A N N U A L
R E P O R T

GROWING TOGETHERWITH CAMBODIA

TABLE OF CONTENTSTABLE OF CONTENTS

03

CAMBODIA'S OVERVIEW

04

AGRICULTURAL SECTOR & MFI MARKET

05

MISSION & RESPONSIBILITIES

06

A MESSAGE FROM CEO

07

JCF BY THE NUMBERS

08

ORGANIZATION CHART

10CORPORATE GOVERNANCE

11

REPORTS OF THE COMMITTEES

12BOARD OF DIRECTORS

13

BUSINESS STRATEGY
Overview#1 Exploring the Potential of Primary Industry#2 Establishing New Credit Scoring Systemwith Digital Transformation

14
15#3 Elaborating Agricultural Finance

16
17

SUSTAINABLE DEVELOPMENT GOALS

18

CUSTOMER SURVEY

19

FINANCIAL STATEMENT SUMMARY20

AUDITED FINANCIAL STATEMENTS

21

COMPANY PROFILE

39* "JCF" is an abbreviation of JC FINANCE PLC.

Annual Report 2020 03

Cambodia's
Overview
Name of Country

Kingdom of Cambodia

Total Area

181,035 sq km

Population

15,530K (2019, NIS Cambodia*)

CapitalPhnom Penh

Languages

Khmer (97.05%), Minority Ethnic Group Language (2.26%)
Vietnamese (0.42%) (2013, NIS Cambodia*)

Religion

Buddhism (97.9%), Islam (1.1%), Christianity (0.5%) etc. (2013,
NIS Cambodia*)

Official language

Khmer

Laos

ThailandCambodia
Phnom Penh

Vietnam* National Institute of Statistics, Ministry of Planning, Cambodia

History and Geopolitics

EconomyPolitics

Relations with Japan

Based on Cambodia andChina's strong relationshipfrom a long time ago, theinfluence of China is blended
into Cambodia people's lives
despited the fact that bothcountries do not have directborder. Historically, China
has deepened its relationshipwith Cambodia with the aimof balancing relations with theneighboring countries such as
Thailand and Vietnam.

In recent years, the amount of
direct investment from China
has been remarkably increasing. It is said that more than
80% comes from China, andthe main fields are infrastructure construction, real estate,
resort development, garment
industry, etc. China’s aid engagement with Cambodia isalso the largest among othercountries.

Although the Hun Sen government has been going on
for a long time since 1985,
there are voices praising
the economic effects ofthe stable handling. Diplomatically, it espouses aneutral policy, however
its relationship with China
stands out with a strong
economic tie.

Basically, Cambodia is considered
to be highly pro-Japanese as
Japan played a major role in the
postwar reconstruction process
in terms of funding and humanresources. The good relationshipis based on popularization of highquality Japan-made consumer
and durable goods and the effort
of preparation of legal aspects
such as civil law and real estate
related laws support by the Japanese Government.

External Environment in 2020 (Covid-19 Pandemic)
From the end of 2019, Covid-19 spread across the world instantly
and caused a global pandemic. Regarding the infection situationof Cambodia, the number of positive cases was small andunder control initially, and it seemed that the government’s
countermeasures had some effect until the beginning of 2021.
However, in February 2021, a large-scale cluster occurred in Phnom
Penh due to the action lacking consideration of foreigners, and theinfection rate and the number of deaths has been increasing at anaccelerating rate since then. On the other hand, our customers,
farmers, have begun to overdue their loan repayments due to the04 Annual Report 2020

deterioration of the business environment such as the restrictionof people’s movement and the stagnation of logistics, as well as theunprecedented drought and flood. The government also requested
financial institutions for support measures to their customers suchas exemption of delinquency charges and JCF has been providing
these measures. At the same time, we visited our customers asmuch as possible and carefully discussed “how to continue tomake repayment on time and keep a long-range good business
relationship in the future”. As a result, by the end of FY2020, wewere able to reduce and control the overdue receivables.

Agricultural Sector
and MFI Market
Comparing with Agricultural sector

GDP Transition

GDP and Agricultural GDP of Cambodia

Agricultural GDP of Cambodia

The agricultural sector share of Cambodia's GDP is relatively declining due to the changes inindustrial structure. However the amount is gradually increasing.
Dramatic changes can be expected if technological innovation (such as implementation of
Agritech,etc.) is realized in the Cambodian agricultural sector.

Breakdown of GDP (2019) *1

Number of Agricultural
Households (2019) *2*3

Service

12.1% Others

38.85%
Industry

209,000
household34.23 %
Agriculture

20.71%

Approximately

USD

2.9

As shown in the graphs, theagricultural sector, one of themain industries of Cambodia,
has a great potential.
It is a sector that can achieve
the productivity and quality
level comparable to that ofdeveloped countries by investing sufficient technology andfunds.
Cambodia, with a population of
16 million, is already attracting
attention as a rice exporter,and may be given an important
position in solving the world's
food problems in the future.

56%

Rice Farming

billion1,517,000
household87.9 % Rice Farming

Market of Microfinance (2019)
Financial Industry
USD 25 billion

Microfinance Industry

USD 5 billion
Small loans(less than
USD 1,000)

Agricultural GDP accounts for about USD5.2 billion, which is about 20%of the total GDP, of which rice farming is about USD2.9 billion which
accounts for 56% of agricultural GDP.
Approximately 90% of all households engaged in agriculture are rice
farmers and in order to have a technical and financial impact on the
agricultural sector, it is considered efficient and effective to focus on therice farming field and its related fields.

*1
*2
*3

USD1 billion
The financial sector is expanding with theeconomic development of Cambodia.
The business model of microfinanceinstitutions are not limited to the generalgroup lending but are diversifying into
various financing services and fields.

Source: JCF research based on NBC reports and others
Source: JCF research based on NBC reports and others
Source: National bank of Cambodia [Annual Report]

Annual Report 2020 05

Missionand ResponsibilitiesRESPONSIBILITIESFor Environment

For Customers

To maintain a sustainable natural environment (EcoSystem), we will
1. understand the principle of nature,
2. think about things from prosperous coexistence, and3. not exploit more than necessary from the naturalenvironment
We promise the above to our stakeholders and will makesocial contributions in a fair manner.

We are based on the principle of customer-oriented
operation (Fiduciary Duty), and aim to further improve
the quality of our financial services by promise to ourcustomers and business partners that we will
1. work for the benefit of the customer,
2. do our best with the expert knowledge and insights, and3. eliminate conflicts of interest both inside and outside
the company.

VISIONJCF will provide loans in“Human Centric” ways. Loansthat care for people, loans thatare kind to people and loansthat are customized for people.
We will always be a financial
institution that is there forpeople who needs us.

VALUE

MISSIONJCF will enhance the life and wealth ofCambodian society and sharing the benefit
together through our financial platform. We
will contribute to the growth of Cambodia
economy and also to other Asian countries
from Cambodia in the future.

06 Annual Report 2020

JCF was founded by investment
from Japan. “JC” means “Japanand Cambodia”, which showsa base of our basic businessconcept that we will bring
Japanese skills, technologies
and experiences to the various
business sectors in Cambodia
starting from the Agricultural
sector. Our vision is to be a
glocal company, thinking
globally and acting locally.

A Message
from the CEO
Creating our future
after turning to profit
First of all, I would like to express my deepest condolences
to those who have lost loved ones to the Covid-19 illness
and my sympathies to those who have suffered from theCovid-19 illness. The spread of vaccines is awaited in eachcountry, however the recovery speed depends significantly
on how each individual behave and take actions regardlessof the policies and restrictions of each government. Let us dowhat each individual can do and overcome these difficulties
together.
JCF obtained its license of Microfinance Institution from
National Bank of Cambodia in January 2018, and three terms
have passed after the fiscal year of 2020. A major feature of
JCF is that we not only provide financial services to ownersof small and medium-sized companies as business funds,
but also collaborate with them to create new businesses.
In particular, in the mid-term plan, we aim to show a strong
presence compare to other financial institutions in Cambodia
in terms of quality and quantity by providing cutting-edge“Agricultural Finance” to customers.
From the end of 2019, Covid-19 has spread globally and lefta major negative impact on the world economy. Looking at
the economic growth rate of Cambodia (IMF statistics), it wasa high level of 7.05% in FY2019. However, it slowed down
to -3.53% in FY2020 and it is expected to recover to 4.16%
in FY2021 based on a certain scenario. Downside risks area relapse of the pandemic, a continuing tough economic
environment and other natural disasters and geopoliticalrisks. I believe that establishing the efficacy of the vaccine
and increasing the speed of spreading it is the first step tosolving these various problems.
On the other hand, during this period, JCF’s FY2019
performance changed from a surplus of USD26K under theold accounting standard (CAS) to a deficit of USD21K under
the new accounting standard (CIFRS) due to a change in theaccounting system. In FY2020, the serious impact of Covid-19
began from 2Q, and in addition, due to natural disasters suchas drought and the unprecedented flood in recent years, theCEO / KIKUCHI Ikuo

amount of loans disbursed decreased significantly. At thesame time, disruption of the flow of people and logistics
caused slow collection. Our collection team has suppressed
the deterioration of the situation by strengthening thecollection through closer contact with the customers. As aresult, the full-year profit for FY2020 was $ 87K, and we wereable to become profitable in the third term of establishment.
On the other hand, in terms of the assets, the loan balance
increased only by 3.1% compared to FY2019. Although theimpact of Covid-19 was a major factor of this result, the sales
and marketing strategy should be reviewed and revised. Tosummarize FY2020, I understand that under an environment
where it was not easy to increase the sales figure, thecollection, a defensive measure, was particularly important.
In 2021, we will focus on the following three points toestablish the foundation for the next generation in order tofurther evolve our business strategy. First, expanding thetargeted industry. To date, our main target was supporting
the business of rice farmers, but in the future, we areconsidering expanding into other primary industries such as
the fisheries and dairy farming. Second, we will build a new
credit scoring system by coordinating with existing DX data.
Third, as a financial function of the “Nokyo Platform”, we will
support the ecosystem related to the agricultural value chain
in every aspect. In other words, we will establish the field of“Agricultural Finance” and show unprecedented existencevalue.
I believe that the current global economy has passed theworst of Covid-19 and is gradually recovering. However, otheruncertain downside factors in the economy, such as climatechange and geopolitical conflicts, are beginning to emerge
and cannot be overlooked. JCF sees adversity situation as
an opportunity for growth and carries out reforming thecompany, and at the same time, we will never forget thevalue of "always staying close to our customers, growing
together, and sharing results". I will greatly appreciate yourcontinued guidance and support.

Annual Report 2020 07

JCF bythe Numbers
LOAN OUTSTANDING BALANCE

7,686

TOTAL CUSTOMER & DISBURSEMENT

18,771
1,245

TOTAL ASSET & LOAN ASSET(%)

8,968

NET PROFIT

88

86%

Turned Profitable!

08 Annual Report 2020

CAPITAL ADEQUACY RATIO

PAR90

64%

97

(6,250)*Capital Included
under registration

1.27%

CUSTOMER ATTRIBUTES
Average loan
ammount

USD 15,035

1%
Cash Loan 2 %Construction
Equipmemt

COMBINEHARVESTER

19 %Type of Current
business
Other
Non-agri Business

53 %GenderFemaleMale

4 % 96 %Purpose of
the loan

Total of78 %rounds

TRACTOR

6

Total of572

supporters

Total amount raised

10 %Other Agriculture

37 %Paddy Farming

USD 936,569(JPY100,850,000)
Our funding platform of Japanese
agricultural cooperatives is supported
by many conscious investors in Japan.
As a result, we have raised a total ofmore than 100 million yen in FY2020.

Annual Report 2020 09

Organization
Chart
Shareholders

The Board of Directors
Risk Management
Committee

Audit Committee
Management Directors
CreditCommittee
General Manager

Internal Audit

CreditCollection

Finance & Acc.

Auditor

Human
Resource

Sale Planning

CreditFinance
Accounting

Legal andCompliance

Administrator

Sale
Promotion

Credit Control

TreasuryBusiness
Development

CreditAdministration
RecoveryManagers

Soriya Lus

Vuthea Chea

YouYorng Yong

Kimpheak LongInternal Auditor

Collection and Recovery Manager

Credit Manager

Financial and Accounting Manager

I had taken in charge of accounting at
first, currently, I am responsible for
audit and internal control processes.
My motto is "Respect yourself andothers", and "Getting ready is the secretof success". I try to work in positive way
every day for company and our future!

I am in charge of collection department.
I always try to embrace or embodies
the value of hard work, dedication,and the importance of building strong
relationships. I hope I am an importantpart of JCF, then I would give all to JCF
to be successful in all business in the
future.

My responsibility is team building incredit department. We should study
and update our knowledge to develop
new product in order to get our businessgoing forward. I am honored to work at
JCF, which I believe is the best company
that is invested by Japanese investors
to develop Cambodian economy bybuilding the income for our customers,
farmers.

My main responsibility is controlling andchecking all daily transactions related
to finance processes. My favorite word
is “Working toward my goals inspires
others around me to do the same and wewill success together”. I love to share myknowledge and experience with all JCF
colleagues as well as helping them tosucceed the goal together!!

10 Annual Report 2020

Corporate GorvernanceIndependent Director
2020 was a year like no other. The global
pandemic of Covid-19 struck the world
with full force, and Cambodia was no
exception to this worldwide crisis. The
global economic downturn triggered by
the pandemic has hit Cambodia’s economy
very hard.
The World Bank projected Cambodia's
economic growth rate of -2% in 2020, thesharpest decline in Cambodia’s recent
history. In addition to Covid-19, severe
drought throttled Cambodian farmers
including the customers of JCF.
With this criticul situation, JCF had to face
the most serious challenges that it had
ever experienced before.

In particular, dealing with delinquent loans
was the most critical issue.
Since the establishment of JCF, it has developped effective credit evaluation procedures, so JCF had few delinquent loans in2018 and 2019. On the other hand, thestrategies and procedures for delinquentloans were not developped enough. Also,
the training of loan officers were notenough to solve this problem.
Then, reflecting these external and internalsituations, the number/amount of delinquent loans increased rapidly in the firsthalf of 2020, and it put big pressure on
profit of JCF.

What we did to make better

For 2019

We have expanded the number of observers to include BOD experts, which hasenabled us to have a broader perspectiveon the development of management strategies. With the addition of international
expertise, we are confident that JCF's management and services will contribute moreto the agricultural sector in Cambodia.
At the field level, we have made significant

improvements in PAR by developing a new
debt collection manual and disseminating
it to the field. We regard it as a remarkableachievement.
Specifically, the management team accompanied the debt collection operation first,
in order to communicate more deeply withthe field and to build up this framework.
We brought the understanding of the field

What we will do to make better"In general, microfinance institutions value
both the achievement of financial goals
and social goals as a double bottom line.
JCF has been aiming to become selfsustaining first and foremost, and thanks
to the support of many people, we are one
step closer to achieving our financial goals
by achieving a single-year surplus in 2020.
I would like to reaffirm that the Board of
Directors and others will play an active

However, JCF turned this hard situation
into good opportunity and recorded its
highest profit ever with improving its
collection activities.
As an independent director and chairperson of audit cmmitty, the inadequate
collection strategy had been my biggest
concern. So I'm very happy to tell you thatJC Finance overcome its weakness
and transformed into stronger and moresustainable ever. We will continue to strive
to maintain your support and trust.
Independent Director

TANAKA Ai

and management closer together andrenewed the manual on debt collection,
carried out by the Management Officer.
At the end of October, PAR had risen to
8.1%, partly due to Covid-19.
From November, measures taken resulted
in a reduction of -1.68% at the end of
November and -2.70% at the end of December.

For 2021

role in promoting and protecting the social
mission of the MFI.
To this end, in addition to the existingcustomer protection code, we believe thatthe pandemic will continue to place a highdemand on the protection of the health of
our customers and employees.
We will take a deeper look at who ourcustomers are and how our activities affectthem, and reflect this in our services andoperations.
We will also continue to expand as wemove towards a listing on the Cambodian
Stock Exchange and towards achieving oursustainable goals for Cambodia.
Our governance will also evolve in strength,
scope, frequency and appropriateness as
we grow."

Annual Report 2020 11

Reports of theCommittees
To strengthen the governance, JCF has below committees
with different levels of managements to effectively control
the institution.

Audit Committee
Risk Committee
The Risk Committee is composed of four members
and chaired by Ms. Kato, an independent director,
with expertise in accounting, banking, auditing,riskmanagement and legal aspects. The Risk
Committee is responsible for; managing credit risk,
capital risk, liquidity and funding risk,operationalrisk, compliance risk and other relevant risks andreviewing economic and competitive market,
political risk and others.
In 2020, the Risk Committee held four times meetings
to review and discuss JCF’s business and operations.

The Audit Committee complies with a Prakas of
National Bank of Cambodia. The Audit Committee iscomposed of 3 members and chaired by Ms. Tanaka,
an independent director. The Audit Committee is
responsible for ensuring compliance with legal
and regulatory requirements and the information
provided to the public and NBC is clear, accurate
and reliable, and as stipulated in aforementioned
Prakas. In 2020, the Audit Committee held meetings
four times to review and discuss on matters relating
to JCF.

Remuneration and
Nomination Committee
Credit Committee
The Credit Committee is composed of threemembers and chaired by Mr. Tomari, director.
The Credit Committee is responsible for ensuringthat the credit policy is consistent with JCF’s longterm objectives and corporate values, checking
whether JCF provides services truly contribute to
the customer’s business development, checking
whether JCF pursuit of appropriate profit on thepremise of securing soundness and others. In 2020,
the Credit Committee held meeting as and whennecessary.

12 Annual Report 2020

The Remuneration and Nomination Committee
is composed of four members and chaired by Ms.
Tanaka, an independent director. The Committee is responsible for ensuring the remuneration
policy is consistent with the long-term objectives
and corporate values of JCF and overseeing the
remuneration of employees and making sure thatthey are all fairly rewarded for their contribution to
JCF’s performance.

Board of
Directors

菊池 育朗

KIKUCHI Ikuo

泊 傑

田中 あい

加藤 侑子

Director, CEO

Director, Chairperson

TOMARI Suguru

TANAKA Ai

KATO Yuko

April 1991
Joined ORIX Corporation

April 2009
Jointed Sumitomo Mitsui
Banking Corporation

December 2004
Joined All About Inc.

April 2015
Appointed as Director of
MJI Enterprise Co, Ltd.
(Microfinance, Myanmar)

November 2002
Joined ABC Capital of ABC
Cooking GroupMay 2008
Appointed as Managing
Director of ABC Capital
January 2014
Joined Something Holdings
Co., Ltd.
Appointed as Executive Officer/ MD of Executive Office
January 2015
Appointed as Director of
SOMETHING HOLDINGS ASIA
PTE. LTD (Singapore)
October 2015
Appointed as MD of
SOMETHING VIETNAM CO.,LTD.
June 2018
Joined JC FINANCE PLC.
Appointed as CEO of thecompany

June 2012
Moved to Cambodia to start a
new business

Independent Director

June 2008
Joined Allm Inc. (Healthcarecompany in Japan)

July 2015
Joined Luckland(CAMBODIA)
Co., Ltd. Corporate Advisor

October 2018
Appointed as CEO of LJ
Finance Ltd. (Microfinance in
Laos)

March 2016
Supported Establishing JC
FINANCE PLC.

December 2018
Appointed as an Independent
Director of JC FINANCE PLC.

Independent Director

November 2016
Appointed as Chief Executive
Officer of MJI Enterprise Co,
Ltd.
October 2019
Appointed as Independent
Director of JC FINANCE PLC.

July 2018
Appointed as COO of JC
FINANCE PLC.
December 2018
Appointed as Director, COO of
JC FINANCE PLC.
December 2020
Appointed as Director,
Chairperson of JC FINANCE
PLC.

Annual Report 2020 13

Business Strategy
Overview
Our business mainly focuses on the primary industry, especiallyon the agricultural sector.
We have carried out our responsibility as a financial institution
to enrich the lives of agricultural households, which account for
70% of the Cambodian population, by supporting their traditionalfarming business and new business model that can increase theirincomes.

Our current three main business strategies are to realize“Supporting Business Creation” “DX/Credit Scoring” and“Agricultural Finance”. Since the establishment in January 2018,
we have constantly updated our strategy by grasping changes in
the natural environment, social environment, and technologicalenvironment. As a result, we are confident that our future strategy
will be further refined and will have a significant social impact on
our business areas.

2020 ANNUAL REPORT
12019 ANNUAL REPORTEXPAND

Expanding the financing product from small agricultural
machineries to bigger agricultural related facilities andfisheries
We mainly support the rice farmers, but in the future,
we will expand to other primary industries such as
distribution businesses related to rice farming andfisheries.

Supporting Business
Creation

Introducing DX
Transformation

EXPLORING THE POTENTIAL OF PRIMARY
INDUSTRY

CONNECTING2ESTABLISHING NEW CREDIT SCORING SYSTEM
WITH DIGITAL TRANSFORMATION

Establishing credit scoring analyzed from the integration of
static and dynamic information

Nokyo Platform Plan

We will utilize the dynamic data collected using GPS
etc., as an important element of credit scoring that will
be developed in the future to establish a new credit andsettlement (payment) system.

SUPPORT

3

ELABORATING AGRICULTURAL FINANCE

Finance institution that supports Nokyo Platform in every
sectorAs an important function of building a Nokyo Platform,
we will promote collaborating with partner companies
and establish a system that can supply funds to thevarious sectors in the agricultural field.

14 Annual Report 2020

Business Strategy #1

Exploring the Potential of Primary Industry

Exploring the Potentialof Primary Industry*GPS Setting before delivery

6

To date, we have provided financing forfarm equipment rather than consumer
goods. We are confident that by committing our funds to the business for
economic growth, our customers are
more likely to enrich their lives througheconomic reproduction. Our main
customers, the farmers, obtain agricultural machinery such as combines
and tractors through our financing andefficiently harvest the crops grown intheir fields. In addition, they can undertake the farm work of other people’s
fields. By doing so, they are starting a
new business and getting paid. In otherwords, this is “the agricultural machinery sharing” and the prototype of thematching business among the farmers.
This new use of agricultural machinery
has triggered changes in Cambodia's
main industries, agriculture, and primary industries and boosts economic
growth.
We plan to roll out these usages offinanced funds and successful cases toother sectors in the primary industry.
In emerging countries, it is undeniable
that there is a lack of technology andknow-how of developed countries. It is
the issue for the entire primary industry, including the fisheries and dairy. On
the other hand, developed countries
like Japan can solve their social issues,

such as the aging farming populationand lack of successors, by exporting
their know-how to emerging countries.
By doing so, the intellectual property ofhumankind will be optimized ultimately, which is an essential point withouteven referring to the SDGs. Startingfrom agriculture, we will expand intoneighboring sectors and evolve thecredit know-how we have cultivatedso far to create new business models
together with our customers. We areconvinced that this disruption in the
primary industry will surely enhance
the growth of the economy that was hit
by Covid-19.

Annual Report 2020 15

Business Strategy #2

Establishing Borderless Credit Scoring System by Digital Transformation

Establishing Borderless
Credit Scoring System
We are actively integrating new technologies into the financial operation. There
are two major operations in financial
business: “credit” and “collection”. As
the issue related to financial inclusion
becomes an important topic, , we havemade financial transactions with thecustomers who were not previously
covered by the conventional credit
method by evaluating the information/
data collected by utilizing a new digitaltechnology. To be more specific, we
re-evaluate the dynamic data collectedfrom the financed agricultural(farming)
equipment. We install a GPS into
the financed agricultural (farming)
equipment to capture and collect thedata of the location and the use of theequipment at all times. As there is a

16 Annual Report 2020

correlation between the mileage of theequipment and an increase in the customer’s income, the data is used as partof the guideline for credit monitoring
and credit management. Also, to collectthe equipment as collateral, rapidly andaccurately, acquiring the location dataof the equipment is critically important.
In some cases, the GPS even stops
the engine remotely, which can be an
incentive for the customer to repay theloan and recover the collateral.
Henceforth, by combining this dynamic
data with conventional static data (IDnumber, address, family structure,etc.), it will be possible to perceive thebusiness opportunities considering thecustomers’ regional characteristics andtheir future life events. In other words,
this new credit scoring system gives
great contributions to the customers’Life Time Value (LTV). From a global
perspective, it can be said that theflow of the people and the logistics do
not remain within the border but are
already borderless. A customer credited
in Cambodia is earning income abroad
to use it as a source of repayment ishappening in reality. Credit and collection can no longer be evaluated ina conventional way. We are confident
that establishing this new credit scoring
system shall become the new trend in
the financial industry in the near future.

Business Strategy #3

Elaborating New Agricultural Financing

JCF will be representing
New Agricultural Finance
Scheme of Nokyo Platform Constructed by allying with external partner

Japanese unique agricultural cooperative society called “Nokyo Platform” isthe model when building our businessstrategies and its core concept of “Cooperatives” is registered as Intangible
Cultural Heritage by UNESCO in 2016
due to its contribution to creative
solutions to various social issues. We
have set “Nokyo Platform” as one of
the standards to achieve in the Cambodian primary industry and have beenworking on establishing the Cambodian version of “Nokyo Platform”. This
platform has two functions to enhance
the prosperity of the primary industry: a trading function that handles

agricultural products and machines
and a financial function that handles
providing finance in various stages ofagricultural business. We aim to bepart of the financial function that cancomprehensively provide loans (funds/
financing) to the entire value chain
from production and wholesales to
consumption. Currently, the main focus
is on financing for the farming equipment on the producer side, the farmers.
However, along with the developmentof the “Nokyo Platform”, it is our responsibility to expand our businessto cover the whole agricultural value
chain to help transform the current“fragmented tenant farming” into
“more sustainable industry”. In order toachieve this goal, the quantity and thequality of the alliances with external
partners are important, and we will not
limit ourselves to domestic players but
actively support foreign players, including Japanese players, to network andhelp localize their activities. As a result,
we are confident that we can increase
our financing opportunitiesand it will
become a stepping stone to handle
more of the customers’ and partners’
financial assets in the future.

Annual Report 2020 17

Sustainable Development
Goals
TARGET 9 • 3

TARGET 9 • A

Approach to SDGs 2020
9th Goal

INDUSTRY,INNOVATION AND INFRASTRUCTURE

Activity and Progress in JCF
It's been four years since
the world started working
towards the Sustainable Development Goals. How has
the world - and Cambodia moved forward?
Cambodia has been ranked
as the third country in theworld that has seen the mostimprovement since the adoption of the SDGs.
On the other hand, there arestill significant challenges toGoal 9, to which we at JCF arecommitted, and we are still
below 50% of the required
progress.

OUTPUTOUTCOME

Funding for financial platforms
JCF provided a total of 5,502,970 USD of loans to
366 people in 2020FY.

Dissemination of agricultural technology
in collaboration with Japanese
agricultural support companies
By providing financing for the purchase of various agricultural machineries from global leading
manufacturers, JCF aims to increase the market
penetration of high performance agricultural
machinery and improve the work efficiency andincome of Cambodian farmers. In addition, we
recognize that this initiative is an economic activity that contributes to solving social issues suchas "8. job satisfaction and economic growth" in
the SDGs.

Innovation in the agricultural
sectorImproved living standards
Business innovation looks like asupernova explosion that happens
out of nowhere, but we believe there
is a tireless human efforts put in it.
We have been working since 2018
to spread Finance x Agritech step bystep in the Cambodian agricultural
sector. This year, we have collectedcustomer feedback as a first stepto understand the outcome of ourservices and to rethink what "customer-centric" means.

On the challenge of Goal 8"Since 2009, improvements in labor efficiency and a reductionin unemployment have been achieved worldwide, albeit with
regional differences.
However, the global economy stagnated again in 2019 and is set tostagnate further in 2020 due to the Covid-19.
The Covid-19 has a particularly negative impact on those in thetemp worker, self-employed, and day labor sectors of the global
market.

18 Annual Report 2020

JCF hopes to contribute to this goal through the dissemination ofagricultural technology in partnership with Japanese agricultural
support companies, and we look forward to taking this idea further
in the coming year.
In addition to this issue, we also recognise from customer feedback
that it is important to conserve the culture and bond of family,
as well as economic growth. We believe that customer-centricmanagement will contribute to the SDGs too.

Customer
SurveyWe had interviewed 10 customers in
ramdom selection. On average, they
increased their income by USD 7,620.
And we found some other positive
impacts. However we also heard thevoice that JCF should improve its
services and business for customer's
future.

(Name)Mr. CHHUN VANNA

Mr. MAO SAMNANG(Gendar)

Male

Male

(Annual income approx.)(after) USD 41,280 / (before) USD 24,000(after) USD 9,000 / (before) USD 7,000(Most recent loan amount)

USD 29,000

USD 9,000(Agricultural land holdings)

0 acres

8 acres

Tractor Service and Combine Service.

Paddy Farming, Cassava Farming,
and Tractor Service

You and JCF

JCF 's staff explained everything to me before
we signed the contract, and even after thecontract, she helped our business, which
made us feel very comfortable. The only difficult moment was when the farm machinebroke down. You know, we couldn't work atthat time.

It was the first loan, I had ever taken in my life.
However, I could see that it was a good option
for the farmer, so I decided to take out the loan
with JCF. Actually, I was really worried until
the income coming in... Now I am confident
and want to expand my business further.
Especially I want to buy more farming land.

You and businessI believe that the mechanization is good because it reduces the time spent working on
the farmnig, it allows you to do other workin your spare time, and it is much cheaper
than renting in the long term.

Now I have more income from tractor service
businesses not only farming. On the other
hand, I have less time to spend with my family, which I regret a little. Not only do I want
to expand my farm, but I also want to build ahouse this year to make my family happy.

Future of the farming
business in Cambodia

The rural areas can be revitalised throughagriculture, which will help people, including
my families.

I don't know about the world, but I just dowhat I can, little by little from my country,
Cambodia.

(About business)

Annual Report 2020 19

Financial Statement
Summary
We have completed threeterms since the establishment in 2018. We would
like to report that we wereable to achieve profitability in FY2020 based on the
CIFRS accounting standard.
FY2020 was a year that wassignificantly influenced by
the external factors, especially force majeure such as
Covid-19 and the unprecedent flood. It goes without
saying that this year caused
great economic losses not
only to our industry but to allother industries.
Under such a difficult environment, we thank for the
support of all the stakeholders that newly establishedcompany like us was able to“turn profitable” as we havecommitted initially.
For FY2021, we aim toachieve the financial goals
beyond FY2020 by greatly accumulating the loan balancethat we could not achieve in
FY2020 and further evolving
the collection method wehave established throughCovid-19 situation.
We would like to thankour stakeholders again for
FY2020 and please look forward to our further growth in
FY2021.

Financial Statement Summary (BS)(USD)

(KHR'000)(USD)(KHR'000)

463,874

1,876,370

338,276

1,378,475

ASSETS
Balances with other banks
Balances with the NBC
Loans and advances to customers
Other assets

702,1072,840,023

622,757

2,537,735

7,686,419

31,091,565

7,453,685

30,373,766

80,200324,40973,982

301,477

Property and equipment

5,444

22,021

16,741

68,220Software30,352

122,774

34,563140,844

Total Assets

8,968,396 36,277,162

8,540,004 34,800,517

LIABILITIES AND SHAREHOLDER’S EQUITY
Liabilities
Income tax payable
Borrowings
Other liabilities
Total liabilities

1,096

4,433

1,202

4,898

3,126,426

12,646,393

4,037,180

16,451,509

87,550354,140

85,978350,360

3,215,072 13,004,966

4,124,360 16,806,768

Share capital

2,000,000

8,000,000

2,000,000

8,000,000

Deposit for future capital injection

4,250,000

17,000,000

3,000,000

12,000,000

Shareholder's Equity

Regulatory reserve

69,804

281,957

71,840290,254

Retained earnings(566,480)(2,288,355)(656,196)(2,654,122)-

278,594-

357,617

Cumulative differences on exchange translation
Total shareholder's equity
Total liabilities and shareholder's equity

Financial Statement Summary (PL)5,753,324 23,272,196

4,415,644 17,993,749

8,968,396 36,277,162

8,540,004 34,800,517

2020
(USD)

2020

2019

(KHR'000)

2019

(USD)

(KHR'000)Interest income

1,301,355

5,305,624

1,266,703

5,132,681

Interest Expense(334,925)(1,365,489)

364,141(1,475,499)

Net interest income

966,430

3,940,135

902,562

3,657,182

Other operating income

60,244

245,61435,941

145,633

Total operating income

1,026,674

4,185,749

938,5033,802,815

General and administrative expenses(821,621)(3,349,749)(901,947)(3,654,690)

Provision for losses on loansand advances to customers(103,529)(422,088)(43,905)(177,903)(29,778)

Income(Loss) before income tax

101,524

413,912(7,349)

Income tax expense(13,844)(56,442)(13,654)(55,326)

87,680357,470(21,003)(85,104)

Net income (loss) for this year
Difference on exchange translation
Net comprehensive income (loss) for the year

20 Annual Report 2020

31Dec2020 31Dec2020 31Dec2019 31Dec2019-(79,023)-(252,405)

87,680278,447(21,003)

167,301

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Company
ProfileCompany Name

JC FINANCE PLC.

Business Category

Microfinance Institution

Licene Number

M.F-85

Establishment

Junuary 17th, 2018

Representative

CEO KIKUCHI Ikuo

Headquarters

No.56, Street 310, Sangkat Boeung
Keng Kang I, Khan Boeung Keng
Kang, Phnom Penh, Cambodia

Tel+855 (0)23 217 419

E-mailinfo@jcfinance.com.kh

Websitehttp://jcfinance.com.kh

Annual Report 2020 39

info@jcfinance.com.kh
http://jcfinance.com.kh/+855 (0)23 217 419