ABOUT PRASAC 2 Vision and Mission ______________________________________________3 Background ____________________________________________________4 Our Challenges _________________________________________________6 Business Objectives ______________________________________________7 Clients and Client Highlights ______________________________________8 Financial Products and Eligible Criteria ___________________________ 11 OWNERSHIP AND GOVERNANCE 12 Organizational Structure _______________________________________ 13 Shareholders _________________________________________________ 14 Board Committee _____________________________________________ 15 Board of Directors ____________________________________________ 16 Management _________________________________________________ 18 OperationaL HIGHLIGHTS 22 Remark From Chairman _______________________________________ 23 Remark From General Manager _________________________________ 25 Financial Performance Highlights ________________________________ 28 Operational Highlights _________________________________________ 30 Staffing and Capacity Building __________________________________ 32 Internal Control and Risk Management ___________________________ 34 Marketing and Social Activities _________________________________ 36 AUDITED FINANCIAL StateMENTS 40 Report of the Board of Directors ________________________________ 41 Report of the Independent Auditors ______________________________ 46 Balance Sheet ________________________________________________ 47 Income Statement ____________________________________________ 48 Statement of Changes In Equity _________________________________ 48 Statement of Cash Flows _______________________________________ 49 Contact Us 50 Office Network with Contact Address _____________________________ 51 Outreach Highlights with Operational Map _________________________ 62 1 ABOUT PRASAC VISION AND MISSION 3 FINANCIAL PRODUCTS BACKGROUND AND ELIGIBLE CRITERIA 4 11 OUR CLIENTS CHALLENGES AND CLIENT HIGHLIGHTS 6 8 BUSINESS OBJECTIVES 7 2 VISION To improve the living standards of the rural people contributing to sustainable economic development by being a financially viable microfinance institution. MISSION To provide sustainable access to financial services for rural communities and micro-enterprises. 3 BACKGROUND PRASAC was a former credit component of PRASAC’s project funded by the European Union and implemented by three ministries of the Royal Government of Cambodia. The project started in 1995 to rehabilitate and support agricultural sector in six provinces around Phnom Penh i.e. Kompong Cham, Kompong Chhnang, Kompong Speu, Takeo, Prey Veng, and Svay Rieng. PRASAC’s project phased out in December 2003. To ensure the access to financial services to rural communities and micro-enterprises,PRASAC’s Project Steering Committee made a strategic decision to transform its credit component into a licensed MFI. In March 2002, the transformation was started by creating PRASAC Credit Association as credit operator registered with the National Bank of Cambodia (NBC). In 2003, a trust fund called Cambodia Rural Development Foundation (CRDF) and PRASAC Staff Company were established to facilitate the transformation. With two initial shareholders, PRASAC was established by registering with the Ministry of Commerce as a private limited liability company in August 2004 and got its license from the NBC in November 2004 to legally provision financial services to rural communities and micro-enterprises. To finalize its transformation, PRASAC started to identify and negotiate with investors since 2005 in order to replace the temporary shareholders i.e. CRDF. In 2007, PRASAC completed its transformation by replacing CRDF with new five shareholders such as BIO (Belgian Investment Company for Developing Countries), DGC (Dragon Capital Group Limited), FMO (The Netherlands Development Finance Company), LOLC (Lanka ORIX LEASING Company Ltd), and Oikocredit. Particularly, PRASAC received a permanent license from NBC in December 2007. 4 MILESTONE 1995 - 1999: PRASAC I, three EU funded rural 2005: The credit fund was transferred from EC to development projects in six provinces, with three the government and finally to PRASAC MFI Ltd as different credit components. Subordinated Debt. 2000 - 2003: Extension as PRASAC II, combined to 2006: The commercialization process was to seek for one project, one credit component. equity investment participation from commercial and social investors. 2000: First strategic decision to create a sustainable institution beyond the closure of PRASAC II 2007: PRASAC completed its transformation by project. replacing CRDF with new five shareholders, BIO, DGC, FMO, LOLC, and Oikocredit. And, PRASAC 2001: HO and branch offices separated from received a permanent license from NBC in December PRASAC II, with separate management but still as a 2007. part of the project. 2008: PRASAC increased its capital to 15 billion 2002: Creation of PCA (PRASAC Credit Association), riels from six shareholders. PRASAC was extending registered with the NBC in March 2002 as Rural its financial services throughout the country. Credit Operator. 2009: PRASAC selected Oracle FLEXCUBE 2003: Two initial shareholders were created, a Trust Universal Banking to modernize its MIS to build Fund called CRDF created by PRASAC II and competitive advantages, offer more diversified ranges PRASAC Staff Company created by staff members. of products and prepare for the next level. 2004: Registered as PRASAC MFI Ltd with Ministry of Commerce as a private limited liability company and received license from NBC. 5 OUR CHALLENGES 1. To continue serving the rural poor under high professional and moral standards implementing transparency and good governance on all operational levels 2. To enforce credit discipline among staffs and clients by strengthening internal control system 3. To diversify loan portfolio and review financial products and services to be competitive and suit clients’ demands, and to look for external funding to safeguard funds and plan expansion 6 BUSINESS OBJECTIVES The business objectives of the Company are to carry out activities of microfinance by providing financial services to rural households and small and medium enterprises, such as: 1. Credit services in the form of group and individual loans 2. Savings and money transfer services 3. To raise funds or borrow money in such manner as the company shall think fit and to secure the repayment of any money borrowed, raised or owed to creditors 4. Do all such other things as incidental or which the Company may think fit and conducive to the attainment of the above objectives. The objectives shall be achieved by strict adherence of high professional and moral standards, transparency, and good governance. 7 CLIENTS AND CLIENT HIGHLIGHTS a. PRASAC’s Client: Rural Community Clients are the rural village households that have repayment capacity residing in rural areas outside the urban areas of all provincial towns. Microenterprise Clients are microenterprises that have number of employees less than 11 and or assets less than USD50,000. 8 b. Client Highlight: SORN SOKHA, 38, Cake Baker, Pursat MRS. DAM TOCH, 35, Raising Pig, Kampong MRS. SOKHA, 38 years old, a cake baker Speu living in Bambekleach village, Roleab commune, Sampov Meas district, Pursat province, MRS. DAM TOCH, 35 years old, is PRASAC’s described her business story that she’s been client who is successfulin her business with baking egg-powder cake for four years. Previously, PRASAC’s loan. Presently, she is living in Sdok her business was not running well due to the Slart village, Phnom Touch commune,Udong shortage of capital. Later , after discussing with district, Kampong Speu province. She spends her husband, in 2008 she decided to request for most of her daily time on raising pigs USD 5,000 loan for 24 months from PRASAC and doing housework. She and her husband, to buy more equipment and materials for MR. SENG THAN, a wine producer, wanted baking the cake. After seeing that her business to raise more pigs to extend their business. getting better with PRASAC’s loan, recently, she After getting advice from their sister, they was able to pay-off and request for USD 4,800 decided to request for USD 2,000 loan for 21 loan from PRASAC for the second time to buy months from PRASAC to support their limited an electronic oven so that she can increase her capital. After selling some pigs, Mrs. Dam Toch productivities to respond to her clients’ needs. had got better living standards and was able MRS. SOKHA said that, “I am very happy to repair her house and buy more furniture. that my business goes well. I also would like to MRS. DAM TOUCH becomes our potential thank to PRASAC that provided me financial client; she repays regularly and will pay-off soon. resource to extend my business. Moreover, what She said with smiling face and hope that, “I’m I like the most is that PRASAC staffs are friendly really thankful to PRASAC that always provides and polite, and the loan assessment is also easy me both financial supports and motivation and and fast; that is the reason why I can trust in advice to do business so that I can get more PRASAC.” incomes.” 9 MR. Lun Chhun Hort, 39, Brick Maker, Kratie MR. Lun Chhun Hort, 39, living in Russey Jar village, Thmoh Kreih commune, Chet Borey district, Kratie province, is another successful client of PRASAC. His main business is producing brick. Previously, he used to borrow money from other money lenders and institution, but since it was too difficult