MYANMAR

2017
ANNUAL
REPORT
ANNUAL REPORT 2017 BRAC IN MYANMAR
If you were to describe this world, which one of the following would you pick?
It is home to magic, art, beauty, and tens of thousands of years of human talent.
Or would you say, even though it may be true, that our world is where we live,
but it is a place that doesn’t work for everyone? Our world is our playground,
a platform for the creativity of all seven billion of us.
Sometimes it’s hard to believe that a world that works for all of us can
be possible. But the opportunities are all around us.
While we all hope for a better future for our world, many of us
are building it. If you are a builder, we are betting on you.
The changemaker
The activist
The hero
The mentor
45 years ago, we started building a world we all want to live in.

We started in Bangladesh.
We listened and learnt, failed and got up again.
We never stopped trying.
And we never will.
We trust in people, and we take on the impossible,
every day. Changing systems of inequity.
Turning potential into skill.
Ready to go to the end of every last mile,
where there are no other signs.
It takes us all to build a world that
works for us all.
We listen, pilot, perfect and scale.
Our DNA is to build.
As the sun rose this morning,

hundreds of thousands of builders rose with it.
Teachers across eight countries opened the

colourful doors of the world’s biggest secular
private education system.
65,000 artisans picked up their needles and
started weaving traditional art into
beautiful clothing.
Credit officers in one of the world’s largest

microfinance institutions sat down
with women in the remotest
corners of seven countries.
Whoever you are, wherever you are, doing good is everyone’s business.
We have never faced bigger challenges but we have never been more ready.
Join the world’s biggest family.
Small is beautiful, scale is necessary.

2 | Annual Report 2017
BUILDING A WORLD THAT SOCIAL ENTERPRISES
WORKS FOR ALL OF US

Solution for social challenges and surplus for
greater impact: Initiatives that engage
individuals, micro and small enterprises as
suppliers, producers and consumers.
We act as a catalyst, creating opportunities for people living in poverty to realise their potential. We
specialise in piloting, perfecting and scaling innovations to impact the lives of millions. We were born in
Bangladesh, are almost completely self-sustainable through our own network of social enterprises and
investments, and operate in 11 countries across Asia and Africa. INVESTMENTS
Socially responsible companies that assist us
in our mission. Our network of investments
help us strive towards the goal of
self-sustainability.
VISION, MISSION AND VALUES
A world free from all forms of exploitation
and discrimination where everyone has the
opportunity to realise their potential.
Empower people and communities in situations
of poverty, illiteracy, disease and social injustice. BRAC UNIVERSITY
Our interventions aim to achieve large scale,
An educational institution's goal is not only to
positive changes through economic and social
provide the highest quality teaching, but also to
programmes that enable women and men to
inculcate the values essential for tomorrow's
realise their potential.
leaders. The journey starts by building a high
Integrity Innovation Inclusiveness Effectiveness calibre and supportive faculty and
administration team who are capable of
teaching the most challenging and up-to-date
educational programmes, and empowering
SOCIAL DEVELOPMENT them with knowledge and life skills so that they
can take on the challenges of building
Eliminating extreme poverty, Expanding themselves and a better nation.
financial choices, Employable skills for
decent work, Climate change and
emergencies, Gender equality, Universal
healthcare, Pro-poor urban development,
Investing in the next generation.
Country offices: Afghanistan, Bangladesh, STICHTING BRAC INTERNATIONAL
Liberia, Myanmar, Nepal, Pakistan,
Philippines, Sierra Leone, South Sudan,
Tanzania, Uganda
HUMANITARIAN RESPONSE
We have been providing life-saving services to forcibly
displaced Myanmar nationals through a multi-sector
AFFILIATES
response since the influx began in September 2018. We
are working closely with the government, local and BRAC USA
international NGOs and other stakeholders through the BRAC UK
Inter Sector Coordination Group.
4 | Annual Report 2017 Annual Report 2017 | 5

CONTENTS CHAIRPERSON’S
FOREWORD
07 Chairperson’s foreword
08 Letter from the Executive Director
09 Message from the Country Representative
10 BRAC across the world
12 Emergency preparedness and response
Over recent years, significant investments have been of greatest concern. Globalisation and technology are
14 Microfinance made to ensure the survival and optimal development reshaping the lives of young people worldwide. 85 per
16 Bamboo sisters of children during the first decade of life. Globally, the cent of jobs that today’s learners will be doing in 2030
under-five mortality rate has decreased significantly. do not exist now. There is an urgent need to redesign
17 A baker’s story
Around 20,000 fewer children died every day in 2016 curricula for secondary, vocational and higher education
18 Building dreams than in 1990. However, this progress has not been to develop skills and competences that will meet the
19 Governance and management: BRAC International universal. Inequities in child mortality between high- needs of the future. Our goal should be to create
income and low-income countries remain large. adaptable learners who are capable of reengineering
21 Governance, management: BRAC in Maynmar, Development partners Reducing these inequities across countries and saving their own skills and capacities in disrupted economies.
22 Country map more children’s lives by ending preventable child deaths Attention must also be paid to developing children and
are important priorities. young people’s human qualities and values, such as
23 Financials
empathy, cooperation and integrity.
We also need to focus on the second decade
of children’s lives. A safe, healthy passage from Political instability and conflict are leaving young people
adolescence into adulthood is the right of every child. To vulnerable to violence, disrupting their schooling and
fulfil this right, families and societies need to ensure that access to basic health services and, in many cases,
adolescents and youth acquire the knowledge and skills inflicting psychological trauma. We must accelerate
required to lead productive and fulfilling lives. Calls for efforts to protect children and young people from
investment in children and young people have increased violence, drug abuse, conflict and poverty, to enable
dramatically in recent years. More and more countries them to lead more productive lives and contribute to
agree that policies, which help young people fulfil their society.
potential, also drive economic development.
Challenges persist in both the education and skills

sectors. We need to ensure that all children complete
their primary schooling and go on to secondary
school. Additional efforts are required to empower girls
to believe that they are capable of doing everything
boys can. The lack of improvement in the quality and Sir Fazle Hasan Abed, KCMG
outcomes of education is another concern. Founder and Chairperson
The global youth unemployment rate stands at 13 per

cent, which is three times higher than the figure for
adults. This lack of job opportunities is one of the issues
Annual Report 2017 | 7

LETTER FROM THE MESSAGE FROM THE
EXECUTIVE DIRECTOR COUNTRY REPRESENTATIVE
There are more young people today than at any other time and 15 million girls of primary-school age will never The year 2017 has been an exciting year for BRAC We also continued the implementation of our
in human history. Children and young people make up enter school. We are building schools only for girls in team in Myanmar! disaster risk reduction and resilience building
almost 40% of the world’s population, with specific needs Afghanistan and Pakistan, places where it is extremely programme to strengthen our organisational
and aspirations for the future, which poses both immense difficult for them to go to school. I am enthusiastic of the great work done so far capacity for humanitarian response by building
opportunities and challenges. While we as a global and for the new challenges ahead. safer and more resilient communities in Myanmar.
In Sub-Saharan Africa alone, 14.2% of the youth
community have made significant progress in ensuring The project will be followed by further phases
population is unemployed, representing massive
a better life for all, there is always more work to be done. 2017 was a great year for our microfinance in 2018 to implement a local model of building
untapped potential for growth. Everyone should be
One in five children, adolescents and youth is out of programme. We reached almost 63,000 women disaster preparedness and emergency response
able to contribute and reap development dividends
school. That is 263 million children and youth across the in 5 regions of Myanmar and our outstanding capabilities of local actors, institutions, vulnerable
and our ELA programme ensures just that for our out-
world. loan portfolio grew by 154% since 2016, reaching communities.
of-school adolescent girls. With specialised skills and
around USD 8.9 million. We are proud of the great
Today’s young people will be tomorrow’s leaders - in our entrepreneurial lessons, our programme enables them to
results achieved and we are confident that our We designed a new strategy to expand our
families, in our workplaces, in our communities. Over a unlock their potential and contribute to society. We give
programme will continue to expand, serving an programmes to include agriculture, health,
third of the Sustainable Development Goal (SDG) targets our girls access to microloans so they can start their own
increasing number of women in need and offering nutrition and youth.
highlight the role of young people and the importance enterprises.
credit to those left out from the formal financial
of their empowerment, participation, and wellbeing. The
Our newly-launched Skills Development Programme in sector. I look forward to continuing this incredible journey
SDGs highlight that young people are a driving force for
Nepal connects children and youth to apprenticeships for realising, in Myanmar and all over the world,
development – however they need to be provided with the
and equips them with the skills needed to not only affect We are highly committed in promoting inclusive the dream that animates all of us, part of BRAC
skills and opportunities needed to reach their potential.
change in their own lives but also in the communities they finance that could reach the most excluded family: a world free from all forms of exploitation
Therefore we at BRAC International have shifted our
are a part of. segments of the society. For this reason, we and discrimination where everyone has the
strategy to focus on ensuring children and youth have
launched two new initiatives aimed at including opportunity to realize their potential.
better opportunities.
Our extraordinary strides in the field of development mean vulnerable groups.
We have invested in Early Childhood Development that we are ready to provide a better, more equitable
programmes in Tanzania, Uganda and Liberia. A dollar life for our children. As our future change-makers, First, we started a project using financial diaries
invested in early childhood development yields a seven- children hold incredible potential for innovation. It is our to collect data from rural women with the aim
fold return in the future. Having a strong foundation from responsibility to give them what they deserve. We cannot of gathering insights of their financial needs and
an early age leads to more productive citizens in the let their potential go unrealised. thus adapt our financial services. Second, we
future. initiated a pilot project with customised credit to ATM Tariqul Islam, Ph.D.
people with disabilities. We are poised to become Country Representative
We believe education is a universal right and no one, the pioneer in targeting people with disabilities BRAC in Myanmar
no matter the circumstance, should be left behind. 130 through truly inclusive microloans.
Faruque Ahmed
million girls between the age of 6 and 17 are out of school
Executive Director
BRAC International

BRAC ACROSS 09
THE WORLD
05
EMERGENCY PREPAREDNESS WHAT WE DO HIGHLIGHTS
AND RESPONSE Our main approach is to build local
capacity. In partnership with the Bill Monitored monthly country safety and security
& Melinda Gates Foundation, BRAC situations and developed 46 weekly safety and
International and BRAC Myanmar are security reports
piloting a model for developing local
emergency preparedness and response Updated Country Risk Assessment and Multi
capacities. Through a participatory, Hazard Risk Assessment on quarterly basis
community-based inclusive approach,
our project will work with schools, Organized the thematic workshop on “Myanmar
communities and regional governments Action Plan on DRR (MAPDRR) and People Most at
in Bago and Yangon to strengthen Risk” together with UNICEF and five other INGOs.
humanitarian localization.
Conducted a Safety and Security Risk
Management training to 40 branch managers of
BRAC Myanmar Microfinance Company Limited.
We have provided basic first aid training to all
branch managers with support from external first
aid trainers.
Conducted workshop to draft the disaster

preparedness plan for BRAC Myanmar with 30
representatives from UNs, INGOs and local NGOs.
Myanmar is exposed to multiple natural hazards. The coastal
Contributed to the Myanmar version of the Core
regions are exposed to cyclones, storm surges, tsunami and Humanitarian Standards
strong wind while major parts of the country are at risk from Became a member of the Basic Education Sub
earthquakes and fires. Heavy rainfall induced flooding is a Sector Working Group on Education in Emergency
recurring phenomenon across the country while some parts of (EiE).
the country are exposed to landslides and droughts. Cyclone Participated in key national workshops and
provided technical inputs to:
Nargis in 2008 claimed 140,000 lives.
National Earthquake Preparedness and Response
We established an emergency preparedness and response Plan, National WASH strategy, 4th Regional
programme in 2016 to strengthen our organisational capacity on Moonson Forum, Calculating Costs and Benefits
of Community Driven Resilience Programmes in
emergency response in order to build safer and more resilient
Myanmar, Urban Disaster Risk Reduction (DRR).
communitie

MICROFINANCE WHAT WE DO HIGHLIGHTS
We operate with an integrated
development approach for sustainable
Operating 42 branches in five regions
poverty reduction by combining both Expanded the microfinance programme in two
economic and social development. Our regions (Sagaing Region and Nay Pyi Taw Council
microfinance activities are therefore a area)
part of a broader, holistic approach to
development, called the “microfinance- In 2017, disbursed microloan USD 19.57
plus approach”. million and number of loans disbursed 65,085
Provided collateral free small enterprise loan USD
We offer inclusive financing to people
living in poverty in Myanmar through two
270,558 and number of loans disbursed
different types of services: microfinance 168 among the entrepreneurs
group loans and individual loans for small Since 2016, increased principal loan outstanding
enterprises. Currently we are working by 58% and principal loan outstanding balance
to develop products related to disability is USD 9 million as on December 2017.
inclusive microfinance and women
enterprise development. Launched the digital financial diaries project to
explore microfinance product diversification.
Complementing to this, we provide Started the people with disabilities project to
financial literacy training and have address specific needs and offer customized social
instituted a range of client protection
& financial services to people with disabilities.
measures that distinguish us for our
commitment towards client-centric Initiated big data analysis, digital credit scoring
financial service delivery. and mobile money channel to small holder farmers
Become the member of Job creation Sub Sector

Working Group
Myanmar has some of the lowest levels of financial inclusion.
More than 70% of adults do not have access to formal financial
institutions (World Bank, 2016). We started our microfinance
programme in 2014 to provide inclusive financial access to
households living in poverty in both rural and urban Myanmar.
We create employment and income opportunities for people
living in poverty, with particular emphasis on women who have
been left out of mainstream financial systems.

THE BAMBOO SISTERS A BAKER’S STORY
Daw Myint Kyi, lives in Htauk Kyant, My Name is Ma Khin Nwe Aye and I am
located in the outskirts of Yangon region. from the Bago region. I never completed
She runs a bamboo baskets weaving school and am not very educated.
enterprise. She lives with her family and However, I always enjoyed baking and I
she has two sons. did not let my lack of education stop me
from pursuing my dreams. I started a
The bamboo baskets enterprise is her small bakery business with my husband
family business which started over 50 and I am doing well enough to be able to
years ago. The technique and skills of support my children. I have three children
making baskets are part of the family and they are all are in school. The eldest
treasure as Daw Myint Kyi’s father taught one is 12 years old, the second one is 8
her and her sisters how to make the years and the youngest one is 5 years
baskets when the girls were very young. old. I want to provide my children with
Now, the craft of bamboo basket weaving education. Although I want them to be
is handed down from one generation doctors and engineers, I will accept and
to another and the two sisters run the support what they want to be.
business together.
The sisters buy the bamboo from We started the business right after we
Bayintaung market in Yangon and got married. I am happy to say that we
handcraft beautiful baskets that are sold are doing so well that we need funding
at a market in Yangon. They usually collect to expand our business. I want to attract
on our own is better because we are time needed and human resource,
and accept the orders, and then send the more customers and I want to start
able to plan our work and take decision and production will be high which will
baskets to the markets. Her father said “I producing packaged bakery. I want to
independently” she said. generate more profit.
started this business in 1964. It became a extend my business with machine for
family business and my daughters didn’t packaging. When the business extends, it
Daw Myint Kyi invested and strengthened The organisation which provides
need to go outside for income. They can directly affects our children education and
the business by borrowing from BRAC. loans with the low interest rate helps
work from home and get an income that future.
Now she has received her third loan and communities to develop their businesses.
we can all survive on. The business is
she wants to get a fourth loan to invest BRAC not only provides financial support
better now.” Initially, I borrowed 150,000 Kyats (USD
in the purchase of higher quantity raw but also indirectly supports other sectors
Daw Myint Kyi said “I am so happy about 113) from BRAC in 2014. Now I borrowed
materials at a lower price for handcrafting like children’s education, health and other
this business because I don’t need to go 20 lakhs Kyats (USD 1,500). I have nine
the baskets. “I am comfortable to take essentials.
outside and I can work with my family at employees at my bakery business.
loan from BRAC Myanmar. We have good
home. My sons are not interested in this I will extend my bakery business with
relationship and I am familiar with BRAC
business. They want to work outside.” the next loan by purchasing a machine
Myanmar. The staff is friendly and kind!”
Daw Myint Kyi said. for packaging which will reduce the
The business generates around 10 lakhs
(USD 740) per month. The flow of income
is highly dependent on the number of
baskets they can produce. “Sometimes
we cannot make too much because of
health issues. However, having a business

BUILDING DREAMS GOVERNANCE AND MANAGEMENT
BRAC INTERNATIONAL Ms. Shabana Azmi
Mr. Shafiqul Hassan
BRAC International is registered Ms. Irene Khan
as Stichting BRAC International in the Dr. Fawzia Rasheed
Netherlands.
MANAGEMENT BOARD
CORPORATE GOVERNANCE
The Management Board is charged with
In line with the guidelines for corporate the daily management, the preparation
governance in the Netherlands, the Board of the budget, the financial statements
decided to adopt a two-tier governance and the long-term strategy plan. The
structure to create a clear division Supervisory Board has stipulated specific
between executive and supervisory restrictions that require its approval.
responsibilities from the end of 2016. The Management Board is appointed by
Supervisory Board and their performance
SUPERVISORY BOARD is reviewed annually. The Management
Board consists of the following members:
Stichting BRAC International has a ten (10)
member Supervisory Board. Mr. Faruque Ahmed, Executive Director
Mr. Saif Md Imran Siddique, Director
In Myanmar, women are starting their own businesses and earning money for their family. The Supervisory Board is charged with Mr. Shameran Abed, Director
I immediately joined my family business after graduating at 26. My family was in the wood the overall supervision of the policies Ms. Lamia Rashid, Director
selling and production business and I was always keen on joining. However, after a few pursued by the Management Board
and its associated institutions and/
years, I started my own business with my husband. The gender diversity in the management
or entities. The Supervisory Board
board is 75/25. The Foundation is trying
My husband and I started selling materials for building houses three years ago. My members are appointed by co-optation.
to bring in more female participation into
neighbourhood was experiencing a boom and there are many factories nearby as well. We The period of membership is governed
its Management board. The management
did really well in the first years but now we are thinking about expanding our business into by the constitution and there is no
board meets on a weekly basis.
selling construction materials as well. board remuneration applicable for the
Supervisory Board.
Unfortunately, it is extremely difficult for young entrepreneurs like my husband and I to get BRAC INTERNATIONAL
access loans for business expansion. My family has helped all they can but we needed The current members of the Supervisory HOLDINGS BV
additional funding to make the expansion happen. Luckily for us, that is around when Board are:
BRAC started offering small enterprise loans. The terms were really good for us and the BRAC International Holdings BV is a
monthly instalments also worked for us. Chairperson wholly owned subsidiary of Stichting
We borrowed 30 lakhs Kyats (USD 2,300) as a first loan and used this money to expand Sir Fazle Hasan Abed, KCMG BRAC International and was incorporated
into selling construction materials. We are not planning on stopping there and am already in 2010. BRAC International’s microfinance
Members programmes, social enterprises and
planning another loan to expand the business further.
Ms. Sylvia Borren investment companies are consolidated
I am extremely grateful organisations like BRAC who are helping our economy by letting Dr. Muhammad Musa under this wing. The social programmes
entrepreneurs like us get access to credit. I believe thanks to loans like this, the economy Ms. Parveen Mahmud currently supporting the enterprises
in Myanmar will grow and we will spur innovation. Dr. Ahmad Mastaqur Raza Chowdhury include seed production and training
Dr. Debapriya Bhattacharya centres.

BRAC International Holdings BV has the In the discharge of their duties, the in countries where it is required. The External audit of Stichting BRAC
role to consolidate the financial results Directors shall be guided by the interests local board members are appointed by International, BRAC International
of all country operations in six countries. of the Company and the business carried Stichting BRAC International’s board. The Holdings BV and all of our legal entities
The consolidated financial statements on by the Company. The Management business of the local entities is managed are undertaken annually. Financial
include the financial data of the stand-alone Board may decide to appoint one or more by these local boards. Further details of transparency is ensured by BRAC
parent organisation, its group companies authorised signatories and to determine the roles of the local board are available in International’s finance and accounts
and other legal entities over which the their authority and title. the respective incorporation documents of division, which prepares financial
foundation has control. these entities. statements following the International
In line with the guidelines for corporate
GROUP FINANCE AND Financial Reporting Standards and the
governance in the Netherlands, the Board AUDIT COMMITTEE ADVISORY COUNCIL laws of relevant countries.
decided to adopt a two-tier governance Composition of the present finance and In 2015, BI decided to form advisory The summary of all audits and
structure to create a clear division between audit committee is as follows: councils to strengthen governance, investigations are submitted to the audit
executive and supervisory responsibilities
support advocacy at the national level and and finance committee on a half yearly
from the end of 2016. Ms. Parveen Mahmud, Chair enhance credibility. basis.
Dr Muhammad Musa, Member
SUPERVISORY BOARD Ms. Sylvia Borren, Member The council members, who are country
The Supervisory Board is charged with Mr. Faruque Ahmed, Member nationals, provide the country leadership
the overall supervision of the policies Mr. Hans Eskes, Member with advice and support on standards
pursued by the Management Board and its Mr. Saif Md Imran Siddique, Secretary and policies, and the development and
associated institutions and/or entities. of the Committee implementation of programmes. They
The Management Board is charged with advise on key external developments
the daily management, the preparation The primary function of the finance and and trends nationally, and promote
of the budget, the financial statements audit committee is to assist the governing BRAC’s mission through effective and
and the long-term strategy plan. The board in fulfilling its responsibilities on the: strategic working relationships with key
Supervisory Board has stipulated specific stakeholders and civil society partners
• Financial reporting and budgeting in the countries. They also support
restrictions that require its approval.
processes information sharing and relevant advocacy
The Supervisory Board exists out of the
• System of internal controls and risk on behalf of BRAC.
following members:
assessment
Sir Fazle Hasan Abed KCMG, Chair • Compliance with legal and ACCOUNTABILITY AND
Dr. Muhammad Musa, Member regulatory requirements TRANSPARENCY
Ms. Parveen Mahmud, Member • Qualifications, independence, and
Ms. Sylvia Borren, Member performance of the external The internal audit department conducts
auditors periodical audits at all our cost centres
• Qualifications, independence, and
MANAGEMENT BOARD performance of the internal audit
on a sample basis. Audits take place at
least once a year and twice or more in
function locations and on programmes where a
The Management Board consists of the
following members: closer watch is warranted. In addition,
LOCAL BOARDS special investigations are conducted in
Managing Director case of fraud or irregularities that may be
Each country entity has a local board. We detected. A ‘whistle blower’ policy is in
Mr. Faruque Ahmed
pursue microfinance and development place and HR takes actions as and when
Director activities through separate entities required.
Mr. Hans Eskes

BRAC IN MYANMAR
GOVERNANCE
BRAC Myanmar Microfinance Company Ltd
Shameran Abed – Managing Director

S N Kairy – Director
Faruque Ahmed – Director
ATM Tariqul Islam Ph.D- Country Representative
MANAGEMENT
ATM Tariqul Islam Ph.D- Country Representative
Sharmin sultana - Head of Finance
Md. Sazaduzzaman - General manager, Microfinance
Lian Huai - Head of Human Resource and Training
Md. Shariful Islam - Head of Internal Audit
Aung Koko - Emergency Response Coordinator
DEVELOPMENT PARTNERS
BRAC IN MYANMAR
FINANCIALS FINANCIAL HIGHLIGHTS
Net Income

BRAC Myanmar Microfinance Company Limited completed its fourth years of operation in 2017. Net profit before tax was
USD 35,094 as against net loss before tax USD 206,702 in 2016.
Interest income earned during the year is USD 2,151,248 as against USD 1,358,897 in 2016.

Operating expenses

Total operating expenses for the year was USD 2,071,585 as against USD 1,636,738 in 2016 showing an increase 27%.
In 2017 an additional 7 branches were opened resulting the total number of branches to 41.

Provisions for Impairment losses

This year amount charged for impairment of loans is USD 66,450 as against 83,906 in 2016 showing an decrease of
21%. Total reserve as against impairment in 2017 was USD 161,508 and USD 109,831 in 2016 representing 1.78% of
gross portfolio. Portfolio at Risk (PAR>30) is 0.79%.

Financial Position

In 2017 the company’s total assets increased by 45% to USD 10,003,967. Loans and advances to customers increased
by 59% and is now 89% of total assets.
PERFORMANCE REVIEW
2017 2016 2015 2014 2013
Income Statement USD USD USD USD USD
Operating Income 2,173,129 1,513,942 536,058 29,824 -
Net profit/(loss) before tax 35,094 (206,702) (432,010) (363,346) (134,775)
2017 2016 2015 2014 2013

Financial Position USD USD USD USD USD
Total Asset 10,003,967 6,908,676 3,497,796 742,478 90,907
Net Equity 5,568,553 5,196,844 2,645,109 356,612 (30,175)
Loan to Customer (net) 8,951,932 5,644,011 2,178,298 306,042 -
Cash at Bank 756,356 1,048,668 1,132,377 370,110 8,317
Contribution to Government 2017 2016 2015 2014 2013

Exchequer USD USD USD USD USD
Income Taxes - - - - -
Withholding tax 66,974 23,757 9,930 2,185 -
Social Security and pension 24,881 16,949 - - -
Annual Report 2016 25

BRAC MYANMAR MICROFINANCE COMPANY LIMITED
REPORT AND FINANCIAL STATEMENTS
2017 2016 2015 2014 2013 FOR THE YEAR ENDED DECEMBER 31, 2017
Returns and ratio
Return on Asset 0.42% -4% -20% -48% -
Cost to income 112% 120% 186% 1318% -

GENERAL INFORMATION
Operational Statistics 2017 2016 2015 2014 2013

DIRECTORS
Total Borrowers 50,977 38,270 16,837 2,433 -

PAR>30 0.79% 0.02% - - - Mr. Shameran Abed - Managing Director
Mr. Faruque Ahmed - Director
Mr. Shib Narayan Kairy - Director

ADMINISTRATORS
OPERATING INCOME VS NUMBER OF BORROWERS

Mr. ATM Tariqul Islam - Country Representative (Appointed on 2 October 2017)
Mr. Kazi Faisal Bin Seraj - Country Representative (Resigned on 27 May 2017)

PRINCIPAL PLACE OF BUSINESS
Operating Income
168. Kyun Shwe Myaing Lane 2
Numbers of Borrowers Bogyoke Ywa, Thuwunna
Thingangyun Township
Yangon
Myanmar

AUDITORS

Khin Su Htay & Associates Limited
Certified Public Accountants
Building No. C 1, Room No. 005 (Ground Floor), Hninnsi Street
Yuzana Highway Complex, Kamayut Township
Yangon, Myanmar

BANKERS

KBZ BANK MYANMA ECONOMIC BANK
No.33 to 49, Corner of Bank St & Branch (1)
Mahabandoola Garden St 43-45 Pansodan St.
Kyauktada Township Kyauktada Township
Yangon Yangon
Myanmar Myanmar
Annual Report 2017 27 Annual Report 2017 28

BRAC MYANMAR MICROFINANCE COMPANY LIMITED BRAC MYANMAR MICROFINANCE COMPANY LIMITED
DIRECTORS’ REPORT DIRECTORS’ REPORT
FOR THE YEAR ENDED DECEMBER 31, 2017 FOR THE YEAR ENDED DECEMBER 31, 2017
The directors have pleasure in submitting their report and the audited financial statements of the company for the year ended 31 December 2017, g) Results from operation
which disclose the state of affairs of BRAC Myanmar Microfinance Company Limited.
The results for the Company's operation for the year ended 31 December 2017 are set out on Page 36.
a) Registration
h) Composition of Directors
BRAC Myanmar Microfinance Company Limited is a wholly owned subsidiary company of BRAC International Holdings B.V., a limited
liability company registered under the laws of the Netherlands, with its registered office in The Hague. The directors who served during the year and up to the date of this report are set out on Page 28 .

BRAC Myanmar Microfinance Company Limited was incorporated as a limited liability company under the company Act on 15 October i) Directors' benefits
2013 with its registration number 559 FC/13-14 and registered office in Yangon, Myanmar.
No director has received or entitled to receive any benefits during the financial year.
The objective of the company is to operate microfinance programme in Myanmar with a mandate to contribute towards alleviating poverty
and attaining Sustainable Development Goals (SDGs) through promoting employment and income generating activities for the poor

j) Corporate governance
women.

The directors are committed to the principles of good corporate governance and recognize the need to conduct the business in accordance
b) Vision
with generally accepted best practice. In so doing the directors therefore confirm that:
A world free from all forms of exploitation and discrimination where everyone has the opportunity to realise their potential.
• The Board of Directors met regularly throughout the year;
c) Mission • They retain full and effective control over the Company;
• The Board accepts and exercises responsibility for strategic and policy decisions, the approval of budgets and the monitoring of
The Company’s mission is to empower people and communities in situations of poverty, illiteracy, disease and social injustice. The performance; and
interventions aim to achieve large scale, positive changes through economic and social programmes that enable men and women to • They bring skills and experience from their own spheres of business to complement the professional experience and skills of the
realize their potential. management team.

d) Our values In 2017 the company had three directors. The Board continued to carry out its role of formulating policies and strategies of the Company,
reviewing the business plan, ensure that the accounting system is maintained in accordance with acceptable standards, the books of
Innovation- the Company has been an innovator in the creation of opportunities for the poor to lift themselves out of poverty. We the Company are kept properly, and that accounts are checked by authorized auditors, as well as recruitment and development of key
value creativity in programme design and strive to display global leadership in groundbreaking development initiatives. personnel.

Integrity- the Company values transparency and accountability in all our professional work, with clear policies and procedures, while k) Risk management
displaying the utmost level of honesty in our financial dealings. The Company holds these to be the most essential elements of our work
ethic. The board accepts the final responsibility for the risk management and internal control system of the Company. The management ensures
that adequate internal financial and operational control systems are developed and maintained on an ongoing basis in order to provide
Inclusiveness- the Company is committed to engaging, supporting and recognizing the value of all members of society, regardless of reasonable assurance regarding:
race, religion, gender, nationality, ethnicity, age, physical or mental ability, socioeconomic status and geography.
· The effectiveness and efficiency of operations;
Effectiveness- the Company values efficiency and excellence in all our work, constantly challenging ourselves to perform better, to · The safeguarding of the Company’s assets;
meet and exceed programme targets, and to improve and deepen the impact of our interventions. · Compliance with applicable laws and regulations;
· The reliability of accounting records;
e) Principal activities · Business sustainability under normal as well as adverse conditions; and
· Responsible behaviours towards all stakeholders.
The Company provides Microfinance services to improve the livelihood of poor people in over 37 townships in Myanmar including extending
loan facilities. The company started a new product called Small Enterprise Programme (SEP) giving individual loans to clients. The efficiency of any internal control system is dependent on the strict observance of prescribed measures. There is always a risk of non-
compliance of such measures by staff. Whilst no system of internal control can provide absolute assurance against misstatement or
f) Financial performance losses, the Company’s system is designed to provide the Board with reasonable assurance that the procedures in place are operating
effectively.
The Company's performance during the year ended 31 December 2017 is as follows:
l) Management structure
- Interest income on loans increased by around 74% from MMK 1,686 million in 2016 to MMK 2,927 million in 2017.
- Loans and advances to customers increased by 58% from MMK 7,704 million in 2016 to MMK 12,192 million in 2017. Loan disbursement The Company is under the supervision of the Board of Directors and the day to day management is entrusted to the Country Representative
increased by 70% from MMK 15,938 million in 2016 to MMK 27,021 million in 2017. Loan realisation increased by 103% from MMK 11,026 who is assisted by the heads of divisions, departments and units. The organization structure of the Company comprises of the following
million in 2016 to MMK 22,478 million in 2017. divisions:
- Operating expenses increased by 39% from MMK 2,031 million in 2016 to MMK 2,819 million in 2017.
- Total asset increased by 44% from MMK 9,430 million in 2016 to MMK 13,625 million in 2017.
- During the year, the company had a net profit of MMK 49.5 million ( 2016-loss of MMK 287.5 million).

DIRECTORS’ REPORT DIRECTORS’ REPORT
FOR THE YEAR ENDED DECEMBER 31, 2017 FOR THE YEAR ENDED DECEMBER 31, 2017
· Micro Finance Program (MF) Training

· Finance & Accounts;
· Administration Training and development of staff capacity is one of the key priorities of the Company. This year all the Branch Accountants received
· Internal audit; hands-on training on their day to day responsibilities. All the program staffs received training as prescheduled. The Company will
· Monitoring Unit; continue to train, re-train and develop its staff in order to improve service delivery and innovation.
· IT and MIS;
· Human resources; Medical assistance
· Communications.
· Public Relations The Company reimburses medical expenses incurred by employees for medical treatment.

m) Related party transactions Social security contribution

Related party transactions are disclosed in Note 13 and 26 to the financial statements. All eligible employees re required to contribute National Social Security Scheme managed by Social Security Board at the rate 5% of
salary maximum of MMK 15,000. As a employer BRAC pays 3% of this social security contribution on behalf of the employees.
n) Future development plans
As a result of contribution to this security fund, employees get sickness benefits, maternity benefits and grant, paternity benefits and
Microfinance Program grant, medical benefits, funeral grant, and many more.

• New 20 Microfinance branches shall be opened in 2018 and increasing the number of borrowers by approximately 28,000. s) Auditors
• Exploring new innovations such as mobile money to enhance service delivery.
• During 2018, a new disability friendly product will be designed meeting the need of people with disability. The auditors, Khin Su Htay & Associates were appointed during the year.
• Finally, as in 2017 BRAC earned profit, very soon it will be eligible for taking voluntary savings as deposit taking institutions which would
potentially help BRAC retain and attract more customers. t) Approval of the financial statements

o) Key achievement in 2017 The financial statements were approved by the directors at a meeting held on 09 March 2018.

The following are the Company’s key achievements for the year:
By order of the Board
• The Microfinance borrower size increased by 12,707 in 2017 (Total borrower as of 2017 is 50,977).
• Launched the new product named SEP, its portfolio as at 31 December 2017 is MMK 313 million.
• Staffs from different departments received total 38 trainings in various financial, operational and management competency issues.

p) Solvency
The Board of directors confirms that applicable accounting standards have been followed and that the financial statements have been
prepared on a going concern basis. The Board of directors has reasonable expectation that the Company has adequate resources to
continue in operational existence for the foreseeable future.
Director Director
q) Gender parity BRAC Myanmar Microfinance BRAC Myanmar Microfinance
Company Limited Company Limited
In 2017, the company had a total staff of 389. The female staff are 327 and male 62.
r) Employees' welfare

Management/employee relationship

There were continued good relation between employees and management for the year 2017. There were no unresolved complaints
received by management from the employees during the year. New performance incentive schemes which were introduced in 2016
continued in 2017.

The Company is an equal opportunity employer. It gives equal access to employment opportunities and ensures that the best available
person is appointed to any given position free from discrimination of any kind and without regard to factors like gender, marital status,
tribes, religion and disability which does not impair ability to discharge duties.

STATEMENT OF DIRECTORS’ RESPONSIBILITIES
FOR THE YEAR ENDED DECEMBER 31, 2017
The company's directors are responsible for the preparation and fair presentation of the financial statements, comprising the statement INDEPENDENT AUDITOR'S REPORT
of financial position at 31 December 2017, the statement of comprehensive income, the statement of changes in equity and statement of
To the members of BRAC Myanmar Microfinance Company Limited
cash flows for the year then ended, and the notes to the financial statements, which include a summary of significant accounting policies
and other explanatory notes, in accordance with International Financial Reporting Standards and in the manner required by the Companies Opinion
Act of Myanmar and for such internal controls as the directors determine are necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to fraud or error. We have audited the financial statements of BRAC Myanmar Microfinance Company Limited ("BRAC" or also referred as "the Company"),
which comprise the statement of financial position of the Company as at 31 December 2017, the statement of comprehensive income,
The directors' responsibilities include: designing, implementing and maintaining internal controls relevant to the preparation and fair statement of changes in equity and statement of cash flows of the Company for the year then ended and a summary of significant
presentation of these financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying accounting policies and other explanatory notes.
appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. They are also responsible for
safe guarding the assets of the company. In our opinion, the financial statements of the Company are properly drawn up in accordance with International Financial Reporting
Standards so as to give a true and fair view of the state of affairs of the Company as at 31 December 2017 and the results, changes in
Under the Companies Act of Myanmar, the directors are required to prepare financial statements for each year that give a true and fair equity and cash flows of the Company for the year then ended. The accounting records required by the Company have been properly kept.
view of the state of affairs of the company as at the end of the financial year and of the operating results of the company for that year. It
also requires the directors to ensure the company keeps proper accounting records that disclose with reasonable accuracy the financial Basis for opinion
position of the company.
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are
The directors accept responsibility for the financial statements which have been prepared using appropriate accounting policies supported further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the
by reasonable and prudent judgment and estimates, in conformity with International Financial Reporting Standards and the Companies Act Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in Myanmar, and we have
of Myanmar. The directors are of the opinion that the financial statements give a true and fair view of the state of the financial affairs and fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is
the profit and cash flow for the year ended 31 December 2017. The directors further accept responsibility for the maintenance of accounting sufficient and appropriate to provide a basis for our opinion.
records that may be relied upon in the preparation of financial statements, as well as adequate systems of internal financial control.
Responsibilities of Management of the Financial Statements
The directors have made an assessment of the company's ability to continue as a going concern and have no reason to believe the
company will not be a going concern for the next twelve months from the date of this statement. Management is responsible for the preparation and fair presentation of these financial statements in accordance with International
Financial Reporting Standard (IFRSs) and for such internal control as management determines is necessary to enable the preparation of
The auditor is responsible for reporting on whether the annual financial statements are fairly presented in accordance with the International financial statements that are free from material misstatement, whether due to fraud or error.
Financial Reporting Standards and Companies Act of Myanmar.
In preparing the financial statements, management is responsible for assessing the Company's ability to continue as a going concern,
Approval of the financial statements disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either
intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
The financial statements, as indicated above, were approved by the board of directors on 09 March 2018 and were signed on its behalf by:
Those charged with governance are responsible for overseeing the Company’s financial reporting process.

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists.
Director Director Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
BRAC Myanmar Microfinance BRAC Myanmar Microfinance expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional skepticism throughout
the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error,design and
perform audit procedures responsive to those risks,and obtain audit evidence that issufficient and appropriate to provide a basis
for our opinion. The risk of not detecting a material misstatement resulting from fraudis higher than forone resulting from error, as
fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related STATEMENT OF FINANCIAL POSITION
disclosures made by management. AS AT 31 DECEMBER 2017

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on
the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, Notes 2017 2016 2017 2016
future events or conditions may cause the Company to cease to continue as a going concern. Kyats Kyats USD USD

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the
financial statements represent the underlying transactions and events in a manner that achieves fair presentation. Assets
Property and equipment 4 176,531,160 177,658,860 129,612 130,153
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Intangible assets 5 86,706,537 29,866,095 63,661 21,880
Company to express an opinion on the financial statements. We are responsible for the direction, supervision and performance Other assets 6 139,477,714 87,309,998 102,407 63,963
of the Company audit. We remain solely responsible for our audit opinion. Loans to customer 7 12,192,530,997 7,704,075,269 8,951,932 5,644,011
Cash and cash equivalents 8 1,030,156,863 1,431,432,280 756,356 1,048,668
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Total assets 13,625,403,271 9,430,342,502 10,003,967 6,908,676

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding Equity
independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our Share capital 9 7,332,540,000 6,696,660,000 5,383,656 4,905,978
independence, and where applicable, related safeguards. Share money deposit 10 684,885,345 1,320,765,345 502,853 967,594
Donor grant 11 868,747,756 427,612,436 637,847 313,269
Retained earnings 12 (1,301,803,971) (1,351,345,357) (955,803) (989,997)

Total equity 7,584,369,130 7,093,692,424 5,568,553 5,196,844

Liabilities
Term loan 13 3,261,228,785 - 2,394,441 -
Related party payables 14 1,144,603,245 811,094,907 840,384 594,209
Member savings payable 15 1,536,774,107 1,335,164,213 1,128,322 978,142
Than Tint Other liabilities 16 98,428,003 190,390,958 72,267 139,481
CPA (P.A 103)
Managing Director Total liabilities 6,041,034,140 2,336,650,078 4,435,414 1,711,832
Khin Su Htay & Associates Limited
09 March 2018 Total equity and liabilities 13,625,403,271 9,430,342,502 10,003,967 6,908,676
The accompanying notes form an integral part of these financial statements.

Head of Finance Country Representative

BRAC Myanmar Microfinance BRAC Myanmar Microfinance
Director Director


STATEMENT OF COMPREHENSIVE INCOME
YEAR ENDED 31 DECEMBER 2017

USD
2,645,109
-
Total equity
2,732,268
(231,733)
138,681
(87,480)
5,196,844
5,196,844
5,568,553
36,401
323,888
11,420
Notes 2017 2016 2017 2016
Kyats Kyats USD USD
Service charge on loan 17 2,927,848,944 1,686,499,870 2,151,248 1,358,897
Total equity
Kyats
3,462,447,152
7,093,692,424
-
3,729,545,345
(287,599,073)
189,299,000
-
7,093,692,424
49,541,387
7,584,369,130
441,135,320
-
Interest expense 18 407,092,619 113,875,325 299,113 91,755

Net income from service charge 2,520,756,325 1,572,624,545 1,852,135 1,267,142

Membership and other fees 19 353,914,000 223,101,400 260,040 179,764
Other income 20 57,789,213 83,197,115 42,461 67,036

Grant income 21 25,169,021 - 18,493 -
436,872,234 306,298,515 320,994 246,800
Donor grant
Kyats
238,313,436
-
-
189,299,000
-
427,612,436
427,612,436
-
-
868,747,756
441,135,320
-
Total operating income 2,957,628,559 1,878,923,060 2,173,129 1,513,942

Impairment loss on loan 7 90,438,716 104,134,679 66,450 83,906
Operating income after impairment charge 2,867,189,843 1,774,788,381 2,106,679 1,430,035

Share money Retained earnings
Kyats
(1,063,746,284)
-
(1,351,345,357)
(287,599,073)
-
(1,351,345,357)
-
49,541,387
-
-
(1,301,803,971)
Staff costs 22 1,715,574,171 1,233,659,818 1,260,525 994,021
Other operating expenses 23 1,045,919,742 751,329,361 768,494 605,384
Depreciation and amortization 24 57,933,079 46,333,254 42,567 37,333
Total operating cost 2,819,426,992 2,031,322,433 2,071,585 1,636,738

Profit/ (Loss) before tax 47,762,851 (256,534,052) 35,094 (206,702)
Income tax expenses - - - -
1,320,765,345
Kyats
(635,880,000)
1,320,765,345
-
-
1,320,765,345
-
-
-
684,885,345
deposit
Net Profit/ (Loss) after tax 47,762,851 (256,534,052) 35,094 (206,702)
Other Comprehensive Income

Unrealized exchange gain/ (loss) 1,778,536 (31,065,021) 1,307 (25,031)

Net Profit/(Loss) 49,541,387 (287,599,073) 36,401 (231,733)
Share capital
Kyats
4,287,880,000
2,408,780,000
-
-
-
6,696,660,000
635,880,000
6,696,660,000
-
-
-
7,332,540,000
STATEMENT OF CHANGES IN EQUITY

Head of Finance Country Representative
Foreign currency translation differences
Foreign currency translation differences

Profit/(Loss) for the year
Profit/(Loss) for the year

At 31 December 2016
At 31 December 2017
At 1 January 2016
At 1 January 2017
Director Director
Donor grants
Donor grants
Share capital
Share capital

STATEMENT OF CASH FLOWS NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2017 YEAR ENDED 31 DECEMBER 2017
These notes form an integral part of the financial statements.
Notes 2017 2016 2017 2016 1. Reporting entity

Kyats Kyats USD USD
BRAC Myanmar Microfinance Company Limited is a wholly owned subsidiary company of BRAC International Holdings B. V., a limited
liability company registered under the laws of Netherlands, with its registered office in The Hague.
Cash flows from operating activities
BRAC Myanmar Microfinance Company Limited was incorporated as a limited liability company under the Companies Act on 15
Net cash flow from operations 25 348,988,635 160,605,628 256,421 129,408 October 2013 with its registration number 559 FC/13-14 and registered office in Yangon, Myanmar.
Loan disbursements (27,020,950,000) (15,937,750,000) (19,853,747) (12,841,839)
Loan collection 22,478,830,830 11,025,699,724 16,516,408 8,883,956 The objectives of the company is to operate microfinance business in Myanmar with a mandate to contribute towards alleviating poverty
and attaining Millennium Development Goals through promoting employment and income generating activities for the poor women.
Net cash used in operating activities (4,193,130,535) (4,751,444,648) (3,080,919) (3,828,476)
2. Basis of preparation
Cash flows from investing activities a. Statement of compliance
Acquisition of property & equipment (46,655,587) (51,913,907) (34,280) (41,830) These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS)..
Acquisition of intangible asset (65,463,294) (34,132,680) (48,099) (27,502)
The financial statements were issued by the Board of Directors on 09 March 2018.
Net cash used in operating activities (112,118,881) (86,046,587) (82,380) (69,332)
b. Basis of measurement
Cash flows from financing activities
The financial statements are prepared under the historical cost convention except for the financial instruments at fair value through profit
Members savings 201,609,894 867,797,635 148,025 635,749 and loss which are measured at fair value when required.
Proceeds from issue of share capital 635,880,000 2,408,780,000 466,872 1,764,674
Grant received in advance 441,135,320 189,299,000 323,888 138,681 c. Functional and presentation currency
Term loan 3,261,228,785 - 2,394,441 -
Share money deposit (635,880,000) 1,320,765,345 (466,872) 967,594 The financial statements are presented in Myanmar Kyats, which is the Company's functional currency.

Net cash from financing activities 3,903,973,999 4,786,641,980 2,866,354 3,506,697 Memorandum figures

Net increase/(decrease) The memorandum column representing the results in United States Dollars (USD) are for presentation purposes only, and do not form part
in cash and cash equivalents (401,275,417) (50,849,255) (296,945) (391,110) of the audited financial statements.

Cash and cash equivalents at 1 January 1,431,432,280 1,482,281,535 1,048,668 1,132,377 The exchange rates used to translate the MMK figures to USD memorandum were as follows:
Effect of exchange rate fluctuation on cash - - 4,632 307,402
• Assets and liabilities were translated at the closing rate at 31 December 2017 which of MMK 1,362 (2016:MMK 1,365);
Cash and cash equivalents at 31 December 8 1,030,156,863 1,431,432,280 756,356 1,048,668 • Income and expenses were translated using an average exchange rate for the period of MMK 1,361 (2016: MMK 1,241.08);
d. Use of estimation and judgments

The preparation of Company's financial statements in conformity with International Financial Reporting Standards (IFRS) requires
management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and
liabilities, and disclosure of contingent assets and liabilities at the date of financial statements and reported amounts of revenues an
expenses during the reported period. Actual results ultimately may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period
in which the estimate is revised and in any future periods affected.
3. Significant accounting policies

a. Foreign currency transactions

Transactions in foreign currencies are translated into the respective functional currency of the operation at the spot exchange rate at
the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated
into the functional currency at the spot exchange rate at that date.

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated into the functional currency Loans and receivables
at the spot exchange rate at the date that the fair value was determined. Foreign currency differences arising on retranslation are recognised
in profit or loss, except for differences arising on the retranslation of available-for-sale equity instruments which is recognised directly in equity. Loans originated by the company by providing finance directly to borrowers is categorized as loans to group members and is carried at
amortized cost. All loans and advances are recognized when cash is advanced to borrowers.
b. Interest income and other income
Other receivables
Interest income and expenses are recognized on a accrual basis taking into account the effective interest rate of the interest earning asset
Other assets comprise prepayments other recoverable which arise during the normal course of business; they are carried at original
or the interest bearing liability.
invoice amount less provision made for impairment losses. A provision for impairment of other receivables is established when there is

objective evidence that the fund will not be able to collect all amounts due according to the original terms of receivables. The amount of
(i) Interest income on loans and advances
the provisions is the difference between the carrying amount and the recoverable amount.
Interest income on Loans and advances (service charges) on regular loans that is, loans where no amounts are overdue as at the end of
the reporting period are recognized on an accrual basis as income. Other financial liabilities
(ii) Membership fees and other charges Other financial liabilities comprises members savings, related party payables and other liabilities. These liabilities are carried at cost, which
Membership fees and other charges are recognized on an accrual basis when the service has been provided. is the fair value of the consideration to be paid in the future for goods and services received.

(iii) Other Income (iii) De-recognition
Other income comprises of house rent received from local stafff or using the office residence and gain on foreign currency translation.
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or when it
c. Income Tax transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and
rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the
Income tax expense is recognised in the profit or loss except to the extent that it relates to items recognised directly in equity, in which Company is recognised as a separate asset or liability.
case it is recognised in equity.
The Company derecognises a financial liability when its contractual obligations are discharged or cancelled or expire.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the
statement of financial position date, and any adjustment to tax payable in respect of previous years. The Company enters into transactions whereby it transfers assets recognised on its statement of financial position, but retains either all
or substantially all of the risks and rewards of the transferred assets or a portion of them. If all or substantially all risks and rewards are
Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulations are subject to
retained, then the transferred assets are not derecognised from the statement of financial position.
interpretation and establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. During the year
2017 the Company earned profits but not liable for tax in accordance with the Myanmar Tax Law becasue of its tax losses in prior years.
In transactions in which the Company neither retains nor transfers substantially all the risks and rewards of ownership of a financial asset,

it derecognises the asset if it does not retain control over the asset. The rights and obligations retained in the transfer are recognised
d. Financial assets and liabilities
separately as assets and liabilities as appropriate. In transfers in which control over the asset is retained, Company continues to recognise

the asset to the extent of its continuing involvement, determined by the extent to which it is exposed to changes in the value of the
(i) Recognition
transferred asset.

The Company initially recognises loans and advances, deposits, and other liabilities on the date at which they are originated. All other financial
The Company writes off certain loans when they are determined to be uncollectible.
assets and liabilities (including assets and liabilities designated at fair value through profit or loss) are initially recognised on the trade date at

which the Company becomes a party to the contractual provisions of the instrument. The Company did not have any financial assets and
(iv) Off-setting
liabilities designated at fair value through profit or loss.
Financial assets and liabilities are set off and the net amount presented in the statement of financial position when, and only when, the
A financial asset or financial liability is initially measured at fair value (for an item not subsequently measured at fair value through profit or loss).
organisation has a legal right to set off the amounts and intends either to settle on a net basis or to realise the asset and settle the liability
The transaction costs that are directly attributable to its acquisition or issue is directly charged to comprehensive income.
simultaneously.

(ii) Classification
Income and expenses are presented on a net basis only when permitted by the accounting standards, or for gains and losses arising from

a group of similar transactions such as currency exchange gain and losses.
The company classifies non-derivative financial assets into loans and receivables which includes cash and cash equivalents, loans and

advances and any other receivables and the Company classifies its non derivative financial liabilities as other financial liabilities.
(v) Fair value measurement

Cash and cash equivalents
Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s

length transaction on the measurement date.
Cash and cash equivalents comprise cash in hand and cash at bank with maturity of less than 3 months, which are highly liquid

assets and are subject to insignificant risk of changes in fair value, and are used by the Company in the management of its short term
When available, Company measures the fair value of an instrument using quoted prices in an active market for that instrument. A market
commitments.
is regarded as active if quoted prices are readily and regularly available and represent actual and regularly occurring market transactions

on an arm’s length basis.
Cash and cash equivalents are carried at amortised cost in the statement of financial position.

If a market for a financial instrument is not active, the company establishes fair value using a valuation technique. Valuation techniques The estimated useful lives for the current and comparative years are as follows:
include using recent arm's length transactions between knowledgeable, willing parties (if available), reference to the current fair value of
other instruments that are substantially the same, discounted cash flow analyses and option pricing models (if required). Furniture & Fixtures 10%
Computer/Laptop 20%
(vi) Impairment of financial assets Equipments 33.33%
Vehicles 20%
At each statement of financial position date the Company assesses whether there is objective evidence that financial assets not carried
at fair value through profit or loss are impaired. Financial assets are impaired when objective evidence demonstrates that a loss event has Management reviews the depreciation methods, residual value and useful life of an asset at the year end and any change considered to
occurred after the initial recognition of the asset, and that the loss event has an impact on the future cash flows of the asset that can be be appropriate in accounting estimate is recorded through the statement of comprehensive income.
estimated reliably.
f. Intangible asset

Objective evidence that financial assets are impaired can include default or delinquency by a borrower, indications that a borrower or issuer Intangible assets acquired separately are measured initially at cost. Following initial acquisition, intangible assets are carried at cost less
will enter bankruptcy, or other observable data relating to a group of assets such as adverse changes in the payment status of borrowers any accumulated amortization and any impairment losses.
or issuers in the group, or economic conditions that correlate with defaults in the group.
The Company has accounting software Sbi Cloud acquired during the year and it is amortised on a straight line basis over its finite useful
Impairment losses on assets carried at amortised cost are measured as the difference between the carrying amount of the financial asset life of 4 years.
and the present value of estimated future cash flows discounted at the asset's original effective interest rate.
g. Operating lease
Losses are recognised in profit or loss and reflected in an allowance account against loans and advances. Interest on the impaired asset
BRAC is involved in operating leases as the lessee for rental property serving as office space. The total payments made under operating
continues to be recognised through the unwinding of the discount. When a subsequent event causes the amount of impairment loss to
leases are charged to the income statement on a straight-line basis over the period of the lease, which is typically twelve (12) months.
decrease, the decrease in impairment loss is reversed through profit or loss.
h. Provisions
e. Property and equipment A provision is recognised if, as a result of a past event, BRAC Myanmar Microfinance Company Limited has a present legal or
constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle
i. Recognition and measurement the obligation.

Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. The loan loss provision is calculated based on the ageing of default loans in the portfolio on the following basis:

Costs comprises its purchase price and any cost directly attributable in bringing the asset to the location and condition necessary for it to Name Period of default Provision % on default loans*
be capable of operating in the manner intended by the management.
Current Performing loans 1%
Subsequent to initial recognition, property and equipment are stated at cost less accumulated depreciation and impairment losses. The Sub-standard 30 days past due 10%
gain or loss on disposal of an item of property, plant and equipment (calculated as the difference between the net proceeds from disposal Watch 31- 60 days past due 50%
and the carrying amount of the item) is recognised in profit or loss. Major improvements that increase the life of the asset are Doubtful 61-90 days past due 75%
capitalized. Loan loss over 90 days past due 100%

ii. Subsequent cost
i. Related party transactions

The cost of replacing a component of an item of property or equipment is recognised in the carrying amount of the item if it is probable
Related parties comprise directors, subsidiaries of BRAC International and key management personnel of the company and companies
that the future economic benefits embodied within the component will flow to the Company, and its cost can be measured reliably. The
with common ownership and/or directors.
costs of the day-to-day servicing and maintenance of property and equipment are recognised in the statement of comprehensive income
as incurred. j. Classes of financial instruments

iii. Depreciation The Company classifies the financial instruments into classes that reflects nature of information and take into account the characteristics
of those financial instruments:
All property and equipment are depreciated on a straight line basis to write off the costs of the assets over the expected useful lives.
Depreciation is recognised as an expense in profit or loss of each component of an item of property and equipment unless it is included Items on the statement of financial position Class
in the carrying amount of another asset.
Loans to customer Loans and receivables

Other assets Loans and receivables
Depreciation is recognised from the date that the property and equipment are installed and are ready for use, or in respect of internally
Related party payables Other liabilities
constructed assets, from the date that the asset is completed and ready for use.
Member savings payable Other liabilities
Other liabilities Other liabilities

Accumulated depreciation
NOTES TO THE FINANCIAL STATEMENTS

Carrying amounts
Total
128,198
-
(9,825)
369
(3,845)
82
USD
146,922
41,830
178,927
178,927
36,530
(2,250)
213,576
18,724
48,774
48,774
36,231
(1,122)
83,964
130,153
129,612
33,895
2017 2016 2017 2016
Kyats Kyats USD USD
5. Intangible assets
Cost
Total
-
-
-
Kyats
192,321,306
51,913,907
244,235,213
244,235,213
49,717,637
(3,062,050)
290,890,800
24,509,684
66,576,353
66,576,353
49,310,227
(1,526,940)
114,359,640
167,811,622
177,658,860
176,531,160
42,066,669
At 1 January 34,132,680 - 25,006 -
Additions 65,463,294 34,132,680 48,099 27,502
Disposal adjustment - - - -
Currency translation adjustment - - 20 (2,497)
At 31 December 99,595,974 34,132,680 73,125 25,006

vehicles
-
Kyats
88,734,000
-
-
3,988,000
92,722,000
99,692,000
92,722,000
6,970,000
-
8,809,824
27,176,070
27,176,070
19,401,172
-
46,577,242
79,924,176
65,545,930
53,114,758
18,366,246
Motor
Accumulated amortization
At 1 January 4,266,585 - 3,126 -

Charge for the year 8,622,852 4,266,585 6,336 3,438
Disposal adjustment - - - -
Currency translation adjustment - - 2 (312)
At 31 December 12,889,437 4,266,585 9,464 3,126
Furniture &
Equipment
Kyats
28,013,660
-
19,298,500
-
-
8,715,160
28,013,660
8,140,100
(1,150,350)
35,003,410
5,207,848
13,300,206
13,300,206
9,722,806
(843,102)
22,179,910
14,090,652
14,713,454
12,823,500
8,092,358
-

Carrying amount

At 31 December 86,706,537 29,866,095 63,661 21,880

6. Other assets
Computer
Kyats
35,783,856
-
16,417,747
-
52,201,603
-
70,557,390
6,369,569
29,414,287
42,457,128
52,201,603
18,727,787
(372,000)
9,471,372
-
15,840,941
15,840,941
12,487,626
(228,305)
-
28,100,262
36,360,662
Advance to third parties 129,720,000 86,959,998 95,242 63,707
Advance to staff - 350,000 - 256
Receivable from BRAC Myanmar 2,564,893 - 1,883 -
Receivable from Donor 7,192,821 - 5,281 -
139,477,714 87,309,998 102,407 63,963

Fixtures
Kyats
48,504,950
-
22,793,000
-
71,297,950
71,297,950
-
85,638,000
4,122,443
-
15,879,750
(1,539,700)
6,136,693
10,259,136
10,259,136
7,698,623
(455,533)
-
17,502,226
44,382,507
68,135,774
-
61,038,814
7. Loan to customers
Group loans 12,033,814,170 7,817,773,392 8,835,400 5,727,307

Small Enterprises Program (SEP) 313,748,497 - 230,359 -
Loans write off (20,383,666) (12,329,895) (14,966) (9,033)
12,327,179,001 7,805,443,497 9,050,792 5,718,274

Add: Interest receivable 85,326,292 48,551,018 62,648 35,569

Less: Impairment loss on loans (219,974,296) (149,919,246) (161,508) (109,831)

12,192,530,997 7,704,075,269 8,951,932 5,644,011

Effect of movements in exchange rate
7.1 The movement on the loan accounts is analyzed as shown below

Opening balance 7,805,443,497 2,905,723,116 5,718,274 2,219,804
4. Property and equipment
Add: Loans disbursement 27,020,950,000 15,937,750,000 19,853,747 12,841,839

Less: Loan realization (22,478,830,830) (11,025,699,724) (16,516,408) (8,883,956)
At 31 December 2016
At 31 December 2016
At 31 December 2016
At 31 December 2017
At 31 December 2017
At 31 December 2017
Loans write off (20,383,666) (12,329,895) (14,977) (9,935)

At 1 January 2016
At 1 January 2016
At 1 January 2016
At 1 January 2017
At 1 January 2017
Translation adjustment - - 10,156 (449,479)

Principal outstanding 12,327,179,001 7,805,443,497 9,050,792 5,718,274
Additions
Additions
Additions
Additions
Add: Interest receivable 85,326,292 48,551,018 62,648 35,569

Write-off
Write-off
Write-off
Write-off
Less: Impairment loss on loans (219,974,296) (149,919,246) (161,508) (109,831)

Cost
12,192,530,997 7,704,075,269 8,951,932 5,644,011




2017 2016 2017 2016 2017 2016 2017 2016
Kyats Kyats USD USD Kyats Kyats USD USD

7.2 Movement of impairment on loans 10. Share money deposit

At 1 January 149,919,246 58,114,462 109,831 44,396 Applied for Share capital 684,885,345 1,320,765,345 502,853 967,594
Charge for the year 90,438,716 104,134,679 66,450 83,906
Loan write off (20,383,666) (12,296,118) (14,977) (9,908) 11. Donor grant
Interest receivable write off - (33,777) - (27)
Currency translation adjustment - - 204 (8,537) Grant received in advance (note- 11.1) 367,935,320 189,299,000 270,143 138,681
219,974,296 149,919,246 161,508 109,831 Grant investment in loan (note-11.2) 500,812,436 238,313,436 367,704 174,589
868,747,756 427,612,436 637,847 313,269
11.1 Grant received in advance
7.2.a Impairment loss on loans
At 1 January 189,299,000 223,013,436 138,681 171,518
Principal Provision Provision Donation received during the year 459,111,520 189,299,000 339,920 137,672
outstanding rate required Donor fund investment in loan (262,499,000) (223,013,436) (192,872) (179,693)
(Kyats) (Kyats) Transferred to statement of - - - -
For general provision comprehensive income (17,976,200) - (13,208) -
No past due 12,023,185,889 1% 120,231,859 Currency translation adjustment - - (2,377) 9,183
For specific provision 367,935,320 189,299,000 270,143 138,681
1-30 days 206,116,936 10% 20,611,694
31-60 days 27,449,368 50% 13,724,684 11.1.1 Donation received during the year
61-90 days 20,082,993 75% 15,062,245
91-over 50,343,815 100% 50,343,815 WPF( Whole Planet Foundation) 404,646,040 189,299,000 299,960 137,672
12,327,179,001 219,974,296 UNCDF 54,465,480 - 39,960 -
459,111,520 189,299,000 339,920 137,672
11.2 Grant investment in loans
2017 2016 2017 2016
Kyats Kyats USD USD At 1 January 238,313,436 15,300,000 174,589 -
8. Cash and cash equivalents Donor fund investment in loan 262,499,000 223,013,436 192,872 179,693
Currency translation adjustment - - 243 (5,104)
Cash in hand 15,758,737 13,617,767 11,570 9,976 500,812,436 238,313,436 367,704 174,589
Cash at bank 1,014,398,126 1,417,814,513 744,786 1,038,692 12. Retained earnings

1,030,156,863 1,431,432,280 756,356 1,048,668 At 1 January (1,351,345,357) (1,063,746,284) (989,997) (812,640)
Profit/(loss) for the year 49,541,387 (287,599,073) 36,401 (231,733)
9. Share capital Currency translation adjustment - - (2,207) 54,377
(1,301,803,971) (1,351,345,357) (955,803) (989,997)
Share capital 7,332,540,000 6,696,660,000 5,383,656 4,905,978 13. Term loan

The Company's share capital includes 733,254 ordinary shares of Kyats 10,000 each, issued and fully paid as detailed below: Loan principal 3,245,833,333 - 2,383,138 -
Accrued interest 15,395,452 - 11,304 -
At 31 December 2017 No. of Shares Kyats USD 3,261,228,785 - 2,394,441 -
14. Related party payables
BRAC International Holdings B.V. 733,253 7,332,530,000 5,383,649
Mr. Faruque Ahmed 1 10,000 7 BRAC (Bangladesh) 597,976,866 530,721,255 439,043 388,807
733,254 7,332,540,000 5,383,656 BRAC International Holdings B.V. 346,017,927 158,329,591 254,051 115,992
BRAC IT Services Ltd. (biTS) 165,989,664 49,178,220 121,872 36,028
Stichting BRAC International 34,618,788 72,865,841 25,418 53,382
The holders of the ordinary shares are entitled to receive dividends as and when declared by the company. All ordinary shares carry one 1,144,603,245 811,094,907 840,384 594,209
vote per share without restrictions.
The amount is payable to BRAC International Holdings B.V., Stichting BRAC International, biTS and BRAC (Bangladesh) represents
expenses beared in favour of BRAC Myanmar Microfinance Company Limited.

2017 2016 2017 2016 2017 2016 2017 2016

Kyats Kyats USD USD Kyats Kyats USD USD

15. Member savings 22. Staff costs

Member savings 1,518,303,844 1,335,142,391 1,114,761 978,126
Salaries 1,636,726,817 1,144,728,031 1,202,591 922,364
Interest on members savings 18,470,263 21,822 13,561 16
Per diem 4,890,337 154,200 3,593 124
1,536,774,107 1,335,164,213 1,128,322 978,142 Leave salaries 9,551,210 46,097,276 7,018 37,143
Staff insurance expenses 21,844,989 14,439,969 16,051 11,635
16. Other liabilities Staff bonus 42,560,818 28,240,342 31,272 22,755
1,715,574,171 1,233,659,818 1,260,525 994,021
Provision for salary 8,634,726 106,782,661 6,340 78,229
Provision for leave salaries 54,436,355 46,097,276 39,968 33,771
23. Other operating expenses
Liabilities for expenses 69,804 10,747 51 8

Withholding tax payable 22,013,758 14,794,483 16,163 10,838
Occupancy expenses (Note-23.1) 261,616,535 205,026,761 192,224 165,200
Insurance provision 6,437,359 4,498,031 4,726 3,295
Travel and transportation (Note-23.2) 152,936,029 123,570,288 112,370 99,567
Medical expense provision - 15,467,760 - 11,332
General maintenance expenses (Note-23.3) 312,873,599 267,809,685 229,885 215,788
Audit fee provision 6,836,001 2,740,000 5,019 2,007
Stationary expenses 29,817,144 27,388,277 21,908 22,068
98,428,003 190,390,958 72,267 139,481 Staff training cost 40,043,575 12,457,378 29,422 10,038
17. Service charge on loan HO logistics expenses 190,548,536 107,957,232 140,006 86,987
Audit and professional fee (Note-23.4) 58,084,324 7,119,740 42,678 5,737
Group loans 2,910,679,198 1,686,499,870 2,138,633 1,358,897 1,045,919,742 751,329,361 768,494 605,384
Individual loans 17,169,746 - 12,616 -
2,927,848,944 1,686,499,870 2,151,248 1,358,897 23.1 Occupancy expenses

18. Interest and other financial expenses
Rent 246,765,403 194,226,052 181,312 156,498
Interest on member savings 160,057,735 113,875,325 117,603 91,755 Utilities 14,851,132 10,800,709 10,912 8,703
Interest on long term loan 240,534,884 - 176,734 - 261,616,535 205,026,761 192,224 165,200
Other financial expenses 6,500,000 - 4,776 -
23.2 Travel & transportation expenses
407,092,619 113,875,325 299,113 91,755
Travel and transportation 115,737,526 81,073,336 85,039 65,325
19. Membership and other fees Air tickets & VISA cost 37,198,503 42,496,952 27,332 34,242
152,936,029 123,570,288 112,370 99,567
Membership fee 31,073,000 22,096,000 22,831 17,804
Loan appraisal fee 270,209,500 159,377,500 198,537 128,418 23.3 Maintenance and general expenses
Sales of passbook 13,952,000 13,839,000 10,251 11,151
Death benefit 6,139,500 4,418,900 4,511 3,561 Wi-Fi and mobile SIM & bill 42,143,281 39,132,753 30,965 31,531
Insurance 32,540,000 23,370,000 23,909 18,830 Maintenance and general expenses 52,336,323 51,461,600 38,454 41,465
Meals 67,208,584 50,216,701 49,382 40,462
353,914,000 223,101,400 260,040 179,764
Accommodation (hotel fare) 7,661,568 9,745,590 5,629 7,853
20. Other income
Entertainment cost 21,643,013 10,208,878 15,902 8,226

Bank charge 4,086,909 1,872,336 3,003 1,509
Non-operational 43,221,072 41,079,146 31,757 33,100
Medical expenses (15,052,971) 15,579,190 (11,060) 12,553
Realized exchange gain 14,568,141 42,117,969 10,704 33,937
Uniform cost 5,313,600 1,930,000 3,904 1,555
Business license & registration 25,958,466 11,717,700 19,073 9,442
57,789,213 83,197,115 42,461 67,036
Visibility & communication expense 25,991,759 10,441,900 19,098 8,414
21. Grant income
Vehicle maintenance & fuel 7,690,387 5,266,401 5,651 4,243
Cash and bank write off 166,000 358,416 122 289
Transferred to statement of comprehensive income 25,169,021 - 18,493 -
Automation expenses 53,576,994 49,178,220 39,366 39,625
25,169,021 - 18,493 - Member death benefit 10,800,000 10,700,000 7,935 8,622
Meeting expenses 1,814,576 - 1,333 -
Fixed asset write-off 1,535,110 - 1,128 -
312,873,599 267,809,685 229,885 215,788


2017 2016 2017 2016 Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported
Kyats Kyats USD USD to the BRAC International Group Audit Committee.

23.4 Audit and professional fee a) Credit Risk

Professional & consultancy fee 49,215,823 3,086,140 36,162 2,487 Credit risk is the risk of financial loss to Company if a customer or counterparty to a financial instrument fails to meet its contractual
Audit fee 8,868,501 4,033,600 6,516 3,250 obligations, and arises principally from the Company’s loans and advances to customers.
58,084,324 7,119,740 42,678 5,737 Management of credit risk

23. Depreciation & amortization For risk management reporting purposes, the Company measures, monitors and manage proactively all elements of credit risk exposure
(such as individual obligor default risk, country and sector risk). The Company does not have any significant exposure to any individual
Depreciation 49,310,227 42,066,669 36,231 33,895 customer or counterparty.
Amortization 8,622,852 4,266,585 6,336 3,438
The model that the Company uses to mitigate this risk is vetting from respective members of the group.
57,933,079 46,333,254 42,567 37,333
The Board of Directors has delegated responsibility for the management of credit risk to senior management. Program operations and
monitoring team are responsible for oversight of the Company’s credit risk.
25. Cash generated from operations
• Formulating credit policies in consultation with business units covering credit assessment, risk grading and reporting, documentary and
Net profit/(loss) for the year 49,541,387 (287,599,073) 36,401 (231,733) legal procedures, and compliance with regulatory and statutory requirements.
Depreciation & amortization 56,406,139 46,333,254 41,445 37,333
Loan loss provision 90,438,716 104,134,679 66,450 83,906 • Establishing the authorization structure for the approval and renewal of credit facilities.
Cash flow before changes in working capital 196,386,242 137,131,140) 144,296 (110,493)
• Reviewing and assessing credit risk. BRAC’s Program department assesses all credit exposures in excess of designated limits prior to
Changes in working capital facilities being committed to customers by the business unit concerned. Renewals and reviews of facilities are subject to the same review
Decrease/(increase) of receivables and other current assets (52,167,716) (10,179,998) (38,330) (8,203) process.
Decrease/(increase) in interest receivable (36,775,274) (44,767,691) (27,021) (36,072)
Increase/(decrease) of related party payables 333,508,338 249,517,871 245,047 201,049 • Limiting concentrations of exposure to geographies and market segments for loans and advances.
Increase/(decrease) of current liabilities (91,962,955) 103,166,586 (67,570) 83,126
• Developing and maintaining BRAC’s risk grading in order to categorize exposures according to the degree of risk of financial loss faced
Net cash generated from operations 348,988,635 160,605,628 256,421 129,408 and to focus management on the attendant risks. The risk grading system is used in determining where impairment provisions may be
required against specific credit exposures.
26. Financial risk management policies and objectives • Reviewing compliance of business units with agreed exposure limits including those for selected industries’ country risk and product
types. Regular reports are provided to BRAC’s Program department on the credit quality of local portfolios and appropriate corrective
The Company has exposure to the following risks arising from financial instruments: actions to be taken.
• credit risk
• liquidity risk • Providing advice, guidance and specialist skills to business units to promote best practice throughout BRAC in the management of
• market risk credit risk.

This note represents information about the Company's exposure to each of the above risk, its objectives, policies and processes for Each branch is required to implement BRAC’s credit policies and procedures with credit approval authorities delegated from management.
measuring and managing risk and the Company's management of capital. Each branch has a Branch Manager who reports on all credit related matters to senior management. Each branch is responsible for the
quality and performance of its credit portfolio and for monitoring and controlling all credit risks in its portfolios including those subject to
Risk management framework central approval.

The Board of Directors has overall responsibility for the establishment and oversight of BRAC’s risk management framework. BRAC does not hold collateral against loans. The lending portfolio consists of non-securitized microfinance loans mutually guaranteed
by group members. Customers are clustered into solidarity groups which collectively secure the loans. Regular audits of branches and
Risk management policies are established to identify and analyse the risks faced by BRAC, to set appropriate risk limits and controls, credit processes are undertaken by Internal Audit.
and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market
conditions and BRAC’s activities. Impaired loans

BRAC, through its training and management standards and procedures, aims to develop a disciplined and constructive control Impaired loans are loans for which BRAC determines that it is probable that it will be unable to collect the principal and interest due
environment in which all employees understand their roles and obligations. according to the contractual terms of the loan.


Past due but not impaired loans Country office receives information from regional units regarding the liquidity profile of their financial assets and liabilities and details of other
projected cash flows arising from projected future business.
Loans where contractual interest or principal payments are past due but BRAC believes that impairment is not appropriate on the basis of
the stage of collection of amounts owed to BRAC. The table below summarises the maturity profile of the Company's financial asset and liabilities based on contractual undiscounted receipts
and payments.
Allowance for impairment
2017 2016 2017 2016
BRAC establishes an allowance for impairment losses that represents its estimate of incurred losses in its loan portfolio. The main Kyats Kyats USD USD
components of this allowance are a specific loss component that relates to individually significant exposures and a collective loan loss Financial assets
allowance established for groups of homogeneous assets in respect of losses that have been incurred but have not been identified on loans
subject to individual assessment for impairment. Loans to customer 12,192,530,997 7,704,075,269 8,951,932 5,644,011
Cash and cash equivalents 1,030,156,863 1,431,432,280 756,356 1,048,668
The ageing of loan to customers and rhe company's expoure to credit risk were: Other assets 139,477,714 87,309,998 102,407 63,963
2017 2016
Total undiscounted financial assets 13,362,165,574 9,222,817,547 9,810,694 6,756,643
Kyats Kyats

Financial liabilities
Current (performing loans) 12,023,185,889 7,017,207,412
Term loan 3,261,228,785 - 2,394,441 -
Sub-standard (30 days past due) 206,116,936 786,636,036
Related party payables 1,144,603,245 811,094,907 840,384 594,209
Watch (31-60 days past due) 27,449,368 665,394
Member savings payable 1,536,774,107 1,335,164,213 1,128,322 978,142
Doubtful (61-90 days past due) 20,082,993 735,135
Other liabilities 98,428,003 190,390,958 72,267 139,481
Loan loss (over 90 days past due) 50,343,815 199,520
Total loan to customer 12,327,179,001 7,805,443,497 Total undiscounted financial liabilities 6,041,034,140 2,336,650,078 4,435,414 1,711,832
Allowance for impairment (219,974,296) (149,919,246)
Net undiscounted financial assets 7,321,131,433 6,886,167,469 5,375,280 5,044,811
Net loans to customer 12,107,204,705 7,655,524,251

Balance as at January 1 149,919,246 58,114,462 (c) Market risk
Impairment charge for the year 90,438,716 104,134,679
Loan write off (20,383,666) (12,296,118) Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the income or
Interest receivable write off - (33,777) the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures
within acceptable parameters, while optimising return.
Balance as at December 31 219,974,296 149,919,246
Currency Risk
BRAC reports loans at their outstanding balance net of allowance made from loan loss provisions. Adjustments in respect of surplus or
deficit in the loan loss reserve are made in the income statement. Foreign currency risk is the risk that the value of financial instruments will fluctuate due to changes in foreign currency exchange rates. The
Company is exposed to currency risk on payments that are denominated in a currency other than the functional currency which is MMK. The
Write-off policy Company's Strategy of managing the currency risk is using functional currency in transaction as much as possible.

BRAC writes off a loan balance (and any related allowances for impairment losses) when BRAC’s Program department determines that Capital Management
the loans are uncollectible. This determination is reached after considering information such as the occurrence of significant changes in
the borrower’s financial position such that the borrower can no longer pay the obligation, or the amount is not collectible due to death, BRAC’s policy is to maintain a strong capital base so as to maintain client, creditor and market confidence and to sustain future development of
dislocation of the borrower or any other natural or humanitarian disaster that affects the livelihood of the borrowers. the business. Capital consists of ordinary share capital, share money deposit, and donor grant. The primary objective of capital management
is to maintain a sufficient liquidity.
(b) Liquidity risk
27. Related parties
Liquidity Risk is the risk that BRAC will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by
delivering cash or another financial asset. The objective of liquidity management is to ensure that BRAC has the ability to generate sufficient Parent and ultimate controlling party
funds to meet all cash flow obligations as they become due, both under normal and stressed conditions without incurring unacceptable
losses or risking damage to the company's reputation. The Company's majority shares were acquired by BRAC International Holdings B.V. which is a subsidiary of Stichting BRAC International.

Management of liquidity risk

BRAC monitors its risk to a shortage of funds by reviewing the cash payment plan. BRAC’s approach to managing liquidity is to ensure, as
far as possible, that it will always have sufficient liquidity to meet its liabilities when due under both normal and stressed conditions without
incurring unacceptable losses or risking damage to BRAC’s reputation.

ASSETS
LIABILITIES
ASSETS
31 December 2017
31 December 2016

The following table sets out the fair values of financial instruments not measured at fair value and analyses them by the level in the fair value hierarchy into which each fair value
measurement is categorised:
Fair value
139,477,714
13,362,165,574
Kyats
1,030,156,863
12,192,530,997
3,261,228,785
1,144,603,245
1,536,774,107
87,309,998
98,428,003
9,222,817,547
6,041,034,140
1,431,432,280
7,704,075,269
811,094,907
1,335,164,213
190,390,958
2,336,650,078
LIABILITIES
Transactions with key management personnel

Key management personnel compensation and transactions

The directors do not get any financial or nonfinancial benefits from the Company. Only one director of the Company controls 1 of the voting
shares of the Company.
13,362,165,574
9,222,817,547
Carrying value
139,477,714
Kyats
1,030,156,863
12,192,530,997
3,261,228,785
1,144,603,245
1,536,774,107
98,428,003
6,041,034,140
1,431,432,280
7,704,075,269
87,309,998
811,094,907
190,390,958
2,336,650,078
1,335,164,213
Other related party transactions
Transaction value Outstanding balance
2017 2016 2017 2016

Kyats Kyats Kyats Kyats

BRAC International Holdings B.V. 187,688,336 108,186,420 346,017,927 158,329,591
Other related companies 222,314,108 185,524,150 798,585,318 652,765,316
12,332,008,711
7,791,385,267
Level 3
Kyats
-
12,192,530,997
139,477,714
3,261,228,785
1,144,603,245
1,536,774,107
98,428,003
6,041,034,140
-
7,704,075,269
87,309,998
811,094,907
190,390,958
2,336,650,078
1,335,164,213

All outstanding balances with these related parties are priced on an arm's length basis and are to be settled in cash. None of the balances
are secured.

28. Use of estimates and judgements

-
Management discussed the development, selection and disclosure of the Organisation’s critical accounting policies and estimates, and
1,030,156,863
1,431,432,280
Level 2
Kyats
1,030,156,863
-
-
-
-
-
-
1,431,432,280
-
-
-
-
-
the application of these policies and estimates.

Key sources of estimation uncertainty

Fair values of financial instruments

-
Level 1: Quoted prices (unadjusted) in active markets for identical instruments.
Level 1
Kyats
-
-
-
-
-
-
-
-
-
-
-
-
-
Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset and liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices).
Level 3: Inputs for the asset and liability that are not based on observable market data. This category includes instruments that are valued
based on quoted prices for similar instruments for which significant unobservable adjustments or assumptions are required to reflect
differences between the instruments.
FOR THE YEAR ENDED DECEMBER 31, 2017

28. Use of estimates and judgements (continued)

REPORT AND FINANCIAL STATEMENTS

Member savings payable
Member savings payable

Related party payables
Related party payables

Loans to customer
Loans to customer
Total liabilities
Total liabilities
Other liabilities
Other liabilities
Total assets
Total assets
Other assets
Other assets
Term loan

29. Contingencies
Contingent liabilities are not recognised but disclosed in the financial statements unless the possibility of an outflow of resources
embodying economic benefits is reliably estimated.
Contingent assets are not recognised in the financial statements as this may results in the recognition of income which may never be
realised.
30. Subsequent events

There were no significant subsequent events occurring in periods after the report date that came to our attention with a material effect
on the financial statements at 31 December 2017.
31. Authorisation of financial statements
The financial statements of the financial year ended 31 December 2017 were authorised for issue in accordance with a resolution of
directors and authorise for issue on 9 March 2018.
Annual Report 2017 56

BRAC International/Communications/AR17/June 18
COVER PHOTO:
BRAC/ALISON WRIGHT
BRAC BRAC INTERNATIONAL BRAC IN MYANMAR

BRAC Centre T : +88 02 9881265 Bezuidenhoutseweg 2 No.168, Kyun Shwe Myaing Yangon, Myanmar
75 Mohakhali F : +88 02 8823542 2594 AV The Hague Lane 2, Bogyoke Ywa T: +951578236
Dhaka 1212 E : [email protected] The Netherlands Thuwanna, Thingangyun E: [email protected]
Bangladesh W : www.brac.net T: +31 (0)6 50 255 110 Township, W: www.bracinternational.nl/myanmar
W: www.bracinternational.nl

MYANMAR

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MYANMAR

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2017

45 years ago, we started building a world we all want to live in.

As the sun rose this morning,

Teachers across eight countries opened the

Credit officers in one of the world’s largest

Small is beautiful, scale is necessary.

WORKS FOR ALL OF US

4 | Annual Report 2017 Annual Report 2017 | 5

Challenges persist in both the education and skills

The global youth unemployment rate stands at 13 per

Annual Report 2017 | 7

8 | Annual Report 2017 Annual Report 2017 | 9

Conducted workshop to draft the disaster

12 | Annual Report 2017 Annual Report 2017 | 13

Become the member of Job creation Sub Sector

14 | Annual Report 2017 Annual Report 2017 | 15

16 | Annual Report 2017 Annual Report 2017 | 17

18 | Annual Report 2017 Annual Report 2017 | 19

20 | Annual Report 2017 Annual Report 2017 | 21

Shameran Abed – Managing Director

2017 2016 2015 2014 2013

Contribution to Government 2017 2016 2015 2014 2013

Annual Report 2016 25

Cost to income 112% 120% 186% 1318% -

Operational Statistics 2017 2016 2015 2014 2013

OPERATING INCOME VS NUMBER OF BORROWERS

Annual Report 2017 27 Annual Report 2017 28

Annual Report 2017 28 Annual Report 2017 29

· Micro Finance Program (MF) Training

Annual Report 2017 30 Annual Report 2017 31

Annual Report 2017 32 Annual Report 2017 33

The accompanying notes form an integral part of these financial statements.

Head of Finance Country Representative

Annual Report 2017 34 Annual Report 2017 35

Service charge on loan 17 2,927,848,944 1,686,499,870 2,151,248 1,358,897

Share money Retained earnings

Other Comprehensive Income

BRAC MYANMAR MICROFINANCE COMPANY LIMITED

The accompanying notes form an integral part of these financial statements.

STATEMENT OF CHANGES IN EQUITY

Foreign currency translation differences

Foreign currency translation differences

Profit/(Loss) for the year

Profit/(Loss) for the year

Annual Report 2017 36 Annual Report 2017 37

These notes form an integral part of the financial statements.

Notes 2017 2016 2017 2016 1. Reporting entity

Cash flows from investing activities a. Statement of compliance

d. Use of estimation and judgments

3. Significant accounting policies

Annual Report 2017 38 Annual Report 2017 39

Annual Report 2017 40 Annual Report 2017 41

Annual Report 2017 42 Annual Report 2017 43

At 1 January 4,266,585 - 3,126 -

139,477,714 87,309,998 102,407 63,963

Group loans 12,033,814,170 7,817,773,392 8,835,400 5,727,307

12,327,179,001 7,805,443,497 9,050,792 5,718,274

Add: Interest receivable 85,326,292 48,551,018 62,648 35,569

12,192,530,997 7,704,075,269 8,951,932 5,644,011

Effect of movements in exchange rate

Effect of movements in exchange rate

Effect of movements in exchange rate

7.1 The movement on the loan accounts is analyzed as shown below