TIDMMIL
RNS Number : 4704D
Myanmar Investments Intl Ltd
29 June 2021
This announcement contains inside 29 June 2021
information
Myanmar Investments International Limited
Interim results to 31 March 2021
Myanmar Investments International Limited [AIM: MIL] ("MIL" or
the "Company"), the AIM-quoted Myanmar focused investment company,
today announces its unaudited interim financial results for the six
months to 31 March 2021.
Myanmar
Myanmar is currently in its fifth month of a politically induced
crisis after the military took over the government on 1 February
2021. At one level an artificial sense of normalcy has returned to
parts of Yangon while at the same time signs of the crisis are
everywhere; long queues to withdraw a maximum of USD 120 from ATMs
per day, as well as regular daily bombings.
In these five months, over 840 people have died, 4,500 leaders
and protestors have been imprisoned and civil liberties curtailed,
not to mention internet restrictions. The public has shown its
defiance through civil disobedience that has paralyzed, inter alia,
the healthcare, banking and education sectors. A parallel shadow
government has been formed that is challenging the military
installed government and the Ethnic Armed Organizations have
increased their skirmishes with the military in the rural
areas.
Equally worrying is the recent formation of the Peoples Defense
Force at both the national and village level. Daily explosions and
killings have become the norm in Yangon and other cities. The
opposition is increasingly better armed.
International condemnation and sanctions against the military
have been issued but with little effect.
The strong determination of a computer savvy gen Z who have
enjoyed a decade of openness and of ethnic groups who sense an
opening to push for a long desired federal structure is likely to
mean that the current conflict could be protracted.
Throw in a looming financial crisis, a weakening currency and
sharp price rises, Fitch Solutions has forecast a 20 per cent
decline in GDP in 2021.
This is a potent and combustible mix to which, as of now, there
appears to be no resolution in sight and may deteriorate
further.
Overview
The Company's shareholders approved a change to the Company's
investment objectives at the AGM held on 24 October 2019 and, as a
result, the Directors have commenced the process of planning and
implementing an orderly disposal of the investment portfolio with
the intention of returning surplus cash to shareholders with a view
towards an eventual winding down of the business.
As at 31 March 2021 the Company had two investments in
Myanmar:
-- an indirect shareholding of 4.1 per cent in AP Towers
Holdings Pte. Limited ("AP Towers"), one of Myanmar's leading
independent tower companies ("ITC"). This investment will most
likely continue to be held until such time as our joint venture
partner looks to create an exit opportunity. At this stage, no
discussions are underway and there is no defined timeframe for such
an exit.
-- a 37.5 per cent shareholding in Myanmar Finance International
Limited ("MFIL") a well-established microfinance company. On 1
April 2020, the Company announced that it has accepted an offer to
sell its shareholding in MFIL. Due to the outbreak of COVID-19 and
the change of government on 1 February 2021 the transaction has not
been closed yet. On 26 April 2021, the purchaser's shareholders
approved a one-year extension for closing the transaction.
The Directors have determined that MIL's Net Asset Value ("NAV")
as at 31 March 2021 was US$28.3 million, or US$0.74 per share.
The valuation of the two investments has been consistent with
the methodology of previous years. However, given the uncertainty
regarding the political and economic development in Myanmar, the
Directors have applied a portfolio discount of 30% to reflect this
uncertainty.
The Company has continued to streamline its operations and as a
result reduced its overheads. In the period to 31 March 2021, the
core cash-based overheads were US$339,000 which is 51.6 per cent
lower than for the same period last year.
As at 31 March 2021, the Company had cash resources of US$2.1
million (2020: US$2.8 million).
AP Towers
Background
AP Towers is an independent tower company ("ITC") in Myanmar,
managing one of the largest networks of towers in Myanmar. Its
wholly owned subsidiaries Apollo Towers and Pan Asia Towers provide
tower and power services to Myanmar's mobile network operators
("MNOs").
MIL's 66.6 per cent subsidiary, MIL 4 Limited ("MIL4") , has a
shareholding of 6.2 per cent in AP Towers, of which 4.1 per cent is
attributable to MIL.
MIL4 sits on the board of AP Towers and contributes to the
strategy and growth of the company.
Update
-- The Myanmar telecoms sector has grown rapidly since 2015.
Myanmar's mobile penetration rate is estimated to be as high as 107
per cent though this is based on SIM cards and not unique
subscribers. Coupled with this is the prevalence of data enabled
devices. Smartphones are estimated to account for approximately 80
per cent of the mobile phones in use in the country and data demand
drives the need for connectivity. Connectivity requires an
extensive network of telecom towers with reliable power. Myanmar
currently has 20,000 towers, of which 11,000 are owned by ITCs, and
is expected to reach 22,000 towers within the next few years.
-- Apollo Towers and Pan Asian Towers have both built strong
reputations in the market for their valuable site locations,
operational excellence and strong customer focus. AP Towers will
look to leverage the best practices of both companies in providing
a full suite of services that are commercially attractive to the
customers of both businesses.
-- The Myanmar telecom tower sector, following a period of rapid
growth, has continued to slow in the last 18 months in terms of
both new towers and new co-locations.
-- Mobile network services in Myanmar have been significantly
disrupted since February 2021, primarily as a result of the
suspension of data services. APTH and other tower and power
providers have also faced difficulties in maintaining the up time
of the power services as movement of key suppliers and personnel
has been restricted. APTH has focused on maintaining the safety and
security of its staff. Whilst the operating environment has been
very challenging, APTH has been able to continue to provide a
reliable service with high up times, thereby contributing the
continued availability of mobile phone services to the population
of Myanmar.
-- Contrary to other industries, the telecoms sector has not
suffered greatly due to the outbreak of COVID-19.
-- As at 31 March 2021, Apollo Towers and Pan Asia Towers
together had an aggregated portfolio of 3,255 towers, 6,668 tenants
and a co-location ratio ("Lease-up-Rate" or "LUR") of 2.05x. This
compares to an LUR of 2.05x at 30 September 2020.
-- By adding additional tenants to existing towers, the yield on
invested capital can significantly improve, making each additional
tenant highly accretive in terms of EBITDA and eventually
enterprise value. Market analysis for Myanmar points to an expected
LUR of 2.2x or higher over the next few years.
-- As of 31 March 2021, AP Towers annualised adjusted "run rate"
revenue and EBITDA has increased to US$108.6 million and US$88.9m,
respectively. This represents an increase of 3.9 per cent and 6.6
per cent, respectively compared with September 2020.
-- Going forward, AP Towers will be looking to increase the
number of tenancies either from new "Build to Suit" towers or from
adding co-locations to its existing towers.
-- AP Towers' net debt was US$ 416.8 million as at 31 March
2021, a decrease of US$ 12.5 million since the end of September
2020.
Valuation
Using the same methodology as at 30 September 2020 with updated
trading and comparable data and on the basis that the trading
environment and outlook is the same as at the time of the 30
September 2020 valuation, the value of this investment would be
US$33.8 million, an increase of US$5.5 million compared with the
valuation as at 30 September 2020.
This value of AP Towers represents a profit of US$13 million
over the cost of the investment and an IRR since the initial
investment in July 2015 of 9.0%.
Myanmar Finance International Limited ("MFIL")
Background
MFIL is one of the leading microfinance operators in Myanmar.
Through 15 main branches and 3 sub-branches it provides loans of
between US$150 and US$5,000 to individuals and small-scale business
operators in rural and semi-urban areas in Yangon, Bago, Ayeyarwady
and Mon. In October 2020 MFIL was granted a license to operate in
the Mandalay region.
MFIL was established as a microfinance joint venture in
September 2014 by MIL and Myanmar Finance Company Limited ("MFC").
In November 2015, the Norwegian Investment Fund for Developing
Countries ("Norfund"), the Norwegian development finance
institution, also became a shareholder such that the shareholdings
today are MIL 37.5 per cent, MFC 37.5 per cent and Norfund 25 per
cent, with a total paid up capital of over US$7 million. MIL's
total investment cost to date is US$2.7 million.
MFIL is a well-established microfinance company that has a
positive impact on the lives and economic well-being of its
clients.
A representative of MIL sits on the board of MFIL and works
closely with the management and shareholders on strategic and
restructuring issues.
Update
-- Although COVID-19 and the related lockdown was difficult for
the microfinance industry, until February 2021 MFIL was relatively
unscathed with Portfolio at Risk over 30 days ("PAR 30+") of around
2%, a growing loan book and operating profits.
-- The current political crisis is having an adverse impact on
the country's economy, finances and business landscape.
Fitch Solutions has forecast a 20 percent decline in GDP for
2021. This will impact livelihoods and the earning capacity of
MFIL's clients.
-- In addition, sporadic violence in some of the areas that MFIL
operates in has affected its clients' mobility and impacted
collection. This difficulty was compounded when mobile internet was
turned off for 6 weeks as mobile remittance agents were unable to
function.
-- The Civil Disobedience Movement that sprung up has led to
strikes in many sectors including banking which has nearly
paralyzed the country's financial system. Cash shortages and
difficulties in making remittances is now a daily struggle for most
citizens.
-- Against this background and with no clear indication of how
this crisis might be resolved, MFIL has adopted a cautious
approach. It has been repositioning its balance sheet into safer
assets while also increasing liquidity. MFIL has also reduced
operating costs and will be adjusting its product lines. This
process is ongoing.
-- MFIL continues to see substantial demand for its products but
before it can consider increasing its loan book, it needs stability
and it needs to assist clients who are unable to repay their full
monthly schedule by giving them appropriate restructuring. MFIL
continues to witness clients showing their willingness to repay
regularly even though their capacity has diminished and they offer
reduced repayments.
-- During the height of the violence in March, MFIL had given
approximately two thirds of its clients a 2-month repayment
holiday.
-- Foreign lenders to the microfinance industry, primarily DFIs,
have indicated their support for the sector and are starting to
extend the tenor of their loans to microfinance companies to
facilitate liquidity while the inevitable restructuring of clients'
loan portfolios take place.
-- In the six months to 31 March 2021, due to the continuing
effects of COVID-19 as well as the initial impact from the civil
disturbances, MFIL incurred a loss of MMK1.38 billion (US$0.9
million). This was due to additions in loan loss reserves of MMK837
million (US$0.6 million) and having maintained a high liquidity
level and therefore having negative net interest margin on the cash
holding. MFIL's shareholders' funds at 31 March 2021 was MMK7.0
billion (US$4.8 million)
-- MFIL's current loan book, at the end of May 2021 is MMK19.5
billion (US$12.1 million) (MMK21.66 billion (US$14.7 million) at 31
March 2021). At 30 September 2020 its PAR 30+ was 3.1%. This has
increased to 6.6% at 31 March 2021. Given the weak economy and the
need to restructure clients, this is expected to increase
significantly over the next few months before MFIL will see a
reduction.
-- MFIL is a strong and liquid microfinance company, as at the
end of May 2021 it had free cash on the balance sheet of over
MMK6.3 billion (US$3.9 million). This should allow MFIL to navigate
its way through the current crisis.
-- In October 2020, the Financial Regulatory Department (FRD),
the microfinance industry's regulatory body, awarded MFIL a license
to open branches in Mandalay, Myanmar's second most populous
region. However, because of the violence in and around Mandalay,
MFIL has not yet started operation.
-- Acquisition of MFIL: COVID-19 related travel difficulties and
the current political crisis have made it difficult to carry out
the closing audit and to complete the conditions precedent. The
purchaser's shareholders at their latest AGM on 26 April 2021 have
approved a one-year extension. We have also extended the
exclusivity period and continue to update the potential purchaser
on events at MFIL and in Myanmar.
We intend to recommence the completion process as soon as it is
practical to do so. This may also require additional negotiations
on the terms as well as updating the due diligence work as it is
over a year since we had agreed terms.
Valuation
As at 30 September 2020 the Directors had assessed the value of
the Group's investment in MFIL to be US$4.4 million using the price
to book value methodology.
Using the same methodology as at 31 March 2021 the Directors
have assessed the value of this investment to be US$3.5 million
which is US$0.9 million lower compared with 30 September 2020.
This value of MFIL represents a profit of US $0.8 million over
the cost of the investment . This equates to an IRR since the
initial investment in September 2014 of 5.2 per cent.
Ad hoc market discount
The change of government has increased the uncertainties and
risks of investing in Myanmar which is compounded by the current
paucity of information. These risks could include, but not be
limited to:
-- reduced investor interest in a trade sale of assets or in an IPO;
-- increased domestic regulatory uncertainties;
-- a material and sustained decline in economic activity
impacting investment and consumer demand;
-- severe reduction in liquidity in the financial system;
-- a volatile foreign exchange rate;
-- prolonged political crisis paralyzing the country's administrative capacity;
-- increases in the number of demonstrations, strikes and violence;
-- enhanced COVID-19 risks;
-- potential broader international sanctions.
Given the uncertainties and increased risks the Directors have
decided to apply an ad hoc discount of 30% on the company's entire
portfolio. This will be reviewed regularly.
The impact on MIL's carrying value of the investments after
applying the discount are:
APT:
This discount reduces the value of this investment to US$23.7
million, which is US$4.7 million lower than at September 2020.
This valuation of AP Towers represents a profit of US$2.9
million over the cost of the investment and an IRR since the
initial investment in July 2015 of 2.3%.
MFIL:
This discount reduces the value of this investment to US$2.45
million, which is US$1.95 million lower than at September 2020.
This valuation of MFIL represents a loss of US$220,000 over the
cost of the investment.
Financial Performance
Unaudited Financial Statements
The unaudited financial statements for the six months to 31
March 2021 are attached at the end of this announcement. They have
been prepared in compliance with IFRS.
Profit and Loss
For the six months to 31 March 2021, MIL's unaudited
consolidated loss after tax was US$5.3 million, compared with a
profit of US$0.86 million in the same period last year.
This is principally represented by:
-- the overheads associated with running the Company's business (US$347,000);
-- the Company's share of MFIL's losses (US$331,000);and
-- the loss on re-evaluation of the investment in AP Towers (US$4,667,000).
Within this the cost of MIL's cash-based overheads (i.e. the
joint venture results, and re-evaluation gains) was US$339,000
compared to US$702,000 for the six months to 31 March 2020, a
reduction of US$363,000 or 51.6 per cent. On a per share basis this
has dropped from 1.84c to 0.89c, a reduction of 51.6 per cent.
Net asset value
The Directors have determined that MIL's Net Asset Value ("NAV")
as at 31 March 2021 was US$28.3 million, or US$0.74 per share. This
is comprised of:
-- the investment in AP Towers, the telecommunication tower
business, of US$23.7 million, excluding the non-controlling
interests, determined using a comparable EBITDA multiple
methodology and applying a portfolio discount of 30%;
-- the investment in MFIL, the microfinance business, of US$2.45
million, determined using a comparable price to book value
methodology and applying a portfolio discount of 30%;
-- cash and other net assets/liabilities of US$2.1 million.
In accordance with the Company's stated policy, the Company's
investments have been determined by reference to the prevailing
International Private Equity and Venture Capital Guidelines.
Summary of NAV
The NAV valuation of US$28.3 million is a net decrease of US$7
million (19.8 per cent) from US$35.3 million as at 30 September
2020. This is mainly attributable to:
-- the fact that the AP Towers investment, is valued US$4.7
million lower than as at 30 September 2020);
-- the reduction of the valuation of MFIL by US$ 1.9 million compared with September 2020; and
-- overheads and transaction costs of US$0.4 million.
In the attached financial statements, the NAV attributable to
shareholders differs from the above stated value of US$28.3 million
due to the following adjustment:
US$ millions
NAV per the financial statements 27.8
MFIL (1) 0.5
NAV per the Directors' valuation 28.3
=============
Note 1: In accordance with IFRS 11 Joint Arrangements, the
investment in MFIL is accounted for as an investment in a joint
venture using the equity method. Whereas in accordance with the
Group's Valuation Policy the Directors' valuation for MFIL is
determined by reference to the International Private Equity and
Venture Capital Guidelines.
Working Capital
As of the date of this announcement the Group has adequate
financial resources to cover its working capital needs for the next
12 months.
Commenting on the Interim Results, Nick Paris, Managing Director
of Myanmar Investments International Limited, said "The last 6
months have been challenging. Not only COVID-19 had an impact on
the development in Myanmar but the circumstances got even more
difficult after the change of government in February 2021.
Nevertheless, we think that we have two healthy investments. The
sale of MFIL is still on the way as the purchaser's AGM has
approved a one-year extension to close the transaction. The
investment in APTH was holding up well. As we have pointed out, we
have applied a portfolio discount of 30% on both investments to
reflect the uncertainty regarding the development in Myanmar. Our
operating costs have been reduced significantly and are kept under
constant review to seek to minimise our cash burn in order to
return surplus capital to our shareholders."
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulation (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
For further information please contact:
Nick Paris Michael Rudolf
Managing Director Chief Financial Officer
Myanmar Investments International Myanmar Investments International
Ltd Ltd
+95 (0) 1 387 947 +95 (0) 1 387 947
nickparis@myanmarinvestments.com michaelrudolf@myanmarinvestments.com
Nominated Adviser Broker
Philip Secrett / George Grainger William Marle
Grant Thornton UK LLP finnCap Ltd
+44 (0) 20 7383 5100 +44 (0) 20 7220 0500
For more information about MIL, please visit
www.myanmarinvestments.com
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTH PERIODED 31 MARCH 2021
Present Prior Prior
Interims Interims Full Year
1 October 1 October 1 April
2020 to 2019 to 2019 to
31 March 31 March 30 September
Note 2021 2020 2020
Unaudited Unaudited Audited
US$ US$ US$
Revenue - - -
Other item of income
Finance income 4 - 216 491
Gain on disposal of a joint venture 10 - 361,248 361,248
Fair value gain on investment
at fair value through profit
or loss 11 - 2,500,000 6,500,000
----------- --------- -------------
- 2,861,464 6,861,739
Items of expense
Employee benefits expense 5 (99,250) (415,331) (893,323)
Depreciation expense - (10,240) (20,719)
Other operating expenses (251,714) (442,240) (1,325,262)
Finance costs 6 (3,607) (4,719) (13,857)
Share of results of joint ventures
, net of tax 10 (321,228) (298,340) (926,004)
Fair value loss on investment
at fair value through profit
or loss 11 (7,000,000) - -
Profit/(Loss) before income tax 7 (7,685,799) 1,690,594 3,677,574
Income tax expense 8 (70) (3,398) (1,306)
Profit/(Loss) for the financial
period /year (7,685,869) 1,687,196 3,676,268
=========== ========= =============
Other comprehensive income:
Items that may be reclassified
subsequently to profit or loss:
Exchange gain/(loss) arising
on translation of foreign operations 10 (279,841) 265,615 399,314
Other comprehensive income for
the financial period /year ,
net of tax (279,841) 265,615 399,314
----------- --------- -------------
Total comprehensive income for
the financial period /year (7,965,710) 1,952,811 4,075,582
=========== ========= =============
Profit/(Loss) attributable to:
Owners of the parent (5,345,088) 857,670 1,616,159
Non-controlling interests (2,340,781) 829,526 2,060,109
----------- --------- -------------
(7,685,869) 1,687,196 3,676,268
=========== ========= =============
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTH PERIODED 31 MARCH 2021
Present Prior Prior
Interims Interims Full Year
1 October 1 October 1 April
2020 to 2019 to 2019 to
31 March 31 March 30 September
Note 2021 2020 2020
Unaudited Unaudited Audited
US$ US$ US$
Total comprehensive income
attributable to:
Owners of the parent (5,624,929) (992,474) 2,015,473
Non-controlling interests (2,340,781) (15,604) 2,060,109
(7,965,710) (1,008,078) 4,075,582
=========== =========== =============
Earnings/(Loss) per share (cents)
* Basic and diluted 9 (14.03) 2.25 4.24
=========== =========== =============
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH
2021
Present Prior
Interims Full Year
31 March 30 September
Note 2021 2020
Unaudited Audited
US$ US$
ASSETS
Non-current assets
Investments in joint ventures - -
Equity instrument at fair value through
profit or loss 11 35,500,000 42,500,000
Plant and equipment - -
------------ ------------
Total non-current assets 35,500,000 42,500,000
------------ ------------
Current assets
Other receivables 99,394 265,834
Cash and cash equivalents 2,109,216 2,364,166
Non-current asset classified as held
for sale 13 1,941,398 2,552,467
------------ ------------
Total current assets 4,150,008 5,185,467
------------ ------------
Total assets 39,650,008 47,685,467
============ ============
EQUITY AND LIABILITIES
Equity
Share capital 14 40,569,059 40,569,059
Share option reserve 15 1,358,913 1,358,913
Accumulated losses (13,768,569) (8,423,481)
Foreign exchange reserve (356,401) (76,560)
Equity attributable to owners of the
parent 27,803,002 33,427,931
Non-controlling interests 11,594,786 13,935,567
------------ ------------
Total equity 39,397,788 47,363,498
------------ ------------
LIABILITIES
Current liabilities
Other payables 234,545 304,053
Income tax payable 17,675 17,916
------------ ------------
Total current liabilities 252,220 321,969
Total equity and liabilities 39,650,008 47,685,467
============ ============
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTH PERIODED 31 MARCH 2021
Equity
attributable
Share Foreign to owners Non-
Share option exchange Accumulated of controlling
Note capital reserve reserve losses the parent interests Total
Unaudited US$ US$ US$ US$ US$ US$ US$
At 1 October 2020 40,569,059 1,358,913 (76,560) (8,423,481) 33,427,931 13,935,567 47,363,498
Loss for the financial
period - - - (5,345,088) (5,345,088) (2,340,781) (7,685,869)
Other comprehensive
income for the
financial period
Exchange loss arising
on translation
of foreign operations 13 - - (279,841) - (279,841) - (279,841)
Total other
comprehensive income
for the financial
period - - (279,841) - (279,841) - (279,841)
---------- --------- --------- ------------ ------------- ------------
Total comprehensive
income for the
financial period - - (279,841) (5,345,088) (5,624,929) (2,340,781) (7,965,710)
Contributions by and
distributions
to owners
Share options expense 15 - - - - - - -
---------- --------- --------- ------------ ------------- ------------ -----------
Total contributions by
and distributions
to owners - - - - - - -
At 31 March 2021 40,569,059 1,358,913 (356,401) (13,768,569) 27,803,002 11,594,786 39,397,788
========== ========= ========= ============ ============= ============ ===========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL PERIOD FROM 1 APRIL 2019 TO 30 SEPTEMBER
2020
Equity
attributable
Share Foreign to owners Non-
Share option exchange Accumulated of controlling
Note capital reserve reserve losses the parent interests Total
Audited US$ US$ US$ US$ US$ US$ US$
2020
At 1 April 2019 40,569,059 1,337,005 (475,874) (10,039,640) 31,390,550 11,875,458 43,266,008
Profit for the
financial year - - - 1,616,159 1,616,159 2,060,109 3,676,268
Other comprehensive
income for the
financial year
Exchange gain arising
on translation
of foreign operations 10 - - 399,314 - 399,314 - 399,314
---------- --------- --------- ------------ ------------- ------------ ----------
Total other
comprehensive income
for
the financial year - - 399,314 - 399,314 - (263,584)
---------- --------- --------- ------------ ------------- ------------ ----------
Total comprehensive
income for the
financial year - - 399,314 1,616,159 2,015,473 2,060,109 4,075,582
Contributions by and
distributions
to owners
Share options expense 15 - 21,908 - - 21,908 - 21,908
Total contributions by
and distributions
to owners - 21,908 - - 21,908 - 21,908
At 30 September 2020 40,569,059 1,358,913 (76,560) (8,423,481) 33,427,931 13,935,567 47,363,498
========== ========= ========= ============ ============= ============ ==========
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTH PERIODED 31 MARCH 2021
Present Prior Prior
Interims Interims Full Year
1 October 1 October 1 April
2020 to 2019 to 2019 to
31 March 31 March 30 September
Note 2021 2020 2020
Unaudited Unaudited Audited
US$ US$ US$
Operating activities
Profit/(Loss) before income
tax (7,685,799) 1,690,594 3,677,574
Adjustments for:
Interest income 4 - (216) (491)
Finance costs 3,607 4,719 13,857
Depreciation of plant and equipment - 10,240 20,719
Share-based payment expense - 10,954 21,908
Share of results of joint ventures,
net of tax 10/13 331,228 298,340 926,004
Fair value (gain) / loss on
investment at fair value through
profit or loss 11 7,000,000 (2,500,000) (6,500,000)
Gain on disposal of joint venture 10 - (361,248) (361,248)
Plant and equipment written
off - 17,385 17,384
Operating cash flows before
working capital changes (350,964) (829,232) (2,184,293)
Changes in working capital:
Other receivables 169,440 (276,481) (90,058)
Other payables (69,508) 114,745 (68,357)
Cash used in operations (251,032) (990,968) (2,342,709)
Interest received - 216 491
Finance costs paid (3,607) (4,719) (13,857)
Income tax (paid) / refunded (311) 63 (280)
Net cash flows used in operating
activities (254,950) (995,408) (2,356,355)
----------- ----------- -------------
Investing activities
Proceeds from disposal of investments - 1,000,000 1,000,000
Net cash flows from investing
activities - 1,000,000 1,000,000
----------- ----------- -------------
Financing activities
Increase in short-term deposits
pledged - (216) (216)
----------- ----------- -------------
Net cash flows used in financing
activities - (216) (216)
----------- ----------- -------------
T
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTH PERIODED 31 MARCH 2021
Present Prior Prior
Interims Interims Full Year
1 October 1 October 1 April
2020 to 2019 to 2019 to
31 March 31 March 30 September
Note 2021 2020 2020
Unaudited Unaudited Audited
US$ US$ US$
Net change in cash and cash
equivalents (254,950) 4,376 (1,356,571)
Cash and cash equivalents at
beginning of financial period/year 2,316,539 2,715,220 3,673,110
Cash and cash equivalents at
end of financial period/year 2,061,589 2,719,596 2,316,539
========= ========= =============
Cash and cash equivalents comprise the following at the end of
the financial period/year:
Present Prior
Interims Full Year
31 March 30 September
2021 2020
Unaudited Audited
US$ US$
Bank balances 2,109,589 2,364,166
Less: short-term deposits pledged (47,627) (47,627)
2,061,589 2,316,539
========= ============
NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION
FOR THE SIX MONTH PERIODED 31 MARCH 2021
1. General corporate information
Myanmar Investments International Limited ("the Company") is a
limited liability company incorporated and domiciled in the British
Virgin Islands ("BVI"). The Company's registered office is at Jayla
Place, Wickhams Cay I, Road Town, Tortola, British Virgin
Islands.
The Company's ordinary shares and warrants are traded on the AIM
market of the London Stock Exchange under the ticker symbols MIL
and MILW respectively.
The Company was established for the purpose of identifying and
investing in, and disposing of, businesses operating in or with
business exposure to Myanmar. The Company's focus was to target
businesses operating in sectors that the Directors believed had
strong growth potential and thereby could be expected to provide
attractive yields, capital gains or both. At the Annual General
Meeting held on 24 October 2019, the Company's shareholders
approved a resolution to begin an orderly disposal of the Company's
investments and in due course look to return surplus capital to
shareholders.
Details of the Company's investments in its joint ventures are
disclosed in Note 10 and 13; its equity instrument at fair value
through profit or loss is disclosed in Note 11 and the principal
activities of the subsidiaries are disclosed in Note 12.
The consolidated financial information of the Company and its
subsidiaries (the "Group") for the period from 1 October 2020 to 31
March 2021 were approved by the Board of Directors on 16 June 2021.
This consolidated financial information is unaudited.
Whilst the financial information included in this announcement
has been prepared in accordance with the International Financial
Reporting Standards ("IFRS"), this announcement does not in itself
contain sufficient information to comply with IFRS. The full
audited financial statements of the Company for the financial
period from 1 April 2019 to 30 September 2020 can be found on the
Company's website at www.myanmarinvestments.com.
1.1 Going concern
The Coronavirus (COVID-19) outbreak and the measures taken to
contain the spread of the pandemic have created a high level of
uncertainty to global economic prospects.
Although the situation continues to evolve with significant
level of uncertainty, the Group does not foresee a huge impact on
its own operation. Regarding its investees it can be said that the
microfinance industry has been impacted by COVID-19. Depending on
the speed of recovery from COVID-19, MFIL's book value at closing
of the on-going transaction to sell its shares in MFIL may have
reduced. The purchaser's AGM on 23rd April 2020 has approved the
transaction and the lenders have given their consent. However,
because of COVID-19 and the political crisis since February 2021,
little progress has been made in obtaining regulatory approval. On
26 April 2021, the purchaser's AGM approved a one-year extension
for closing the transaction. Regarding the Group's other investment
in AP Towers, it is to be noted that contrary to other industries,
the telecoms sector has not suffered greatly due to the outbreak of
COVID-19.
After due and careful enquiries, the Directors have a reasonable
expectation that the Company has adequate financial resources to
continue in operational existence for the foreseeable future. This
expectation is based on a review of the Company's existing
financial resources, its present and expected future commitments in
terms of its overheads and running costs; and its commitments to
its existing investments.
1. General corporate information (Continued)
1.1 Going concern (Continued)
Accordingly, the Directors have adopted the going concern basis
in preparing the consolidated financial information.
2. Summary of significant accounting policies
The Company's accounting policies are available in the financial
statements for the financial period from 1 April 2019 to 30
September 2020, 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 information are
available in the full audited financial statements for the
financial period from 1 April to 30 September 2020, a copy of which
can be found on the Company's website at
www.myanmarinvestments.com.
4. Finance income
1 October 1 October 1 April
2020 to 2019 to 2019 to
31 March 31 March 30 September
2021 2020 2020
Unaudited Unaudited Audited
US$ US$ US$
Interest income - 216 491
========= ========= =============
5. Employee benefits expense
1 October 1 October 1 April
2020 to 2019 to 2019 to
31 March 31 March 30 September
2021 2020 2020
Unaudited Unaudited Audited
US$ US$ US$
Salaries, wages and other staff benefits 99,250 404,377 826,415
Bonuses - - 50,000
Share options expense - 10,954 21,908
--------- --------- -------------
99,250 415,331 898,323
========= ========= =============
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/year.
7. Profit/(Loss) before income tax
In addition to the charges and credits disclosed elsewhere in
the notes to the consolidated financial information, the above
includes the following charges:
1 October 1 October 1 April
2020 to 2019 to 2019 to
31 March 31 March 30 September
2021 2020 2020
Unaudited Unaudited Audited
US$ US$ US$
Auditor's remuneration 25,597 23,275 103,397
Consultants' fees 101,261 58,428 218,999
Short term lease expenses 736 44,487 84,206
Professional fees 59,545 15,912 599,324
Travel and accommodation - 32,538 54,572
========= ========= =============
8. Income tax
1 October 1 October 1 April
2020 to 2019 to 2019 to
31 March 31 March 30 September
2021 2020 2020
Unaudited Unaudited Audited
US$ US$ US$
Current income tax
* current financial period /year (241) 3,461 3,703
* ( over) / under provision in prior financial period/
year 311 (63) (2,397)
--------- --------- -------------
70 3,398 1.306
========= ========= =============
9. Earnings/(Loss) per share
Basic earnings or loss per share is calculated by dividing the
profit or loss for the financial period/year attributable to owners
of the parent by the weighted average number of ordinary shares
outstanding during the financial period/year.
The following reflects the profit or loss and share data used in
the basic and diluted earnings or loss per share computation:
1 October 1 October 1 April
2020 to 2019 to 2019 to
31 March 31 March 30 September
2021 2020 2020
Unaudited Unaudited Audited
Profit/(Loss) for the financial period/year
attributable to owners of the Company
(US$) (5,345,088) 857,670 1,616,159
Weighted average number of ordinary
shares during the financial period/year
applicable to basic profit or loss
per share 38,102,054 38,097,037 38,097,037
Earnings/(Loss) per share
Basic and diluted (cents) (14.03) 2.25 4.24
=========== ========== =============
Diluted earnings or loss per share is the same as the basic
earnings or loss per share because the potential ordinary shares to
be converted are anti-dilutive as the effect of the shares
conversion would be to decrease the profit or loss per share.
10. Investments in joint ventures
31 March 30 September
2021 2020
Unaudited Audited
US$ US$
Investments in joint ventures
Unquoted equity investments, at cost - 4,815,000
Share of post-acquisition results of joint
venture , net of tax - (1,547,221)
Share of post-acquisition foreign currency
translation reserve - (76,560)
Reclassified to non-current asset held-for-sale - (2,552,467)
- -
Movement during the period/year
Balance at beginning of financial period/year - 3,717,909
Investments during the financial period/year
Share of results of joint ventures, net of
tax - (926,004)
Share of foreign currency translation reserve - 399,314
Advances during the financial period/year - -
Disposal of joint venture during the financial
period/year - (638,752)
Reclassified to non-current asset held-for-sale - (2,552,467)
Balance at end of financial period/year - -
========= ============
11. Equity instrument at fair value through profit or loss
31 March 30 September
2021 2020
Unaudited Audited
US$ US$
Investment in AP Towers (2019: Apollo Towers),
at fair value 35,500,000 42,500,000
========== ============
Investment in AP Towers
The Group's investment in AP Towers Holdings Pte. Ltd ("AP
Towers") (2019: Apollo Towers Holdings Limited ("Apollo Towers")),
is made through the Group's 66.67 per cent subsidiary, MIL 4
Limited ("MIL 4").
On 23 January 2020, MIL 4 exchanged its investment in Apollo
Towers for shares in AP Towers which owns Pan Asia Majestic Eagle
Limited ("Pan Asia Towers"), another Myanmar independent tower
company. Under the share swap, MIL 4 has exchanged its existing
13.7 per cent shareholding in Apollo Towers for a shareholding of
6.2 per cent in AP Towers. The share swap effectively brings Apollo
Towers and Pan Asia Towers under common ownership of AP Towers.
Movement in the investment is as follows:
31 March 30 September
2021 2020
Unaudited Audited
US$ US$
Balance at beginning of financial period/year 42,500,000 36,000,000-
Fair value (loss) / gain during the financial
period/year (7,000,000) 6,500,000
Balance at end of financial period/year 35,500,000 42,500,000
=========== ============
As at 31 March 2021, the equity instrument at fair value through
profit or loss represents an effective 4.1% equity interest in the
unquoted share capital of AP Towers.
The Group intends to hold these investments for long-term
appreciation in value as well as strategic investment purposes.
Management engaged their internal valuation specialists to
perform a valuation on the investment. The valuation of the
unquoted investment is categorised into Level 3 of the fair value
hierarchy. The information on the significant unobservable inputs
and the inter-relationship between key unobservable inputs and fair
value are as follows:
Inter-relationship
between key
Valuation unobservable
Financial technique Significant inputs
assets used unobservable inputs and fair value
Unquoted Comparable Increase EBITDA
equity Company * Earnings Before Interest, Tax, Depreciation and and EV/EBITDA
investments Analysis Amortization ("EBITDA") of US$88.9million multiple
will increase
the
fair value of
* Enterprise Value ("EV") per EBITDA multiple of 13.6x the
financial asset.
* Portfolio discount of 30%
Investment in Apollo Towers (30 September 2020)
Inter-relationship
between key
Valuation unobservable
Financial technique Significant inputs
assets used unobservable inputs and fair value
Unquoted Comparable Increase EBITDA
equity Company * Earnings Before Interest, Tax, Depreciation and and EV/EBITDA
investments Analysis Amortization ("EBITDA") of US$83.4million multiple
will increase
the
fair value of
* Enterprise Value ("EV") per EBITDA multiple of 13.1x the
financial asset.
As announced on 23 January 2020, MIL 4 exchanged its investment
in Apollo Towers Holdings Limited ("Apollo Towers") for shares in
AP Tower Holdings Pte. Ltd. ("AP Towers") which owns Pan Asia
Majestic Eagle Limited ("Pan Asia Towers"), another Myanmar
independent tower company. Under the share swap, MIL 4 has
exchanged its existing 13.7 per cent shareholding in Apollo Towers
for a shareholding of approximately 6.2 per cent in AP Towers, of
which approximately 4.1 per cent indirectly held by MIL. The Share
Swap effectively brings Apollo Towers and Pan Asia Towers under
common ownership of AP Towers.
12. Investment in subsidiaries
Details of the subsidiaries are as follows:
Proportion
Country of Proportion of ownership
incorporation/ of ownership interest
principal interest held by
place of held by non-control
Name of subsidiaries business Principal activities the Group interests
% %
Investment holding
Myanmar Investments Limited Singapore company 100 -
Provision of
management services
MIL Management Pte. Ltd. Singapore to the Group 100 -
British
Virgin Investment holding
MIL 4 Limited Islands company 66.67 33.33
Held by MIL Management Pte.
Ltd
Provision of
management services
MIL Management Co., Ltd(2) Myanmar to the Group 100 -
(2) In the process of striking off.
13. Non-current asset classified as held for sale
As the result of the ongoing transaction to sell the Group's
37.5% equity interest in MFIL (Note 10), the entire carrying amount
of the Group's investment in MFIL has been reclassified as
non-current asset held for sale as at 30 September 2020.
31 March 30 September
2021 2020
Unaudited Audited
US$ US$
Investments in joint venture
Unquoted equity investments, at cost 2,670,000 -
Share of post-acquisition results of joint
venture , net of tax (372,201) -
Share of post-acquisition foreign currency
translation reserve (356,401) -
1,941,398
Movement during the period/year
Balance at beginning of financial period/year 2,552,467 -
Investments during the financial period/year - -
Share of results of joint ventures, net of
tax (331,228) -
Share of foreign currency translation reserve (279,841) -
Advances during the financial period/year - -
Disposal of joint venture during the financial
period/year - -
Balance at end of financial period/year 1,941,398 2,552,467
========= ============
The details of the joint venture are as follows:
Effective
Name of joint venture equity interest
(Country of incorporation/ held by the
place of business) Principal activities Company
31 30
March September
2021 2020
% %
Myanmar Finance International Limited Provider of microfinance
(Myanmar) ("MFIL") loans 37.5 37.5
Summary
1 October 1 October 1 April
2020 to 2019 to 2019 to
31 March 31 March 30 September
2021 2020 2020
Unaudited Unaudited Audited
US$ US$ US$
Share of results of joint venture,
net of tax
MFIL (331,228) (123,180) (349,699)
========= ========= =============
14. Share capital
31 March 30 September
2021 2020
Unaudited Audited
US$ US$
Issued and fully paid share capital:
Ordinary shares at the beginning of the financial
period/year 40,569,059 40,569,059
40,569,059 40,569,059
========== ============
31 March 2020
Ordinary
shares Warrants
Equity Instruments in issue
At the beginning of the financial period 38,097,037 14,128,387
At the end of the financial period 38,108,451 13,573,901
============ ===========
The holders of ordinary shares are entitled to receive dividends
as declared from time to time and are entitled to one vote per
share without restriction at meetings of the Company.
All the shares have been admitted to trading on AIM under the
ticker MIL.
Warrants
As at 31 March 2021, there were 13,573,901 (30 September 2020:
14,128,387) Warrants in issue.
During the six-month period ended 31 March 2021, 554,486
Warrants were exercised cashlessly at the previously announced
ratio of 48.57 Warrants for a new Ordinary Share, resulting in
11,414 new Ordinary Shares being issued.
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") are set out in the
financial statements for the year to 30 September 2020, which can
be found on the Company's website at www.myanmarinvestments.com
(Long Term Incentive Plans ("LTIP") / ESOP).
During the six-month period ended 31 March 2021, no further
options were created, granted or forfeited.
As at 31 March 2021, 2,590,527 (30 September 2020: 2,590,527)
share options had been granted under the Plan.
16. Significant related party disclosures
Compensation of key management personnel
The remuneration of Directors for the financial period from 1
October 2020 to 31 March 2021 was as follows:
Short term Share
Directors' employee option
fees benefits plan Total
US$ US$ US$ US$
Financial period from
1 October 2020 to 31 March
2021
Executive directors
Maung Aung Htun - 43,000 - 43,000
Nicholas John Paris - 40,000 - 40,000
Non-executive directors
Henrik Onne Bodenstab 8,750 - - 8,750
Rudolf Gildemeister 7,500 - - 7,500
---------- ---------- ------- ------
16,250 83,000 - 99,250
========== ========== ======= ======
17. Dividends
The Directors of the Company did not recommend any dividend in
respect of the financial period from 1 October 2020 to 31 March
2021 (1 April 2019 to 30 September 2020: Nil).
18. Financial risk management objectives and policies
The Company's financial risk management objectives and policies
are set out in the audited financial statements for the financial
period from 1 April 2019 to 30 September 2020.
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END
IR VKLBLFQLFBBF
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June 29, 2021 04:15 ET (08:15 GMT)
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