TIDMMIL
RNS Number : 9525T
Myanmar Investments Intl Ltd
30 November 2021
This announcement contains inside information 30 November
2021
Myanmar Investments International Limited
Audited financial results for the year to 30 September 2021
Myanmar Investments International Limited [AIM: MIL] ("MIL" or
the "Company"), the Myanmar focused investment company, today
announces its audited financial results for the year to 30
September 2021.
Copies of the Company's annual report and accounts will be sent
to shareholders and warrant holders shortly and will also be
available to download from the Company's website on
www.myanmarinvestments.com/financial-reports.
Highlight
During the financial year our net asset value ("NAV") has
decreased by 27.5 per cent and was US$25.6 million as at 30
September 2021, equivalent to US$ 0.67 per share.
Myanmar: Covid-19 and Political Turmoil
Please find a detailed report about the situation in Myanmar in
the "Chairmen's Letter".
Future Strategy
In late 2018, the Directors felt that the investment environment
in Myanmar is unlikely to generate an appropriate risk adjusted
return commensurate with an investment in a frontier economy.
Accordingly, the Directors thought that it was appropriate to start
planning for an orderly disposal of our three investments with a
view to ultimately winding up the Company.
At the Company's AGM, held in Yangon on 24 October 2019, the
shareholders approved a resolution to amend the Company's
Investment Policy such that the Board can:
-- undertake an orderly disposal of its investments; and
-- return surplus capital to shareholders.
Since then, the Directors have taken the following action to
implement this new strategy:
-- We sold our investment in Medicare International Health &
Beauty ("Medicare") for US$1 million to our main joint venture
partner in November 2019. The transaction was completed in December
2019.
-- We are in the process of selling our investment in Myanmar
Finance International Limited ("MFIL").
-- We have continued to streamline our operations and as a
result reduced our overheads. As part of the cost reduction
process, we closed our office in Yangon and removed staff costs
from the operation as of 31 March 2020.
Business review
The Company has invested in two businesses:
AP Towers Holdings Pte. Ltd ("AP Towers") / Apollo Towers
-- The Company had invested US$21 million in Apollo Towers.
-- The share exchange with AP Towers was completed in January
2020. Under the share exchange, the Company swapped its indirect
interest of 9.1 per cent of Apollo Towers for an indirect interest
of 4.1 per cent of AP Towers. The share exchange effectively
brought Apollo Towers and Pan Asia Towers, another Myanmar
independent tower company, under the common ownership of AP
Towers.
-- As at 30 September 2021, Apollo Towers and Pan Asia Towers
together had an aggregated portfolio of 3,254 towers, 6,669 tenants
and a co-location ratio ("Lease-up-Rate" or "LUR") of 2.05x which
is unchanged since 30 September 2020.
-- Based on AP Towers actual results for the 6 months ended 30
September 2021, AP Towers annualised adjusted "run rate" revenue
has decreased to US$102.5 million. This represents a decline of 1.9
per cent over the same period last year. The annualised adjusted
"run rate" EBITDA has increased to US$85.9 million. This represents
an increase of 3.0 per cent over the same period last year.
-- Going forward, AP Towers will, when market conditions allow,
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$396.2 million as at the end of
September 2021, a decrease of US$ 20.6 million since 31 March 2021
and a decrease of US$33.1 million since 30 September 2020.
-- Contrary to other industries, the telecoms sector has not
suffered greatly due to the outbreak of Covid-19.
Myanmar Finance International Limited ("MFIL")
-- MIL has invested US$2.7 million for a 37.5 per cent shareholding.
-- It is one of Myanmar's leading microfinance companies.
-- Covid and the political turmoil has severely impacted the
Myanmar economy and has affected borrowers. The Portfolio at Risk
over 30 days ("PAR 30+") has risen to 14.2 percent.
-- MFIL has been restructuring its balance sheet with agreements
reached with all lenders to extend their loan maturities by 12
months and formal documentation are currently being signed.
-- MFIL has cash of MMK 8 billion and has reduced its loan book to MMK 16.5 billion
-- MFIL focuses on urban and semi-rural lending in Yangon, Bago, Ayeyarwady and Mon State.
-- The Company is in the process of selling this investment. On
1 April 2020, the Company announced that it had accepted an offer
to sell its shareholding in MFIL and on 23 April 2020 the
purchaser's AGM approved the purchase subject to completion of
certain conditions precedent including a closing audit, lender's
consents, and Myanmar regulatory approval. Subsequent to that
announcement, and because of logistical problems in completing the
conditions precedent, the purchaser's AGM on 26 April 2021 approved
a one-year extension of their agreement to purchase MFIL.
Financial review
During the past year our net asset value ("NAV") has decreased
by 27.5 per cent and was US$25.6 million as at 30 September 2021.
This was driven mainly by the decrease in the assessed value of our
investments in AP Towers (down US$6.1 million to US$22.3 million)
and in MFIL (down US$2.9 million to US$1.5 million).
During the period we achieved our in 2020 projected operating
"run-rate" costs of US$0.7 million per annum.
Henrik Bodenstab, Chairman of MIL, "It has been a challenging
year. Myanmar was hit hard by Covid-19 and on top came the
political crisis when the military took over the government on 1
February 2021. We intend to complete the sale of MFIL as soon as it
is practical which will include finalising the closing audit and
obtaining regulatory approval. We have reduced our operating costs
significantly. In order to maximise the return of surplus capital
to our shareholders, we are considering the option of cancelling
the admission to trading of the ordinary shares of Myanmar
Investments International Limited from the AIM market of the London
Stock Exchange which would save a substantial amount of money."
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 CFO
Myanmar Investments International Myanmar Investments International
Limited +95 (0) 1 387 947 Limited +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
CHAIRMEN'S LETTER
Dear fellow shareholder
MYANMAR: COVID-19 AND POLITICAL TURMOIL
Myanmar is a resource rich and strategically located country
with substantial economic potential but one that has consistently
proven to be difficult to invest in.
In 2020 Myanmar was affected by the global Covid-19 pandemic
which, although the number of cases were minimal, led to two
lockdowns and border restrictions. During this period there was
also an election that returned Daw Aung San Suu Kyi's party, the
National League for Democracy ("NLD"), to power with an increased
majority. However, on 1 February 2021 before the new government
could be sworn in, the military took over and promised a new
election within 2 years. Since then, there has been continuous
resistance across the country. The new military installed
government, the Special Administrative Council ("SAC"), has not
been recognized by most countries but neither has the National
Unity Government ("NUG") established by a group of former members
of parliament been accredited, although some countries such as
South Korea have allowed NUG to open an Information Office.
In the early days public dissatisfaction was shown through
demonstrations across the country. These were often met with force
by the army, known as the Tatmadaw. Large demonstrations morphed
into a Civil Disobedience Movement campaign ("CDM") that included
strikes by bank staff, civil servants and teachers that paralyzed
the country. Eight months later flash mobs still take place and, at
different levels, CDM is still on-going.
The political conflict has also turned violent with frequent
clashes between the Tatmadaw, and many of the Ethnic Armed
Organizations ("EAOs"). Numerous locally formed People's Defence
Forces ("PDF"), akin to militia groups, have also sprung up to
resist the SAC or to protect their community. In cities such as
Yangon or Mandalay PDFs tend to use assassinations and bombings.
While in the rural areas there has been an upsurge in armed
conflicts with the EAOs particularly in the northwest (Chin State,
Sagaing and Magway regions) and southeast (Kayah State).
To date neither ASEAN nor the international community have been
able to broker a resolution to this situation.
In June 2021, compounding the political crisis, there was a
surge in Covid-19 cases which overwhelmed a fragile medical
infrastructure that was understaffed from CDM.
Inevitably, the ongoing political crisis and a third wave of
Covid-19 materially impacted an economy that had already been
weakened by the pandemic in 2020. According to the World Bank
Myanmar's economy is expected to have contracted by around 18 per
cent in fiscal year 2021 (Myanmar's fiscal year is to 30
September). An 18 per cent contraction, coming on top of weak
growth in fiscal year 2020, would mean that the country's economy
is around 30 per cent smaller than it would have been in the
absence of Covid-19 and the military takeover of February 2021.
Despite interventions from the central bank, liquidity in the
financial system has dried up and commercial banks are restricting
transfers and withdrawals. By September 2021 the Myanmar Kyat had
nearly halved against the US Dollar although it has partially
recovered in recent weeks. The weaker currency is feeding through
to higher import prices. In August 2021 the World Food Programme
reported a 68 per cent increase in the price of fuel, 40 per cent
for cooking oil and 16 per cent for rice.
United Nations Development Programme ("UNDP") has forecast that
almost half of the population, in the worst-case scenario, risks
falling into poverty by 2022 doubling the pre Covid-19 level and
reversing all economic gains made since 2005.
All sectors have been affected. Construction activities have
slowed or stopped, farm input costs have risen sharply while
importers do not have access to US dollars and are now unable to
open letters of credit at foreign banks. Foreign companies have
either adopted a wait-and-see approach while reducing expatriate
staff or have announced that they are withdrawing. Notable exits
include Telenor, British American Tobacco, Amata and Adani
Ports.
Economic contraction and a weaker Kyat are fuelling inflation,
unemployment and the poverty rate. Covid precaution has closed the
borders with Thailand and China. In the past there were as many as
4 million migrant Myanmar workers in Thailand that would send money
home but in 2020 an estimated 30 per cent temporarily went home to
avoid infection and are now unable to return to work.
It is unclear how the political situation will playout. The SAC
appears to be digging in for the long term and continues to
prosecute senior NLD leaders and protesters while ignoring ASEAN
and international appeals. However, it does not appear able to
fully control the country and continues to suffer from widespread
attacks by EAOs and PDFs that are being formed across the
country.
On the other hand, the opposition National Unity Government
continues to organize international opposition to the coup while
trying to influence local administration and soldiers to defect.
However, it has a limited budget and does not have a permanent
infrastructure that can govern.
Therefore, neither side appears able to deliver a knockout blow
and a stalemate has developed.
The last twelve months have been difficult with violence,
poverty level, inflation and unemployment rising but, at least in
the cities, there are tentative signs that the economy is beginning
to stabilize at a much lower level of economic activity.
Anecdotally traffic jams are back despite of higher fuel prices and
smart restaurants are busy again. Myanmar people are resilient and
resourceful having endured multiple periods of harsh military rule
over the last 50 years. Businesses are adapting and reverting to
the old cash economy ways of doing business. People still need to
eat, to try to build their business, to borrow and make phone
calls. A "new normal" way of life is settling in.
Against this background MIL will continue to actively manage its
investments while seeking an orderly exit from them as soon as the
opportunity to do so arises. In the meantime, the MIL Directors are
considering a range of cost cutting measures to conserve the
Company's cash balances including the possibility of cancelling the
admission of trading of MIL's ordinary shares from the AIM market
of the London Stock Exchange. They intend to consult with MIL
Shareholders on these measures and on an appropriate method by
which to return surplus capital to Shareholders.
REPORTING PERIOD
The State Administration Council (SAC) announced in August 2021
that Myanmar's fiscal year will be re-changed from 1 April to 31
March starting from the 2022 - 2023 financial year. Our investee
companies (MFIL and AP Towers) have decided to change their fiscal
years accordingly and the Board has decided to follow this
decision. Therefore, we will issue interim accounts for the periods
from 1 October 2021 to 31 March 2022 and from 1 April 2022 to 30
September 2022 which will both be published within 3 months of the
period end. Our next full audited set of financial statements will
therefore be on 31 March 2023 which will comprise the 18-month
period from 1 October 2021 to 31 March 2023 which will be published
within 3 months of the period end.
As a result of this change, we need to alter the Articles of
Association of the Company (the "Articles") to delete the maximum
time period of 15 months between AGMs. We do urge all Shareholders
to approve this resolution which will help us to produce the next
financial statements without breaching the terms of our
Articles.
CHANGE IN STRATEGY AND POSSIBLE DELISTING FROM LONDON STOCK
EXCHANGE ("LSE")
At the Annual General Meeting (" AGM ") in 2019 shareholders
approved a resolution to amend the investment objective and
policies of the Company as follows:
"The Company will seek to realise the Company's investments in
an orderly manner, such realisations to be effected at such times,
on such terms and in such manner as the Directors (in their
absolute discretion) may determine.
Following such realisations, the Company will make periodic
returns of surplus capital to Shareholders on such terms and in
such manner as the Directors (in their absolute discretion) may
determine.
The Company shall not make any new investments in projects to
which it is not already committed. However, this will not preclude
the Directors (in their absolute discretion) from:
(a) authorising the expenditure of such capital as is necessary
to: (i) complete arrangements pertaining to the Company's existing
investments; or (ii) carry out any activities that the Directors
(in their absolute discretion) deem appropriate to ensure the sale
ability of any existing investment; or (b) entering into any
contract or other arrangement with any third party to realise all
or any part of the Company's existing investments.
Following the disposal of all of the Company's existing
investments, the Directors intend to put a winding up proposal to
the Shareholders."
Important steps have been made to implement this new
strategy:
-- We sold our investment in Medicare International Health &
Beauty ("Medicare") for US$1 million to our main joint venture
partner in November 2019. The transaction was completed in December
2019. This represented a loss of US$1.1 million on the cost of the
investment which largely reflected our share of the operating
losses from opening a chain of new stores in Myanmar.
-- We are in the process of selling our investment in Myanmar
Finance International Limited ("MFIL"). On 1 April 2020 we
announced that we have accepted an offer to sell our shareholding
in MFIL to a Thai based company subject to the purchaser's AGM
approving the purchase, lender's consent, and Myanmar regulatory
approval. The minimum consideration for this transaction will be
calculated based on a pre-agreed formula of 2 times the audited
book value of MFIL at closing once these conditions have been
satisfied. Subsequent to that announcement, the purchaser's AGM on
23 April 2020 approved the transaction and the lenders to MFIL have
given their consent. However, 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.
-- We have continued to streamline our operations and as a
result reduced our overheads. As part of the cost reduction
process, we closed our office in Yangon and removed staff costs
from the operation as of 31 March 2020. The core cash-based
overheads for the 12-month period from 1 October 2020 to 30
September 2021 are 38.7 per cent lower than for the 12-month period
from 1 October 2019 to 30 September 2020 (excluding one-off
expenses for closing the office in Yangon).
We are now holding around US$1.8 million of cash and when the
sale of MFIL completes we will seek to return surplus capital to
our shareholders. We also intend to streamline our operations
further as by then we will only have one investment left. Due to
the political situation, it is unclear how fast our investments can
be monetized. Therefore, the Directors are considering the option
of cancelling the admission to trading of the ordinary shares of
Myanmar Investments International Limited from the AIM market of
the London Stock Exchange which would save a substantial amount of
money. Any cancellation would require shareholder consent of 75% of
those voting at a general meeting.
We will keep our shareholders informed about the outcome of the
analysis.
CORPORATE GOVERNANCE
The Company seeks to uphold the fundamental principles of good
corporate governance and has adopted the Quoted Companies Alliance
2018 Corporate Governance Code. The Chairman's Statement on
Corporate Governance provides greater detail on how the Board
itself operates as well as the steps taken to ensure that its staff
adhere to principles such as compliance with the UK anti-bribery
legislation.
On behalf of the Board, we should like to take this opportunity
to thank a number of our key stakeholders: our remaining staff for
their professionalism and commitment; our business partners for all
of their advice and contributions; and our shareholders for their
continued support.
HENRIK BODENSTAB AUNG HTUN
Chairman
Deputy Chairman
29 November 2021 29 November 2021
EXECUTIVE DIRECTOR'S REVIEW
Business Review
During the past 12 months our net asset value ("N AV") has
decreased by 27.5 per cent and was US$25.6 million as at 30
September 2021. This change is mainly attributable to the decrease
in the assessed value of the Company's investments in AP Towers
(down US$ 6.1 million to US$22.3 million) and MFIL (down US$2.9
million to US$1.5 million) and the operating expenses for the
reporting period (US$ 0.7 million).
During the past 12 months our operating expenses were
significantly reduced to US$0.7 million compared with US$1.1
million (excluding one off expenses for the closing of the office
in Yangon) for the same period in the previous year.
Overall, AP Towers performed well but MFIL was disrupted in
Myanmar from the impact of Covid-19 and the takeover of the
military on 1 February 2021:
-- AP Towers: the Company swapped its interest in Apollo Towers
for an interest in AP Towers in January 2020. The share exchange
effectively brought Apollo Towers and Pan Asia Towers, another ITC
under the common ownership of AP Towers which now manages one of
the largest network of towers in Myanmar; and
-- MFIL: the company has actively been reducing its loan book
and where necessary helping clients to restructure their loans
while increasing its holding of safe and liquid assets. It has also
agreed a one-year standstill with all of its lenders. Documentation
is now being signed.
-- As at year end Portfolio at Risk over 30 days ("PAR 30+") was 14.2 percent.
-- As soon as logistically practical further discussions with
the purchaser will be necessary to establish a timeline to closing
the sale of MFIL. It has been 20 months since the transaction was
negotiated and much has changed in the country. It may be necessary
to amend the transaction terms.
In all cases, Myanmar Investments' team have worked closely with
these businesses to provide strategic advice as well as hands-on
local knowledge.
Financial Review
NET ASSET VALUE
The Directors assess the Group's NAV attributable to the
shareholders of the Company as at 30 September 2021 to be US$25.6
million, a decrease of 27.5 per cent compared with the Group's NAV
as at 30 September 2020. This represents US$0.67 per share, based
on the number of shares in issue at the year-end. This change
principally reflects the net changes in the Directors' assessment
of the values of the Company's investments, described in more
detail below, less the Group's running costs for the year.
As at 30 September 2021 the Group's NAV consisted of:
-- an investment in AP Towers, the telecommunication tower
business, of US$22.3 million, excluding the non-controlling
interests, determined using a comparable EBITDA multiple
methodology;
-- an investment in MFIL, the microfinance business, of US$1.5
million, determined using a price to book value methodology;
and
-- cash and other net assets of US$1.8 million.
AP TOWERS
As at 30 September 2020 the Directors had assessed that the
Company's attributable shareholding in AP Towers , excluding the
non-controlling interests attributable to the minority shareholders
of MIL 4, was worth US$28.3 million as at that date, using a
comparable EBITDA multiple methodology .
Applying the same methodology that we used as at 30 September
2020 with updated trading and comparable data, the value of this
investment would be US$29.7 million, an increase of US$1.4 million
compared with the valuation as at 30 September 2020.
This value of AP Towers represents an unrealised gain of US $8.9
million over the cost of the investment and an
IRR since the initial investment in July 2015 of 5.9 per cent.
MFIL
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.
Applying the same methodology that we used as at 30 September
2020 the Directors have assessed the value of this investment to be
US$2.0 million which is US$2.4 million lower compared with 30
September 2020.
This value of MFIL represents a loss of US $0.7 million over the cost of the investment .
Valuation 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 are not
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 risks in Myanmar the Directors have
decided to apply a valuation discount of 25% on the company's
entire portfolio as at 30 September 2021 which compares to the 30%
discount that they applied as at 31 March 2021. This change
reflects signs of stabilization in the country and its economy and
will be reviewed regularly.
The impact on MIL's carrying value of the investments after
applying the discount are:
AP Towers:
This discount reduces the value of this investment to US$22.3
million, which is US$6.07 million lower than at September 2020.
This valuation of AP Towers represents a profit of US$1.5
million over the cost of the investment and an IRR since the
initial investment in July 2015 of 1.1%.
MFIL:
This discount reduces the value of this investment to US$1.5
million, which is US$2.9 million lower than at September 2020.
This valuation of MFIL represents a loss of US$1.2 million over
the cost of the investment.
SUMMARY OF NAV
Contrary to the past, the NAV attributable to the shareholders
of the Company in the attached audited financial statements does
not differ from the NAV determined by the Directors as the
investment in MFIL has been classified as a "non-current asset
classified as held for sale" which requires the valuation of MFIL
at "fair value" and not at "at equity". 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.
FINANCIAL RESULTS
For the year to 30 September 2021 the Group's audited loss after
tax attributable to the shareholders of the Company was US$7.8
million. The Group's audited profit after tax attributable to the
shareholders of the Company for the 18-month financial period to 30
September 2020 was US$1.6 million.
This is a significant deterioration on the last period result.
The loss per share is US cents 20.49 compared with a profit per
share of US cents 4.24 for the 18-month period to 30 September 2020
and primarily relates to adjusting the valuation of the investments
down.
But we are on track with the reduction of our overheads. As part
of the cost reduction process, we had closed our office in Yangon
and removed staff costs from the operation as of 31 March 2020. The
annualised core cash-based overheads (including the costs of being
a quoted company but excluding discretionary compensation, share
option expenses and transaction costs) for the 6-month period from
1 April 2020 to 30 September 2020 were US$0.7 million and this is
what we have achieved during this year.
Outside of our overheads the most significant items were:
-- Our share of the 'fair value loss on investment at fair value
through profit or loss' for the investment in AP Towers of US$6.07
million;
-- 'Fair value loss on investment at fair value through profit
or loss' for the investment in MFIL of US$1.05 million.
DIVIDS
Based on the above the Directors do not recommend payment of a
dividend at this time.
WORKING CAPITAL
Based as of the date of this report the Group has adequate
financial resources to cover its working capital needs for the next
12 months.
NICK PARIS
Managing Director
29 November 2021
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE FINANCIAL YEARED 30 SEPTEMBER 2021
Financial
period from
Financial 1 April 2019
ended to
30 September 30 September
Note 2021 2020
US$ US$
Revenue - -
Other item of income
Finance income 4 476 491
Gain on disposal of a joint venture 10 - 361,248
Fair value (loss)/gain on investment
at fair value through profit or loss 11 (9,100,000) 6,500,000
Items of expense
Employee benefits expense 5 (198,500) (898,323)
Depreciation expense 12 - (20,719)
Other operating expenses (495,663) (1,325,262)
Finance costs 6 (6,827) (13,857)
Share of results of joint ventures,
net of tax 10 - (926,004)
Write down to fair value less cost
to sell on non-current asset held for
sale 16 (1,052,467) -
(Loss)/profit before income tax 7 (10,852,981) 3,677,574
Income tax expense 8 (120) (1,306)
(Loss)/profit for the financial year/period (10,853,101) 3,676,268
============= =============
Other comprehensive income:
Items that may be reclassified subsequently
to profit or loss:
Exchange gain arising on translation
of foreign
operations 10 - 399,314
Other comprehensive income for the
financial year/period , net of tax - 399,314
------------- -------------
Total comprehensive (loss)/income for
the financial year/period (10,853,101) 4,075,582
============= =============
(Loss)/Profit attributable to:
Owners of the parent (7,806,703) 1,616,159
Non-controlling interests 13 (3,046,398) 2,060,109
------------- -------------
(10,853,101) 3,676,268
============= =============
Total comprehensive (loss)/income attributable
to:
Owners of the parent (7,806,703) 2,015,473
Non-controlling interests 13 (3,046,398) 2,060,109
(10,853,101) 4,075,582
============= =============
(Loss)/Earnings per share (cents)
* Basic and diluted 9 (20.49) 4.24
============= =============
The accompanying notes form an integral part of these financial
statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2021
30 September 30 September
Note 2021 2020
US$ US$
ASSETS
Non-current assets
Investments in joint ventures 10 - -
Equity instrument at fair value through
profit or loss 11 33,400,000 42,500,000
Plant and equipment 12 - -
------------ ------------
Total non-current assets 33,400,000 42,500,000
------------ ------------
Current assets
Other receivables 14 117,989 268,834
Cash and bank balances 15 1,807,634 2,364,166
------------ ------------
1,925,623 2,633,000
Non-current asset classified as held
for sale 16 1,500,000 2,552,467
------------ ------------
Total current assets 3,425,623 5,185,467
------------ ------------
Total assets 36,825,623 47,685,467
============ ============
EQUITY AND LIABILITIES
Equity
Share capital 17 40,569,059 40,569,059
Share option reserve 18 1,358,913 1,358,913
Accumulated losses (16,230,184) (8,423,481)
Foreign exchange reserve (76,560) (76,560)
Equity attributable to owners of the
parent 25,621,228 33,427,931
Non-controlling interests 13 10,889,169 13,935,567
------------ ------------
Total equity 36,510,397 47,363,498
------------ ------------
LIABILITIES
Current liabilities
Other payables 19 297,512 304,053
Income tax payable 17,714 17,916
------------ ------------
Total current liabilities 315,226 321,969
Total equity and liabilities 36,825,623 47,685,467
============ ============
The accompanying notes form an integral part of these financial
statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEARED 30 SEPTEMBER 2021
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$
2021
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 year,
representing
total
comprehensive loss
for the
financial year - - - (7,806,703) (7,806,703) (3,046,398) (10,853,101)
At 30 September
2021 40,569,059 1,358,913 (76,560) (16,230,184) 25,621,228 10,889,169 36,510,397
========== ========= ========= ============ ============= ============ ============
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 period - - - 1,616,159 1,616,159 2,060,109 3,676,268
Exchange gain
arising on
translation
of foreign
operations 10 - - 399,314 - 399,314 - 399,314
---------- ------------
Total comprehensive
income for
the financial
period - - 399,314 1,616,159 2,015,473 2,060,109 4,075,582
Share options
expense 18 - 21,908 - - 21,908 - 21,908
Total transactions
with owners
in their capacity
as 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
========== ========= ========= ============ ============= ============ ============
The accompanying notes form an integral part of these financial
statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE FINANCIAL YEARED 30 SEPTEMBER 2021
Financial
period from
Financial 1 April 2019
ended to
30 September 30 September
Note 2021 2020
US$ US$
Operating activities
(Loss)/profit before income tax (10,852,981) 3,677,574
Adjustments for:
Interest income 4 (476) (491)
Finance costs 6 6,827 13,857
Depreciation of plant and equipment 12 - 20,719
Gain on disposal of a joint venture 10 - (361,248)
Fixed assets written off 7 - 17,384
Fair value loss/(gain) on investment
at fair value through
profit or loss 11 9,100,000 (6,500,000)
Write down to fair value less cost
to sell on non-current
asset held for sale 16 1,052,467 -
Share options expense 18 - 21,908
Share of results of joint ventures,
net of tax 10 - 926,004
Operating cash flows before working
capital changes (694,163) (2,184,293)
Changes in working capital:
Other receivables 150,845 (90,059)
Other payables (6,541) (68,357)
Cash used in operations (549,859) (2,342,709)
Interest received 4 476 491
Finance costs paid 6 (6,827) (13,857)
Income tax paid (321) (280)
Net cash flows used in operating activities (556,531) (2,356,355)
------------- -------------
Investing activities
Proceeds from disposal of investments 10 - 1,000,000
Net cash flows generated from investing
activities - 1,000,000
Financing activities
Decrease/(increase) in short-term deposits
pledged 35,943 (216)
Net cash flows generated from/(used
in) financing activities 35,943 (216)
Net change in cash and cash equivalents (520,588) (1,356,571)
Cash and cash equivalents at beginning
of the financial year/period 2,316,539 3,673,110
Cash and cash equivalents at the end
of financial year/period 15 1,795,951 2,316,539
============= =============
The accompanying notes form an integral part of these financial
statements.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEARED 30 SEPTEMBER 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.
The principal activities of the subsidiaries are disclosed in
Note 13 to the financial statements.
In the previous financial year, the Group and the Company
changed its reporting period end from 31 March to 30 September such
that the previous reporting period covered a period of 18 months,
and therefore the financial statements are not comparable.
1.1 Going concern
The Group incurred loss after tax of US$10,853,101 during the
current financial year. The Directors have a reasonable expectation
that the Group has adequate financial resources to continue in
operational existence for the foreseeable future as the Group's
current assets exceeded its current liabilities by US$3,110,397.
This expectation is based on a review of the Group'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 Group's financial
statements.
2. Summary of significant accounting policies
The Company's significant accounting judgements and estimates
used in the preparation of these financial statements are available
in the full audited financial statements, a copy of which can be
found on the Company's website at www.myanmarinvestments.com.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEARED 30 SEPTEMBER 2021
3. Significant accounting judgements and estimates
The preparation of the Group's financial statements requires
management to make judgements, estimates and assumptions that
affect the reported amounts of revenues, expenses, assets and
liabilities and the accompanying disclosures, and the disclosure of
contingent liabilities at the reporting date. Uncertainty about
these assumptions and estimates could result in outcomes that could
require a material adjustment to the carrying amount of the asset
or liability affected in the future periods.
3.1 Critical judgements made in applying the entity's accounting policies
The following is the critical judgement that management has made
in the process of applying the Group's accounting policies and
which have a significant effect on the amounts recognised in the
consolidated financial statements:
(i) Extension of period required to complete a sale of the non-current asset held for sale
As the result of the ongoing transaction to sell the Group's
37.5% equity interest in Myanmar Finance International Ltd.
("MFIL") (Note 10), the entire carrying amount of the Group's
investment in MFIL has been reclassified as non-current asset held
for sale since the prior financial period. However, due to certain
events and circumstances beyond the Group's control in Myanmar as
disclosed in Note 23 to the financial statements, the sale could
not be completed within one year. The Group remains committed to
its plan to sell its investment in MFIL. As such, management is of
the view that the continuous classification of its investment in
MFIL as non-current asset held for sale is appropriate as at 30
September 2021.
3.2 Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources
of estimation uncertainty at the reporting date, that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year,
are described below. The Group based its assumptions and estimates
on parameters available when the financial statements were
prepared. Existing circumstances and assumptions about future
developments, however, may change due to market changes or
circumstances arising beyond the control of the Group. Such changes
are reflected in the assumptions when they occur.
(i) Fair value of unquoted equity instrument at fair value through profit or loss
The Group's equity instrument at fair value through profit or
loss are measured at fair value for financial reporting purposes.
The Board of Directors of the Company has set up an Investment
Committee to determine the appropriate valuation techniques and
inputs for fair value measurements being the EV/EBITDA
multiple.
In estimating the fair value of an asset or a liability, the
Group uses market-observable data to the extent it is available.
Where Level 1 inputs are not available, the Group engages internal
qualified valuers to perform the valuation. The valuation of the
unquoted investment is categorised into Level 3 (2020: Level 3) of
the fair value hierarchy. The Investment Committee works closely
with the qualified internal valuers to establish the appropriate
valuation techniques and inputs to the model. The Investment
Committee reports its findings to the Board of Directors of the
Company on a periodic basis to explain the cause of fluctuations in
the fair value of the assets and liabilities.
Information about the valuation techniques and inputs used in
determining the fair value of the unquoted equity instrument at
fair value through profit or loss are disclosed in Note 11 to the
financial statements.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEARED 30 SEPTEMBER 2021
3. Significant accounting judgements and estimates (Continued)
3.2 Key sources of estimation uncertainty (Continued)
(ii) Measurement of non-current asset held for sale
The Group follows the accounting policies set out in Note 2.9
and measures the non-current asset held for sale at lower of the
carrying amount and fair value less cost to sell. In determining
the fair value less cost to sell, the Company considers the terms
and conditions of the Binding Offer as disclosed in Note 10 to the
financial statements. The details of non-current asset held for
sale are disclosed in Note 16 to the financial statements.
4. Finance income
Financial
period from
Financial 1 April 2019
year ended to
30 September 30 September
2021 2020
US$ US$
Interest income 476 491
============= =============
5. Employee benefits expense
Financial
period from
Financial 1 April 2019
year ended to
30 September 30 September
2021 2020
US$ US$
Salaries, wages and other staff benefits 198,500 826,415
Bonuses - 50,000
Share options expense (Note 18) - 21,908
------------- -------------
198,500 898,323
============= =============
The employee benefits expense includes the remuneration of
Directors as disclosed in Note 20 to the financial statements.
6. Finance costs
Finance costs represent bank charges for the financial
year/period.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEARED 30 SEPTEMBER 2021
7. (Loss)/profit before income tax
In addition to the charges and credits disclosed elsewhere in
the notes to the financial statements, the above includes the
following charges:
Financial
period from
Financial 1 April 2019
year ended to
30 September 30 September
2021 2020
US$ US$
Auditor's remuneration 51,607 103,397
Consultants' fees 191,472 218,999
Fixed assets written off - 17,384
Short term leases 2,730 84,206
Professional fees 147,428 599,324
Travel and accommodation - 54,572
============= =============
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEARED 30 SEPTEMBER 2021
8. Income tax expense
Financial
period from
Financial 1 April 2019
year ended to
30 September 30 September
2021 2020
US$ US$
Current income tax
* current financial year/period 120 3,703
* over-provision in prior financial year/period - (2,397)
------------- -------------
120 1,306
============= =============
A reconciliation of income tax applicable to (loss)/profit
before income tax at the statutory income tax rate of 25% (2020:
25%) in Myanmar is as follows:
Financial
period from
Financial 1 April 2019
year ended to
30 September 30 September
2021 2020
US$ US$
(Loss)/profit before income tax (10,852,981) 3,677,574
Share of results of joint venture, net of
tax (Note 10) - 926,004
------------- -------------
(10,852,981) 4,603,578
============= =============
Income tax at the applicable tax rates (2,713,245) 1,150,895
Effects of different income tax rates in
other countries (95) (587)
Over-provision in prior financial year - (2,397)
Income not subject to tax - (1,545,082)
Expenses not deductible for tax 2,713,539 399,482
Income tax exemption (81) (1,005)
Income tax for the financial year/period 120 1,306
=========== ===========
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEARED 30 SEPTEMBER 2021
9. (Loss)/earnings per share
Basic (loss)/earnings per share is calculated by dividing the
profit or loss for the financial year/period attributable to owners
of the parent by the weighted average number of ordinary shares
outstanding during the financial year/period.
The following reflects the profit or loss and share data used in
the basic and diluted (loss)/earnings per share computation:
Financial
period from
Financial 1 April 2019
year ended to
30 September 30 September
2021 2020
US$ US$
(Loss)/profit for the financial year/period
attributable to owners of the Company (US$) (7,806,703) 1,616,159
Weighted average number of ordinary shares
during
the financial year/period applicable to
basic profit
or loss per share 38,108,451 38,097,037
(Loss)/earnings per share
Basic and diluted (cents) (20.49) 4.24
============= =============
Diluted (loss)/earnings per share is the same as the basic
(loss)/earnings per share for financial year ended 30 September
2021 and financial period ended 30 September 2020 because the
potential ordinary shares to be converted arising from share
options and warrants are anti-dilutive.
10. Investments in joint ventures
30 September
2020
US$
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)
3,191,219
Disposal of joint venture during the financial period (638,752)
Reclassified to non-current asset held-for-sale (2,552,467)
------------
-
============
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEARED 30 SEPTEMBER 2021
10. Investments in joint ventures (Continued)
30 September
2020
US$
Movement during the period
Balance at beginning of financial period 3,717,909
Share of results of joint ventures, net of tax (926,004)
Share of foreign currency translation reserve 399,314
Disposal of joint venture during the financial period (638,752)
Reclassified to non-current asset held-for-sale (2,552,467)
-----------
Balance at end of financial period -
===========
Myanmar Finance International Ltd.
The Group, through its wholly-owned subsidiary Myanmar
Investment Limited ("MIL"), holds 37.5% equity interest in a joint
venture Myanmar Finance International Ltd ("MFIL"), a company
incorporated in Myanmar, within principal activity of provision of
microfinance loans.
On 26 February 2020, MIL together with each of the other
shareholders of MFIL, received a Binding Offer ("BO") to sell the
entire share capital of MFIL to Thitikorn Plc ("TK") (the
"Purchaser"), a consumer finance company incorporated in Thailand
and listed on the Stock Exchange of Thailand.
The original BO was executed on 17 March 2020 with the intention
of agreeing and executing the Sale and Purchase Agreement ("SPA")
within a month. However, due to the outbreak of Covid-19, the
regulatory approval could not be obtained in time. Therefore, the
BO has been extended for several times and the latest extension was
signed on 22 November 2021 which extended the expiry of BO to 28
February 2022.
In accordance with the BO, the minimum consideration for this
transaction will be calculated based on a pre-agreed formula of 2
times the book value of MFIL at closing once conditions above have
been satisfied.
As the result of the ongoing transaction above, the entire
carrying amount of the Group's investment in MFIL has been
reclassified as non-current asset held for sale in prior year and
continued being classified as non-current held for sale in current
year (Note 16).
Medicare International Health and Beauty Pte. Ltd. and its
subsidiary ("MIHB Group")
On 28 November 2019, the Group disposed its entire investment in
MIHB Group for US$1,000,000. For the period from 1 April 2019 to 28
November 2019 (date of disposal), the Group recorded share of
losses from its investment in MIHB Group amounting to US$576,305.
The carrying amount of the Group's investment in MIHB Group as at
the date of disposal was US$638,752. As a result, the Group
recognised a gain on disposal of US$361,248 during the previous
financial period.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEARED 30 SEPTEMBER 2021
11. Equity instrument at fair value through profit or loss
30 September 30 September
2021 2020
US$ US$
Investment in unquoted equity instrument,
at fair value 33,400,000 42,500,000
============ ============
The Group, through its 66.67% subsidiary, MIL 4 Limited ("MIL
4") invested in a 6.2% (2020:6.2%) equity interest in unquoted
share capital of AP Towers Holdings Pte. Ltd. ("AP Towers").
On 23 January 2020, MIL 4 exchanged its then existing investment
in Apollo Towers holdings Limited ("Apollo Tower") 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 in unquoted equity instrument is as
follows:
30 September 30 September
2021 2020
US$ US$
Balance at beginning of financial year/period 42,500,000 36,000,000
Fair value (loss)/gain during the financial
year/period (9,100,000) 6,500,000
Balance at end of financial year/period 33,400,000 42,500,000
============ ============
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 (2020: 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:
30 September 2021
Inter-relationship
between key
Valuation unobservable
Financial technique Significant inputs
asset used unobservable inputs and fair value
Unquoted Comparable Increase EBITDA
equity Company * Earnings Before Interest, Tax, Depreciation and and EV/EBITDA
investment Analysis Amortisation ("EBITDA") of US$85.9million multiple
- AP will increase
Towers the
fair value of
* Enterprise Value ("EV") per EBITDA multiple of 12.7x the
financial asset.
Increase in
* Valuation discount of 25%* valuation
discount will
decrease
the fair value
of the financial
asset
* Due to uncertain political environment and ongoing COVID-19
pandemic in Myanmar during current financial year, management is of
the view that an additional 25% discount should be applied to the
Group's investments in Myanmar.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEARED 30 SEPTEMBER 2021
11. Equity instrument at fair value through profit or loss (Continued)
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 Amortisation ("EBITDA") of US$83.4million multiple
will increase
the
fair value of
* Enterprise Value ("EV") per EBITDA multiple of 13.1x the
financial asset.
12. Plant and equipment
Computer Furniture
equipment Office equipment and fittings Total
US$ US$ US$ US$
2020
Cost
Balance at 1 April 2019 10,852 1,118 56,469 68,439
Written off (10,852) (1,118) (56,469) (68,439)
Balance at 30 September 2020 - - - -
========== ================ ============= ========
Accumulated depreciation
Balance at 1 April 2019 6,865 1,118 22,353 30,336
Depreciation for the financial
period 2,326 - 18,393 20,719
Written off (9,191) (1,118) (40,746) (51,055)
Balance at 30 September 2020 - - - -
========== ================ ============= ========
Carrying amount
Balance at 30 September 2020
and 30 September 2021 - - - -
========== ================ ============= ========
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEARED 30 SEPTEMBER 2021
13. Investment in subsidiaries
Details of the subsidiaries are as follows:
Proportion Proportion
of of
Country of ownership ownership
incorporation/ interest interest
principal held by the held by non-control
Name of subsidiaries place of business Principal activities Group interests
2021 2020 2021 2020
% % % %
Myanmar Investments Investment holding
Limited(1) Singapore company 100 100 - -
Provision of
MIL Management Pte. management services
Ltd.(1) Singapore to the Group 100 100 - -
British
Virgin Investment holding
MIL 4 Limited(1) Islands company 66.67 66.67 33.33 33.33
Held by MIL Management
Pte. Ltd.
Provision of
MIL Management Co., management services
Ltd(2) Myanmar to the Group 100 100 - -
(1) Audited by BDO LLP, Singapore.
(2) In the process of striking off.
Non-controlling interests
The summarised financial information before intra-group
elimination of the subsidiary that has material non-controlling
interests as at the end of each reporting period is as follows:
MIL 4 Limited
30 September 30 September
2021 2020
US$ US$
Assets and liabilities
Non-current assets 33,400,000 42,500,000
Current assets 923 71,067
Current liabilities (733,422) (764,373)
Net assets 32,667,501 41,806,694
=============== ================
Accumulated non-controlling interests 10,889,169 13,935,567
=============== ================
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEARED 30 SEPTEMBER 2021
13. Investment in subsidiaries (Continued)
MIL 4 Limited
30 September 30 September
2021 2020
US$ US$
Revenue - -
Other (loss)/income (9,100,000) 6,500,000
Administrative expenses (39,193) (319,673)
----------- ---------
(Loss)/profit and total comprehensive (loss)/income
for the financial year/period (9,139,193) 6,180,327
(Loss)/profit and total comprehensive (loss)/income
allocated to non-controlling interests (3,046,398) 2,060,109
=========== =========
Operating cash flows before working capital
changes (39,193) (319,673)
Working capital changes 39,193 319,673
----------- ---------
Net cash used in operating activities - -
----------- ---------
Net change in cash and cash equivalents - -
=========== =========
14. Other receivables
30 September 30 September
2021 2020
US$ US$
Other receivables 60,103 211,962
Deposits - 9,061
Prepayments 57,887 47,811
------------ ------------
117,990 268,834
============ ============
15. Cash and bank balances
30 September 30 September
2021 2020
US$ US$
Cash and bank balances 1,795,951 2,316,539
Short-term deposit 11,683 47,627
------------ ------------
1,807,634 2,364,166
============ ============
The short-term deposit bears interest rate of ranging from 0% to
1.4% (2020: 0.95% to 1.40%) per annum, has a tenure of
approximately 12 months (2020: 12 months) and is pledged to bank to
secure credit facilities.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEARED 30 SEPTEMBER 2021
15. Cash and bank balances (Continued)
Cash and bank balances and short-term deposits are denominated
in the following currencies:
30 September 30 September
2021 2020
US$ US$
United States dollar 1,676,445 2,232,114
Singapore dollar 128,168 129,031
Myanmar kyat 3,021 3,021
------------ ------------
1,807,634 2,364,166
============ ============
For the purpose of the statement of cash flows, cash and cash
equivalents comprise the following at the end of the financial
year/period:
30 September 30 September
2021 2020
US$ US$
Cash and bank balances 1,807,634 2,364,166
Less: short-term deposits pledged (11,683) (47,627)
------------ ------------
1,795,951 2,316,539
============ ============
16. Non-current asset classified as held for sale
As the result of the ongoing transaction to sell the Group's
37.5% (2020:37.5%) 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. However, due to certain events and circumstances beyond the
Group's control in Myanmar, the sale could not be completed within
one year. The Group remains committed to its plan to sell its
investment in MFIL. As such, the Group continued classifying its
investment in MFIL as non-current asset held for sale is
appropriate as at 30 September 2021.
Details of assets in non-current asset classified as
held-for-sale were as follows:
30 September 30 September
2021 2020
US$ US$
Investment in joint venture - 37.5% equity
interest in Myanmar Finance International
Limited 2,552,467 2,552,467
Less: Write down to fair value less cost
to sell (1,052,467) -
------------ ------------
1,500,000 2,552,467
============ ============
Non-current assets classified as held for sale are measured at
the lower of the asset's previous carrying amount and fair value
less costs to sell. Management estimates the fair value less cost
to sell at US$1,500,000 based on 2 times the audited book value of
MFIL at 30 September 2021, adjusted for a valuation discount of 25%
due to uncertain political environment and ongoing COVID-19
pandemic in Myanmar during current financial year. The valuation of
the non-current asset held for sale is categorised into Level 3 of
the fair value hierarchy. Therefore, the carrying amount of the
non-current asset held for sale was written down to its fair value
less cost to sell. Accordingly, write down of US$1,052,467 was
recognised in profit or loss for the current financial year.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEARED 30 SEPTEMBER 2021
17. Share capital
30 September 30 September
2021 2020
US$ US$
Issued and fully-paid share capital:
Ordinary shares at the beginning of the financial
year/period 40,569,059 40,569,059
============ ============
2021 2020
Ordinary Ordinary
Equity Instruments in issue shares Warrants shares Warrants
At the beginning of the
financial year/period 38,097,037 14,128,387 38,097,037 14,128,387
Exercise during the year - (554,486) - -
Issuance during the financial
year 11,414 - - -
---------- ---------- ---------- ----------
At the end of the financial
year/period 38,108,451 13,573,901 38,097,037 14,128,387
========== ========== ========== ==========
The holders of ordinary shares are entitled to receive dividends
as declared from time to time and are entitled to one vote per
share without restriction at meetings of the Company.
During the financial year, 554,486 warrants were exercise via a
cashless conversion and resulting in issuance of 11,414 new
ordinary shares. The new ordinary shares ranked pari passu in all
respects with the existing ordinary shares of the Company and
listed in the London Stock Exchange.
All the shares have been admitted to trading on AIM under the
ticker MIL.
Warrants
No new warrants were issued during the period.
On 16 September 2016, the Company allotted 811,368 warrants
pursuant to the Fourth Subscription. The Company had agreed that
for every four Ordinary Shares subscribed for by a subscriber they
would receive one warrant at nil cost.
The warrants entitle the holder to subscribe for an Ordinary
share at an exercise price of US$0.75. The warrants may be
exercised during each 15 Business Day period commencing on the
first day of each Quarter during the Subscription Period (from 21
June 2015 to 21 June 2018).
On 22 May 2018, the Company amended the existing warrants to
extend the exercise period for warrants that remained outstanding
at 21 June 2018:
a) the exercise period for the warrants was extended such that
the warrants can be exercised until 31 December 2021, but at a
higher exercise price of US$0.90; and
b) in the extended period, warrant holders will have the option
to exercise their warrants on a cashless basis in certain
circumstances.
All warrants have been admitted to trading on AIM under the
ticker MILW.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEARED 30 SEPTEMBER 2021
18. Share option reserve
Details of the Share Option Plan (the "Plan")
The Plan allows for the total number of shares issuable under
share options to constitute a maximum of one tenth of the number of
the total number of ordinary shares in issue (excluding shares held
by the Company as treasury shares and shares issued to the Founders
prior to Admission).
Any future issuance of shares will give rise to the ability of
the Remuneration Committee to award additional share options. Such
share options will be granted with an exercise price set at a 10
percent premium to the subscription price paid by shareholders on
the relevant issue of shares that gave rise to the availability of
each tranche of share options.
Share options can be exercised any time after the first
anniversary and before the tenth anniversary of the grant (as may
be determined by the Remuneration Committee in its absolute
discretion) of the respective share options.
Share options are not admitted to trading on AIM but application
will be made for shares that are issued upon the exercise of the
share options to be admitted to trading on AIM.
As at 30 September 2021, there were 3,622,740 (2020: 3,622,740)
share options available for issue under the Plan of which 2,590,527
(2020: 2,590,527) had been granted. These granted share options
have a weighted average exercise price of US$1.214 (2020: US$1.214)
per share and a weighted average contractual life of 5 years (2020:
5 years).
The 3,622,740 share options available were created under the
following series:
Exercise
price
Series/Date Occasion Number (USD)
Admission Placing and
Series 1/June 2013 Subscription 584,261 1.100
Series 2/ December
2014 Second Subscription 361,700 1.155
Series 3/ July 2015 Third Subscription 1,734,121 1.265
Series 4/ September
2016 Fourth Subscription 324,546 1.430
Series 5/ June 2017 Fifth Subscription 618,112 1.298
------------------
3,622,740
==================
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEARED 30 SEPTEMBER 2021
18. Share option reserve (Continued)
The following share-based payment arrangements were in existence
during the current financial year/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 1.100 153,487
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 23,500 2 June 2015 1 June 2025 1.155 14,365
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 3 921,600 15 January 2016 14 January 2026 1.265 490,120
Series 3 180,000 28 June 2016 27 June 2026 1.265 125,863
Series 1 2,267 19 October 2016 18 October 2026 1.100 1,363
Series 2 2,000 19 October 2016 18 October 2026 1.155 1,149
Series 3 551,999 19 October 2016 18 October 2026 1.265 289,752
---------------- -----------
2,590,527 1,357,848
================ ===========
Share options that are allocated to a Participant are subject to
a three-year vesting period during which the rights to the share
options will be transferred to the Participant in three equal
annual instalments provided, save in certain circumstances, that
they are still in employment with or engaged by the Company.
Fair value of share options granted in the financial year
No share options were granted during the financial year.
Share options were priced using Black-Scholes option pricing
model. Where relevant, the expected life used in the model was
adjusted based on management's best estimate for the effects of
non-transferability, exercise restrictions (including the
probability of meeting market conditions attached to the option),
and behavioural considerations. Expected volatility was based on
historical share price volatility from the date of grant of the
share options.
The Black-Scholes option pricing model uses the following
assumptions:
Grant date
28 June 19 October 19 October 19 October
2016 2016 2016 2016
-------- ---------- ---------- ----------
Grant date share price (US$) 1.628 1.388 1.388 1.388
Exercise price (US$) 1.265 1.100 1.155 1.265
Expected volatility 22.47% 22.25% 22.25% 22.25%
Option life 10 years 10 years 10 years 10 years
Risk-free annual interest
rates 1.46% 1.76% 1.76% 1.76%
The Group recognised a net expense of Nil (2020: US$21,908)
related to equity-settled share-based payment transactions during
the financial year/period.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEARED 30 SEPTEMBER 2021
18. Share option reserve (Continued)
Movement in share option during the financial year/period
The following reconciles the share options outstanding at the
start of the year/period and at the end of the year/period.
2021 2020
Weighted Weighted
average exercise average exercise
Number price Number price
US$ US$
Balance at beginning and
end of financial year/period 2,590,527 1.213 2,590,527 1.213
========= =========
No share options were exercised during the financial
year/period.
Movement in share option reserve during the financial
year/period
30 September 30 September
2021 2020
US$ US$
Balance at start of the financial year/period 1,358,913 1,337,005
Share options expense - 21,908
Balance at end of financial year/period 1,358,913 1,358,913
============ ============
19. Other payables
30 September 30 September
2021 2020
US$ US$
Accruals 106,961 113,294
Other payables 190,551 190,759
------------ ------------
297,512 304,053
============ ============
Other payables are denominated in the following currencies:
30 September 30 September
2021 2020
US$ US$
Singapore dollar 52,018 58,793
United States dollar 243,524 224,553
British pound 1,970 3,119
Euro - 11,199
Myanmar Kyat - 6,389
297,512 304,05
============ ============
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2021
20. Significant related party disclosures
For the purposes of these financial statements, parties are
considered to be related to the Group and the Company if the Group
and the Company have the ability, directly or indirectly, to
control the party or exercise significant influence over the party
in making financial and operating decisions, or vice versa, or
where the Group and the Company and the party are subject to common
control or common significant influence. Related parties may be
individuals or other entities. During the current financial period,
in addition to the information disclosed elsewhere in these
financial statements, there was no other significant transactions
with related parties.
Compensation of key management personnel
During the current financial year, no emoluments were paid by
the Group to the Directors as an inducement to join or upon joining
the Group or as compensation for loss of office.
The remuneration of Directors for the financial year/period were
as follows:
Short term Share
Directors' employee option
fee benefits plan Total
US$ US$ US$ US$
Financial year ended 30 September
2021
Executive directors
Maung Aung Htun - 86,000 - 86,000
Nicholas John Paris - 80,000 - 80,000
Non-executive directors
Henrik Onne Bodenstab 17,500 - - 17,500
Rudolf Gildemeister 15,000 - - 15,000
----------
32,500 166,000 - 198,500
========== ========== ======= =======
Financial period from 1 April
2019 to 30 September 2020
Executive directors
Maung Aung Htun - 192,823 5,115 197,938
Anthony Michael Dean - 267,209 5,115 272,324
Craig Robert Martin - 26,333 1,201 27,534
Nicholas John Paris 10,000 73,333 - 83,333
Non-executive directors
Christopher William Knight 24,789 - 1,201 25,990
Henrik Onne Bodenstab 22,793 - 1,136 23,929
Rudolf Gildemeister 13,167 - - 13,167
----------
70,749 559,698 13,768 644,215
========== ========== ======= =======
21. Dividends
The Directors of the Company do not recommend any dividend in
respect of the financial year ended 30 September 2021 (2020:
Nil).
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2021
22. Financial risk management objectives and policies
The Group's Financial risk management objectives and policies
have not changed in the past year and can be found on the website
at www.myanmarinvestments.com.
23. Impact of COVID-19 and political crisis in Myanmar
The Coronavirus (COVID-19) outbreak and the political crisis
after the change of government on 1 February 2021 have created a
high level of uncertainty to economic prospects.
The situation continues to evolve with significant level of
uncertainty and the Group has seen an impact on its own
operation.
Regarding its investees it can be said that the last 9 months
have been difficult for the microfinance industry. A surge in COVID
cases in June 2021 led to shortages of medical supplies and the
country going into a hard lockdown. The "stay at home" directive
severely reduced economic activity and mobility. The political
crisis since 1 February 2021 has further impacted business
sentiment and activity. Bank transfers and withdrawals have been
restricted and USD has been hard to source. The impact of the
lockdown and civil disobedience movement has made it complicated to
complete the formality of the sale of Myanmar Finance International
Ltd ("MFIL"). The purchaser has therefore agreed to extend the
offer to early 2022 (Note 10). The Group intends to complete the
sale as soon as it is practical.
Regarding the Group's other investment in AP Towers Holdings
Pte. Ltd. ("AP Towers"), it is to be noted that contrary to other
industries, the telecommunication sector has not suffered greatly
due to the outbreak of COVID-19. But the Myanmar telecommunication
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 and restriction of data services imposed by the
regulator. Whilst the operating environment has been very
challenging, AP Towers 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.
24. Authorisation of financial statements
The financial statements of the Group for the financial year
ended 30 September 2021 were approved by the Board of Directors
on
Notes to Editors
Myanmar Investments International Limited (AIM: MIL) was the
first Myanmar-focused investment company to be admitted to trading
on the AIM market of the London Stock Exchange. MIL was established
in 2013 with the intention of building long-term shareholder value
by proactively investing in a diversified portfolio of Myanmar
businesses that will benefit from the country's re-emergence and
ongoing economic development. The Company is led by an experienced
and entrepreneurial team who between them have considerable
industrial, corporate and financial management experience. At the
Annual General Meeting on 24 October 2019, the Company's
shareholders approved a change in the investment policy of the
Company to now seek to harvest the Company's investments over
time.
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