TIDMMIL
RNS Number : 0638L
Myanmar Investments Intl Ltd
29 December 2022
This announcement contains inside 29 December 2022
information
Myanmar Investments International Limited
Interim results to 30 September 2022
Myanmar Investments International Limited [AIM: MIL] ("MIL" or
the "Company"), the AIM-quoted Myanmar focused investment company,
today announces its unaudited interim financial results for the six
months to 30 September 2022 in line with the Company's change in
year-end to bring it in line with the new Myanmar year end of 31
March, as announced on 9 February 2022.
Myanmar
The crisis in Myanmar continues but is shapeshifting. How the
politics evolves in 2023 will determine the next chapter for the
economy.
At one level, the military has not been able to effectively
govern a large part of the north/northeast and southwest of the
country through troop deployment on the ground and therefore is now
resorting to air attacks on villages that they believe harbour
anti-government forces. This has slowed the anti-government groups
from expanding their areas of influence but also has not given the
State Administration Council (" SAC") the necessary control. At the
same time, in the major cities of Yangon, Mandalay and Nay Phi Taw,
the level of daily violent attacks and assassinations has markedly
declined leading to a sense of normalcy. The armed conflict has
therefore morphed into a stalemate.
Politically, the anti-government groups are not unified. Some
Ethnic Armed Organizations ("EAO" ) have waged aggressive attacks
on government troops, yet others are less active and appear more
willing to consider bilateral peace arrangements with the SAC. The
many People Defense Forces ("PDF") that have sprung up across the
country have had varying degrees of success but are underfunded and
lack critical weaponry. The National Unity Government ("NUG"), the
de facto government in exile, has not managed to articulate a clear
strategy nor unity. This lack of coordination is due, in part, to
the protagonists' differing agendas for the future. Dislike of the
military may initially have galvanized action, but the lack of
coherency is now hampering the ability to build momentum and the
opposition has now morphed into stubborn defensive resistance
rather than being the aggressor.
Internationally, western attention has focused on the invasion
of Ukraine, while ASEAN has not made any progress in implementing
their 5-point plan for Myanmar which was adopted in April 2021.
Even with Indonesia, a vocal critic of the coup d'etat, due to
assume the chair of ASEAN in 2023, member countries are divided in
their approach. The need for ASEAN as an institution to always
reach a consensus means that it has morphed into a toothless
tiger.
Meanwhile the Myanmar military, in spite of stories of
significant casualties, continues to pursue their vision of a
controlled democracy with the Tatmadaw as the effective arbiter on
all matters. The NLD, Aung San Suu Kyi's party, has been weakened
by her, and most of its senior leaders', imprisonment. The SAC is
also changing the voting system to Proportional Representation and
amending the political party registration process. They expect
these changes to embed their control in future parliaments and to
dictate the level of opposition that can be tolerated.
In November 2022, the SAC granted amnesty to over 5,000
prisoners. Among those released was a small group of NLD
politicians and a few high-profile foreigners.
These moves are believed to be part of a controlled relaxation
to blunt international criticism and pave the way for a general
election in mid-2023. Should an election take place, even if it is
not necessarily internationally accepted, it could, like the 2010
election (which was also initially widely condemned), herald the
beginning of a change. This will largely depend on who the military
nominates as the next president. Leading up to the elections there
could be an increase in instability.
The economy shows signs of stabilization at depressed
levels.
The military takeover, Covid-19 pandemic and global disruptions
have reversed development gains that began with the Thein Sein
government's reforms in 2011.
According to the World Bank, Myanmar's growth is projected at 3
per cent in the fiscal year to September 2022 and inflation will
have reached 17 per cent per annum. However, this apparent headline
growth masks a significant increase in poverty and an increase in
the difficulties of doing business.
In October 2022, the World Food Program reported that 15.2
million people, out of a population of 53 million, were facing
acute food insecurity and more than 1.38 million people were
displaced. The cost of a basic food basket rose by 62 per cent year
on year.
Over the last 2 years, businesses have been adversely impacted
by the sharp rises in prices of imported inputs and goods, the
weakened currency, persistent banking and logistic issues and
elevated levels of domestic conflicts across the country. In
addition to these problems, the government has imposed more
regulations, import quotas and licensing requirements including the
central bank's regulation to freeze foreign debt repayments and
force conversion of foreign currencies into Myanmar Kyat.
In recent weeks, the currency, as quoted in the unofficial
market, appears to have stabilized at around MMK2,900 per US$ but
this is still 50 per cent lower than in the pre coup era and has
not yet fed through into increased optimism.
The IHS Markit Myanmar Manufacturing PMI decreased to 44.6 in
November 2022 from 45.7 in October, signaling the second fastest
decline in the health of the manufacturing sector in the current
seven months run of contraction. Both output and new orders
contracted at a faster pace because of ongoing material scarcity
and power shortages, while employment continues to contract.
Myanmar's minimum wage is MMK4,800 per day (US$2.3 per day at
the official exchange rate) compared to over US$10 per day in
Thailand, leading to a sharp increase in migrant workers flowing
into Thailand and depriving Myanmar of skilled labour. At the
executive level, the brain drain of young technically skilled IT
and financial staff to neighbouring countries continues. Even with
an enlightened new government, it will take time to attract back
talent to help to rebuild the country.
A recent blow to country's credibility is the Financial Action
Task Force's requirement for financial institutions in member
countries to adopt enhanced due diligence on Myanmar related
transactions. This is the so-called FATF blacklist. While this is
not a sanction per se, it will impact all international
transactions with Myanmar entities thereby increasing costs and
adding delays.
While the currency may have stabilized, and Yangon traffic and
night life has returned giving rise to a feeling of normalcy,
manufacturing, tourism and financial services activities remain
subdued. Only exports of basic raw commodities can help the country
in the short run. Looking forward the regime's more restrictive
fiscal and economic policies, the costs of the conflict and the
brain drain will inhibit potential recovery and investments.
With strongly entrenched but fractured positions on all sides,
the only hope is that in 2023 the political landscape morphs once
again into a form that is tolerable to all constituents. However,
for foreign investors, this does not necessarily equate to a
dynamic economic recovery.
MIL 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 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 Company.
As at 30 September 2022, the Company had two investments in
Myanmar:
-- an indirect shareholding of 4.1 per cent in AP Towers
Holdings Pte. Ltd. ("AP Towers"), one of Myanmar's leading
independent telecom 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 had 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 31 August 2022, the parties signed an
agreement to extend the time period for completion of the binding
offer to 28 February 2023.
The Directors have determined that MIL's Net Asset Value ("NAV")
as at 30 September 2022 was US$10.5 million, or US$0.28 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 25 per cent to
reflect this uncertainty (31 March 2022 - 30 per cent; 30 September
2021 - 25 per cent).
The Company has continued to streamline its operations and as a
result has reduced its overheads. In the period to 30 September
2022, the core cash-based overheads were US$286,000 which is 14.8
per cent lower than for the same period last year. The Directors
intend to reduce costs further as key parts of the Company are shut
down or sold and to conserve the remaining cash for as long as
possible.
The Directors had been considering the option of cancelling the
admission of the ordinary shares from the AIM market of the London
Stock Exchange in order to seek to reduce operating costs but there
was initially insufficient support for this from shareholders.
However, as the current economic and political crisis is now
directly affecting the financial performance of our businesses and
it looks like Myanmar could remain unattractive to western
investors for longer than initially expected, the Directors have
been re-engaging with shareholders to discuss this again. The aim
is to reduce operating costs and cash outflows as much as possible
and therefore lengthen the time before the current cash balance is
substantially depleted. The alternative to making changes now would
be to undertake a modest equity share issue priced at a significant
discount to NAV once the Company's cash balance falls to a level
that is close to 12 months of forecast cash outflows.
As at 30 September 2022, the Company had cash resources of
US$1.1 million (30 September 2021: US$1.8 million).
AP Towers ("APT")
Background
AP Towers is one of the largest Independent Telecom Towers
Companies ("ITC") in Myanmar. The Company swapped its interest in
Apollo Towers for an interest in AP Towers in January 2020. Under
this share exchange, MIL's 66.6 per cent subsidiary, MIL 4 Limited
("MIL4") , exchanged its existing 13.7 per cent shareholding in
Apollo Towers for a shareholding of 6.2 per cent in AP Towers, of
which 4.1 per cent is attributable to MIL.
The share exchange effectively brought Apollo Towers and Pan
Asia Towers, another Myanmar ITC, under the common ownership of AP
Towers which now manages one of the largest network of towers in
Myanmar. Apollo Towers and Pan Asia Towers provide tower and power
services to all of Myanmar's major mobile network operators
("MNOs").
MIL initially invested in Apollo Towers in July 2015 when it led
a consortium of investors that invested US$30 million for a 14.2
per cent shareholding.
A representative of 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.
-- 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
leverages 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 24 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. AP Towers and other tower and power providers have faced
increasing challenges in maintaining the up time of the power
services as movement of key suppliers and personnel has been
restricted. AP Towers has maintained the safety and security of its
staff, whilst continuing to deliver high quality services to all of
its customers. 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 to the
continued availability of mobile phone services to the population
of Myanmar.
-- As at 30 September 2022, AP Towers had an aggregated
portfolio of 3,254 towers, 6,703 tenants and a co-location ratio
("Lease-up-Rate" or "LUR") of 2.06x which is stable relative to 30
September 2021.
-- Based on AP Towers actual results for the 6 months ended 30
September 2022, AP Towers annualised adjusted "run rate" revenue
has decreased to US$92.3 million. This represents a decline of 3.2
per cent over the same figure as at 31 March 2022. The annualised
adjusted "run rate" EBITDA has been almost unchanged at US$76.7
million. This represents a small increase of 1.3 per cent over the
same figure as at 31 March 2022.
-- 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$387.4 million as at the end of
September 2022, a decrease of US$ 16.6 million since 31 March 2022
and a decrease of US$ 8.8 million since 30 September 2021.
Valuation
As at 31 March 2022 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$15.5 million as at that date, using a
comparable EBITDA multiple methodology and before applying the
portfolio discount .
Applying the same methodology that we used as at 31 March 2022
with updated trading and comparable data, the value of this
investment is US$11.5 million, a decrease of US$4.0 million
compared with the valuation as at 31 March 2022. This reduction is
mainly driven by a decrease in comparable multiples.
This value of AP Towers currently represents a loss of US$9.3
million over the original cost of the investment.
Myanmar Finance International Limited ("MFIL")
Background
MFIL is one of the first microfinance operators in Myanmar. As
at 30 September 2022, the company had 10 branches. However, over
the coming months management plans to further reduce and combine
the number of branches and shift focus to service SME clients with
loans of between US$500 and US$5,000. These are small-scale traders
and business operators in semi-urban areas in Yangon, Bago,
Ayeyarwady and Mon. In October 2020, MFIL was granted a license to
operate in the Mandalay region but has not yet activated the
license.
MFIL was established as a microfinance joint venture in
September 2014 by MIL and Myanmar Finance Company Limited ("MFCL").
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, MFCL 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
-- In the six months to 30 September 2022, MFIL's loan book has
been reduced from MMK14.0 billion and 32,000 clients to MMK12.85
billion and 30,547 clients with Portfolio at Risk over 30 days
("PAR 30+") increasing to 27 per cent.
-- The company is in the process shifting towards servicing
small traders and SME clients. Over the next year this will lead to
a significant reduction in the number of group loans provided where
borrowers (typically groups of 8 to 12 individuals borrowing an
average of US$200 each) cross guarantee each other. This is the
traditional microfinance model but in an economy that is in
difficulties and if more than two or three members in a group face
repayment issues, the model does not work so well. The cost of
servicing smaller borrowers is also higher.
-- Since August 2022, MFIL has been negotiating a debt repayment
plan with all of its lenders and in October entered into an
agreement to repay all of its foreign debts of US$2.7 million at a
significant principal haircut. This agreement, however, is
conditional upon receiving regulatory approval to remit repayment
proceeds.
With its domestic lenders, in one case the US$ collateral has
settled approximately 85 per cent of the outstanding MMK loan and
with the second lender an agreement to repay in full has been
signed and MFIL has sufficient liquid assets on hand for
implementation.
-- Once repayment to foreign lenders is complete, MFIL expects
its shareholders funds to double prior to any additional loan loss
provisions that may be made. Total remaining liabilities will be
less than MMK790 million (US$0.377 million) down from MMK12.7
billion at the end of March 2022.
-- The microfinance industry has been badly affected by both the
Covid lockdown and economic crisis following the military takeover.
Economic difficulties have a disproportionately larger negative
impact on the low-income segment of society which are borrowers
from microfinance institutions.
Industry data indicates that the average PAR 30+ for the larger
microfinance companies to be 35 per cent with many in excess of 50
per cent.
-- According to an International Labour Organization briefing
note in August 2022, Myanmar remains deeply affected by heavy job
losses 18 months after the military takeover with 1.1 million fewer
people employed compared to 2020. The PMI index in November 2022 is
also showing seven consecutive months of decreases indicating
sluggish demand and consequently reduced employment.
Borrowers of microfinance companies tend to be farmers, small
traders and SMEs and therefore are not captured in the ILO
statistics however a weak employment market tends to correlate to
reduced earnings for small traders.
-- Although MFIL's borrowers have not been immune from the
continuing economic and political crisis, most continue to
demonstrate a strong willingness to repay even though they have
significantly reduced ability.
-- MFIL continues to see significant demand for new loans, but
management believes that a sustained recovery in the sector may
take longer.
Management therefore continues its policy of reducing the loan
book in the group loan category and to redeploy funds to existing
good SME clients while reducing the overall loan book and
liabilities. The aim is to become a small, debt free and
sustainable company within 18 months.
This restructuring is expected to result in a smaller and more
focused MFIL with fewer branches.
-- The offer for 100 per cent of MFIL from Thitikorn Plc, a Thai
finance company, has been extended to the end of February 2023 and
is subject to, inter alia, local regulatory approval.
Valuation
As at 31 March 2022, the Directors had assessed the value of the
Group's investment in MFIL to be US$1.2 million using the price to
book value methodology contained in the Sale Agreement and before
applying the portfolio discount.
Applying the same methodology that we used as at 31 March 2022,
the value of this investment is US$0.83 million, a decrease of
US$0.37 million compared with the valuation as at 31 March
2022.
This value of MFIL currently represents a loss of US $1.8
million over the original cost of the investment .
Portfolio 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 risks in Myanmar, the Directors have
decided to apply a valuation discount of 25 per cent on the
company's entire portfolio as at 30 September 2022 which compares
to the 30 per cent discount that they applied as at 31 March 2022.
This change reflects that Myanmar has now settled into a measure of
stability and that there has also been an improvement in the access
to foreign exchange within the country since 31 March 2022. There
is still ongoing uncertainty about the exit opportunities from our
investments and the portfolio discount will be reviewed
regularly.
The impact on MIL's carrying value of the investments after
applying the portfolio discount are:
APT:
This discount reduces the value of this investment to US$8.7
million, which is US$2.2 million lower than at March 2022.
This valuation of AP Towers currently represents a loss of
US$12.1 million over the cost of the investment.
MFIL:
This discount reduces the value of this investment to US$0.6
million, which is US$0.2 million lower than at March 2022.
This valuation of MFIL currently represents a loss of
US$2.0million over the cost of the investment.
Financial Performance
Unaudited Financial Statements
The unaudited financial statements for the six months to 30
September 2022 are attached at the end of this announcement. They
have been prepared in compliance with IFRS and have been reviewed
by the Company's auditors, BDO LLP, in accordance with The
International Standard on Review Engagements 2410.
Profit and Loss
For the six months to 30 September 2022, MIL's unaudited
consolidated loss after tax attributable to the owners of the
Company was US$2.7 million, compared with a loss after tax of
US$2.2 million in the same period last year.
This is principally represented by:
-- the overheads associated with running the Company's business (US$0.3 million);
-- the write down to fair value less cost to sell on non-current
asset held for sale of the investment in MFIL (US$0.2 million);
and
-- the fair value loss of the investment in AP Towers (US$2.2 million).
Within this, the cost of MIL's cash-based overheads (i.e.
excluding transaction costs and re-evaluation losses) was
US$286,000 compared to US$336,000 for the six months to 30
September 2021, a reduction of US$50,000 or 14.8 per cent. On a per
share basis this has dropped from 0.88c to 0.75c, a reduction of
14.9 per cent.
Net asset value
The Directors have determined that MIL's Net Asset Value
attributable to the owners of the Company ("NAV") as at 30
September 2022 was US$10.5 million, or US$0.28 per share. This is
comprised of:
-- the investment in AP Towers, the telecommunication tower
business, of US$8.7 million (which equals 66.67 per cent of US$13.0
million), excluding the non-controlling interests, determined using
a comparable EBITDA multiple methodology and applying a portfolio
discount of 25 per cent;
-- the investment in MFIL, the microfinance business, of US$0.6
million, determined using a comparable price to book value
methodology and applying a portfolio discount of 25 per cent;
-- cash and other net assets/liabilities of US$1.2 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$10.5 million is a net decrease of US$2.7
million (20.5 per cent) from US$13.2 million as at 31 March 2022.
This is mainly attributable to:
-- the fact that the AP Towers investment, is valued US$2.2
million lower than as at 31 March 2022);
-- the reduction of the valuation of MFIL by US$0.2 million compared with March 2022; and
-- overheads and transaction costs of US$0.3 million.
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 again been challenging for the Company and the two
companies in which it is invested but Myanmar has now settled into
a measure of stability following the military takeover in February
2021. We have been consistent with our valuation methodology but
the slowdown in the financial results of MFIL and the fall in the
valuation of comparable businesses to APT have led to significant
reductions in our valuation of them during the reporting period.
The Directors have however decreased the portfolio valuation
discount that is applied from 30% to 25% based on an improvement in
the access to foreign exchange within the country since 31 March
2022. The net result is a reduction of 20.5 per cent in the
Company's NAV.
We continue to manage the Company cautiously and conserve its
cash as much as we can, but shareholder rewards are still dependent
on seeing an improvement in the economic conditions within Myanmar
which would then enable the Company to implement its exit plans for
both of its investments.
We have re-engaged with the Company's shareholders to consider a
proposal to de-list MIL shares from The London Stock Exchange as
turnover in them is so low and because it would significantly
reduce our ongoing cash outflows and we intend to reach a
conclusion on this proposal shortly. MIL shareholders would be
asked to vote on it at an Extraordinary General Meeting before it
can be implemented."
The information contained within this announcement is deemed to
constitute inside information as stipulated under the retained EU
law version of the Market Abuse Regulation (EU) No. 596/2014 (the
"UK MAR") which is part of UK law by virtue of the European Union
(Withdrawal) Act 2018. The information is disclosed in accordance
with the Company's obligations under Article 17 of the UK MAR. 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/Ciara William Marle
Donnelly finnCap Ltd
Grant Thornton UK LLP +44 (0) 20 7220 0500
+44 (0) 20 7383 5100
For more information about MIL, please visit
www.myanmarinvestments.com
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX-MONTH PERIODED 30 SEPTEMBER 2022
Present Prior Prior
Interims Interims Full Year
1 April 1 April 1 October
2022 to 2021 to 2020 to
30 September 30 September 30 September
Note 2022 2021 2021
Unaudited Unaudited Audited
US$ US$ US$
Revenue - - -
Other item of income
Finance income 4 - 476 476
Items of expense
Employee benefits expense 5 (84,250) (99,250) (198,500)
Other operating expenses (204,555) (243,949) (495,663)
Finance costs 6 (2,706) (3,220) (6,827)
Fair value loss on investment
at fair value through profit
or loss 10 (3,300,000) (2,100,000) (9,100,000)
Write down to fair value less
cost to sell on non-current asset
held for sale 12 (217,500) (441,398) (1,052,467)
Loss before income tax 7 (3,809,011) (2,887,341) (10,852,981)
Income tax credit/(expense) 8 9 (50) (120)
Loss and total comprehensive
income for the financial period
/year (3,809,002) (2,887,391) (10,853,101)
============= ============= =============
Loss and total comprehensive
income attributable to:
Owners of the parent (2,705,377) (2,181,774) (7,806,703)
Non-controlling interests (1,103,625) (705,617) (3,046,398)
------------- ------------- -------------
(3,809,002) (2,887,391) (10,853,101)
------------- ------------- -------------
Loss per share (cents)
* Basic and diluted 9 (7.10) (5.73) (20.49)
============= ============= =============
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2022
Present Prior
Interims Full Year
30 September 30 September
Note 2022 2021
Unaudited Audited
US$ US$
ASSETS
Non-current assets
Equity instrument at fair value through
profit or loss 10 13,000,000 33,400,000
Plant and equipment - -
------------ ------------
Total non-current assets 13,000,000 33,400,000
------------ ------------
Current assets
Other receivables 108,127 117,989
Cash and cash equivalents 1,140,385 1,807,634
Non-current asset classified as held for
sale 12 622,500 1,500,000
------------ ------------
Total current assets 1,871,012 3,425,623
------------ ------------
Total assets 14,871,012 36,825,623
============ ============
EQUITY AND LIABILITIES
Equity
Share capital 13 40,569,059 40,569,059
Share option reserve 14 1,358,913 1,358,913
Accumulated losses (31,336,199) (16,230,184)
Foreign exchange reserve (76,560) (76,560)
Equity attributable to owners of the
parent 10,515,213 25,621,228
Non-controlling interests 4,079,211 10,889,169
------------ ------------
Total equity 14,594,424 36,510,397
------------ ------------
LIABILITIES
Current liabilities
Other payables 276,588 297,512
Income tax payable - 17,714
------------ ------------
Total current liabilities 276,588 315,226
Total equity and liabilities 14,871,012 36,825,623
============ ============
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX-MONTH PERIODED 30 SEPTEMBER 2022
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$
2022
At 1 April 2022 40,569,059 1,358,913 (76,560) (28,630,822) 13,220,590 5,182,836 18,403,426
Loss for the financial
year, representing
total comprehensive
loss for the financial
year - - - (2,705,377) (2,705,377) (1,103,625) (3,809,002)
At 30 September 2022 40,569,059 1,358,913 (76,560) (31,336,199) 10,515,213 4,079,211 14,594,424
========== ========= ========= ============ ============= ============ ===========
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
Audited 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
========== ========= ========= ============ ============= ============ ============
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX-MONTH PERIODED 30 SEPTEMBER 2022
Present Prior Prior
Interims Interims Full Year
1 April 1 April 1 October
2022 to 2021 to 2020 to
30 September 30 September 30 September
Note 2022 2021 2021
Unaudited Unaudited Audited
US$ US$ US$
Operating activities
Loss before income tax (3,809,011) (2,887,341) (10,852,981)
Adjustments for:
Interest income 4 - - (476)
Finance costs 2,706 3,220 6,827
Fair value loss on investment
at fair value through profit
or loss 10 3,300,000 2,100,000 9,100,000
Write down to fair value less
cost to sell on non-current
asset held for sale 12 217,500 441,398 1,052,467
Operating cash flows before
working capital changes (288,805) (342,723) (694,163)
Changes in working capital:
Other receivables 1,764 (18,595) 150,845
Other payables 9,454 62,967 (6,541)
Cash used in operations (277,587) (298,351) (549,859)
Interest received - - 476
Finance costs paid (2,706) (3,220) (6,827)
Income tax refunded/(paid) 9 (10) (321)
Net cash flows used in operating
activities (280,284) (301,581) (556,531)
------------- ------------- -------------
Financing activities
Decrease in short-term deposits
pledged - 35,943 35,943
------------- ------------- -------------
Net cash flows generated from
financing activities - 35,943 35,943
------------- ------------- -------------
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX-MONTH PERIODED 30 SEPTEMBER 2022
Present Prior Prior
Interims Interims Full Year
1 April 1 April 1 October
2022 to 2021 to 2020 to
30 September 30 September 30 September
Note 2022 2021 2021
Unaudited Unaudited Audited
US$ US$ US$
Net change in cash and cash
equivalents (280,284) (265,638) (520,588)
Cash and cash equivalents at
beginning of financial period/year 1,408,986 2,061,589 2,316,539
Cash and cash equivalents at
end of financial period/year 1,128,702 1,795,951 1,795,951
============= ============= =============
Cash and cash equivalents comprise the following at the end of
the financial period/year:
Present Prior
Interims Full Year
30 September 30 September
2022 2021
Unaudited Audited
US$ US$
Cash and bank balances 1,140,385 1,807,634
Less: short-term deposits pledged (11,683) (11,683)
1,128,702 1,795,951
============ ============
NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION
FOR THE SIX-MONTH PERIODED 30 SEPTEMBER 2022
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 are traded on the AIM market of
the London Stock Exchange under the ticker symbols MIL. The
Company's warrants were traded on the AIM market of the London
Stock Exchange under the ticker symbols MILW until 31 December
2021.
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 equity instrument at
fair value through profit or loss and the principal activities of
the subsidiaries are disclosed in Note 10.
The consolidated financial information of the Company and its
subsidiaries (the "Group") for the period from 1 April 2022 to 30
September 2022 were approved by the Board of Directors on 23
December 2022. 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"), the same accounting policies,
presentation and methods of computation are followed in the
condensed financial statements as were applied in the Group's
latest annual audited financial statements. The full audited
financial statements of the Company for the financial year ended 30
September 2021 can be found on the Company's website at
www.myanmarinvestments.com. While the financial figures included in
the financial information included in this announcement have been
computed in accordance with IFRS applicable to interim periods, the
financial information included in this announcement does not
contain sufficient information to constitute an interim financial
report as that term is defined in IAS 34.
1.1 Going concern
The Group incurred loss after tax of US$3,809,002 during the
six-month period ended 30 September 2022. 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$1,594,424. This expectation is based on a review
of the Group's existing financial resources, its present and
expected future commitments in terms of its overheads and running
costs; and its commitments to its existing investments.
Accordingly, the Directors have adopted the going concern basis in
preparing the Group's financial statements.
2. Summary of significant accounting policies
The Group's accounting policies are available in the financial
statements for the financial year ended 30 September 2021, a copy
of which can be found on the Company's website at
www.myanmarinvestments.com.
3. Significant accounting judgements and estimates
The Group's significant accounting judgements and estimates used
in the preparation of these financial information are available in
the full audited financial statements for the financial year ended
30 September 2021, a copy of which can be found on the Company's
website at www.myanmarinvestments.com.
4. Finance income
1 April 1 April 1 October
2022 to 2021 to 2020 to
30 September 30 September 30 September
2022 2021 2021
Unaudited Unaudited Audited
US$ US$ US$
Interest income - 476 476
============= ============= =============
5. Employee benefits expense
1 April 1 April 1 October
2022 to 2021 to 2020 to
30 September 30 September 30 September
2022 2021 2021
Unaudited Unaudited Audited
US$ US$ US$
Salaries, wages and other staff benefits 84,250 99,250 198,500
============= ============= =============
The employee benefits expense includes the remuneration of
Directors as disclosed in Note 15.
6. Finance costs
Finance costs represent bank charges for the financial
period/year.
7. 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 April 1 April 1 October
2022 to 2021 to 2020 to
30 September 30 September 30 September
2022 2021 2021
Unaudited Unaudited Audited
US$ US$ US$
Auditor's remuneration 26,877 26,010 51,607
Consultants' fees 63,039 90,211 191,472
Short term lease expenses 2,048 1,994 2,730
Professional fees 70,787 87,883 147,428
============= ============= =============
8. Income tax
1 April 1 April 1 October
2022 to 2021 to 2020 to
30 September 30 September 30 September
2022 2021 2021
Unaudited Unaudited Audited
US$ US$ US$
Current income tax
* current financial period/year - 50 120
* Over provision in prior financial period/year (9) - -
------------- ------------- -------------
(9) 50 120
============= ============= =============
9. Loss per share
Basic loss per share is calculated by dividing the 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 loss and share data used in the basic
and diluted loss per share computation:
1 April 1 April 1 October
2022 to 2021 to 2020 to
30 September 30 September 30 September
2022 2021 2021
Unaudited Unaudited Audited
Loss for the financial period/year
attributable to owners of the Company
(US$) (2,705,377) (2,181,774) (7,806,703)
Weighted average number of ordinary
shares during the financial period/year
applicable to basic loss per share 38,108,451 38,108,451 38,108,451
Loss per share
Basic and diluted (cents) (7.10) (5.73) (20.49)
============= ============= =============
Diluted loss per share is the same as the basic loss per share
because the potential ordinary shares to be converted are
anti-dilutive as the effect of the shares conversion would be to
increase the loss per share.
10. Equity instrument at fair value through profit or loss
30 September 30 September
2022 2021
Unaudited Audited
US$ US$
Investment in unquoted equity instrument,
at fair value 13,000,000 33,400,000
============ ============
The Group, through its 66.67% subsidiary, MIL 4 Limited ("MIL
4") invested in a 6.2% (30 September 2021: 6.2%) equity interest in
unquoted share capital of AP Towers Holdings Pte. Ltd ("AP
Towers").
Movement in the investment in unquoted equity instrument is as
follows:
1 April 1 October
2022 to 30 2020 to 30
September September
2022 2021
Unaudited Audited
US$ US$
Balance at beginning of financial
period/year 16,300,000 42,500,000
Fair value loss during the financial
period/year (3,300,000) (9,100,000)
Balance at end of financial period/year 13,000,000 33,400,000
=========== ===========
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 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
30 September 2022
Unquoted Comparable Increase EBITDA
equity Company * Earnings Before Interest, Tax, Depreciation and and EV/EBITDA
investments Analysis Amortisation ("EBITDA") of US$76.7million multiple
will increase
the
fair value of
* Enterprise Value ("EV") per EBITDA multiple of 8.3x the
financial asset.
Increase in
* Portfolio discount of 25%* valuation
discount will
decrease
the fair value
of the financial
assets.
30 September 2021
Unquoted Comparable Increase EBITDA
equity Company * Earnings Before Interest, Tax, Depreciation and and EV/EBITDA
investments Analysis Amortisation ("EBITDA") of US$85.9million multiple
will increase
the
fair value of
* Enterprise Value ("EV") per EBITDA multiple of 12.7x the
financial asset.
Increase in
* Portfolio discount of 25%* valuation
discount will
decrease
the fair value
of the financial
assets.
* Due to uncertain political environment and ongoing COVID-19
pandemic in Myanmar during current financial period/year,
management is of the view that an additional 25% (30 September
2021: 25%) discount should be applied to the Group's investments in
Myanmar.
11. Investment in subsidiaries
Details of the subsidiaries at 30 September 2022 and 30
September 2021 were as follows:
Proportion
Country Proportion of ownership
of 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(1) Myanmar to the Group 100 -
(1) In the process of striking off.
12. Non-current asset classified as held for sale
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. 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 certain conditions have been satisfied.
As the result of the ongoing transaction to sell the Group's
37.5% (2020:37.5%) equity interest in MFIL, the entire carrying
amount of the Group's investment in MFIL has been classified 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
and the BO with the Purchaser has been extended to 28 February
2023. As such, investment in MFIL classified as non-current asset
held for sale as at 30 September 2022.
Details of assets in non-current asset classified as
held-for-sale were as follows:
1 April 1 October
2022 to 30 2020 to 30
September September
2022 2021
Unaudited Audited
US$ US$
Investment in joint venture - 37.5%
equity interest in Myanmar Finance
International Limited 840,000 2,552,467
Less: Write down to fair value less
cost to sell (217,500) (1,052,467)
622,500 1,500,000
=========== ===========
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$622,500 (31 March 2022: US$840,000; 30 September
2021: US$1,500,000) based on 2 times the unaudited book value of
MFIL at 30 September 2022, adjusted for a valuation discount of 25%
(31 March 2022: 30%; 30 September 2021: 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$217,500 (31 March 2022: US$660,000;
30 September 2021: US$1,052,467) was recognised in profit or loss
for the six-month period ended 30 September 2022.
13. Share capital
30 September 30 September
2022 2021
Unaudited Audited
US$ US$
Issued and fully paid share capital:
Ordinary shares at the beginning of the financial
period/year 40,569,059 40,569,059
============ ============
Ordinary
shares Warrants
Equity Instruments in issue
30 September 2022
At the beginning/end of the financial period 38,108,451 -
========== ==========
30 September 2021
At the beginning of the financial year 38,097,037 14,128,387
Exercised during the financial year - (554,486)
Issued during the financial year 11,414 -
At the end of the financial year 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 30 September 2022, there were nil (30 September 2021:
13,573,901) warrants in issue.
All unexercised warrants as of 31 December 2021 were cancelled
as the warrant instrument ended on 31 December 2021.
14. Share option reserve
Details of the Share Option Plan (the "Plan") are set out in the
financial statements for the financial year ended 30 September
2021, which can be found on the Company's website at
www.myanmarinvestments.com.
During the six-month period ended 30 September 2022, no further
options were created, granted or forfeited.
As at 30 September 2022, 2,590,527 (30 September 2021:
2,590,527) share options had been granted under the Plan.
15. Significant related party disclosures
Compensation of key management personnel
The remuneration of Directors for the financial period was as
follows:
Short term
Directors' employee
fees benefits Total
US$ US$ US$
Financial period from
1 April 2022 to 30 September
2022
Executive directors
Maung Aung Htun - 43,000 43,000
Nicholas John Paris - 25,000 25,000
Non-executive directors
Henrik Onne Bodenstab 8,750 - 8,750
Rudolf Gildemeister 7,500 - 7,500
---------- ----------- ------
16,250 68,000 84,250
========== =========== ======
Short term
Directors' employee
fees benefits Total
US$ US$ US$
Financial period from
1 April 2021 to 30 September
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
========== =========== ======
16. Dividends
The Directors of the Company did not recommend any dividend in
respect of the financial period from 1 April 2022 to 30 September
2022 (1 October 2020 to 30 September 2021: Nil).
17. Financial risk management objectives and policies
The Group's financial risk management objectives and policies
are set out in the audited financial statements for the financial
year ended 30 September 2021.
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