REG - Myanmar Investments - Half-year Report
29/12/2022 07:00
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RNS Number : 0638L Myanmar Investments Intl Ltd 29 December 2022
This announcement contains inside information 29 December 2022
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 0.88¢ to 0.75¢,
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 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 30 SEPTEMBER 2022
Present Prior Prior
Interims Interims Full Year
Note 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$
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
Note 30 September 30 September
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 PERIOD ENDED 30 SEPTEMBER 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 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 - - - (2,705,377) (2,705,377) (1,103,625) (3,809,002)
financial year
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 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 30 SEPTEMBER 2022
Present Prior Prior
Interims Interims Full Year
Note 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$
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 12 217,500 441,398 1,052,467
sale
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 PERIOD ENDED 30 SEPTEMBER 2022
Present Prior Prior
Interims Interims Full Year
Note 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$
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 2022 30 September
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 PERIOD ENDED 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$) (2,705,377) (2,181,774) (7,806,703)
Weighted average number of ordinary shares during the financial period/year 38,108,451 38,108,451 38,108,451
applicable to basic loss per share
Loss per share
Basic and diluted (cents) (7.10) (5.73) (20.49)
Diluted loss per share is the same as the basic loss per share because the
potential ordinary shares to be converted are anti-dilutive as the effect of
the shares conversion would be to increase the loss per share.
10. Equity instrument at fair value through profit or loss
30 September 30 September
2022 2021
Unaudited Audited
US$ 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 2022 to 30 September 1 October 2020 to 30 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:
Financial assets Valuation Significant Inter-relationship between key unobservable inputs
technique used unobservable inputs and fair value
30 September 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$76.7million financial asset.
- Enterprise Value ("EV") per EBITDA multiple of 8.3x Increase in valuation discount will decrease the fair value of the financial
assets.
- Portfolio discount of 25%*
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 Increase in valuation discount will decrease the fair value of the financial
assets.
- 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 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:
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.
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 2022 to 30 September 1 October 2020 to 30 September
2022 2021
Unaudited Audited
US$ US$
Investment in joint venture - 37.5% equity interest in Myanmar Finance 840,000 2,552,467
International Limited
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:
Directors' Short term Total
fees employee
benefits
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
Directors' Short term Total
fees employee
benefits
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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