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
Date: 14 February 2020The Republic of the Union of Myanmar
Seang
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(b)
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
Date: 14 February 2020The Republic of the Union of Myanmar
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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
t7
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)
Significant accounting policies (Cont'd)
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
NOTES TO THE FINANCIAL SIAIEMENISFOR THE FINANCIAL PERIOD ENDED 30 SEPTEMBER 2079
3. Significant accounting policies (Cont'd)
(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
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD ENDED 30 SEPTEMBER 2079
3. Significant accounting policies (Cont'd)
(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
()
Significant accounting policies (Cont'd)
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
NOTES TO THE FINANCIAL SIAIEMENISFOR THE FINANCIAL PERIOD ENDED 30 SEPTEMBER 2079
3. Significant accounting policies (Cont'd)
(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
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD ENDED 30 SEPTEMBER 2079
3. Significant accounting policies (Cont'd)
(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
NOTES TO THE FINANCIAL SIAIEMENISFOR THE FINANCIAL PERIOD ENDED 30 SEPTEMBER 2019
4.
Significant accounting policies (Cont'd)
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
NOTES TO THE FINANCIAL SIAIEMENTSFOR THE FINANCIAL PERIOD ENDED 30 SEPTEMBER 2079
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
NOTES TO THE FINANCIAL SIAIEMENTSFOR THE FINANCIAL PERIOD ENDED 30 SEPTEMBER 2079
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
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD ENDED 30 SEPTEMBER 2079
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
NOTES TO THE FINANCIAL SIAIEMENISFOR THE FINANCIAL PERIOD ENDED 30 SEPTEMBER 2079
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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SATHAPANA LIMITED
NOTES TO THE FINANCIAL SIAIEMENTSFOR THE FINANCIAL PERIOD ENDED 30 SEPTEMBER 2079
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
30 September 2079 31 March 2019
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
NOTES TO THE FINANCIAL SIAIEMENTSFOR THE FINANCIAL PERIOD ENDED 30 SEPTEMBER 2079
t7. Accrued expenses and other liabilities
Accrued tax payable
Accrued interest payable for borrowing
Accrued expenses and other liabilities
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
30 September 2079 31 March 2019
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
NOTES TO THE FINANCIAL SIAIEMENTSFOR THE FINANCIAL PERIOD ENDED 30 SEPTEMBER 2079
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
NOTES TO THE FINANCIAL SIAIEMENISFOR THE FINANCIAL PERIOD ENDED 30 SEPTEMBER 2079
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
NOTES TO THE FINANCIAL SIAIEMENTSFOR THE FINANCIAL PERIOD ENDED 30 SEPTEMBER 2079
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
30 September 2079 31 March 2019
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
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD ENDED 30 SEPTEMBER 2079
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
Cash and cash at banks
lnterest receivables
Loan and advance to customers - net
Prepaid expense
Other receivables
Property, plant and equipment - net
lntangible assets-net
Deferred tax assets
Total Assets
Liabilities
Deposit f rom customer
AIP for depositor
Accrued expenses and other liabilities
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
NOTES TO THE FINANCIAL SIAIEMENTSFOR THE FINANCIAL PERIOD ENDED 30 SEPTEMBER 2079
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
Cash and cash at banks
lnterest receivables
Loan and advance to customers -
net
Prepaid expense
Other receivables
Property, plant and equipment - net
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
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD ENDED 30 SEPTEMBER 2079
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:
30 September 2079 31 March 2019
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
NOTES TO THE FINANCIAL SIAIEMENTSFOR THE FINANCIAL PERIOD ENDED 30 SEPTEMBER 2079
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
NOTES TO THE FINANCIAL SIAIEMENTSFOR THE FINANCIAL PERIOD ENDED 30 SEPTEMBER 2079
26. Financial risk management objectives and policies (Cont'd)
As at 30 September 2019
Financial assets:
Cash and cash at banks
Loan and interest receivables
Total undiscounted financial assets
Financial liabilities:
Deposit from customer
Interest payable on customerdepositor
Accrued expenses and other liabilities
Borrowings
Employee pension
Total undiscounted financialliabilities
Total net undiscounted financialassets
As at 31 March 2019
Financial assets:
Cash and cash at banks
Loan and interest receivables
Total undiscounted financial assets
Financial liabilities:
Deposit from customer
Interest payable on customerdepositor
Accrued expenses and other liabilities
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
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD ENDED 30 SEPTEMBER 2019
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