>Bank</strong>’s<br />
guidelines on the suspension of interest on non-per<strong>for</strong>ming loans and provision <strong>for</strong> bad and<br />
doubtful debts.<br />
Interest expense on deposits of customer and settlement accounts of other banks and<br />
borrowings are recognised on a daily accruals basis.<br />
2.11 Fee and commission income<br />
Fee and commission income is generally recognised on an accruals basis when the service has<br />
been provided. Fee and commission income comprises income received from inward and<br />
outward bank transfers, bank guarantees, letters of credit, ATM/Visa and Mastercard charges.<br />
Loan commitment fees are deferred and recongised as other income in the income statement<br />
over the loan term. Unamortised loan commitment fees are presented as a deduction to loan.<br />
In previous reporting periods, loan commitment fees were recongised as income when incurred.<br />
No restatement of prior year's accounts was made as the amount was immaterial.<br />
2.12 Property and equipment<br />
Property and equipment is stated at cost less accumulated depreciation, except freehold land<br />
which is not depreciated. Repairs and maintenance costs are charged to the income statement<br />
during the financial year in which they are incurred. The following rates and method of<br />
depreciation are used to allocate their cost to income statement:<br />
Buildings – straight-line 5%<br />
Renovations – straight-line 5%<br />
Motor vehicles – declining 25%<br />
Office equipment and furniture – declining 25%<br />
Computers and IT equipment – declining 50%<br />
2.13 Operating lease<br />
Leases in which a significant portion of the risks and rewards of ownership are retained by the<br />
lessor are classified as operating leases. Payments made under operating leases are charged<br />
to the income statement on a straight-line basis over the period of the lease.<br />
2.14 Computer software<br />
Acquired computer software licenses are capitalised on the basis of cost incurred to acquired<br />
the specific software and bring it to use. These costs are amortised over two-year period using<br />
declining balance method.<br />
Costs associated with developing or maintaining computer software programmes are recognised<br />
as an expense as incurred.<br />
15
CANADIA BANK <strong>Plc</strong>.<br />
NOTES TO THE FINANCIAL STATEMENTS<br />
FOR THE YEAR ENDED 31 DECEMBER <strong>2007</strong><br />
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)<br />
2.15 Income tax<br />
Income tax is calculated on the basis of taxable profit, which is calculated by adjusting the<br />
financial result <strong>for</strong> certain expense items in accordance with Cambodian regulations. Taxes<br />
other than on income are recorded within operating expenses.<br />
Deferred income tax will be provided in full, using the liability method, on temporary differences<br />
arising between tax bases of assets and liabilities and their carrying amounts in the financial<br />
statements. Deferred tax assets are recognised to the extent that it is probable that future<br />
taxable profit will be available against which the temporary differences can be utilised.<br />
2.16 Subordinated debts<br />
Subordinated debts are treated as financial liabilities <strong>for</strong> financial reporting purpose and included<br />
as a Tier II line item in the calculation of the <strong>Bank</strong>’s net worth in accordance with the guidelines<br />
of the Central <strong>Bank</strong>. Subordinated debts are interest-free with no fixed terms of repayment.<br />
2.17 Related party transactions<br />
Parties are considered to be related if one party has the ability to control the other party or can<br />
exercise significant influence over the other party in making financial and operating decisions.<br />
In accordance with the Law on <strong>Bank</strong>ing and <strong>Financial</strong> Institutions, related parties are defined as<br />
parties who hold, directly or indirectly, at least 10% of the capital or voting rights and includes<br />
any individual who participates in the administration, direction, management or internal control of<br />
the <strong>Bank</strong>.<br />
Transactions with related parties and related account balances are disclosed in note 27 to the<br />
financial statements.<br />
2.18 Comparative figures<br />
Certain comparative figures have been reclassified to con<strong>for</strong>m with the current year’s<br />
presentation of the financial statements.<br />
16
CANADIA BANK <strong>Plc</strong>.<br />
NOTES TO THE FINANCIAL STATEMENTS<br />
FOR THE YEAR ENDED 31 DECEMBER <strong>2007</strong><br />
3. BALANCES WITH THE CENTRAL BANK<br />
<strong>2007</strong> 2006<br />
US$ Riel Million US$ Riel Million<br />
(Unaudited) (Unaudited)<br />
Current accounts, non-interest bearing 8,601,000 34,430 7,735,124 31,381<br />
Term deposits, Interest bearing 25,000,000 100,075 19,000,000 77,083<br />
Statutory capital deposit, non-interest<br />
bearing 4,054,500 16,230 4,054,500 16,449<br />
Reserve deposits, non interest bearing 33,401,249 133,705 21,901,233 88,854<br />
71,056,749 284,440 52,690,857 213,767<br />
Term deposits with the Central <strong>Bank</strong> will mature within one month and earn interest at the rates<br />
ranging from 4.00% to 4.19% per annum (2006: 3.79% to 4.06% per annum).<br />
Under Prakas No. B7-01-136 dated 15 October 2001; the <strong>Bank</strong> is required to maintain a<br />
statutory deposit of 10% of its registered capital. This statutory deposit is interest bearing at 1/2<br />
of the six-month period refinancing rate set by the Central <strong>Bank</strong> <strong>for</strong> statutory deposits<br />
maintained in Riel and 3/8 six-month SIBOR rate <strong>for</strong> statutory deposits maintained in US$.<br />
Reserve accounts represent the minimum reserve requirement which is calculated at 8% of the<br />
total deposits from customers and settlement accounts of other banks.<br />
4. BALANCES WITH OTHER BANKS AND FINANCIAL INSTITUTIONS<br />
<strong>2007</strong> 2006<br />
US$ Riel Million US$ Riel Million<br />
(Unaudited) (Unaudited)<br />
In Cambodia:<br />
Current accounts, non-interest<br />
bearing 740,862 2,966 427,210 1,733<br />
Outside Cambodia:<br />
Current accounts 78,044,795 312,413 50,915,586 206,564<br />
Fixed deposits 1,000,000 4,003 4,656,072 18,890<br />
79,785,657 319,382 55,998,868 227,187<br />
Analysis by maturity:<br />
Within one month 78,785,657 315,379 51,342,796 208,297<br />
One to three months 1,000,000 4,003 4,656,072 18,890<br />
79,785,657 319,382 55,998,868 227,187<br />
Current accounts with banks outside Cambodia earn interest at the rate from 0% to 5.14%<br />
(2006: 0% to 5.21%). Fixed deposits earn interest at 5% per annum (2006: 5% per annum).<br />
17
CANADIA BANK <strong>Plc</strong>.<br />
NOTES TO THE FINANCIAL STATEMENTS<br />
FOR THE YEAR ENDED 31 DECEMBER <strong>2007</strong><br />
5. LOANS AND ADVANCES TO CUSTOMERS<br />
<strong>2007</strong> 2006<br />
US$ Riel Million US$ Riel Million<br />
(Unaudited) (Unaudited)<br />
Commercial loans:<br />
Overdrafts 79,924,839 319,939 57,814,259 234,552<br />
Short term loans 134,021,723 536,489 82,428,900 334,414<br />
Long term loans 87,452,221 350,071 51,307,270 208,153<br />
Micro-financing loans 147,507 590 145,398 592<br />
301,546,290 1,207,089 191,695,827 777,711<br />
Consumer loans:<br />
Mortgage loans 43,778,017 175,243 25,215,490 102,299<br />
Credit cards 1,028,354 4,117 530,043 2,150<br />
Other consumer loans 385,501 1,544 - -<br />
45,191,872 180,904 25,745,533 104,449<br />
Total loans (gross) 346,738,162 1,387,993 217,441,360 882,160<br />
Provisions <strong>for</strong> loan losses - specific (*) (13,176,166) (52,744) (12,033,815) (48,822)<br />
Unamortised loan commitment fees (1,158,006) (4,636) - -<br />
(*) Movements on the provisions <strong>for</strong> loan losses are as follows:<br />
332,403,990 1,330,613 205,407,545 833,338<br />
<strong>2007</strong> 2006<br />
US$ Riel Million US$ Riel Million<br />
(Unaudited) (Unaudited)<br />
At beginning of the year 12,033,815 48,171 9,856,220 39,987<br />
Exchange differences 2,235 9 1,962 8<br />
Charges <strong>for</strong> the year 16,772,419 67,140 8,719,679 35,376<br />
Amount written off (560) (2) (78,902) (320)<br />
Recovery during the year (15,631,743) (62,574) (6,465,144) (26,229)<br />
At end of the year 13,176,166 52,744 12,033,815 48,822<br />
18
CANADIA BANK <strong>Plc</strong>.<br />
NOTES TO THE FINANCIAL STATEMENTS<br />
FOR THE YEAR ENDED 31 DECEMBER <strong>2007</strong><br />
5. LOANS AND ADVANCES TO CUSTOMERS (continued)<br />
Further classification of loans and advances to customers (gross) is as follows:<br />
<strong>2007</strong> 2006<br />
US$ Riel Million US$ Riel Million<br />
(Unaudited) (Unaudited)<br />
Standard loans:<br />
- Secured 322,512,095 1,291,016 178,366,178 723,632<br />
- Unsecured 432,311 1,731 557,837 2,263<br />
Substandard loans:<br />
- Secured 6,824,523 27,319 15,054,774 61,077<br />
- Unsecured - - - -<br />
Doubtful loans:<br />
- Secured 6,393,600 25,593 18,471,762 74,939<br />
- Unsecured - - - -<br />
Loss loans:<br />
- Secured 10,575,633 42,334 4,990,809 20,249<br />
- Unsecured - - - -<br />
346,738,162 1,387,993 217,441,360 882,160<br />
Further analysis of the above loans and advances to customers (gross) is provided below:<br />
<strong>2007</strong> 2006<br />
US$ Riel Million US$ Riel Million<br />
(Unaudited) (Unaudited)<br />
(a) Analysis by maturity<br />
1 – 3 months 6,938,627 27,775 2,851,888 11,570<br />
4 – 6 months 8,251,982 33,033 1,728,232 7,011<br />
7 – 12 months 192,375,703 770,080 126,829,723 514,548<br />
Over 1 year but within 3 years 87,303,867 349,477 55,640,688 225,735<br />
Over 3 years but within 5 years 12,594,433 50,415 9,533,679 38,678<br />
Over 5 years 39,273,550 157,213 20,857,150 84,618<br />
346,738,162 1,387,993 217,441,360 882,160<br />
(b) Analysis by currency<br />
US Dollar 345,465,486 1,382,898 215,609,730 874,729<br />
Khmer Riel 147,508 591 247,590 1,004<br />
Thai Baht 1,125,168 4,504 1,584,040 6,427<br />
346,738,162 1,387,993 217,441,360 882,160<br />
19
CANADIA BANK <strong>Plc</strong>.<br />
NOTES TO THE FINANCIAL STATEMENTS<br />
FOR THE YEAR ENDED 31 DECEMBER <strong>2007</strong><br />
5. LOANS AND ADVANCES TO CUSTOMERS (continued)<br />
<strong>2007</strong> 2006<br />
US$ Riel Million US$ Riel Million<br />
(Unaudited) (Unaudited)<br />
(c) Analysis by residence<br />
Residents 346,738,162 1,387,993 217,441,360 882,160<br />
346,738,162 1,387,993 217,441,360 882,160<br />
(d) Analysis by relationship<br />
Non-related parties 346,502,898 1,387,051 217,422,159 882,082<br />
Related parties 235,264 942 19,201 78<br />
346,738,162 1,387,993 217,441,360 882,160<br />
(e) Analysis by industry<br />
Manufacturing 32,429,041 129,813 17,392,828 70,563<br />
Building and construction 87,297,636 349,452 56,645,481 229,811<br />
Mortgage 43,782,506 175,261 25,215,490 102,299<br />
Wholesale and retail 70,570,455 282,494 33,971,257 137,821<br />
Import and export 13,850,276 55,443 6,391,476 25,930<br />
Transportation, storage and<br />
communication 11,293,512 45,208 5,307,483 21,532<br />
Services 75,747,889 303,219 66,310,152 269,020<br />
Agriculture 4,220,175 16,893 2,192,795 8,898<br />
Professional and private individuals 1,028,354 4,117 553,236 2,244<br />
Others 6,518,318 26,093 3,461,162 14,042<br />
(f) Interest rates<br />
The annual interest rates that applied during the year are as follows:<br />
346,738,162 1,387,993 217,441,360 882,160<br />
<strong>2007</strong> 2006<br />
Overdrafts 6% - 18% 6% - 18%<br />
Short term loans 7.2% - 21.6% 6.0% - 24%<br />
Long term loans 7.2% - 16.8% 7.2% - 18.0%<br />
Venture capital loans 5%-6.5% 4%-6%<br />
Micro-financing loans 12% - 21.6% 12% - 21.6%<br />
Mortgage loans 7.2% - 12% 7.2% - 18%<br />
Credit card facilities 18% - 22% 18% - 22%<br />
20
CANADIA BANK <strong>Plc</strong>.<br />
NOTES TO THE FINANCIAL STATEMENTS<br />
FOR THE YEAR ENDED 31 DECEMBER <strong>2007</strong><br />
6. OTHER ASSETS<br />
<strong>2007</strong> 2006<br />
US$ Riel Million Riel Million<br />
(Unaudited) (Unaudited)<br />
Deposits with companies outside<br />
Cambodia 234,890 940 259,066 1,051<br />
Accrued interest receivable 1,475,025 5,905 729,654 2,960<br />
Prepaid expenses 44,663 179 46,095 187<br />
Advances to constructors - - 728,226 2,954<br />
Other advances 734,152 2,939 564,005 2,288<br />
Travelers cheques purchased 36,517 146 135,028 548<br />
Guarantee deposits <strong>for</strong> MasterCard and<br />
Visa 940,119 3,763 900,878 3,655<br />
Foreclosed property receivable 900,000 3,603 - -<br />
Other debtors 1,488,164 5,957 246,682 1,001<br />
5,853,530 23,432 3,609,634 14,644<br />
7. INVESTMENT IN THE FOREIGN TRADE BANK OF CAMBODIA<br />
On 28 October 2005, the <strong>Bank</strong> entered into a sale and purchase agreement with the<br />
Privatisation Committee (acting on behalf of the Royal Government of Cambodia), to acquire<br />
46% of the share capital of Foreign Trade <strong>Bank</strong> of Cambodia (“FTB”) <strong>for</strong> a consideration of US$<br />
10,580,000.<br />
21
CANADIA BANK <strong>Plc</strong>.<br />
NOTES TO THE FINANCIAL STATEMENTS<br />
FOR THE YEAR ENDED 31 DECEMBER <strong>2007</strong><br />
8. PROPERTY AND EQUIPMENT<br />
Freehold<br />
Assets<br />
under Furniture and Office<br />
Computer<br />
and<br />
land Building construction fixtures equipment IT equipment Vehicles Total<br />
US$ US$ US$ US$ US$ US$ US$ US$<br />
At 1 January 2006<br />
Cost 4,114,764 2,914,195 978,010 267,672 1,272,810 1,234,706 871,121 11,653,278<br />
Accumulated depreciation - (988,954) - (210,945) (1,130,404) (832,197) (455,506) (3,618,006)<br />
Net book amount 4,114,764 1,925,241 978,010 56,727 142,406 402,509 415,615 8,035,272<br />
Year ended 31 December 2006<br />
Opening net book amount 4,114,764 1,925,241 978,010 56,727 142,406 402,509 415,615 8,035,272<br />
Additions 100,900 26,515 3,119,193 61,590 158,005 85,494 86,600 3,638,297<br />
Disposals/transfers (730,874) - - - (495) - (25,571) (756,940)<br />
Depreciation charge - (146,153) - (18,659) (60,122) (221,300) (106,588) (552,822)<br />
Closing net book value 3,484,790 1,805,603 4,097,203 99,658 239,794 266,703 370,056 10,363,807<br />
At 31 December 2006<br />
Cost 3,484,790 2,940,710 4,097,203 244,960 642,211 1,080,852 925,921 13,416,647<br />
Accumulated depreciation - (1,135,107) - (145,302) (402,417) (814,149) (555,865) (3,052,840)<br />
Net book amount 3,484,790 1,805,603 4,097,203 99,658 239,794 266,703 370,056 10,363,807<br />
In million Riel (unaudited) 14,138 7,325 16,622 404 973 1,082 1,502 42,046<br />
22
CANADIA BANK <strong>Plc</strong>.<br />
NOTES TO THE FINANCIAL STATEMENTS<br />
FOR THE YEAR ENDED 31 DECEMBER <strong>2007</strong><br />
8. PROPERTY AND EQUIPMENT (continued)<br />
Freehold<br />
land<br />
Assets<br />
under<br />
Building construction<br />
Furniture<br />
and<br />
fixtures<br />
Office<br />
equipment<br />
Computer<br />
and<br />
IT equipment Vehicles Total<br />
US$ US$ US$ US$ US$ US$ US$ US$<br />
Year ended 31 December <strong>2007</strong><br />
Opening net book amount 3,484,790 1,805,603 4,097,203 99,658 239,794 266,703 370,056 10,363,807<br />
Additions 360,000 322,691 7,583,811 170,844 374,665 777,914 489,483 10,079,408<br />
Disposals – net - - - (2,025) (1,148) - (85,599) (88,772)<br />
Depreciation charge - (150,122) - (38,397) (100,998) (297,587) (123,445) (710,549)<br />
Closing net book value 3,844,790 1,978,172 11,681,014 230,080 512,313 747,030 650,495 19,643,894<br />
At 31 December <strong>2007</strong><br />
Cost 3,844,790 3,261,401 11,681,014 413,330 1,008,039 1,733,515 1,314,813 23,258,902<br />
Accumulated depreciation - (1,285,229) - (183,250) (495,726) (986,485) (664,318) (3,615,008)<br />
Net book amount 3,844,790 1,978,172 11,681,014 230,080 512,313 747,030 650,495 19,643,894<br />
In million Riel (Unaudited) 15,391 7,919 46,759 921 2,051 2,989 2,604 78,634<br />
23
CANADIA BANK <strong>Plc</strong>.<br />
NOTES TO THE FINANCIAL STATEMENTS<br />
FOR THE YEAR ENDED 31 DECEMBER <strong>2007</strong><br />
9. COMPUTER SOFTWARE<br />
Work in<br />
Software progress Total<br />
US$ US$ US$<br />
At 1 January 2006<br />
Cost 478,251 - 478,251<br />
Accumulated amortisation (296,850) - (296,850)<br />
181,401 - 181,401<br />
Net book amount<br />
Year ended 31 December 2006<br />
Opening net book amount 181,401 - 181,401<br />
Additions 7,144 - 7,144<br />
Allocations (14) - (14)<br />
Amortisation charge (89,009) - (89,009)<br />
Closing net book amount 99,522 - 99,522<br />
At 31 December 2006<br />
Cost 485,395 - 485,395<br />
Accumulated amortisation (385,873) - (385,873)<br />
Net book amount 99,522 - 99,522<br />
In million Riel equivalents (unaudited) 404 - 404<br />
Year ended 31 December <strong>2007</strong><br />
Opening net book amount 99,522 - 99,522<br />
Additions 106,483 1,055,625 1,162,108<br />
Amortisation charge (89,355) - (89,355)<br />
Closing net book amount 116,650 1,055,625 1,172,275<br />
At 31 December <strong>2007</strong><br />
Cost 591,878 1,055,625 1,647,503<br />
Accumulated amortisation (475,228) - (475,228)<br />
Net book amount 116,650 1,055,625 1,172,275<br />
In million Riel equivalents (unaudited) 467 4,226 4,693<br />
10. PROPERTIES FORECLOSED<br />
These represent the collaterals held <strong>for</strong> loans which are in default and have been <strong>for</strong>eclosed<br />
in the ordinary course of banking operations. Foreclosed properties are accounted <strong>for</strong> in<br />
accordance with note 2.7. These assets are not held <strong>for</strong> operational purposes and will be<br />
disposed of in order to recover the outstanding amount within the maximum allowable period<br />
of twelve months as per the guidelines issued by the Central <strong>Bank</strong>.<br />
24
CANADIA BANK <strong>Plc</strong>.<br />
NOTES TO THE FINANCIAL STATEMENTS<br />
FOR THE YEAR ENDED 31 DECEMBER <strong>2007</strong><br />
11. DEPOSITS AND BALANCES OF OTHER BANKS<br />
<strong>2007</strong> 2006<br />
US$ Riel Million US$ Riel Million<br />
(Unaudited) (Unaudited)<br />
Current accounts 3,996,884 16,000 2,361,292 9,580<br />
Saving accounts 2,742,520 10,978 1,511,317 6,131<br />
6,739,404 26,978 3,872,609 15,711<br />
Current accounts are non interest bearing. Saving accounts of other banks earn interest rate<br />
at 0.75% per annum (2006: 0.75% per annum).<br />
12. DEPOSITS FROM NON-BANK CUSTOMERS<br />
<strong>2007</strong> 2006<br />
US$ Riel Million US$ Riel Million<br />
(Unaudited) (Unaudited)<br />
(a) Analysis by category<br />
Current accounts 29,873,554 119,584 17,895,055 72,600<br />
Saving accounts 255,969,220 1,024,645 142,029,873 576,215<br />
Fixed deposits 165,151,846 661,103 128,033,027 519,430<br />
Margin deposits 575,443 2,303 1,500,504 6,088<br />
451,570,063 1,807,635 289,458,459 1,174,333<br />
Margin deposits represent the aggregate balance of required non-interest bearing cash<br />
deposits from customers <strong>for</strong> letters of credit and guarantee outstanding at year end (note 26)<br />
<strong>2007</strong> 2006<br />
US$ Riel Million US$ Riel Million<br />
(Unaudited) (Unaudited)<br />
(b) Analysis by maturity<br />
Within 1 month 285,842,774 1,144,229 162,227,805 658,158<br />
1 to 3 months 28,957,230 115,916 47,392,359 192,271<br />
4 to 6 months 20,805,476 83,284 20,830,920 84,511<br />
7 to 12 months 35,514,774 142,166 46,057,776 186,856<br />
Over 1 year but within 3 years 80,449,809 322,040 12,949,599 52,537<br />
451,570,063 1,807,635 289,458,459 1,174,333<br />
25
CANADIA BANK <strong>Plc</strong>.<br />
NOTES TO THE FINANCIAL STATEMENTS<br />
FOR THE YEAR ENDED 31 DECEMBER <strong>2007</strong><br />
12. DEPOSITS FROM NON-BANK CUSTOMERS (continued)<br />
<strong>2007</strong> 2006<br />
US$ Riel Million US$ Riel Million<br />
(Unaudited) (Unaudited)<br />
(c) Analysis by resident status<br />
Residents 447,114,874 1,789,801 286,172,351 1,161,001<br />
Non-residents 4,455,189 17,834 3,286,108 13,332<br />
451,570,063 1,807,635 289,458,459 1,174,333<br />
(d) Analysis by relationship<br />
Related parties 514,751 2,061 646,302 2,622<br />
External customers 451,055,312 1,805,574 288,812,157 1,171,711<br />
451,570,063 1,807,635 289,458,459 1,174,333<br />
(e) Analysis by currency<br />
US dollar 445,153,522 1,781,950 282,835,562 1,147,463<br />
Khmer riel 4,282,805 17,144 4,766,953 19,340<br />
Thai baht 2,022,745 8,097 1,614,990 6,552<br />
Gold 110,991 444 240,954 978<br />
451,570,063 1,807,635 289,458,459 1,174,333<br />
(f) Analysis by customer<br />
Government and state<br />
enterprises 17,890,792 71,617 18,672,525 75,754<br />
Business enterprises 168,892,526 676,077 90,118,252 365,610<br />
Other financial institutions 170,582 683 - -<br />
Individuals 253,650,445 1,015,363 173,682,961 704,632<br />
Not-<strong>for</strong>-profit organisations 5,733,000 22,949 2,730,421 11,077<br />
Other 5,232,718 20,946 4,254,300 17,260<br />
(g) Interest rates<br />
451,570,063 1,807,635 289,458,459 1,174,333<br />
The current accounts and margin deposits are not interest bearing. The saving and fixed<br />
deposits bear the following interest rates per annum:<br />
<strong>2007</strong> 2006<br />
% %<br />
Saving deposits 0.75 - 2.00 0.75 - 2.00<br />
Fixed deposits 3.00 - 9.60 3.00 - 6.50<br />
26
CANADIA BANK <strong>Plc</strong>.<br />
NOTES TO THE FINANCIAL STATEMENTS<br />
FOR THE YEAR ENDED 31 DECEMBER <strong>2007</strong><br />
13. CURRENT TAX LIABILITIES<br />
<strong>2007</strong> 2006<br />
US$ Riel Million US$ Riel Million<br />
(Unaudited) (Unaudited)<br />
Balance at beginning of the year 2,786,518 11,154 1,258,013 5,104<br />
Charge <strong>for</strong> the year 5,028,697 20,130 3,164,356 12,838<br />
Income tax paid during the year (3,394,072) (13,586) (1,635,851) (6,637)<br />
4,421,143 17,698 2,786,518 11,305<br />
Provision <strong>for</strong> income tax is calculated by applying accounting net income be<strong>for</strong>e tax to the<br />
corporate tax rate. No effect has been taken into account on items deemed not deductible by<br />
the Law on Taxation.<br />
The <strong>Bank</strong> has obtained tax clearance up to the fiscal year 2004. The remaining tax years are<br />
currently being reassessed by the Tax Department and accordingly its tax <strong>for</strong> these years are<br />
not considered final. The outcome of a tax audit cannot, at present be determined.<br />
14. OTHER LIABILITIES<br />
<strong>2007</strong> 2006<br />
US$ Riel Million US$ Riel Million<br />
(Unaudited) (Unaudited)<br />
Accrued interest payable 3,641,960 14,579 2,523,841 10,239<br />
Provision <strong>for</strong> L/C claim - - 862,360 3,499<br />
Suspense account remittance - - 192,767 782<br />
Tax payable 100,716 403 67,731 275<br />
Accounts payable 42,288 169 5,079 21<br />
Accrued expense 152,697 611 107,516 436<br />
Amount due to MasterCard International 538,050 2,154 333,059 1,351<br />
Staff bonus payable 251,658 1,007 185,324 752<br />
Other liabilities 416,297 1,667 246,755 1,001<br />
15. BORROWINGS<br />
5,143,666 20,590 4,524,432 18,356<br />
<strong>2007</strong> 2006<br />
US$ Riel Million US$ Riel Million<br />
(Unaudited) (Unaudited)<br />
Borrowed funds from IFC - - 2,500,000 10,143<br />
Borrowed funds from KfW through MoEF 4,379,241 17,530 4,806,669 19,500<br />
4,379,241 17,530 7,306,669 29,643<br />
27
CANADIA BANK <strong>Plc</strong>.<br />
NOTES TO THE FINANCIAL STATEMENTS<br />
FOR THE YEAR ENDED 31 DECEMBER <strong>2007</strong><br />
15. BORROWINGS (continued)<br />
The US$2,500,000 borrowed from the International Finance Corporation ("IFC") was the<br />
result of a Loan Agreement between the <strong>Bank</strong> and the IFC dated 20 September 2004<br />
whereby IFC agreed to lend the <strong>Bank</strong> US$2,500,000 to be loaned out to eligible subborrowers<br />
to finance acquisition of residential property in Cambodia. On 22 January <strong>2007</strong>,<br />
the <strong>Bank</strong> fully settled IFC’s loan.<br />
The US$4,592,955 borrowed from KfW through the Ministry of Economy and Finance<br />
(“MoEF”) is the result of loan and finance agreements between the <strong>Bank</strong>, KfW and MoEF<br />
dated 23 April 2003 <strong>for</strong> SME term-lending I and dated 18 October 2005 <strong>for</strong> SME term-lending<br />
II. The agreements stipulate that the funds borrowed from KfW, through MoEF shall be sublent<br />
to Small and Medium Enterprises (“SME”) to build SME capacity in Cambodia. The subloans<br />
are classified as an asset of the <strong>Bank</strong>. During the year, the <strong>Bank</strong> repaid US$427,428 to<br />
MoEF.<br />
The interest rates during the year were as follows:<br />
<strong>2007</strong> 2006<br />
IFC 8.67% - 9.36% 6.67% - 8.67%<br />
KfW 5.01% - 6.00% 4.34% - 4.88%<br />
16. SUBORDINATED DEBT<br />
On 28 October 2005, the <strong>Bank</strong> entered into an agreement with Mr Pung Kheav Se (a main<br />
shareholder of the <strong>Bank</strong> through CIHP) to provide the <strong>Bank</strong> with a subordinated loan of US$<br />
7,080,000 <strong>for</strong> the purpose of acquiring shares in the Foreign Trade <strong>Bank</strong> of Cambodia. This<br />
subordinated debt is interest free with no fixed terms of repayment. This subordinated debt<br />
was approved in principle by the Central <strong>Bank</strong> on 28 December 2005.<br />
This subordinated debt is treated as a liability <strong>for</strong> financial reporting purpose and included as<br />
capital Tier II <strong>for</strong> the <strong>Bank</strong>’s Net Worth calculation in accordance with Guidelines of the<br />
Central <strong>Bank</strong>.<br />
17. SHARE CAPITAL<br />
<strong>2007</strong> 2006<br />
US$ Riel Million US$ Riel Million<br />
(Unaudited) (Unaudited)<br />
<strong>Canadia</strong> Investment Holding <strong>Plc</strong> (CIHP) 40,545,000 162,302 - -<br />
Overseas Cambodian Investment<br />
Corporation (OCIC) - - 40,545,000 164,491<br />
40,545,000 162,302 40,545,000 164,491<br />
28
CANADIA BANK <strong>Plc</strong>.<br />
NOTES TO THE FINANCIAL STATEMENTS<br />
FOR THE YEAR ENDED 31 DECEMBER <strong>2007</strong><br />
17. SHARE CAPITAL (continued)<br />
During the year, OCIC conducted a corporate restructuring whereby it has transferred its<br />
investment in the <strong>Bank</strong> to <strong>Canadia</strong> Investment Holding <strong>Plc</strong> (“CIHP”), a newly established<br />
company. The restructuring was approved by the Central <strong>Bank</strong> and the Ministry of<br />
Commerce. Consequently, CIHP is now the new holding company of the <strong>Bank</strong>.<br />
The total authorised amount of share capital as at 31 December <strong>2007</strong> was 40,545,000<br />
shares (2006: 40,545,000 shares) with a par value of US$ 1 per share.<br />
<strong>2007</strong> 2006<br />
US$ Riel Million US$ Riel Million<br />
(Unaudited) (Unaudited)<br />
At beginning of the year 40,545,000 162,302 26,000,000 105,482<br />
Increase during the year - - 4,000,000 16,228<br />
Dividends paid and re-invested - - 10,545,000 42,781<br />
At end of the year 40,545,000 162,302 40,545,000 164,491<br />
On both 29 April 2006 and 26 June 2006, the Board of Director approved a US$2 million<br />
increase in paid up capital through the issuance of 2,000,000 ordinary shares at a par value<br />
of US$1 per share resulting in an overall increase in paid up capital of US$4 million.<br />
A directors resolution was passed on 12 June 2006 which specified that the US$10,545,000<br />
declared as a dividend was to be reinvested in the share capital of the <strong>Bank</strong>.<br />
The capital increase in aggregate of US$14,545,000 was approved by the Central <strong>Bank</strong> on<br />
21 July 2006.<br />
18. INTEREST INCOME<br />
<strong>2007</strong> 2006<br />
US$ Riel Million US$ Riel Million<br />
(Unaudited) (Unaudited)<br />
Loans and advances to customers 31,713,930 126,952 21,697,042 88,025<br />
Placements with banks 3,478,277 13,923 2,843,760 11,537<br />
Placements with the Central <strong>Bank</strong> 1,222,377 4,893 809,688 3,285<br />
36,414,584 145,768 25,350,490 102,847<br />
29
CANADIA BANK <strong>Plc</strong>.<br />
NOTES TO THE FINANCIAL STATEMENTS<br />
FOR THE YEAR ENDED 31 DECEMBER <strong>2007</strong><br />
19. INTEREST EXPENSE<br />
<strong>2007</strong> 2006<br />
US$ Riel Million US$ Riel Million<br />
(Unaudited) (Unaudited)<br />
Deposits from customers 9,101,653 36,434 5,890,144 23,896<br />
Borrowings - KfW and IFC 266,088 1,065 414,674 1,683<br />
9,367,741 37,499 6,304,818 25,579<br />
20. FEE AND COMMISSION INCOME<br />
<strong>2007</strong> 2006<br />
US$ Riel Million US$ Riel Million<br />
(Unaudited) (Unaudited)<br />
Commissions from remittance<br />
service 1,789,023 7,161 1,366,507 5,544<br />
Loan commitment fees 1,326,735 5,311 745,001 3,022<br />
Fees <strong>for</strong> telex, fax and phone 436,734 1,748 592,003 2,402<br />
Other fees and commissions 807,485 3,232 528,296 2,143<br />
Income from letters of credit 204,336 818 221,086 897<br />
Miscellaneous loan fees and service<br />
charges 727,905 2,914 537,135 2,179<br />
Fees <strong>for</strong> credit card advances and<br />
late charge 109,623 439 181,743 738<br />
ATM/Credit card annual fees 121,811 488 231,752 940<br />
5,523,652 22,111 4,403,523 17,865<br />
30
CANADIA BANK <strong>Plc</strong>.<br />
NOTES TO THE FINANCIAL STATEMENTS<br />
FOR THE YEAR ENDED 31 DECEMBER <strong>2007</strong><br />
21. GENERAL ADMINISTRATIVE EXPENSES<br />
<strong>2007</strong> 2006<br />
US$ Riel Million US$ Riel Million<br />
(Unaudited) (Unaudited)<br />
Payroll and other staff cost 3,373,229 13,503 2,720,967 11,039<br />
Depreciation and amortisation<br />
expenses 799,904 3,202 654,359 2,655<br />
Repair and maintenance 92,252 369 86,333 350<br />
Building rental 166,020 664 135,440 549<br />
Utilities 237,128 949 200,568 814<br />
Loss on <strong>for</strong>eign exchange currency 309,098 1,237 504,547 2,047<br />
Charitable donations and gifts 523,824 2,097 304,276 1,234<br />
Travel, accommodation and food 249,106 997 274,478 1,114<br />
Advertising and public relations 337,173 1,350 217,578 883<br />
Legal and professional fees 172,122 689 177,933 722<br />
Taxes and duties 272,510 1,091 164,344 667<br />
Communication 229,280 918 152,791 620<br />
Motor vehicles 96,460 386 79,453 322<br />
Furniture, fixture and equipment<br />
expenses 42,456 170 5,251 21<br />
Stationery and supplies 32,639 131 71,162 289<br />
Printing and <strong>for</strong>ms 58,878 236 31,758 129<br />
Insurance 18,672 75 17,808 72<br />
Loss on disposal of property and<br />
equipment 235 1 21,431 87<br />
Other operational costs 438,212 1,754 493,474 2,002<br />
7,449,198 29,819 6,313,951 25,616<br />
22. PROVISION FOR LOAN LOSSES - NET<br />
<strong>2007</strong> 2006<br />
US$ Riel Million US$ Riel Million<br />
(Unaudited) (Unaudited)<br />
Provision <strong>for</strong> loan losses (16,772,419) (67,140) (8,719,679) (35,375)<br />
Recovery of loan losses 15,631,743 62,574 6,465,144 26,229<br />
(1,140,676) (4,566) (2,254,535) (9,146)<br />
31
CANADIA BANK <strong>Plc</strong>.<br />
NOTES TO THE FINANCIAL STATEMENTS<br />
FOR THE YEAR ENDED 31 DECEMBER <strong>2007</strong><br />
23. INCOME TAX EXPENSE<br />
a) Income tax expense<br />
<strong>2007</strong> 2006<br />
US$ Riel Million US$ Riel Million<br />
(Unaudited) (Unaudited)<br />
Current 4,421,143 17,698 2,786,518 11,305<br />
Deferred tax - - - -<br />
4,421,143 17,698 2,786,518 11,305<br />
In accordance with Cambodian tax laws, the <strong>Bank</strong> has an obligation to pay corporate income<br />
tax on the higher of either the Tax on Profit at the rate of 20% of taxable profit or Minimum<br />
Tax at 1% of turnover inclusive of all taxes except Value Added Tax.<br />
b).<br />
Reconciliation between income tax expense and accounting profit:<br />
<strong>2007</strong> 2006<br />
US$ Riel Million US$ Riel Million<br />
(Unaudited) (Unaudited)<br />
Accounting profit be<strong>for</strong>e income tax 25,143,485 100,649 15,681,051 63,618<br />
Non-deductible expenses <strong>for</strong> tax<br />
purposes - - 140,730 571<br />
Taxable income 25,143,485 100,649 15,821,781 64,189<br />
Income tax calculated at the rate of<br />
20% 5,028,697 20,130 3,164,356 12,838<br />
c) Other tax matter<br />
The <strong>Bank</strong>’s tax returns are subject to periodic examination by the Tax Department. Some<br />
areas of tax laws and regulations may be open to different interpretation, there<strong>for</strong>e tax<br />
amounts reported in the financial statements could be changed at a later date, upon final<br />
determination by the Tax Department.<br />
32
CANADIA BANK <strong>Plc</strong>.<br />
NOTES TO THE FINANCIAL STATEMENTS<br />
FOR THE YEAR ENDED 31 DECEMBER <strong>2007</strong><br />
24. CASH USED IN OPERATIONS<br />
<strong>2007</strong> 2006<br />
US$ Riel Million US$ Riel Million<br />
(Unaudited) (Unaudited)<br />
Cash flows from operating activities<br />
Profit be<strong>for</strong>e income tax 25,143,485 100,649 15,681,051 63,618<br />
Adjustments <strong>for</strong>:<br />
Provision <strong>for</strong> loan losses – net 1,140,676 4,566 2,254,535 9,146<br />
Depreciation and amortisation 799,904 3,202 654,358 2,655<br />
Gain on disposals of property and<br />
equipment (1,373) (5) 21,481 87<br />
Operating profit be<strong>for</strong>e changes in<br />
working capital 27,082,692 108,412 18,611,425 75,506<br />
Increase/(decrease) in cash attributable<br />
to the change in operating assets and<br />
liabilities:<br />
Payment to the Board of Directors - - (40,000) (161)<br />
Deposits and placements with banks 3,656,072 14,635 (2,156,072) (8,747)<br />
Loans and advances to customers, net (128,137,122) (517,568) (49,930,573) (202,568)<br />
Other assets (2,243,895) (8,982) (674,547) (2,737)<br />
Foreclosed properties (314,051) (1,257) (1,391,486) (5,645)<br />
Deposits and balances from banks 2,866,795 11,476 1,038,955 4,215<br />
Deposits from non-bank customers 162,111,604 648,933 54,611,643 221,559<br />
Other liabilities 619,234 7,114 (1,157,158) (4,702)<br />
Cash generated from operations 65,641,330 262,763 18,912,187 76,720<br />
25. CASH AND CASH EQUIVALENTS<br />
<strong>2007</strong> 2006<br />
US$ Riel Million US$ Riel Million<br />
(Unaudited) (Unaudited)<br />
Cash on hand 27,501,167 110,087 25,141,461 101,999<br />
Deposits and placements with the<br />
Central <strong>Bank</strong> 33,601,000 134,505 26,735,124 108,464<br />
Deposits and placements with banks 78,785,657 315,379 51,342,797 208,298<br />
139,887,824 559,971 103,219,382 418,761<br />
33
CANADIA BANK <strong>Plc</strong>.<br />
NOTES TO THE FINANCIAL STATEMENTS<br />
FOR THE YEAR ENDED 31 DECEMBER <strong>2007</strong><br />
26. COMMITMENTS AND CONTINGENCIES<br />
(i)<br />
Loan commitment, guarantee and other financial liabilities<br />
At 31 December <strong>2007</strong> and 2006, the <strong>Bank</strong> had the contractual amounts of the <strong>Bank</strong>’s offbalance<br />
sheet financial instruments that commit it to extend credit to customers, guarantee<br />
and other facilities as follows:<br />
<strong>2007</strong> 2006<br />
US$ Riel Million US$ Riel Million<br />
(Unaudited) (Unaudited)<br />
Documentary credits 6,926,989 27,741 2,637,587 10,701<br />
<strong>Bank</strong>ers' acceptance 3,286,418 13,156 2,020,180 8,196<br />
Per<strong>for</strong>mance and bankers‘ guarantees 759,482 3,040 855,779 3,472<br />
Tender bonds - - 51,901 211<br />
Unused portion of approved credit<br />
facilities 39,748,989 159,115 25,502,232 103,463<br />
Other 108,190 433 102,007 414<br />
No material losses are anticipated as a result of these transactions.<br />
50,833,068 203,485 31,169,686 126,457<br />
(ii)<br />
Lease commitments<br />
Where the <strong>Bank</strong> is the lessee, the future minimum lease payments under non-cancelable<br />
operating leases of its branches in Phnom Penh and provinces are as follows:<br />
<strong>2007</strong> 2006<br />
US$ Riel Million Riel Million<br />
(Unaudited) (Unaudited)<br />
Not later than one year 176,080 705 129,600 526<br />
Later than one year and not later<br />
than three years 294,580 1,179 326,380 1,324<br />
Over three years 2,446,352 9,793 2,574,372 10,444<br />
2,917,012 11,677 3,030,352 12,294<br />
34
CANADIA BANK <strong>Plc</strong>.<br />
NOTES TO THE FINANCIAL STATEMENTS<br />
FOR THE YEAR ENDED 31 DECEMBER <strong>2007</strong><br />
26. COMMITMENTS AND CONTINGENCIES (continued)<br />
(iii)<br />
Capital commitments<br />
At 31 December <strong>2007</strong>, the <strong>Bank</strong> had capital commitments in respect of new office buildings,<br />
new core banking software and other related services.<br />
<strong>2007</strong> 2006<br />
US$ Riel Million Riel Million<br />
Authorised and contracted <strong>for</strong>: (Unaudited) (Unaudited)<br />
Not later than one year 1,425,464 5,706 1,777,650 7,212<br />
Later than one year and not later<br />
than three years 559,753 2,241 2,281,185 9,254<br />
1,985,217 7,947 4,058,835 16,466<br />
The estimated total capital expenditures of the <strong>Bank</strong>’s new head office building are<br />
approximately US$18.7 million of which costs incurred and capitalised under the property<br />
and equipment to date is US$11.7 million. Out of the US$7 million of outstanding capital<br />
expenditure, an amount of US$1.9 million has been contracted <strong>for</strong>.<br />
27. RELATED PARTY BALANCE AND TRANSACTIONS<br />
The <strong>Bank</strong> is controlled by <strong>Canadia</strong> Investment Holding <strong>Plc</strong> (2006: Overseas Cambodian<br />
Investment Corporation) which owns 100% the <strong>Bank</strong>’s share.<br />
The following transactions were carried out with related party:<br />
(a) Loans and advances to directors and key management<br />
<strong>2007</strong> 2006<br />
US$ Riel Million US$ Riel Million<br />
(Unaudited) (Unaudited)<br />
Loans and advances to directors and<br />
key management<br />
Beginning of year 19,201 77 - -<br />
Loans advanced during the year 223,673 895 185,227 751<br />
Loan repayments received 7,610 30 1,026 4<br />
Interest received 13,858 56 787 3<br />
End of the year 235,264 942 187,040 758<br />
The loans to directors and key management carry interest ranging from 10% to 12% (2006:<br />
10% to 12%).<br />
35
CANADIA BANK <strong>Plc</strong>.<br />
NOTES TO THE FINANCIAL STATEMENTS<br />
FOR THE YEAR ENDED 31 DECEMBER <strong>2007</strong><br />
27. RELATED PARTY BALANCE AND TRANSACTIONS (continued)<br />
(b)<br />
Deposits with related parties<br />
<strong>2007</strong> 2006<br />
US$ Riel Million US$ Riel Million<br />
(Unaudited) (Unaudited)<br />
Deposits with FTB 188,582 755 172,537 700<br />
The <strong>Bank</strong> has correspondence account with FTB. This account is non-interest bearing.<br />
(c)<br />
Deposits from related parties<br />
<strong>2007</strong> 2006<br />
US$ Riel Million US$ Riel Million<br />
(Unaudited) (Unaudited)<br />
Saving deposits from<br />
<strong>Canadia</strong> Investment Holding <strong>Plc</strong> 66,413 266 153,729 624<br />
Directors and key management 448,338 1,795 492,573 1,998<br />
514,751 2,061 646,302 2,622<br />
Interest paid 3,307 13 1,881 8<br />
The saving deposits from <strong>Canadia</strong> Investment Holding <strong>Plc</strong>, directors and key management<br />
bear interest at 0.75% (2006: 0.75%).<br />
(d)<br />
Borrowings<br />
<strong>2007</strong> 2006<br />
US$ Riel Million US$ Riel Million<br />
(Unaudited) (Unaudited)<br />
Loans from directors, interest free - - 185,227 751<br />
Subordinated debt from Mr Pung<br />
Keav Se 7,080,000 28,341 7,080,000 28,724<br />
7,080,000 28,341 7,265,227 29,475<br />
The subordinate debt is interest free with no fixed term of repayment. This subordinate debt<br />
was to finance the acquisition of FTB. The proceed from the future disposal of FTB’s shares<br />
is to pay back this subordinate debt.<br />
36
CANADIA BANK <strong>Plc</strong>.<br />
NOTES TO THE FINANCIAL STATEMENTS<br />
FOR THE YEAR ENDED 31 DECEMBER <strong>2007</strong><br />
27. RELATED PARTY BALANCE AND TRANSACTIONS (continued)<br />
(e)<br />
Key management compensation<br />
<strong>2007</strong> 2006<br />
US$ Riel Million US$ Riel Million<br />
(Unaudited) (Unaudited)<br />
Salaries and short term benefits 383,725 1,536 108,335 440<br />
(f)<br />
Other<br />
<strong>2007</strong> 2006<br />
US$ Riel Million US$ Riel Million<br />
(Unaudited) (Unaudited)<br />
Rental income 1,200 5 1,200 5<br />
The <strong>Bank</strong> provides office space to CIH.<br />
28. FINANCIAL RISK MANAGEMENT<br />
(a)<br />
Credit risk<br />
The <strong>Bank</strong> assumes exposure to credit risk which is the risk that a counterparty will be unable<br />
to pay amounts in full when due. The <strong>Bank</strong> structures the levels of credit risk it undertakes by<br />
placing limits on the amount of risk accepted in relation to one borrower, or group of<br />
borrowers, and the geographical and industry segments. Procedures of risk limit setting,<br />
monitoring, usage, and control are governed by internal regulations. Such risks are<br />
monitored on a regular basis.<br />
Exposure to credit risk is managed through regular analysis of the ability of the borrowers<br />
and potential borrowers to meet interest and capital repayment obligations and reviewing<br />
these lending limits where appropriate. Exposure to credit risk is also managed in part by<br />
obtaining collateral and corporate or personal guarantees as well as by providing <strong>for</strong> loan<br />
losses.<br />
Commitments to extend credit represent unused portions of approved loans, guarantees or<br />
letters of credit. In general, all of the <strong>Bank</strong>'s guarantees and letters of credit are collateralised<br />
with cash deposits or collateral pledged to the <strong>Bank</strong>, and accordingly the <strong>Bank</strong> normally<br />
assumes minimal risks.<br />
37
CANADIA BANK <strong>Plc</strong>.<br />
NOTES TO THE FINANCIAL STATEMENTS<br />
FOR THE YEAR ENDED 31 DECEMBER <strong>2007</strong><br />
28. FINANCIAL RISK MANAGEMENT (continued)<br />
(b)<br />
Market risk<br />
(i)<br />
Interest rate risk<br />
Cash flow interest rate risk is the risk that future cash flows of a financial instrument will<br />
fluctuate because of changes in market interest rates. Interest margins may increase as a<br />
result of such changes but may reduce or create losses in the event that unexpected<br />
movements arise.<br />
The <strong>Bank</strong>’s interest rates are generally fixed on a short term basis. Interest rates that are<br />
contractually fixed on both assets and liabilities are often renegotiated to reflect current<br />
market conditions. The management is satisfied that the <strong>Bank</strong>'s position is such that<br />
exposure to movements in interest rates is minimised.<br />
The table in note 29-1 summarises the <strong>Bank</strong>'s exposure to interest rate risks. Included in the<br />
table are the <strong>Bank</strong>'s assets and liabilities at carrying amounts, categorised by the earlier of<br />
contractual re-pricing or maturity dates.<br />
(ii)<br />
Foreign currency exchange risk<br />
Foreign currency exchange risk refers to the adverse exchange rate movements on <strong>for</strong>eign<br />
currency exchange positions taken from time to time.<br />
The <strong>Bank</strong> has no material exposure to currency risk as it transacts essentially in US$.<br />
Significant presence of US$ is the normal practice of banks operating in Cambodia.<br />
(c)<br />
Liquidity risk<br />
Liquidity risk is defined as the risk when the maturity of assets and liabilities do not match.<br />
Liquidity risk management at the <strong>Bank</strong> is per<strong>for</strong>med on the basis of measuring liquidity<br />
surplus/deficit and liquidity ratios that are calculated using scenario analysis.<br />
The matching and/or controlled mismatching of the maturities and interest rates of assets<br />
and liabilities is fundamental to the management of the <strong>Bank</strong>. It is unusual <strong>for</strong> banks ever to<br />
be completely matched since business transactions are often of an uncertain term and of<br />
different types. An unmatched position potentially enhances profitability, but can also<br />
increase the risk of losses.<br />
The table in note 29-2 analyses the assets and liabilities of the <strong>Bank</strong> into relevant maturity<br />
based on the remaining period at the balance sheet date to the contractual or estimated<br />
maturity dates.<br />
38
CANADIA BANK <strong>Plc</strong>.<br />
NOTES TO THE FINANCIAL STATEMENTS<br />
FOR THE YEAR ENDED 31 DECEMBER <strong>2007</strong><br />
29. INTEREST RATE, LIQUIDITY, CURRENCY AND CREDIT RISKS (continued)<br />
29.1. Interest rate risk<br />
Up to 1<br />
month 1-3 months 4-6 months<br />
7-12<br />
months 1 to 5 years<br />
Over<br />
5 years<br />
Non-interest<br />
bearing Total<br />
US$ US$ US$ US$ US$ US$ US$ US$<br />
As at 31 December <strong>2007</strong><br />
Assets<br />
Cash on hand - - - - - - 27,501,166 27,501,166<br />
Balances with the Central <strong>Bank</strong> 25,000,000 - - - - 4,054,500 42,002,249 71,056,749<br />
Balances with other banks and financial<br />
institutions 69,789,926 1,000,000 - - - - 8,995,731 79,785,657<br />
Loan and advances to customers – net 1,083,354 5,855,272 8,251,982 189,351,329 97,957,720 31,062,339 (1,158,006) 332,403,990<br />
Other assets - - - - - 1,175,009 4,678,521 5,853,530<br />
Investment in FTB - - - - - - 10,580,000 10,580,000<br />
Properties <strong>for</strong>eclosed - - - - - - 4,512,741 4,512,741<br />
Total assets 95,873,280 6,855,272 8,251,982 189,351,329 97,957,720 36,291,848 97,112,402 531,693,833<br />
Liabilities<br />
Deposits and balances of banks 2,742,520 - - - - - 3,996,884 6,739,404<br />
Deposits from non-bank customers 255,969,220 28,957,230 20,805,476 35,514,774 80,449,809 - 29,873,554 451,570,063<br />
Current tax liabilities - - - - - - 4,421,143 4,421,143<br />
Other liabilities - - - - - - 5,143,666 5,143,666<br />
Other borrowings - 213,714 - 213,714 3,951,813 - - 4,379,241<br />
Subordinated debt - - - - 7,080,000 - - 7,080,000<br />
Total liabilities 258,711,740 29,170,944 20,805,476 35,728,488 91,481,622 - 43,435,247 479,333,517<br />
Interest sensitivity gap (162,838,460) (22,315,672) (12,553,494) 153,622,841 6,476,098 36,291,848 53,677,155 52,360,316<br />
In million Riel equivalents (Unaudited) (651,842) (89,330) (50,252) 614,952 25,924 145,276 214,870 209,598<br />
39
CANADIA BANK <strong>Plc</strong>.<br />
NOTES TO THE FINANCIAL STATEMENTS<br />
FOR THE YEAR ENDED 31 DECEMBER <strong>2007</strong><br />
29. INTEREST RATE, LIQUIDITY, CURRENCY AND CREDIT RISKS (continued)<br />
29.1 Interest rate risk (continued)<br />
Up to 1<br />
Over 5 Non-interest<br />
month 1-3 months 4-6 months 7-12 months 1 to 5 years years bearing Total<br />
As at 31 Dec 2006 US$ US$ US$ US$ US$ US$ US$ US$<br />
Assets<br />
Cash on hand - - - - - - 25,141,461 25,141,461<br />
Balances with the Central <strong>Bank</strong> 19,000,000 - - - 4,054,500 - 29,636,357 52,690,857<br />
Balances with other banks and<br />
financial institutions 51,342,796 4,656,072 - - - - - 55,998,868<br />
Loan and advances to customers- net 2,851,887 1,728,232 120,388,519 60,795,307 19,643,600 - 205,407,545<br />
Other assets - - - - - 1,711,565 1,898,069 3,609,634<br />
Investment in FTB - - - - - - 10,580,000 10,580,000<br />
Properties <strong>for</strong>eclosed - - - - - - 4,198,690 4,198,690<br />
Total assets 73,194,683 6,384,304 120,388,519 60,795,307 23,698,100 1,711,565 71,454,577 357,627,055<br />
Liabilities<br />
Deposits and balances of other banks 1,511,316 - - - - - 2,361,293 3,872,609<br />
Deposits from non-bank customers 146,000,954 47,392,359 20,830,920 46,057,776 12,949,599 - 16,226,851 289,458,459<br />
Current tax liabilities - - - - - - 2,786,518 2,786,518<br />
Other liabilities - - - - - - 4,524,432 4,524,432<br />
Other borrowings 2,500,000 213,714 - 213,714 3,524,383 854,858 - 7,306,669<br />
Subordinate debt - - - - 7,080,000 - - 7,080,000<br />
Total liabilities 150,012,270 47,606,073 20,830,920 46,271,490 23,553,982 854,858 25,899,094 315,028,687<br />
Interest sensitivity gap (76,817,587) (41,221,769) 99,557,599 14,523,817 144,118 856,707 45,555,483 42,598,368<br />
In Riel Million equivalent (Unaudited) (311,649) (167,237) 403,905 58,923 585 3,476 184,818 172,822<br />
40
CANADIA BANK <strong>Plc</strong>.<br />
NOTES TO THE FINANCIAL STATEMENTS<br />
FOR THE YEAR ENDED 31 DECEMBER <strong>2007</strong><br />
29. INTEREST RATE, LIQUIDITY, CURRENCY AND CREDIT RISKS (continued)<br />
29.2 Liquidity risk<br />
Up to 1<br />
month<br />
1-3<br />
months<br />
4-6<br />
months<br />
7-12<br />
months<br />
1 to 5<br />
years<br />
Over 5<br />
years<br />
No fixed<br />
maturity<br />
date Total<br />
US$ US$ US$ US$ US$ US$ US$ US$<br />
As at 31 DECEMBER <strong>2007</strong><br />
Assets<br />
Cash on hand 27,501,166 - - - - - - 27,501,166<br />
Balances with Central <strong>Bank</strong> 33,601,000 - - - - - 37,455,749 71,056,749<br />
Balances with other banks and financial<br />
institutions 78,785,657 1,000,000 - - - - - 79,785,657<br />
Loan and advances to customers – net 903,875 5,548,506 7,871,659 189,059,891 97,957,720 31,062,339 - 332,403,990<br />
Other assets 4,678,521 - - - - - 1,175,009 5,853,530<br />
Investment in FTB - - - - - - 10,580,000 10,580,000<br />
Properties <strong>for</strong>eclosed - 4,512,741 - - - - - 4,512,741<br />
Total assets 145,470,219 11,061,247 7,871,659 189,059,891 97,957,720 31,062,339 49,210,758 531,693,833<br />
Liabilities<br />
Deposits and balances of banks 6,739,404 - - - - - - 6,739,404<br />
Deposits from non-bank customers 285,842,774 28,957,230 20,805,476 35,514,774 80,340,309 109,500 - 451,570,063<br />
Current tax liabilities - 4,421,143 - - - - - 4,421,143<br />
Other liabilities 4,403,921 739,745 - - - - - 5,143,666<br />
Other borrowings - 213,714 - 213,714 3,951,813 - - 4,379,241<br />
Subordinated debt - - - - 7,080,000 - - 7,080,000<br />
Total liabilities 296,986,099 34,331,832 20,805,476 35,728,488 91,372,122 109,500 - 479,333,517<br />
Net liquidity surplus / (gap) (151,515,880) (23,270,585) (12,993,817) 153,331,403 6,585,598 30,952,839 49,210,758 52,360,316<br />
In million Riel equivalents (Unaudited) (606,518) (93,152) (51,774) 613,785 26,362 123,904 196,991 209,598<br />
41
CANADIA BANK <strong>Plc</strong>.<br />
NOTES TO THE FINANCIAL STATEMENTS<br />
FOR THE YEAR ENDED 31 DECEMBER <strong>2007</strong><br />
29. INTEREST RATE, LIQUIDITY, CURRENCY AND CREDIT RISKS (continued)<br />
29.2 Liquidity risk (continued)<br />
Up to 1 month 1-3 months 4-6 months 7-12 months 1 to 5 years<br />
Over 5<br />
years<br />
No fixed<br />
maturity date Total<br />
US$ US$ US$ US$ US$ US$ US$ US$<br />
As at 31 December 2006<br />
Assets<br />
Cash on hand 25,141,461 - - - - - - 25,141,461<br />
Balances with Central <strong>Bank</strong> 26,735,124 - - - - - 25,955,733 52,690,857<br />
Balances with other banks and<br />
financial institutions 51,342,796 4,656,072 - - - - - 55,998,868<br />
Loan and advances to customers 2,851,888 1,728,232 120,388,518 60,795,307 19,643,600 - 205,407,545<br />
Other assets 1,169,843 - - 728,226 - - 1,711,565 3,609,634<br />
Investment in FTB - - - - - - 10,580,000 10,580,000<br />
Properties <strong>for</strong>eclosed - - - 4,198,690 - - - 4,198,690<br />
Total assets 107,241,112 6,384,304 120,388,518 65,722,223 19,643,600 - 38,247,298 357,627,055<br />
Liabilities<br />
Deposits and balances of banks 3,872,609 - - - - - - 3,872,609<br />
Deposits from non-bank customers 162,227,805 47,392,359 20,830,920 46,057,776 12,949,599 - - 289,458,459<br />
Current tax liabilities - 2,786,518 - - - - - 2,786,518<br />
Other liabilities 4,524,432 - - - - - - 4,524,432<br />
Other borrowings 2,500,000 - - - - 4,806,669 - 7,306,669<br />
Subordinated debt - - - - 7,080,000 - - 7,080,000<br />
Total liabilities 173,124,846 50,178,877 20,830,920 46,057,776 20,029,599 (4,806,669) - 315,028,687<br />
Net liquidity surplus / (gap) (65,883,734) (43,794,573) 99,557,598 19,664,447 (385,999) (4,806,669) 38,247,298 42,598,368<br />
In Riel Million equivalent (Unaudited) (267,290) (177,675) 403,906 79,779 (1,566) (19,501) 155,169 172,822<br />
42
CANADIA BANK <strong>Plc</strong>.<br />
NOTES TO THE FINANCIAL STATEMENTS<br />
FOR THE YEAR ENDED 31 DECEMBER <strong>2007</strong><br />
29. INTEREST RATE, LIQUIDITY, CURRENCY AND CREDIT RISKS (continued)<br />
29.3. CURRENCY ANALYSIS<br />
US$ KHR EUR THB GOLD OTHER TOTAL<br />
US$<br />
equivalents<br />
US$<br />
equivalents<br />
US$<br />
equivalents<br />
US$<br />
equivalents<br />
US$<br />
equivalents<br />
US$<br />
equivalents<br />
US$<br />
equivalents<br />
As at 31 DECEMBER <strong>2007</strong><br />
Assets<br />
Cash on hand 24,642,650 1,534,355 7,725 1,177,053 130,673 8,710 27,501,166<br />
Balances with the central bank 70,669,355 387,394 - - - - 71,056,749<br />
Balances with other banks and financial<br />
institutions 75,008,275 4,084 1,903,474 - - 2,869,824 79,785,657<br />
Loan and advances to customers: 330,622,806 147,507 - 1,633,677 - - 332,403,990<br />
Other assets 4,945,104 857,447 5,744 - - 45,235 5,853,530<br />
Investment in FTB 10,580,000 - - - - - 10,580,000<br />
Property <strong>for</strong>eclosed 4,512,741 - - - - - 4,512,741<br />
Total assets 520,980,931 2,930,787 1,916,943 2,810,730 130,673 2,923,769 531,693,833<br />
Liabilities<br />
Deposits and balances of banks 6,734,292 5,112 - - - - 6,739,404<br />
Deposits from non-bank customers 445,153,522 4,282,805 - 2,022,745 110,991 - 451,570,063<br />
Current tax liabilities - 4,421,143 - - - - 4,421,143<br />
Other liabilities 4,959,737 34,225 - - 4,323 145,381 5,143,666<br />
Other borrowings 4,379,241 - - - - - 4,379,241<br />
Subordinated debt 7,080,000 - - - - - 7,080,000<br />
Total liabilities 468,306,792 8,743,285 - 2,022,745 115,314 145,381 479,333,517<br />
Net Balance Sheet Position 52,674,139 (5,812,498) 1,916,943 787,985 15,359 2,778,388 52,360,316<br />
In million Riel equivalents (Unaudited) 210,855 (23,267) 7,673 3,154 61 11,122 209,598<br />
43
CANADIA BANK <strong>Plc</strong>.<br />
NOTES TO THE FINANCIAL STATEMENTS<br />
FOR THE YEAR ENDED 31 DECEMBER <strong>2007</strong><br />
29. INTEREST RATE, LIQUIDITY, CURRENCY AND CREDIT RISKS (continued)<br />
29.3. CURRENCY ANALYSIS (continued)<br />
US$ KHR EUR THB Gold OTHER TOTAL<br />
As at 31 December 2006<br />
US$<br />
equivalent<br />
US$<br />
equivalent<br />
US$<br />
equivalent<br />
US$<br />
equivalent<br />
US$<br />
equivalent<br />
US$<br />
equivalent<br />
US$<br />
equivalent<br />
ASSETS<br />
Cash on hand 21,610,912 2,299,532 12,619 513,104 240,954 464,340 25,141,461<br />
Balances with central bank 51,473,847 1,217,010 - - - - 52,690,857<br />
Balances with banks and OFIs 52,958,442 29,989 1,983,021 686,018 - 341,398 55,998,868<br />
Loans and advances to customers 203,721,313 102,192 - 1,584,040 - - 205,407,545<br />
Other assets 3,061,816 496,701 24,140 26,305 - 672 3,609,634<br />
Investments in FTB 10,580,000 - - - - - 10,580,000<br />
Properties <strong>for</strong>eclosed 4,198,690 - - - - - 4,198,690<br />
TOTAL ASSETS 347,605,020 4,145,424 2,019,780 2,809,467 240,954 806,410 357,627,055<br />
LIABILITIES<br />
Deposits and balances of banks 2,920,881 951,728 - - - - 3,872,609<br />
Deposits from non-bank customers 282,835,562 4,766,953 - 1,614,990 240,954 - 289,458,459<br />
Current tax liabilities - 2,786,518 - - - - 2,786,518<br />
Other liabilities 4,280,002 217,322 - 27,108 - - 4,524,432<br />
Other borrowings 7,306,669 - - - - - 7,306,669<br />
Subordinated debt 7,080,000 - - - - - 7,080,000<br />
TOTAL LIABILITIES 304,423,114 8,722,521 - 1,642,098 240,954 - 315,028,687<br />
Net Balance Sheet Position 43,181,906 (4,577,097) 2,019,780 1,167,369 - 806,410 42,598,368<br />
In million Riel equivalents (Unaudited) 175,189 (18,569) 8,194 4,736 - 3,272 172,822<br />
44