TIDMMIL
RNS Number : 6366R
Myanmar Investments Intl Ltd
25 September 2017
25 September 2017
This announcement contains inside information
Myanmar Investments International Limited
Audited financial results for the year to 31 March 2017
Myanmar Investments International Limited [AIM: MIL] ("MIL" or
the "Company"), the Myanmar focused investment company, today
announces its audited financial results for the year to 31 March
2017.
Highlights
Myanmar Update
-- The new Government, led by U Htin Kyaw of the National League
for Democracy ("NLD"), assumed power on 1 April 2016 with Daw Aung
San Suu Kyi acting as State Counsellor.
-- The process of national reconciliation has begun with the establishment of the 21st Century Panglong Conference.
-- In October 2016, the United States lifted all remaining
economic sanctions on the country, and readmitted the country into
its preferred tariff system.
-- Myanmar was removed from the FATF "black" and "grey" lists
noting significant progress in addressing strategic anti-money
laundering deficiencies.
-- MyTel, a joint venture including Viettel Global of Vietnam,
received a licence to operate the fourth mobile network in Myanmar
in January 2017.
-- International brand names such as Uber and GrabTaxi commenced operations in Myanmar.
-- The Companies Act is advancing through parliament and is
expected to be set into law by the end of 2017.
Myanmar Investments International Limited Update
-- MIL has raised over US$40 million since Admission, including:
o US$4.2 million raised in September 2016; and
o US$7.3 million raised in June 2017.
-- Apollo Towers, one of Myanmar's leading telecom tower companies, continues to grow strongly:
o 13.4% market share of the Myanmar tower market;
o High quality EBITDA (from Grade A international telecom
companies) has more than doubled over the past year; and
o US$250 million loan secured from the Overseas Private
Investment Corporation ("OPIC") of the United States.
-- Myanmar Finance International Limited ("MFIL"), our leading
microfinance joint venture, continues to scale up:
o Strong growth in its borrower base and loan book at 43,000 and
US$6 million, representing Compound Annual Growth Rates ("CAGR") of
77% and 145% since investment, respectively;
o Secured US$3 million in Kyat-denominated debt facilities with
more on the way; and
o Solid increase in profitability, up nearly 380% over the prior
year.
-- MIL formed a three-way joint venture, Medicare, a pharmacy,
health and beauty franchise business, alongside industry veterans
and utilising a proven regional business model:
o Designed to capitalise on both an expected rise in consumer
spending power and a notable absence of modern retail outlets with
similar offerings; and
o Partners include Medicare Vietnam, the largest pharmacy,
health, beauty and personal care retail group in Vietnam and Randy
Guttery, an industry veteran with decades of experience in retail
businesses in nine countries around Asia.
-- MIL signed a memorandum of understanding with a
well-established local tour operator and travel agent to set up a
joint venture company that will develop the business further as
well as invest in tourism related assets.
-- The Company is continuing to progress a pipeline of potential
business opportunities targeting sectors such as education,
healthcare, food retailing and financial services.
-- An additional stock exchange listing in Asia is being considered.
Aung Htun, MIL's Managing Director commented, "It has been a
busy and rewarding year for Myanmar Investments. We have
established a new pharmacy, health and beauty retail franchise
business; our existing microfinance and telecom tower businesses
have grown well; our pipeline is exciting with a few imminent
prospects; and we have raised significant funds for our future
expansion. As anticipated when building businesses in emerging
economies there will be challenges, but I strongly believe that the
rewards will be great and outweigh the risks. MIL is well placed to
continue to succeed in our vision of building a diversified, but
focused, stable of businesses that will benefit from Myanmar's
emergence."
For further information please contact:
Aung Htun Michael Dean
Managing Director Finance Director
Myanmar Investments Myanmar Investments
International Ltd International Ltd
+95 (0) 1 391 804 +95 (0) 1 391 804
+95 (0) 94 0160 0501 +95 (0) 94 2006 4957
aunghtun@myanmarinvestments.com mikedean@myanmarinvestments.com
Nominated Adviser Broker
Philip Secrett / Jamie Andrew Pinder / David
Barklem/ Herring
Carolyn Sansom Alistair Roberts (Hong
Grant Thornton UK LLP Kong)
+44 (0) 20 7383 5100 Investec Bank plc
+44 (0) 20 7597 4000
Public Relations
Julian Bosdet / Dr.
Jenny Lee / Alejandra
Campuzano
Abchurch Communications
+44 (0) 20 7398 7714
Copies of the Company's annual report and accounts will be sent
to shareholders and warrantholders shortly and will also be
available to download from the Company's website
www.myanmarinvestments.com.
CHAIRMAN'S STATEMENT
The year to 31 March 2017 has seen the Company grow and perform
strongly. Post year-end the Company entered its third business and
has raised a total of US$11.5 million from two rounds of fund
raising in September 2016 and June 2017.
MIL's investment case is underpinned by Myanmar's continued and
impressive development as a country with great potential. It is
undergoing a complex transition from decades of military rule to
that of a democratic country. The pace of reform under U Thein
Sein's administration inevitably slowed towards the end and has
remained as such whilst the new government under the leadership of
Daw Aung San Suu Kyi finds its feet.
Of specific note for Myanmar Investments, the past year has
witnessed:
-- strong growth at Apollo Towers, one of Myanmar's leading
telecommunication tower companies, in which the Company has a 9.3%
interest;
-- Apollo Towers securing a landmark US$250 million loan from
the United States' Government's Overseas Private Investment
Corporation ("OPIC");
-- profits up nearly 380% and greater traction in raising debt
finance for Myanmar Finance International Limited ("MFIL"), our
37.5% joint venture micro-finance company;
-- an equity fund raising in September 2016 and another post
year-end in June 2017, which together raised a total of US$11.5
million;
-- further growth in developing a pipeline of exciting new business opportunities;
-- enhancing our network of contacts in Myanmar as well as in neighbouring countries; and
-- continued development of our Myanmar-based human resources capacity.
Shortly after the year end we established a retail pharmacy,
healthcare and beauty franchise business with Medicare, Vietnam's
leading pharmacy chain, in which we have a 45% shareholding.
Strategy
Our vision is to build a diversified but focused stable of
businesses that will benefit from Myanmar's emergence.
After four years on the ground in Myanmar, the Company's overall
strategy remains unchanged. However, drawing on the team's deep
experience here, we have refined our approach further to achieve
our goals. We therefore have a number of key criteria that we look
for in any business opportunity and these are more fully described
in the section "Investment Strategy Overview". These criteria can
rarely be satisfied immediately with the opportunities that are
available. It is therefore a case of us rolling up our sleeves and
setting to work to close the gaps in those situations that we think
are most of the way there, or can provide a compelling investment
upside.
So when we engage in a business it may already be up and running
or it may be a completely new venture. Either way, we will have
formed a partnership made up of a winning combination. We work with
local entrepreneurs looking for capital and expertise to grow their
businesses, as well as with proven foreign players looking to bring
international concepts and capability to Myanmar.
We continue to apply our efforts as an active management team,
eschewing the reactive approach of a passive fund manager operating
from outside the country. Our team lives and works in Myanmar,
immersed and actively engaged in-country - there is nothing passive
about how our business strategy is executed.
Since our admission to trading on AIM in 2013, our strategy has
been to raise capital in line with our ability to deploy it.
Therefore, in accordance with the strategy set out in the Company's
admission document, MIL will consider raising additional equity to
fund further businesses. Where appropriate we may also bring in
like-minded co-investors thereby generating fee income for the
Company.
As at the date of this announcement we own influential
shareholdings in three businesses and have a strong pipeline, which
has picked up after an initial slow down around the time of the
election in Myanmar. The details of the three businesses, referred
to above, are reported in detail in the Executive Directors'
Review.
Corporate and Social Responsibility
The Board is fully cognisant of the responsibility that it
carries in ensuring that all of our businesses operate in a manner
that fully reflects our corporate and social responsibility to all
our stakeholders. We therefore seek opportunities that positively
impact Myanmar during its unprecedented period of re-emergence. Our
strategy therefore includes an up-front evaluation of the economic,
social and environmental aspects of prospective businesses.
At the corporate level we support worthwhile causes, such as the
educational and healthcare development of the country or
humanitarian relief efforts through charitable donations - next
year's calendar will highlight this. At the business level we
strongly encourage all our partners to identify and adopt practices
which will help to develop the workforce, suppliers and customers
in their local communities.
Impact Investing
More fundamentally, our investments have all had a significant
positive impact on the lives of Myanmar citizens. To date we have
established businesses in microfinance, telecommunications and
healthcare, all of which are providing a positive and sustainable
benefit to Myanmar and its citizens.
MFIL
MFIL today has over 48,000 borrowers. That is 48,000 households
who have been economically empowered (without resorting to loan
sharks) to expand their businesses (small shops, trading
businesses, food stalls etc.) through MFIL's ethical lending
practices. MFIL's rural outreach is 37% of its business and
amplifies MFIL's impact by enabling rural communities to access
formal financial services. MFIL also strongly believes in women's
empowerment: 85% of its borrowers are women, while internally 62%
of its management are women. More broadly, since MIL's investment,
MFIL has created about 150 new jobs within the company, providing
employment for young people in the areas in which MFIL
operates.
Apollo Towers
Apollo Towers has built almost 15% of the country's telecoms
towers. With a penetration rate of close to 80% that suggests
Apollo is enabling access to mobile telephony and data for around
6.3 million people. Simple maths maybe, but the picture is clear:
ordinary Myanmar citizens can now readily communicate and access
information. This not only brings education and enrichment to their
lives but also supports the country's productivity and economic
development.
Medicare
Medicare's business practices make sure that all products
provided to our customers are genuine, safe and comply with
prevailing regulations. This means they have been shipped and
stored properly; that the correct medicine has been dispensed as
treatment for the relevant ailment; and that the medicine is still
within its "sell-by date". Medicare aims at providing affordable
health and beauty necessities to help customers stay healthy. Every
Medicare store adheres to Good Pharmacy Practice ("GPP") to
contribute to health improvement and to help customers with health
problems to make the best use of genuine, quality and affordable
medicines. These may seem like simple practices but they are not
widespread in Myanmar today.
Financial performance
The Directors have assessed the Group's net asset value as at 31
March 2017 to be US$29.2 million, representing a year on year
increase of 20.3% (see "Net Asset Value" in the Financial Review
section of the Executive Directors' Review below). This is
equivalent to US$0.96 per share, based on the number of shares in
issue at that time.
For the year to 31 March 2017 the Company's loss after tax was
US$2.8 million. Excluding non-recurrent costs and non-cash items
the loss was only US$2.0 million and principally represents the
overheads associated with running the Company's business. This
compares with US$1.9 million for the year to 31 March 2016, a
year-on-year increase of only 6.6%.
In this context, given the tremendous work that has been done
this past year in adding value to our tower and microfinance
businesses, in starting up our pharmacy business and in further
developing our pipeline, the Executive Directors are commended for
keeping the Company's running costs under control.
Subsequent to the year-end, the Company successfully closed a
further equity issue, raising US$7.3 million and added a number of
new shareholders to our register.
Outlook
The past year has been a very productive one for the management
and staff of the Company. The US$250 million loan from the US
Government's Overseas Private Investment Corporation ("OPIC") to
Apollo Towers was one of the landmark events in the country's
business landscape. In addition, we have seen solid growth in the
development of our microfinance joint venture's customer base, loan
book and, more significantly, its borrowings from leading financial
institutions. The establishment of the new Medicare joint venture
is also especially noteworthy given that it demonstrates the
commitment of our management team when it identifies an
opportunity, even if it has to be built from scratch.
The Company has built up its pipeline of new business
opportunities and we expect to close a number of these in the not
too distant future.
Despite the new government moving ahead cautiously with its
reform programmes, the country still benefits from strong economic
growth. We expect this growth to continue for some time because it
is rooted in the real and pressing need to reconstruct the economy
and backed by substantial natural resources. It can only be
amplified by any new initiatives that the government
introduces.
We are closely monitoring the tragic events in Rakhine state
which, to date, are localized and have had no impact on the
Company's operations.
The Board wants to thank you, our shareholders, for your
continued support and encouragement. Given our existing strong
foundations in core sectors of the economy, coupled with our
pipeline of new business opportunities, I have every confidence for
the future development of the Company in the year ahead.
William Knight
Chairman
22 September 2017
EXECUTIVE DIRECTORS' REVIEW
BUSINESS LINES
As at 31 March 2017 we had interests in two businesses in
different sectors that are important to the re-emerging Myanmar:
Telecommunications, through Apollo Towers Pte Ltd, Myanmar's second
largest independent telecommunications tower company by number of
towers, and Financial Services through Myanmar Finance
International Co. Ltd, one of the country's leading microfinance
companies.
After the year end, in May 2017, we entered into the equally
important Healthcare sector with the formation of a joint venture
in the pharmacy, health and beauty space.
Apollo Towers Pte Ltd ("Apollo Towers")
Before opening its telecoms sector to foreign investment in
2013, Myanmar had only one significant Mobile Network Operator
("MNO") and was ranked equally with North Korea for having Asia's
lowest mobile penetration rate at about 7%. After a highly
competitive and transparent bidding process, two winners emerged:
Norway's Telenor and Ooredoo from Qatar and this has led to the
mobile phone penetration rate surging to over 70%. The foundation
for this boom was the unprecedented rollout of infrastructure as
seen by the increase in telecommunication towers from fewer than
3,000 in 2013 to over 13,000 in 2017.
As one of Myanmar's leading tower companies, Apollo continues to
play a key role in the country's burgeoning telecommunications
sector by constructing, managing and leasing tower and power
infrastructure to the country's MNOs. Although all three MNO's now
cover the country's most populous areas, the nationwide telecoms
infrastructure rollout continues as the MNOs seek to expand
geographical coverage and increase the capacity of their networks
as they introduce 4G/LTE technology and respond to increasing data
consumption. The pending launch of the fourth MNO, "MyTel", a joint
venture between Vietnam's Viettel and a consortium of Myanmar
companies, will further increase demand for telecommunications
infrastructure.
MyTel's entry and the existing MNOs' network densification is
likely to lead to additional tower orders and also a significant
industrywide growth in the number of tenancies per tower, known as
"co-location", which brings higher-margin revenues where a tower
with capacity is already available. MyTel is expected to rely on
the existing tower infrastructure for at least 2,500 sites and may
place orders for an additional 3,000 sites as it rolls out its
network. Independent experts estimate that Myanmar will need 23,000
towers by 2021 and, as a country, will boast one of the region's
highest co-location rates. With only about 50% of the tower
infrastructure in place, Myanmar's telecoms sector holds ample
growth opportunities for the country's tower companies.
Since MIL's investment in July 2015, Apollo has almost doubled
its tower portfolio, which now stands at approximately 1,800
towers, and Apollo plans to build an additional 2,000 towers over
the coming years. Apollo reached a major milestone in June 2016
when it secured financing for its business through a US$250 million
debt facility made available by the United States' Overseas Private
Investment Corporation ("OPIC"), which was the organisation's first
investment in the country. In addition, Apollo continues to explore
additional financing options to strengthen its balance sheet to
accommodate further growth.
The expansion of Apollo's tower portfolio and its growing
co-location rate has endowed the company with a high-quality
EBITDA-stream which, with most of its customers being Grade A
international telecom companies, has more than doubled over the
past year on the back of revenue increasing 46% to US$46 million.
MIL's team will continue its involvement on the company's board as
well as its close working relationship with the Yangon-based
management team to support the next phase of Apollo's growth. With
a proven rollout capability in a challenging environment, and with
long term financing in place, Apollo will continue to be a key
player in the ongoing rollout and will profit from the telecom
industry's high-paced growth.
Apollo was founded in 2013 by Sanjiv Ahuja and TPG Growth, the
middle market and growth equity investment platform of TPG
(formerly Texas Pacific Group), the leading global private
investment firm with approximately US$70 billion of assets under
management. Mr Ahuja is a global telecoms veteran and the former
CEO of Orange S.A. and has founded several successful
telecommunications infrastructure businesses around the world.
On 31 July 2015, MIL led a US$30 million investment into Apollo
in return for a 14.2% interest in that company. Of this, MIL
contributed US$20 million for a 9.46% indirect shareholding with
LIM Asia Special Situations Master Fund Limited ("LIM"), which is
itself a substantial shareholder in MIL, contributing US$9.8
million for a 4.63% indirect shareholding. The remaining 0.09% was
contributed by an unconnected third-party. All three investors made
the investment through a special purpose vehicle, MIL 4 Limited. As
at 31 March 2017 MIL's total invested cost in Apollo was US$21
million (2016: US$21 million) for an indirect interest of 9.3%
(2016: 9.0%).
Myanmar Finance International Co. Ltd ("MFIL")
MFIL is one of the leading microfinance operators in Myanmar and
provides small loans (US$137 on average per borrower, but it can be
as high as US$7,300) to small-scale business operators in rural and
semi-urban areas in Yangon and Bago. MFIL is controlled jointly by
MIL together with our local partners Myanmar Finance Company
Limited ("MFCL") and the Norwegian Government's Investment Fund for
Developing Countries ("Norfund"). As at 31 March 2017 MIL has
invested US$1.92 million (2016: US$1.92 million) for a 37.5% (2016:
37.5%) stake.
During the financial year, significant regulatory reforms were
announced by the industry regulator, the Financial Regulatory
Department ("FRD") under the Ministry of Planning and Finance. The
most significant of these include the relaxation of constraints on
borrowings by microfinance companies, as well as the introduction
of a revised, more stringent deposit-taking license regulatory
regime.
As a result, MFIL has, as of today, secured a total of US$3
million in debt facilities (2016: nil), made up of US$2 million
from Malayan Banking Berhad Yangon Branch and US$1 million through
Symbiotics S.A., a leading investment company specialising in
emerging, sustainable and inclusive finance. Furthermore, MFIL has
been approved to continue as a deposit-taking microfinance
institution ("DMI"), currently one of only eight thus approved out
of 162 microfinance institutions.
On the back of these developments MFIL made significant strides
during the financial year in expanding its business, and as of 31
March 2017, had built up its customer base to 43,000 borrowers
(2016: 32,000) with a loan portfolio of US$6 million (2016: US$4
million). The loan portfolio has grown at a CAGR of 145% since
MIL's initial investment in September 2014 and the number of
borrowers has grown at a CAGR of 77% over the same period.
The year to 31 March 2017 was MFIL's second full-year of net
profitability, generating MMK 288 million (US$229,156) of net
profit after-tax for the year. Now that MFIL has clearly passed
breakeven point, with increased gearing we expect net profitability
to grow rapidly as we move forward.
MFIL also opened one more branch in each of Yangon and Bago,
bringing its branch network to eight branches in total (five in
Yangon and three in Bago) (2016: six branches; four in Yangon and
two in Bago). MFIL has now expanded beyond its core group-lending
product, having launched a micro-business loan product across all
its branches.
Ever since its investment into MFIL in 2014, MIL has played a
key role in supporting the buildout and expansion of the MFIL
business. In 2015 and 2016 MIL's efforts were more focused on
immediate needs such as the recruitment of a seasoned CEO, the
introduction of new systems and procedures, the strengthening of
the governance of the MFIL board, and the establishment of the
internal audit function. While in this financial year we have
shifted our focus to longer-term, strategic support aimed at
expansion. This has included continuing efforts to raise debt
financing for the company, as well as product and channel
development.
In the coming years, MIL expects to continue working closely
with MFIL management to take on further debt facilities, to prepare
for and launch new products and to expand geographically. It may
also be that as the industry consolidates, MFIL will take a lead
role in acquiring smaller competitors.
Medicare International Health & Beauty Pte Ltd
("Medicare")
Since the year end we have established a third business.
We have long been excited at the prospects for the pharmacy,
health, beauty and personal care retail. The present supply from
the existing retail offering is mainly from small, single site
pharmacies which often offer out of date or poorly stored
medicines. There are few independent chains and therefore very few
professional retailers in this space. Coupled with this, we foresee
that demand for health and beauty products will grow strongly given
the expected rise in consumer spending power, as well as greater
emphasis on quality and reliability that comes from the ethical
dispensing of medicines and their proper storage. McKinsey has
predicted that the Middle and Affluent Classes ("MAC") in Myanmar
are set to boom in the coming years, with the segment growing to 19
million people by 2030, and tripling consumer spending from US$35
billion to US$100 billion.
Having investigated the sector in Myanmar, MIL concluded that
there was a significant gap in the market for a modern and
professional retail business offering pharmaceutical, health and
beauty products, and that the best way to approach this opportunity
is to set up a franchise with experienced partners.
In May 2017, MIL set up Medicare with two partners to introduce
the pharmacy, health, beauty and personal care chain store
franchise concept in Myanmar which is already well-proven in ASEAN
countries like Thailand and Vietnam. The two partners are as
follows:
-- Medicare Vietnam, which is the largest pharmacy, health, beauty and personal care retail group with over 55 outlets throughout Vietnam. The store concept is informative, friendly and bright with an energetic, smart and modern image. Medicare first opened its doors in Vietnam in 2001 with a 600 square metre store in Ho Chi Minh City. It was the first and only modern health and beauty retail brand in Vietnam for over 10 years until 2011 when competition appeared. The business has built up a reputation with customers for genuine, affordable everyday health and beauty necessities.
-- Randy Guttery, a highly experienced senior executive with
many decades of experience in leadership roles at Asian-based
retailers in nine countries including Wal-Mart in Korea and India,
VinMart in Vietnam and Reliance Markets in India.
Medicare Vietnam brings a proven franchise operating model to
Medicare with all the supporting marketing skills, inventory and
supply chain management, HR development, operating systems,
know-how, technical support and training. The well-known "Medicare"
brand name gives Medicare a head start, especially when coupled
with their exclusive products.
Medicare will work with local businesses to set up six stores in
the first year of operation. After these stores have been proven
Medicare will then roll out additional stores over the next five
years.
Since the year end, MIL has invested US$500,000 and holds a 45%
stake in Medicare. We plan to invest US$5 million more over the
next few years as we roll out this exciting franchise across
Myanmar.
MIL has been actively engaged both strategically and
operationally including on the ground support, especially in site
selection and staff recruitment. MIL has also seconded its
financial system adviser to Medicare to work with them in setting
up the financial systems and controls for the company.
Memorandum of Understanding
In March 2017, MIL signed a Memorandum of Understanding with a
well-established local tour operator and travel agency to set up a
joint venture company that will develop the business further as
well as invest in tourism related assets.
The tourism sector in Myanmar is experiencing rapid growth with
the number of arrivals growing at a CAGR of 40% between 2010 and
2016 to six million and continued growth over the next several
years.
MIL is in the process of negotiating final terms and is aiming
to finalise contracts for this investment within the next few
months.
The proposed joint venture tour operator and travel agency is
profitable and will act as a spring board for further investments
that will benefit from the growth in tourist arrivals.
INVESTMENT ACTIVITIES
Our investment strategy is set out in more detail in the section
"Investment Strategy Overview". The execution of that strategy is
based on our on-the-ground experience built up over the past four
years.
Sectoral focus
We are open to investing in most sectors of the economy.
However, to meet our demanding criteria, certain sectors have
proven to be more attractive than others.
For example, businesses that cater to the growing domestic
consumer demand are of great interest and these could be in retail,
education, healthcare, telecommunications, financial services or
entertainment, to name just a few.
These are fast-growing sectors in Myanmar, often with a limited
number of mainly small competitors. We have witnessed elsewhere in
Asia the significant growth in such businesses. In some cases, the
business lines may not yet exist in Myanmar, so we will start new
businesses to fill these vacuums, building the brands of tomorrow
in otherwise empty spaces.
In others, the supply side may be fragmented and of variable
quality. When these are combined with the predicted growth of the
MAC and the expected growth in their disposable income it produces
a very attractive business case.
Similarly, we believe that the tourism sector will produce
attractive business opportunities. At present, Myanmar attracts
relatively few tourists when compared to its Asian neighbours.
Given the range of attractions and experiences that Myanmar can
provide, we are confident that this is again a sector where demand
will drive exceptional growth. This is also an important foreign
exchange earner for the country and will benefit from strong
government support, in some ways mirroring Thailand where tourism
contributes 18% of GDP.
Another key sector that we focus on is the business to business
("B2B") sector. This may often be an indirect upstream play on the
consumer sector. With poor logistics, distribution, services and
manufacturing in Myanmar there are many businesses that can benefit
from the adoption of more efficient business models similar to
those which have already been embraced in neighbouring
countries.
One of the features of all these business opportunities is that
many of them only require a modest initial investment that can then
be scaled up as the business develops. This is certainly the case
in our recent investment in Medicare, where we have started with
only a US$500,000 investment but plan to invest 10 times that
amount as we roll out the franchise network.
As a proactive investment holding company our objective is to
develop market-leading businesses that can be listed on a stock
exchange, held for yield or sold in three to five years. We build
businesses.
Management
When assessing any business opportunity, first and foremost, we
consider the quality of management and their integrity. However, in
Myanmar there is a shortage of experienced local executives and
there is often a need to bring in foreign expertise to augment the
local team. This is where MIL has a distinct advantage through its
network in the region. As a core component of the execution of our
business strategy, we have assembled a panel of experienced Asian
and other executives who we can bring in to assist with the initial
investment assessment, or, if needed, can remain in the business as
company executives, mentors or board members.
Business development
Very few opportunities come to us through intermediaries and 95%
of the 200 plus deals that we have looked at over the past four
years have been sourced directly by MIL's management.
These opportunities arise from numerous meetings with
businessmen and women who have business plans that, whilst
attractive, still need to be stress-tested and refined to make sure
that they are both commercially feasible and capable of being
executed in the Myanmar of today.
This is a time-consuming process which looks to de-risk each and
every opportunity. It requires patience, knowledge and an extensive
network of partners who we can engage with to address any of the
business parts that might otherwise not work so well. It requires
not only a disciplined professional assessment of the challenges
that the business faces but also the ability to put in place real
solutions. When we invested in MFIL it was only after MIL had
conducted an extensive executive search for a proven microfinance
Chief Executive. Our joint venture with Medicare Vietnam was a
three-way JV with the CEO who would run the business.
Our experience building such businesses in Asia over the past 30
years puts us at a distinct advantage over many of the more
passive, traditional "private equity" style investors who might be
considering Myanmar.
To execute our strategy we have developed a strong team here in
Yangon, where we presently have 10 investment professionals on the
ground. They are a mix of international and Myanmar professionals
with complementary backgrounds, skill sets and experiences.
FINANCIAL REVIEW
Fund raisings
In the past 12 months, MIL has completed two further equity fund
raisings. On 16 September 2016, the Company raised US$4.2 million
(before costs) and then more recently, on 27 June 2017, the Company
closed a further round and raised US$7.3 million (before costs). In
both cases, we placed shares to a wide range of institutional
investors, family offices and high net worth individuals.
Net Asset Value
The Directors' assess the Group's net asset value (attributable
to the shareholders of the Company) as at 31 March 2017 to be
US$29.2 million, a year on year increase of 20.3%. This represents
US$0.96 per share, based on the number of shares in issue at that
time. This change principally reflects the increase in the
appraised value of MFIL, the proceeds from the fund raising in
September 2016 less the running costs for the year.
At that date the Group had:
-- an investment in Apollo Towers, the telecommunication tower
business, of US$20.8 million, excluding the non-controlling
interests, determined using the Price of a Recent Investment
methodology;
-- an investment in MFIL, the microfinance business, of US$5.5
million, determined using the Price to Book methodology; and
-- cash and other net assets of US$2.9 million.
Apollo Towers
As at 31 March 2016 the Directors had assessed the value of the
Group's investment in Apollo Towers to be US$20.8 million,
representing the Group's attributable interest in the investment,
this being the cost of the investment as at that date. In assessing
the value of the investment in Apollo Towers as at 31 March 2017,
the Directors have decided to continue to hold the investment at
this same value, it being the "Price of a Recent Investment", as
defined by the International Private Equity and Venture Capital
Valuation Guidelines.
The Directors believe however that additional value has been
created in Apollo Towers since the investment was made. Whilst
other methodologies indicate an uplift in value, these produce such
a wide discrepancy in values that the Directors feel that selecting
one methodology could render the re-valuation process misleading.
This is due to the number of key variables involved in each of the
valuation methodologies and the wide spread of assumptions that
could reasonably be used for each variable.
The Directors believe that a more accurate re-valuation will be
possible once Apollo Towers has achieved certain in-progress
milestones. Therefore, the Group will continue to hold its
Investment in Apollo Towers at the Price of a Recent Investment,
but will revisit the Apollo Tower's valuation when there is greater
clarity on the variables that determine the value of Apollo Tower's
business.
MFIL
As at 31 March 2016 the Directors had assessed the value of the
Group's investment in MFIL to be US$2.1 million, this being
determined using the "Price of a Recent Investment" methodology. In
assessing the value of the investment in MFIL as at 31 March 2017,
the Directors have decided that given the sustainable growth in
MFIL's underlying business it is appropriate to change the
valuation methodology to "Price to Book Value".
Based on this methodology, the Directors have determined that
the value of the Group's investment in MFIL as at 31 March 2017 to
be US$5.5 million.
In the attached audited financial statements the net asset value
differs from the above stated value of US$29.2 million due to the
following differences:
US$
Net asset value per the audited
financial statements 25,584,478
Apollo Towers (1) (192,884)
MFIL (2) 3,832,469
-----------
Net asset value per the Directors'
valuation 29,224,063
===========
Note 1: In accordance with IFRS 9 Financial Instruments, the
investment in Apollo Towers is accounted for as an investment in
available for sale securities. Whereas in accordance with the
Group's Valuation Policy the Directors' valuation is determined
using the Price of a Recent Investment methodology as described in
the International Private Equity and Venture Capital
Guidelines.
Note 2: 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 is determined
using the Price to Book methodology as described in the
International Private Equity and Venture Capital Guidelines.
Overheads
For the year to 31 March 2017 the Group's audited loss after tax
was US$2.8 million.
This represents:
-- our share of MFIL's profits less;
-- the overheads associated with running the Group's business;
-- the impact of the share based payments arising from the
Group's Employee Share Option Scheme; and
-- transaction costs associated with investigating investments that did not come to fruition.
Within this, the core cash-based overheads, excluding
discretionary compensation, share option expense and aborted
transaction costs amounted to US$2.0 million compared to US$1.9
million the previous year, a year-on-year increase of just
6.6%.
Barring unforeseen circumstances, we do not expect the level of
such running costs to fluctuate significantly in the foreseeable
future.
Dividends
Based on the above we do not recommend payment of a dividend at
this time.
SHAREHOLDER MATTERS
Corporate Governance
Myanmar Investments seeks to uphold the fundamental principles
of good corporate governance and is guided by the responsibilities
laid down for AIM quoted companies. The Annual Report section
headed "Corporate Governance" will provide more details on how the
Board itself operates as well as the steps taken to ensure that its
staff adhere to principles such as compliance with the UK
Anti-Bribery Law.
Secondary Listing
The Executive Directors are assessing the prospects for
establishing a secondary listing for the Company in Asia. We
believe that a listing nearer Myanmar could be of great benefit in
both attracting regional investors and, equally importantly, in
building up liquidity in the trading of the Company's shares and
warrants.
Annual General Meeting
This year's Annual General Meeting will be held at The British
Club, Yangon, Myanmar at 9.00am (Myanmar time) on Wednesday, 18
October 2017. Shareholders who cannot attend the Annual General
Meeting in person are encouraged to use their proxy votes.
Shareholders who hold their shares through CREST are able to lodge
their votes electronically.
PROSPECTS
We are pleased with the progress we have made this year but
mindful that these are only the first steps to building a strong
foundation in a complex and transitioning society.
A successful fund raising in September, the work with Medicare
Vietnam that culminated in the new joint venture just after the
year end, a wide and exciting pipeline of new business
opportunities, coupled with the strong fundamental performance of
both of our existing investments in the past year: all illustrate
that we have what it takes and that we are in the right place at
the right time.
Barring unforeseen circumstances, we expect all our businesses
to continue to grow strongly in the years ahead.
However, as noted above, there remains an expectation in the
business community of a slowdown in business activity as the new
government takes its time to formulate and prioritise its various
strategies and determine how best to implement them.
In the sectors that we focus on, we have not seen any such
slowdown in opportunities. We continue to identify attractive
businesses. They will not all become MIL Group companies and the
attrition rate of potential investee businesses not accepted in to
the MIL Group is currently high. However, we are confident that we
will soon add additional business lines to our already exciting
stable of businesses.
From a fund raising perspective, we are encouraged by the two
recent rounds of fund raising and this has affirmed our strategy of
raising funds only in line with the growth in our business needs.
We continue to assess the possibility of a secondary listing in
Asia to enhance liquidity in our shares and also to make our shares
more accessible to Asian investors. We will make further
announcements on this as we develop this further.
Aung Htun Michael Dean
Managing Director Finance Director
22 September 2017 22 September 2017
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE FINANCIAL YEARED 31 MARCH 2017
Note 2017 2016
US$ US$
Revenue - -
Other item of income
Other income 4 174 21,598
Items of expense
Employee benefits expense 5 (1,867,297) (1,384,666)
Depreciation expense 12 (12,941) (14,996)
Other operating expenses (1,016,672) (840,653)
Finance costs 6 (13,887) (14,413)
Share of results of joint
venture, net of tax 10 85,933 16,485
Loss before income tax 7 (2,824,690) (2,216,645)
Income tax expense 8 (8,390) (19,009)
Loss for the financial year (2,833,080) (2,235,654)
=========== ===========
Other comprehensive income:
Items that may be reclassified
subsequently to profit
or loss:
Exchange loss arising on translation
of foreign operations (188,209) (188,435)
Exchange differences arising
from dilution of interest
in joint ventures - 107,303
----------- -----------
Other comprehensive income
for the financial year,
net of tax 10 (188,209) (81,132)
----------- -----------
Total comprehensive income
for the financial year (3,021,289) (2,316,786)
=========== ===========
Loss attributable to:
Owners of the parent (2,828,540) (2,233,369)
Non-controlling interests 13 (4,540) (2,285)
----------- -----------
(2,833,080) (2,235,654)
=========== ===========
Total comprehensive income
attributable to:
Owners of the parent (3,016,749) (2,314,501)
Non-controlling interests (4,540) (2,285)
(3,021,289) (2,316,786)
=========== ===========
Loss per share (cents)
* Basic and diluted 9 (9.74) (10.21)
=========== ===========
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH
2017
Note 2017 2016
US$ US$
ASSETS
Non-current assets
Investment in joint venture 10 1,711,681 1,813,957
Available-for-sale financial
assets 11 31,395,522 31,385,522
Plant and equipment 12 12,510 16,887
----------- -----------
Total non-current assets 33,119,713 33,216,366
----------- -----------
Current assets
Other receivables 14 198,504 91,750
Cash and cash equivalents 15 3,303,327 1,386,059
----------- -----------
Total current assets 3,501,831 1,477,809
----------- -----------
Total assets 36,621,544 34,694,175
=========== ===========
EQUITY AND LIABILITIES
Equity
Share capital 16 32,656,994 28,765,805
Share option reserve 17 866,390 313,561
Accumulated losses (7,669,565) (4,843,655)
Foreign exchange reserve (269,341) (81,132)
Equity attributable to owners
of the parent 25,584,478 24,154,579
Non-controlling interests 13 10,394,108 10,398,648
----------- -----------
Total equity 35,978,586 34,553,227
----------- -----------
LIABILITIES
Current liabilities
Other payables 18 632,738 131,421
Income tax payable 10,220 9,527
----------- -----------
Total current liabilities 642,958 140,948
Total equity and liabilities 36,621,544 34,694,175
=========== ===========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEARED 31 MARCH 2017
Equity
attributable
Share Foreign to owners Non-
Share option exchange Accumulated of controlling
Note capital reserve reserve losses the parent interests Total
US$ US$ US$ US$ US$ US$ US$
2017
At 1 April 2016 28,765,805 313,561 (81,132) (4,843,655) 24,154,579 10,398,648 34,553,227
Loss for the
financial year - - - (2,828,540) (2,828,540) (4,540) (2,833,080)
Other
comprehensive
income for the
financial
year
Exchange gains
arising on
translation
of foreign
operations - - (188,209) - (188,209) - (188,209)
---------- -------- --------- ----------- ------------- ------------ -----------
Total other
comprehensive
income for
the financial
year 10 - - (188,209) - (188,209) - (188,209)
---------- -------- --------- ----------- ------------- ------------ -----------
Total
comprehensive
income for the
financial
year - - (188,209) (2,828,540) (3,016,749) (4,540) (3,021,289)
Contributions by
and
distributions to
owners
---------- -------- --------- ----------- ------------- ------------ -------------
Issue of shares 16 4,219,081 - - - 4,219,081 - 4,219,081
Exercise of
warrants 7,885 - - - 7,885 - 7,885
Share issue
expenses 16 (335,777) - - - (335,777) - (335,777)
Share options
expense 17 - 555,459 - - 555,459 - 555,459
Cancellation of
share options 17 - (2,630) - 2,630 - - -
---------- -------- --------- ----------- ------------- ------------ -------------
Total
contributions
by and
distributions
to owners 3,891,189 552,829 2,630 4,446,648 - 4,446,648
At 31 March 2017 32,656,994 866,390 (269,341) (7,669,565) 25,584,478 10,394,108 35,978,586
========== ======== ========= =========== ============= ============ =============
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEARED 31 MARCH 2017
Equity
attributable
Share Foreign to owners Non-
Share option exchange Accumulated of controlling
Note capital reserve reserve losses the parent interests Total
US$ US$ US$ US$ US$ US$ US$
2016
At 1 April 2015 8,996,282 160,113 - (2,610,286) 6,546,109 - 6,546,109
Loss for the financial
year - - - (2,233,369) (2,233,369) (2,285) (2,235,654)
Other comprehensive
income
for the financial year
Exchange gains arising
on translation of
foreign
operations - - (188,435) - (188,435) - (188,435)
Exchange differences
arising from dilution
of interest in joint
ventures - - 107,303 - 107,303 - 107,303
--------- -------- --------- ----------- ------------- ------------ -----------
Total other comprehensive
income for the financial
year 10 - - (81,132) - (81,132) - (81,132)
--------- -------- --------- ----------- ------------- ------------ -----------
Total comprehensive
income
for the financial year - - (81,132) (2,233,369) (2,314,501) (2,285) (2,316,786)
Transactions with
non-controlling
interests:
--------- -------- --------- ----------- ------------- ------------ -----------
Contribution from
non-controlling
interests to a
subsidiary 13 - - - - - 10,400,933 10,400,933
Total transactions with
non-controlling
interests - - - - - 10,400,933 10,400,933
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEARED 31 MARCH 2017
Equity
attributable
Share Foreign to owners Non-
Share option exchange Accumulated of controlling
Note capital reserve reserve losses the parent interests Total
US$ US$ US$ US$ US$ US$ US$
2016 (Continued)
Contributions by and
distributions to owners
---------- -------- --------- ----------- ------------- ------------ ----------
Issue of shares 16 19,942,397 - - - 19,942,397 - 19,942,397
Share issue expenses 16 (172,874) - - - (172,874) - (172,874)
Share options expense 17 - 153,448 - - 153,448 - 153,448
---------- -------- --------- ----------- ------------- ------------ ----------
Total contributions by
and distributions to
owners 19,769,523 153,448 - - 19,922,971 - 19,922,971
At 31 March 2016 28,765,805 313,561 (81,132) (4,843,655) 24,154,579 10,398,648 34,553,227
========== ======== ========= =========== ============= ============ ==========
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE FINANCIAL YEARED 31 MARCH 2017
Note 2017 2016
US$ US$
Operating activities
Loss before income tax (2,824,690) (2,216,645)
Adjustments for:
Interest income 4 (174) (181)
Finance costs 6 13,887 14,413
Depreciation of plant and
equipment 12 12,941 14,996
Share-based payment expense 17 555,459 153,448
Share of results of joint
venture, net of tax 10 (85,933) (16,485)
Gain on dilution of interest
in joint venture 4 - (20,909)
Operating cash flows before
working capital changes (2,328,510) (2,071,363)
Changes in working capital:
Other receivables (106,754) (2,896)
Other payables 501,317 66,226
Cash used in operations (1,933,947) (2,008,033)
Interest received 4 174 181
Finance costs paid 6 (13,887) (14,413)
Income tax paid (7,697) (10,747)
Net cash flows used in operating
activities (1,955,357) (2,033,012)
----------- ------------
Investing activities
Investment in available-for-sale
financial assets 11 (10,000) (31,385,522)
Investment in joint venture 10 - (407,500)
Purchase of plant and equipment 12 (8,564) (7,631)
----------- ------------
Net cash flows used in investing
activities (18,564) (31,800,653)
Financing activities
Contribution from non-controlling
interests to a subsidiary 13 - 10,400,933
Net proceeds from issuance
of shares 16 3,891,189 19,769,523
Increase in short-term deposits
pledged - (163)
Net cash flows generated from
financing activities 3,891,189 30,170,293
Net change in cash and cash
equivalents 1,917,268 (3,663,372)
Cash and cash equivalents
at beginning of the year 1,349,915 5,013,287
Cash and cash equivalents
at the end of financial year 15 3,267,183 1,349,915
=========== ============
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEARED 31 MARCH 2017
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 has been established for the purpose of identifying
and investing in, and disposing of, businesses operating in or with
business exposure to Myanmar. The Company will target businesses
operating in sectors that the Directors believe have strong growth
potential and thereby can be expected to provide attractive yields,
capital gains or both.
The principal activities of the subsidiaries are disclosed in
Note 13 to the financial statements.
The consolidated financial statements of the Company and its
subsidiaries (the "Group") for the financial year ended 31 March
2017 were approved by the Board of Directors on 22 September
2017.
The Directors have adopted the going concern basis in preparing
the consolidated financial statements.
2. Summary of significant accounting policies
The Company's accounting policies are available in the full
audited financial statements, a copy of which can be found on the
Company's website at www.myanmarinvestments.com.
3. Significant accounting judgements and estimates
The Company's significant accounting judgements and estimates
used in the preparation of these financial statements are available
in the full audited financial statements, a copy of which can be
found on the Company's website at www.myanmarinvestments.com.
4. Other income
2017 2016
US$ US$
Interest income 174 181
Gain on dilution of interest in
joint venture - 20,909
Other - 508
---- ------
174 21,598
==== ======
5. Employee benefits expense
2017 2016
US$ US$
Salaries, wages and other staff
benefits 1,061,838 1,030,710
Bonuses 250,000 200,000
Share options expense 555,459 153,956
--------- ---------
1,867,297 1,384,666
========= =========
The employee benefits expense includes the remuneration of
Directors as disclosed in Note 19 to the financial statements.
6. Finance costs
Finance costs represent bank charges for the financial year.
7. Loss before income tax
In addition to the charges and credits disclosed elsewhere in
the notes to the consolidated financial statements, the above
includes the following charges and credits:
2017 2016
US$ US$
Auditor's remuneration 52,071 48,791
Consultants fees 377,240 264,591
Foreign exchange loss, net - 1,242
Operating lease expenses 74,273 83,460
Professional fees 59,098 16,076
Travel and accommodation 63,779 84,998
Transaction costs 30,447 9,098
======= =======
8. Income tax
2017 2016
US$ US$
Current income tax
* current financial year 9,631 9,779
* (over)/under-provision in prior financial year (1,241) 9,230
------- ------
8,390 19,009
======= ======
A reconciliation of income tax applicable to loss before income
tax at the statutory income tax rate of 25% (2016: 25%) in Myanmar
is as follows:
2017 2016
US$ US$
Loss before income tax (2,824,690) (2,216,645)
Share of results of joint venture,
net of tax (85,933) (16,485)
----------- -----------
(2,910,623) (2,233,130)
=========== ===========
Income tax at the applicable tax
rates (727,655) (558,283)
Effects of different income tax
rates in other countries 732,756 571,480
Under-provision in prior financial
year (1,241) 9,230
Tax effects of expenses not deductible
for tax purposes 4,530 4,168
Others - (7,586)
----------- -----------
Income tax for the financial year 8,390 19,009
=========== ===========
9. Loss per share
Basic loss per share is calculated by dividing the loss for the
financial year attributable to owners of the parent by the weighted
average number of ordinary shares outstanding during the financial
year.
The following reflects the loss and share data used in the basic
and diluted loss per share computation:
2017 2016
Loss for the financial year attributable
to owners of the Company (US$) (2,828,540) (2,233,369)
Weighted average number of ordinary
shares during the financial year
applicable to basic loss per share 29,049,372 21,884,673
Loss per share
Basic and diluted (cents) (9.74) (10.21)
=========== ===========
Diluted loss per share is the same as the basic loss per share
because the potential ordinary shares to be converted are
anti-dilutive as the effect of the shares conversion would be to
decrease the loss per share.
10. Investment in joint venture
2017 2016
US$ US$
Investment in joint venture
At 1 April 1,813,957 1,450,195
Investments during the year - 407,500
Share of results of joint venture,
net of tax 85,933 16,485
Foreign exchange adjustment (188,209) (81,132)
Gain on dilution of interest in
joint venture - 20,909
--------- ---------
At 31 March 1,711,681 1,813,957
========= =========
On 26 August 2014 the Company's wholly-owned subsidiary, Myanmar
Investments Limited ("MIL"), signed a joint venture agreement
("JVA") with Myanmar Finance Company Limited ("MFC") in which, the
two parties agreed to establish a Myanmar microfinance joint
venture company, Myanmar Finance International Ltd. ("MFIL").
Under the terms of the JVA, MFC injected its existing
microfinance business into the joint venture which is jointly
managed by MIL and MFC. The two partners agreed to a four-phased
contribution of US$4.8 million in capital (MIL's share being
US$2.84 million) with MIL owning 55 per cent of the new company and
MFC holding the remaining 45 per cent.
On 7 August 2015, MIL invested an additional US$266,667 in MFIL
(which included US$120,000 as premium paid, reflecting MFC's
injected microfinance business) and the Company's equity interest
in MFIL remained at 55%.
On 16 November 2015, The Norwegian Investment Fund for
Developing Countries ("Norfund") subscribed for new shares in MFIL
for a total consideration of US$1,430,720. Concurrent with
Norfund's investment, the fourth and final tranche of the initial
capital specified under the JVA was called from MIL and MFC and MIL
invested an additional US$140,833 bringing its total capital
contribution to date of US$1,920,000. Following Norfund's
investment and the final capital contributions by MIL and MFC,
MIL's and MFC's shareholdings in MFIL were each reduced to 37.5%,
while Norfund now has a 25% shareholding in MFIL. Arising from the
dilution of equity interest in MFIL, a gain of US$20,909 was
recognised to the consolidated statement of comprehensive
income.
MFIL is a well-established provider of microfinance loans to
small-scale business operators in rural and urban areas of Yangon
and neighbouring Bago.
MFIL is deemed to be a joint venture of the Company as the
appointment of its directors and the allocation of voting rights
for key business decisions require the unanimous approval of all
its shareholders.
The detail of the joint venture is as follows:
Effective equity
Name of joint venture interest
(Country of incorporation/place Principal held by the
of business) activities Company
2017 2016
% %
Myanmar Finance International Provider of
Limited(1) microfinance
(Myanmar) loans 37.5 37.5
(1)Audited by JF Group Audit Firm, Yangon, Myanmar.
The summarised financial information below reflects the amounts
presented in the financial statements of the joint venture (and not
the Company's share of those amounts), adjusted for differences in
accounting policies between the Company and the joint venture.
2017 2016
US$ US$
Assets and liabilities
Cash and cash equivalents 504,649 1,259,004
Trade receivables 5,898,757 4,037,562
Other current assets 192,680 93,403
--------- ---------
Current assets 6,596,086 5,389,969
Non-current assets 119,763 150,182
--------- ---------
Total assets 6,715,849 5,540,151
--------- ---------
Current liabilities 1,998,898 1,022,933
Non-current liabilities 472,468 -
--------- ---------
Total liabilities 2,471,366 1,022,933
--------- ---------
Net assets 4,244,483 4,517,218
========= =========
Investment in joint venture 37.5% 37.5%
Share of net assets 1,591,681 1,693,957
Premium paid 120,000 120,000
--------- ---------
1,711,681 1,813,957
========= =========
2017 2016
US$ US$
Included in the current liabilities
are:
Current financial liabilities
(excluding trade and other payables
and provision) 1,677,700 828,327
Non-current financial liabilities
(excluding trade and other payables
and provision) 472,468 -
=========== ==================
Period
from
9 July
2015 (Date
Year ended of incorporation)
31 March to 31 March
2017 2016
US$ US$
Income and expenses
Revenue 1,557,162 819,948
Other income 77,692 142,255
Operating expense (1,063,140) (786,888)
Depreciation (54,429) (34,406)
Interest expense (198,359) (75,415)
Tax expense (89,770) (16,373)
----------- ------------------
Profit after income tax 229,156 49,121
=========== ==================
11. Available-for-sale financial assets
2017 2016
US$ US$
Available-for-sale financial assets
Unquoted equity, at cost 31,395,522 31,385,522
========== ==========
As disclosed in Note 13 to the financial statements, MIL 4
Limited ("MIL 4") was incorporated by the Company to acquire shares
in Apollo Towers Pte. Ltd. ("Apollo"), a Singapore incorporated
company.
On 29 July 2015, MIL 4 acquired a 14.18% stake in Apollo Towers
Pte. Ltd. ("Apollo"), an unquoted Singapore incorporated company,
for a purchase consideration of US$30,182,725.
On 24 December 2015, Apollo held a further round of fund raising
in which MIL 4 only invested US$1,202,797 into Apollo, resulting in
a dilution of MIL 4's equity interest to 13.48%.
On 16 June 2016, MIL4 purchased a warrant for a total
consideration of US$10,000, allowing MIL4 to purchase for a nominal
amount 1.56% of Apollo's total capital stock on a fully diluted
basis. The warrant has not been exercised by MIL4 as of 31 March
2017.
Apollo owns and operates a leading telecommunication towers
business in Myanmar through its subsidiary Apollo Towers Myanmar
Limited.
The investment in unquoted equity securities is stated at cost,
including transaction costs, less impairment loss, if any. The
investment is denominated in United States Dollars.
12. Plant and equipment
Computer Office Furniture
equipment equipment and fittings Total
US$ US$ US$ US$
2017
Cost
Balance at 1 April
2016 13,739 4,580 30,155 48,474
Additions 3,671 315 4,578 8,564
---------- ---------- ------------- ------
Balance at 31 March
2017 17,410 4,895 34,733 57,038
========== ========== ============= ======
Accumulated depreciation
Balance at 1 April
2016 7,649 1,599 22,339 31,587
Depreciation for the
financial year 4,104 1,413 7,424 12,941
---------- ---------- ------------- ------
Balance at 31 March
2017 11,753 3,012 29,763 44,528
========== ========== ============= ======
Carrying amount
Balance at 31 March
2017 5,657 1,883 4,970 12,510
========== ========== ============= ======
2016
Cost
Balance at 1 April
2015 10,749 2,297 27,797 40,843
Additions 2,990 2,283 2,358 7,631
---------- ---------- ------------- ------
Balance at 31 March
2016 13,739 4,580 30,155 48,474
========== ========== ============= ======
Accumulated depreciation
Balance at 1 April
2015 3,604 752 12,235 16,591
Depreciation for the
financial year 4,045 847 10,104 14,996
---------- ---------- ------------- ------
Balance at 31 March
2016 7,649 1,599 22,339 31,587
========== ========== ============= ======
Carrying amount
Balance at 31 March
2016 6,090 2,981 7,816 16,887
========== ========== ============= ======
13. Investment in subsidiaries
Details of the investments in which the Group has a controlling
interest are as follows:
Proportion
Proportion of
Country of ownership
of incorporation/ ownership interest
principal interest held by
place Principal held by non-control
Name of subsidiaries of business activities the Group interests
2017 2016 2017 2016
% % % %
Investment
Myanmar Investments holding
Limited (1) Singapore company 100 100 - -
Provision
of management
MIL Management Pte. services
Ltd.(1) Singapore to the Group 100 100 - -
MIL No. 2 Pte. Ltd.(2) Singapore Dormant 100 100 - -
MIL No. 3 Pte. Ltd.(2) Singapore Dormant 100 100 - -
British Investment
Virgin holding
MIL 4 Limited (1) Islands company 66.67 66.67 33.33 33.33
Held by MIL Management
Pte. Ltd.
Provision
of management
MIL Management Co., services
Ltd(3) Myanmar to the Group 100 100 - -
(1) Audited by BDO LLP, Singapore.
(2) Not required to be audited as the subsidiary is dormant
since the date of its incorporation.
(3) Audited by JF Group Audit Firm, Yangon, Myanmar.
Incorporation of a subsidiary
On 9 July 2015, the Company incorporated a 100.00% owned
subsidiary, MIL 4 for a cash consideration of US$5,000, in the
British Virgin Islands for the purpose of investing into Apollo as
disclosed in Note 11 to the financial statements.
On 29 July 2015, the Company and new shareholders injected an
amount of US$19,995,000 and US$10,000,000 into MIL 4 respectively,
which resulted in the dilution of equity interest in the subsidiary
to 66.67%.
On 24 December 2015, the Company and MIL 4's shareholders
further increased its investment in MIL 4 by US$801,864 and
US$400,933 respectively and the Company's equity interest in MIL 4
remains at 66.67% during this round of additional investment.
Non-controlling interests
The summarised financial information before intra-group
elimination of the subsidiary that has material non-controlling
interests as at the end of each reporting period is as follows:
MIL 4 Limited
2017 2016
US$ US$
Assets and liabilities
Non-current assets 31,395,522 31,385,522
Current assets 89,778 32,289
Current liabilities (302,977) (221,869)
Net assets 31,182,323 31,195,942
========== ==========
Accumulated non-controlling interests 10,394,108 10,398,648
========== ==========
Period
from
9 July
2015 (Date
of incorporation)
Year to 31 March to 31 March
2017 2016
US$ US$
Revenue - -
Administrative expenses (13,620) (6,855)
---------------- ------------------
Loss for the financial year/period,
representing total comprehensive
income for the financial year/period (13,620) (6,855)
================ ==================
Loss allocated to non-controlling
interests, representing total
comprehensive income allocated
to non-controlling interests (4,540) (2,285)
================ ==================
Net cash used in operating activities (96,567) (1,838)
Net cash used in investing activity (10,000) (31,385,522)
Net cash generated from financing
activities 106,567 31,387,360
---------------- ------------------
Net change in cash and cash equivalents - -
================ ==================
14. Other receivables
2017 2016
US$ US$
Other receivables 136,974 29,591
Deposits 12,502 14,605
Prepayments 49,028 47,554
------- ------
198,504 91,750
======= ======
Other receivables are denominated in the following
currencies:
2017 2016
US$ US$
United States dollar 192,254 88,732
Singapore dollar - 2,105
Myanmar kyat 6,250 913
-------
198,504 91,750
======= ======
15. Cash and cash equivalents
2017 2016
US$ US$
Cash and bank balances 3,267,183 1,349,915
Short-term deposit 36,144 36,144
--------- ---------
3,303,327 1,386,059
========= =========
The short-term deposit bears interest at an average rate of
0.25% (2016: 0.25%) per annum and is for a tenure of approximately
12 months (2016: 12 months).
The short-term deposit of the Company amounting to US$36,144
(2016: US$36,144) is pledged to bank to secure credit
facilities.
Cash and cash equivalents are denominated in the following
currencies:
2017 2016
US$ US$
United States dollar 3,164,896 1,233,692
Singapore dollar 134,075 146,834
Myanmar kyat 4,356 5,533
--------- ---------
3,303,327 1,386,059
========= =========
For the purpose of the statement of cash flows, cash and cash
equivalents comprise the following at the end of the financial
year:
2017 2016
US$ US$
Bank balances 3,303,327 1,386,059
Less: short-term deposits pledged (36,144) (36,144)
--------- ---------
3,267,183 1,349,915
========= =========
16. Share capital
2017 2016
US$ US$
Issued and fully-paid share capital:
Ordinary shares at the beginning
of the financial year 28,765,805 8,996,282
Issuance of ordinary shares during
the financial year 4,219,081 19,942,397
Exercise of warrants during the
financial year 7,885 -
Share issuance expenses (335,777) (172,874)
----------
32,656,994 28,765,805
========== ==========
2017 2016
Equity Instruments Ordinary Ordinary
in issue Shares Warrants Shares Warrants
At the beginning
of the
financial year 27,300,833 15,240,027 9,959,619 9,459,619
Issuance during
the
financial year 3,245,447 811,368 17,341,214 5,780,408
Exercise of warrants
during the financial
year 10,513 (10,513) - -
---------- ---------- ---------- ----------
At the end of the
financial year 30,556,793 16,040,882 27,300,833 15,240,027
========== ========== ========== ==========
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.
On 21 July 2015, the Company allotted 17,341,214 Ordinary Shares
at US$1.15 per share (total of US$19,942,397) pursuant to a
subscription for new shares (the "Third Subscription").
On 16 September 2016, the Company allotted 3,245,447 Ordinary
Shares at US$1.30 per share (total of US$4,219,081) pursuant to a
subscription for new shares (the "Fourth Subscription").
During the financial year, a total of 10,513 warrants were
exercised at a price of US$0.75 by the parties that held them for
cash consideration of US$7,885.
All the shares have been admitted to trading on AIM under the
ticker MIL.
The new ordinary shares issued during the financial year ranked
pari passu in all respects with the existing ordinary shares of the
Company.
Warrants
On 21 July 2015, the Company allotted 5,780,408 Warrants
pursuant to the Third Subscription. The Company had agreed that for
every three Ordinary Shares subscribed for by a subscriber they
would receive one Warrant at nil cost.
On 16 September 2016, the Company allotted 811,368 Warrants
pursuant to the Fourth Subscription. The Company had agreed that
for every four Ordinary Shares subscribed for by a subscriber they
would receive one Warrant at nil cost.
The Warrants entitle the holder to subscribe for an Ordinary
share at an exercise price of US$0.75. The Warrants may be
exercised during each 15 Business Day period commencing on the
first day of each Quarter during the Subscription Period (from 21
June 2015 to 21 June 2018).
All Warrants have been admitted to trading on AIM under the
ticker MILW.
17. Share option reserve
Details of the Share Option Plan (the "Plan")
The Plan allows for the total number of shares issuable under
share options to constitute a maximum of one tenth of the number of
the total number of ordinary shares in issue (excluding shares held
by the Company as treasury shares and shares issued to the Founders
prior to Admission).
Any future issuance of shares will give rise to the ability of
the Remuneration Committee to award additional share options. Such
share options will be granted with an exercise price set at a 10
percent premium to the subscription price paid by shareholders on
the relevant issue of shares that gave rise to the availability of
each tranche of share options.
Share options can be exercised any time after the first
anniversary and before the tenth anniversary of the grant (as may
be determined by the Remuneration Committee in its absolute
discretion) of the respective share options.
Share options are not admitted to trading on AIM but application
will be made for shares that are issued upon the exercise of the
share options to be admitted to trading on AIM.
As at 31 March 2017, there were 3,004,628 (2016: 2,680,082)
share options available for issue under the Plan of which 2,673,028
(2016: 1,894,661) had been granted. These granted share options
have a weighted average exercise price of US$1.214 (2016: US$1.194)
per share and a weighted average contractual life of 8.51 years
(2016: 9.11 years).
The 3,004,628 share options available were created under the
following series:
Exercise
price
Series/Date Occasion Number (USD)
Admission Placing and
Series 1 Subscription 584,261 1.100
Series 2 Second Subscription 361,700 1.155
Series 3 Third Subscription 1,734,121 1.265
Series 4 Fourth Subscription 324,546 1.430
---------
3,004,628
=========
The following share-based payment arrangements were in existence
during the current financial year:
Fair
Number Exercise value
Option of share price at grant
series options Grant date Expiry date (USD) date
Series
1 410,000 27 June 2013 26 June 2023 1.100 153,495
Series 9 December 8 December
1 25,000 2013 2023 1.100 19,015
Series 25 September 24 September
1 132,261 2014 2024 1.100 62,937
Series
2 24,000 2 June 2015 1 June 2025 1.155 14,671
Series 15 January 14 January
1 10,200 2016 2026 1.100 6,235
Series 15 January 14 January
2 331,700 2016 2026 1.155 193,562
Series 15 January 14 January
3 956,600 2016 2026 1.265 508,734
Series
3 195,000 28 June 2016 27 June 2026 1.265 136,351
Series 19 October 18 October
1 6,800 2016 2026 1.100 4,088
Series 19 October 18 October
2 6,000 2016 2026 1.155 3,447
Series 19 October 18 October
3 575,467 2016 2026 1.265 302,071
----------- -----------
2,673,028 1,404,606
=========== ===========
Share options that are allocated to a Participant are subject to
a three year vesting period during which the rights to the share
options will be transferred to the Participant in three equal
annual instalments provided, save in certain circumstances, that
they are still in employment with or engaged by the Company.
Fair value of share options granted in the financial year
The weighted average fair value of the share options granted
during the financial year is US$0.569 (2016: US$0.547). Share
options were priced using Black-Scholes option pricing model. Where
relevant, the expected life used in the model has been adjusted
based on management's best estimate for the effects of
non-transferability, exercise restrictions (including the
probability of meeting market conditions attached to the option),
and behavioural considerations. Expected volatility is based on
historical share price volatility from the date of grant of the
share options.
The Black-Scholes option pricing model uses the following
assumptions:
Grant date
28 June 19 October 19 October 19 October
2016 2016 2016 2016
-------- ---------- ---------- -----------
Grant date share
price (US$) 1.628 1.388 1.388 1.388
Exercise price (US$) 1.265 1.100 1.155 1.265
Expected volatility 22.47% 22.25% 22.25% 22.25%
Option life 10 years 10 years 10 years 10 years
Risk-free annual
interest rates 1.46% 1.76% 1.76% 1.76%
The Group recognised a net expense of US$555,459 (2016:
US$153,448) related to equity-settled share-based payment
transactions during the financial year.
Movement in share option during the financial year
The following reconciles the share options outstanding at the
start of the year and at the end of the year.
2017 2016
Weighted Weighted
average average
exercise exercise
Number price Number price
US$ US$
Balance at start of
the
financial year 1,894,661 1.194 574,061 1.100
Granted 783,267 1.263 1,324,000 1.234
Forfeited (4,900) 1.117 (3,400) 1.100
Balance at end of
financial year 2,673,028 1.214 1,894,661 1.194
========= =========
No share options were exercised during the financial year.
Movement in share option reserve during the financial year
2017 2016
US$ US$
Balance at start of the financial
year 313,561 160,113
Share options expense 555,459 153,448
Cancellation of share options (2,630) -
------------- -------------
Balance at end of financial year 866,390 313,561
============= =============
18. Other payables
2017 2016
US$ US$
Accruals 596,032 130,237
Other payables 36,706 1,184
------- -------
632,738 131,421
======= =======
Other payables are denominated in the following currencies:
2017 2016
US$ US$
Singapore dollar 47,179 50,613
United States dollar 523,791 57,348
British pound 50,976 20,678
Euro 2,667 2,782
Myanmar Kyat 8,125 -
632,738 131,421
======= =======
19. Significant related party disclosures
For the purposes of these consolidated financial statements,
parties are considered to be related to the Group and the Company
if the Group and the Company have the ability, directly or
indirectly, to control the party or exercise significant influence
over the party in making financial and operating decisions, or vice
versa, or where the Group and the Company and the party are subject
to common control or common significant influence. Related parties
may be individuals or other entities.
Compensation of key management personnel
For the financial year ended 31 March 2017, no emoluments were
paid by the Group to the Directors as an inducement to join or upon
joining the Group or as compensation for loss of office.
The remuneration of Directors for the financial years ended 31
March 2017 and 31 March 2016 was as follows:
Short
term Share
Directors' employee option
fee benefits(1) plan Total
US$ US$ US$ US$
Financial year ended
31 March 2017
Executive directors
Maung Aung Htun - 456,747 179,327 636,074
Anthony Michael Dean - 434,784 165,913 600,697
Independent non-executive
directors
Christopher William
Knight 40,000 - 34,352 74,352
Craig Robert Martin 30,000 - 34,453 64,453
Christopher David Appleton 30,000 - 34,554 64,554
Henrik Onne Bodenstab 26,200 - 5,051 31,251
----------
126,200 891,531 453,650 1,471,381
========== ============ ======= ===========
Financial year ended
31 March 2016
Executive directors
447,208
Maung Aung Htun - (2) 58,193 505,401
429,909
Anthony Michael Dean - (2) 52,119 482,028
Independent non-executive
directors
Christopher William
Knight 35,000 - 7,896 42,896
Craig Robert Martin 27,500 - 8,461 35,961
Christopher David Appleton 27,500 - 9,027 36,527
----------
90,000 877,117 135,696 1,102,813
========== ============ ======= =========
(1) The short-term employee benefits also includes rental
expenses paid for the Director's accommodation.
(2) The short-term employee benefits include bonuses totalling
US$150,000 for the Executive Directors that relate to the financial
year ended 31 March 2015 as determined by the Remuneration
Committee.
20. Commitments
Operating lease commitments - as lessee
The Group leases the Yangon office and accommodation for
Directors under non-cancellable operating leases. The operating
lease commitments are based on rental rates as specified in the
lease agreements. The Group has the option to renew certain
agreements on the leased premises for another one year.
In accordance with prevailing market conditions in Yangon, lease
payments are paid in advance.
Future minimum rentals payable under non-cancellable operating
leases at the reporting date are as follows:
2017 2016
US$ US$
Within one financial year - 39,000
- 39,000
==== ======
21. Dividends
The Directors of the Company do not recommend any dividend in
respect of the financial year ended 31 March 2017 (2016: Nil).
22. Financial risk management objectives and policies
The Company's financial risk management objective and policies
are available in the audited financial statements, a copy of which
can be found on the Company's website at
www.myanmarinvestments.com
23. Subsequent events
Equity fund raising
On 27 June 2017, the Company raised US$7,293,725 through the
issuance of 6,181,123 new ordinary shares.
Notes to Editors:
Myanmar Investments International Limited (AIM: MIL) is the
first Myanmar-focused investment company to be admitted to trading
on the AIM market of the London Stock Exchange. MIL was established
in 2013 with the intention of building long term shareholder value
by proactively investing in a diversified range of Myanmar
businesses that will benefit from the country's re-emergence and
ongoing economic development. The Company is led by an experienced
and entrepreneurial team who between them have considerable
industrial, corporate and financial management experience.
To date the Company has raised over US$40 million, predominantly
from institutional investors, family offices and high net worth
individuals.
MIL aims to identify businesses with strong growth which if
necessary can be "de-risked" through the introduction of
experienced senior line-management, mentors and/or strategic
partners sourced by MIL's management board. The Company's main
focus is on opportunities that are experiencing acute supply and
demand imbalances, such as within the consumer and
capacity-constrained sectors.
With its strong proprietary pipeline of business opportunities,
MIL provides investors with a highly disciplined and conservative
investment process into one of the most promising growth
opportunities of this era.
MIL's largest investment (US$21 million for a 9.3% shareholding)
is in Apollo Towers, one of Myanmar's top telecommunications towers
companies with 1,800 towers. Apollo operates in the high growth
telecommunications sector with a strong management that is growing
the number of co-locations (ie multiple tenancies) on its portfolio
of towers. In June 2016, the US Government's Overseas Private
Investment Corporation ("OPIC") provided a US$250 million debt
facility to Apollo Towers.
MIL's first investment in August 2014 was into Myanmar Finance
International Limited ("MFIL") which today is one of the top 10
microfinance companies in Myanmar. Since MIL invested, MFIL's
business has developed rapidly. The business is profitable with
zero NPLs and a sustainable expansion plan for long term growth. In
November 2015, the Norwegian Government's Norwegian Investment Fund
for Developing Countries ("Norfund"), the Norwegian development
finance institution, also became a 25% shareholder in MFIL.
In May 2017 MIL announced it had established a pharmacy,
healthcare and personal care product franchise joint venture. It is
expected that the business will fill a vacuum in the present retail
landscape and at the same time tap into the rapid growth of the
middle and affluent classes in Myanmar. The two joint venture
partners are: a) an experienced retail group that runs over 55
pharmacy, health and beauty outlets in a neighbouring Asian
country; and b) an industry veteran with significant experience
leading Asian-based retail concepts. The Company has made an
initial investment of US$495,000 for a 45% stake. The Company
expects to invest further capital in the business over the next few
years as it continues to expand.
Myanmar, a country of approximately 51.4 million people and
roughly the size of France, has been isolated for much of the last
50 years. Once it was one of the more prosperous countries in
Southeast Asia as it has an abundance of natural resources (oil,
natural gas, arable land, tourist attractions and a long
coastline), it is now one of the least developed countries in the
world.
The country has undergone an unprecedented and peaceful
transformational reform process, initiated by U Thein Sein's
Administration in 2011. This is now continuing under the elected
civilian administration led by Daw Aung San Suu Kyi which came to
power in April 2016 as a result of the first democratic elections
in 50 years. While the process is still evolving, the new
government has broad support and significant progress has been made
to the economic prospects of the country.
In October 2016, the United States lifted all remaining
sanctions against Myanmar and re-admitted the country into its
preferred tariff system.
For more information about MIL, please visit
http://www.myanmarinvestments.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR LLFIEAVISFID
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