sathapana limited...utw (myanmar) limited has expressed their willingness to accept reappointment as...

Directors' Report and Audited Financia/ Sfafemenfs

SATHAPANA LIMITEDReg No. 105201095 (Former Reg No. 993 FC(2OL4-2OL5)

(lncorporated in the Republic of the Union of Myanmar)

For the f inancial period ended30 September 2079

UTW (Myanmar) LimitedCertified Public Accountants

SATHAPANA LIMITED

General lnformation

Directors

Ken HanChang-Woo HanYu HanKim VadaHun MonivannSuzuki MasaruSeang Serey (Appointed as director on 5 August 2Ot9)Susumu Watahiki

Registered Office

No. 9718, Kaba Aye Pagoda Road

Bahan Township

Yangon, Myanmar

Auditors

UTW (Myanmar) Limited

Bankers

Co-operative Bank Limited (Public Bank)Kanbawza Bank LimitedAyeyarwady Bank LimitedYOMA Bank LimitedMUFG Bank Limited (Yangon Branch)Mizuho Bank Limited (Yangon Branch)E-Sun Bank Limited (Yangon Branch)

lndex

Directors'Report

Page

Statement by Directors

lndependent Auditor's Report

Statement of Financial Position

Statement of Comprehensive lncome

Statement of Changes in Equity

Statement of Cash Flows

Notes to the Financial Statements 11

SATHAPANA LIMITED

Directors' Report

The directors are pleased to present their report to the members together with the audited financialstatements of SATHAPANA LIMITED (the "Company") for the financial period ended 30 September 2019under the Section 267 of the Myanmar Companies Law 2017.

Directors

The directors of the Company in office at the date of this report are:Ken HanChang-Woo HanYu HanKim VadaHun MonivannSuzuki MasaruSeang Serey (Appointed as director on 5 August 20L9)Susumu Watahiki

State of the Company's affairs

The Company is engage in the business to conduct microfinance business. There has been no change in thebusiness of the Company during the financial period ended 3O September 2019.

Financial performance1 April 2019 1 April 2018

to to30 September 2019 31 March 2019

MMK MMK

Financial results

Revenue (including other operating income)

Profit before depreciation & tax

Less: Depreciation

Prof it after depreciation

Less: lncome taxes

Total comprehensive income for the year

74,O85,t45,700 78,627,689,750

3,909,306,354 6,446,769,228

(24t,285,202) (318,511,696)

3,668,027,762 6,728,t57,532

(990,775,094) (L,697,068,737)

2,677,906,068 4,437,088,795

SATHAPANA LIMITED

Director's Report

Transfer to reserve account

MMK669,476,577 which represents 25% of the net profit after tax was transferred to the Reserve Accountduring the financial period ended 3O September 2Ot9 in compliance with Section 33(b) of the MicrofinanceLaw.

Dividend

No dividend is recommended for the current financial period.

Risks and uncertainties

The Company did not face any risks and uncertainties during the current financial period.

Auditor

UTW (Myanmar) Limited has expressed their willingness to accept reappointment as auditor.

On behalf of the board of directors:

/. ///:c,t-- /1u--,.---Mr. Ken Han t

Managing Director

Date: 14 February 2020The Republic of the Union of Myanmar

2

SATHAPANA LIMITED

Statement by Directors

We, Ken Han and Seang Serey, being the appointed Managing Director and Director, respectively, ofSathapana Limited, do hereby state that, in the opinion of the Directors,

1) the accompanying statement of comprehensive income, statement of financial position, statementof changes in equity and statement of cash flows together with notes thereto are drawn up so as togive a true and fair view of the state of affairs of the Company as at 30 September 2019 and theresulis of the business, changes in equity and cash flows of the Company for the financial periodended on that date; and

2) at the date of this statement, there are reasonable grounds to believe that the Company will be ableto pay its debts as and when they fall due.

On behalf of the board of directors:

k-* //;Ken HanManaging Director


Seang

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lndependent Auditor's Report for the financial period ended 30 Septembet 2Ol9

To the members of SATHAPANA LIMITED

We have audited the accompanying financial statements of SATHAPANA LIMITED (the "Company"), whichcomprise the statement of financial position as at 3O September 2079, statement of comprehensive income,statement of changes in equity, and statement of cash flows for the period then ended, and a summary ofsignif icant accounting policies and other explanatory notes.

Managemenf 's Respons ibitity for the Financiatstafemenfs

Management is responsible for the preparation and fair presentation of these financial statements inaccordance with Myanmar Financial Reporting Standards and the provisions of the Myanmar Companies Law.This responsibility includes:

devising and maintaining a system of internal accounting controls sufficient to provide a reasonableassurance that assets are safeguarded against loss from unauthorized use or disposition; andtransactions are properly authorized and that they are recorded as necessary to permit the preparationof true and fair statement of comprehensive income and statement of financial position and to maintainaccountability of assets;

selecting and applying appropriate accounting policies; and

(c) making accounting estimates that are reasonable in the circumstances.

Aud itor's R es po nsi bi tity

Our responsibility is to express an opinion on these financial statements based on our audit. We conductedour audit in accordance with Myanmar Standards on Auditing. Those standards require that we comply withethical reguirements and plan and perform the audit to obtain reasonable assurance whether the financialstatements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in thefinancial statements. The procedures selected depend on the auditor's judgment, including the assessmentof the risks of material misstatement of the financial statements, whether due to fraud or error. ln makingthose risk assessments, the auditor considers internal control relevant to the entity's preparation and fairpresentation of the financial statements in order to design audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internalcontrol. An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of accounting estimates made by management, as well as evaluating the overall presentationof the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for ouraudit opinion.

Opinion

ln our opinion, the financial statements present fairly, in all material respects, the financial position ofSATHAPANA LIMITED as of 30 September 2079, and of its financial performance and its cash flows for theperiod then ended in accordance with Myanmar Financial Reporting Standards including the modification ofthe requirement of Myanmar Accounting Standards 39, Financial instruments: Recognition and Measurementin respect of loan loss provision by Microfinance Supervisory Committee Notification number 512076 andthe provisions of the Myanmar Companies Law.

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UTWReport on Other Leqal and Regulatory Requiremenfs

ln accordance with the provisions of the Myanmar Companies Law, we also report that:

(a) ln accordance with section 2BO (a) and (b) of the Myanmar Companies Law, we have obtained all theinformation and explanations, we are required;

(b) Books of account have been maintained by SATHAPANA LIMITED as required by Section 258 of theMyanmar Companies Law; and

(c) ln accordance with section 37 of Microfinance Law, we report that financial statements of the Companyadequately reflect the financial position of the Company and its solvency.

Daw Moe Moe Aye(PA No. 186)UTW (Myanmar) LimitedFirm Registration No: ACC005Certified Public Accountants


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SATHAPANA LIMITED

STATEMENT OF FINANCIAL POSITIONAS AT 30 SEPTEMBER 2019

30 September 2079 31 March 2019MMK MMK

Assets

Cash and cash at banks

lnterest receivables

Loan and advance to customers - net

Prepaid expenses

Other receivables

Property, plant and equipment - net

Intangible assets-net

Deferred tax assets

Total assets

Equity and liabilities

Deposit from customers

Accrued interest payable for depositor

Accrued expenses and other liabilities

Borrowings

Employee pension

Deferred rent

Total liabilities

Equity

Share capital

Retained earnings

Reserve

Total equity

Total equity and liabilities

f4,* Ll*--Ken HanManaging Director

Notes

9

10

11

L2

13

74

15

9,670,788,478

1,750,828,200

109,853,061,616

1,330,688,502

194,670,670

2,007,779,825

48,760,226

35,255,679

6,439,070,841

1,280,851,400

73,366,666,602

2,356,408,757

75,402,56L1,702,565,828

45,330,094

77,352,353

124,885,833,136 85,283,648,435

76

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18

t9L7

8,734,505,000

502,325,300

2,435,497,081

77,747,602,7L9

720,685,7 75

78,994,710

5,141,050,000

376,231,300

2,651,748,839

51,139,000,000

477,O14,94L

10,280,213

90,159,603,925 60,795,325,293

20

2L

26,236,600,000

6,090,068,295

2,399,560,976

18,676,600,000

4,O3L,638,744

7,730,084,399

34,726,229,277 24,488,323,L43

6

SATHAPANA LIMITED

STATEMENT OF COMPREHENSIVE INCOMEFOR THE FINANCIAL PERIOD ENDED 30 SEPTEMBER 2019

1 April2019to

30 September 2019

1April2018to

31 March 2019

lnterest income

lnterest expense

Net interest income

Other items of income (expenses)

General and administrative expenses

Provision for loan loss

Loan collection/(written off)Other income - net

Profit before tax

lncome tax expense

Profit for the year

Other comprehensive income

Notes

5

5

MMK

72,919,997,000

(4,646,724,637)

MMK

77,217,5L8,700

(5,231,019,615)

8,273,266,369 7t,gg6,4gg,4g5

6

10

10

7

(4,97 4,653,722)(420,286,386)

583,500789,711,407

3,668,O27,L62

(990,1t5,o94)

2,677,906,069

(6,774,963,809)(323,08L344)

(23,707,550)

7,203,4tt,750

6,128,!57,532

(1,697,068,737)

4,437,O88,795

Other comprehensive income for the year, net of tax

Total comprehensive income for the,year 2,677,906,068 4,437,O89,795

l<,*- U,r*-Ken HanManaging Director Director

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SATHAPANA LIMITED

STATEMENT OF CASH FLOWSFOR THE FINANCIAL PERIOD ENDED 30 SEPTEMBER 2019

NotesOperating activities

Profit before tax from continuing operation

Adjustments for:

Depreciation of property, plant and equipment 13

Amortization of intangible assets 14

Provisions for loan loss and loan written off 10

Unrealized foreign exchange (gain)/loss - net

Loss on fixed asset write off/transfer 13

Operating cash flows before changes in workingcapital

Changes in working capital:

lncrease in loans and interest receivables

lncrease in other receivables

Decrease in prepaid expenses(Decrease)/increase in accrued expenses and otherliabilitieslncrease in customer savings and interest payable

Increase in pension payable

lncrease in deferred rent

Net changes in working capital

Tax paid

Net cash flows used in operating activities

lnvesting activities

Purchase of property, plant and equipment

Purchase of intangible assets

Net cash flows used in investing activities

13

74

4,274,596,767 6,859,OO4,200

30 September2019MMK

3,668,O27,762

233,212,9098,072,293

420,285,386(55,743,972)

737,929

31 March 2019MMK

6,728,757,532

304,868,237!3,743,459

346,788,894

60,310,118

5,135,960

(37 ,376,658,200)(119,268,109)

7,680,s66,047

(7,220,367,906)

2,7t9,549,000243,670,774

g,7t3,gg7

(29 ,643,561,400)e2,394)

77,776,220

36,720,O49

2,647,276,4A0207,044,501

LO,2BO,2L3

(29,789,207 ,730)

(869,747 ,607)

(26,736,6L6,477)

(7,769,657,314)

(30,658,355,331) (2t,047,263,525)

(533,164,835)

(77,502,425)

(1,o79,060,280)

(75,427,788)

(544,657,26A) (7,O94,482,068)

9

SATHAPANA LIMITED

STATEMENT OF CASH FLOWSFOR THE FINANCIAL PERIOD ENDED 30 SEPTEMBER 2019

Financing activities

Proceeds from borrowings

Repayment of borrowings

Payment of loan transaction costs

Proceeds from share issuance

Net cash flows from financing activities

Net increase in cash and cash at banks

Currency realignment

Cash and cash at bank at beginning period/year

Cash and cash at bank at end of period/year

20 7,560,000,000

34,382,904,528 24,5O8,973,4OO

18

1B

30 September2019MMK

29,O78,400,OOO

(1,019,250,000)(L,236,245,472)

31 March 2019MMK

26,076,250,O00(1,019,250,000)

(548,426,600)

3,t79,88L,93751,835,640

6,439,O7O,84L

2,367,227,8O737,086,652

4,O34,756,382

9,67O,788,478 6,439,O70,841

10

Notes

SATHAPANA LIMITED

NOJ'ES TO THE FINANCIAL SIATEMENTSFOR THE FINANCIAL PERIOD ENDED 30 SEPTEMBER 2079

1. General

SATHAPANA LIMITED (the "Company") is established in the Republic of the Union of Myanmar andobtained certificate of registration No. 105201095 (Former No. 993 FCl2074 - 2015) on 2 January2015 in pursuance of the Myanmar Companies Law by the Ministry of National Planning and EconomicDevelopment. The Company is a subsidiary of Maruhan lnvestment Asia Pte. Ltd. The ultimate parentis Maruhan Corporation whose shares are not publicly traded in Japan.

As stated in its amended permit to trade No.993 fCl2074'2015 dated 2B April 2075, the scope ofactivities of the Company is to conduct microf inance business. The Company obtained its microfinancelicense f rom the Microfinance Supervisory Committee.

The registered office of the Company is located at No. 97lB,K,aba Aye Pagoda Road, Bahan Township,Yangon, Republic of the Union of Myanmar.

Basis of preparation

The financial statements of the Company have been prepared in accordance with the MyanmarFinancial Reporting Standard ("lVFRS").

The financialstatements have been prepared on a historicalcost basis. The f unctional and presentationcurrency used in the financialstatement is the Myanmar Kyat (MN/K).

Presentation of f inancial statements

The Company presents its statement of financial position broadly in order of liquidity. An analysisregarding recovery or settlement within 12 months after the statement of financial position date(current) and more than 12 months after the statement of financial position date (non-current) ispresented in Note 23.

Changes in accounting policies

The significant accounting policies have been consistently applied by the Company in the preparationof the financialstatements as of and for the period ended 30 September 2079 and are consistent withthose used in the previous year.

Change in financial reporting period

The Republic of the Union of Myanmar approved the change of financial year from fiscal year whichbegins on the first day of April and ends on the last day of March of the following year to fiscal yearwhich shall begin on the first day of October and end on the last day of September of the following year.The change of f inancial year is to be first implemented in the f inancial statements for the financial yearf rom 1 October 2079 to 30 September 2020.

Based on the Ministry of Planning and Finance, lnternal Revenue Department Notification letterNo.4(1)OuSa-2/PaTaKhal2Ot9(5229) dated 15 May 2079, all Companies should close their accountsfor the transition period from l April 2019 to 30 September 2019. Accordingly, the Company thenprepared its financial statements for the period ended 30 September 2079 as its transition to the newaccounting period. The amount presented in the financialstatements are not entirely comparable.

11

2.

SATHAPANA LIMITED

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD ENDED 30 SEPTEMBER 2079

3. Significantaccountingpolicies

(a) Assets and liabilities classification

The Company presents assets and liabilities in statement of financial position in the orderfrom the most liquid assets or liabilities to the least liquid ones and disclose in the note tofinancialstatement on current/non-current classification. An asset is current when it is:

- Expected to be realized or intended to be sold or consumed in normaloperating cycle- Held primarily for the purpose of trading- Expected to be realized within twelve months after the reporting period, or- Cash or cash at banks unless restricted from being exchanged or used to settle and;- Liability for at least twelve months after the reporting period

All other assets are classified as non-current.

A liability is current when:

- lt is expected to be settled in normal operating cycle- lt is held primarily for the purpose of trading- lt is due to be settled within twelve months after the reporting period- There is no unconditional right to defer the settlement of the liability for at least twelve

months after the reporting period

The Company classif ies all other liabilities as non-current.

(b) Revenue recognition

lnterest income is recognized to the extent that it is probable that the economic benefits willflow to the Company and the revenue can be reliably measured, regardless of when thepayment is being made.

lnterest income includes the amortization of any discount or premium or other differencesbetween the initial carrying amount of an interest-bearing instrument and its'amount ifmaturity is calculated on an effective interest basis.

(c) Cash and cash at bank

Cash and cash at bank comprise of cash on hand and cash at bank.

(d) Pension benefit - Defined contribution pension plan

The Company operates a defined contribution pension plan. The contribution payable to adefined contribution plan is in proportion to the services rendered to the Company by theemployees with a fixed share both from employer and employee and is recorded as anexpense under'Salaries and wages'. Unpaid contributions are recorded as a liability.

(e) Provisions

Provisions are recognized when the Company has a present obligation (legal or constructive)as a result of past event, it is probable that an outflow of resources embodying economicbenefits will be required to settle the obligation and the amount of obligation can beestimated reliably.

72

SATHAPANA LIMITED

NOIES TO THE FINANCIAL SIAIEMENTSFOR THE FINANCIAL PERIOD ENDED 30 SEPTEMBER 2079

3. Significant accounting policies (Cont'd)

(q)

Foreign currency transactions and balances

The presentation and functional currency of the Company is MMK. Transactions in foreigncurrencies are measured in the functional currencies of the Company and are recorded oninitial recognition in the functional currencies at exchange rates approximating those rulingat the transaction dates. Monetary assets and liabilities denominated in foreign currenciesare translated at the rate of exchange ruling at the end of the reporting period.

Non-monetary items that are measured in terms of historical cost in a foreign currency aretranslated using the exchange rates as at the dates of the initial transactions. Non-monetaryitems measured at fair value in a foreign currency are translated using the exchange rates atthe date when the fair value was determined.

Exchange differences arising on the settlement of monetary items or on translating monetaryitems at the end of the reporting period are recognized in profit or loss.

Property, plant and equipment

All property, plant and equipment are initially recognized at cost, which comprises itspurchase price and any costs directly attributable in bringing the asset to the location andcondition necessary for it to be capable of operating in the manner intended by management.

Subsequent to initial recognition, property, plant and equipment are carried at cost Iessaccumulated depreciation and impairment losses. Such cost includes the cost of replacingpart of fixed assets when that cost is incurred, if the recognition criteria are met. Likewise,when a major inspection is performed, its cost is recognized in the carrying amount of fixedassets as a replacement if the recognition criteria are satisfied. All repairs and maintenancecosts that do not meet the recognition criteria are recognized in profit or loss as incurred.

Depreciation is computed using the straight-line method over the estimated useful lives ofthe assets as follows:

(f)

Leasehold improvements

Furniture and fixture

Equ ipment

Motor vehicles (car)

Motor vehicles (motorbike)

Computer equipment

Other f ixed asset (security house)

Term of lease (1 to 1O years)

5 years

5 years

10 years

E,,^---J yudr )

5 years

5 years

An item of property, plant and equipment is derecognized upon disposal or when no futureeconomic benefit is expected from its use or disposal. Any gain or loss arising onderecognition of the asset (calculated as the difference between the net disposal proceedsand the carrying amount of the asset) is included in the income statement in the year theasset is derecognized.

The residual values, useful lives and methods of depreciation of property, plant andequipment are reviewed at each financial year end and adjusted prospectively, if appropriate.

13

SATHAPANA LIMITED

NOTES TO THE FINANCIAL SIAIEMENTSFOR THE FINANCIAL PERIOD ENDED 3A SEPTEMBER 2079

Significant accounting policies (Cont'd)

(h) lntangible assets

lntangible assets acquired separately are measured initially at cost. Following initialacquisition, intangible assets are carried at cost less any accumulated amortization and anyaccumulated impairment losses. lnternally generated intangible assets, excluding capitalizeddevelopment costs, are not capitalized and expenditure is reflected in profit or loss in theyear in which the expenditure is incurred.

The useful lives of intangible assets are assessed as either finite or indefinite. Intangibleassets with finite useful lives are amortized over the estimated useful Iives and assessed forimpairment whenever there is an indication that the intangible asset may be impaired. Theamortization period and the amortization method are reviewed at least at each financial year-end. Changes in the expected useful life or the expected pattern of consumption of futureeconomic benefits embodied in the asset is accounted for by changing the amortizationperiod or method, as appropriate, and are treated as changes in accounting estimates.

lntangible assets with indefinite useful lives or not yet available for use are tested forimpairment annually, or more frequently if the events and circumstances indicate that thecarrying value may be impaired either individually or at the cash-generating unit level. Suchintangible assets are not amortized. The useful life of an intangible asset with an indefiniteuseful life is reviewed annually to determine whether the useful life assessment continues tobe supportable. lf not, the change in useful life from indefinite to finite is made on aprospective basis.

Gains or losses arising from de-recognition of an intangible asset are measured as thedifference between the net disposal proceeds and the carrying amount of the asset and arerecognized in profit or loss when the asset is derecognized.

The Company has a software called Micro Banking System Windows (the "MBWin") acquiredseparately during the year and it is amortized on straight line basis over its finite useful lifeof 5 years.

(i) Reserves

The reserves recorded in equity on the Company's statement of financial position pertains to25% of the net prof it after tax will be set aside as capital reserve at the end of the fiscal yearin compliance with Section 33(b) of the Microf inance Law.

(j) Leases

The determination of whether an arrangement is (or contains) a lease is based on thesubstance of the arrangement at the inception date. The arrangement is assessed forwhether fulfilment of the arrangement is dependent on the use of a specific asset or assetsor the arrangement conveys a right to use the asset or assets, even if that right is notexplicitly specified in an arrangement.

74

3.

SATHAPANA LIMITED

NOTES TO THE FINANCIAL SIAIEMENISFOR THE FINANCIAL PERIOD ENDED 30 SEPTEMBER 2079

(j)


Leases (cont'd)

The Company as a /essee

The Company does not have finance leases as of 30 September 2079.

Operating lease payments are recognized as an expense in the statement of profit or loss ona straight-line basis over the lease term.

The Company does not have any operating leases as lessor as of 30 September 2079.

Taxation

lncome tax expense represents the sum of the corporate income tax currently payable andany penalty in the statement of profit or loss.

Corporate income tax is measured at the amount expected to be paid to or recovered f romthe taxation authorities, using the tax rates enacted or substantially enacted as at thereporting date.

Deferred tax

Deferred tax is provided using the liability method on temporary differences between the taxbases of assets and liabilities and their carrying amounts for financial reporting purposes atthe reporting date.

Deferred tax Iiabilities are recognized for all taxable temporary dif ferences, except:

- When the deferred tax liability arises from the initial recognition of goodwill or anasset or liability in a transaction that is not a business combination and, at the timeof the transaction, affects neither the accounting profit nor taxable profit or loss

- ln respect of taxable temporary differences associated with investments insubsidiaries, associates and interests in joint ventures, when the timing of thereversal of the temporary differences can be controlled and it is probable that thetemporary differences will not reverse in the foreseeable f uture

Deferred tax assets are recognized for all deductible temporary differences, the carryforward of unused tax credits and any unused tax losses. Deferred tax assets are recognizedto the extent that it is probable that taxable profit will be available against which thedeductible temporary differences, and the carry forward of unused tax credits and unusedtax losses can be utilized, except:

- When the deferred tax asset relating to the deductible temporary difference arisesfrom the initial recognition of an asset or liability in a transaction that is not abusiness combination and, at the time of the transaction, affects neither theaccounting profit nor taxable profit or loss

- ln respect of deductible temporary differences associated with investments insubsidiaries, associates and interests in joint ventures, deferred tax assets arerecognized only to the extent that it is probable that the temporary differences willreverse in the foreseeable future and taxable profit will be available against whichthe temporary diff erences can be utilized

(k)

15

3.

SATHAPANA LIMITED



(k) Taxation (Cont'd)

The carrying amount of deferred tax assets is reviewed at each reporting date and reducedto the extent that it is no longer probable that sufficient taxable profit will be available toallow all or part of the deferred tax asset to be utilized.

Unrecognized deferred tax assets are re-assessed at each reporting date and are recognizedto the extent that it has become probable that future taxable profits will allow the deferredtax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply inthe year when the asset is realized, or the liability is settled, based on tax rates (and tax laws)that have been enacted or substantively enacted at the reporting date.

(l) Financial instruments - initial recognition and subsequent measurement

A financial instrument is any contract that gives rise to a financial asset of one entity and af inancial liability or equity instrument of another entity.

i) Financial assets

lnitial recognition and measurement

Financial assets are classified, at initial recognition, as financial assets at fair valuethrough profit or loss, loans and receivables, held-to-maturity investments, available-for-sale financial assets, or as derivatives designated as hedging instruments in an effectivehedge, as appropriate. All financial assets are recognized initially at fair value plus, in thecase of financial assets not recorded at fair value through profit or loss, transaction coststhat are attributable to the acquisition of the financial asset.

Purchases or sales of financial assets that require delivery of assets within a time frameestablished by regulation or convention in the market place (regular way trades) arerecognized on the trade date, i.e., the date that the Company commits to purchase orsell the asset.

Subsequent measurement

For purposes of subsequent measurement financial assets are classified in fourcategories:- Financial assets at fair value through prof it or loss- Loans and receivables- Held to maturity investments- Available for sale financial investments

Financial assets at fair value through profit or loss

Financial assets at fair value through prof it or loss include financial assets held for tradingand financial assets designated upon initial recognition at fair value through profit or loss.Financial assets are classified as held for trading if they are acquired for the purpose ofselling or repurchasing in the near term. Derivatives, including separated embeddedderivatives are also classified as held for trading unless they are designated as effectivehedging instruments as defined by MAS 39. Financial assets at fair value through profitor loss are carried in the statement of financial position at fair value with net changes infair value presented as finance costs (negative net changes in fair value) or financeincome (positive net changes in fair value) in the statement of comprehensive income.The Company has not designated any f inancial assets at fair value through prof it or loss.

1,6

SATHAPANA LIMITED



(l) Financial instruments - initial recognition and subsequent measurement (Cont'd)

i) Financial assets (Cont'd)

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinablepayments that are not quoted in an active market. After initial measurement, suchf inancial assets are subsequently measured at amortized cost using the effective interestrate (ElR) method, less impairment. Amortized cost is calculated by taking into accountany discount or premium on acquisition and fees or costs that are an integral part of theEIR.

The EIR amortization is included in finance income in the statement of comprehensiveincome. The losses arising from impairment are recognized in the statement ofcomprehensive income in finance costs for loans and in cost of sales or other operatingexpenses for receivables. This category generally applies to loans to customer and otherreceivables.

Held-to-maturity investments

Non-derivative financial assets with fixed or determinable payments and fixed maturitiesare classified as held to maturity when the Company has the positive intention and abilityto hold them to maturity. After initial measurement, held to maturity investments aremeasured at amortized cost using the ElR, less impairment.

Amortized cost is calculated by taking into account any discount or premium onacquisition and fees or costs that are an integral part of the ElR. The EIR amortization isincluded as finance income in the statement of comprehensive income. The losses arisingfrom impairment are recognized in the statement of comprehensive income as financecosts. The Company did not have any held-to-maturity investments for the year ended30 September 2079.

Available-for-sa le (AFS) financia I investments

AFS financial investments include equity investments and debt securities. Equityinvestments classified as AFS are those that are neither classified as held for trading nordesignated at fair value through profit or loss. Debt securities in this category are thosethat are intended to be held for an indefinite period of time and that may be sold inresponse to needs for liquidity or in response to changes in the market conditions. Afterinitial measurement, AFS financial investments are subsequently measured at fair valuewith unrealized gains or losses recognized in Other Comprehensive lncome (OCl) andcredited in the AFS reserve until the investment is derecognized, at which time thecumulative gain or loss is recognized in other operating income, or the investment isdetermined to be impaired, when the cumulative loss is reclassified f rom the AFS reserveto the statement of comprehensive income in finance costs. lnterest earned whilstholding AFS financial investments is reported as interest income using the EIR method.

The Company evaluates whether the ability and intention to sell its AFS financialassetsin the near term is still appropriate. When, in rare circumstances, the Company is unableto trade these financial assets due to inactive markets, the Company may elect toreclassify these financial assets if the management has the ability and intention to holdthe assets for foreseeable future or until maturity. The Company did not have any AFSinvestments during the year ended 30 September 2O!9.

77

SATHAPANA LIMITED

NOTES TO THE FINANCIAL SIAIEMENTSFOR THE FINANCIAL PERIOD ENDED 30 SEPTEMBER 2079

()


Financial instruments - initial recognition and subsequent measurement (Cont'd)

i) Financial assets (Cont'd)

For a financial asset reclassified from the AFS category, the fair value carrying amountat the date of reclassification becomes its new amortized cost and any previous gain orloss on the asset that has been recognized in equity is amortized to profit or Ioss overthe remaining life of the investment using the ElR. Any difference between the newamortized cost and the maturity amount is also amortized over the remaining life of theasset using the ElR. lf the asset is subsequently determined to be impaired, then theamount recorded in equity is reclassified to the statement of comprehensive income.

Derecognition

A financial asset (or, where applicable, a part of a financial asset or part of a group ofsimilar financial assets) is primarily derecognized (i.e. removed from the Company'sstatement of f inancial position) when:

- The rights to receive cash flows f rom the asset have expired, or

- The Company has transferred its rights to receive cash flows from the asset or has

assumed an obligation to pay the received cash flows in full without material delayto a third party under a 'pass-through'arrangement; and either (a) the Company has

transferred substantially all the risks and rewards of the asset, or (b) the Companyhas neither transferred nor retained substantially all the risks and rewards of theasset, but hastransferred control of the asset.

lmpairment of f inancial assets

The Company assesses, at each reporting date, wheiher there is objective evidence thata financial asset or a group of f inancial assets is impaired. An impairment exists if one ormore events that has occurred since the initial recognition of the asset (an incurred 'lossevent'), has an impact on the estimated future cash flows of the financial asset or thegroup of financial assets that can be reliably estimated. Evidence of impairment mayinclude indications that the debtors or a group of debtors is experiencing significantf inancial diff iculty, def aulter delinquency in interest or principal payments, theprobability that they will enter bankruptcy or other financial reorganization andobservable data indicating that there is a measurable decrease in the estimated futurecashflows, such as changes in arrears or economic conditions that correlate with defaults.

Financial assets carried at amortized cost

For financial assets carried at amortized cost, the Company first assesses whetherimpairment exists individually for financial assets that are individually significant, orcollectively for financial assets that are not individually significant. lf the Companydetermines that no objective evidence of impairment exists for an individually assessedfinancial asset, whether significant or not, it includes the asset in a group of financialassets with similar credit risk characteristics and collectively assesses them forimpairment. Assets that are individually assessed for impairment and for which animpairment loss is, or continues to be, recognized are not included in a collectiveassessment of im pairment.

1U

3.

SATHAPANA LIMITED



(l) Financial instruments - initial recognition and subseguent measurement (Cont'd)

The amount of any impairment loss identified is measured as the difference between theasset's carrying amount and the present value of estimated future cash flows (excludingfuture expected credit losses that have not yet been incurred). The present value of theestimated future cash flows is discounted at the financial asset's original effectiveinterest rate. The carrying amount of the asset is reduced through the use of anallowance account and the Ioss is recognized in statement of comprehensive income.

Interest income (recorded as finance income in the statement of comprehensive income)continues to be accrued on the reduced carrying amount and is accrued using the rate ofinterest used to discount the future cash flows for the purpose of measuring theimpairment loss.

Loans together with the associated allowance are written off when there is no realisticprospect of future recovery and all collateral has been realized or has been transferredto the Company. If, in a subsequent year, the amount of the estimated impairment lossincreases or decreases because of an event occurring after the impairment wasrecognized, the previously recognized impairment loss is increased or reduced byadjusting the allowance account. lf a write-off is later recovered, the recovery is creditedin the statement of comprehensive income.

AFS financial investments

For AFS financial investments, the Company assesses at each reporting date whetherthere is objective evidence that an investment or a group of investments is impaired.

ln the case of equity investments classified as AFS, objective evidence would include a

significant or prolonged decline in the fair value of the investment below its cost.'Significant' is evaluated against the original cost of the investment and 'prolonged'against the period in which the fair value has been below its original cost. When there isevidence of impairment, the cumulative loss - measured as the difference between theacquisition cost and the current fair value, less any impairment loss on that investmentpreviously recognized in the statement of comprehensive income - [s removed from OCIand recognized in the statement of comprehensive income. lmpairment losses on equityinvestments are not reversed through profit or loss; increases in their fair value afterimpairment are recognized in OCl.

ln the case of debt instruments classified as AFS, the impairment is assessed based onthe same criteria as financial assets carried at amortized cost. However, the amountrecorded for impairment is the cumulative loss measured as the difference between theamortized cost and the current fair value, less any impairment loss on that investmentpreviously recognized in the statement of comprehensive income.

Future interest income continues to be accrued based on the reduced carrying amountof the asset, using the rate of interest used to discount the future cash flows for thepurpose of measuring the impairment loss. The interest income is recorded as part offinance income. lf, in a subsequent year, the fair value of a debt instrument increasesand the increase can be objectively related to an event occurring after the impairmentloss was recognized in the statement of comprehensive income, the impairment loss isreversed through the statement of comprehensive income.

79

SATHAPANA LIMITED



(l) Financial instruments - initial recognition and subsequent measurement (Cont'd)

ii) Financial liabilities

lnitial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair valuethrough profit or loss, loans and borrowings, payables, as appropriate.

All financial Iiabilities are recognized initially at fair value and, in the case of loans andborrowings and payables, net of directly attributable transaction costs.

The Company's financial Iiabilities include savings and other payables.

Subsequent measurement

The measurement of financial liabilities depends on their classification, as describedbelow:

Financial liabilities at fair value through prof it or loss

Financial liabilities at fair value through profit or loss include financial liabilities held fortrading and f inancial liabilities designated upon initial recognition as at fair value throughprofit or loss.

Financial liabilities are classified as held for trading if they are incurred for the purposeof repurchasing in the near term.

Gains or losses on liabilities held for trading are recognized in the statement ofcom prehensive income.

Financial liabilities designated upon initial recognition at fair value through profit or lossare designated at the initial date of recognition, and only if the criteria in MAS 39 aresatisfied. The Company has not designated any financial liability as at fair value throughprof it or loss.

Loans and borrowings

After initial recognition, loans and borrowings, including install payment obligation forthe purchase of license, is subsequently measured at amortized cost using the EIR

method. Gains and losses are recognized in profit or loss when the liabilities arederecognized as well as through the EIR amortization process.

Amortized cost is calculated by taking into account any discount or premium on

acquisition and fees or costs that are an integral part of the ElR. The EIR amortization is

included as f inance costs in the statement of comprehensive income.

20

SATHAPANA LIMITED


4.


ii) Financial liabilities (Cont'd)

Derecognition

A financial liability is derecognized when the obligation under the liability is dischargedor cancelled, or expires.

When an existing financial liability is replaced by another from the same lender onsubstantially different terms, or the terms of an existing liability are substantiallymodif ied, such an exchange or modification is treated as the derecognition of the originalliability and the recognition of a new liability. The difference in the respective carryingamounts is recognized in the statement of comprehensive income.

Significant accounting judgements, estimates and assumptions

The preparation of the Company's financial statements requires management to make judgments,estimates and assumptions that affect the reported amounts of revenues, expenses, assets andliabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertaintyabout these assumptions and estimates could result in outcomes that require a material adjustmentto the carrying amount of assets or liabilities affected in future years.

Judgement

ln the process of applying the Company's accounting policies, management has made the followingjudgements, apart from those involving estimations, which have the most significant effect on theamounts recognized in the financial statements.

I n pattn e n t L oSseS o n I o a n s re ce iv a bl es

The Company reviews its individuallysignificant loansat each statement of financial position date toassess whether an impairment loss should be recorded in the income statement. The amount andtiming of recorded expenses for any period would therefore differ depending on the judgments andestimates made for each year.

Estimates

The key assumptions concerning the future and the other key sources of estimation uncertainty atthe reporting date, that have signif icant risk of causing a materialadjustment to the carrying amountof assets and liabilities within the next financial year, are described below. The Company based itsassumptions and estimates on parameters available when the financial statements were prepared.Existing circumstances and assumptions about future developments, however, may change due tomarket changes or circumstances arising beyond the control of the. Company. Such changes areref lected in the assumptions when they occur.

27

3.

SATHAPANA LIMITED

NOIES TO THE FINANCIAL SIAIEMENTSFOR THE FINANCIAL PERIOD ENDED 30 SEPTEMBER 2079

4. Significant accounting judgements, estimates and assumptions (cont'd)

Recognition of deferred income tax assets

The Company assesses at each reporting date and recognizes deferred income tax assets to theextent of probable future taxable profits and reversing taxable temporary differences that will allowthe deferred income tax assets to be utilized. Management uses judgment and estimates in assessingthe probability of future taxable profits, considering management's future plan of actions, includingthe timing of reversal of deferred income tax liability, aided by forecasting and budgeting techniques.Deferred income tax assets recognized amounted to MMK 35,255,679 and MMK 17,352,353 as of30 Septemb er 2019 and 31 March 2079, respectively (see Note 15).

Estimation of usef ul lives and residual values of property and equipment and intangible assets

The Company estimates the useful lives of property and equipment and intangible assets based oninternal technical evaluation and experience with similar assets. The estimated useful lives andresidual values are reviewed periodically and updated if expectations differ from previous estimatesdue to physical wear and tear, technical and commercial obsolescence and other limits on the use ofthe assets. The carrying amount of depreciable property and equipment, net of accumulateddepreciation, amounted to MMK 2,001,779,825 and MMK 1,702,565,828 as of 30 September 2019and 31 March 2O!9, respectively (see Note 13). The carrying amount of depreciable intangibleassets, net of amortization expense, amounted to MMK 48,750,226 and MMK 45,330,094 as of30 September 2079 and 31 March 2079, respectively (see Note 14).

lnterest income and interest expense

lncome from loan to customers

1 Apr 2019to

30 Sep 2019

MMK

L2,919,997,OOO

1 Apr 2018to

31 Mar 2019

MMK

77,2t7,518,LOO

lnterest income is derived from loan and advance to customer charged at the rate 2.5% per monthon the loan outstanding balance.

1 Apr 2019to

30 Sep 2019

MMK

4,120,053,83 1

526,670,800

1 Apr 2018to

31 Mar 2019

MMK

4,505,800,21s

725,219,400

lnterest expense

lnterest expense on borrowings

lnterest expense on deposits from customers

4,645,724,631 5,237,OLg,615

These interest expenses are relating to the borrowings from creditors and savings deposits fromcustomers which are paid 720/o to 13% per annum (p.a) and 15% p.a respectively.

22

5.

SATHAPANA LIMITED


General and administrative expenses

Salaries and wages

Rental lease payments

Travel and transportation expenses

Depreciation and amortization

Professional fees

Office supplies

Communication expense

Marketing and advertising

Others

Others include staffexpenses.

Other income - net

Loan fee income

Fee and commission on borrowings

Foreign exchange gain/(loss) - net

1 Apr 2019to

Nofes 30 Sep 2019MMK,

3,258,447,606

489,723,724

254,264,184

L3,14 247,285,202

163,530,530

737,298,938

45,494,798

45,487,989

345,133,851

1 Apr 2018to

31 Mar 2019MMK

4,362,596,O54

732,656,96L

368,288,635

318,517,696

746,338,O21

203,662,t83

68,957,073

94,241,740

4L9,677,446

4,974,653,722 6,774,963,809

training and uniform, repair and maintenance, utility, security, and other

7.1 Apr 2019

to30 Sep 2019

MMK

t,765,154,700

(432,277,t69)

56,233,870

1 Apr 2018to

31 Mar 2019MMK

!,404,177,650

(100,298,075)

(700,467,82s)

789,777,407 1,2o3,4L7,750

The loan fee income is charged from loan customer as loan processing and commission fee for 1% onthe loan disbursement amount.

23

SATHAPANA LIMITED


8. lncome tax expense

Major components of income tax expenseThe major components of income tax expense for theyears ended 30 September 2019 and2018 are:

1 Apr 2019to

30 Sep 2019MMK

1,008,018,420

(77 ,903,326)

1 Apr 2018to

31 Mar 2019MMK

1,700,370,695

(9,301,958)

Current income tax

Deferred income tax

-Origination of temporary dif f erences

Accounting profit before tax

Tax at 25%

Adjustments:

Nondeductible expenses

Deferred income tax

Under provision for previous year

lncome tax expenses recognized in profit orloss

9. Cash and cash at banks

Cash on hand

Cash at bank

990,1t5,094 7,691,068,737

B_qc_o n cjljctjo n I e,t.we qn t a x e x p e n se s-a n d,a c c lun t lng pr q f]t

1 Apr 2019to

30 Sep 2019

1 Apr 2018to

31 Mar 2019

MMK

3,668,027,762

MMK

6,128,157,432

917,005,291

90,989,7 44

(77 ,903,326)

23,385

1,532,039,3s8

95,847,843

(9,301,958)

72,483,494

990,715,O94 L,69L,068,737

30 September 2OL9 31 March 2019MMK

703,399,704

8,967,388,714

MMK

321,628,295

5,777,442,546

9,670,788,478 6,439,07O,941

Currently, the cash at bank only consist of current account with banks in both MMK and USD currency,and they bear no interest.

Cash and cash at bank denominated in foreign currencies at the end of the reporting period:

30 September 2019MMK

7,687,342,197

31 March 2019MMK

312,273,488United States Dollar

24

SATHAPANA LIMITED


10. Loan and advance to customers

30 September 2Ol9 31 March 2019

Group loan

lndividual loan

Less: Loan loss provision

Net Ioan portfolio

MMK

92,287,082,950

18,775,994,700

109,853,06!,676

Loan portfolio is divided into 2 categories based on remaining tenure as of:

30 September 2OL9 31 March 2019

MMK

69,598,003,950

4,558,392340

lLL,063,o77,650

(1,210,016,034)

74,L56,396,250

(789,729,648)

73,366,556,602

Current loan

Non-current loan

Less: Loan loss provision

Net loan portfolio

MMK

LOO,9t7 ,421,150

10,145,656,500

MMK

77,693,635,650

2,462,760,600

111,063,o77,650

(1,210,016,034)

74,L56,396,25O

(789,729,648)

109,853,057,676 73,366,666,502

As of 3O September 2079, the C.ompany calculated the loan loss provision in accordance with FinancialRegulatory Department (FRD)'s regulation as follows:

Loan Classif icationNumber of

D;;;;;;i;r. ProvisionRate

Normal

Below Normal

Poor

Doubtful Debt

Default

Balances at beginning of period/year

Provision for the year

Balances at end of period/year

MMK

789,729,648' 420,286,386

0

1-30

31- 60

61-90\On

L%

70%

5OYo

75%

100%

A reconciliation of the reserve for loan losses for the loans to customers, is as follows:

30 September 2OL9 31 March 2019MMK

466,648,304323,087,344

t,270,o76,O34 789,729,648

On 30 September 2019 and 31 March 2079, the Company collected loan written off amounting toMMK 583,500 and nil, respectively.

25

SATHAPANA LIMITED


11. Prepaid expenses

Prepaid rent - office

Prepaid rent - apartment

Prepaid - others

30 September 2079 31 March 2019

MMK MMK

797,OtO,275 340,677,OO2

52,523,877 64,095,162

487,754,356 1,951,636,593

1,330,688,502 2,356,408,757

Prepaid others include prepaid profit tax, and others etc.

12. Other receivables

30 September 2OL9 31 March 2019MMK MMK

Other advance payments or deposits 794,670,670 75,402,56L

Other advance payments or deposit include advance payments or deposit f or buying fixed asset, otheritems, for travel or mission, and other receivables.

26

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74. lntangible assets

Cost

As at 1 April

Additions

As at 3Oseptember/3 lMarch

Accumu lated amortization

As at 1 April

Amortization charge for the period

As at 3OSeptember/3 lMarch

Net carrying amount:

As at 30september/3 lMarch

Beginning balance

This period movement (due to differencein depreciation and prepaid rent)

Ending balance

L6. Deposit from customer

Less than one year

Over one year


MMK MMK

78,455,692

t!,502,42563,044,904

15,427,788

89,969,L77 78,466,692

(33,136,598)

(8,072,293)

(19,393,139)

(L3,743,459)

(47,208,897) (33,136,598)

45,330,O94

lntangible assets currently consist of only operating system license which called Micro Banker forWindow (MBWin).

15. Deferred tax assets

3O September 2079 31 March 2019

48,760,226

MMK

77,352,353

77,903,326

MMK

8,050,395

9,301,958

35,255,679 77,352,353

30 September 2OL9 31 March 2019

MMK

8,189,820,000

s44,685,000

MMK

5,009,750,000

131,300,000

8,734,505,000 5,141,050,000

As of the reporting date, the Company has only the compulsory deposit collected from the borrower5% on loan disbursed amount and the Company offer interest rate 15% per annum.

28

SATHAPANA LIMITED


t7. Accrued expenses and other liabilities

Accrued tax payable

Accrued interest payable for borrowing


Deferred rent

18. Borrowings

By lenders

Mizuho Bank

Triodos

Blue Orchard

AYA Bank

Symbiotics Sicav

CB Bank

E-Sun Bank

By repayment maturity

ln one year

Over one year

By type

Revolving loan

Term loan

By source

On-shore

Off-shore

30 September 2019 31 March 2019MMK

599,267,089

7,244,366,259

597,857,733

78,994,7L0

MMK

1,664,357,299

515,533,085

477,858,455

10,280,213

2,454,485,797 2,662,O29,O52


MMK

24,732,850,000

,2,025,778,250

75,612,136,972

7,924,863,224

3,054,029,333

1 1 c)C)C) 1Atr, -7 11Ltta//t/aJtt LJ

73,097 ,999,227

MMK

24,t32,850,000

3,057,750,000

15,948,400,000

8,000,000,000

77,747,602,719 51,139,000,000

37,873,390,427

45,874,272,292

25,171,350,000

24,967,650,000

77,747,602,719 51,139,000,000

24,732,850,000

53,614,752,719

24,132,850,000

27,005,150,000

77,747,602,779 51,139,000,000

43,957,658,937

33,789,943,782

32,132,850,000

19,006,150,000

29

77,747,602,779 51,139,000,000

SATHAPANA LIMITED


18. Borrowings(Cont'd)

During the period, the Company has outstanding loan agreement with eight creditors with thef ollowing term and conditions:

Mizuho Bank Ltd, Yangon Branch

The loan from Mizuho is uncommitted short-term revolving credit. On 2B June 2019, the Companyrenewed the uncommitted short term revolving credit amounting MMK24,732,850,000. The maximumdrawdown period is twelve months starting from 2B June 2019 to 26 June 2O2O which is subjected tobe extended automatically for successive period of one year unless otherwise notified by the bank. Theinterest rate for this loan is up to 72.5% without any loan fee.

Triodos SICAV ll - Triodos Microfinance Fund and Triodos Custody B.V

The disbursed loan amount is USD 3,000,000 equivalent in local currency (as of that time the equivalentamount is MMK 4,077,000,000) with term of 3 years. The loan will be matured on 15 August 2020.During the Ioan term, the Company is required to repay principal four times with25% each time everysix months starting on 15 February 2019 up to 15 August 2020 while the interest payment is semi-annual on 15th February and 15th August.

During the period, the Company repaid 25% of the original principal to creditor. The interest rate of theloan is 13% excluding withholding tax.

Blue Orchard

There are two loans from Blue Orchard:1- The 1st loan amount is USD 5,000,000 equivalent in local currency (as of that time the

equivalent amount is MMK 6,805,000,000) with term of 3 years. The Ioan was disbursed on23 August 20L7 and will be matured on 23 August 2020. The principal repayment is only onetime at its maturity date while the interest payment is semi-annual. The interest rate of the loanis 13% excluding withholding tax

2' On 26 February 2079, the Company entered into a new loan agreement amounting USD

6,000,000 equivalent in local currency (as of the disbursement date, the equivalent amount is

N/N4K 9,143,400,000) with term of 2 years. The loan was disbursed on27 February 2019 andwill be matured on 27 February 2021. lt is the bullet repayment loan at its maturity date whileinterest payment is semi-annual. the interest rate is 13% excluding withholding tax.

AYA Bank

On 20 December 2018, the Company entered into a new Ioan agreement with a local creditor, AYABank. The loan amount is MMK 8,000,000,000 with tenor of 2 years starting f rom 27 December 2018to 22 December 2020. The loan is secured by Stand-by letter of Credit (SBLC) issued by Mizuho bankin Tokyo. The principal repayment is one time at maturity date while interest payment is monthly. Thegross interest rate for this loan is 13%.

Symbiotics Sicav

During the period, the Company entered into a new loan agreement with an offshore lender,Symbiotics Sicav. The loan amount is USD 2,000,000 equivalent in local currency (as of thedisbursement date, the equivalent amount is MMK 3,078,400,000) with tenor of 2 years. The loanwas disbursed on 20 May 2019 and will mature on 15 May 2027.lt is the bullet repayment loan atits maturity date while interest payment is semi annual. The interest rate is 13% p.a, excludingwithholding tax.

30

SATHAPANA LIMITED


18. Borrowings(Cont'd)

CB Bank

During the period, the Company also entered into a new loan agreement with a local bank, CB bank.The total approved loan amount is MMK 25,500,000,000 with the tenor of 3 years from the firstdisbursement date on 21June 2019. As of 30 September 20L9, the Company made 2 drawdownstotaling MMK 12,500,000,000 and the remaining of MMK13,000,000,000 to be drawdown in theother 2 times in next f iscal year. The loan principal will be repaid two times during its tenor with 50%repayment on the second year end while the rest will be repaid on its maturity date, 20June 2022.The loan bears an interest rate of 72.50% p.a and is secured by SBLC from Aozora bank in Japan.

E-Sun Bank, Yangon Branch

During the period, the Company also entered into a loan agreement with a foreign branch bank fromTaiwan, E-Sun bank. The total approved loan amount is MMK 18,500,000,000 with the tenor of 3years from the first disbursement date on24 July 2019. As of 30 September 2079, the Companymade 2 drawdowns totaling MMK13,500,000,000 and the remaining of MMK 5,000,000,000 to bedrawdown in the next fiscal year. The loan principal will be repaid two times during its tenor in whichthe first repayment amount of MMK1,000,000,000 will be repaid on the second year end while therest will be repaid on its maturity date,23 July 2022. The loan bears an interest rate of 12.00% p.aand is secured by SBLC from Tokyo Star bank in Japan.

MUFG Bank, Yangon Branch

During the period, the Company also entered into an uncommitted short term revolving facilityagreement with a foreign branch bank, MIFG bank. The maximum facility amount is USD 6,000,000equivalent to local currency and its availability period is one year starting from 28 June 2019 to27 June 2020 with the possibilit! of auto roll over at the end of availability period subject to advancenotice by the Company and the consent by MUFG. The interest rate for this revolving loan is 72.50/op.a without any loan fee. As of the end of September 20L9, the Company has not made any drawdownand outstanding loan with MUFG is zero.

t9. Employee pension

Employee contribution (5% of basic salary)

Employer contribution (10% of basic salary)

3O September20L9 31 March 2019

MMK

247,756,497

479,529,278

MMK

759,635,493

317 ,379,448

720,685,775 477,O74,94L

The Company has a pension scheme whereby both employee and employer contribute each month.This scheme is treated as defined contribution plan as the Company's liability is limited only to fixedamount and therefore not discounted.

Employee contribution is repaid to employee when they resign, retires, or be terminated while theCompany contribution is only paid to resigned or retired staff who has three years of service with theCompany.

31

SATHAPANA LIMITED


20. Issued share capital

Mr. Yu Han

MARUHAN lnvestmentAsia Pte. Ltd.

At 30Sept/31Mar

Beginning BalanceAdvances made duringthe period/year

At 30Sept/31Mar

30 September 2OL9 31 March 2019No. of shares MMK No. of shares MMK

1 1,000

79,999,999 25,236,599,000

1 1,000

74,999,999 18,676,599,OOO

20,000,000 26,236,600,ooo 15,000,000 18,676,500,000

At the first time of capital injection, the Financial Regulatory Department (FRD) recognized 1S wasequal 1,000MMK for one share.

During this fiscal year as of September 2Ot9, MARUHAN Investment Asia Pte. Ltd have injected newcapital of USD5,000,000 which, as of fund received in July 2079, it is equivalent toMMK7,560,000,000 and the agreed number of new shares for this amount is 5,000,000. As ofSeptember 30,2Ot9, the Company has registered additional share capitat with DICA. However, it hasnot yet been approved by FRD as of audit report date.

MARUHAN Investment Asia Pte. Ltd


No. of shares MMK No. of shares MMK

74,999 ,999 78,67 6,599 ,000

5,000,000 7,560,000,000

14,999,999 78,676,599,O00

79,999,999 26,236,599,O0O 74,999,999 18,676,599,OOO

The holders of ordinary shares are entitled to receive dividends as and when declared by the Company.All ordinary shares carry one vote per share without restrictions.

21. Reserve

30 September20L9 31 March 2019

Beginning balance

Addition for the period/year

Ending balance

MMK

7,730,084,399

669,476,577

MMK

620,872,200

7,709,272,199

2,399,560,976 L,730,O84,399

ln compliance with Section 33(b) of the Microfinance Law, 25% of the net profit after tax will be setaside to a general reserve account at the end of the fiscal period. Such account shall be carried out tillit is equivalent to 100% of paid-up capital.

32

SATHAPANA LIMITED


22. Commitments and contingencies

Operating lease commitments - Company as lessee:

The company has several operating lease agreements for offices, apartment for expats and operatingcars. The company is restricted to sublease those properties to third parties. Future commitments forrental payment payable under non-cancellable operating leases at the end of reporting period are asfollows:

30 September2019 31 March 2019

MMK

189,103,3737,414,159,450

MMK

235,697,O001,329,577,200

L,603,262,823 t,565,2!4,200

23. Maturity analysis of assets and liabilities

The table below shows an analysis of assets and liabilities analyzed according to when they areexpected to be recovered or settled.

As at 30 September 2019

Less than oneyear Over one year Total

MMK

9,670,788,4T8

7,750,828,200

99,877,867,339

1,180,130,683

794,670,670

MMK MMK

35,255,679

172,608,285,310 L2,277,547,926 124,995,933,136

Within one year

More than one year

Assets



Loan and advance to customers - net

Prepaid expense

Other receivables


lntangible assets-net

Deferred tax assets

Total Assets

Liabilities

Deposit f rom customer

AIP for depositor


Borrowings*

Employee pension**

Deferred rent

Total Liabilities

18,994,710 78,994,770

43,737,957,O94 47,O2L,646,937

70,047,794,277

150,557,819

2,007,779,825

48,760,226

35,255,679

9,670,788,478

1,750,828,200

109,853,067,676

1,330,688,502

L94,670,670

2,007,779,825

48,760,226

8,189,820,000

502,325,300

2,435,491,087

37,873,390,427736,930,286

544,685,000

45,874,272,292

583,755,429

8,734,505,000

s02,325,3002,435,497,087

77,747,602,779

720,685,715

33

90,L59,603,925

SATHAPANA LIMITED


23. Maturity analysis of assets and liabilities (cont'd)

* Current portion of borrowing include revolving loan with Mizuho bank.

** As of 30 September 2019, Management expect the amounis to be paid out within the next 12months based on the Company's average turnover rate.

As at 31 March 2019

Less than oneyear Over one year Total

Assets



Loan and advance to customers -

net

Prepaid expense

Other receivables


lntangible assets-net

Deferred tax assets

Total Assets

Liabilities

Deposit from customer

Accrued interest payable fordepositorAccrued expenses and otherliabilities

Borrowings*

Employee pension**

Deferred rent

Total Liabilities

80,8to,442,372 4,473,206,O64 85,283,648,436

MMK

6,439,070,847

1,280,851,400

70,928,533,608

2,086,583,962

75,442,567

MMK

2,438,132,994

269,824,795

7,702,565,828

45,330,094

77,352,353

MMK

6,439,070,841

1,280,851,400

73,366,666,602

2,356,408,757

75,402,561

7,702,565,828

45,330,094

17,352,353

6,009,750,000

376,231,300

2,657,7 48,839

26,t7 7,350,000

109 ,713,436

131,300,000

24,967,650,000

357,301,505

70,280,273

6,141,050,000

376,237,300

2,65!,748,839

51,139,000,000

477,074,94t

10,280,213

35,318,793,575 25,476,531,718 60,795,325,293

* Current portion of borrowing include revolving loan with Mizuho bank.

** As of 31 March 2079, Management expect the amounts to be paid out within the next 12 monthsbased on the Company's average turnover rate.

34

SATHAPANA LIMITED


24. Related party transactions

Compensation to key management

During the year, the company has compensated to executive members in cash f orm for the gross salary(base pay plus allowance before taxed) together with new year bonus, and in non-cash form foraccommodation as follows:


Current executive members - Salary

Current executive members - Accommodation

MMK

236,219,808

37,392,000

MMK

422,718,631

68,837,500

273,61!,808 490,956,L31

The executive members include Chief Executive Off icer (CEO), Chief Operation Off icer (COO), and ChiefFinancial Officer (CFO). During the year, our board directors recruited and appointed a new executivemember, Chief Risk Officer, with the effective date from 1 October 2079.

The Company uses the exchange rate as of September 2019 in conversion annual gross salary fromUSD to MMK for the purpose to disclose in this audit report.

25. Fair value of financial instruments

The fair value of a financial instrument is the amount at which the instrument could be exchanged orsettled between knowledgeable and willing parties in an arm's length transaction, otherthan in a forcedor liquidation sale.

Financial instruments whose carrying amount approximates fair value

Management has determined that the carrying cash and cash at banks, loans and other receivables,savings and other payables, based on their notional amounts, are reasonable approximation of theirfair values, either due to their short-term nature or that they are floating rate instruments that arere-priced to market interest rates on or near the end of the reporting period.

26. Financial risk management objectives and policies

The Company's principal financial liabilities comprise of savings and other payables. The main purposeof these financial liabilities is to finance the Company's operations and to provide guarantees to supportits operations. The Company's principal financial assets include loans and other receivables includinginterest receivables, and cash and cash at banks that derive directly from its operations.

The Company is exposed to market risk, credit risk and liquidity risk. The Company's seniormanagement oversees the management of these risks.

35

SATHAPANA LIMITED


26. Financial risk management objectives and policies (Cont'd)

Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuatebecause of changes in market prices. Market risk generally comprise three types of risk: interest raterisk, currency risk and other price risk such equity price risk and commodity risk.

Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument willfluctuate because of changes in foreign exchange rates. The Company's exposure to the risk ofchanges in foreign exchange rates is minimal as its financial assets and financial liabilities aredenominated in f unctional currency.

Credit risk

The Company performs ongoing credit evaluations of its customers and generally does not requirecollateral on trade receivables. Allowance for doubtful debts / receivables on uncollectible tradereceivables have been made based on the expected collectability of outstanding trade receivables at- the statement of financial position date.

The maximum exposure to credit risk is represented by the carrying amount of the financial assets asstated in the statement of financial position.

Interest rate risk

lnterest rate risk is the risk that the fair value or future cash flows of a financial instrument willfluctuate because of changes in market interest rates.

The Company is not significantly exposed to interest rate risk since all of its financial assets andliabilities are subject to fixed interest rates.

Liquidity risk

The Company monitors its risk to a shortage of funds by reviewing the cash payment plan. TheCompany's objective is to maintain a levelof cash and bank balances deemed sufficient to finance theCompany's operations and mitigate the effects of fluctuations in cash flows.

The table below summarizes the maturity profile of the Company's financial asset and liabilities basedon contractual undiscounted receipts and payments.

36

SATHAPANA LIMITED


26. Financial risk management objectives and policies (Cont'd)

As at 30 September 2019

Financial assets:


Loan and interest receivables

Total undiscounted financial assets

Financial liabilities:


Interest payable on customerdepositor


Borrowings

Employee pension

Total undiscounted financialliabilities

Total net undiscounted financialassets

As at 31 March 2019

Financial assets:


Loan and interest receivables

Total undiscounted financial assets

Financial liabilities:


Interest payable on customerdepositor


Borrowings

Employee pension

Total undiscounted financialliabilities

Net undiscounted financialassets/(liabilities)

Less than 1 year 1 to 3 years TotalMMK

9,670,788,478

1o7,552,695,539

MMK

70,047,194,277

MMK

9,670,788,4L8

111,603,889,876

171,233,483,957 70,O47,L94,277 !27,274,678,234

8,189,820,000

502,325,300

2,435,497,087

37,873,390,427

736,930,286

s44,685,O00

Ltr, A7A )1) )A)

583,755,429

8,734,505,000

502,325,300

2,435,491,08L

77,747,602,779

720,685,775

43,L37,957,O94 47,002,652,727 9A,L40,609,915

68,O95,526,863 (36,96]-,459,444) 37,734,069,419

Less than 1 year 1 to 3 years TotalMMK

6,439,070,841

72,209,385,008

MMK MMK

78,648,455,849 2,438,L32,994 81,085,599,943

- 6,439,070,847

2,438,732,994 74,647,579,002

6,009,7s0,000

37 6,231,300

2,657,7 48,839

26,171,350,000

709,7 73,436

131,300,000

24,967,650,O00

367,301,505

6,141,050,000

376,231,300

2,651,748,839

51,139,000,000

477,O74,947

35,3L8,793,575 25,466,257,505 60,795,045,080

43,329,662,27 4 (23,028,7!8,511) 20,301,543,7 63

37

SATHAPANA LIMITED


27. Capital management

For the purpose of the Company's capital management, capital includes issued capital, all otherequity reserves attributable to the equity holders of the Company. The primary objective of theCompany's capital management is to maintain a sufficient solvency in order to support its businessand maximize the shareholder value.

The Company manaqes its capital structure and makes adjustments in light of changes in economicconditions and the requirements of the financial covenants, if any. To maintain or adjust the capitalstructure, the Company may adjust the dividend payment to shareholders, return capital toshareholders or issue new shares. All capital requirements of the Company are internally generatedand financed by third party debts as of 30 September 2079. No dividend was paid or declared duringthe period ended 30 September 2079.

The Company monitors capital during the review of financial information monthly. In addition,management reviews the amount of expected payment in the board meeting.

30 September2019 31 March 2019

lnterest bearing debts

Other liabilities

Less: Cash and cash at banks

Net Debt

Equity attributable to equity holders of theCom pa ny

Total capital

Capital and net debt

Gearing ratio

MMK

86,482,707,779

3,677,496,206

(9,670,788,478)

MMK

57,280,050,000

3,5L5,275,293

(6,439,070,847)

28.

80,488,815,507 54,356,254,452

34,726,229,271 24,488,323,743

34,726,229,27t 24,488,323,143

775,2!5,044,778 78,844,577,595

Events after reporting period

On 18 November 2079, the Company made the loan drawdown from MAY bank amountingMMK 3,035,200,000, and also the Company obtained approval from FRD for the second loan fromAYA bank amounting to MMK 16 billion on 28 November 2019.

Other than these and other than those disclosed elsewhere in these financial statements, at the dateof this report, there were no other event, which occurred subsequent to 30 September 2019 thathad significant impact on the financial position of the Company as at 30 September 2079.

Authorization of financial statements

The f inancial statements f or the f inancial period ended 30 Septemb er 2019 were authorized f or issuein accordance with a resolution of the directors and authorize for issue on 14 February 2020.

29.

70% 69%

38

sathapana limited...utw (myanmar) limited has expressed their willingness to accept reappointment as...

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