TIDMMIL
RNS Number : 4029X
Myanmar Investments Intl Ltd
24 November 2017
This announcement contains inside 24 November 2017
information
Myanmar Investments International Limited
Unaudited interim results for the six months ended 30 September
2017 and strategic update
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 30 September 2017. This also includes detail on the
Company's recent performance, an update of the strategy and
prospects for its next stage of growth. All financial estimates are
based on unaudited initial management estimates. All dates are in
the year 2017 unless otherwise stated.
Overview
The Company now has four core business lines in Myanmar all of
which are performing well and all of which have a positive impact
on the lives of Myanmar citizens. The Company has a strong pipeline
of new opportunities and is now looking to raise funds to
consummate some of these. The most significant of these is a
potential US$62 million investment into the telecom tower sector,
an industry the Company knows well. The Company's loss per share
for the period was 15.7% lower than for the previous year.
Summary update
-- MIL's existing joint venture businesses have achieved positive results over the period:
o Apollo Towers Pte Ltd ("Apollo Towers"), one of Myanmar's
leading telecom tower companies with an approximate 13% share of
the Myanmar telecom tower market, is steadily growing the number of
co-tenancies on its towers. It has also secured additional funding
during the period that has strengthened its financial position.
o MIL is evaluating a substantial investment opportunity in
Myanmar's telecom tower space which is expected to have a
significant positive impact on its telecom towers business.
o Myanmar Finance International Limited ("MFIL"), the Company's
microfinance joint venture, has continued to grow its business on
the back of additional debt funding. As a result, its loan book has
increased by a Combined Annual Growth Rate ("CAGR") of 109% (since
investment) to US$7.8 million and the number of borrowers has
increased to about 51,000.
-- The Company formed a new joint venture during the period and
another just after the period end:
o In May, the Company set up Medicare International Health &
Beauty ("MIHB"), a joint venture with Medicare of Vietnam. To date
MIL has invested US$895,000 for a 47.1% stake in this greenfield
pharmacy, health and beauty franchise business and, as previously
announced, has plans to invest up to US$5 million as the roll-out
of the stores progresses. We already have four stores open and two
more on the way.
o In October, the Company established Myanmar Voyages Group, a
tourism joint venture which will acquire a stake in a
well-established travel agency and tour operator as well as
investing in additional tourism related assets such as hotels,
specialised tourist attractions and restaurants. To date MIL has
committed to invest US$800,000 and plans to invest further as part
of the programme to acquire additional tourism assets.
-- MIL continues to keep its cash overheads tightly under
control. In the period to 30 September, management estimates the
cash overheads were around US$1.09 million which is broadly in line
with the same period in the previous year. On a per share basis
this equates to a 15.7% reduction year-on-year.
-- As at 30 September, management estimates the Company had cash
resources of approximately US$8.3 million (2016: US$4.5
million).
-- The Company continues to develop its proprietary business
pipeline in segments of the economy where the Directors see
investment and growth opportunities arising; currently the focus is
on prospective investments in the telecom, financial services,
hospitality, consumer and education sectors. The Directors are also
looking at a number of compelling opportunities that fall outside
these core focus sectors.
-- In June, the Company raised US$7.3 million from existing
shareholders and new investors, including institutional investors,
family offices, high net worth individuals and, through the
PrimaryBid platform, retail and other investors.
-- The transition from military dictatorship to civilian
government continues though not without its difficulties. Whilst
the situation in Rakhine stems from a complex and historically
charged background, the inexcusable humanitarian crisis clearly
needs to be remedied promptly. We anticipate that any international
action is likely to be targeted and designed to not impact the
substantive positive developments that have been achieved elsewhere
in the country. Progress, in the form of advancement in education,
healthcare, infrastructure, political reform and economic growth,
continues unabated.
Apollo Towers
Background
Apollo Towers is the second largest independent telecom tower
company in Myanmar. Established in 2013 it provides tower and power
services to all of the countries mobile network operators, being
Telenor of Norway (Apollo Towers' anchor tenant), Ooredoo of Qatar,
MPT (the state-owned enterprise jointly managed with KDDI and
Sumitomo) and the newly established, Viettel-led consortium,
MyTel.
MIL first invested in Apollo Towers in July 2015 when it led a
consortium of investors that invested US$30 million for a 14.18%
shareholding in Apollo Towers. The other shareholders are TPG
Growth ("TPG"), the middle market and growth equity investment
platform of TPG (formerly Texas Pacific Group), the global
investment firm, and Sanjiv Ahuja, the ex-Orange CEO. As at 30
September 2017, MIL's indirect shareholding in Apollo Towers is now
9.0% for a cost of US$21 million. In June 2016, Apollo Towers
successfully secured a US$250 million loan from the United States'
Overseas Private Investment Corporation ("OPIC") marking OPIC's
first financing in the country.
Update
-- The Myanmar telecoms sector continues to experience solid
growth with continuing demand for capacity expansion. Myanmar's
mobile penetration rate continues to grow with estimates currently
as high as 89%. Myanmar presently has 13,000 towers and is expected
to reach 23,000 towers within the next few years.
-- Apollo Towers has nearly doubled its tower portfolio to 1,800
towers since MIL's investment in 2015 and the company has plans for
700 more towers to be constructed in its next phase of development
with capacity for building a further 600 towers thereafter.
-- 13% of Myanmar's telecom towers are now under Apollo Towers'
management, making it the second largest independent telecom tower
in Myanmar.
-- Apollo Towers is experiencing a significant increase in the
number of co-tenants on its towers from both the imminent entry of
Myanmar's new operator, MyTel, and also the country's multiple new
internet service providers. As at 30 September 2017 its co-location
rate (meaning the number of multiple tenancies on its towers) was
1.5 times. Apollo Towers is targeting a co-location rate of 2.0
times by the end of this financial year at 31 March 2018.
-- Management estimates Apollo Towers' EBITDA for the six months
to 30 September 2017 was US$7.5 million.
-- During the period to 30 September 2017, Apollo Towers
successfully closed a round of mezzanine debt to enable it to
settle all its existing trade debts and to ensure it is well placed
to grow through further drawdowns of its OPIC loan facility.
-- There is an opportunity to significantly increase MIL's
participation in the telecom tower industry in Myanmar. If
successful, the transactions (including a consolidation of assets)
would result in MIL holding an interest in the country's largest
independent telecom tower company. MIL has the opportunity to
invest up to US$62million in this potential transaction.
Myanmar Finance International Limited ("MFIL")
Background
MFIL is one of the leading microfinance operators in Myanmar and
provides small loans (US$153 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. It is one of the few approved
deposit-taking microfinance institutions in Myanmar.
MFIL was established as a microfinance joint venture in August
2014 by MIL and Myanmar Finance Company Limited ("MFC") a company
controlled by U Htet Nyi, a Myanmar entrepreneur and honorary
consul for Norway and Finland. 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%, MFC 37.5% and Norfund
25%, with a total paid up capital of nearly US$5 million. MIL's
total investment cost to date is US$1.7 million.
Update
-- During the six months to 30 September, MFIL continued its
strong growth trajectory with its borrower base now at around
51,000 borrowers and its loan book up to MMK 10.6 billion (US$7.8
million), a CAGR of 70% and 109% respectively since MIL's initial
investment.
-- The average loan size provided by MFIL has increased by 160%
to MMK 208,000 (US$153) from MMK 80,000 at the time of the initial
investment.
-- Management estimates that MFIL's net profit after tax
("NPAT") for the six months to 30 September 2017 was
US$151,000.
-- MFIL has not incurred any non-performing loans ("NPLs") since MIL invested in 2014.
-- MFIL has launched a new micro-business product to complement
the strong and steady growth in its core group loan business.
-- It now has eight branches, including five in Yangon and three in Bago.
-- MFIL has US$3 million worth of Kyat-denominated debt
facilities now in place. MFIL is working to finalise additional
Kyat loans from a number of development finance institutions.
MFIL's shareholders may provide additional financing ahead of
closing loans from third parties so as not to slow down the growth
of the core lending business.
-- MFIL is profitable and by taking on additional leverage, with
no foreign currency exposure, it will continue to increase its
profitability. The fact that it has incurred no NPLs is
attributable to its prudent business model and strong banking
discipline.
Medicare International Health & Beauty ("Medicare")
Background
Medicare operates a nascent chain of modern pharmacy, health and
beauty franchise stores. All of these stores demonstrate the
"Medicare" brand concept of being informative, friendly and bright
with an energetic and smart style. Similar to a "Boots", "Watsons"
or "Walgreens", such branded quality chains are not yet common in
Myanmar; the bulk of the 8,000 or so pharmacies in Myanmar are
stand alone "Mom & Pop" stores.
In May 2017, MIL formed this greenfield joint venture. The
Company initially held a 45% interest (subsequently increased to
47.1%) in the joint venture and the joint venture partners are:
o Medicare Vietnam, Vietnam's largest pharmacy, health, beauty
and personal care retail group. Medicare Vietnam started in 2001
and today has over 65 outlets throughout Vietnam. The business has
built up a reputation with customers for genuine, ethical and
affordable everyday health and beauty necessities.
o Randy Guttery, a highly experienced senior executive with many
decades' 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.
Update
-- Since its establishment in May, the Medicare joint venture
has already rolled out 4 stores in downtown Yangon with 2 more
stores expected to open shortly.
-- From a standing start, it now employs over 50 staff, many of
whom were sent to Vietnam for their initial training. All the
pharmacists are University educated and speak both Myanmar and
English.
-- At this stage, Medicare is refining its product offering both
in terms of the range of products that it offers as well as the
locations in which it operates. It is expected that once this
testing phase is concluded, that Medicare will then expand the
number of stores to over 50 stores, predominantly in Yangon and the
other major cities.
-- MIL is excited at the prospects for the pharmacy, healthcare
and personal care retail sector given the expected rise in consumer
spending power. McKinsey has predicted that the middle and affluent
classes in Myanmar are set to boom in the coming years and this
segment could grow to 19 million people by 2030, tripling consumer
spending from US$35 billion to US$100 billion.
-- To date MIL has invested US$895,000 for a shareholding of
47.1% and expects to invest up to US$5 million as part of the store
roll-out programme over the next few years.
-- The first three stores were only open for a month during the
period to 30 September. The Company's share of the losses for the
period, mainly due to start-up costs, amounted to US$120k.
Myanmar Voyages
Background
-- After the period end in October 2017, MIL, together with U
Thet Lwin Toh and Daw Lwin Lwin Kyaw, two leading Myanmar tourism
entrepreneurs (the "Myanmar Partners"), established Myanmar
Voyages.
-- The tourism sector in Myanmar is experiencing rapid growth
with the number of arrivals having increased at a compound average
growth rate of 24% between 2010 to 2016, with tourist arrivals and
tourist expenditure in 2016 reaching US$2.9 million and US$2.2
billion respectively. Tourist expenditure is forecast to grow to
US$4.5 billion by 2027. As such, tourism is of significant
importance to Myanmar as a key export sector bringing in foreign
currency as well as providing employment opportunities across the
country.
Update
-- Myanmar Voyages Group is acquiring 60% of the existing travel
agency business of Myanmar Voyage International Tourism Company
Limited ("MVI"), which was founded in 1996 by the Myanmar Partners.
The Myanmar Partners will continue to hold the remaining 40% of
MVI.
-- MVI focuses on inbound tourism, serving tourists from markets
such as Spain, Scandinavia and Japan, as well as providing land
excursion tour packages for cruise liners calling at ports in
Myanmar.
-- The intention is for Myanmar Voyages to build on the platform
that MVI provides and establish or acquire additional assets in the
tourism sector including hotels, specialised tourist attractions
and restaurants.
-- Therefore, Myanmar Voyages is also looking to acquire:
o a hotel management agreement to run the Serenity Inle Resort,
which features bungalow villas on Inle Lake itself as well as
villas and rooms on the famous lake shore; and
o a 30% stake in Culture Attractions Limited ("CAL"), which
operates the "Mingalabar Balloon" in Kandawgyi Park, Yangon. This
is a static helium balloon that provides panoramic views of Yangon
for tourists and domestic visitors. It is a unique feature of the
Yangon landscape and not dissimilar to the "London Eye" in terms of
its attraction.
-- The above planned acquisitions are subject to regulatory
approvals and/or final negotiations and further announcements will
be made on these in future.
-- To date MIL has commited to invest US$800,000 for a
shareholding of 97% in Myanmar Voyages Group. This percentage will
come down as the MVI acquisition is subject to an earn-out
adjustment over the next two years. MIL expects to make additional
investments in Myanmar Voyages as part of the plan to acquire
tourism related assets over the next few years.
Potential food and beverage retail investment
-- In October, MIL signed an MOU to set up a food and beverage retail joint venture in Myanmar.
-- The joint venture partner is an experienced Myanmar retail group.
-- The joint venture will acquire an existing coffee shop chain
run by the joint venture partner, together with the franchise for a
donut chain. The joint venture will acquire a number of other food
and beverage master franchises that are already under negotiation
with the respective brand owners. It will also further develop
several "own brand" food and beverage chains that are at present in
the form of test outlets.
-- MIL is in the process of negotiating final terms with the
joint venture partner and is aiming to finalise contracts for this
investment within the next few months.
-- It is expected that initially MIL's investment will be
US$500,000 together with a convertible loan of US$3.5 million. MIL
expects that it will make additional investments into this joint
venture as the business expands, both in terms of the number of
outlets it owns but also in the number of franchises that it
operates.
-- MIL is excited at the prospects for the food and beverage
retail sector given the expected rise in consumer spending power,
especially given Myanmar's youthful population with about 55% under
the age of 30. The McKinsey forecasts mentioned above are equally
relevant to this opportunity.
Strategic Update
On 10 April 2017, MIL issued a strategic update. Since that
date, as set out above, the Company has closed both of the tourism
and pharmacy investments as described. Since then it has also
signed the food and beverage retail MOU.
MIL has a clear business strategy for its current and potential
investments in Myanmar:
-- To stay focused on the business development process and
actively manage risk minimisation / reward maximisation to produce
superior long term returns. This will come both from additional
investment in existing companies (including helping them build or
buy businesses) as well as from new investments.
-- MIL's permanent capital structure allows it to optimise
returns by determining the point and method of monetisation.
-- Investment yields are complemented by generating revenue from fee earning activities.
In essence, MIL's strategy is to build net asset value per share
as well as to generate dividends when it becomes commercially
appropriate. Over time this will provide an attractive total return
to its shareholders.
In line with the above strategy, the Company continues to
develop its proprietary business pipeline in segments of the
economy where the Directors see the most attractive investment and
growth opportunities arising. This pipeline has been developed by
leveraging off the Directors' network of relationships in Myanmar
and the immediate Asia region:
-- Currently the focus is on possible investments in the
telecom, financial services, hospitality, consumer and education
sectors. The Directors are also looking at a few compelling
opportunities that fall outside these core focus sectors.
-- The telecom opportunity is a substantial one that is expected
to have a significant positive impact on the Company's telecom
towers business. Like the other pipeline opportunities, it will
require the Company to raise funds to take full advantage of the
opportunity on offer.
-- Some of the hospitality, consumer and education opportunities
offer the prospect of a modest initial investment with scale-up
potential once the business model has been proven. The rise in
spending power of the middle and affluent class in Myanmar is
expected to make these attractive sectors.
Financial Performance
Profit and Loss
For the six months to 30 September, MIL's unaudited consolidated
loss after tax was US$1.38 million.
This represents:
-- our share of MFIL's profits (US$57k) less;
-- our share of Medicare's losses (US$120k);
-- the overheads associated with running the Company's business (US$1.09 million); and
-- the non-cash impact of the share based payments arising from
the Company's Employee Share Option Plan ("ESOP") (US$228k).
The Remuneration Committee is presently assessing the
effectiveness and appropriateness of the ESOP scheme and is
considering replacing it with an alternative long term incentive
scheme.
It should be noted that for the same 6-month period last year
the consolidated loss after tax, excluding the joint venture
results and share based payments, was US$1.12 million. As such the
level of cash overheads for the 6 months to 30 September reduced by
US$33k over the past year. On a per share basis the loss has
dropped from 4.84c to 4.08c, a reduction of 15.7%.
Net asset value
The Directors have determined that MIL's Net Asset Value ("NAV")
as at 30 September was US$34.97 million, or US$0.952 per share.
This is comprised of:
-- the investment in Apollo Towers of US$20.8 million, excluding
the non-controlling interests, determined using the Price of a
Recent Investment methodology;
-- the investment in MFIL of US$5.5 million, determined using
the Price to Book Value methodology;
-- the investment in Medicare of US$375k, determined as the
proportionate share of the joint venture's net asset value; and
-- cash and other net assets/liabilities of US$8.3 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.
The mezzanine debt that Apollo Towers raised during this period
had a negative impact on the equity value of Apollo Towers.
However, the Directors believe that significant additional value
that has been created in Apollo Towers since the investment was
made means that it should still continue to be held at cost. Whilst
some 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 Towers' valuation when there is greater
clarity on the variables that determine the value of Apollo Towers'
business.
As at 31 March 2017 the Directors had assessed the value of the
Group's investment in MFIL to be US$5.5 million, this being
determined using the "Price to Book Value" methodology. In
assessing the value of the investment in MFIL as at 30 September,
the Directors have decided that it is appropriate to maintain both
that methodology and that value.
The Directors have assessed the value of the Group's investment
in Medicare as at 30 September to be US$375,000, being the
proportionate share of the joint venture's net assets as at that
date. Since that date the Company has invested a further
US$400,000.
The NAV valuation of US$34.97 million represents a 19.7%
increase in the NAV over the 6-month period to 30 September, and
this is mainly attributable to:
-- the equity fund raising in June of US$7.3 million; after allowing for
-- cash overheads (ie excluding the impact of the ESOP) of US$1.09 million; and
-- the start-up losses in Medicare.
Unaudited Financial Statements
Attached to this announcement are the unaudited financial
statements, which have been prepared in compliance with IFRS.
Fundraising
In June the Company raised US$7.3 million through an equity
issue of new ordinary shares. The proceeds will be used for future
investment as well as covering the Company's general overheads.
Whilst existing shareholders continued to support the Company's
growth, new shareholders also participated in this round.
MIL has now raised over US$41 million since inception from a
broad based group of shareholders with an increasing number of
institutional investors. As stated above, and in accordance with
the Company's strategy, we are considering raising additional
equity to fund further investments.
We continue to examine the prospects for establishing an
additional listing for the Company in Asia. We believe that a
listing nearer Myanmar may be of benefit in attracting regional
investors, both institutional and retail, which in turn could help
increase liquidity in the trading of the Company's shares and
warrants.
Commenting on the Interim Results, U Aung Htun, Managing
Director of Myanmar Investments International Limited, said:
"Clearly the current headline news on Myanmar belongs to the
heart-breaking events in Rakhine. This tragedy however overshadows
all the substantive progress achieved throughout the country.
MIL continues to make impactful investments that will make a
positive difference to Myanmar citizens elsewhere in the country.
Our investment in telecommunications has brought news, education
and entertainment to millions across the country. We have invested
in microfinance, providing funding to enable 50,000 otherwise
unbankable families to start their own micro-businesses. We have
started a pharmaceutical, health and beauty franchise chain
providing reliable and ethical dispensing of medicines, healthcare
and beauty products. More recently we have invested in a tourism
business which will create jobs and bring hard foreign currency
into the country.
We have always known that the transition from the old regime
would be complex and would take time. We remain bullish about the
country's prospects as we are a long term investor and partner to
the development in Myanmar."
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:
Aung Htun Michael Dean
Managing Director Finance Director
Myanmar Investments International Myanmar Investments International
Ltd 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 Barklem/ Andrew Pinder / David Herring
Carolyn Sansom Alistair Roberts (Hong Kong)
Grant Thornton UK LLP Investec Bank plc
+44 (0) 20 7383 5100 +44 (0) 20 7597 4000
For more information about MIL, please visit
www.myanmarinvestments.com
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Present Prior Prior Full
Interims Interims Year
1 April 1 April
2017 to 1 April 2016 to
30 Sept 2016 to 31 March
Note 2017 30 Sep 2016 2017
Unaudited Unaudited Audited
US$ US$ US$
Revenue - - -
Other item of income
Other income 4 182 75 174
Items of expense
Employee benefits expense 5 (835,839) (846,445) (1,867,297)
Depreciation expense 12 (3,966) (8,381) (12,941)
Other operating expenses (476,780) (515,423) (1,016,672)
Finance costs 6 (6,999) (6,761) (13,887)
Share of results of joint venture,
net of tax 10 (63,120) 47,942 85,933
Loss before income tax 7 (1,386,522) (1,328,993) (2,824,690)
Income tax expense 8 374 (5,382) (8,390)
Loss for the financial period (1,386,148) (1,334,375) (2,833,080)
=========== ============ ===========
Other comprehensive income:
Items that may be reclassified
subsequently to profit or loss:
Exchange gain/(loss) arising
on translation of foreign operations 10 11,773 (55,153) (188,209)
Other comprehensive income
for the financial period, net
of tax 11,773 (55,153) (188,209)
----------- ------------ -----------
Total comprehensive income
for the financial period (1,374,375) (1,389,528) (3,021,289)
=========== ============ ===========
Loss attributable to:
Owners of the parent (1,384,970) (1,332,330) (2,828,540)
Non-controlling interests (1,178) (2,045) (4,540)
----------- ------------ -----------
(1,386,148) (1,334,375) (2,833,080)
=========== ============ ===========
Total comprehensive income
attributable to:
Owners of the parent (1,373,197) (1,387,483) (3,016,749)
Non-controlling interests (1,178) (2,045) (4,540)
(1,374,375) (1,389,528) (3,021,289)
=========== ============ ===========
Loss per share (cents)
* Basic and diluted 9 (4.08) (4.84) (9.74)
=========== ============ ===========
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Present Interims Prior Prior Full
Interims Year
1 April 2017 1 April 1 April 2016
to 30 Sept 2016 to to 31 March
Notes 2017 30 Sep 2016 2017
Unaudited Unaudited Audited
US$ US$ US$
ASSETS
Non-current assets
Investments in joint ventures 10 2,155,334 1,806,746 1,711,681
Available for sale financial assets 11 31,395,522 31,395,522 31,395,522
Plant and equipment 12 12,217 9,556 12,510
---------------- ------------ ------------
33,563,073 33,211,824 33,119,713
---------------- ------------ ------------
Current assets
Other receivables 291,068 155,934 198,504
Cash and cash equivalents 8,305,290 4,545,048 3,303,327
---------------- ------------ ------------
8,596,358 4,700,982 3,501,831
---------------- ------------ ------------
TOTAL ASSETS 42,159,431 37,912,806 36,621,544
---------------- ------------ ------------
EQUITY AND LIABILITIES
Equity
Share capital 14 39,689,881 32,815,247 32,656,994
Share option reserve 15 1,094,090 566,870 866,390
Accumulated losses (9,054,535) (6,175,985) (7,669,565)
Foreign exchange reserve (257,569) (136,285) (269,341)
---------------- ------------ ------------
Equity attributable to owners of
the parent 31,471,867 27,069,847 25,584,478
Non-controlling interests 10,392,929 10,396,603 10,394,108
---------------- ------------ ------------
Total equity 41,864,796 37,466,450 35,978,586
---------------- ------------ ------------
LIABILITIES
Current liabilities
Other payables 287,100 414,760 632,738
Income tax payable 7,535 13,318 10,220
---------------- ------------ ------------
Total current liabilities 294,635 428,078 642,958
---------------- ------------ ------------
TOTAL EQUITY AND LIABILITIES 42,159,431 37,912,806 36,621,544
================ ============ ============
NET ASSETS ATTRIBUTABLE TO SHAREHOLDERS
OF THE COMPANY 31,471,867 27,069,847 25,584,478
================ ============ ============
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTH PERIODED 30 SEPTEMBER 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$
At 1 April 2017 32,656,994 866,390 (269,341) (7,669,565) 25,584,477 10,394,108 35,978,586
Loss for the
financial
period (1,384,970) (1,384,970) (1,178) (1,386,148)
Other comprehensive
income for the
financial
period
Exchange gain arising
on translation of
foreign
operations 10 11,773 11,773 11,773
---------- --------- --------- ----------- ------------- ------------ -----------
Total other
comprehensive
income for the
financial
period 11,773 11,773 11,773
---------- --------- --------- ----------- ------------- ------------ -----------
Total comprehensive
income for the
financial
period 11,773 (1,384,970) (1,373,197) (1,178) (1,374,375)
Contributions by and
distributions to
owners
---------- --------- --------- ----------- ------------- ------------ -----------
Issue of shares 14 7,293,725 7,293,725 7,293,725
Exercise of warrants 11,250 11,250 11,250
Share issue expenses 14 (272,088) (272,088) (272,088)
Share option expense 15 227,700 227,700 227,700
Total contributions
by and distributions
to owners 7,032,887 227,700 7,260,587 7,260,587
At 30 September 2017 39,689,881 1,094,090 (257,569) (9,054,535) 31,471,867 10,392,929 41,864,796
========== ========= ========= =========== ============= ============ ===========
UNAUDITED 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$
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 differences
arising from
dilution
of interest in
joint
ventures - - (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 CASH FLOWS
Present Interims Prior Prior Full
Interims Year
Period ended Period ended Period ended
30 Sept 2017 30 Sept 2016 31 March 2017
Unaudited Unaudited Audited
Note US$ US$ US$
Operating activities
Loss before income tax (1,386,522) (1,328,993) (2,824,690)
Adjustments for:
Interest income 4 (182) (75) (174)
Finance costs 6 6,999 6,761 13,887
Depreciation of plant and
equipment 12 3,966 8,381 12,941
Share-based payment expense 15 227,700 253,309 555,459
Share of results of joint
ventures, net of tax 10 63,120 (47,942) (85,933)
Operating cash flows before
working capital changes (1,084,919) (1,108,559) (2,328,510)
Changes in working capital:
Other receivables (92,564) (64,184) (106,754)
Other payables (345,639) 283,339 501,317
Cash used in operations (1,523,122) (889,404) (1,933,947)
Interest received 182 75 174
Finance costs paid (6,999) (6,761) (13,887)
Income tax paid (2,311) (1,591) (7697)
Net cash flows used in operating
activities (1,532,250) (897,681) (1,955,357)
---------------- ------------- --------------
Investing activities
Investment in available for
sale securities 11 - (10,000) (10,000)
Investment in joint venture 10 (495,000) - -
Purchase of plant and equipment 12 (3,673) (1,050) (8,564)
---------------- ------------- --------------
Net cash flows used in investing
activities (498,673) (11,050) (18,564)
Financing activities
Net proceeds from issuance
of shares 14 7,032,887 4,067,720 3,891,189
Net cash flows generated from
financing activities 7,032,887 4,067,720 3,891,189
Net change in cash and cash
equivalents 5,001,964 3,158,989 1,917,268
Cash and equivalents at beginning
of the year 3,267,183 1,349,915 1,349,915
Cash and equivalents at end
of financial period 8,269,147 4,508,904 3,267,183
================ ============= ==============
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTH PERIODED 30 SEPTEMBER 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.
Details of the Company's investments in its joint ventures are
disclosed in Note 10; its investment in available-for-sale
financial assets are disclosed in Note 11 and the principal
activities of the subsidiaries are disclosed in Note 13.
The consolidated financial statements of the Company and its
subsidiaries (the "Group") for the six month period ended 30
September 2017 were approved by the Board of Directors on 23
November 2017.
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 2017 can be found on the Company's website at
www.myanmarinvestments.com.
1.1 Going concern
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.
Accordingly, 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 financial
statements for the year to 31 March 2017, 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 for the year to 31 March
2017, a copy of which can be found on the Company's website at
www.myanmarinvestments.com.
4. Other income
6 months to Year ended
6 months to 30 30 September 31 March
September 2017 2016 2017
US$ US$ US$
Interest income 182 75 174
182 75 174
=============== ============= ==========
5. Employee benefits expense
6 months to Year ended
6 months to 30 30 September 31 March
September 2017 2016 2017
US$ US$ US$
Salaries, wages and other staff
benefits 573,139 593,136 1,061,838
Bonuses 35,000 - 250,000
Share option expense 227,700 253,309 555,459
--------------- ------------- ----------
835,839 846,445 1,867,297
=============== ============= ==========
The employee benefits expense includes the remuneration of
Directors as disclosed in Note 16.
6. Finance costs
Finance costs represent bank charges for the financial
period.
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:
6 months 6 months
to 30 September to 30 September Year ended
2017 2016 31 March 2017
US$ US$ US$
Auditor's remuneration 21,946 21,183 52,071
Consultants fees 153,897 226,101 377,240
Operating lease expenses 32,842 40,473 74,273
Professional fees 47,848 13,618 59,098
Travel and accommodation 49,850 53,276 63,779
Transaction Costs - - 30,447
================ ================ ==============
8. Income tax
The Company received a tax refund during the period for over
payment of taxes in prior periods.
9. Loss per share
Basic loss per share is calculated by dividing the loss for the
financial period attributable to owners of the parent by the
weighted average number of ordinary shares outstanding during the
financial period.
The following reflects the loss and share data used in the basic
and diluted loss per share computation:
6 months 6 months
to to Year ended
30 September 30 September 31 March
2017 2016 2017
Loss for the financial period attributable
to owners of the Company (US$) (1,384,970) (1,332,330) (2,828,540)
Weighted average number of ordinary
shares during the financial period
applicable to basic loss per share 33,944,443 27,553,577 29,049,372
Loss per share
Basic and diluted (cents) (4.08) (4.84) (9.74)
============= ============= ===========
Diluted loss per share is the same as the basic loss per share
because the potential ordinary shares to be converted are
anti-dilutive as the effect of the shares conversion would be to
decrease the loss per share.
10. Investments in joint ventures
Myanmar Finance International Ltd.
6 months 6 months Year ended
to 30 September to 30 September 31 March
2017 2016 2017
Investment in joint venture (37.5%) US$ US$ US$
At 1 April 1,711,681 1,813,957 1,813,957
Investments during the year - - -
Share of results of joint venture,
net of tax 56,925 47,942 85,933
Foreign exchange adjustment 11,773 (55,153) (188,209)
Gain on dilution of interest
in joint venture - - -
---------------- ---------------- ----------
At period end 1,780,379 1,806,746 1,711,681
================ ================ ==========
In August 2014, the Company's wholly-owned subsidiary, Myanmar
Investments Limited ("MIL"), established 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. At that time MIL owned 55 per cent and MFC
owned 45 per cent of MFIL. It was also agreed that both parties
would make additional equity contributions as MFIL's business grew.
To date MIL's equity capital contributions have totalled
US$1,780,379.
In November 2015, The Norwegian Investment Fund for Developing
Countries ("Norfund") also became a shareholder in MFIL. Following
Norfund's investment, MIL's and MFC's shareholdings in MFIL were
each reduced to 37.5%, while Norfund now has a 25% shareholding in
MFIL.
MFIL is a well-established provider of microfinance loans to
small-scale business operators in rural and urban areas of Yangon
and neighbouring Bago.
MFIL is deemed to be a joint venture of the Company as the
appointment of its directors and the allocation of voting rights
for key business decisions require the unanimous approval of all
its shareholders.
Medicare International Holdings Pte Ltd
6 months 6 months Year ended
to 30 September to 30 September 31 March
2017 2016 2017
Investment in joint venture
(45%) US$ US$ US$
At 1 April - - -
Investment during the year 495,000 - -
Share of results of joint venture,
net of tax (120,045) - -
At period end 374,955 - -
================ ================ ==========
In May 2017 the Company's wholly-owned subsidiary, MIL No. 2
Pte. Ltd. ("MIL 2"), issued shares to H&B Management Solutions
Pte. Limited and Randall Guttery such that they owned 45% and 10%
of MIL 2's shares respectively. The Company also subscribed
$490,000 for additional MIL 2 shares and its interest in MIL 2 was
diluted to 45%. MIL 2 therefore ceased to be a subsidiary and
became a jointly controlled entity. At the same time, MIL 2 changed
its name to Medicare International Health and Beauty Pte. Ltd.
("Medicare").
Medicare was established to introduce the pharmacy, health,
beauty and personal care chain store franchise concept in
Myanmar.
Medicare is deemed to be a joint venture of the Company as the
appointment of its directors and the allocation of voting rights
for key business decisions requires the approval of other
shareholders.
Summary
6 months 6 months Year ended
to 30 September to 30 September 31 March
2017 2016 2017
Share of results of joint venture,
net of tax US$ US$ US$
Myanmar Finance International
Ltd. 56,925 47,942 85,933
Medicare International Holdings
Pte Ltd. (120,045) - -
(63,120) 47,942 85,933
----------------- ----------------- -----------
11. Available-for-sale financial assets
6 months 6 months Year ended
to 30 September to 30 September 31 March
2017 2016 2017
Available-for-sale financial assets US$ US$ US$
Unquoted equity shares, at cost 31,392,522 31,395,522 31,395,522
================ ================ ==========
MIL 4 Limited ("MIL 4"), a 66.67% owned subsidiary, was
incorporated by the Company to acquire shares in Apollo Towers Pte.
Ltd. ("Apollo"), an unquoted Singapore incorporated company.
On 29 July 2015, MIL 4 acquired a 14.18% stake in Apollo 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 acquired a warrant for a total
consideration of US$10,000, allowing MIL4 to purchase for a nominal
amount 1.56% of Apollo's total capital stock on a fully diluted
basis. During the period Apollo issued warrants to an unconnected
third party on an arm's length basis. As a result of this MIL4 now
has an effective equity interest of 13.4% in Apollo and the
Company's effective equity interest in Apollo is 9.0%.
Apollo owns and operates a leading telecommunication towers
business in Myanmar through its subsidiary Apollo Towers Myanmar
Limited.
In accordance with IFRS, the investment in unquoted equity
securities is stated at cost, including transaction costs. The
investment is denominated in United States Dollars.
12. Plant and equipment
Computer Furniture
equipment Office equipment and fittings Total
US$ US$ US$ US$
Financial period ended 30
September 2017
Cost
Balance at 1 April 2017 17,410 4,895 34,733 57,038
Additions - - 3,673 3,673
---------- ---------------- ------------- ------
Balance at 30 September 2017 17,410 4,895 38,406 60,711
========== ================ ============= ======
Accumulated depreciation
Balance at 1 April 2017 11,753 3,012 29,763 44,528
Depreciation for the financial
period 1,720 580 1,666 3,966
---------- ---------------- ------------- ------
Balance at 30 September 2017 13,473 3,592 31,429 48,494
========== ================ ============= ======
Carrying amount
Balance at 30 September 2017 3,937 1,303 6,977 12,217
========== ================ ============= ======
Financial year ended 31 March
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
========== ================ ============= ======
13. Investment in subsidiaries
Details of the investments in which the Group has a controlling
interest are as follows:
Proportion Proportion
Country of of of
incorporation/ ownership ownership
principal interest interest
place of held by the held by non-control
Name of subsidiaries business Principal activities Group interests
% %
Myanmar Investments Investment
Limited Singapore holding company 100 -
Provision of
management
MIL Management Pte. services to
Ltd. Singapore the Group 100 -
MIL No. 3 Pte. Ltd. Singapore Dormant 100 -
British Virgin Investment
MIL 4 Limited Islands holding company 66.67 33.33
Held by MIL Management
Pte. Ltd.
Provision of
management
MIL Management Co., services to
Ltd Myanmar the Group 100 -
14. Share capital
6 months 6 months
to 30 September to 30 September Year to 31
2017 2016 March 2017
US$ US$ US$
Issued and fully-paid share capital:
Ordinary shares at the beginning
of the period 32,656,994 28,765,805 28,765,805
Issuance of ordinary shares during
the period 7,293,725 4,224,591 4,219,081
Exercise of warrants during the period 11,250 - 7,885
Share issuance expenses (272,088) (156,871) (335,777)
---------------- ----------------
39,689,881 32,833,525 32,656,994
================ ================ ===========
Equity Instruments in issue Ordinary Shares Warrants
At the beginning of the financial
period 30,556,793 16,040,882
Issued during the financial period 6,181,123 -
Exercise of warrants during the financial
period 15,000 (15,000)
--------------- ----------
At the end of the financial period 36,752,916 16,025,882
=============== ==========
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 23 June 2017, the Company allotted 5,333,623 Ordinary Shares
at US$1.18 per share (total of US$6,293,675) pursuant to a
subscription for new shares. On 27 June 2017, the Company allotted
847,500 Ordinary Shares at US$1.18 per share (total of
US$1,000,050) pursuant to a subscription for new shares (together
these two issues are the "Fifth Subscription").
During the financial period, a total of 15,000 warrants were
exercised at a price of US$0.75 by the parties that held them for
cash consideration of US$11,250.
All shares have been admitted to trading on AIM under the ticker
MIL.
The new ordinary shares issued during the financial period
ranked pari passu in all respects with the existing ordinary shares
of the Company.
Warrants
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.
15. Share option reserve
Details of the Share Option Plan (the "Plan")
Details of the Share Option Plan (the "Plan") are available in
the financial statements for the year to 31 March 2017, which can
be found on the Company's website at
www.myanmarinvestments.com.
As at 30 September 2017, there were 3,622,740 share options
available for issue under the Plan of which 2,673,028 had been
granted. These granted share options have a weighted average
exercise price of US$1.214 per share and a weighted average
contractual life of 8.01 years.
The 3,622,740 share options available were created under the
following series:
Exercise
price
Series/Date Occasion Number (USD)
Series 1 Admission Placing and Subscription 584,261 1.100
Series 2 Second Subscription 361,700 1.155
Series 3 Third Subscription 1,734,121 1.265
Series 4 Fourth Subscription 324,546 1.430
Series 5 Fifth Subscription 618,112 1.298
---------
3,622,740
=========
The following share-based payment arrangements were in existence
during the current financial period:
Exercise Fair value
Number of price at grant
Option series share options Grant date Expiry date (USD) date
Series 1 410,000 27 June 2013 26 June 2023 1.100 153,495
Series 1 25,000 9 December 2013 8 December 2023 1.100 19,015
25 September 24 September
Series 1 132,261 2014 2024 1.100 62,937
Series 2 24,000 2 June 2015 1 June 2025 1.155 14,671
Series 1 10,200 15 January 2016 14 January 2026 1.100 6,235
Series 2 331,700 15 January 2016 14 January 2026 1.155 193,562
Series 3 956,600 15 January 2016 14 January 2026 1.265 508,734
Series 3 195,000 28 June 2016 27 June 2026 1.265 136,351
Series 1 6,800 19 October 2016 18 October 2026 1.100 4,088
Series 2 6,000 19 October 2016 18 October 2026 1.155 3,447
Series 3 575,467 19 October 2016 18 October 2026 1.265 302,071
================ ----------
2,673,028 1,404,606
================ ==========
Movement in share options during the financial period
There were 2,673,028 share options outstanding during the period
as there were no grants or forfeitures during the period.
No share options were exercised during the financial period.
Movement in share option reserve during the financial period
6 months 6 months Year ended
to 30 September to 30 September 31 March
2017 2016 2017
US$ US$ US$
Balance at start of the financial
period 866,390 313,561 313,561
Grant of share options/Share option
expenses 227,700 253,309 555,459
Cancellation of Share Options - - (2,630)
================ ================ ==========
Balance at end of financial period 1,094,090 566,870 866,390
================ ================ ==========
The Group recognised a net expense of US$227,700 related to
equity-settled share-based payment transactions during the
financial period.
16. Significant related party disclosures
Compensation of key management personnel
Director remuneration for the six month period ended 30
September 2017 is as follows:
Short term Share
Directors' employee option
fee benefits(1) plan Total
US$ US$ US$ US$
Executive directors
Maung Aung Htun - 277,945 65,101 343,046
Anthony Michael Dean - 291,912 61,756 353,668
Independent non-executive
directors
Christopher William Knight 20,000 - 13,322 33,322
Craig Robert Martin 15,000 - 13,322 28,322
Christopher David Appleton 15,000 - 13,322 28,322
Henrik Bodenstab 15,000 - 5,614 20,614
----------
65,000 569,857 172,437 807,294
========== ============ ======= =======
(1) The short term employee benefits also includes rental
expenses paid for Directors' accommodation.
Share Subscription
The following Directors participated in the share subscription
in June 2017:
Share
Subscription
Director US$
Maung Aung Htun 358,720
Anthony Michael Dean 220,660
Craig Robert Martin 50,000
Christopher David Appleton 50,000
Henrik Bodenstab 50,000
--------------
729,380
==============
17. Dividends
The Directors of the Company do not recommend any dividend in
respect of the six month period ended 30 September 2017.
18. Financial risk management objectives and policies
The Company's financial risk management objectives and policies
are available in the audited financial statements for the year to
31 March 2017, a copy of which can be found on the Company's
website at www.myanmarinvestments.com.
19. Subsequent events
There have been no material subsequent events since the period
end.
- Ends -
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR EAKFDASNXFFF
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