REG - Myanmar Investments - Half-year Report
29/06/2022 07:01
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RNS Number : 5035Q Myanmar Investments Intl Ltd 29 June 2022
This announcement contains inside information 29 June 2022
Myanmar Investments International Limited
Interim results to 31 March 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 31 March 2022.
As announced on 9 February 2022, to conform with the need to change the
Company's year-end to bring it in line with the new Myanmar year end of 31
March the Company will issue 6-month interims for the period to 31 March 2022
and 6-month interims for the period to 30 September 2022. It will then issue
a full audited set of financial statements for the 18-month period to
31 March 2023.
Myanmar
After over a year of military rule, Myanmar remains in a deep crisis.
Politically, the military formed State Administrative Council continues to
prosecute Aung San Suu Kyi and her party with the court handing down multiple
jail sentences on her, former MPs and ministers. Opposition to military rule
continues unabated with violent clashes and assassinations being carried out
by both the People Defense Forces, a collection of independent and loosely
coordinated militia groups, and the more organized Ethnic Armed Organizations
daily across the country especially in the northern parts.
After a year of sanctions on key individuals and institutions and limited
diplomatic progress, internationally Myanmar is increasingly being isolated
with ASEAN now refusing to invite Senior General Min Aung Hlaing to its
meetings and many Western countries downgrading diplomatic representation in
the country.
Covid lockdown had badly affected businesses and travel but recently the
quarantine requirement has been removed. Similar to other ASEAN countries,
Covid infection rates have declined, and borders are beginning to reopen. This
could lead to an increase in Asian trade, business travel and maybe some
tourism.
The Ukraine conflict has, however, increased Myanmar's energy import costs
which has been difficult for the government particularly when it has to be
paid for in scarce US$. According to a World Food Programme report, by the end
of March 2022 fuel prices had increased by 133 per cent. since February 2021.
The increase in fuel prices, and the impact of a depreciating currency more
broadly, has caused a significant rise in food prices and poverty. Increases
in gas import costs, coupled with the poor state of Myanmar's electricity
generating infrastructure, has led to frequent electricity power cuts in
recent months.
In February 2022, Fitch Solutions forecast that, in addition to the estimated
20 per cent contraction in Myanmar's GDP in 2020/21 (fiscal year is October to
September) the real GDP in 2021/22 will further contract by 4.4 per cent.
Private consumption will decline because of depleted savings, lack of
employment and surging inflation. The United Nation Development Programme
predicts that more than half of the population could fall below the poverty
line this year.
The shortage of US$ has led the government to fix the exchange rate at 1,850
MMK/US$ although in the black market the rate is round 2,060 MMK/US$. Recent
Central Bank announcements continue to restrict the use of foreign currencies
including requiring companies to convert holdings into MMK and restricting
imports. These restrictions, together with rising inflation, political
instability and the poor medium term economic outlook will deter long term
foreign investments in the country.
The dire forecast contrasts with the superficial appearance of stability seen
in Yangon where traffic jams have returned, and residents have adjusted to
life under military rule and a reduction in the ease of withdrawing cash from
their bank accounts. It must be remembered that ATM machines only became
available in 2013 and only a decade ago when Myanmar suffered from regular
electricity brownouts and transactions were primarily in cash. People have
simply gone back to the old ways.
There is a possibility that Myanmar has fallen to its lowest point. The Asian
Development Bank has forecast a potential per capita GDP growth of 1.9 per
cent in 2023. Whilst putting Myanmar at the bottom of ASEAN growth, it is
nonetheless a sign that the worst may be over. An election promised for
mid-2023, even though unlikely to return the country to normal democracy,
could be a turning point.
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 31 March 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 15 March 2022, the parties
signed an agreement to extend the time period for completion of the binding
offer to 31 August 2022.
The Directors have determined that MIL's Net Asset Value ("NAV") as at 31
March 2022 was US$13.2 million, or US$0.35 per share.
The valuation of the two investments has been consistent with the methodology
of previous years. However, given the uncertainty regarding the political and
economic development in Myanmar, the Directors have applied a portfolio
discount of 30 per cent to reflect this uncertainty (30 September 2021 - 25
per cent).
The Company has continued to streamline its operations and as a result reduced
its overheads. In the period to 31 March 2022, the core cash-based overheads
were US$329,000 which is 2.9 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 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 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 are going to re-engage with
shareholders. The aim is to explore further changes (including reconsidering
the de-listing proposal) which would 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 31 March 2022, the Company had cash resources of US$1.4 million (31
March 2021: US$2.1 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 31 March 2022, AP Towers had an aggregated portfolio of 3,257
towers, 6,689 tenants and a co-location ratio ("Lease-up-Rate" or "LUR") of
2.05x which is unchanged since 30 September 2021.
· Based on AP Towers actual results for the 6 months ended 31 March 2022,
AP Towers annualised adjusted "run rate" revenue has decreased to US$95.4
million. This represents a decline of 7.0 per cent over the same figure as at
30 September 2021. The annualised adjusted "run rate" EBITDA has decreased to
US$75.7 million. This represents a decrease of 11.8 per cent over the same
figure as at 30 September 2021.
· 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$404.0 million as at the end of March 2022,
an increase of US$ 7.8 million since 30 September 2021 and a decrease of US$
12.8 million since 31 March 2021.
Valuation
As at 30 September 2021 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$29.7 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 30 September 2021 with
updated trading and comparable data, the value of this investment is US$15.5
million, a decrease of US$14.2 million compared with the valuation as at 30
September 2021. This reduction is driven by a combination of a decrease in
comparable multiples and a decline in the EBITDA of AP Towers.
This value of AP Towers represents a loss of US$5.3 million over the original
cost of the investment.
Myanmar Finance International Limited ("MFIL")
Background
MFIL is one of the leading microfinance operators in Myanmar. As at 31 March
2022, the company had 15 main branches and 3 subbranches. However, over the
coming months management has plans to reduce and combine the number of
branches. It provides loans of between US$150 and US$5,000 to individuals and
small-scale business operators in rural and semi-urban areas in Yangon, Bago,
Ayeyarwady and Mon. In October 2020, MFIL was granted a license to operate in
the Mandalay region.
MFIL was established as a microfinance joint venture in September 2014 by MIL
and Myanmar Finance Company Limited ("MFC"). In November 2015, the Norwegian
Investment Fund for Developing Countries ("Norfund"), the Norwegian
development finance institution, also became a shareholder such that the
shareholdings today are MIL 37.5 per cent, MFC 37.5 per cent and Norfund 25
per cent, with a total paid up capital of over US$7 million. MIL's total
investment cost to date is US$2.7 million.
MFIL is a well-established microfinance company that has a positive impact on
the lives and economic well-being of its clients.
A representative of MIL sits on the board of MFIL and works closely with the
management and shareholders on strategic and restructuring issues.
Update
· 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.
· According to an International Labour Organization briefing note in
January 2022, the annual employment losses in 2021 amounted to 8 per cent, or
1.6 million jobs lost. A sizeable decrease from a workforce of 20.5 million in
2020.
Key economic sectors suffered considerable impacts. Rural farmers were
affected by lower incomes, export reductions and higher input prices, as well
as monsoon flooding. Construction, garments, and tourism and hospitality were
also among the hardest hit industries in 2021, with year-on-year employment
losses reaching an estimated 31 per cent, 27 per cent and 30 per cent,
respectively.
· For 2021/22, both Fitch Solutions and the Asian Development Bank
("ADB") forecast a reduction in GDP although ADB sees signs of stability
returning with a possible small growth in 2023. The recent relaxation in covid
related quarantine requirements and lifting of border closures should increase
trade and travel.
· Although MFIL's borrowers have not been immune from the continuing
economic and political crisis, most continue to demonstrate a strong will to
repay even though they have significantly reduced ability.
· Management therefore continues its policy of reducing the loan book as
well as the company's liabilities.
· As at 31 March 2022, MFIL's loan book has decreased from MMK21.7
billion in March 2021 to MMK14.0 billion and 32,000 clients (down from 49,000)
with Portfolio at Risk over 30 days (PAR 30+) of 10.3 per cent. Full
provisions have been made to cover potential loan losses.
· The company continues to maintain a high level of liquidity but also
continues to make losses because of provisions, forex losses and the high
costs of borrowings when compared to an asset impairment base where part of
the loan book is not performing, and also the company's cash holding is
effectively generating minimal returns.
· After the last report at 30 September 2021, MFIL successfully
negotiated a one-year extension to all of its loans and had made a prepayment
of 25 per cent of the outstanding loan principal. Operating expenses had also
been reduced by a similar percentage.
At the time management believed that the cuts were sufficient and would not
materially impact the company's network.
· Although there is significant demand for new loans and very early signs
that the economic decline has slowed, management now believes that a sustained
recovery in the sector may take longer, and they have decided to embark on a
second round of costs cutting and negotiations with all lenders to reduce the
company's liabilities further. The strategy is "to go small in order to grow
back".
This restructuring is expected to be finalised within the next few months and
is likely to result in a smaller MFIL with fewer branches, lower costs and
substantially reduced liabilities. A structure that is able to weather further
deterioration in the operating environment.
· The offer for 100 per cent of MFIL from Thitikorn Plc, a Thai finance
company, has been extended to the end of August 2022 and is subject to, inter
alia, local regulatory approval.
Valuation
As at 30 September 2021, the Directors had assessed the value of the Group's
investment in MFIL to be US$2.0 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 30 September 2021, the value
of this investment is US$1.2 million, a decrease of US$0.8 million compared
with the valuation as at 30 September 2021.
This value of MFIL represents a loss of US$1.5 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 30 per cent on the company's entire portfolio as
at 31 March 2022 which compares to the 25 per cent discount that they applied
as at 30 September 2021. This change reflects the ongoing uncertainty about
the exit opportunities from our investments and 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$10.9 million, which
is US$11.4 million lower than at September 2021.
This valuation of AP Towers represents a loss of US$9.9 million over the cost
of the investment.
MFIL:
This discount reduces the value of this investment to US$0.84 million, which
is US$0.66 million lower than at September 2021.
This valuation of MFIL represents a loss of US$1.8million over the cost of the
investment.
Financial Performance
Unaudited Financial Statements
The unaudited financial statements for the six months to 31 March 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 31 March 2022, MIL's unaudited consolidated loss after
tax attributable to the owners of the Company was US$12.4 million, compared
with a loss after tax of US$5.3 million in the same period last year.
This is principally represented by:
· the overheads associated with running the Company's business
(US$333,000);
· the write down to fair value less cost to sell on non-current asset
held for sale of the investment in MFIL (US$660,000); and
· the fair value loss of the investment in AP Towers (US$11.4 million).
Within this, the cost of MIL's cash-based overheads (i.e. excluding
transaction costs and re-evaluation losses) was US$329,000 compared to
US$339,000 for the six months to 31 March 2021, a reduction of US$10,000 or
2.9 per cent. On a per share basis this has dropped from 0.89¢ to 0.86¢, a
reduction of 2.9 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 31 March 2022 was US$13.2 million, or
US$0.35 per share. This is comprised of:
· the investment in AP Towers, the telecommunication tower business, of
US$10.9 million (which equals 66.67 per cent of US$16.3 million), excluding
the non-controlling interests, determined using a comparable EBITDA multiple
methodology and applying a portfolio discount of 30 per cent;
· the investment in MFIL, the microfinance business, of US$0.8 million,
determined using a comparable price to book value methodology and applying a
portfolio discount of 30 per cent;
· cash and other net assets/liabilities of US$1.5 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$13.2 million is a net decrease of US$12.4 million
(48.4 per cent) from US$25.6 million as at 30 September 2021. This is mainly
attributable to:
· the fact that the AP Towers investment, is valued US$11.4 million lower
than as at 30 September 2021);
· the reduction of the valuation of MFIL by US$660,000 compared with
September 2021; and
· overheads and transaction costs of US$333,000.
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. The combined effects of the military takeover in
February 2021 and of the impact of the Covid virus have now had a direct
impact on both of our investments. We have been consistent with our valuation
methodology but the slowdown in their financial results has led to significant
reductions in our valuation of them. In addition, the Directors have increased
the portfolio valuation discount to reflect an increase in the uncertainty of
when we might be able to sell our investments and at what price. The result is
a reduction of 48.4 per cent in the Company's NAV. We are managing the Company
cautiously and conserving cash, but its success is heavily dependent on seeing
an improvement in the economic conditions within Myanmar. Meanwhile we intend
to re-engage with shareholders to consider possible changes including the
de-listing of our shares which would reduce our cash outflows as much as
possible. This is necessary in order to preserve our cash and avoid the need
to undertake a share issue priced at a discount to NAV in order to ensure that
our cash balance does not fall below the critical going concern level of 12
months of forecast outflows."
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 Ltd Myanmar Investments International 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 Donnelly William Marle
Grant Thornton UK LLP finnCap Ltd
+44 (0) 20 7383 5100 +44 (0) 20 7220 0500
For more information about MIL, please visit www.myanmarinvestments.com
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX-MONTH PERIOD ENDED 31 MARCH 2022
Present Prior Prior
Interims Interims Full Year
Note 1 October 1 October 1 October
2021 to 2020 to 2020 to
31 March 31 March 30 September
2022 2021 2021
Unaudited Unaudited Audited
US$ US$ US$
Revenue - - -
Other item of income
Finance income 4 - - 476
Items of expense
Employee benefits expense 5 (99,250) (99,250) (198,500)
Other operating expenses (236,397) (251,714) (495,663)
Finance costs 6 (3,221) (3,607) (6,827)
Fair value loss on investment at fair value through profit or loss 11 (17,100,000) (7,000,000) (9,100,000)
Write down to fair value less cost to sell on non-current asset held for sale 13 (660,000) (611,069) (1,052,467)
Loss before income tax 7 (18,098,867) (7,965,640) (10,852,981)
Income tax expense 8 (8,103) (70) (120)
Loss and total comprehensive income for the financial period/year (18,106,971) (7,965,710) (10,853,101)
Loss and total comprehensive income attributable to:
Owners of the parent (12,400,638) (5,624,929) (7,806,703)
Non-controlling interests (5,706,333) (2,340,781) (3,046,398)
(18,106,971) (7,965,710) (10,853,101)
Loss per share (cents)
- Basic and diluted 9 (32.54) (14.76) (20.49)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2022
Present Prior
Interims Full Year
Note 31 March 30 September
2022 2021
Unaudited Audited
US$ US$
ASSETS
Non-current assets
Investments in joint ventures 10 - -
Equity instrument at fair value through profit or loss 11 16,300,000 33,400,000
Plant and equipment - -
Total non-current assets 16,300,000 33,400,000
Current assets
Other receivables 109,891 117,989
Cash and cash equivalents 1,420,669 1,807,634
Non-current asset classified as held for sale 13 840,000 1,500,000
Total current assets 2,370,560 3,425,623
Total assets 18,670,560 36,825,623
EQUITY AND LIABILITIES
Equity
Share capital 14 40,569,059 40,569,059
Share option reserve 15 1,358,913 1,358,913
Accumulated losses (28,630,822) (16,230,184)
Foreign exchange reserve (76,560) (76,560)
Equity attributable to owners of the parent 13,220,590 25,621,228
Non-controlling interests 5,182,836 10,889,169
Total equity 18,403,426 36,510,397
LIABILITIES
Current liabilities
Other payables 267,134 297,512
Income tax payable - 17,714
Total current liabilities 267,134 315,226
Total equity and liabilities 18,670,560 36,825,623
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX-MONTH PERIOD ENDED 31 MARCH 2022
Note Share Share Foreign Accumulated Equity Non- Total
capital
option exchange losses attributable controlling
reserve
reserve to owners of interests
the parent
Unaudited US$ US$ US$ US$ US$ US$ US$
2022
At 1 October 2021 40,569,059 1,358,913 (76,560) (16,230,184) 25,621,228 10,889,169 36,510,397
Loss for the financial year, representing total comprehensive loss for the - - - (12,400,638) (12,400,638) (5,706,333) (18,106,971)
financial year
At 31 March 2022 40,569,059 1,358,913 (76,560) (28,630,822) 13,220,590 5,182,836 18,403,426
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2021
Note Share Share Foreign Accumulated Equity Non- Total
capital
option exchange losses attributable controlling
reserve
reserve to owners of interests
the parent
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 - - - (7,806,703) (7,806,703) (3,046,398) (10,853,101)
financial year
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 PERIOD ENDED 31 MARCH 2022
Present Prior Prior
Interims Interims Full Year
Note 1 October 1 October 1 October
2021 to 2020 to 2020 to
31 March 31 March 30 September
2022 2021 2021
Unaudited Unaudited Audited
US$ US$ US$
Operating activities
Loss before income tax (18,098,867) (7,965,640) (10,852,981)
Adjustments for:
Interest income 4 - - (476)
Finance costs 3,221 3,607 6,827
Fair value loss on investment at fair value through profit or loss 11 17,100,000 7,000,000 9,100,000
Write down to fair value less cost to sell on non-current asset held for 13 660,000 611,069 1,052,467
sale
Operating cash flows before working capital changes (335,647) (358,178) (694,163)
Changes in working capital:
Other receivables 8,098 169,440 150,845
Other payables (48,092) (62,294) (6,541)
Cash used in operations (335,647) (251,032) (549,859)
Interest received - - 476
Finance costs paid (3,221) (3,607) (6,827)
Income tax paid (8,103) (311) (321)
Net cash flows used in operating activities (386,965) (254,950) (556,531)
Financing activities
Decrease in short-term deposits pledged - - 35,943
Net cash flows generated from financing activities - - 35,943
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX-MONTH PERIOD ENDED 31 MARCH 2022
Present Prior Prior
Interims Interims Full Year
Note 1 October 1 October 1 October
2021 to 2020 to 2020 to
31 March 31 March 30 September
2022 2021 2021
Unaudited Unaudited Audited
US$ US$ US$
Net change in cash and cash equivalents (386,965) (254,950) (520,588)
Cash and cash equivalents at beginning of financial period/year 1,795,951 2,316,539 2,316,539
Cash and cash equivalents at end of financial period/year 1,408,986 2,061,589 1,795,951
Cash and cash equivalents comprise the following at the end of the financial
period/year:
Present Prior
Interims Full Year
31 March 2022 30 September
2021
Unaudited Audited
US$ US$
Cash and bank balances 1,420,669 1,807,634
Less: short-term deposits pledged (11,683) (11,683)
1,408,986 1,795,951
NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION
FOR THE SIX-MONTH PERIOD ENDED 31 MARCH 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 its joint ventures are disclosed in
Note 10 and 13; its equity instrument at fair value through profit or loss is
disclosed in Note 11 and the principal activities of the subsidiaries are
disclosed in Note 12.
The consolidated financial information of the Company and its subsidiaries
(the "Group") for the period from 1 October 2021 to 31 March 2022 were
approved by the Board of Directors on 28 June 2022. This consolidated
financial information is unaudited.
Whilst the financial information included in this announcement has been
prepared in accordance with the International Accounting 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$18,106,971 during the six-month period
ended 31 March 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$2,103,426. This expectation is based on a review of the
Group's existing financial resources, its present and expected future
commitments in terms of its overheads and running costs; and its commitments
to its existing investments. Accordingly, the Directors have adopted the going
concern basis in preparing the Group's financial statements.
2. Summary of significant accounting policies
The Group's accounting policies are available in the financial statements for
the financial year ended 30 September 2021, a copy of which can be found on
the Company's website at www.myanmarinvestments.com.
3. Significant accounting judgements and estimates
The Group's significant accounting judgements and estimates used in the
preparation of these financial information are available in the full audited
financial statements for the financial year ended 30 September 2021, a copy of
which can be found on the Company's website at www.myanmarinvestments.com.
4. Finance income
1 October 1 October 1 October
2021 to 2020 to 2020 to
31 March 31 March 30 September
2022 2021 2021
Unaudited Unaudited Audited
US$ US$ US$
Interest income - - 476
5. Employee benefits expense
1 October 1 October 1 October
2021 to 2020 to 2020 to
31 March 31 March 30 September
2022 2021 2021
Unaudited Unaudited Audited
US$ US$ US$
Salaries, wages and other staff benefits 99,250 99,250 198,500
The employee benefits expense includes the remuneration of Directors as
disclosed in Note 16.
6. Finance costs
Finance costs represent bank charges for the financial period/year.
7. Loss before income tax
In addition to the charges and credits disclosed elsewhere in the notes to the
consolidated financial information, the above includes the following charges:
1 October 1 October 1 October
2021 to 2020 to 2020 to
31 March 31 March 30 September
2022 2021 2021
Unaudited Unaudited Audited
US$ US$ US$
Auditor's remuneration 42,192 25,597 51,607
Consultants' fees 89,655 101,261 191,472
Short term lease expenses 2,112 736 2,730
Professional fees 56,592 59,545 147,428
8. Income tax
1 October 1 October 1 October
2021 to 2020 to 2020 to
31 March 31 March 30 September
2022 2021 2021
Unaudited Unaudited Audited
US$ US$ US$
Current income tax
- current financial period/year - (241) 120
- Under provision in prior financial period/year 8,103 311 -
8,103 70 120
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 October 1 October 1 October
2021 to 2020 to 2020 to
31 March 31 March 30 September
2022 2021 2021
Unaudited Unaudited Audited
Loss for the financial period/year attributable to owners of the Company (US$) (12,400,638) (5,624,929) (7,806,703)
Weighted average number of ordinary shares during the financial period/year 38,108,451 38,102,054 38,108,451
applicable to basic loss per share
Loss per share
Basic and diluted (cents) (32.54) (14.76) (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. Investments in joint ventures
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 15 March 2022 which extended the expiry of BO to 31
August 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 certain conditions 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 13).
11. Equity instrument at fair value through profit or loss
31 March 30 September
2022 2021
Unaudited Audited
US$ US$
Investment in unquoted equity instrument, at fair value 16,300,000 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:
31 March 30 September
2022 2021
Unaudited Audited
US$ US$
Balance at beginning of financial period/year 33,400,000 42,500,000
Fair value loss during the financial period/year (17,100,000) (9,100,000)
Balance at end of financial period/year 16,300,000 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:
Financial assets Valuation Significant Inter-relationship between key unobservable inputs
technique used unobservable inputs and fair value
31 March 2022
Unquoted equity investments Comparable Company Analysis - Earnings Before Interest, Tax, Depreciation and Amortisation ("EBITDA") Increase EBITDA and EV/EBITDA multiple will increase the fair value of the
of US$75.7million financial asset.
- Enterprise Value ("EV") per EBITDA multiple of 10.0x
- Portfolio discount of 30%*
30 September 2021
Unquoted equity investments Comparable Company Analysis - Earnings Before Interest, Tax, Depreciation and Amortisation ("EBITDA") Increase EBITDA and EV/EBITDA multiple will increase the fair value of the
of US$85.9million financial asset.
- Enterprise Value ("EV") per EBITDA multiple of 12.7x
- Portfolio discount of 25%*
* Due to uncertain political environment and ongoing COVID-19 pandemic in
Myanmar during current financial period/year, management is of the view that
an additional 30% (30 September 2021: 25%) discount should be applied to the
Group's investments in Myanmar.
12. Investment in subsidiaries
Details of the subsidiaries at 31 March 2022 and 30 September 2021 were as
follows:
Name of subsidiaries Country of incorporation/ Principal activities Proportion of ownership interest held by Proportion of ownership interest held by
principal place of business the Group non-control interests
% %
Myanmar Investments Limited Singapore Investment holding company 100 -
MIL Management Pte. Ltd. Singapore Provision of management services to the Group 100 -
MIL 4 Limited British Investment holding company 66.67 33.33
Virgin
Islands
Held by MIL Management Pte. Ltd
MIL Management Co., Ltd((1)) Myanmar Provision of management services to the Group 100 -
( )
((1)) In the process of striking off.
13. Non-current asset classified as held for sale
As the result of the ongoing transaction to sell the Group's 37.5%
(2020:37.5%) equity interest in MFIL (Note 10), the entire carrying amount of
the Group's investment in MFIL has been classified as non-current asset held
for sale as at 30 September 2020. However, due to certain events and
circumstances beyond the Group's control in Myanmar, the sale could not be
completed within one year. The Group remains committed to its plan to sell its
investment in MFIL and the BO with the Purchaser has been extended to 31
August 2022. As such, the Group continued classifying its investment in MFIL
as non-current asset held for sale is appropriate as at 31 March 2022.
Details of assets in non-current asset classified as held-for-sale were as
follows:
31 March 30 September
2022 2021
US$ US$
Investment in joint venture - 37.5% equity interest in Myanmar Finance 1,500,000 2,552,467
International Limited
Less: Write down to fair value less cost to sell (660,000) (1,052,467)
840,000 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$840,000 (30
September 2021: US$1,500,000) based on 2 times the audited book value of MFIL
at 30 September 2021, adjusted for a valuation discount of 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$660,000 (30 September 2021: 1,052,467) was recognised in profit or
loss for the six-month period ended 31 March 2022.
14. Share capital
31 March 30 September
2022 2021
Unaudited Audited
US$ 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
31 March 2022
At the beginning of the financial period 38,108,451 13,573,901
Cancelled during the financial period - (13,573,901)
At the 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 31 March 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.
15. 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 31 March 2022, no further options were
created, granted or forfeited.
As at 31 March 2022, 2,590,527 (30 September 2021: 2,590,527) share options
had been granted under the Plan.
16. Significant related party disclosures
Compensation of key management personnel
The remuneration of Directors for the financial period was as follows:
Directors' Short term Share Total
fees employee option
benefits plan
US$ US$ US$ US$
Financial period from
1 October 2021 to 31 March 2022
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
Directors' Short term Share Total
fees employee option
benefits plan
US$ US$ US$ US$
Financial period from
1 October 2020 to 31 March 2021
Executive directors
Maung Aung Htun - 43,000 - 43,000
Nicholas John Paris - 40,000 - 40,000
Non-executive directors
Henrik Onne Bodenstab 8,750 - - 8,750
Rudolf Gildemeister 7,500 - - 7,500
16,250 83,000 - 99,250
17. Dividends
The Directors of the Company did not recommend any dividend in respect of the
financial period from 1 October 2021 to 31 March 2022 (1 October 2020 to 30
September 2021: Nil).
18. 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.
19. Comparative
Certain comparative information for the prior financial period was
reclassified to conform the current financial period's classification.
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