+ Financial Statement for 2007 - Canadia Bank Plc.

CANADIA BANK Plc. 

FINANCIAL STATEMENTS 

FOR THE YEAR ENDED 31 DECEMBER 2007



FOR THE YEAR ENDED 31 DECEMBER 2007 

CONTENTS 

Page 

DIRECTORS’ REPORT 1 – 5 

INDEPENDENT AUDITOR’S REPORT 6 – 7 


Balance sheet 8 

Income statement 9 

Statement of changes in equity 10 

Cash flow statement 11 

Notes to the financial statements 12 – 44 

APPENDIX : NOTES ON COMPLIANCE WITH CENTRAL BANK PRAKAS* 45 – 55 

* Appendices do not form part of the audited financial statements.

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CANADIA BANK PLC. 

No. 265 - 269 

Ang Duong Street 

Phnom Penh, Cambodia 

Tel 

Fax : (855) 23 - 427064 

Telex : CANADIA KA36188 

E-mail :canadia@camnet.conn.kgr 

SWIFT : CADI KH PP 

: (855) 23 - 2152E6 (9 Lines) 

DIRECTORS' REPORT 

The directors hereby submit their report and the audited financial statements of Canadia Bank 

Plc. ("the Bank") for the year ended 31 December 2007. 

CANADIA BANK PLC. 

The Bank was incorporated in 1991 under a joint venture between the National Bank of 

Cambodia ("the Central Bank") and certain overseas Cambodians. On 4 February 1998, the 

Central Bank disposed of all its shares to private investors. 

In 2001, the Overseas Cambodian lnvestment Corporation ("OClC"), a public limited company 

incorporated in the Kingdom of Cambodia, acquired '100% of the shares of the Bank and 

consequently became the holding company of the Bank. 

During the year, OCIC conducted a corporate restructuring whereby it has transferred its 

investment in the bank to Canadia Investment Holding Plc ("ClHP"), a newly established 

company. The restructuring was approved by the Central Bank and the Ministry of 

Commerce. Consequently, CIHP is now the new holding company of the Bank. 

PRINCIPAL ACTIVITIES 

The principal activities of the Bank are comprised of the operation of core banking business 

and the provision of related financial services through the Bank's head office and various 

branches in Phnom Penh and the orovinces. 

There have been no significant changes in the nature of these principal activities during the 

year. 

RESULTS OF OPERATION AND DIVIDEND 

The results of operations for the year ended 31 December 2007 are set out in the income 

statement on page 9. 

There were no dividends (2006: US$10,545,000) declared or paid during the year ended 31 

December 2007. 

RESERVES AND PROVISIONS 

There were no material movements to or from reserves and orovisions durinq the financial 

year other than those disclosed in the financial statements.

BAD AND DOUBTFUL LOANS 

Before the financial statements of the Bank were drawn up, the directors took reasonable 

steps to ascertain that action had been taken in relation to the writing off of bad loans and the 

making of provisions for doubtful loans, and satisfied themselves that all known bad loans had 

been written off and that adequate provisions have been made for bad and doubtful loans. 

At the date of this report, the directors are not aware of any circumstances which would render 

the amount written off for bad loans or the amount of the provision for bad and doubtful loans 

in the financial statements of the Bank inadequate to any material extent. 

CURRENT ASSETS 

Before the financial statements of the Bank were drawn up, the directors took reasonable 

steps to ensure that any current assets, other than loans, which were unlikely to be realised in 

the ordinary course of business at their value as shown in the accounting records of the Bank, 

have been written down to an amount which they might be expected to realise. 

At the date of this report, the directors are not aware of any circumstances which would render 

the values attributed to the current assets in the financial statements of the Bank misleading in 

any material respect. 

VALUATION METHODS 

At the date of this report, the directors are not aware of any circumstances that have arisen 

which would render adherence to the existing method of valuation of assets and liabilities in 

the financial statements of the Bank misleading or inappropriate in any material respect. 

CONTINGENT AND OTHER LIABILITIES 

At the date of this report, there does not exist: 

(a) 

(b) 

any charge on the assets of the Bank which has arisen since the end of the financial 

year which secures the liabilities of any other person, or 

any contingent liability in respect of the Bank that has arisen since the end of the 

financial year other than in the ordinary course of banking business. 

No contingent or other liability of the Bank has become enforceable, or is likely to become 

enforceable within the period of twelve months after the end of the financial year which, in the 

opinion of the directors, will or may have a material effect on the ability of the Bank to meet its 

obligations as and when they fall due. 

2

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 Bank, which would render any amount 

stated in the financial statements misleading in any material respect. 

ITEMS OF AN UNUSUAL NATURE 

The results of the operations of the Bank for the financial year were not, in the opinion of the 

directors, materially affected by any items, transaction or event of a material and unusual 

nature. There has not arisen in the interval between the end of the financial year and the date 

of this report any item, transaction or event of a material and unusual nature likely, in the 

opinion of the directors, to substantially affect the results of the operations of the Bank for the 

year in which this report is made. 

THE BOARD OF DIRECTORS 

The members of the Board of Directors holding office during the year and as at the date of this 

report are: 

Mr Pung Kheav Se, General Manager (Executive) 

Mrs Lim Sophany, Director (Executive) 

Mr Pung Way, Director (Executive) 

Mr Jimmy Leow Min Fong , Chairman of Audit Committee (Non-executive) 

Mr Charles Vann, Deputy General Manager (Executive) 

Mrs Pung Carolyne, Assistant to General Manager (Executive), 

(appointed on 10 February 2007) 

Mr Chen Lee Yiaw Hui, Senior Manager (Executive) (appointed on 10 February 2007) 

Mr Shen Jie Qing, (Non-executive) (appointed on 23 March 2007) 

Dr Sam Ghanty (resigned on 28 February 2007) 

The appointment of Mr Shen Jie Qing as a Director of the Bank is pending approval from the 

Central Bank as at the date of this report. 

DIRECTORS' INTERESTS 

The Bank’s directors who hold shares in CIHP, the ultimate parent company of the Bank are: 

Mr Pung Kheav Se, Mr Pung Way and Mrs Lim Sophany. 

DIRECTORS' BENEFITS 

During and at the end of the financial year, no arrangements existed, to which the Bank was a 

party, with the object of enabling directors of the Bank to acquire benefits by means of the 

acquisition of shares in or debentures of the Bank or any other body corporate; and 

No director of the Bank has received or become entitled to receive any benefit by reason of a 

contract made by the Bank with the directors or with a firm of which the director is a member, 

or with a company which the director has a substantial financial interest other than those 

disclosed in the financial statements. 

3

RESPONSIBILITIES OF THE DIRECTORS IN RESPECT OF THE FINANCIAL 

STATEMENTS 

The Board of Directors is responsible to ensure that the financial statements are properly 

drawn up so as to present fairly, in all material respects, the financial position of the Bank as at 

31 December 2007 and of its financial performance and cash flows for the year then ended. In 

preparing these financial statements, the Board of Directors are required to: 

i) adopt appropriate accounting policies which are supported by reasonable and prudent 

judgements and estimates and then apply them consistently; 

ii) comply with the disclosure requirements and guidelines issued by the Central Bank and 

Cambodian Accounting Standards or, if there have been any departures in the interests 

of true and fair presentation, these have been appropriately disclosed, explained and 

quantified in the financial statements; 

iii) 

iv) 

v) 

maintain adequate accounting records and an effective system of internal controls; 

prepare the financial statements on a going concern basis unless it is inappropriate to 

assume that the Bank will continue operations in the foreseeable future; and 

effectively control and direct the Bank in all material decisions affecting the operations 

and performance and ascertain that such have been properly reflected in the financial 

statements. 

The Board of Directors confirm that the Bank has complied with the above requirements in 

preparing the financial statements. 

Signed in accordance with a resolution of the Board of Directors. 

/^, I 

(",,\' v''- 

Mr Pung Kheav Se 

General Manager 

Date'.24 March 2008 

Mr Charles Vann 

Deputy General Manager 

Date:24 March 2008

APPROVAL OF THE FINANCIAL STATEMENTS 

The accompanying financial statements, present fairly, in all material respects, the financial 

position of the Bank as at 31 December 2007, and of its financial performance and its cash 

flows for the year then ended in accordance with the guidelines issued by the Central Bank 

and Cambodian Accounting Standards, were approved by the Board of Directors. 

Mr Pung Kheav Se 

General Manager 

DaIe:24 March 2008 

C\L\) - 

Mr Charles Vann 

Deputy General Manager 

Date:24 March 2008

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Phnom Penh 

Kingdom of Combodio. 

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I ndependent auditor's report 

To the Shareholders of Canadia Bank Plc. 

We have audited the accompanying financial statements of Canadia Bank Plc. ("the Bank") 

which comprise the balance sheet as of 3'1 December 2007 and the income statement, 

statement of changes in equity and cash flow statement for the year then ended and a 

summary of significant accounting policies and other explanatory notes on pages 8to 44. 

Board's Responsibility for the Financial Statements 

The Board of Directors is responsible for the preparation and fair presentation of these 

financial statements in accordance with guidelines issued by the Central Bank and Cambodian 

Accounting Standards. This responsibility includes: designing, implementing and maintaining 

internal control relevant to the preparation and fair presentation of financial statements that are 

free from material misstatement, whether due to fraud or error; selecting and applying 

appropriate accounting policies; and making accounting estimates that are reasonable in the 

circumstances. 

A u d itor's Re spo n si bil ity 

Our responsibility is to express an opinion on these financial statements based on our audit. 

We conducted our audit in accordance with International Standards on Auditing. Those 

Standards require that we comply with ethical requirements and plan and perform the audit to 

obtain reasonable assurance whether the financial statements are free from material 

misstatement. 

An audit involves performing procedures to obtain audit evidence about the amounts and 

disclosures in the financial statements. The procedures selected depend on the auditor's 

judgment, including the assessment of the risks of material misstatement of the financial 

statements, whether due to fraud or error. In making those risk assessments, the auditor 

considers internal controls relevant to the entity's preparation and fair presentation of the 

financial statements in order to design audit procedures that are appropriate in the 

circumstances, but not for the purpose of expressing an opinion on the effectiveness of the 

entity's internal control. An audit also includes evaluating the appropriateness of accounting 

policies used and the reasonableness of accounting estimates made by management, as well 

as evaluating the overall presentation of the financial statements. 

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a 

basis for our audit ooinion.

frrcM$snusu5{aPERs@ 

Opinion 

In our opinion, the accompanying financial statements present fairly, in all material respects, 

the financial position of the Bank as of 31 December 2007, and of its financial performance 

and its cash flows for the year then ended in accordance with the guidelines issued by the 

Central Bank and Cambodian Accounting Standards. 

(Cambodia) Limited 

Penh, Kingdom of Cambodia 

Date:24 March 2008


BALANCE SHEET 

AS AT 31 DECEMBER 2007 

2007 2006 

Note US$ Riel Million US$ Riel Million 

(Unaudited) 

(Unaudited) 

ASSETS 

Cash on hand 27,501,166 110,087 25,141,461 101,998 

Balances with the Central Bank 3 71,056,749 284,440 52,690,857 213,767 

Balances with other banks and financial 

institutions 4 79,785,657 319,382 55,998,868 227,187 

Loans and advances to customers - net 5 332,403,990 1,330,613 205,407,545 833,338 

Other assets 6 5,853,530 23,432 3,609,634 14,644 

Investment in the Foreign Trade Bank 7 10,580,000 42,352 10,580,000 42,924 

Property and equipment 8 19,643,894 78,634 10,363,807 42,046 

Computer software 9 1,172,275 4,693 99,522 404 

Properties foreclosed 10 4,512,741 18,065 4,198,690 17,035 

Total assets 552,510,002 2,211,698 368,090,384 1,493,343 

LIABILITIES AND 

SHAREHOLDERS’ EQUITY 

LIABILITIES 

Deposits and balances of other banks 11 6,739,404 26,978 3,872,609 15,711 

Deposits from non-bank customers 12 451,570,063 1,807,635 289,458,459 1,174,333 

Current tax liabilities 13 4,421,143 17,698 2,786,518 11,305 

Other liabilities 14 5,143,666 20,590 4,524,432 18,356 

Borrowings 15 4,379,241 17,530 7,306,669 29,643 

Subordinated debt 16 7,080,000 28,341 7,080,000 28,724 

Total liabilities 479,333,517 1,918,772 315,028,687 1,278,072 

SHAREHOLDERS’ EQUITY 

Share capital 17 40,545,000 162,302 40,545,000 164,491 

Retained earnings 32,631,485 130,624 12,516,697 50,780 

Total shareholders’ equity 73,176,485 292,926 53,061,697 215,271 

Total liabilities and shareholders’ 

equity 552,510,002 2,211,698 368,090,384 1,493,343 

The accompanying notes on pages 12 to 44 form an integral part of these 

financial statements. 

8


STATEMENT OF INCOME 



Note US$ Riel Million US$ Riel Million 

(Unaudited) 

(Unaudited) 

Interest income 18 36,414,584 145,768 25,350,490 102,847 

Interest expense 19 (9,367,741) (37,499) (6,304,818) (25,579) 

Net interest income 27,046,843 108,269 19,045,672 77,268 

Fee and commission income 20 5,523,652 22,111 4,403,523 17,865 

Fee and commission expense (528,071) (2,114) (370,931) (1,505) 

Net fee and commission income 4,995,581 19,997 4,032,592 16,360 

Other operating income 1,690,935 6,768 1,171,273 4,752 

General administrative expenses 21 (7,449,198) (29,819) (6,313,951) (25,616) 

Operating income before 

extensions of credit 26,284,161 105,215 17,935,586 72,764 

Provision for loan losses - net 22 (1,140,676) (4,566) (2,254,535) (9,146) 

Profit before income tax 25,143,485 100,649 15,681,051 63,618 

Income tax expense 23 (5,028,697) (20,130) (3,164,356) (12,838) 

Net income 20,114,788 80,519 12,516,695 50,780 



9


STATEMENT OF CHANGES IN EQUITY 


Share Retained 

capital earnings Total 

US$ US$ US$ 

Balance as at 1 January 2006 26,000,000 10,585,002 36,585,002 

Net profit for the year - 12,516,695 12,516,695 

Payment to the Board of Directors - (40,000) (40,000) 

Proceeds from issue of shares 4,000,000 - 4,000,000 

Dividends paid - (10,545,000) (10,545,000) 

Dividends reinvested in share capital 10,545,000 - 10,545,000 

Balance as at 31 December 2006 40,545,000 12,516,697 53,061,697 

In million Riel equivalents (Unaudited) 164,491 50,780 215,271 

Balance as at 1 January 2007 40,545,000 12,516,697 53,061,697 

Net profit for the year - 20,114,788 20,114,788 

Balance as at 31 December 2007 40,545,000 32,631,485 73,176,485 

In million Riel equivalents (Unaudited) 162,302 130,624 292,926 



10


CASH FLOW STATEMENT 



US$ Riel Million US$ Riel Million 

(Unaudited) 

(Unaudited) 

Cash flows from operating activities 

Cash used in operations (note 24) 65,641,330 262,763 18,912,187 76,720 

Income tax paid (3,394,072) (13,587) (1,635,851) (6,637) 

Net cash generated from operating 

activities 62,247,258 249,176 17,276,336 70,083 

Cash flows from investing activities 

Statutory deposits and reserve account 

with the Central Bank (11,500,017) (46,035) (7,354,516) (29,837) 

Investment in securities - - 2,214,014 8,982 

Proceeds from sale of property and 

equipment 90,146 361 735,469 2,984 

Purchases of property and equipment (10,079,408) (40,348) (3,638,297) (14,761) 

Purchases of computer software (1,162,108) (4,652) (7,144) (29) 

Net cash generated from investing 

activities (22,651,387) (90,674) (8,050,474) (32,661) 

Cash flows from financing activities 

Proceeds from issue of shares - - 14,545,000 59,009 

Dividends paid - - (10,545,000) (42,781) 

Proceed from borrowing - KfW - - 1,814,669 7,362 

Repayment of borrowed funds – KfW (427,429) (1,710) - - 

Repayments of borrowed funds – IFC (2,500,000) (10,008) - - 

Net cash generated from financing 

activities (2,927,429) (11,718) 5,814,669 23,590 

Net changes in cash and cash equivalents 36,668,442 146,784 15,040,531 61,019 

Cash and cash equivalents: 

At beginning of year 103,219,382 413,187 88,178,851 357,742 

At end of year (Note 25) 139,887,824 559,971 103,219,382 418,761 



11


NOTES TO THE FINANCIAL STATEMENTS 


1. BACKGROUND INFORMATION 

Canadia Bank Plc. was incorporated in 1991 under a joint venture between the National Bank of 

Cambodia ("the Central Bank") and certain overseas Cambodians. On 4 February 1998, the 

Central Bank disposed of all its shares to private investors. 

In 2001, the Overseas Cambodian Investment Corporation ("OCIC"), a public limited company 

incorporated in the Kingdom of Cambodia, acquired 100% of the shares of the Bank and 

consequently became the holding company of the Bank. 


investment in the Bank to Canadia Investment Holding Plc (“CIHP”), a newly established 

company. The restructuring was approved by the Central Bank and the Ministry of Commerce. 

Consequently, CIHP is now the new holding company of the Bank. 

The principal activities of the Bank comprise the operations of core banking business and the 

provision of related financial services through its head office and various branches in Phnom 

Penh and the provinces. The Bank holds a commercial banking license which was renewed for 

an indefinite period on 18 October 2006. There have been no significant changes in the nature 

of these principal activities during the year. 

The registered office of the Bank is currently located at No. 265-269 Ang Duong Street, Phnom 

Penh, Kingdom of Cambodia. 

As at 31 December 2007, the Bank has 602 employees (31 December 2006: 460 employees). 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

The significant accounting policies adopted in the preparation of these financial statements are 

set out below. These policies have been consistently applied to all the years presented, unless 

otherwise stated. 

2.1 Basis of preparation 

The financial statements have been prepared in accordance with the guidelines issued by the 

Central Bank and Cambodian Accounting Standards. The financial statements have been 

prepared under the historical cost convention, as modified by the revaluation of properties 

foreclosed. The accompanying financial statements are prepared for jurisdiction of Cambodia 

and are not intended to present the financial position, financial performance and cash flows in 

accordance with generally accepted accounting principles and practice in other countries and 

those who are not informed about Cambodia's accounting principles, procedures and practices. 

For the sole purpose of complying with Announcement No. B795-139-AN dated 5 December 

1995 of the Central Bank, a translation to Khmer Riel 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 of and for the year ended 31 December 2007 using the official rate of 

exchange regulated by the Central Bank as at the reporting date, which was US$1 to Riel 4,003 

(31 December 2006: US$1 to Riel 4,057). Such translation amounts are unaudited and should 

not be construed as representations that the US$ amounts represent, or have been or could be, 

converted into Khmer Riel at that or any other rate. 

12




2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 

2.2 Foreign currency transactions 

Items included in the financial statements of the Bank are measured using United States dollars 

(US$). The financial statements are presented in US$, a widely accepted currency in Cambodia. 

Transactions in currencies other than US$ are translated into US$ at the exchange rate 

prevailing at the date of transaction. Foreign exchange gains and losses resulting from the 

settlement of such transactions and from the translation at the year end exchange rate from 

monetary assets and liabilities denominated in currencies other than US$, are recognised in the 

income statement. 

The principal rates used to translate monetary assets and liabilities at the balance sheet date 

are: 


Khmer Riel RIEL 4,003 4,057 

Euro EUR 0.68 0.76 

Canadian dollars CAD 0.97 1.16 

Great British Pound GBP 0.50 0.51 

Hong Kong dollars HKD 7.69 7.69 

Japanese Yen JPY 100.00 125.00 

Thai Baht THB 40.00 40.00 

Australian dollars AUD 1.12 1.27 

2.3 Cash and cash equivalents 

Cash and cash equivalents includes cash on hand and deposits and placements with the 

Central Bank, other banks and other financial institutions with original maturities of three months 

or less. 

2.4 Statutory deposits with the Central Bank 

Statutory deposits represent mandatory reserve deposits and cash maintained with the Central 

Bank in compliance with the Law on Banking and Financial Institutions and are not available to 

finance the Bank’s day-to-day operations. These statutory deposits are not considered as part of 

cash and cash equivalents for the purpose of the cash flow statement. 

13





2.5 Loans and advances to customers 

All loans and advances to customers are stated in the balance sheet as the amount of principal, 

less any amounts written off and the provision for loan losses. Short term loans are those with a 

repayment date within one year of the date the loan was advanced. Long term loans are those 

with a final repayment date of more than one year of the date the loan was advanced. 

Loans are written off when there is no realistic prospect of recovery. Recoveries of loans and 

advances previously written off or provided for decrease the amount of the provision for losses 

on loans and advances in the income statement. 

2.6 Provision for loan losses 

The Bank is required to follow the mandatory credit classification and provisioning as required 

by Prakas B7-02-145 dated 7 June 2002 issued by the Central Bank. The Prakas requires 

commercial banks to classify their loan portfolio into four classes and the mandatory level of 

specific provisioning is provided, depending on the classification concerned and regardless of 

the assets (except cash) pledged as collateral as following: 

Rate of provision 

Standard 0% 

Substandard 10% 

Doubtful 30% 

Loss 100% 

2.7 Foreclosed properties 

Foreclosed properties are carried at the lower of the outstanding balance of the related loan or 

advance and the estimated net realisable value of the property at the date of foreclosure. 

Gains/losses are recognised in the statement of income at the date of disposal. 

2.8 Investment in Foreign Trade Bank of Cambodia 

The Bank entered into a sale and purchase agreement on 28 October 2005 with the 

Privatisation Committee (acting on behalf of the Royal Government of Cambodia), to acquire 

46% of the share capital of Foreign Trade Bank of Cambodia (“FTB”). This investment was 

recognised at cost and accounted for using the accounting for investments in accordance with 

the Cambodia Accounting Standard (“CAS”) 25. The dividend income received from the 

investment in FTB is credited to the income statement. 

2.9 Other credit related commitments 

In the normal course of business, the Bank enters into other credit related commitments 

including loan commitments, letters of credit and guarantees. The accounting policy and 

provision methodology are similar to those for originated loans as noted above. Specific 

provisions are raised against other credit related commitments when losses are considered 

probable. 

14





2.10 Interest income and expenses 

Interest earned on loans and advances to customers, deposits with the Central Bank and other 

banks are recognised on a daily accruals basis, except where serious doubt exists as to the 

collectibility of loans and advances to customers, in which case, no interest income is 

recognised. The policy on the suspension of interest is in conformity with the Central Bank’s 

guidelines on the suspension of interest on non-performing loans and provision for bad and 

doubtful debts. 

Interest expense on deposits of customer and settlement accounts of other banks and 

borrowings are recognised on a daily accruals basis. 

2.11 Fee and commission income 

Fee and commission income is generally recognised on an accruals basis when the service has 

been provided. Fee and commission income comprises income received from inward and 

outward bank transfers, bank guarantees, letters of credit, ATM/Visa and Mastercard charges. 

Loan commitment fees are deferred and recongised as other income in the income statement 

over the loan term. Unamortised loan commitment fees are presented as a deduction to loan. 

In previous reporting periods, loan commitment fees were recongised as income when incurred. 

No restatement of prior year's accounts was made as the amount was immaterial. 

2.12 Property and equipment 

Property and equipment is stated at cost less accumulated depreciation, except freehold land 

which is not depreciated. Repairs and maintenance costs are charged to the income statement 

during the financial year in which they are incurred. The following rates and method of 

depreciation are used to allocate their cost to income statement: 

Buildings – straight-line 5% 

Renovations – straight-line 5% 

Motor vehicles – declining 25% 

Office equipment and furniture – declining 25% 

Computers and IT equipment – declining 50% 

2.13 Operating lease 

Leases in which a significant portion of the risks and rewards of ownership are retained by the 

lessor are classified as operating leases. Payments made under operating leases are charged 

to the income statement on a straight-line basis over the period of the lease. 

2.14 Computer software 

Acquired computer software licenses are capitalised on the basis of cost incurred to acquired 

the specific software and bring it to use. These costs are amortised over two-year period using 

declining balance method. 

Costs associated with developing or maintaining computer software programmes are recognised 

as an expense as incurred. 

15





2.15 Income tax 

Income tax is calculated on the basis of taxable profit, which is calculated by adjusting the 

financial result for certain expense items in accordance with Cambodian regulations. Taxes 

other than on income are recorded within operating expenses. 

Deferred income tax will be provided in full, using the liability method, on temporary differences 

arising between tax bases of assets and liabilities and their carrying amounts in the financial 

statements. Deferred tax assets are recognised to the extent that it is probable that future 

taxable profit will be available against which the temporary differences can be utilised. 

2.16 Subordinated debts 

Subordinated debts are treated as financial liabilities for financial reporting purpose and included 

as a Tier II line item in the calculation of the Bank’s net worth in accordance with the guidelines 

of the Central Bank. Subordinated debts are interest-free with no fixed terms of repayment. 

2.17 Related party transactions 

Parties are considered to be related if one party has the ability to control the other party or can 

exercise significant influence over the other party in making financial and operating decisions. 

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 or voting rights and includes 

any individual who participates in the administration, direction, management or internal control of 

the Bank. 

Transactions with related parties and related account balances are disclosed in note 27 to the 


2.18 Comparative figures 

Certain comparative figures have been reclassified to conform with the current year’s 

presentation of the financial statements. 

16




3. BALANCES WITH THE CENTRAL BANK 



(Unaudited) (Unaudited) 

Current accounts, non-interest bearing 8,601,000 34,430 7,735,124 31,381 

Term deposits, Interest bearing 25,000,000 100,075 19,000,000 77,083 

Statutory capital deposit, non-interest 

bearing 4,054,500 16,230 4,054,500 16,449 

Reserve deposits, non interest bearing 33,401,249 133,705 21,901,233 88,854 

71,056,749 284,440 52,690,857 213,767 

Term deposits with the Central Bank will mature within one month and earn interest at the rates 

ranging from 4.00% to 4.19% per annum (2006: 3.79% to 4.06% per annum). 

Under Prakas No. B7-01-136 dated 15 October 2001; the Bank is required to maintain a 

statutory deposit of 10% of its registered capital. This statutory deposit is interest bearing at 1/2 

of the six-month period refinancing rate set by the Central Bank for statutory deposits 

maintained in Riel and 3/8 six-month SIBOR rate for statutory deposits maintained in US$. 

Reserve accounts represent the minimum reserve requirement which is calculated at 8% of the 

total deposits from customers and settlement accounts of other banks. 

4. BALANCES WITH OTHER BANKS AND FINANCIAL INSTITUTIONS 




In Cambodia: 

Current accounts, non-interest 

bearing 740,862 2,966 427,210 1,733 

Outside Cambodia: 

Current accounts 78,044,795 312,413 50,915,586 206,564 

Fixed deposits 1,000,000 4,003 4,656,072 18,890 

79,785,657 319,382 55,998,868 227,187 

Analysis by maturity: 

Within one month 78,785,657 315,379 51,342,796 208,297 

One to three months 1,000,000 4,003 4,656,072 18,890 

79,785,657 319,382 55,998,868 227,187 

Current accounts with banks outside Cambodia earn interest at the rate from 0% to 5.14% 

(2006: 0% to 5.21%). Fixed deposits earn interest at 5% per annum (2006: 5% per annum). 

17




5. LOANS AND ADVANCES TO CUSTOMERS 




Commercial loans: 

Overdrafts 79,924,839 319,939 57,814,259 234,552 

Short term loans 134,021,723 536,489 82,428,900 334,414 

Long term loans 87,452,221 350,071 51,307,270 208,153 

Micro-financing loans 147,507 590 145,398 592 

301,546,290 1,207,089 191,695,827 777,711 

Consumer loans: 

Mortgage loans 43,778,017 175,243 25,215,490 102,299 

Credit cards 1,028,354 4,117 530,043 2,150 

Other consumer loans 385,501 1,544 - - 

45,191,872 180,904 25,745,533 104,449 

Total loans (gross) 346,738,162 1,387,993 217,441,360 882,160 

Provisions for loan losses - specific (*) (13,176,166) (52,744) (12,033,815) (48,822) 

Unamortised loan commitment fees (1,158,006) (4,636) - - 

(*) Movements on the provisions for loan losses are as follows: 

332,403,990 1,330,613 205,407,545 833,338 




At beginning of the year 12,033,815 48,171 9,856,220 39,987 

Exchange differences 2,235 9 1,962 8 

Charges for the year 16,772,419 67,140 8,719,679 35,376 

Amount written off (560) (2) (78,902) (320) 

Recovery during the year (15,631,743) (62,574) (6,465,144) (26,229) 

At end of the year 13,176,166 52,744 12,033,815 48,822 

18




5. LOANS AND ADVANCES TO CUSTOMERS (continued) 

Further classification of loans and advances to customers (gross) is as follows: 




Standard loans: 

- Secured 322,512,095 1,291,016 178,366,178 723,632 

- Unsecured 432,311 1,731 557,837 2,263 

Substandard loans: 

- Secured 6,824,523 27,319 15,054,774 61,077 

- Unsecured - - - - 

Doubtful loans: 

- Secured 6,393,600 25,593 18,471,762 74,939 


Loss loans: 

- Secured 10,575,633 42,334 4,990,809 20,249 


346,738,162 1,387,993 217,441,360 882,160 

Further analysis of the above loans and advances to customers (gross) is provided below: 




(a) Analysis by maturity 

1 – 3 months 6,938,627 27,775 2,851,888 11,570 

4 – 6 months 8,251,982 33,033 1,728,232 7,011 

7 – 12 months 192,375,703 770,080 126,829,723 514,548 

Over 1 year but within 3 years 87,303,867 349,477 55,640,688 225,735 

Over 3 years but within 5 years 12,594,433 50,415 9,533,679 38,678 

Over 5 years 39,273,550 157,213 20,857,150 84,618 

346,738,162 1,387,993 217,441,360 882,160 

(b) Analysis by currency 

US Dollar 345,465,486 1,382,898 215,609,730 874,729 

Khmer Riel 147,508 591 247,590 1,004 

Thai Baht 1,125,168 4,504 1,584,040 6,427 

346,738,162 1,387,993 217,441,360 882,160 

19




5. LOANS AND ADVANCES TO CUSTOMERS (continued) 




(c) Analysis by residence 

Residents 346,738,162 1,387,993 217,441,360 882,160 

346,738,162 1,387,993 217,441,360 882,160 

(d) Analysis by relationship 

Non-related parties 346,502,898 1,387,051 217,422,159 882,082 

Related parties 235,264 942 19,201 78 

346,738,162 1,387,993 217,441,360 882,160 

(e) Analysis by industry 

Manufacturing 32,429,041 129,813 17,392,828 70,563 

Building and construction 87,297,636 349,452 56,645,481 229,811 

Mortgage 43,782,506 175,261 25,215,490 102,299 

Wholesale and retail 70,570,455 282,494 33,971,257 137,821 

Import and export 13,850,276 55,443 6,391,476 25,930 

Transportation, storage and 

communication 11,293,512 45,208 5,307,483 21,532 

Services 75,747,889 303,219 66,310,152 269,020 

Agriculture 4,220,175 16,893 2,192,795 8,898 

Professional and private individuals 1,028,354 4,117 553,236 2,244 

Others 6,518,318 26,093 3,461,162 14,042 

(f) Interest rates 

The annual interest rates that applied during the year are as follows: 

346,738,162 1,387,993 217,441,360 882,160 


Overdrafts 6% - 18% 6% - 18% 

Short term loans 7.2% - 21.6% 6.0% - 24% 

Long term loans 7.2% - 16.8% 7.2% - 18.0% 

Venture capital loans 5%-6.5% 4%-6% 

Micro-financing loans 12% - 21.6% 12% - 21.6% 

Mortgage loans 7.2% - 12% 7.2% - 18% 

Credit card facilities 18% - 22% 18% - 22% 

20




6. OTHER ASSETS 


US$ Riel Million Riel Million 


Deposits with companies outside 

Cambodia 234,890 940 259,066 1,051 

Accrued interest receivable 1,475,025 5,905 729,654 2,960 

Prepaid expenses 44,663 179 46,095 187 

Advances to constructors - - 728,226 2,954 

Other advances 734,152 2,939 564,005 2,288 

Travelers cheques purchased 36,517 146 135,028 548 

Guarantee deposits for MasterCard and 

Visa 940,119 3,763 900,878 3,655 

Foreclosed property receivable 900,000 3,603 - - 

Other debtors 1,488,164 5,957 246,682 1,001 

5,853,530 23,432 3,609,634 14,644 

7. INVESTMENT IN THE FOREIGN TRADE BANK OF CAMBODIA 

On 28 October 2005, the Bank entered into a sale and purchase agreement with the 

Privatisation Committee (acting on behalf of the Royal Government of Cambodia), to acquire 

46% of the share capital of Foreign Trade Bank of Cambodia (“FTB”) for a consideration of US$ 

10,580,000. 

21




8. PROPERTY AND EQUIPMENT 

Freehold 

Assets 

under Furniture and Office 

Computer 

and 

land Building construction fixtures equipment IT equipment Vehicles Total 

US$ US$ US$ US$ US$ US$ US$ US$ 

At 1 January 2006 

Cost 4,114,764 2,914,195 978,010 267,672 1,272,810 1,234,706 871,121 11,653,278 

Accumulated depreciation - (988,954) - (210,945) (1,130,404) (832,197) (455,506) (3,618,006) 

Net book amount 4,114,764 1,925,241 978,010 56,727 142,406 402,509 415,615 8,035,272 

Year ended 31 December 2006 

Opening net book amount 4,114,764 1,925,241 978,010 56,727 142,406 402,509 415,615 8,035,272 

Additions 100,900 26,515 3,119,193 61,590 158,005 85,494 86,600 3,638,297 

Disposals/transfers (730,874) - - - (495) - (25,571) (756,940) 

Depreciation charge - (146,153) - (18,659) (60,122) (221,300) (106,588) (552,822) 

Closing net book value 3,484,790 1,805,603 4,097,203 99,658 239,794 266,703 370,056 10,363,807 

At 31 December 2006 

Cost 3,484,790 2,940,710 4,097,203 244,960 642,211 1,080,852 925,921 13,416,647 

Accumulated depreciation - (1,135,107) - (145,302) (402,417) (814,149) (555,865) (3,052,840) 

Net book amount 3,484,790 1,805,603 4,097,203 99,658 239,794 266,703 370,056 10,363,807 

In million Riel (unaudited) 14,138 7,325 16,622 404 973 1,082 1,502 42,046 

22




8. PROPERTY AND EQUIPMENT (continued) 

Freehold 

land 

Assets 

under 

Building construction 

Furniture 

and 

fixtures 

Office 

equipment 

Computer 

and 

IT equipment Vehicles Total 


Year ended 31 December 2007 

Opening net book amount 3,484,790 1,805,603 4,097,203 99,658 239,794 266,703 370,056 10,363,807 

Additions 360,000 322,691 7,583,811 170,844 374,665 777,914 489,483 10,079,408 

Disposals – net - - - (2,025) (1,148) - (85,599) (88,772) 

Depreciation charge - (150,122) - (38,397) (100,998) (297,587) (123,445) (710,549) 

Closing net book value 3,844,790 1,978,172 11,681,014 230,080 512,313 747,030 650,495 19,643,894 

At 31 December 2007 

Cost 3,844,790 3,261,401 11,681,014 413,330 1,008,039 1,733,515 1,314,813 23,258,902 

Accumulated depreciation - (1,285,229) - (183,250) (495,726) (986,485) (664,318) (3,615,008) 

Net book amount 3,844,790 1,978,172 11,681,014 230,080 512,313 747,030 650,495 19,643,894 

In million Riel (Unaudited) 15,391 7,919 46,759 921 2,051 2,989 2,604 78,634 

23




9. COMPUTER SOFTWARE 

Work in 

Software progress Total 

US$ US$ US$ 

At 1 January 2006 

Cost 478,251 - 478,251 

Accumulated amortisation (296,850) - (296,850) 

181,401 - 181,401 

Net book amount 

Year ended 31 December 2006 

Opening net book amount 181,401 - 181,401 

Additions 7,144 - 7,144 

Allocations (14) - (14) 

Amortisation charge (89,009) - (89,009) 

Closing net book amount 99,522 - 99,522 

At 31 December 2006 

Cost 485,395 - 485,395 


Net book amount 99,522 - 99,522 

In million Riel equivalents (unaudited) 404 - 404 

Year ended 31 December 2007 

Opening net book amount 99,522 - 99,522 

Additions 106,483 1,055,625 1,162,108 

Amortisation charge (89,355) - (89,355) 

Closing net book amount 116,650 1,055,625 1,172,275 

At 31 December 2007 

Cost 591,878 1,055,625 1,647,503 


Net book amount 116,650 1,055,625 1,172,275 

In million Riel equivalents (unaudited) 467 4,226 4,693 

10. PROPERTIES FORECLOSED 

These represent the collaterals held for loans which are in default and have been foreclosed 

in the ordinary course of banking operations. Foreclosed properties are accounted for in 

accordance with note 2.7. These assets are not held for operational purposes and will be 

disposed of in order to recover the outstanding amount within the maximum allowable period 

of twelve months as per the guidelines issued by the Central Bank. 

24




11. DEPOSITS AND BALANCES OF OTHER BANKS 





Saving accounts 2,742,520 10,978 1,511,317 6,131 

6,739,404 26,978 3,872,609 15,711 

Current accounts are non interest bearing. Saving accounts of other banks earn interest rate 

at 0.75% per annum (2006: 0.75% per annum). 

12. DEPOSITS FROM NON-BANK CUSTOMERS 




(a) Analysis by category 


Saving accounts 255,969,220 1,024,645 142,029,873 576,215 

Fixed deposits 165,151,846 661,103 128,033,027 519,430 

Margin deposits 575,443 2,303 1,500,504 6,088 

451,570,063 1,807,635 289,458,459 1,174,333 

Margin deposits represent the aggregate balance of required non-interest bearing cash 

deposits from customers for letters of credit and guarantee outstanding at year end (note 26) 




(b) Analysis by maturity 

Within 1 month 285,842,774 1,144,229 162,227,805 658,158 

1 to 3 months 28,957,230 115,916 47,392,359 192,271 

4 to 6 months 20,805,476 83,284 20,830,920 84,511 

7 to 12 months 35,514,774 142,166 46,057,776 186,856 

Over 1 year but within 3 years 80,449,809 322,040 12,949,599 52,537 

451,570,063 1,807,635 289,458,459 1,174,333 

25




12. DEPOSITS FROM NON-BANK CUSTOMERS (continued) 




(c) Analysis by resident status 

Residents 447,114,874 1,789,801 286,172,351 1,161,001 

Non-residents 4,455,189 17,834 3,286,108 13,332 

451,570,063 1,807,635 289,458,459 1,174,333 

(d) Analysis by relationship 

Related parties 514,751 2,061 646,302 2,622 

External customers 451,055,312 1,805,574 288,812,157 1,171,711 

451,570,063 1,807,635 289,458,459 1,174,333 

(e) Analysis by currency 

US dollar 445,153,522 1,781,950 282,835,562 1,147,463 

Khmer riel 4,282,805 17,144 4,766,953 19,340 

Thai baht 2,022,745 8,097 1,614,990 6,552 

Gold 110,991 444 240,954 978 

451,570,063 1,807,635 289,458,459 1,174,333 

(f) Analysis by customer 

Government and state 

enterprises 17,890,792 71,617 18,672,525 75,754 

Business enterprises 168,892,526 676,077 90,118,252 365,610 

Other financial institutions 170,582 683 - - 

Individuals 253,650,445 1,015,363 173,682,961 704,632 

Not-for-profit organisations 5,733,000 22,949 2,730,421 11,077 

Other 5,232,718 20,946 4,254,300 17,260 

(g) Interest rates 

451,570,063 1,807,635 289,458,459 1,174,333 

The current accounts and margin deposits are not interest bearing. The saving and fixed 

deposits bear the following interest rates per annum: 


% % 

Saving deposits 0.75 - 2.00 0.75 - 2.00 

Fixed deposits 3.00 - 9.60 3.00 - 6.50 

26




13. CURRENT TAX LIABILITIES 




Balance at beginning of the year 2,786,518 11,154 1,258,013 5,104 

Charge for the year 5,028,697 20,130 3,164,356 12,838 

Income tax paid during the year (3,394,072) (13,586) (1,635,851) (6,637) 

4,421,143 17,698 2,786,518 11,305 

Provision for income tax is calculated by applying accounting net income before tax to the 

corporate tax rate. No effect has been taken into account on items deemed not deductible by 

the Law on Taxation. 

The Bank has obtained tax clearance up to the fiscal year 2004. The remaining tax years are 

currently being reassessed by the Tax Department and accordingly its tax for these years are 

not considered final. The outcome of a tax audit cannot, at present be determined. 

14. OTHER LIABILITIES 




Accrued interest payable 3,641,960 14,579 2,523,841 10,239 

Provision for L/C claim - - 862,360 3,499 

Suspense account remittance - - 192,767 782 

Tax payable 100,716 403 67,731 275 

Accounts payable 42,288 169 5,079 21 

Accrued expense 152,697 611 107,516 436 

Amount due to MasterCard International 538,050 2,154 333,059 1,351 

Staff bonus payable 251,658 1,007 185,324 752 

Other liabilities 416,297 1,667 246,755 1,001 

15. BORROWINGS 

5,143,666 20,590 4,524,432 18,356 




Borrowed funds from IFC - - 2,500,000 10,143 

Borrowed funds from KfW through MoEF 4,379,241 17,530 4,806,669 19,500 

4,379,241 17,530 7,306,669 29,643 

27




15. BORROWINGS (continued) 

The US$2,500,000 borrowed from the International Finance Corporation ("IFC") was the 

result of a Loan Agreement between the Bank and the IFC dated 20 September 2004 

whereby IFC agreed to lend the Bank US$2,500,000 to be loaned out to eligible subborrowers 

to finance acquisition of residential property in Cambodia. On 22 January 2007, 

the Bank fully settled IFC’s loan. 

The US$4,592,955 borrowed from KfW through the Ministry of Economy and Finance 

(“MoEF”) is the result of loan and finance agreements between the Bank, KfW and MoEF 

dated 23 April 2003 for SME term-lending I and dated 18 October 2005 for SME term-lending 

II. The agreements stipulate that the funds borrowed from KfW, through MoEF shall be sublent 

to Small and Medium Enterprises (“SME”) to build SME capacity in Cambodia. The subloans 

are classified as an asset of the Bank. During the year, the Bank repaid US$427,428 to 

MoEF. 

The interest rates during the year were as follows: 


IFC 8.67% - 9.36% 6.67% - 8.67% 

KfW 5.01% - 6.00% 4.34% - 4.88% 

16. SUBORDINATED DEBT 

On 28 October 2005, the Bank entered into an agreement with Mr Pung Kheav Se (a main 

shareholder of the Bank through CIHP) to provide the Bank with a subordinated loan of US$ 

7,080,000 for the purpose of acquiring shares in the Foreign Trade Bank of Cambodia. This 

subordinated debt is interest free with no fixed terms of repayment. This subordinated debt 

was approved in principle by the Central Bank on 28 December 2005. 

This subordinated debt is treated as a liability for financial reporting purpose and included as 

capital Tier II for the Bank’s Net Worth calculation in accordance with Guidelines of the 

Central Bank. 

17. SHARE CAPITAL 




Canadia Investment Holding Plc (CIHP) 40,545,000 162,302 - - 

Overseas Cambodian Investment 

Corporation (OCIC) - - 40,545,000 164,491 

40,545,000 162,302 40,545,000 164,491 

28




17. SHARE CAPITAL (continued) 


investment in the Bank to Canadia Investment Holding Plc (“CIHP”), a newly established 

company. The restructuring was approved by the Central Bank and the Ministry of 

Commerce. Consequently, CIHP is now the new holding company of the Bank. 

The total authorised amount of share capital as at 31 December 2007 was 40,545,000 

shares (2006: 40,545,000 shares) with a par value of US$ 1 per share. 




At beginning of the year 40,545,000 162,302 26,000,000 105,482 

Increase during the year - - 4,000,000 16,228 

Dividends paid and re-invested - - 10,545,000 42,781 

At end of the year 40,545,000 162,302 40,545,000 164,491 

On both 29 April 2006 and 26 June 2006, the Board of Director approved a US$2 million 

increase in paid up capital through the issuance of 2,000,000 ordinary shares at a par value 

of US$1 per share resulting in an overall increase in paid up capital of US$4 million. 

A directors resolution was passed on 12 June 2006 which specified that the US$10,545,000 

declared as a dividend was to be reinvested in the share capital of the Bank. 

The capital increase in aggregate of US$14,545,000 was approved by the Central Bank on 

21 July 2006. 

18. INTEREST INCOME 




Loans and advances to customers 31,713,930 126,952 21,697,042 88,025 

Placements with banks 3,478,277 13,923 2,843,760 11,537 

Placements with the Central Bank 1,222,377 4,893 809,688 3,285 

36,414,584 145,768 25,350,490 102,847 

29




19. INTEREST EXPENSE 




Deposits from customers 9,101,653 36,434 5,890,144 23,896 

Borrowings - KfW and IFC 266,088 1,065 414,674 1,683 

9,367,741 37,499 6,304,818 25,579 

20. FEE AND COMMISSION INCOME 




Commissions from remittance 

service 1,789,023 7,161 1,366,507 5,544 

Loan commitment fees 1,326,735 5,311 745,001 3,022 

Fees for telex, fax and phone 436,734 1,748 592,003 2,402 

Other fees and commissions 807,485 3,232 528,296 2,143 

Income from letters of credit 204,336 818 221,086 897 

Miscellaneous loan fees and service 

charges 727,905 2,914 537,135 2,179 

Fees for credit card advances and 

late charge 109,623 439 181,743 738 

ATM/Credit card annual fees 121,811 488 231,752 940 

5,523,652 22,111 4,403,523 17,865 

30




21. GENERAL ADMINISTRATIVE EXPENSES 




Payroll and other staff cost 3,373,229 13,503 2,720,967 11,039 

Depreciation and amortisation 

expenses 799,904 3,202 654,359 2,655 

Repair and maintenance 92,252 369 86,333 350 

Building rental 166,020 664 135,440 549 

Utilities 237,128 949 200,568 814 

Loss on foreign exchange currency 309,098 1,237 504,547 2,047 

Charitable donations and gifts 523,824 2,097 304,276 1,234 

Travel, accommodation and food 249,106 997 274,478 1,114 

Advertising and public relations 337,173 1,350 217,578 883 

Legal and professional fees 172,122 689 177,933 722 

Taxes and duties 272,510 1,091 164,344 667 

Communication 229,280 918 152,791 620 

Motor vehicles 96,460 386 79,453 322 

Furniture, fixture and equipment 

expenses 42,456 170 5,251 21 

Stationery and supplies 32,639 131 71,162 289 

Printing and forms 58,878 236 31,758 129 

Insurance 18,672 75 17,808 72 

Loss on disposal of property and 

equipment 235 1 21,431 87 

Other operational costs 438,212 1,754 493,474 2,002 

7,449,198 29,819 6,313,951 25,616 

22. PROVISION FOR LOAN LOSSES - NET 




Provision for loan losses (16,772,419) (67,140) (8,719,679) (35,375) 

Recovery of loan losses 15,631,743 62,574 6,465,144 26,229 

(1,140,676) (4,566) (2,254,535) (9,146) 

31




23. INCOME TAX EXPENSE 

a) Income tax expense 




Current 4,421,143 17,698 2,786,518 11,305 

Deferred tax - - - - 

4,421,143 17,698 2,786,518 11,305 

In accordance with Cambodian tax laws, the Bank has an obligation to pay corporate income 

tax on the higher of either the Tax on Profit at the rate of 20% of taxable profit or Minimum 

Tax at 1% of turnover inclusive of all taxes except Value Added Tax. 

b). 

Reconciliation between income tax expense and accounting profit: 




Accounting profit before income tax 25,143,485 100,649 15,681,051 63,618 

Non-deductible expenses for tax 

purposes - - 140,730 571 

Taxable income 25,143,485 100,649 15,821,781 64,189 

Income tax calculated at the rate of 

20% 5,028,697 20,130 3,164,356 12,838 

c) Other tax matter 

The Bank’s tax returns are subject to periodic examination by the Tax Department. Some 

areas of tax laws and regulations may be open to different interpretation, therefore tax 

amounts reported in the financial statements could be changed at a later date, upon final 

determination by the Tax Department. 

32




24. CASH USED IN OPERATIONS 




Cash flows from operating activities 

Profit before income tax 25,143,485 100,649 15,681,051 63,618 

Adjustments for: 

Provision for loan losses – net 1,140,676 4,566 2,254,535 9,146 

Depreciation and amortisation 799,904 3,202 654,358 2,655 

Gain on disposals of property and 

equipment (1,373) (5) 21,481 87 

Operating profit before changes in 

working capital 27,082,692 108,412 18,611,425 75,506 

Increase/(decrease) in cash attributable 

to the change in operating assets and 

liabilities: 

Payment to the Board of Directors - - (40,000) (161) 

Deposits and placements with banks 3,656,072 14,635 (2,156,072) (8,747) 

Loans and advances to customers, net (128,137,122) (517,568) (49,930,573) (202,568) 

Other assets (2,243,895) (8,982) (674,547) (2,737) 

Foreclosed properties (314,051) (1,257) (1,391,486) (5,645) 

Deposits and balances from banks 2,866,795 11,476 1,038,955 4,215 

Deposits from non-bank customers 162,111,604 648,933 54,611,643 221,559 

Other liabilities 619,234 7,114 (1,157,158) (4,702) 

Cash generated from operations 65,641,330 262,763 18,912,187 76,720 

25. CASH AND CASH EQUIVALENTS 




Cash on hand 27,501,167 110,087 25,141,461 101,999 

Deposits and placements with the 

Central Bank 33,601,000 134,505 26,735,124 108,464 

Deposits and placements with banks 78,785,657 315,379 51,342,797 208,298 

139,887,824 559,971 103,219,382 418,761 

33




26. COMMITMENTS AND CONTINGENCIES 

(i) 

Loan commitment, guarantee and other financial liabilities 

At 31 December 2007 and 2006, the Bank had the contractual amounts of the Bank’s offbalance 

sheet financial instruments that commit it to extend credit to customers, guarantee 

and other facilities as follows: 




Documentary credits 6,926,989 27,741 2,637,587 10,701 

Bankers' acceptance 3,286,418 13,156 2,020,180 8,196 

Performance and bankers‘ guarantees 759,482 3,040 855,779 3,472 

Tender bonds - - 51,901 211 

Unused portion of approved credit 

facilities 39,748,989 159,115 25,502,232 103,463 

Other 108,190 433 102,007 414 

No material losses are anticipated as a result of these transactions. 

50,833,068 203,485 31,169,686 126,457 

(ii) 

Lease commitments 

Where the Bank is the lessee, the future minimum lease payments under non-cancelable 

operating leases of its branches in Phnom Penh and provinces are as follows: 




Not later than one year 176,080 705 129,600 526 

Later than one year and not later 

than three years 294,580 1,179 326,380 1,324 

Over three years 2,446,352 9,793 2,574,372 10,444 

2,917,012 11,677 3,030,352 12,294 

34




26. COMMITMENTS AND CONTINGENCIES (continued) 

(iii) 

Capital commitments 

At 31 December 2007, the Bank had capital commitments in respect of new office buildings, 

new core banking software and other related services. 



Authorised and contracted for: (Unaudited) (Unaudited) 

Not later than one year 1,425,464 5,706 1,777,650 7,212 

Later than one year and not later 

than three years 559,753 2,241 2,281,185 9,254 

1,985,217 7,947 4,058,835 16,466 

The estimated total capital expenditures of the Bank’s new head office building are 

approximately US$18.7 million of which costs incurred and capitalised under the property 

and equipment to date is US$11.7 million. Out of the US$7 million of outstanding capital 

expenditure, an amount of US$1.9 million has been contracted for. 

27. RELATED PARTY BALANCE AND TRANSACTIONS 

The Bank is controlled by Canadia Investment Holding Plc (2006: Overseas Cambodian 

Investment Corporation) which owns 100% the Bank’s share. 

The following transactions were carried out with related party: 

(a) Loans and advances to directors and key management 




Loans and advances to directors and 

key management 

Beginning of year 19,201 77 - - 

Loans advanced during the year 223,673 895 185,227 751 

Loan repayments received 7,610 30 1,026 4 

Interest received 13,858 56 787 3 

End of the year 235,264 942 187,040 758 

The loans to directors and key management carry interest ranging from 10% to 12% (2006: 

10% to 12%). 

35




27. RELATED PARTY BALANCE AND TRANSACTIONS (continued) 

(b) 

Deposits with related parties 




Deposits with FTB 188,582 755 172,537 700 

The Bank has correspondence account with FTB. This account is non-interest bearing. 

(c) 

Deposits from related parties 




Saving deposits from 

Canadia Investment Holding Plc 66,413 266 153,729 624 

Directors and key management 448,338 1,795 492,573 1,998 

514,751 2,061 646,302 2,622 

Interest paid 3,307 13 1,881 8 

The saving deposits from Canadia Investment Holding Plc, directors and key management 

bear interest at 0.75% (2006: 0.75%). 

(d) 

Borrowings 




Loans from directors, interest free - - 185,227 751 

Subordinated debt from Mr Pung 

Keav Se 7,080,000 28,341 7,080,000 28,724 

7,080,000 28,341 7,265,227 29,475 

The subordinate debt is interest free with no fixed term of repayment. This subordinate debt 

was to finance the acquisition of FTB. The proceed from the future disposal of FTB’s shares 

is to pay back this subordinate debt. 

36




27. RELATED PARTY BALANCE AND TRANSACTIONS (continued) 

(e) 

Key management compensation 




Salaries and short term benefits 383,725 1,536 108,335 440 

(f) 

Other 




Rental income 1,200 5 1,200 5 

The Bank provides office space to CIH. 

28. FINANCIAL RISK MANAGEMENT 

(a) 

Credit risk 

The Bank assumes exposure to credit risk which is the risk that a counterparty will be unable 

to pay amounts in full when due. The Bank structures the levels of credit risk it undertakes by 

placing limits on the amount of risk accepted in relation to one borrower, or group of 

borrowers, and the geographical and industry segments. Procedures of risk limit setting, 

monitoring, usage, and control are governed by internal regulations. Such risks are 

monitored on a regular basis. 

Exposure to credit risk is managed through regular analysis of the ability of the borrowers 

and potential borrowers to meet interest and capital repayment obligations and reviewing 

these lending limits where appropriate. Exposure to credit risk is also managed in part by 

obtaining collateral and corporate or personal guarantees as well as by providing for loan 

losses. 

Commitments to extend credit represent unused portions of approved loans, guarantees or 

letters of credit. In general, all of the Bank's guarantees and letters of credit are collateralised 

with cash deposits or collateral pledged to the Bank, and accordingly the Bank normally 

assumes minimal risks. 

37




28. FINANCIAL RISK MANAGEMENT (continued) 

(b) 

Market risk 

(i) 

Interest rate risk 

Cash flow interest rate risk is the risk that future cash flows of a financial instrument will 

fluctuate because of changes in market interest rates. Interest margins may increase as a 

result of such changes but may reduce or create losses in the event that unexpected 

movements arise. 

The Bank’s interest rates are generally fixed on a short term basis. Interest rates that are 

contractually fixed on both assets and liabilities are often renegotiated to reflect current 

market conditions. The management is satisfied that the Bank's position is such that 

exposure to movements in interest rates is minimised. 

The table in note 29-1 summarises the Bank's exposure to interest rate risks. Included in the 

table are the Bank's assets and liabilities at carrying amounts, categorised by the earlier of 

contractual re-pricing or maturity dates. 

(ii) 

Foreign currency exchange risk 

Foreign currency exchange risk refers to the adverse exchange rate movements on foreign 

currency exchange positions taken from time to time. 

The Bank has no material exposure to currency risk as it transacts essentially in US$. 

Significant presence of US$ is the normal practice of banks operating in Cambodia. 

(c) 

Liquidity risk 

Liquidity risk is defined as the risk when the maturity of assets and liabilities do not match. 

Liquidity risk management at the Bank is performed on the basis of measuring liquidity 

surplus/deficit and liquidity ratios that are calculated using scenario analysis. 

The matching and/or controlled mismatching of the maturities and interest rates of assets 

and liabilities is fundamental to the management of the Bank. It is unusual for banks ever to 

be completely matched since business transactions are often of an uncertain term and of 

different types. An unmatched position potentially enhances profitability, but can also 

increase the risk of losses. 

The table in note 29-2 analyses the assets and liabilities of the Bank into relevant maturity 

based on the remaining period at the balance sheet date to the contractual or estimated 

maturity dates. 

38




29. INTEREST RATE, LIQUIDITY, CURRENCY AND CREDIT RISKS (continued) 

29.1. Interest rate risk 

Up to 1 

month 1-3 months 4-6 months 

7-12 

months 1 to 5 years 

Over 

5 years 

Non-interest 

bearing Total 


As at 31 December 2007 

Assets 

Cash on hand - - - - - - 27,501,166 27,501,166 

Balances with the Central Bank 25,000,000 - - - - 4,054,500 42,002,249 71,056,749 


institutions 69,789,926 1,000,000 - - - - 8,995,731 79,785,657 

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 

Other assets - - - - - 1,175,009 4,678,521 5,853,530 

Investment in FTB - - - - - - 10,580,000 10,580,000 

Properties foreclosed - - - - - - 4,512,741 4,512,741 

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 

Liabilities 

Deposits and balances of banks 2,742,520 - - - - - 3,996,884 6,739,404 

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 

Current tax liabilities - - - - - - 4,421,143 4,421,143 

Other liabilities - - - - - - 5,143,666 5,143,666 

Other borrowings - 213,714 - 213,714 3,951,813 - - 4,379,241 

Subordinated debt - - - - 7,080,000 - - 7,080,000 

Total liabilities 258,711,740 29,170,944 20,805,476 35,728,488 91,481,622 - 43,435,247 479,333,517 

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 

In million Riel equivalents (Unaudited) (651,842) (89,330) (50,252) 614,952 25,924 145,276 214,870 209,598 

39





29.1 Interest rate risk (continued) 

Up to 1 

Over 5 Non-interest 

month 1-3 months 4-6 months 7-12 months 1 to 5 years years bearing Total 

As at 31 Dec 2006 US$ US$ US$ US$ US$ US$ US$ US$ 

Assets 

Cash on hand - - - - - - 25,141,461 25,141,461 

Balances with the Central Bank 19,000,000 - - - 4,054,500 - 29,636,357 52,690,857 

Balances with other banks and 

financial institutions 51,342,796 4,656,072 - - - - - 55,998,868 

Loan and advances to customers- net 2,851,887 1,728,232 120,388,519 60,795,307 19,643,600 - 205,407,545 

Other assets - - - - - 1,711,565 1,898,069 3,609,634 


Properties foreclosed - - - - - - 4,198,690 4,198,690 

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 

Liabilities 

Deposits and balances of other banks 1,511,316 - - - - - 2,361,293 3,872,609 

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 

Current tax liabilities - - - - - - 2,786,518 2,786,518 

Other liabilities - - - - - - 4,524,432 4,524,432 

Other borrowings 2,500,000 213,714 - 213,714 3,524,383 854,858 - 7,306,669 

Subordinate debt - - - - 7,080,000 - - 7,080,000 

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 

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 

In Riel Million equivalent (Unaudited) (311,649) (167,237) 403,905 58,923 585 3,476 184,818 172,822 

40





29.2 Liquidity risk 

Up to 1 

month 

1-3 

months 

4-6 

months 

7-12 

months 

1 to 5 

years 

Over 5 

years 

No fixed 

maturity 

date Total 


As at 31 DECEMBER 2007 

Assets 

Cash on hand 27,501,166 - - - - - - 27,501,166 

Balances with Central Bank 33,601,000 - - - - - 37,455,749 71,056,749 


institutions 78,785,657 1,000,000 - - - - - 79,785,657 

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 

Other assets 4,678,521 - - - - - 1,175,009 5,853,530 


Properties foreclosed - 4,512,741 - - - - - 4,512,741 

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 

Liabilities 

Deposits and balances of banks 6,739,404 - - - - - - 6,739,404 

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 

Current tax liabilities - 4,421,143 - - - - - 4,421,143 

Other liabilities 4,403,921 739,745 - - - - - 5,143,666 

Other borrowings - 213,714 - 213,714 3,951,813 - - 4,379,241 


Total liabilities 296,986,099 34,331,832 20,805,476 35,728,488 91,372,122 109,500 - 479,333,517 

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 

In million Riel equivalents (Unaudited) (606,518) (93,152) (51,774) 613,785 26,362 123,904 196,991 209,598 

41





29.2 Liquidity risk (continued) 

Up to 1 month 1-3 months 4-6 months 7-12 months 1 to 5 years 

Over 5 

years 

No fixed 

maturity date Total 


As at 31 December 2006 

Assets 

Cash on hand 25,141,461 - - - - - - 25,141,461 

Balances with Central Bank 26,735,124 - - - - - 25,955,733 52,690,857 

Balances with other banks and 

financial institutions 51,342,796 4,656,072 - - - - - 55,998,868 

Loan and advances to customers 2,851,888 1,728,232 120,388,518 60,795,307 19,643,600 - 205,407,545 

Other assets 1,169,843 - - 728,226 - - 1,711,565 3,609,634 


Properties foreclosed - - - 4,198,690 - - - 4,198,690 

Total assets 107,241,112 6,384,304 120,388,518 65,722,223 19,643,600 - 38,247,298 357,627,055 

Liabilities 

Deposits and balances of banks 3,872,609 - - - - - - 3,872,609 

Deposits from non-bank customers 162,227,805 47,392,359 20,830,920 46,057,776 12,949,599 - - 289,458,459 

Current tax liabilities - 2,786,518 - - - - - 2,786,518 

Other liabilities 4,524,432 - - - - - - 4,524,432 

Other borrowings 2,500,000 - - - - 4,806,669 - 7,306,669 


Total liabilities 173,124,846 50,178,877 20,830,920 46,057,776 20,029,599 (4,806,669) - 315,028,687 

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 

In Riel Million equivalent (Unaudited) (267,290) (177,675) 403,906 79,779 (1,566) (19,501) 155,169 172,822 

42





29.3. CURRENCY ANALYSIS 

US$ KHR EUR THB GOLD OTHER TOTAL 

US$ 

equivalents 

US$ 

equivalents 

US$ 

equivalents 

US$ 

equivalents 

US$ 

equivalents 

US$ 

equivalents 

US$ 

equivalents 

As at 31 DECEMBER 2007 

Assets 

Cash on hand 24,642,650 1,534,355 7,725 1,177,053 130,673 8,710 27,501,166 

Balances with the central bank 70,669,355 387,394 - - - - 71,056,749 


institutions 75,008,275 4,084 1,903,474 - - 2,869,824 79,785,657 

Loan and advances to customers: 330,622,806 147,507 - 1,633,677 - - 332,403,990 

Other assets 4,945,104 857,447 5,744 - - 45,235 5,853,530 

Investment in FTB 10,580,000 - - - - - 10,580,000 

Property foreclosed 4,512,741 - - - - - 4,512,741 

Total assets 520,980,931 2,930,787 1,916,943 2,810,730 130,673 2,923,769 531,693,833 

Liabilities 

Deposits and balances of banks 6,734,292 5,112 - - - - 6,739,404 

Deposits from non-bank customers 445,153,522 4,282,805 - 2,022,745 110,991 - 451,570,063 

Current tax liabilities - 4,421,143 - - - - 4,421,143 

Other liabilities 4,959,737 34,225 - - 4,323 145,381 5,143,666 

Other borrowings 4,379,241 - - - - - 4,379,241 

Subordinated debt 7,080,000 - - - - - 7,080,000 

Total liabilities 468,306,792 8,743,285 - 2,022,745 115,314 145,381 479,333,517 

Net Balance Sheet Position 52,674,139 (5,812,498) 1,916,943 787,985 15,359 2,778,388 52,360,316 

In million Riel equivalents (Unaudited) 210,855 (23,267) 7,673 3,154 61 11,122 209,598 

43





29.3. CURRENCY ANALYSIS (continued) 

US$ KHR EUR THB Gold OTHER TOTAL 

As at 31 December 2006 

US$ 

equivalent 

US$ 

equivalent 

US$ 

equivalent 

US$ 

equivalent 

US$ 

equivalent 

US$ 

equivalent 

US$ 

equivalent 

ASSETS 

Cash on hand 21,610,912 2,299,532 12,619 513,104 240,954 464,340 25,141,461 

Balances with central bank 51,473,847 1,217,010 - - - - 52,690,857 

Balances with banks and OFIs 52,958,442 29,989 1,983,021 686,018 - 341,398 55,998,868 

Loans and advances to customers 203,721,313 102,192 - 1,584,040 - - 205,407,545 

Other assets 3,061,816 496,701 24,140 26,305 - 672 3,609,634 

Investments in FTB 10,580,000 - - - - - 10,580,000 

Properties foreclosed 4,198,690 - - - - - 4,198,690 

TOTAL ASSETS 347,605,020 4,145,424 2,019,780 2,809,467 240,954 806,410 357,627,055 

LIABILITIES 

Deposits and balances of banks 2,920,881 951,728 - - - - 3,872,609 

Deposits from non-bank customers 282,835,562 4,766,953 - 1,614,990 240,954 - 289,458,459 

Current tax liabilities - 2,786,518 - - - - 2,786,518 

Other liabilities 4,280,002 217,322 - 27,108 - - 4,524,432 

Other borrowings 7,306,669 - - - - - 7,306,669 

Subordinated debt 7,080,000 - - - - - 7,080,000 

TOTAL LIABILITIES 304,423,114 8,722,521 - 1,642,098 240,954 - 315,028,687 

Net Balance Sheet Position 43,181,906 (4,577,097) 2,019,780 1,167,369 - 806,410 42,598,368 

In million Riel equivalents (Unaudited) 175,189 (18,569) 8,194 4,736 - 3,272 172,822 

44

+ Financial Statement for 2007 - Canadia Bank Plc.

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