TIDMMIL
RNS Number : 2520R
Myanmar Investments Intl Ltd
29 June 2020
This announcement contains inside 29 June 2020
information
Myanmar Investments International Limited
Interim results to 31 March 2020
Myanmar Investments International Limited [AIM: MIL] ("MIL" or
the "Company"), the AIM-quoted Myanmar focused investment company,
today announces its unaudited interim financial results for the six
months to 31 March 2020.
As announced on 2 September 2019, to conform with the need to
change the Company's year-end to bring it in line with the new
Myanmar year end of 30 September the Company will issue 6-month
interims for the period to 30 September 2019 and 6-month interims
for the period to 31 March 2020. It will then issue a full audited
set of financial statements for the 18-month period to 30 September
2020.
Overview
The Company's shareholders approved a change to the Company's
investment objectives at the AGM held on 24 October 2019 and, as a
result, the Directors have commenced the process of planning and
implementing an orderly disposal of the investment portfolio with
the intention of returning surplus cash to shareholders with a view
towards an eventual winding down of the business.
As at 31 March 2020 the Company had invested in two businesses
in Myanmar:
-- an indirect shareholding of 4.1 per cent in AP Towers
Holdings Pte. Limited ("AP Towers"), one of Myanmar's leading
independent tower companies ("ITC"). This investment will most
likely continue to be held until such time as our joint venture
partner looks to create an exit opportunity. At this stage, no
discussions are underway and there is no defined timeframe for such
an exit.
-- a 37.5 per cent shareholding in Myanmar Finance International
Limited ("MFIL") a well-established microfinance company. On 1
April 2020, the Company announced that it has accepted an offer to
sell its shareholding in MFIL subject to the purchaser's AGM
approving the purchase, lender's consent, and Myanmar regulatory
approval.
In addition, the following investment was sold in the period
ending 31 March 2020:
-- a 48.8 per cent shareholding in Medicare International Health
& Beauty ("Medicare") which is the first full-service chain of
modern pharmacy, health, and beauty franchise stores in Myanmar.
The Company sold this investment for US$1 million to its main joint
venture partner in November 2019.
The Directors have determined that MIL's Net Asset Value ("NAV")
as at 31 March 2020 was US$33.2 million, or US$0.87 per share.
The Company has continued to streamline its operations and as a
result reduced its overheads. As part of the cost reduction process
(mandated by the shareholders), the Company closed its office in
Yangon and laid-off its local staff as of 31 March. Henceforth it
will operate using consulting arrangements for personnel as
required. In the period to 31 March 2020, the core cash-based
overheads were US$817,000 including US$115,000 for one-off costs
for the closing of the office in Yangon. Excluding these one-off
costs, the core cash-based overheads were 5.2 per cent lower on a
per share basis than for the same period last year with most of the
reductions coming towards the end of that period. By September
2020, the monthly overheads will have reduced significantly
more.
As at 31 March 2020, the Company had cash resources of US$2.8
million (2019: US$3.7 million).
AP Towers
Background
AP Towers is one of the largest ITC companies in Myanmar.
The Company swapped its interest in Apollo Towers for an
interest in AP Towers in January 2020.
Under this share exchange, MIL's 66.6 per cent subsidiary, MIL 4
Limited ("MIL4") , exchanged its existing 13.7 per cent
shareholding in Apollo Towers for a shareholding of 6.2 per cent in
AP Towers, of which 4.1 per cent is attributable to MIL.
The share exchange effectively brought Apollo Towers and Pan
Asia Towers, another Myanmar ITC, under the common ownership of AP
Towers which now manages one of the largest network of towers in
Myanmar. Apollo Towers and Pan Asia Towers provide tower and power
services to all of Myanmar's mobile network operators ("MNOs")
being Telenor, Ooredoo, MPT and the more recently established,
Viettel-led consortium, MyTel.
MIL initially invested in Apollo Towers in July 2015 when it led
a consortium of investors that invested US$30 million for a 14.2
per cent shareholding in Apollo Towers. It co-invested alongside
TPG Growth ("TPG"), part of one of the world's largest alternative
asset managers with assets under management of US$104 billion.
MIL4 sits on the board of AP Towers and contributes to the
strategy and growth of the company.
Update
-- The Myanmar telecoms sector generally continues to grow.
Myanmar's mobile penetration rate continues to grow with estimates
currently as high as 107 per cent though this is based on SIM cards
and not unique subscribers. Coupled with this is the prevalence of
data enabled devices. Smartphones are estimated to account for
approximately 80 per cent of the mobile phones in use in the
country and data demand drives the need for connectivity.
Connectivity requires an extensive network of telecom towers with
reliable power. Myanmar currently has 20,000 towers, of which
11,000 are owned by ITCs, and is expected to reach 22,000 towers
within the next few years.
-- Apollo Towers and Pan Asian Towers have both built strong
reputations in the market for their valuable site locations,
operational excellence and strong customer focus. AP Towers will
look to leverage the best practices of both companies in providing
a full suite of services that are commercially attractive to the
customers of both businesses.
-- However, although the broader Myanmar telecom market
continues to grow, the Myanmar telecom tower sector, following a
period of rapid growth, has continued to slow in the last 6 months.
This follows the entry of Myanmar's fourth mobile operator, MyTel,
into the market who have pursued a policy of undercutting their
competitors. As a result, the other MNOs have taken a more cautious
approach to extending their networks and at the same time are
focussing more on cost management.
-- As a result, whilst there has still been growth in the demand
for both new towers and new tenancies the market has seen a
reduction in the rate of growth whilst the other MNOs re-assess
their strategies in light of this evolution.
-- Contrary to other industries, the telecoms sector has not
suffered greatly due to the outbreak of Covid-19.
-- As at 31 March 2020 Apollo Towers and Pan Asia Towers
together had an aggregated portfolio of 3,246 towers, 6,682 tenants
representing a co-location ratio ("Lease-up-Rate" or "LUR") of
2.06x. This compares to an LUR of 2.02x at 31 March 2019. Since
then towers have increased by 1.9% in towers and tenancies by 4.0%.
The majority of that growth took place in the first 6 months of the
year, reflecting the slowdown in growth mentioned above.
-- By adding additional tenants to existing towers, the yield on
invested capital can significantly improve, making each additional
tenant highly accretive in terms of EBITDA and eventually
enterprise value. Market analysis for Myanmar points to an expected
LUR of 2.2x or higher over the next few years.
-- In our report as of 30 September 2019 we pointed out that if
the accounts for Apollo Towers and Pan Asia Towers for the six
months to 30 September 2019 were, on a pro-forma basis, to be
aggregated and adjusted for non-recurring items, and then
annualised to provide an indicative "run rate" they would have
shown annualised revenues and EBITDA of US$123 million (including
pass through power revenue) and US$72.9 million, respectively. This
would have represented an increase of 4.0 per cent and 5.0 per
cent, respectively over the six-month period. The adoption of IFRS
16 accounting increases this EBITDA to US$78.2 million.
-- As of 31 March 2020, AP Towers shows for the twelve months to
31 March 2020, revenues, and (adjusted for non-recurring items and
the change in accounting for IFRS 16) EBITDA of US$103.7 million
(excluding pass through power revenue) and US$78.4 million,
respectively. This represents an increase of 11.9 per cent and 3.4
per cent, respectively over the same period last year.
-- Historically reported revenue has included 'pass through'
revenue, which is the variable power costs such as diesel and
electricity that is contractually recharged to customers at cost.
This is a substantial figure that is subject to seasonal variations
and other fluctuations. However, as the name 'pass through'
suggests this revenue does not contribute meaningfully to profits.
Assessing the business with this included in revenue can distort
the underlying trend as regards revenue progression of tower
leasing, which is responsible for profits. Accordingly, AP Towers
is now reporting revenue to shareholders with pass through revenue
excluded. Any net gain or loss on pass through, which tends to be
small, is reflected in the disclosed profitability. On this basis
the revenue to 31 March 2019 was US$92.7 million and in the year to
31 March 2020 this rose to US$103.7 million a growth of 11.9 per
cent. Much of this growth was the full year effect of new tenancies
and power contracts added in the previous financial year. Revenue
for the six months to 31 March 2020 was US$52.8 million, growth of
3.7 per cent over the first half of the year indicating that growth
has slowed during the year.
-- Going forward, AP Towers will be looking to increase the
number of tenancies either from new "Build to Suit" towers or from
adding co-locations to its existing towers. Given its existing
undrawn debt facilities, coupled with cash flows from operations,
there will be available capital to build further towers over the
next few years without the need to seek additional funding.
-- AP Towers' net debt was US$371.6 million as at the end of March.
-- On 7(th) April 2020 APTH refinanced approximately $140m of
mezzanine debt that had originally been raised by Apollo. That has
resulted in a significant reduction in the cost of that borrowing
that will benefit shareholders going forward.
Valuation
As at 30 September 2019 the Directors had assessed that if the
share exchange had been completed by 30 September 2019, the
Company's attributable shareholding in AP Towers would have been
worth US$32 million as at that date, using a comparable EBITDA
multiple methodology .
The share exchange was completed in January 2020.
Using the same methodology as at 30 September 2019 the Directors
have assessed the value of this investment to be US$25.7 million.
The downward revision in valuation of US$6.3 million compared with
the in principle valuation of the AP Towers investments done in 30
September 2019, is mainly attributable to a slightly lower actual
EBITDA (adjusted for IFRS 16) of AP Towers than the EBITDA
(adjusted for IFRS 16) as at 30 September 2019 (that was based on
an indicative "run rate") and a decline of earnings multiples of
the comparable companies that we follow. In addition, given the
uncertainty due to the outbreak of COVID-19, the Company applied an
additional discount factor on this multiple.
This value of AP Towers represents a profit of US $4.9 million
over the cost of the investment and an IRR since
the initial investment in July 2015 of 4.6 per cent.
Myanmar Finance International Limited ("MFIL")
Background
MFIL is one of the leading microfinance operators in Myanmar and
provides small loans
(MMK 315,000 or US$205) on average per borrower, but it can be
as high as MMK 10 million or
US$6,520 to small-scale business operators in rural and
semi-urban areas in Yangon, Bago, Ayeyawady and Mon.
MFIL was established as a microfinance joint venture in August
2014 by MIL and Myanmar Finance Company Limited ("MFC"). In
November 2015, the Norwegian Investment Fund for Developing
Countries ("Norfund"), the Norwegian development finance
institution, also became a shareholder such that the shareholdings
today are MIL 37.5 per cent, MFC 37.5 per cent and Norfund 25 per
cent, with a total paid up capital of over US$7 million. MIL's
total investment cost to date is US$2.7 million.
MIL sits on the board of MFIL and works closely with the
management and shareholders in strengthening and growing the
business and assisting with securing debt finance.
Update
-- MFIL is a well-established microfinance company that has a
positive impact on the lives and economic well-being of its
customers.
-- Since inception MFIL has grown to 15 branches in Yangon,
Bago, Ayeyawady and Mon. Half of MFIL's loan book is now in the SME
segment.
-- At the time of the last report MFIL had completed a
restructuring of its operation and had started to expand its loan
book. At 30 September 2019, its loan book was MMK21 billion (US$15
million) and this had increased to MMK27 billion (US$19 million) at
the end of February 2020.
-- Since mid-March 2020 when COVID-19 started MFIL has
significantly reduced its new lending and is currently undertaking
a review of its loan portfolio.
-- MFIL remains a strong microfinance company with surplus cash
on its balance sheet of over MMK7.4 billion (US$5 million), as at
31 March 2020.
-- Over the last few weeks MFIL has successfully entered into an
arrangement with lenders that have loans falling due within 2020 to
extend repayment terms to 2021, this coupled with its reduction in
lending and strong cash position has given MFIL a high level of
liquidity.
-- In the 6 months to 31 March MFIL made a loss of MMK449
million (US$0.3 million) as a result of its negative net interest
margin caused by its high level of liquidity.
-- The microfinance industry has been impacted by Covid-19 as grassroot level clients have been disproportionately affected by the lockdown. This will lead to an increase in non-performing loans.
-- On 1 April 2020 MIL announced that it has accepted an offer
to sell its shareholding in MFIL subject to the purchaser's AGM
approving the purchase, lender's consent, and Myanmar regulatory
approval.
-- The minimum consideration for this transaction will be
calculated based on a pre-agreed formula of 2 times the audited
book value of MFIL at closing once these conditions have been
satisfied. Depending on the speed of recovery from Covid-19 MFIL's
book value at closing may have reduced.
-- Subsequent to that announcement, the purchaser's AGM on
23(rd) April 2020 has approved the transaction and the lenders have
given their consent. However, because of COVID-19 which, inter
alia, has stopped all commercial air travel between Myanmar and
Thailand, little progress has been made in obtaining regulatory
approval.
-- Assuming a level of normalcy returns over the next few months
we expect completion to take place within the next 2 to 4
months.
Valuation
As at 30 September 2019 the Directors had assessed the value of
the Group's investment in MFIL to be US$4.4 million using the price
to book value methodology.
Using the same methodology as at 31 March 2020 the Directors
have assessed the value of this investment to still be US$4.4
million.
This value of MFIL represents a profit of US $1.7 million over
the cost of the investment . This equates to an IRR since the
initial investment in September 2014 of 11.9 per cent.
Medicare International Health & Beauty ("Medicare")
Background
Medicare is the first full-service chain of modern pharmacy,
health, and beauty franchise stores in Myanmar.
MIL established the business in 2017 together with Medicare
Vietnam, Vietnam's leading pharmacy, health, beauty and personal
care retail group and Randy Guttery, an industry veteran with
significant experience leading Asian-based retail concepts. The
business is now the largest such chain in the country and is
reputed to be the largest employer of trained pharmacists in the
country.
As at 30 September 2019 Medicare had 22 modern franchised stores
on the streets and in the shopping centres of Yangon with a further
one under construction. Medicare provides the growing customer base
at its franchised stores with a very broad range (4,500 SKUs) of
international quality products at affordable prices.
As at 30 September 2019, MIL had invested US$2,145,000 for a
shareholding of 48.8 per cent.
Disposal
Given the Company's strategy of looking to realise its
investments, coupled with Medicare's continued operating losses
that need funding as well as the capex needed to get Medicare to
achieve critical mass, the Directors concluded that it was
preferable to exit from this investment sooner rather than
later.
As a result, the Company agreed with the owners of Medicare
Vietnam, its main joint venture partner, to sell this investment
for US$1 million in November 2019. This represented a loss of
US$1.1 million
on the cost of the investment which largely reflects MIL's share
of the operating losses to date. The Company had booked US$1.5
million as its s hare of results of this joint venture (equity
method). Therefore, the sales price of US$1 million represents a
gain on the disposal of this investment of US$0.4 million.
As at 30 September 2019 this investment had been valued by the
Directors at US$1 million.
Financial Performance
Unaudited Financial Statements
The unaudited financial statements for the six months to 31
March 2020 are attached at the end of this announcement. They have
been prepared in compliance with IFRS and have been reviewed by the
Company's auditors, BDO LLP, in accordance with The International
Standard on Review Engagements 2410.
Profit and Loss
For the six months to 31 March 2020, MIL's unaudited
consolidated profit after tax was US$0.86 million, compared with a
loss of US$1.05 million in the same period last year.
This is principally represented by:
-- the overheads associated with running the Company's business (US$713,000);
-- one-off costs for closing the office in Yangon (US$115,000);
-- the Company's share of MFIL's losses (US$123,000);
-- net profit on Medicare's disposal (US$186,000);
-- transaction costs (US$30,000);
-- the non-cash impact of the share-based payments arising from
the Company's Employee Share Option Plan ("ESOP") (US$11,000);
and
-- the gain on re-evaluation of the investment in AP Towers (US$ 1,667,000).
Within this the cost of MIL's cash-based overheads (i.e.
excluding one-off costs, the joint venture results, transaction
costs, share based payments and re-evaluation gains) was US$702,000
compared to US$733,000 for the six months to 31 March 2019, a
reduction of US$31,000 or 4.2 per cent. On a per share basis this
has dropped from 1.94c to 1.84c, a reduction of 5.2 per cent.
Net asset value
The Directors have determined that MIL's Net Asset Value ("NAV")
as at 31 March 2020 was US$33.2 million, or US$0.87 per share. This
is comprised of:
-- the investment in AP Towers, the telecommunication tower
business, of US$25.7 million, excluding the non-controlling
interests, determined using a comparable EBITDA multiple
methodology;
-- the investment in MFIL, the microfinance business, of US$4.4
million, determined using a comparable price to book value
methodology;
-- cash and other net assets/liabilities of US$3.1 million.
In accordance with the Company's stated policy, the Company's
investments have been determined by reference to the prevailing
International Private Equity and Venture Capital Guidelines.
Summary of NAV
The NAV valuation of US$33.2 million is a net increase of
US$806,000 (2.5 per cent) from US$32.3 million over the six-month
period to 31 March 2020. This is mainly attributable to:
-- the fact that the AP Towers investment, under the revised
valuation is US$1,667,000 higher than the previously held Apollo
Towers investment (as at 30 September 2019); and
-- overheads and transaction costs of US$861,000.
In the attached financial statements, the NAV attributable to
shareholders differs from the above stated value of US$33.2 million
due to the following adjustments:
US$ millions
NAV per the financial statements 31.3
MFIL (1) 1.9
NAV per the Directors' valuation 33.2
=============
Note 1: In accordance with IFRS 11 Joint Arrangements, the
investment in MFIL is accounted for as an investment in a joint
venture using the equity method. Whereas in accordance with the
Group's Valuation Policy the Directors' valuation for MFIL is
determined by reference to the International Private Equity and
Venture Capital Guidelines.
Working Capital
As of the date of this announcement the Group has adequate
financial resources to cover its working capital needs for the next
12 months.
Commenting on the Interim Results, Nick Paris, Managing Director
of Myanmar Investments International Limited, said "Your Company
continued to focus on implementing the change of investment
objective that was approved at the AGM in October 2019. As a
result, no new investments have been or will be made and steps are
being actively taken to sell the existing investments when
opportunities arise at acceptable prices. This process commenced
with the sale of Medicare to our Joint Venture partner and
continued with the agreement to sell MFIL. Our operating costs are
kept under constant review to seek to minimise our cash burn to
return surplus capital to our shareholders."
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulation (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
For further information please contact:
Nick Paris Michael Rudolf
Managing Director Chief Financial Officer
Myanmar Investments International Myanmar Investments International
Ltd Ltd
+95 (0) 1 387 947 +95 (0) 1 387 947
nickparis@myanmarinvestments.com michaelrudolf@myanmarinvestments.com
Nominated Adviser Broker
Philip Secrett / Jamie Barklem William Marle / Giles Rolls
/ Seamus Fricker finnCap Ltd
Grant Thornton UK LLP +44 (0) 20 7220 0500
+44 (0) 20 7383 5100
For more information about MIL, please visit
www.myanmarinvestments.com
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTH PERIODED 31 MARCH 2020
Present Prior Prior
Interims Interims Full Year
1 October 1 October 1 April
2019 to 2018 to 2018 to
31 March 31 March 31 March
Note 2020 2019 2019
Unaudited Unaudited Audited
US$ US$ US$
Revenue - - -
Other item of income
Finance income 4 216 197 514
Gain on disposal of a joint
venture 10 361,248 - -
Fair value gain on investment
at fair value through profit
or loss 11 2,500,000 - -
--------- ----------- -----------
2,861,464 197 514
Items of expense
Employee benefits expense 5 (415,331) (378,763) (916,343)
Depreciation expense (10,240) (10,978) (22,001)
Other operating expenses (442,240) (502,620) (1,006,933)
Finance costs 6 (4,719) (5,000) (12,715)
Share of results of joint ventures
, net of tax 10 (298,340) (173,105) (491,290)
Profit/(Loss) before income
tax 7 1,690,594 (1,070,269) (2,448,768)
Income tax (expense)/credit 8 (3,398) 440 (436)
Profit/(Loss) for the financial
period /year 1,687,196 (1,069,829) (2,449,204)
========= =========== ===========
Other comprehensive income:
Items that may be reclassified
subsequently to profit or loss:
Exchange gain/(loss) arising
on translation of foreign operations 10 265,615 61,751 (263,584)
Other comprehensive income
for the financial period /year
, net of tax 265,615 61,751 (263,584)
--------- ----------- -----------
Total comprehensive income
for the financial period /year 1,952,811 (1,008,078) (2,712,788)
========= =========== ===========
Profit/(Loss) attributable
to:
Owners of the parent 857,670 (1,054,225) (2,420,931)
Non-controlling interests 829,526 (15,604) (28,273)
--------- ----------- -----------
1,687,196 (1,069,829) (2,449,204)
========= =========== ===========
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTH PERIODED 31 MARCH 2020
Present Prior Prior
Interims Interims Full Year
1 October 1 October 1 April
2019 to 2018 to 2018 to
31 March 31 March 31 March
Note 2020 2019 2019
Unaudited Unaudited Audited
US$ US$ US$
Total comprehensive income
attributable to:
Owners of the parent 1,123,285 (992,474) (2,684,515)
Non-controlling interests 829,526 (15,604) (28,273)
1,952,811 (1,008,078) (2,712,788)
========= =========== ===========
Earnings/(Loss) per share (cents)
* Basic and diluted 9 2.25 (2.79) (6.42)
========= =========== ===========
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH
2020
Present Prior
Interims Full Year
31 March 31 March
Note 2020 2019
Unaudited Audited
US$ US$
ASSETS
Non-current assets
Investments in joint ventures 10 2,524,443 3,717,909
Equity instrument at fair value through
profit or loss 11 38,500,000 36,000,000
Plant and equipment - 38,103
------------ ------------
Total non-current assets 41,024,443 39,756,012
------------ ------------
Current assets
Other receivables 527,210 178,775
Cash and cash equivalents 2,767,223 3,720,521
------------ ------------
Total current assets 3,294,433 3,899,296
------------ ------------
Total assets 44,318,876 43,655,308
============ ============
EQUITY AND LIABILITIES
Equity
Share capital 13 40,569,059 40,569,059
Share option reserve 14 1,358,913 1,337,005
Accumulated losses (10,414,924) (10,039,640)
Foreign exchange reserve (233,776) (475,874)
Equity attributable to owners of the
parent 31,279,272 31,390,550
Non-controlling interests 12,702,495 11,875,458
------------ ------------
Total equity 43,981,767 43,266,008
------------ ------------
LIABILITIES
Current liabilities
Other payables 319,435 372,410
Income tax payable 17,674 16,890
------------ ------------
Total current liabilities 337,109 389,300
Total equity and liabilities 44,318,876 43,655,308
============ ============
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTH PERIODED 31 MARCH 2020
Equity
attributable
Share Foreign to owners Non-
Share option exchange Accumulated of controlling
Note capital reserve reserve losses the parent interests Total
Unaudited US$ US$ US$ US$ US$ US$ US$
At 1 October 2019 40,569,059 1,347,959 (499,391) (11,272,594) 30,145,033 11,872,969 42,018,002
Profit for the
financial period - - - 857,670 857,670 829,526 1,687,196
Other comprehensive
income for the
financial period
Exchange gain arising
on translation
of foreign operations 10 - - 265,615 - 265,615 - 265,615
Total other
comprehensive income
for the financial
period - - 265,615 - 265,615 - 265,615
---------- --------- --------- ------------ ------------- ------------
Total comprehensive
income for the
financial period - - 265,615 857,670 1,123,285 829,526 1,952,811
Contributions by and
distributions
to owners
Share options expense 14 - 10,954 - - 10,954 - 10,954
---------- --------- --------- ------------ ------------- ------------ ----------
Total contributions by
and distributions
to owners - 10,954 - - 10,954 - 10,954
At 31 March 2020 40,569,059 1,358,913 (233,776) (10,414,924) 31,279,272 12,702,495 43,981,767
========== ========= ========= ============ ============= ============ ==========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEARED 31 MARCH 2019
Equity
attributable
Share Foreign to owners Non-
Share option exchange Fair value Accumulated of controlling
Note capital reserve reserve reserve losses the parent interests Total
Audited US$ US$ US$ US$ US$ US$ US$ US$
2019
---------- --------- --------- ----------- ------------ ------------ ----------- -----------
At 31 March
2018 40,161,942 1,220,549 (212,290) 3,069,652 (10,711,403) 33,528,450 11,903,731 45,432,181
Effect of
adopting IFRS
9 - - - (3,069,652) 3,069,652 - - -
---------- --------- --------- ----------- ------------ ------------ ----------- -----------
At 1 April
2018 40,161,942 1,220,549 (212,290) - (7,641,751) 33,528,450 11,903,731 45,432,181
Loss for the
financial
year - - - - (2,420,931) (2,420,931) (28,273) (2,449,204)
Other
comprehensive
income for
the financial
year
Exchange loss
arising on
translation
of foreign
operations 10 - - (263,584) - - (263,584) - (263,584)
---------- --------- --------- ----------- ------------ ------------ ----------- -----------
Total other
comprehensive
income
for the
financial
year - - (263,584) - - (263,584) - (263,584)
---------- --------- --------- ----------- ------------ ------------ ----------- -----------
Total
comprehensive
income for
the financial
year - - (263,584) - (2,420,931) (2,684,515) (28,273) (2,712,788)
Contributions
by and
distributions
to owners
Exercise of
warrants 13 491,916 - - - - 491,916 - 491,916
Share issue
expenses 13 (84,799) - - - - (84,799) - (84,799)
Share options
expense 14 - 139,498 - - - 139,498 - 139,498
Cancellation
of share
options 14 - (23,042) - - 23,042 - - -
---------- --------- --------- ----------- ------------ ------------ ----------- -----------
Total
contributions
by and
distributions
to owners 407,117 116,456 - - 23,042 546,615 - 546,615
At 31 March
2019 40,569,059 1,337,005 (475,874) - (10,039,640) 31,390,550 11,875,458 43,266,008
========== ========= ========= =========== ============ ============ =========== ===========
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTH PERIODED 31 MARCH 2020
Present Prior Prior
Interims Interims Full Year
1 October 1 October 1 April
2019 to 2018 to 2018 to
31 March 31 March 31 March
Note 2020 2019 2019
Unaudited Unaudited Audited
US$ US$ US$
Operating activities
Profit/(Loss) before income
tax 1,690,594 (1,070,269) (2,448,768)
Adjustments for:
Interest income 4 (216) (197) (514)
Finance costs 4,719 5,000 12,715
Depreciation of plant and
equipment 10,240 10,978 22,001
Share-based payment expense 10,954 43,720 139,498
Share of results of joint
ventures, net of tax 10 298,340 173,105 491,290
Fair value gain on investment
at fair value through profit
or loss 11 (2,500,000) - -
Gain on disposal of joint
venture 10 (361,248) - -
Plant and equipment written
off 17,385 - -
Operating cash flows before
working capital changes (829,232) (837,663) (1,783,778)
Changes in working capital:
Other receivables (276,481) 55,427 15,809
Other payables 114,745 163,975 (59,920)
Cash used in operations (990,968) (618,261) (1,827,889)
Interest received 216 197 514
Finance costs paid (4,719) (5,000) (12,715)
Income tax refunded 63 5,096 1,517
Net cash flows used in operating
activities (995,408) (617,968) (1,838,573)
----------- ----------- -----------
Investing activities
Proceeds from disposal of investments 1,000,000 - -
Investment in joint ventures 10 - - (500,000)
Advances to joint ventures 10 - (625,000) (625,000)
Purchase of plant and equipment - (2,200) (5,353)
----------- ----------- -----------
Net cash flows from/(used in)
investing activities 1,000,000 (627,200) (1,130,353)
Financing activities
Increase in short-term deposits
pledged (216) (11,267) (11,267)
Net proceeds from issuance
of shares 13 - 311,586 407,117
----------- ----------- -----------
Net cash flows (used in)/from
financing activities (216) 300,319 395,850
----------- ----------- -----------
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTH PERIODED 31 MARCH 2020
Present Prior Prior
Interims Interims Full Year
1 October 1 October 1 April
2019 to 2018 to 2018 to
31 March 31 March 31 March
Note 2020 2019 2019
Unaudited Unaudited Audited
US$ US$ US$
Net change in cash and cash
equivalents 4,376 (944,849) (2,573,076)
Cash and cash equivalents at
beginning of financial period/year 2,715,220 4,617,959 6,246,186
Cash and cash equivalents at
end of financial period/year 2,719,596 3,673,110 3,673,110
========= ========= ===========
Cash and cash equivalents comprise the following at the end of
the financial period/year:
Present Prior
Interims Full Year
31 March 31 March
2020 2019
Unaudited Audited
US$ US$
Bank balances 2,767,223 3,720,521
Less: short-term deposits pledged (47,627) (47,411)
2,719,596 3,673,110
========= ==========
NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION
FOR THE SIX MONTH PERIODED 31 MARCH 2020
1. General corporate information
Myanmar Investments International Limited ("the Company") is a
limited liability company incorporated and domiciled in the British
Virgin Islands ("BVI"). The Company's registered office is at Jayla
Place, Wickhams Cay I, Road Town, Tortola, British Virgin
Islands.
The Company's ordinary shares and warrants are traded on the AIM
market of the London Stock Exchange under the ticker symbols MIL
and MILW respectively.
The Company was established for the purpose of identifying and
investing in, and disposing of, businesses operating in or with
business exposure to Myanmar. The Company's focus was to target
businesses operating in sectors that the Directors believed had
strong growth potential and thereby could be expected to provide
attractive yields, capital gains or both. At the Annual General
Meeting held on 24 October 2019, the Company's shareholders
approved a resolution to begin an orderly disposal of the Company's
investments and in due course look to return surplus capital to
shareholders.
Details of the Company's investments in its joint ventures are
disclosed in Note 10; its equity instrument at fair value through
profit or loss is disclosed in Note 11 and the principal activities
of the subsidiaries are disclosed in Note 12.
The consolidated financial information of the Company and its
subsidiaries (the "Group") for the period from 1 October 2019 to 31
March 2020 were approved by the Board of Directors on 29 June 2020.
This consolidated financial information is unaudited.
Whilst the financial information included in this announcement
has been prepared in accordance with the International Financial
Reporting Standards ("IFRS"), this announcement does not in itself
contain sufficient information to comply with IFRS. The full
audited financial statements of the Company for the year to 31
March 2019 can be found on the Company's website at
www.myanmarinvestments.com.
1.1 Going concern
The Coronavirus (COVID-19) outbreak and the measures taken to
contain the spread of the pandemic have created a high level of
uncertainty to global economic prospects.
Although the situation continues to evolve with significant
level of uncertainty, the Group does not foresee a huge impact on
its own operation. Regarding its investees it can be said that the
microfinance industry has been impacted by COVID-19. Depending on
the speed of recovery from COVID-19, MFIL's book value at closing
of the on-going transaction to sell its shares in MFIL may have
reduced. The purchaser's AGM on 23rd April 2020 has approved the
transaction and the lenders have given their consent. However,
because of COVID-19 which, inter alia, has stopped all commercial
air travel between Myanmar and Thailand, little progress has been
made in obtaining regulatory approval. Assuming a level of normalcy
returns over the next few months the completion of the transaction
is expected to take place within the next 2 to 4 months. Regarding
the Group's other investment in AP Towers, it is to be noted that
contrary to other industries, the telecoms sector has not suffered
greatly due to the outbreak of COVID-19.
After due and careful enquiries, the Directors have a reasonable
expectation that the Company has adequate financial resources to
continue in operational existence for the foreseeable future. This
expectation is based on a review of the Company's existing
financial resources, its present and expected future commitments in
terms of its overheads and running costs; and its commitments to
its existing investments.
1. General corporate information (Continued)
1.1 Going concern (Continued)
Accordingly, the Directors have adopted the going concern basis
in preparing the consolidated financial information.
2. Summary of significant accounting policies
2.1 Basis of preparation of the financial information
The interim consolidated financial information have been
prepared for the financial period from 1 October 2019 to 31 March
2020 in accordance with International Financial Reporting Standards
("IFRS") and is presented in United States Dollar ("US$").
The interim consolidated financial information does not include
the full disclosures normally included in a complete set of
financial statements and should be read in conjunction with the
audited consolidated financial statements for the financial year
ended 31 March 2019.
2.2 Summary of significant accounting policies
The interim consolidated financial information have been
prepared on the historical basis except as disclosed in the
accounting policies in the audited consolidated financial
statements for the financial year ended 31 March 2019.
The accounting policies and methods of computation used in the
interim financial information are consistent with those applied in
the audited financial statements for the financial year ended 31
March 2019 and are set out in Note 3 to the audited financial
statements for the financial year ended 31 March 2019. Due to the
adoption of the new standards and interpretations effective 1 April
2019, the accounting policy for IFRS 16 Leases is disclosed
below:
IFRS 16 Leases
IFRS 16 supersedes IAS 17 Leases, IFRIC 4 Determining whether an
Arrangement contains a Lease, SIC-15 Operating Leases-Incentives
and SIC-27 Evaluating the Substance of Transactions Involving the
Legal Form of a Lease. The standard sets out the principles for the
recognition, measurement, presentation and disclosure of leases and
requires lessees to recognise most leases on the balance sheet.
The Group adopted IFRS 16 using the modified retrospective
method of adoption, with the date of initial application of 1 April
2019. The Group elected to use the transition practical expedient
to not assess whether a contract is, or contains a lease at 1 April
2019. Instead, the Group applied the standard to contracts that
were previously identified as leases applying
IAS 17 and IFRIC 4 at the date of initial application. The Group
also elected to use the recognition exemptions for lease contracts
that, at the commencement date, have a lease term of 12 months or
less and do not contain a purchase option (short-term leases) and
lease contracts for which the underlying asset is of low value
(low-value assets).
There is no material impact to the consolidated statement of
comprehensive income, consolidated statement of financial position,
consolidated statement of cash flows or the basic and diluted
earnings per share on adoption of IFRS 16 by the Group.
3. Significant accounting judgements and estimates
The Company's significant accounting judgements and estimates
used in the preparation of these financial information are
available in the full audited financial statements for the year to
31 March 2019, a copy of which can be found on the Company's
website at www.myanmarinvestments.com.
4. Finance income
1 October 1 October 1 April
2019 to 2018 to 2018 to
31 March 31 March 31 March
2020 2019 2019
Unaudited Unaudited Audited
US$ US$ US$
Interest income 216 197 514
========= ========= =========
5. Employee benefits expense
1 October 1 October 1 April
2019 to 2018 to 2018 to
31 March 31 March 31 March
2020 2019 2019
Unaudited Unaudited Audited
US$ US$ US$
Salaries, wages and other staff benefits 404,377 310,922 739,024
Bonuses - 24,121 37,821
Share options expense 10,954 43,720 139,498
--------- --------- ---------
415,331 378,763 916,343
========= ========= =========
The employee benefits expense includes the remuneration of
Directors as disclosed in Note 15.
6. Finance costs
Finance costs represent bank charges for the financial
period/year.
7. Profit/(Loss) before income tax
In addition to the charges and credits disclosed elsewhere in
the notes to the consolidated financial information, the above
includes the following charges:
1 October 1 October 1 April
2019 to 2018 to 2018 to
31 March 31 March 31 March
2020 2019 2019
Unaudited Unaudited Audited
US$ US$ US$
Auditor's remuneration 23,275 34,026 61,278
Consultants' fees 58,428 98,423 268,564
Short term lease expenses 44,487 - -
Operating lease expenses - 40,796 91,381
Professional fees 15,912 4,623 16,177
Travel and accommodation 32,538 21,106 59,769
Transaction costs 30,019 105,150 154,356
========= ========= =========
8. Income tax
1 October 1 October 1 April
2019 to 2018 to 2018 to
31 March 31 March 31 March
2020 2019 2019
Unaudited Unaudited Audited
US$ US$ US$
Current income tax
* current financial period /year 3,461 894 1,574
* over provision in prior financial period/ year (63) (1,334) (1,138)
--------- --------- ---------
3,398 (440) 436
========= ========= =========
9. Earnings/(Loss) per share
Basic earnings or loss per share is calculated by dividing the
profit or loss for the financial period/year attributable to owners
of the parent by the weighted average number of ordinary shares
outstanding during the financial period/year.
The following reflects the profit or loss and share data used in
the basic and diluted earnings or loss per share computation:
1 October 1 October 1 April
2019 to 2018 to 2018 to
31 March 31 March 31 March
2020 2019 2019
Unaudited Unaudited Audited
Profit/(Loss) for the financial period/year
attributable to owners of the Company
(US$) 857,670 (1,054,225) (2,420,931)
Weighted average number of ordinary
shares during the financial period/year
applicable to basic profit or loss
per share 38,097,037 37,685,988 37,685,988
Earnings/(Loss) per share
Basic and diluted (cents) 2.25 (2.79) (6.42)
========== =========== ===========
Diluted earnings or loss per share is the same as the basic
earnings or loss per share because the potential ordinary shares to
be converted are anti-dilutive as the effect of the shares
conversion would be to decrease the profit or loss per share.
10. Investments in joint ventures
31 March 31 March
2020 2019
Unaudited Audited
US$ US$
Investments in joint ventures
Unquoted equity investments, at cost 2,670,000 4,190,000
Share of post-acquisition results of joint
venture , net of tax 88,219 (621,217)
Share of post-acquisition foreign currency
translation reserve (233,776) (475,874)
2,524,443 3,092,909
Advances to joint ventures - 625,000
--------- ---------
2,524,443 3,717,909
--------- ---------
Movement during the period/year
Balance at beginning of financial period/year 3,195,920 3,347,783
Investments during the financial period/year - 500,000
Share of results of joint ventures, net of
tax (298,340) (491,290)
Share of foreign currency translation reserve 265,615 (263,584)
Advances during the financial period/year - 625,000
Disposal of joint venture during the financial
period/year (638,752) -
Balance at end of financial period/year 2,524,443 3,717,909
========= =========
10. Investments in joint ventures (Continued)
Medicare International Health and Beauty Pte. Ltd. and its
subsidiary
On 28 November 2019, the Company has disposed its entire
investment in Medicare for US$1,000,000 and recorded a gain on
disposal of US$361,248.
The details of the joint ventures are as follows:
Effective
Name of joint ventures equity interest
(Country of incorporation/ held by the
place of business) Principal activities Company
31 31
March March
2020 2019
% %
Medicare International Health and Provider of beauty,
Beauty Pte. Ltd. health, and pharmaceutical
(Singapore) ("Medicare") products - 48.6
Myanmar Finance International Limited(1) Provider of microfinance
(Myanmar) ("MFIL") loans 37.5 37.5
(1) Reviewed by JF Group Audit Firm, Yangon, Myanmar.
Summary
1 October 1 October 1 April
2019 to 2018 to 2018 to
31 March 31 March 31 March
2020 2019 2019
Unaudited Unaudited Audited
US$ US$ US$
Share of results of joint ventures,
net of tax
MFIL (123,180) 26,284 111,764
Medicare (175,160) (199,389) (603,054)
(298,340) (173,105) (491,290)
========= ========= =========
The share of result for the financial period of Medicare was up
until date of disposal on 28 November 2019.
11. Equity instrument at fair value through profit or loss
31 March 31 March
2020 2019
Unaudited Audited
US$ US$
Investment in AP Towers (2019: Apollo Towers),
at fair value 38,500,000 36,000,000
========== ==========
11. Equity instrument at fair value through profit or loss (Continued)
Investment in AP Towers
The Group's investment in AP Towers Holdings Pte. Ltd ("AP
Towers") (2019: Apollo Towers Holdings Limited ("Apollo Towers")),
is made through the Group's 66.67 per cent subsidiary, MIL 4
Limited ("MIL 4").
Movement in the investment is as follows:
31 March 31 March
2020 2019
Unaudited Audited
US$ US$
Balance at beginning of financial period/year 36,000,000 -
Fair value gain during the financial period/year 2,500,000 -
Reclassification from available-for-sale
financial asset - 36,000,000
Balance at end of financial period/year 38,500,000 36,000,000
========== ==========
As at 31 March 2020, the equity instrument at fair value through
profit or loss represents an effective 4.1% equity interest in the
unquoted share capital of AP Towers.
The Company has designated its equity investment previously
classified as available-for-sale financial assets in the financial
year ended 31 March 2018 to be measured as fair value through
profit or loss as at 1 April 2018. The Company intends to hold this
investment for long-term appreciation in value.
As at 31 March 2020, the fair value attributed to the
non-controlling interests in MIL 4 was US$12,833,333 (2019:
US$12,000,000).
Management engaged their internal valuation specialists to
perform a valuation on the investment. The valuation of the
unquoted investment is categorised into Level 3 of the fair value
hierarchy. The information on the significant unobservable inputs
and the inter-relationship between key unobservable inputs and fair
value are as follows:
Inter-relationship
between key
Valuation unobservable
Financial technique Significant inputs
assets used unobservable inputs and fair value
Unquoted Comparable Increase EBITDA
equity Company * Earnings Before Interest, Tax, Depreciation and and EV/EBITDA
investments Analysis Amortization ("EBITDA") of US$71.9million multiple
will increase
the
fair value of
* Enterprise Value ("EV") per EBITDA multiple of 13.4x the
financial asset.
11. Equity instrument at fair value through profit or loss (Continued)
Investment in Apollo Towers (31 March 2019)
Inter-relationship
between key
Valuation unobservable
Financial technique Significant inputs
assets used unobservable inputs and fair value
Unquoted Comparable Increase EBITDA
equity Company * Earnings Before Interest, Tax, Depreciation and and EV/EBITDA
investments Analysis Amortization ("EBITDA") of US$32.2million multiple
will increase
the
fair value of
* Enterprise Value ("EV") per EBITDA multiple of 15.4x the
financial asset.
As announced on 23 January 2020, MIL 4 exchanged its investment
in Apollo Towers Holdings Limited ("Apollo Towers") for shares in
AP Tower Holdings Pte. Ltd. ("AP Towers") which owns Pan Asia
Majestic Eagle Limited ("Pan Asia Towers"), another Myanmar
independent tower company. Under the share swap, MIL 4 has
exchanged its existing 13.7 per cent shareholding in Apollo Towers
for a shareholding of approximately 6.2 per cent in AP Towers, of
which approximately 4.1 per cent indirectly held by MIL. The Share
Swap effectively brings Apollo Towers and Pan Asia Towers under
common ownership of AP Towers.
12. Investment in subsidiaries
Details of the subsidiaries are as follows:
Proportion
Country of Proportion of ownership
incorporation/ of ownership interest
principal interest held by
place of held by non-control
Name of subsidiaries business Principal activities the Group interests
% %
Investment holding
Myanmar Investments Limited Singapore company 100 -
Provision of
management services
MIL Management Pte. Ltd. Singapore to the Group 100 -
British
Virgin Investment holding
MIL 4 Limited Islands company 66.67 33.33
Held by MIL Management Pte.
Ltd.
Provision of
management services
MIL Management Co., Ltd Myanmar to the Group 100 -
13. Share capital
31 March 31 March
2020 2019
Unaudited Audited
US$ US$
Issued and fully-paid share capital:
Ordinary shares at the beginning of the financial
period/year 40,569,059 40,161,942
Exercise of warrants during the financial
period/year - 491,916
Share issuance expenses - (84,799)
---------- ----------
40,569,059 40,569,059
========== ==========
31 March 2020
Ordinary
shares Warrants
Equity Instruments in issue
At the beginning and end of the financial
period 38,097,037 14,128,387
============ ===========
The holders of ordinary shares are entitled to receive dividends
as declared from time to time and are entitled to one vote per
share without restriction at meetings of the Company.
All the shares have been admitted to trading on AIM under the
ticker MIL.
Warrants
As at 31 March 2020, there were 14,128,387 (31 March 2019:
14,128,387) Warrants in issue.
During the six month period ended 31 March 2020, no Warrants
were exercised.
All Warrants have been admitted to trading on AIM under the
ticker MILW.
14. Share option reserve
Details of the Share Option Plan (the "Plan") are set out in the
financial statements for the year to 31 March 2019, which can be
found on the Company's website at www.myanmarinvestments.com.
During the six month period ended 31 March 2020, no further
options were created, granted or forfeited.
As at 31 March 2020, 2,590,527 (31 March 2019: 2,590,527) share
options had been granted under the Plan.
15. Significant related party disclosures
Compensation of key management personnel
The remuneration of Directors for the financial period from 1
October 2019 to 31 March 2020 was as follows:
Short term
employee Share
Directors' benefits option
fees (1) plan Total
US$ US$ US$ US$
Financial period from
1 October 2019 to 31 March
2020
Executive directors
Maung Aung Htun - 98,003 2,558 100,561
Craig Robert Martin - 1,667 601 2,268
Anthony Michael Dean - 88,450 2,558 91,008
Nicholas John Paris - 33,333 - 33,333
Non-executive directors
Christopher William Knight 8,750 - 601 9,351
Henrik Onne Bodenstab 7,500 - 568 8,068
Nicholas John Paris 1,250 - - 1,250
Rudolf Gildemeister 6,667 - - 6,667
---------- ---------- ------- -------
24,167 221,453 6,886 252,506
========== ========== ======= =======
(1) The short term employee benefits also includes rental
expenses paid for the Directors' accommodation.
16. Dividends
The Directors of the Company did not recommend any dividend in
respect of the financial period from 1 October 2019 to 31 March
2020 (1 October 2018 to 31 March 2019: Nil).
17. Financial risk management objectives and policies
The Company's financial risk management objectives and policies
are set out in the audited financial statements for the year to 31
March 2019.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR UNAARRVUNUAR
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