A n n uAl R e p oR
t 2 0 1 8
THE MYANMAR OPPORTUNITY
Myanmar is emerging from decades of stagnation and has the economic foundations for a period of
strong growth:
Fast growing economy: IMF projects GDP growth for Myanmar to average 7.2% p.a. through 2023
Population of 54 million people (26th most populous country in the world) with huge growth potential as
Myanmar, the last so-called frontier economy in Asia, increases economic liberalisation
Large workforce with a high literacy rate of 90%
68% of the population is of working age
28% of the population is under 24 which will provide strong consumer demand
Significant natural resources: hydrocarbons, fertile land, minerals, precious stones, forests and water
Strategically situated in one of the world’s most economically dynamic regions amid the intersection of
India, China and South East Asia
Critical to China’s ‘One Belt One Road’ strategy providing direct access to the Indian Ocean
Myanmar has undergone an unprecedented transformational reform process, initiated by the U Thein
Sein administration in 2011
The elections in 2015 were the first democratic elections in 50 years
During the year the Foreign Investment law was revised and a new Companies Act enacted, both of
which will assist in foreign investment
This remarkable change has not been without its difficulties and the situation in Rakhine state, which
stems from a complex and historically charged background, remains un-remedied
The Advisory Commission, led by the late former UN Secretary-General Kofi Annan, on the Rakhine
State crisis has provided an important framework which can provide the foundations for addressing the
distressing situation there
CONTENTS
4 Business Review
12 Chairmen’s Letter
14 Executive Directors’ Review
18 Board of Directors
21 Investment Strategy Overview
22 Directors’ Report
31 Chairman’s Statement
on Corporate Governance
43 Remuneration Committees’ Report
45 Statement of Directors’ Responsibilities
46 Key Audit Matters
47 Financial Contents
93 Notice of Annual General Meeting
The Myanmar Kyat exchange rate was MMK 1,560 to US$1.00 as at 20 September 2018
References to “today” are to 21 September 2018 being the date of printing of this document
MYANMAR INvESTMENTS
In June 2013 Myanmar Investments International Limited became the first Myanmar-focused company
to be quoted on the AIM market of the London Stock Exchange.
Our vision is to build a diversified portfolio of businesses which will benefit from Myanmar’s emergence.
Myanmar Investments is not a passive investment fund, but rather a proactive business-building
company with extensive on-the-ground experience; 95% of investment opportunities have been
sourced by management.
Myanmar Investments is headquartered in Yangon with an experienced team of seven investment
professionals with proven capabilities to source and develop attractive business opportunities.
The Company has already invested in three businesses:
Apollo Towers
US$21 million invested for a 9.0% shareholding
Stand-alone EBITDA of US$24.2 million, a year on year (“YoY”) increase of 20%
Being reorganised to come under common ownership with Pan Asia Towers, the 4th largest independent
telecom tower company in Myanmar
Together the two businesses will have a 20% market share of the independent Myanmar tower market
Future growth will be driven by an increase in the tower portfolio but also by increase in tenancies as co-
location rates rise
Myanmar Finance International
US$2.3 million invested for a 37.5% shareholding
One of Myanmar’s leading microfinance companies
Strong growth in its borrower base and loan book
at 31 March 2018 at 54,000 and US$9 million,
representing compound annual growth rates
(“CAGR”) of 60% and 97% respectively
since investment
Solid increase in profitability, up 67% over
the previous year making three years of
consecutive profitability
Today it has secured US$12 million in
Kyat-denominated debt facilities
MEDICARE
US$1.4 million invested for a 48.1%
shareholding
A start-up pharmaceutical, health and beauty franchise retailer
Designed to capitalise on both an expected rise in
consumer spending power and a notable absence of modern retail outlets with similar offerings
Today it has 14 stores in operation with more under development
In addition, the Company has a strong proprietary pipeline targeting business opportunities in consumer or B2B
sectors such as education, healthcare and financial services.
ANNUAL REPORT 2018 MYANMAR INVESTMENTS INTERNATIONAL LIMITED
1
MYANMA R
• One of the fastest growing economies in Asia
• Large population of 54 million
• A young population
• Endowed with significant natural resources
• Emerging from decades of stagnation
PARTNERS
• Norfund
• TPG
• Medicare Vietnam
IMPACT IN VES TIN G
• Socially beneficial
• Creating jobs
• Microfinance = financial inclusion
• Telecoms = information, communication, education
• Healthcare = quality of medicines and pharmacists
• Ethical business practices
PIPELIN E
• Healthcare
• Education
• Financial Services
STRATEGY
• Build businesses
• Strong capital gains
• Dividends in future
• Keep costs under control
• Active entrepreneurs not passive portfolio investors
MANAG EMENT
• Experienced investors in Asia
• On the ground presence in Myanmar
• Based in Yangon since 2013
• Professional team with
broad and complementary skill sets
LON DON LI STIN G
• High levels of transparency and accountability
• Strong Corporate Governance
• Not a passive fund but a business-
PORTFOLI O
PROJECT LENDER S
building сompany
• Liquidity
Apollo Towers
• Soon to be part of the
No1 telecom tower group.
• Strong EBITDA growth on
back of demand for
telecom services
MFIL
• Microfinance
• Profitable and fast
growing
• Significant leverage
is now in place
Medicare
• Modern pharmacy,
health and beauty
stores
• Start-up but now with
14 stores and more
soon to open
• OPIC
• Norfund
• Maybank
• Yoma
2
MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2018
MYANMA R
• One of the fastest growing economies in Asia
• Large population of 54 million
• A young population
• Endowed with significant natural resources
• Emerging from decades of stagnation
PARTNERS
• Norfund
• TPG
• Medicare Vietnam
IMPACT IN VES TIN G
• Socially beneficial
• Creating jobs
• Microfinance = financial inclusion
• Telecoms = information, communication, education
• Healthcare = quality of medicines and pharmacists
• Ethical business practices
PIPELIN E
• Healthcare
• Education
• Financial Services
PORTFOLI O
MFIL
Apollo Towers
• Soon to be part of the
No1 telecom tower group.
• Strong EBITDA growth on
back of demand for
telecom services
• Microfinance
• Profitable and fast
growing
• Significant leverage
is now in place
Medicare
• Modern pharmacy,
health and beauty
stores
• Start-up but now with
14 stores and more
soon to open
PROJECT LENDER S
• OPIC
• Norfund
• Maybank
• Yoma
STRATEGY
• Build businesses
• Strong capital gains
• Dividends in future
• Keep costs under control
• Active entrepreneurs not passive portfolio investors
MANAG EMENT
• Experienced investors in Asia
• On the ground presence in Myanmar
• Based in Yangon since 2013
• Professional team with
broad and complementary skill sets
LON DON LI STIN G
• High levels of transparency and accountability
• Strong Corporate Governance
• Not a passive fund but a business-
building сompany
• Liquidity
ANNUAL REPORT 2018 MYANMAR INVESTMENTS INTERNATIONAL LIMITED
3
Business Review - Apollo Towers
Apollo towers is the second largest independent telecom tower company in
Myanmar, owning 12% of the independent telecoms towers and also having one of
the highest shares of tenancies in the market. the Company has announced that its
shareholding in Apollo towers will be exchanged for shares in towers Holdings, which
already owns pan Asia towers, the fourth largest independent telecom tower company
in Myanmar. together the two businesses will be market leaders in Myanmar with a 20%
market share of towers.
the Company’s investment in the tower space will benefit from the continued need to
build more towers in Myanmar, as the mobile penetration rate and data consumption
in the country increases, but also from the increasing co-
location of additional tenants on its towers as a result
of the promotion of infrastructure sharing which is
encouraged through regulation.
By coming together with pan Asia towers, this
is expected to provide additional benefits from
economies of scale and greater flexibility
in servicing customers, operations and
financing.
In the year to 31 March 2018, Apollo towers
achieved revenues and adjusted eBItDA of
uS$51.8 million and uS$24.2 million, a Y-o-Y
increase of 12% and 20% respectively.
The Myanmar telecoms sector
continues to experience solid
growth with continuing demand for
capacity expansion as the mobile
penetration rate continues to
grow with data usage also surging
ahead from 90 MB per connection
in 2012 to an estimated 1,080 MB
per connection in 2017.
4
In 2017, Myanmar had 15,100 towers. Independent sector consultants expect
that Myanmar will have about 23,000 towers with a market average co-
location rate of 2.3x by 2022.
Bringing Apollo Towers and Pan Asia Tower under
common ownership is an exciting development
and is expected to benefit from economies of scale
and greater flexibility in servicing its customers,
operations and financing and this will enhance
MIL’s returns from its investment in this space.
Apollo Towers has
nearly doubled its
tower portfolio to
1,800 towers since
MIL’s investment in
2015.
BACkgRounD
Apollo Towers is the second largest independent telecom tower company (“ITC”) in Myanmar. Established
in 2013 it constructs, manages and leases tower and power infrastructure to all of the country’s MNOs,
being Telenor of Norway (Apollo Towers’ anchor tenant), Ooredoo of Qatar, MPT (the state-owned enterprise
jointly managed with KDDI and Sumitomo) and the newly established, Viettel-led consortium, MyTel. The
nationwide telecoms infrastructure roll-out continues as the MNOs seek to expand geographical coverage
and increase the capacity of their networks as they introduce 4G/LTE technology and respond to increasing
data consumption. This is likely to lead to additional tower orders and also a significant industrywide growth
in the number of tenancies per tower, known as ‘co-location’, which brings significantly higher-margined
revenues.
MIL first invested in Apollo Towers in July 2015 when it led a consortium of investors that invested US$30 million
for a 14.2% shareholding in Apollo Towers. The other shareholders were TPG Growth, an equity investment
platform of TPG (one of the world’s largest alternative asset managers with assets under management of
US$84 billion), and Sanjiv Ahuja, the ex-Orange Chief Executive Officer. As at 31 March 2018, MIL’s indirect
shareholding in Apollo Towers was 9.0% for a cost of US$21 million.
In June 2016, Apollo Towers Myanmar Limited (“Apollo Myanmar”) secured a US$250 million loan from
the United States’ Overseas Private Investment Corporation (“OPIC”) marking OPIC’s first financing in the
country. During the year, it also secured additional mezzanine funding that has strengthened its financial
position and which will be sufficient to finance its organic growth for the foreseeable future.
Before opening its telecoms sector to foreign investment in 2013, Myanmar had only one significant MNO
and was ranked equally with North Korea for having Asia’s lowest mobile penetration rate of about 7%. After
a highly competitive and transparent bidding process, two winners emerged: Norway’s Telenor and Ooredoo
from Qatar. Today the mobile phone penetration rate has surged, ostensibly to 100%, though with many
subscribers having dual SIM phones, Telenor estimates the number of unique mobile subscribers could be
only half of this number. Which means there is significant growth potential still. The foundation for this boom
was the unprecedented roll-out of infrastructure as seen by the increase in telecommunication towers from
fewer than 3,000 in 2013 to over 15,000 today.
As at 31 March 2018 Apollo Towers’ co-location
or lease-up rate (“LUR”) (meaning the number
of multiple tenancies on its towers) was 2.0x, an
increase of 30% since September 2017; boosting
Apollo Tower’s monthly adjusted EBITDA in March
2018 to US$2.1 million for the month; an increase
of 154% in comparison to the same month in 2017.
Whilst co-location growth has been slower than
originally anticipated at the time of MIL’s investment,
it has increased significantly in the past six months:
the co-location rate at year end of 2.0x is up 37%
from 1.4x a year ago.
The growth in co-locations
has been driven in part by
new contracts from Telecom
International Myanmar Company
Limited, operating under the
brand name “MyTel”,
the
country’s most recent and
fourth Mobile Network Operator
(“MNO”). In conjunction with
new business from the country’s
multiple new internet service
providers, these developments
have allowed Apollo Towers
to substantially increase its
co-location rate, revenue and
EBITDA.
The expansion of
Apollo Towers’ tower
its
portfolio and
growing co-location
rate has endowed
the company with a
high-quality EBITDA-
stream, with most
of
its customers
being supported by
Grade A international
telecom companies.
5
Business Review - Apollo Towers continued
pAn ASIA toweRS
On 21 September 2018 MIL announced that its subsidiary, MIL 4 Limited, had agreed to
exchange its existing shares in Apollo Towers for shares in Towers (M) Holdings Pte. Ltd.
(“towers Holdings”). This reorganisation forms part of a much larger transaction under which
funds controlled by TPG Capital, have set up Towers Holdings which has acquired Pan Asia
Majestic Eagle Limited (“Pan Asia Towers”), Myanmar’s fourth largest ITC.
Pan Asia Towers was established in 2013 and owns approximately 1,300 towers that it has
constructed and leased to Ooredoo Myanmar Limited and MNOs under long-term master
lease agreements. In addition, Pan Asia Towers has long-term contracts with all of the
country’s MNOs and has also secured a large-scale commitment for additional tenancies from
MyTel.
It is intended that both Apollo Towers and Pan Asia Towers will be under the common
ownership of Towers Holdings. Taken together they will have an initial portfolio of
approximately 3,100 towers and 6,000 tenants, which, on a pro-forma aggregated basis,
would have represented a LUR of 2.0x as at the end of March 2018. The Directors estimate
that, on a pro-forma aggregated basis, the two businesses would have had total revenues of
approximately US$90 million and an EBITDA of approximately US$53 million for the financial
year ending 31 March 2018. Apollo Towers’ and Pan Asia Towers’ unaudited management
accounts for the three months from January to March 2018, were they to be annualised and
aggregated, indicate annual revenues of US$102 million and an EBITDA of US$59 million.
Going forward, the two businesses intend to increase the number of towers in their portfolios and,
given the existing undrawn debt facilities available to them both, coupled with cash flows from
their operations, there will be available capital to add a further 1,000 towers over the next few
years. Additionally, the two businesses intend to add more tenancies to
these new towers as well as to their existing towers and thereby
increase their composite LUR from the current pro-forma level
of 2.0x and will target to achieve or exceed an LUR 2.2x
within a few years in line with the market.
6
MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2018
The existing debt facilities will remain in place, including the US$250 million loan facility granted by opIC
to Apollo Myanmar (of which only US$165 million has been drawn) and Apollo Towers’ US$100 million
mezzanine facility. In addition, based on the existing and new acquisition debt facilities, less the available
cash, the net debt in the two businesses at closing is expected to be approximately US$319 million.
The Directors believe that contributing MIL’s investment in Apollo Towers into the
reorganisation will enhance the future growth of this investment. It is expected
that the future gains the two businesses will achieve will exceed the value
accretion that might be achieved by Apollo Towers and Pan Asia Towers
independently. The two businesses are expected to manage Myanmar’s
largest portfolio of towers and the Directors believe that together
they will have stronger growth prospects than Apollo Towers on its
own. The Directors also believe that the increased scale of the
two businesses will make them more competitive in servicing the
needs of customers and provide them with economies of scale
to operate more efficiently. It is considered that having the two
businesses under common ownership would make a suitable
candidate for strategic investors or a listing on one of the
region’s stock exchanges over the next three to five years. It is
therefore advantageous for MIL to move its investment into a
combined business holding company rather than remain as a
minority investor in one of the businesses.
As part of the re-organisation, the Company’s 66.7% subsidiary,
MIL 4, will exchange its 13.5% shareholding in Apollo Towers
for an approximate shareholding of 6.2% in Towers Holdings, of
which approximately 4.2% is attributable to MIL.
MIL’s team will continue its involvement on the board of Towers
Holdings as well as its close working relationship with the Yangon-
based management team to support the next phase of Tower Holdings’
growth.
ANNUAL REPORT 2018 MYANMAR INVESTMENTS INTERNATIONAL LIMITED
7
Business Review - MFIL
Myanmar Finance International limited (“MFIl”) is one of the
leading microfinance companies in Myanmar, set up in 2014 by MIl
together with u Htet nyi, a well-established Myanmar entrepreneur,
and the norwegian government’s Investment Fund for Developing
Countries (“norfund”).
MFIl focuses on urban and semi-rural lending in Yangon
and Bago but plans to expand to other states during
the coming year.
In the year to 31 March 2018, MFIl produced its
third year of profitability generating MMk 518
million (uS$380,000) of net profit after-tax for
the year, a Y-o-Y increase of 67%.
As at the year end, the
average loan size provided by
MFIL had increased by 181%
to MMK 224,000 (US$168)
from MMK 80,000 at the time
of the initial investment.
MFIL now has eight branches: five in
Yangon and three in Bago.
Loan quality remains good,
with non-performing loans
(“NPLs”) at 0.5% as at year
end.
MFIL is profitable and by taking on
additional leverage, with no foreign
currency exposure, it is expected to
continue to increase its profitability. The
fact that it has incurred low NPLs is
attributable to its prudent business model
and strong banking discipline.
MFIL continued its strong growth
trajectory since investment, with
its borrower base at 31 March
2018 of over 54,000 borrowers
and its loan book up to MMK 12.3
billion (US$9.2 million), a CAGR of
60% and 97% respectively since
MIL’s initial investment in 2014.
Today, this has now grown to over
65,000 borrowers with a loan book
of over MMK 19.1 billion (over
US$13.4 million).
8
BACkgRounD
MFIL is one of the leading microfinance operators in
Myanmar and provides small loans (US$168 on average
per borrower, but loans can be as high as US$6,600) to
small-scale business operators in rural and semi-urban
areas in Yangon and Bago. It is one of the few approved
deposit-taking microfinance institutions in Myanmar.
MFIL was established as a microfinance joint venture
in August 2014 by MIL and Myanmar Finance Company
Limited (“MFC”) a company controlled by U Htet Nyi, a
Myanmar entrepreneur and honorary consul for Norway and
Finland. 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%, MFC 37.5% and Norfund 25%,
with a total paid up capital of nearly US$6 million. MIL’s total investment
cost to date is US$2.3 million.
Since its investment into MFIL in 2014, MIL has played a key role in supporting the buildout and expansion of the
MFIL business. In 2015 and 2016 MIL’s efforts were more focused on immediate needs such as the recruitment
of a seasoned Chief Executive Officer, the introduction of new systems and procedures, the strengthening
of the governance of the MFIL board, and the establishment of the internal audit function. More recently
the Company has shifted its focus to longer-term, strategic support aimed at expansion. This has included
continuing efforts to raise debt financing for the company, as well as product and channel development.
In the coming years, MIL expects to continue working closely with MFIL management to take on further debt
facilities, to prepare for and launch new products and to expand geographically. Notwithstanding MFIL’s strong
performance so far, some signs of over-indebtedness and excessive competition are beginning to emerge in
certain areas of the marketplace and MIL will continue to work closely with MFIL management to navigate
through these challenges ahead. This may also be a catalyst for consolidation in the industry and MFIL will look
for the opportunity to acquire suitable competitors.
During the year, the shareholders of MFIL injected an additional US$1 million shareholder capital into MFIL, on a pro-rata
basis among all shareholders. This takes the paid-up capital of MFIL to nearly US$6 million.
loan
In April 2018, MFIL secured a
US$6 million, local-currency
facility
denominated
(approximately MMK 8 billion)
from Yoma Bank, one of
Myanmar’s
leading banks.
Security for the loan was
provided by Norfund, one of
MIL’s joint venture partners
in MFIL, together with other
similar-minded international
lenders.
MFIL will use these loans to further expand its loan
portfolio and open new branches in Yangon and
Bago, to continue to roll out its newly launched
micro-business loan product and to explore
the feasibility of expanding into new States and
regions. Including these new facilities, MFIL
now has about US$12 million worth of Kyat-
denominated debt facilities signed and in place,
with US$3 million drawn down as of 31 March 2018
and about US$9 million drawn down as of today.
is working
MFIL
to
finalise additional Kyat
loans from a number of
other institutions.
9
Business Review - Medicare
Medicare International Health & Beauty (“Medicare”) is the first full
service chain of modern pharmacy, health and beauty franchise
stores in Myanmar.
MIl established the business together with Medicare
Vietnam, Vietnam’s leading pharmacy, health, beauty
and personal care retail groups, and Randy guttery, an
industry veteran with significant experience leading
Asian-based retail concepts.
In the year to 31 March 2018, Medicare rolled out 9
stores in downtown Yangon – today there are a further
5 stores with more stores expected to open in the
coming months.
The concept has been well received by consumers
in Myanmar. Medicare is currently refining its product
offering, both in terms of the range of products that it
offers as well as the locations in which it operates, based
on consumer behaviour seen to date and feedback
received. It is expected that once this testing phase
is concluded, Medicare will then seek to expand the
number of stores it operates to over 50 stores over the
coming years, predominantly in Yangon and other major
cities.
10
MIL is excited at the prospects for the pharmacy,
healthcare and personal care retail sector given the
expected rise in consumer spending power. McKinsey
has predicted that the middle and affluent classes in
Myanmar are set to boom in the coming years and
this segment could grow to 19 million people by 2030,
tripling consumer spending from US$35 billion to
US$100 billion.
BACkgRounD
Medicare operates a nascent chain of modern pharmacy, health and beauty franchise stores. All of these
stores demonstrate the “Medicare” brand concept of being informative, friendly and bright with an energetic
and smart style. The brand is seeking to become a recognised chain like “Boots”, “Watsons” or “Walgreens”,
as such branded quality chains are not yet common in Myanmar; the bulk of the 8,000 or so pharmacies in
Myanmar are stand-alone “Mom & Pop” stores.
In May 2017, MIL formed the Medicare joint venture with two joint venture partners:
Medicare Vietnam, which is the largest pharmacy, health, beauty and personal care retail
group throughout Vietnam, with over 80 outlets. Medicare Vietnam has built up a reputation
with customers for genuine, affordable everyday health and beauty necessities. Medicare
Vietnam brings a proven franchise-operating model to Medicare with all the supporting
marketing skills, inventory and supply chain management, HR development, operating systems,
know-how, technical support and training. The well-known “Medicare” brand name gives
Medicare a head start, especially when coupled with their own brand and exclusive products; and
Randy Guttery, a highly experienced senior executive with many decades’ experience in
leadership roles at Asian-based retailers in nine countries including Wal-Mart in Korea and
India, VinMart in Vietnam and Reliance Markets in India
It is expected that Medicare will fill a vacuum in the present retail landscape and at the same time tap into
the rapid growth of the middle and affluent classes in Myanmar. MIL has long been excited at the prospects
for the pharmacy, health, beauty and personal care retail in Myanmar. The present supply of pharmaceutical
products from the existing retail offering is mainly from small, single site pharmacies which often offer out
of date or poorly stored medicines. There are few independent chains and therefore very few professional
retailers in this space. Coupled with this, the Company anticipated that demand for pharmaceutical, health and
beauty products will grow significantly given the expected rise in consumer spending power, as well as greater
emphasis on quality and reliability that comes from the ethical dispensing of medicines and their proper storage.
Having thoroughly investigated the sector in Myanmar, MIL concluded that there was a significant gap in the
market for a modern and professional retail business offering pharmaceutical, health and beauty products,
and that the best way to approach this opportunity is to set up a franchise with experienced partners. MIL has
been actively engaged both strategically and operationally including on the ground support, especially in site
selection and staff recruitment. MIL also seconded its financial systems adviser to Medicare to work with them
in setting up the financial systems and controls for the company.
At year end MIL had invested US$1,395,000 for a
shareholding of 48.1% and expects to invest up to
US$5 million as part of the store roll-out programme
over the next few years.
From a standing start, Medicare now employs over
115 staff. Most store managers are pharmacists, who
are university educated and bilingual in Burmese and
English.
11
CHAiRmen’s LetteR
Dear fellow shareholder
It has been another solid year of progress for the
Company, in which our three businesses have all
experienced solid growth and we have proactively re-
shaped our strategy for the future.
we have built a
solid platform for sourcing,
managing and executing
investment opportunities.
As you will be aware, over the last seven years
Myanmar has undergone a transition from military
dictatorship to civilian government, a situation which
has allowed MIL to make strategic investments as
the country has started to develop. However, this
remarkable change has not been without its difficulties. The situation in Rakhine state, which stems from a
complex and historically charged background, remains un-remedied. We expect this issue to reduce near
term capital inflows, as well as tourist arrivals from western countries.
In addition, although Myanmar’s economy has rebounded and macroeconomic imbalances have stabilised
as the country has emerged from its isolation, Myanmar is still at an early stage of its growth and has limited
foreign exchange reserves and tax base. A significant depreciation of the Kyat from an average of MMK
1,356 per US$1.00 in 2017/18 could lead to inflationary pressure.
While banking regulation and practices have been strengthened over the last few years, there has been a
significant increase in bank lending over the same period and now there are emerging signs of some stresses
in the economy which could lead to a rise in non performing loans and slower credit growth in the coming
years.
During the year the updated Foreign Investment law and Companies Act were promulgated and, whilst there
have been a number of significant advances, there is still opportunity for further improvement.
Your Board continues to be a strong believer in Myanmar’s long term potential as a new and growing
market in the broader vibrant ASEAN economy. We have built a solid platform for sourcing, managing and
executing investment opportunities. However, from our on-the-ground presence we know that the next few
years will see additional challenges. We have therefore adapted our approach to ensure we protect and
grow our existing investments with a leaner structure that will still allow us to take advantage of meaningful
opportunities as and when they arise.
Your Company has made significant and impactful investments in businesses active in the telecom towers,
microfinance and retail pharmacy sectors. The telecom towers and microfinance businesses are now well
established businesses with good track records and strong positions in their sectors; they are now poised to
see even more significant growth. The retail pharmacy franchise business is a greenfield venture we started
from scratch this past year and the roll-out of stores is progressing well.
IMpACt InVeStIng
Each of our businesses is an impact investment. Collectively they employ around 500 people.
Apollo Towers has built almost 12% of the country’s independent telecoms towers. Estimating the number
of subscribers that benefit from this is not possible but clearly they number in the millions. So utilising Apollo
Towers’ towers, these citizens can now readily communicate and access information. This not only brings
education and enrichment to their lives but also supports their, and the country’s, economic advancement.
12
MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2018
MFIL today has over 65,000 borrowers. That is
65,000 households which have been economically
empowered (without resorting to loan sharks) to
expand their businesses (small shops, trading
businesses, food stalls etc) through MFIL’s ethical
lending practices. MFIL’s rural outreach is 37% of
its business and this has a significant impact on
enabling rural communities to access legitimate
funds. MFIL also strongly believes in women’s
empowerment: 86% of its borrowers are women,
while internally 55% of its management are women.
Medicare aims at providing affordable health and
beauty products to its customers. Every Medicare
store adheres to Good Pharmacy Practice (‘GPP’)
to contribute to health improvement and to help
customers with health p ro b l e m s m a k e t h e
best use of genuine, quality and affordable
medicines. This means they have been shipped
and stored properly; that the correct medicine has
been dispensed as treatment for the relevant ailment;
and that the medicine is still within its ‘sell-by date’.
Simple concepts but not ones that are widespread in
Myanmar today.
outlook
This year’s MIL calendar features a different local
charity each month. The Company made a modest
donation to each and provided the contact details
so that others might be able to also support them if
they feel so moved.
We are pleased with the progress our existing businesses have made. We certainly expect both Apollo
Towers and MFIL to go from strength to strength and are greatly encouraged by the strong start that
Medicare has made.
Additionally, the Company continues to evaluate a pipeline of business opportunities that we believe will
benefit from Myanmar’s inherent long term potential.
On behalf of the Board, we should like to take this opportunity to thank a number of our key stakeholders:
our staff for their professionalism and commitment; our business partners for all of their advice and inputs;
and our shareholders for their continued support.
Chris Appleton will be stepping down at this year’s
AGM and we thank him for all his sterling efforts over
the past five years.
Your Company
has made significant and
impactful investments
in businesses active in the
telecom towers, microfinance
and retail pharmacy
sectors.
WILLIAM KNIGHT
Chairman
21 September 2018
AUNG HTUN
Deputy Chairman
21 September 2018
ANNUAL REPORT 2018 MYANMAR INVESTMENTS INTERNATIONAL LIMITED
13
exeCutive DiReCtoRs’ Review
BUSINESS REVIEW
The past year has been an encouraging one: our net asset value appreciated by 30% to US$37.9 million and
our overheads remained flat at US$2.9 million, with our loss per share reducing 12% compared to the prior
year.
Our two established businesses both performed strongly:
Apollo Tower: the long-planned increase in co-locations finally kicked in with a significant increase in
EBITDA; and
MFIL: the core business continued to grow strongly once we were able to secure additional debt
facilities to properly leverage the investment.
Our new start-up business, Medicare has got off to a strong start with 14 branches already operational today
in Yangon and more under development.
In all cases, Myanmar Investment’s team have been closely embedded in these businesses to provide
strategic advice as well as hands-on local knowledge.
Our proprietary network continues to produce a number of interesting investment opportunities. However,
evaluating, negotiating, structuring and executing a new business investment properly requires a significant
level of commitment in terms of human resources and, as a result, overheads. Often these opportunities are
small, ‘venture capital’ or start-up opportunities that will take time to get to scale. Whilst there is no change
to the Company’s underlying investment policy, we have adopted a more selective approach in reviewing
new investment opportunities. It is therefore expected that new investments will be those that are larger,
already generating profit and requiring less start-up development work than has been the case in the past. As
a result, the Board believes it will be able to operate a more streamlined business model with a significantly
lower level of overheads.
FINANCIAL REVIEW
net ASSet VAlue
The Directors assess the Group’s net asset value (“NAV”) (attributable to the shareholders of the Company)
as at 31 March 2018 to be US$37.9 million, a year-on-year increase of 29.6%. This represents US$1.01 per
share, based on the number of shares in issue at the year-end. This change principally reflects the increases
in the Director’s assessment of the values of Apollo Towers and MFIL together with the proceeds from the
fund raising in June 2017, less the Group’s running costs for the year.
the past year has been
an encouraging one:
our net asset value
appreciated by 30%
to uS$37.9 million
As at 31 March 2018 the Group’s NAV consisted of:
an investment in Apollo Towers of US$24 million,
excluding the non-controlling interests, determined
using a discounted cashflow methodology;
an investment in MFIL of US$6.3 million, determined
using a price to forward book value methodology;
the investment in Medicare of US$1.4 million, determined
based on the price of recent investment; and
cash and other net assets/liabilities of US$6.2 million.
14
MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2018
Apollo toweRS
As at 31 March 2017 the Directors had assessed the
value of the Group’s investment in Apollo Towers,
excluding the non-controlling interests attributable
to the minority shareholders of MIL 4, to be US$20.8
million, this being the cost of the investment as at
that date. In assessing the value of the investment
in Apollo Towers as at 31 March 2018, the Directors
have decided to move to a discounted cashflow
(“DCF”) basis of valuation.
The revised value of Apollo Towers represents an
increase of 15.4% and equates to an IRR since the
initial investment in July 2015 of 5.5%.
In selecting the DCF basis of valuation the Directors
recognise that this is the product of a number of
key variables, where small changes in one or more
inputs can have a significant impact on the resulting
valuation. However, the Directors recognise that Apollo Towers has achieved certain milestones during the
year by securing co-location agreements with key customers and it would be inappropriate to continue to
hold the investment at cost given that the initial investment was made three years ago. The Directors believe
the assumptions they have used to be reasonable. However, the impact of the sensitivity of this method of
valuation must be recognised.
Grab taxis are now appearing in Myanmar.
MFIl
As at 31 March 2017 the Directors had assessed the value of the Group’s investment in MFIL to be US$5.5
million, this being determined using the price to forward book value methodology. In assessing the value of
the investment in MFIL as at 31 March 2018, the Directors have maintained the same methodology and have
determined the value of the Group’s investment in MFIL as at 31 March 2018 to be US$6.3 million.
The revised value of MFIL represents an increase over the year of 14.5% and equates to an IRR since the
initial investment in September 2014 of 40.4%.
MeDICARe
The investment in Medicare was made during the financial year.
As at 31 March 2018 the Directors have assessed the value of the Group’s investment in Medicare to be
US$1.4 million, this being determined using the price of recent investment methodology.
The book value of Medicare reflects a loss during the year of US$327,000, being MIL’s share of the start-up
losses. This is broadly in line with the Directors’ expectations as this new venture looks to establish itself as
the first retail pharmaceutical, health and beauty chain franchise in Myanmar.
SuMMARY oF nAV
In the attached audited financial statements, the NAV attributable to shareholders differs from the above
stated value of US$37.9 million due to the following differences:
NAV per the audited financial statements
33,528,450
US$
MFIL1
Medicare1
NAV per the Directors’ valuation
4,020,328
326,889
37,875,667
Note 1: In accordance with IFRS 11 Joint Arrangements, the
investments in MFIL and Medicare are accounted for as an
investment in a joint venture using the equity method. Whereas
in accordance with the Group’s Valuation Policy the Directors’
valuation for MFIL is determined using the price to forward book
value methodology and for Medicare is determined using the
price of recent investment methodology, both as described in the
International Private Equity and Venture Capital Guidelines.
ANNUAL REPORT 2018 MYANMAR INVESTMENTS INTERNATIONAL LIMITED
15
exeCutive DiReCtoRs’ Review
FInAnCIAl ReSultS
For the year to 31 March 2018 the Group’s audited loss after tax was US$3.07 million, a modest increase-on
last year’s US$2.83 million whilst the loss per share decreased 12% YoY.
Note that this loss excludes the US$3.1 million fair value gain attributable to the shareholders from the
Company’s investment in Apollo Towers.
This loss therefore represents:
our share of MFIL’s profits; less
our share of Medicare’s start-up losses; less
the overheads associated with running the Group’s business; less
the impact of the share-based payments arising from the Group’s Employee Share Option Scheme; less
transaction costs associated with investigating investments that did not come to fruition.
Whilst MFIL’s contribution increased YoY this was offset by the start-up losses incurred by Medicare.
Within this, the core cash-based overheads (excluding discretionary compensation, share option expenses
and transaction costs) amounted to US$2.2 million compared to US$2.1 million the previous year, a YoY
increase of 6.6%.
As previously announced, the Board has set in motion a series of cost cutting measures to reduce our
overheads with a target of getting to a monthly level of costs significantly lower than 2017/18’s costs by the
end of March 2019.
DIVIDenDS
Based on the above we do not recommend payment of a dividend at this time.
FunD RAISIng
During the financial year, MIL raised US$7.3 million (before costs) through a share placing in June 2017 to a
range of institutional investors, family offices and high net worth individuals.
Since our admission to trading on AIM in 2013, our strategy has been to raise capital in line with our ability
to deploy it. Therefore, in accordance with the strategy set out in the Company’s admission document, MIL
will consider raising additional equity to fund further businesses. Where appropriate we may also bring in like-
minded co-investors thereby generating fee income for your Company.
woRkIng CApItAl
As of the date of this report the Group has adequate financial resources to cover its working capital needs for
the next 12 months.
the company is in
an optimal position:
a solid portfolio; adequate cash
reserves for on-going overheads;
and a front row seat for the
opportunities
that lie ahead.
SHAREHOLDER MATTERS
CoRpoRAte goVeRnAnCe
The Company seeks to uphold the fundamental
principles of good corporate governance and is
guided by the responsibilities laid down for AIM
quoted companies. The Chairman’s Statement on
Corporate Governance provides more details on how
the Board itself operates as well as the steps taken
to ensure that its staff adhere to principles such as
compliance with the UK anti-bribery legislation.
16
MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2018
AnnuAl geneRAl MeetIng
This year’s Annual General Meeting will be
held at The British Club, Yangon, Myanmar
at 9.00am (Myanmar time) on Thursday 18
October 2018. Shareholders who cannot
attend the Annual General Meeting
in
person are encouraged to use their proxy
votes. Shareholders who hold their shares
through CREST are able to lodge their votes
electronically. Details are set out in the Notice
of the Annual General Meeting at the end of
this report.
PROSPECTS
We expect all three of our businesses will
continue to perform well over the coming year
and beyond:
Apollo Towers: teaming up with Pan Asia Towers represents a very exciting and transformative
opportunity. Together they will have the largest tower portfolio in Myanmar and will be well placed
and well-funded to take advantage of new tower construction opportunities, add additional co-
locating tenants on to their already significant portfolio of towers and extract both operational and
financial efficiencies arising from the significant step up in scale.
MFIL: with additional debt facilities in the pipeline combined with no apparent let-up in demand
for our products as well as an expansion of our branch network, we expect profitability to
continue to grow. MFIL is also tightening its lending standards in response to signs of short-
term over-indebtedness in some of the areas in which it operates. Looking further ahead, the
business is likely to need to expand its capital base once we have drawn down all the planned
debt facilities. As such we will most likely be looking to raise additional funds for MIL’s share.
Medicare: the roll-out of stores has been very impressive and we expect to continue the same
pace of expansion through the rest of 2018. Assuming we then continue to expand in 2019, MIL
will also most likely be looking to raise additional funds for its share of the roll-out funding.
There remains an expectation in the business community of a slowdown in new business activity as
the government continues to take time to formulate and prioritise its various strategies and determine
how best to implement them. Additionally, as we move towards the elections in 2020 we expect 2019,
will see a significant increase in political activity with a possible corresponding decrease in economic
and business activity. We do not expect this to filter through to the everyday demand for our three
business lines but it may have an impact on the overall FDI environment.
With this backdrop we have scaled back our overheads so that we can ensure that we continue
to maximise value from our existing investments whilst at the same time being well placed to take
advantage of suitable opportunities.
As a result, we feel that the Company is in an optimal position: a solid portfolio; adequate cash
reserves for on-going overheads; and a front row seat for the opportunities that lie ahead.
CRAIG MARTIN
Managing Director
21 September 2018
MICHAEL DEAN
Finance Director
21 September 2018
ANNUAL REPORT 2018 MYANMAR INVESTMENTS INTERNATIONAL LIMITED
17
BoARD oF DiReCtoRs
CHRISTOPHER WILLIAM KNIGHT
Independent Non-Executive Chairman
MAUNG AUNG HTUN
Deputy Chairman
Mr Knight is an alternative asset investment
specialist who has spent almost his entire career
dealing with the financial development of growth
companies in developing economies with particular
emphasis on Asia. Amongst his many firsts in a
career dedicated to developing frontier and emerging
markets, he originated the creation of the first
London-listed investment fund for Thailand, as well
as the first investment funds for Vietnam, Portugal
Mauritius and Russia East of the Ural Mountains.
His experience covers involvement with a number of
listing jurisdictions, including AIM, in his capacity as
an independent non-executive director.
He spent 18 years in various senior positions
within the Lloyds Bank group initially as a project
finance specialist for projects in the Far East,
Middle East and North Africa. Amongst his various
responsibilities, he established and directed the
bank’s first overseas merchant banking office in
Hong Kong to cover East Asia and the Indian sub-
continent; he later became responsible for the
creation of a number of the early emerging market
investment funds.
Since 1991, as an independent director or adviser,
he has served as Chairman of the J.P Morgan
Chinese Investment Trust Plc, senior Independent
Director of Fidelity Asian Values Trust Plc and, as
a co-founder of Emerisque Brands, an East/West
management buy-in company, he was chairman of
its three Shanghai-located Chinese joint ventures.
He has served on the Board of an AIM listed private
equity fund of funds for India - a country in which
he has had extensive involvement - and of a Korean-
led fund dedicated to investing in Korean companies
involved with China. He is a frequent visitor to China
and is on the advisory board of China Resolutions
Ltd, a company established to assist Chinese
companies listed overseas to meet international
standards of good corporate governance.
With effect from 1 June 2018, Mr Htun became
Deputy Chairman of Myanmar Investments, having
been Managing Director since the Company’s
Admission to AIM in 2013.
Mr Htun is half Myanmar and is also an engineering
graduate from Imperial College. He brings over 30
years of hands-on experience of advising, starting,
building and managing companies.
Mr Htun started at Kleinwort Benson in London
before founding, in 1987, Seamico Securities in
Thailand, a company he took public in 1995. In
1999 he founded Thai Strategic Capital, a Bangkok
based private equity fund manager where he led
investments into, among others, B-Quik, Modern
Asia Environmental Holdings and Wuttisak Clinic.
Mr Htun brings a wealth of experience and contacts
in a diverse range of industries and currently sits
on the board of Nam Seng Insurance Plc., as well
as being a member of the investment committee of
Lakeshore Capital Partners. He is a director of the
Thai Private Equity & Venture Capital Association
which he co-founded in 1989.
Mr Htun has also been appointed by Myanmar’s
State Counsellor to the committee to review the
restructuring of the Yangon Electricity Supply
Company and is Chairman of the Advisory Board of
the Swiss Government funded Centre for Vocational
Training.
CRAIG RObERT MARTIN
Managing Director
With effect from 1 June 2018, Mr Martin became
Managing Director of Myanmar Investments, having
been an Independent Non-executive Director since
the Company’s Admission to AIM in 2013.
Mr Knight is Chairman of Earth Capital Asia Ltd, a
sustainable technology investment company based
in Hong Kong. He currently is advising a UK based
food technology company on its strategy for the
Chinese market including the rest of Asia. Similarly,
he is advising, and on the Board of, a family office of
industrial designers and architects based in London
and Colombo, and he is a member of the Board of
Advisers of Shapla Capital Partners which is bringing
equity investment to private sector companies in
Bangladesh. He is a regular visitor to Myanmar.
Mr Martin has over 25 years of business-building
and direct investment experience in emerging
markets in Southeast Asia. He has lived and
worked in Southeast Asia since 1993, living in
Cambodia (seven years), Vietnam (five years) and
Singapore (twelve years), and has invested in
many sectors across Asia. His direct investment
experience covers fintech, telecoms, agribusiness,
building materials, education, media, retail,
real estate, manufacturing, finance, logistics,
transportation and renewable energy.
Mr Martin has a Master of Engineering from
the University of York, UK, and a MBA with
Distinction from INSEAD, and is a member of
the Singapore Institute of Directors. Until March
2018, Mr Martin was co-CEO of CapAsia, a
Singapore headquartered private equity fund
manager, focussing on investments in emerging
markets. Since leaving CapAsia, Mr Martin has
become Executive Chairman of Dynam Capital, an
investment management firm focussed on Vietnam.
18
MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2018
ANTHONy MICHAEL DEAN
Finance Director
CHRISTOPHER DAvID APPLETON
Independent Non-executive Director
Mr Dean has over 35 years of experience in the
financial industry in investment banking, private
equity and accounting. Over 25 of these years have
been spent in Asia, principally Hong Kong, Singapore
and Myanmar. He has held senior management
positions with Credit Lyonnais Securities Asia
(“CLSA”), including Head of its Investment Banking
and co-Head of its Private Equity businesses; was
a Director of PPMV Asia (the private equity arm of
Prudential plc); and spent a further eight years as
chief financial officer for a global shipping group.
Mr Dean is a non-executive independent director of
Singapore main board listed Delfi Limited. He is a
Fellow of the Institute of Chartered Accountants in
England and Wales, an Associate of the Chartered
Institute of Taxation and a member of the Singapore
Institute of Directors. From 2015 to 2017 he was
an elected member of the British Chamber of
Commerce in Myanmar and its Treasurer.
Mr Appleton has worked in finance since 1982 and
in Asia since 1984. He worked in Japan as equity
analyst then equity sales and management. Moving
to Hong Kong in 1998, Mr Appleton worked for
Salomon Smith Barney as Head of Asian Sales
before becoming Head of Asia for Fox-Pitt, Kelton
directly running all the equity functions, as well as
responsibility for capital markets and advisory. During
this time he also set up their Tokyo office. In 2005
he founded Faye Capital as an advisory business
and in 2008 acquired a licence for third party asset
management. After closing Faye Capital in 2010, Mr
Appleton briefly worked at HSBC Private Bank as
Head of Investment Advisory. Since 2011, he has
been running his private assets.
Mr Appleton was educated at Oxford University with
postgraduate studies at Tokyo University.
Mr Appleton has advised he will step down as a
Director of the Company at the end of October 2018.
HENRIK ONNE bODENSTAb
Independent Non-executive Director
Over the past 20 years Mr Bodenstab has gained
broad international experience by living and working
extensively in Asia, the US and Europe. He started
his professional career in 1992 in Asia, at the
Wünsche Group of Companies, a diversified group
of companies focussing on international trade and
shipping. In 1996, he joined the Boston Consulting
Group in Hamburg, Germany. In 1998 he co-founded
OneClip, a direct marketing and advertising company
in New York, which he led until 2002. Mr Bodenstab
re-joined the Wünsche Group in 2002 as a managing
partner. In 2014, Mr Bodenstab became a partner
at Trilantic Europe, a Pan-European private equity
firm with a focus on mid-market transactions in
healthcare, consumer, automotive, industrials and
business services.
Mr Bodenstab is Chairman of the Board of Meridian
10 Holding AG, on the Advisory Board of
Prettl SWH GmbH, a member of the board
of Oberberg Group and a Director of
Hansabay Pte Ltd in Singapore. He
holds a BA in Economics and Political
the University of
Science
Michigan and an MBA from the
Harvard Business School.
from
ANNUAL REPORT 2018 MYANMAR INVESTMENTS INTERNATIONAL LIMITED
19
miLestones
20
MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2018
investment stRAteGY oveRview
Myanmar Investments:
Focusses on building businesses that can provide capital gains, dividends and fee generation opportunities;
plans to maximise returns to shareholders by exiting at the right time for that business; and
focuses on value creation and the timely monetisation of invested capital.
As a proactive investor, the Company seeks to add value to each of the businesses it invests into. The
Company actively participates in the management process with the objective of helping to improve the
growth and performance of an investee company. The Company may acquire majority or minority stakes.
The challenge is not in finding the deals - opportunities abound - but in maintaining rigorous discipline
throughout the business evaluation process and in selecting the right partners.
our partners could be:
local entrepreneurs who have grown their business, despite the difficulties of the past, and are now
looking to raise capital to propel the business to the next level – MFIL being an example of this;
foreign players, well experienced in their sector, looking to enter their space in Myanmar – Apollo Towers
being an illustration of this; and
foreign or local corporates or individuals with the right background to start a business from scratch –
Medicare Myanmar being an example.
A core component of our strategy is to stay focused on the business-building process and manage risk
minimisation / reward maximisation in order to produce businesses capable of delivering sustainable and
superior long-term returns.
this is achieved by:
focussing on sectors with strong growth;
identifying credible senior and line management; and
de-risking the business where needed with new managers, mentors or strategic partners.
our screening criteria therefore reflects the following:
our equity stake in a business can be either a majority or minority position, providing that in the latter
case we have commensurate negative control provisions;
there must be a clear path to cash flows and sustainable margins;
the business must be working capital efficient and/or receptive to leverage;
the business must be capable of becoming a leading player with a strong franchise value in its sector; and
a detailed consideration of
the business
integrity as well as economic, social impact and
environmental aspects of the proposed business.
MIL is permanent capital: we are not a fund with a finite
life. This allows the Company to optimise returns by
assessing both the long- and short-term considerations.
In businesses where strong, durable domestic
franchises can be built, the approach is to target
returns on equity (at the business level) in excess of
20%, an expectation of strong dividend flows with a
possible listing of the business on an appropriate stock
exchange. In some businesses, exits will be made
when returns have been optimised. In these cases,
targeted returns would be 30%+ / 3x capital, pre-
leverage.
our vision is
to build a diversified
but focused stable
of businesses that
will benefit from
Myanmar’s
emergence.
ANNUAL REPORT 2018 MYANMAR INVESTMENTS INTERNATIONAL LIMITED
21
DiReCtoRs’ RePoRt
The Directors present their annual report and audited consolidated financial statements of the Group for the
financial year ended 31 March 2018.
tHe CoMpAnY
Myanmar Investments International limited (the “Company”) is a public company limited by shares
incorporated under the laws of the British Virgin Islands. The Company was admitted to trading on the AIM
market of the London Stock Exchange (“AIM”) on 27 June 2013.
tHe gRoup
The Group’s investments are managed through two companies: a wholly owned subsidiary in Singapore, MIl
Management pte ltd, and its own wholly owned subsidiary in Myanmar, MIl Management Co., ltd.
Two wholly owned subsidiaries have been established in Singapore to act as investment holding companies
for investments in Myanmar. Of these, as of 31 March 2018, Myanmar Investments limited holds a 37.5%
shareholding in Myanmar Finance International Limited (“MFIL”), a Myanmar incorporated microfinance joint
venture company. At the financial year end the other company, MIl no. 3 pte. ltd., had not yet commenced
business.
As of 31 March 2018, the Company holds a 48.1% shareholding in Medicare International Health &
Beauty Pte Ltd (“Medicare”) a Singapore joint venture holding company for a Myanmar pharmaceutical,
health and beauty franchise business.
Two wholly owned subsidiaries have been
established in the British Virgin Islands to act as
investment holding companies for investments in
Myanmar. Of these, as of 31 March 2018, MIl 4
limited (“MIL4”) holds a 13.5% effective equity
interest in Apollo Towers. MIL4 is 66.7% owned by
the Company and therefore as of 31 March 2018,
the Company has an indirect interest in Apollo
Towers of 9.0%. At the end of March 2018, the other
company, MIl tower Ventures limited, had not yet
commenced business.
The above bolded companies comprise the
Myanmar Investments International Limited Group
(the “Group”).
FunD RAISIngS
In June 2017 the Company concluded a share offering which raised US$7.3 million (gross) through a
subscription of 6,181,123 new ordinary shares at a subscription price of US$1.18 per share.
During the year to 31 March 2018, 694,375 warrants were converted to ordinary shares raising US$520,781.
Following the financial year end, on 21 June 2018 a further 202,905 warrants were converted to ordinary
shares raising US$152,179.
AMenDMentS to tHe teRMS oF tHe CoMpAnY’S wARRAntS
On 21 May 2018, subsequent to the financial year end, the Company’s shareholders and warrantholders
voted to amend the terms of the Company’s warrants such that with effect from 21 June 2018:
the exercise period for the warrants was extended until 31 December 2021 but at a higher exercise price
of US$0.90; and
until December 2021, in the extended period warrantholders have the option to exercise their warrants
on a cashless basis in December of each year in certain circumstances.
22
MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2018
If a warrantholder wants to exercise their warrants on a cashless basis then the number of new ordinary shares
that they would receive is lower than the number of new ordinary shares they would receive if they exercised
their warrants for cash. The lower ratio of new ordinary shares to warrants is designed to only reflect the
“in the money” value of the warrants. This is determined by using a formula which reflects the higher of: (i)
the prevailing market value of the ordinary shares for the three months prior to exercise (volume weighted
average price or ‘VWAP’); and (ii) the Company’s net asset value as calculated by the Board in the previous
September.
InVeStMent polICY
The Company’s investment policy was set out in its Admission Document and is reproduced below. There
has been no change in its investment policy since admission of the Company’s shares to trading on AIM
(“Admission”).
Strategy
The Company’s primary objective is to build capital value over the long term by making investments
in a diversified portfolio of Myanmar businesses that the Directors believe will benefit from Myanmar’s re-
emergence. In the first few years it is expected that the portfolio of the Company will be concentrated as it
seeks out new potential investments. However, in time and subject to available opportunities the Directors
intend to diversify the portfolio.
The Company intends to be a proactive investor, seeking to add value to the development of each of the
entities in which it (or one of its subsidiaries) invests (an ‘Investee Company’). As such, the Company will
usually, where permitted under Myanmar or other applicable law, seek participation in the management
process through board representation, with a view to helping improve the performance and growth of the
Investee Company. The Company may acquire majority or minority stakes in Investee Companies.
Value may be added through advice on such matters as capital structure and introductions to potential foreign
lenders, introductions to foreign markets, sourcing suitable senior management hires or mentors to help
develop the business, access to foreign technical partners, implementation of governance issues and listing
on the Yangon Stock Exchange (YSX) or other regional bourse.
Where appropriate the Company may seek to bring in strategic investors who are capable of adding
operational value to the Investee Company.
Investment Categories
Investments will fall into two categories, core investments and financial investments:
Core Investments
The Company intends that its core investments will be in businesses which, in the Directors’ opinion:
are considered essential to the domestic economy in Myanmar;
are businesses where there are limited opportunities, creating a medium term barrier to entry; and/or
are capable of being built into leading franchises in Myanmar.
For core investments, the Company will seek to help the Investee Company enhance its return on equity and,
as soon as it is prudent, generate dividends. When appropriate, the Investee Company will be encouraged
to list on a local or regional stock exchange although the Group will generally expect to continue to hold its
investment for a further period of time.
It is expected that core investments will be held until such time as the Directors believe that long term growth
rates have started to moderate. As such there will not be an expectation of a near term disposal unless a
compelling opportunity for full or partial divestment arises.
ANNUAL REPORT 2018 MYANMAR INVESTMENTS INTERNATIONAL LIMITED
23
DiReCtoRs’ RePoRt
Financial Investments
The Company’s financial investments are intended to be ‘private equity style’ investments where the Company
sees potential for capital gains and liquidity.
Financial investments therefore, unlike core investments, are expected to be made only when there is a
realistic and credible exit plan. As such they are likely to be disposed of within a five- to seven-year time
horizon, though this may be adjusted in appropriate circumstances. Exits may be achieved through listings on
the YSX or on suitable overseas stock exchanges, trade sales or share swaps.
It is expected, in the initial years, that the Company’s investments will typically range between US$5 million
and US$25 million, although it may consider larger or smaller investments. Investments that are larger than
the Company’s existing resources are expected to be funded through further equity issues. Additionally,
where an Investment Target is larger than the Company’s appetite or does not fall within the Investment
Policy, the Group may seek to generate fee income (for example placement and management fees and carried
interests) through placements to financial investors.
Sanctions and Restrictions
The Company will comply with any sanctions and restrictions imposed by the EU, the UK, the BVI and
Singapore. The Directors will also take into consideration other actions by jurisdictions relevant to the
business of the Company relating to investment in and trade with Myanmar. Should there be any addition
to or re-imposition of sanctions or restrictions at any time in the future, the Directors will seek to ensure
compliance with such regulations.
Portfolio
The Company expects to build a diversified portfolio. However, this will take some time and as a
consequence, particularly during the early life of the Company, its investment portfolio will be concentrated in
a limited number of Investee Companies.
There is no minimum or maximum number of companies that the Company can invest in at any one time.
Similarly, there are no sector limits nor minimum or maximum exposure limits to any one company or joint
venture partner.
Geographical Diversity
The Company will primarily make investments in companies, businesses or assets located in Myanmar. This
will include Myanmar businesses that are listed on foreign stock exchanges but also foreign companies that
have a material exposure to doing business with or in Myanmar.
Forms of Investment
The Company may employ all forms of permitted investment mechanisms, utilising instruments and structures
that might be suitable to allow participation in Investment Targets in a manner that seeks to minimise risks
and maximise rewards. The Company may invest in equity, quasi-equity or debt instruments, which may or
may not represent shareholding or management control. Investments are likely to be made through special
purpose vehicles established specifically for each Investee Company, or by way of legal joint ventures or
nominee or trust structures. In some circumstances the Company may invest via contracts that grant an
economic interest in an asset.
Because Myanmar businesses are relatively small compared to their more developed Asian counterparts, the
Company’s investments are more likely to be in the form of expansion capital than buyouts and may also be in
greenfield businesses.
Funding of Investments
In order to finance future Investments, the Company will issue further Ordinary Shares to raise capital as and
when investment opportunities become available. The Company may also consider issuing Ordinary Shares as
consideration for acquiring Investments or have the Company or one of its subsidiaries issue debt or hybrid
financial instruments.
24
MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2018
Borrowings
The Directors believe that an appropriate amount
of appropriately structured debt could enhance the
overall returns from the Company’s Investments.
It is the Directors’ present intention that any
borrowings taken on in support of an investment
should ideally be raised at a subsidiary level on a
non-recourse basis. Where this is not available and
the Directors consider that the assumption of debt
will enhance the overall return from an investment
without giving rise to a disproportionate risk, then
the Company may borrow directly or may provide
guarantees to its subsidiaries for such borrowings.
The Directors do not intend to take on borrowings
of more than 50% of the prevailing net asset value
(“NAV”) of the Company, though if the NAV were to
decline this benchmark might be breached.
The Company or its subsidiaries may also issue
hybrid financial instruments and may borrow in any
currency that the Directors consider appropriate.
It is not expected that the Company will borrow to
fund its operating expenses.
Guests at MIL’s Investor Day in yangon
Sectors
The Company does not plan to limit itself to any specific sectors. However, at this time there are certain
sectors falling within its Investment Policy which, given the large funding requirements typically required,
it would not currently look to focus on. These sectors include large real estate development, infrastructure
development and exploration and production of natural resources. However, the Company would consider
establishing sector specific vehicles in the future - possibly with suitable joint venture partners - to participate
in such opportunities.
Whilst the Investment Policy is not sector specific, in assessing which sectors the Company may invest in, the
following themes will be considered:
Regulatory framework: under present foreign investment regulations there are limitations and prohibitions
imposed with regard to foreign investment in certain specified sectors. However, these regulations may
be subject to change and refinement.
Ease of upgrading: the Directors believe that there are many areas of the Myanmar economy that can
benefit from practices and technology that are commonplace in Western and other Asian economies
without the need to introduce advanced technology. Relatively easy to implement changes can have a
significant improvement on efficiency and profitability. These might be in manufacturing industries but
also in services such as distribution and retailing.
Scalability: the Company will be looking at sectors where there are opportunities for significant scalability
given their potential, both domestically and in export markets.
Barriers to entry: in some sectors being first to market may help secure key retail locations or licences,
giving rise to competitive advantages.
Leverage: the Company will take into consideration the availability of locally sourced debt where that
may be influenced by the nature of the underlying business.
Key sectors particularly attractive to the Company are those experiencing acute supply vs. demand
imbalances, such as consumer (products, services, retail, distribution) and other capacity-constrained
(infrastructure, energy, logistics) sectors.
ANNUAL REPORT 2018 MYANMAR INVESTMENTS INTERNATIONAL LIMITED
25
DiReCtoRs’ RePoRt
Investment Policy Review
The Directors will review the investment policy on an
annual basis and, subject to their review and in the
absence of unforeseen circumstances, the Company
intends to adhere to the Investment Policy for the
foreseeable future.
Notwithstanding the above, should the Company
wish to make a material change to its Investment
Policy, which may be prompted, inter alia, by
changes in government policies or economic
conditions which alter, reduce or
introduce
investment opportunities, the Company will seek prior
shareholder consent at a general meeting.
In the event of a breach of the Investment Policy or
any restrictions imposed on the Investment Policy,
if the Board considers the breach to be material,
notification shall be made to a Regulatory Information
Service provider.
Modern buses now ply yangon’s busy streets
ReSultS AnD DIVIDenDS
The Directors assess the Group’s net asset value (attributable to the shareholders of the Company) as at
31 March 2018 to be US$37.9 million (2017: US$29.2million), a 29.6% increase over the year. The net asset
value per share as of 31 March 2018 was US$1.01 per share (2017: US$0.96 per share) based on the shares
in issue at that time. This change principally reflects the increases in the Director’s assessment of the values
of Apollo Towers and MFIL together with the proceeds from the fund raising in June 2017 less the Group’s
costs for the year.
The results for the year are set out in detail in the consolidated statement of comprehensive income.
The Directors do not recommend the payment of a dividend for the financial year ended 31 March 2018.
ReVIew oF tHe CoMpAnY’S BuSIneSS AnD FutuRe outlook
The Chairmen’s Letter and the Executive Directors’ Report provide further details as to the development of
the business in the year under review as well as the future outlook.
DIReCtoRS
The members of the Board are listed in the section headed “Board of Directors”.
Aung Htun and Michael Dean served as Executive Directors throughout the year under review. William Knight,
Craig Martin, Henrik Bodenstab and Christopher Appleton, all of whom are independent Non-Executive
Directors, also served throughout the year under review.
On 1 June 2018 Aung Htun became Deputy Chairman and Craig Martin became Managing Director.
In accordance with the Company’s articles of association, Aung Htun, Craig Martin and Henrik Bodenstab
retire by rotation and offer themselves for re-election at the Company’s Annual General Meeting. Chris
Appleton has advised that he will step down as a Director at the end of October 2018.
The means by which the Board administers its responsibilities are set out in detail in the Chairman’s
Statement on Corporate Governance.
26
MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2018
DIReCtoRS’ SHAReHolDIngS
There are no requirements in place pursuant to the Company’s articles of association for the Directors to own
shares in the Company.
At the date of signing this report, the Directors’ interests in the equity of the Company were as follows:
Director
William Knight
Aung Htun
Craig Martin
Michael Dean
Henrik Bodenstab
Christopher Appleton
Ordinary
Shares
28,000
677,000
237,372
410,000
585,849
190,372
Warrants
Share options
3,000
123,000
145,000
98,000
181,159
98,000
157,005
899,626
167,005
815,626
35,000
177,005
SHARe optIon plAn
The Company established its share option plan as a long-term incentive scheme for its employees, Directors
and advisers, built around the fundamental principle of aligning their interests with those of our shareholders.
It was envisaged that it would be used for five years and then re-assessed. As a result of that re-assessment
the Board has decided that no further options will be granted, though the existing options will remain in
place. In future the carried interest plan will be the Company’s long-term incentive scheme.
The share option plan is designed to reward a participant only if there is an appreciation in value of the
Company’s share price. The share option plan is administered by the Remuneration Committee.
The share option plan provides that share options available for grant by the Company shall constitute a
maximum of one-tenth of the total number of ordinary shares in issue on the date preceding the date of grant
(excluding shares held by the Company as treasury shares and founder shares).
Any issue of ordinary shares by the Company enables the Remuneration Committee to grant further share
options which are granted with an exercise price set at a 10% premium to the subscription price paid by
shareholders for the issue of ordinary shares that gave rise to each tranche of the share options. However,
the share options that arose as a result of the ordinary shares issued in connection with Admission have an
exercise price of US$1.10.
Share options can be exercised at any time after the first anniversary and any time up to the tenth
anniversary of the grant of the share options (as may be determined by the Remuneration Committee in its
absolute discretion). Share options will not be admitted to trading on AIM but application will be made for
ordinary shares that are issued upon the exercise of the share options to be admitted to trading on AIM.
Series
Placing
Series 1
Series 2
Series 3
Series 4
Series 5
Admission
December 2014
July 2015
September 2016
June 2017
Number of
share options
Options granted as at
31 March 2018
Options available
to be granted
Exercise price
(US$)
584,261
361,700
1,734,121
324,546
618,112
3,622,740
584,261
361,700
1,727,067
-
-
2,673,028
-
-
7,054
324,546
618,112
949,712
1.100
1.155
1.265
1.430
1.298
In conjunction with the introduction of the Carried Interest Plan, on 17 September 2018 the Board cancelled
the 949,712 unissued options.
ANNUAL REPORT 2018 MYANMAR INVESTMENTS INTERNATIONAL LIMITED
27
DiReCtoRs’ RePoRt
CARRIeD InteReSt plAn
As noted above the Company has put in place the carried interest plan to be the Company’s long-term
incentive scheme and no further grants of share options will be made under the original employee share
option plan. As a long-term incentive scheme for its employees, Directors and advisers, it is built around the
fundamental principle of aligning interests with those of our shareholders.
The carried interest plan was adopted by the Remuneration Committee and the Board on 17 September
2018.
Under the carried interest plan, beneficiaries will receive a portion of the “excess profits” made from the final
realisation of an investment. In computing the excess profits:
The starting value for MFIL and Apollo Towers will be the Directors’ appraised NAV of those investments
as at 31 March 2017, adjusted for any later capital injections, to reflect the fact that no share option
grants have been made since November 2016.
The starting value for Medicare will be its cost.
A hurdle rate of 10%, compounded annually, will be applied.
The carried interest plan will receive 10% of any resultant excess profit and this will be allocated between the
beneficiaries by the Remuneration Committee.
InSuRAnCe
The Group maintains appropriate insurance including D&O insurance in respect of its Directors and officers.
RelAteD pARtY tRAnSACtIonS
Other than the Directors’ compensation, details of which are described in the section headed “Directors’
Remuneration Report”, the Group has not undertaken any related party transactions during the year under
review.
SuBStAntIAl InteReStS
At the date of signing this report, the following interests of 3% or more of the issued ordinary share capital
had been notified to the Group:
Name
Number of Ordinary Shares
Percentage of Issued Capital
LIM Asia Special Situations Master Fund Limited
Stewart Investors Asia Pacific Fund
Probus Opportunities SA SICAV-FIS – Mekong Fund
Red Oak Operations Limited
Chasophie Group Limited
Alpha Investments Asia FCP-SIF Fund
Finanzverwaltungs GbR Langen II
Pachira Holdings Limited
Crystal Consultancy Services Limited
7,718,665
3,653,695
2,118,644
2,105,569
1,601,086
1,449,475
1,443,051
1,113,499
1,113,499
20.5%
9.7%
5.6%
5.6%
4.3%
3.9%
3.8%
3.0%
3.0%
goIng ConCeRn
Based on the Group’s current resources and projected cash flows, the Board believes that the Group will be
able to satisfy its working capital requirements for at least the next twelve months. The Board has therefore
concluded that it is appropriate to continue to adopt the going concern basis in preparing the financial
statements.
lItIgAtIon
The Group is not engaged in any litigation or claim of material importance, nor, so far as the Directors are
aware, is any litigation or claim of material importance pending or threatened against the Group.
28
MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2018
BuSIneSS IntegRItY
The Directors place great emphasis on business
integrity in all aspects of the Group’s operations.
Whilst conforming to appropriate regulations this
emphasis goes further and is embodied in the
Group’s culture.
Specifically, the Group’s business integrity culture
seeks to ensure compliance with a broad range of
ethical considerations, not all of which are financial in
nature. These include:
Sanctions;
Financial Action Task Force
(“FATF”)
recommendations;
Anti-Money laundering (“AML”);
Countering the Financing of Terrorism (“CFT”);
Anti-Bribery procedures;
Whistleblowing procedures;
Politically Exposed Persons (“PEP”);
Confidentiality;
Share Dealing; and
Social and environmental considerations.
In furtherance of these aims all staff receive training in all of these areas.
Additionally, the Group conducts a risk-focussed approach to all its business dealings with third parties. This
will include conducting appropriate enquiries as to the background and sources of funding of significant
counter-parties including potential new shareholders (where a new equity issue is involved), potential Investee
Companies and potential staff. This may involve retaining third party research and assessment functions.
pAYMent to SupplIeRS
The Group’s policy is to agree the terms of payment with suppliers prior to engaging them, to ensure that
suppliers are made aware of the terms of payment, and to abide by the terms of payment.
tRAnSpARenCY to SHAReHolDeRS
The Company seeks to be open and transparent to its shareholders. In accordance with AIM rules, the
Company will use the RNS of the London Stock Exchange to announce significant milestones. It has also
established a website that allows viewing of published information.
All Shareholders are encouraged to attend the Annual General Meeting and ask further questions.
InteRnAl ContRolS
The Directors acknowledge their responsibility for the Group’s system of internal control and for reviewing its
effectiveness. However, the system of internal controls is designed to manage rather than eliminate the risk of
failure to achieve business objectives and as such can only provide reasonable, but not absolute, assurance
against material misstatement or loss.
The Board also considers the process for identifying, evaluating and managing any significant risks faced by
the Company.
The Audit Committee confirms that it has reviewed the Group’s risk management and internal control
systems and believes that the controls are satisfactory given the size and nature of the Group.
ANNUAL REPORT 2018 MYANMAR INVESTMENTS INTERNATIONAL LIMITED
29
DiReCtoRs’ RePoRt
FInAnCIAl RISk pRoFIle
The Directors have overall responsibility for the establishment and oversight of the Group’s risk management
framework. The Group’s risk management policies are established to set out its overall business strategies,
tolerance of risk and general risk management philosophy. Risk management policies and systems are
reviewed regularly to reflect changes in market conditions and the Group’s activities.
Further details on financial risk management objectives and policies are given in the notes to the
consolidated financial statements.
DISCloSuRe oF InFoRMAtIon to AuDItoRS
All of the Directors confirm that they have taken all the steps that they ought to have taken to make
themselves aware of any information needed by the Company’s auditors for the purposes of their audit and
to establish that the auditors are aware of that information. The Directors are not aware of any relevant audit
information of which the auditors are unaware.
AuDItoRS
BDO LLP were appointed as auditors to the Group during the period and have expressed their willingness
to continue in office and a resolution for their re-appointment will be proposed at the forthcoming Annual
General Meeting.
On behalf of the Board of Directors
WILLIAM KNIGHT
Chairman
21 September 2018
CRAIG MARTIN
Managing Director
21 September 2018
30
MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2018
CHAiRmAn’s stAtement
on CoRPoRAte GoveRnAnCe
Dear Shareholders
Since March 2018, in compliance with the change in the AIM Rules for Companies, the Company has
adopted the Quoted Companies Alliance (“QCA”) 2018 Corporate Governance Code as it believes it to
be a well-established corporate governance framework grounded in international best practices which is
appropriate for the Company given its size and Investment Policy.
The QCA 2018 Corporate Governance Code sets out ten principles of corporate governance:
Companies need to deliver growth in long-term shareholder value. This requires an efficient, effective
and dynamic management framework and should be accompanied by good communication which
helps to promote confidence and trust.
Deliver growth
1. Establish a strategy and business model which promotes long-term value for shareholders
2. Seek to understand and meet shareholder needs and expectations
3. Take into account wider stakeholder and social responsibilities and their implications for long-term
success
4. Embed effective risk management, considering both opportunities and threats, throughout the
organisation
Maintain a dynamic management framework
5. Maintain the board as a well-functioning, balanced team led by the chair
6. Ensure that between them the directors have the necessary up-to-date experience, skills and
capabilities
7. Evaluate board performance based on clear and relevant objectives, seeking continuous
improvement
8. Promote a corporate culture that is based on ethical values and behaviours
9. Maintain governance structures and processes that are fit for purpose and support good decision-
making by the board
Build trust
10. Communicate how the company is governed and is performing by maintaining a dialogue with
shareholders and other relevant stakeholders
It should be noted that during the year to 31 March 2018 the Company was not under an obligation to
actually comply with any Corporate Governance code but nonetheless had been using the QCA Corporate
Governance Code as a suitable framework to guide the Board.
I address each of the QCA 2018 Corporate Governance Code’s ten principles of corporate governance in
turn below.
1.
eStABlISH A StRAtegY AnD BuSIneSS MoDel wHICH pRoMote long-teRM VAlue
FoR SHAReHolDeRS
The Company’s strategy is to establish a business development and investment platform that seeks to make
sensible investments in Myanmar, to capitalise on the growth opportunities there.
A more detailed analysis of the implementation of the Company’s business strategy is set out in detail in the
“Investment Policy” section of the Directors’ Report.
In essence the Company is seeking to make capital gains and/or derive income from investments in
Myanmar.
ANNUAL REPORT 2018 MYANMAR INVESTMENTS INTERNATIONAL LIMITED
31
CHAiRmAn’s stAtement
on CoRPoRAte GoveRnAnCe
The key challenges are those that derive from:
Operating in a frontier economy, including the attendant higher operating expenses and relatively limited
pool of experienced executives and network of professional advisers; and
Sourcing, making, managing and realising investments.
The Board seeks to manage the risks inherent in this strategy by:
Recruiting high calibre and experienced professionals and providing them with meaningful incentives
that are aligned to the interests of shareholders;
Maintaining and developing an active presence on the ground in Yangon;
Maintaining and developing a network of Myanmar contacts to assist in investment sourcing, execution
and realisation as well as maintaining a strong “finger on the pulse” of developments in the country;
Conducting robust due diligence on investment opportunities and negotiating minority protections where
applicable;
Maintaining a rigorous monitoring process of both the executive staff and the investee companies;
Ensuring an on-going programme of staff training on investing, changing rules and regulations in
Myanmar and business ethics; and
Proactively looking for opportunities to add value to each of the investee companies.
The section on “Risk Factors” on page 54 of the Company’s Admission Document which can be found on the
Company’s website should also be read.
2.
Seek to unDeRStAnD AnD Meet SHAReHolDeR neeDS AnD expeCtAtIonS
The Company was established for a very specific purpose and this purpose has been clearly communicated
to potential shareholders, initially through the Admission Document, a copy of which is on the Company’s
website. In addition, the Company’s website, in compliance with AIM Rule 26, contains a detailed description
of the Company and its business.
Since Admission the Board has sought to maintain an open dialogue with the Company’s shareholders
through:
its Annual General meeting;
the Regulatory News Service (“RNS”) system of the London Stock Exchange;
periodic mailing and press releases;
its website myanmarinvestments.com;
meetings with shareholders in the major financial cities in which its shareholders are based, including
Singapore, Hong Kong, Bangkok, Dubai, Hamburg, London and Edinburgh;
the Company’s investor forums which have been held in Yangon; and
maintaining an active social media communications platform through LinkedIn, Twitter and Facebook,
today the latter having over 4,800 followers.
In addition, the Company responds promptly to any requests for information from shareholders and potential
investors, within the limits of ensuring that unpublished price sensitive information is disclosed only via the
appropriate regulatory channels.
The Company believes it has been successful in maintaining an open and transparent dialogue with its
shareholders, especially given its relatively small size and limited personnel.
32
MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2018
In terms of communication, shareholders and potential investors can use the dedicated email address
enquiries@myanmarinvestments.com or contact directly Mike Dean, the Finance Director at mikedean@
myanmarinvestments.com
or
William Knight (Chairman)
Aung Htun (Deputy Chairman)
Craig Martin (Managing Director)
william.wknight@gmail.com
aunghtun@myanmarinvestments.com
craigmartin@myanmarinvestments.com
3.
tAke Into ACCount wIDeR StAkeHolDeR AnD SoCIAl ReSponSIBIlItIeS AnD tHeIR
IMplICAtIonS FoR long-teRM SuCCeSS
The Board seeks to take into account the views of other stakeholders, other than the shareholders, in the
execution of the Company’s Investment Policy.
Other stakeholders that the Board seeks to engage with include:
Employees – the Company seeks to provide a rewarding career for its staff in a caring and encouraging
environment that enables each individual to maximise their potential. As illustrations of this, but by no
means an exhaustive summary:
the Company provides extensive training for its staff, including on the job training that is
supplemented by more formal training courses that are run in-house or by external trainers,
including on-line training schemes;
the Company considers itself to be ‘gender blind’ in its approach to its employees: it does not take
gender into account when recruiting, promoting, training or remunerating its employees. There has
never been an instance of a gender pay gap in its remuneration of its staff; and
all new joiners are required to confirm they are familiar with the Employee Handbook, including the
sections on:
non-discrimination (“employees are not to engage in any practice or behaviour which
discriminates against another person on the grounds of their age, sex, race, religion or
physical attributes. Similarly, the Company will not tolerate aggressive or bullying behaviour
within the workplace”); and
ethics, including understanding the Company’s policy on bribery, confidentiality and its Share
Dealing Code.
Partners – the Company seeks to be a reliable and supportive business partner to each of its co-
investors, looking to add value wherever possible and to work together to maximise the value of each
business. In this context ‘value’ may not just be financial value but also the value that the businesses
bring to their own employees, sub-contractors, customers and local communities. For example, working
with our joint venture partners to ensure that the lending practices of MFIL adhere to the highest ethical
standards, or working with Apollo Towers to ensure that child labour is not used by any of its sub-
contractors.
Community – the Company’s three investments all have significant positive benefits for the communities
in which they operate:
Apollo Towers provides essential infrastructure on which the country’s telecommunication network
depends. Myanmar people can now readily communicate and access information and this not
only brings education and enrichment to their lives but also supports their, and the country’s,
economic advancement;
MFIL provides much needed access to financing for people wishing to start and develop their
simple micro-businesses. This is an area that Myanmar, like many emerging economies,
desperately needs; and
Medicare aims at providing a wider range of international and authentic brands of health and
ANNUAL REPORT 2018 MYANMAR INVESTMENTS INTERNATIONAL LIMITED
33
CHAiRmAn’s stAtement
on CoRPoRAte GoveRnAnCe
beauty products to its customers. Every Medicare store adheres to Good Pharmacy Practice to
contribute to health improvement and to help customers with health problems make the best
use of genuine, high quality and affordable medicines.
Society – where appropriate the Company has supported local charitable causes. During the devastating
floods of 2015 it donated to the Red Cross to assist in its effort in alleviating the damage done by the
storms. This year’s calendar features a different local charity each month. The Company made a modest
donation to each and provided the contact details so that others might be able to also support them if
they felt so moved.
4.
eMBeD eFFeCtIVe RISk MAnAgeMent, ConSIDeRIng BotH oppoRtunItIeS AnD
tHReAtS, tHRougHout tHe oRgAnISAtIon
The Board is responsible for managing the risks inherent in the Company’s strategy and the implementation
of that strategy.
To ensure that appropriate resources are focussed on the key risk areas the Board has set up two sub-
committees: the Investment Committee and the Audit Committee.
Investment Committee
The Investment Committee comprises Aung Htun, Michael Dean, Henrik Bodenstab and Craig Martin and
for the year under review was chaired by Craig Martin, who at the time was an independent non-executive
director. Since the financial year end, Craig Martin has become Managing Director and Henrik Bodenstab has
become Chairman of the Investment Committee.
During the year under review there were 17 meetings of the Investment Committee and all the members of
the committee attended all of the meetings.
The Investment Committee is the principal manager of the Company’s exposure to risk that might arise
from within the Company’s core investing activities. The Investment Committee has responsibility for,
amongst other things, establishing the investment policy, guiding management in the execution of this
policy, monitoring the deal flow and investments in progress, supervising the management team’s handling
of investments, and planning the realisation of investments. During the year under review, the Investment
Committee carried out quarterly evaluations of each of the investments, assessed a number of specific new
investment opportunities, and reviewed and prioritised the deal flow of potential investment opportunities.
The Investment Committee has made recommendations to the Board regarding making investments and is
responsible for computing the Company’s net asset value for the Board’s consideration.
Audit Committee
The Audit Committee comprises Craig Martin, William Knight and Henrik Bodenstab and for the year under
review was chaired by Craig Martin, who at the time was an independent non-executive director. Since the
financial year end Craig Martin has become Managing Director and William Knight has become Chairman of
the Audit Committee.
During the year under review there were five meetings of the Audit Committee and all the members of the
committee attended all of the meetings.
The Audit Committee has responsibility for, amongst other things, the planning and review of the Company’s
annual report and accounts and half-yearly reports and the involvement of the Company’s auditors in that
process. The Audit Committee also has oversight of the Company’s cash flow projections. The committee
focuses in particular on compliance with legal requirements, accounting standards and on ensuring that an
effective system of internal financial control is maintained over the Group’s underlying assets and liabilities as
well as the books and records. The ultimate responsibility for reviewing and approval of the annual report and
accounts and the half-yearly reports remains with the Board.
The Audit Committee also advises the Board on the appointment of the external Auditors, reviews their fees
34
MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2018
and the audit plan. It approves the external Auditors’ terms of engagement, their remuneration and any non-
audit work.
The Audit Committee also meets the Group’s auditors and reviews reports from the Auditors relating to
accounts and internal control systems. The Audit Committee meets with the Auditors as and when the Audit
Committee requires and, in conformity with good practice, meets the Auditors without the presence of the
executive directors.
Auditor objectivity and independence is safeguarded through limiting non-audit services to tax work.
Share Dealing
The Company has adopted a share dealing code to comply with the EU Market Abuse Regulation (“MAR”)
that is consistent with the obligations set out in Rule 21 of the AIM Rules for Companies relating to directors’
dealings in ordinary shares and warrants. The revised share dealing code was approved by the Board on 3
July 2016. The Company takes all reasonable steps to ensure compliance by the Directors and the Group’s
applicable employees.
The Takeover Code
As the Company was incorporated in the BVI, it is not treated as being resident in the UK, the Channel
Islands or the Isle of Man by the UK Panel on Takeovers and Mergers and therefore it is not subject to the
UK Takeover Code. However, the Company has incorporated certain provisions into its articles of association
which are broadly similar to those of Rules 4, 5, 6 and 9 of the Takeover Code. It should however be noted
that, as the Takeover Panel will have no role in the interpretation of these provisions, shareholders will not
necessarily be afforded the same level of protection as is available to a company subject to the Takeover
Code which now has the effect of law for those companies within its jurisdiction. Additionally, the Directors
have the right to waive the application of these provisions.
Financial Action Task Force (“FATF”)
The Company’s operations manual is drafted to ensure the policies and procedures associated with its
operations and investments are compliant with FATF requirements.
On 24 June 2016 Myanmar was recognised by the FATF as having made significant progress in addressing
its strategic anti-money laundering/counter terrorist financing deficiencies earlier identified by the FATF and
included in its action plan. As a result, Myanmar is no longer subject to monitoring by the FATF.
5. MAIntAIn tHe BoARD AS A well-FunCtIonIng, BAlAnCeD teAM leD BY tHe CHAIR
The Board seeks to ensure that it is comprised of a well-balanced mix of professionals whose individual skill
sets and extensive experiences complement each other to ensure that the Board has the requisite resources
to enable the Company to achieve its strategic goals. If resources permitted, the Board would consider the
inclusion of other members with diverse backgrounds to provide a broader range of skill sets, perspectives
and experiences.
The Board is responsible for setting Company strategy and then ensuring that the Company has the requisite
wherewithal to achieve that strategy.
Out of a total of six directors, the Board comprises two executive directors (Craig Martin, the Managing
Director, and Michael Dean, the Finance Director), one non-executive non-independent director (Aung Htun)
and three non-executive independent directors (William Knight, Henrik Bodenstab and Christopher Appleton).
There is a clear separation of the roles of the Managing Director and the Chairman.
The Board meets regularly and is provided with timely updates and information from the two Executive
Directors. As and when there are urgent commercial or other corporate matters, Board meetings are
convened to seek guidance from the Board or to elicit a decision. All directors are expected to act in good
faith and to act in the interests of the Company.
ANNUAL REPORT 2018 MYANMAR INVESTMENTS INTERNATIONAL LIMITED
35
CHAiRmAn’s stAtement
on CoRPoRAte GoveRnAnCe
The Chairman oversees the agenda for all Board meetings liaising closely with the executive and non-
executive directors. The same applies for the meetings of the various committees outlined below and their
respective chairmen. The Chairman is specifically responsible for the Chairman’s Report and the Chairman’s
Statement on Corporate Governance in the Annual Report, and answerable to the shareholders on behalf of
the Board for them. The Chairman is ultimately responsible to shareholders for the ethos, and oversight of
good practice, of the executive management.
The Board is supported by the Investment Committee, the Audit Committee, the Remuneration Committee
and the Nomination and Corporate Governance Committee. Since Admission, these committees have been
established with clear terms of reference and they regularly review matters within their purview.
The Directors have access to the Company’s nominated adviser (“Nomad”), broker, legal advisers, auditor,
company secretary and, should it prove necessary in the furtherance of their duties, to independent
professional advice at the expense of the Group.
Unless there is an unexpected event, Board and committee meetings are scheduled well in advance at a
time and place that will enable the Directors to participate. All members of the Board are expected to attend
each Board meeting and to arrange their schedules accordingly, although non-attendance is occasionally
unavoidable.
An agenda and supporting papers are circulated to the Board and the relevant committees well in advance
of the meeting. Directors may request any agenda items be added that they consider appropriate for Board
discussion. Additionally, each Director is required to inform the Board of any potential or actual conflicts of
interest prior to Board discussion.
Directors’ and Officers’ liability insurance cover is maintained by the Company on behalf of the Directors.
Number of Meetings and Directors’ Attendance
During the year under review there were 24 Board
meetings and all directors attended all of them.
During the year under review there were appropriately
timed meetings of each of the sub-committees: the
Investment Committee held 17 meetings; the Audit
Committee held five meetings; the Remuneration
Committee held six meetings; and the Nomination and
Corporate Governance Committee held three meetings.
All the members of the various committees attended all
of their respective meetings.
6. enSuRe tHAt Between tHeM tHe DIReCtoRS
HAVe tHe neCeSSARY up-to-DAte expeRIenCe,
SkIllS AnD CApABIlItIeS
The following is a summary of the relevant experiences,
skills and personal qualities and capabilities that each
director brings to the Board. It should be read in
conjunction with their biographies above.
CHRIStopHeR wIllIAM knIgHt, Independent Non-Executive Chairman
Mr Knight has held a long career in the financial services sector, first at Lazard Brothers as an export credit
negotiator and then within the Lloyds Bank group over 18 years in a variety of senior positions including
spells in Hong Kong, covering the Indo-Asia Pacific region, and Portugal, where he directed the Bank of
London and South America, a wholly owned subsidiary of the Lloyds Bank group. The experience prepared
36
MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2018
him well for a career dedicated to financing the development of frontier and emerging economies as an
independent practitioner. It is his long-standing and on-going experience as a board member of a variety of
both listed and private investment companies for frontier markets, his chairmanship of a variety of AIM listed
companies as well as his strategic knowledge of many parts of Asia, that he brings to the Board of Myanmar
Investments; (Myanmar being a country in which he was first doing business over 35 years ago). His breadth
of knowledge, relevant experience and independence of thought complements the other members of the
Board.
His current Chairmanship of a Hong Kong based sustainable technology investment company and his on-
going advisory roles relating to the Asian region ensures that not only is he regularly visiting the region but
also is maintaining an up-to-date knowledge base. He also regularly attends relevant conferences, seminars
and meetings of professional bodies.
MAung Aung Htun, Deputy Chairman
Aung Htun has worked in Thailand for over 30 years during which time he founded, and was Managing
Director of, Seamico Securities, a leading investment banking and broking company which went public
in 1995. He has also led, or is an investment committee member of, various Thai focussed private equity
investment operations which have exposed him to a variety of industrial sectors. In these roles he has built
up a wide network of senior corporate executives, entrepreneurs and investor contacts, many of which have
shown interest in Myanmar.
Mr Htun has a long experience of involvement in governance and management of publicly listed companies.
In addition to Seamico Securities, he founded and was on the board of Siam Selective Growth Trust Plc. (a
London Stock exchange listed investment trust managed by Seamico) and has sat on the boards of various
Stock Exchange of Thailand listed companies as a non-executive director as well as an audit committee
member.
In addition to commercial interests in Myanmar he has been appointed by Myanmar’s State Counsellor to the
committee to review the restructuring of the Yangon Electricity Supply Company.
Through these various roles Aung Htun brings financial, governance, management and investment experience
as well as a wide network of relationships in both Myanmar and Thailand which is a key investor in, and
trading partner of, Myanmar.
He attends seminars and training courses in both Bangkok and Yangon on pertinent subjects.
CRAIg RoBeRt MARtIn, Managing Director
For the past 25 years Mr Martin has worked and invested in a number of the emerging and frontier
markets of South East Asia including Cambodia, Laos, Vietnam and Myanmar. In addition to working with
entrepreneurs and providing market entry and consulting studies for multinationals in these markets, he
has led investments across South East Asia for institutional investors including Standard Chartered Bank,
Prudential and CapAsia. Mr Martin has also lived in Cambodia and Vietnam giving him first-hand experience
of the challenges of working in markets such as Myanmar.
With these accumulated experiences, Mr Martin is well versed in the origination, negotiation and financing
of investment opportunities in countries not dissimilar to Myanmar. He has also successfully overseen the
development of such investments and led them to profitable exits. His work with international investors
makes him very familiar with international standards of corporate governance.
Mr Martin is a regular contributor and attendee at conferences on investing in South East Asia. He is a
member of the Singapore Institute of Directors and keeps himself updated on corporate governance and risk
management through seminars and publications.
ANNUAL REPORT 2018 MYANMAR INVESTMENTS INTERNATIONAL LIMITED
37
CHAiRmAn’s stAtement
on CoRPoRAte GoveRnAnCe
AntHonY MICHAel DeAn, Finance Director
Mr Dean is a qualified accountant (ICAEW) and a member of the UK’s Chartered Institute of Taxation and the
Singapore Institute of Directors. He has lived in Asia for 25 years of his 35 year career working in many of
the emerging economies of the region. During this time he has held senior posts in financial institutions such
as CLSA (Head of its Investment Banking and co-Head of its Private Equity businesses) and Prudential plc’s
Asian private equity division as well as spending 10 years in shipping as CFO of the Epic Shipping Group. He
is a non-executive independent director of Singapore main board listed Delfi Limited, where he chairs both
the Audit Committee and the Risk Management Committee.
This accumulated experience makes him ideally placed to provide both the financial disciplines and
investment acumen that the Company, and its investee companies, need. This is especially so in the context
of a listed company doing business in a challenging emerging economy such as Myanmar.
Mr Dean regularly attends seminars and courses in Yangon on the changing economic, legal, banking and
commercial landscape. He also attends courses in Singapore on changes in accounting standards, risk
management and other pertinent topics.
HenRIk onne BoDenStAB, Independent Non-executive Director
Mr Bodenstab has over 25 years of relevant professional experiences which he brings to the Company in his
role as an Independent Non-executive Director and Chairman of the IC.
During his tenure at the Boston Consulting Group Mr Bodenstab had extensive engagements in various
industries, which covered broad strategic as well as operational challenges. This allowed him to gain very
relevant experiences in effectively and systematically approaching new industries and companies.
After his time as a consultant Mr Bodenstab worked in executive operational roles both in companies he
founded as well as larger established entities. During this time Mr Bodenstab gained expertise in many of
the industries that Myanmar Investments is actively engaged in. He also worked extensively throughout Asia
gaining first-hand experiences of the challenges and opportunities of newly developing markets.
Since 2014 Mr Bodenstab has been a partner in a private equity company. He has had extensive experience
both of executing a number of investments for the funds it manages and of being engaged in multiple
processes on the buy and sell side. This has equipped Mr Bodenstab to provide in-depth advice on the
due-diligence processes, financing and funding rounds, development of investments to maximise returns for
shareholders, as well as the development of corporate governance protocols appropriate for an institutional
investor.
Overall Mr Bodenstab brings many years of expertise in strategic, operational and financial matters which are
of great benefit to the Company.
CHRIStopHeR DAVID Appleton, Independent Non-executive Director
Mr Appleton has held senior positions in the financial industry in Asia over a career of over 30 years.
Initially training as a credit analyst in the Asia Pacific Banking department of Kleinwort Benson and taking a
diploma in Accounting and Finance, Mr Appleton then developed these skills of analysing companies to the
equity side of the business as an equity analyst in the Tokyo market covering a variety of companies in the
automotive, aerospace and railway sectors. During a spell in Seoul he also brought these skills to the then
emerging market of Korean equities and convertible bonds. Assessing the value of companies is a key skill.
After moving to the sales side Mr Appleton was responsible for client relations and how investors evaluate
companies. Eventually moving on to equity management he developed skills of managing multinational
teams and crafting and meeting budgets. Whilst managing FPK Asia (then a subsidiary of Swiss Re) he was
responsible for all aspects of the brokerage in Asia including trading and corporate finance with responsibility
for budgets and targets.
38
MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2018
During all of his career Mr Appleton has been involved in assessing the quality of investments against other
investments, and the reaction of investors. This and the skills of evaluating securities and managing complex
budgets and teams is helpful in being an effective non-executive director on the board of an investing
company.
Mr Appleton has attended FT NED events and training sessions in both Hong Kong and London and is
also a member of the Guernsey Non-Executive Forum. In addition, he is a member of Chatham House and
maintains a key interest in the politics and risks of Asia.
Collectively the Board believes it has the necessary skill sets to discharge its responsibilities.
The Board draws on specialist legal advice in the UK, Singapore and Myanmar if the need arises.
The Investment Committee will bring in specialist due diligence advisers when assessing the risks inherent
in a given investment situation. These might cover commercial, financial or legal due diligence as well as seeking
advice on such matters as insurance or IT aspects.
The Remuneration Committee has retained the services of external advisers to assist it in the formulation of
compensation arrangements for the Executive Directors.
The NCGC has retained the services of external advisers to assist it in establishing protocols to ensure that the
Company’s business is conducted so as to comply with the FATF requirements.
7.
eVAluAte BoARD peRFoRMAnCe BASeD on CleAR AnD ReleVAnt oBjeCtIVeS, SeekIng
ContInuouS IMpRoVeMent
Since Admission, the Board has sought to ensure that the Board itself was “fit for purpose” and at the same
time has adhered to a level of corporate governance appropriate for a London-listed company operating in
an emerging economy.
Nomination and Corporate Governance Committee
As such it established the Nomination and Corporate Governance Committee (“NCGC”) and set down
detailed terms of reference for the NCGC.
During the year under review the NCGC comprised Christopher Appleton, William Knight, Craig Martin and
Aung Htun and was chaired by Christopher Appleton. During the year under review there were three meetings
of the NCGC and all the members of the committee attended all of the meetings.
The NCGC is responsible for assessing the performance of the Board and the various committees and also
considering new or replacement appointments to the Board or senior management. This committee is also
responsible for ensuring the Company’s compliance with the AIM Rules for Companies as well as other
relevant corporate governance standards.
The NCGC annually formally assesses the effectiveness of the Board, the balance of skills represented and
the composition and performance of its various committees.
The assessment of each individual board member includes attendance at meetings, preparation for each
meeting, co-operation with the other Directors, effectiveness, their ability to follow up on a timely basis, their
contact with shareholders, and, where relevant, their effectiveness as a committee chairman. To date none
of the Board members has been found wanting and each has been elected to the position of Director by the
Shareholders in general meeting.
ANNUAL REPORT 2018 MYANMAR INVESTMENTS INTERNATIONAL LIMITED
39
CHAiRmAn’s stAtement
on CoRPoRAte GoveRnAnCe
The assessment of each committee includes regularity of meetings, effectiveness of the committee in
meeting its terms of reference, knowledge of the subject matter, agenda making, minutes taken and again the
committee’s chairman’s effectiveness. To date none of the committees has been found wanting.
The assessments of the individual board members and the committees are conducted in private with the
individual assessments all being sent to the chairman of the NCGC who in turn reports the overall results to
the board. The results have been fairly constant each year and at no time have indicated any areas of serious
concern.
The Chairman of the Board has affirmed that the Board is adequately staffed to discharge its duties and
each of the Committee Chairmen have confirmed that their Committees are adequately staffed to discharge
their duties. The NCGC has confirmed that the Board has an appropriate balance of skills and experience in
relation to the activities of the Group.
When considering the appointment and reappointment of Directors, the NCGC and the Board consider
whether the Board and its committees have the appropriate balance of skills, experience, independence,
knowledge and diversity to enable them to discharge their respective duties and responsibilities effectively.
The NCGC also established guidelines to determine, on an annual basis, the independence of each of
the Directors. This requires a statement by each Director to affirm that there are no situations that could
compromise their independence. Each other director then also has to affirm that they believe that Director
to be independent. The process is repeated for all the four independent directors. To date all independent
directors have been affirmed as being independent.
As of the date of this report the Board consists of six Directors. The Board does not believe that it is currently
in the best interests of the Group to seek to appoint a new Director, in addition to the current Directors, to
broaden the diversity of the Board. At the next occasion when the Board is looking to add new members, the
Board would look to take that opportunity to redress the present gender imbalance, provided that a suitable
candidate can be identified.
Shareholders vote on the re-appointment of at least one Director at each Annual General Meeting, with every
Director’s appointment being voted on by shareholders every three years.
During the year under review the NCGC ensured that all new employees received appropriate training and the
employment handbook, which includes adequate explanation on such topics as share dealing, anti-bribery
legislation, anti-money laundering and whistle blowing.
The NCGC has direct access to the Company’s Nomad and, in conformity with good practice, non-executive
members of the committee periodically met with the Nomad without the presence of the executive directors
during the year under review.
The Board has direct access to the Company’s statutory auditor and, in conformity with good practice, the
members of the Audit Committee meet with the statutory auditor, at least once without the presence of the
executive directors.
8.
pRoMote A CoRpoRAte CultuRe tHAt IS BASeD on etHICAl VAlueS AnD BeHAVIouRS
The Company’s corporate culture is a blend of its vision, its values, its people and its practices.
Our vision is to build a diversified but focused stable of businesses that will benefit from Myanmar’s
emergence.
Our values are established by the Board and in particular the Executive Directors. These are conveyed to our
staff and other the stakeholders through our business practices.
40
MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2018
As noted above, the Company sets great store by ensuring that not only are its own operations conducted
ethically but also the businesses of its investee companies must be run on similar lines.
In this regard the evaluation of both our staff and our investee companies includes an assessment of ethical
behaviour. Any new investment opportunity is subject to our own proprietary “Business Integrity” assessment
before we will proceed with it.
The Board ensures that during the year it interacts with all of our staff and all of our business partners to
ensure that there is a consistency in their feedback on the values and corporate culture that we aspire to.
9. MAIntAIn goVeRnAnCe StRuCtuReS AnD pRoCeSSeS tHAt ARe FIt FoR puRpoSe AnD
SuppoRt gooD DeCISIon-MAkIng BY tHe BoARD
The Board is responsible for managing the Company in pursuing its clearly stated strategy.
The day-to-day running of the Company is the responsibility of the Executive Directors who are well versed in
making investments of the type required by the Company’s strategy as well as the responsibilities of a listed
company.
The Managing Director in particular is responsible for the overall control and management of the Group, the
development and implementation of the Group’s investing and business strategies, for directing the Group’s
investment activities so as to achieve its strategic objectives, management of shareholder relations, and
responsibility for planning and execution of fundraising activities.
The Finance Director in particular is responsible for the overall control and management of the finance and
accounting functions of the Group, including the development of adequate internal controls, the maintenance
of the Group’s HR and IT systems, and for compliance with the Company’s obligations as a BVI company
and an AIM listed company.
In discharging this responsibility, the Board has established sub-committees to focus on key areas of risk
management and good corporate governance. The work and terms of reference of the Audit Committee and
the Investment Committee are described in Section 4 above and similarly the terms of reference of the NCGC
is described in Section 7 above.
Remuneration Committee
The Remuneration Committee comprises William Knight, Craig Martin, Christopher Appleton and Henrik
Bodenstab and is chaired by William Knight.
During the year under review there were 6 meetings of the Remuneration Committee and all the members of
the committee attended all of the meetings.
The Remuneration Committee is responsible for establishing a formal and transparent procedure for
developing policy on executive remuneration and to set the remuneration packages of individual Directors.
This includes agreeing with the Board the framework for remuneration of the Managing Director and the
Finance Director and such other members of the executive management of the Company as it is designated
to consider. This includes the administration of the Employee Share Option Plan and the Carried Interest
Scheme. It is also responsible for determining the total individual remuneration packages of each Director
including, where appropriate, bonuses, incentive payments and allocation of Share Options. No Director plays
a part in any decision about his own remuneration.
The Remuneration Committee’s report for the year is included within this Annual Report.
ANNUAL REPORT 2018 MYANMAR INVESTMENTS INTERNATIONAL LIMITED
41
CHAiRmAn’s stAtement
on CoRPoRAte GoveRnAnCe
10. CoMMunICAte How tHe CoMpAnY IS goVeRneD AnD IS peRFoRMIng BY MAIntAInIng
A DIAlogue wItH SHAReHolDeRS AnD otHeR ReleVAnt StAkeHolDeRS
During the year under review, although the Company was not under an obligation to actually comply with
any corporate governance code, nonetheless it had been using the QCA Corporate Governance Code as a
guideline. There were no instances where there was a breach or a departure from the principles of the QCA
Corporate Governance Code.
It is my belief that this report, taken together with the rest of the Annual Report, should provide the reader
with a clear understanding of:
the Company’s strategy;
the inherent risks in executing that strategy;
the risk management processes taken to minimise risks and maximise returns;
the allocation of duties between the Board, its sub-committees and the Executive Directors;
our efforts to conduct an open dialogue with our shareholders;
the engagement of the Company with other stakeholders; and
the promotion and preservation of our Corporate culture.
Should anyone have any further questions or suggestions on how we might reasonably improve our
performance in this regard then I would heartily encourage them to contact either myself (william.wknight@
gmail.com) or either of the Executive Directors at their email addresses listed above in Section 2.
Yours faithfully
WILLIAM KNIGHT
Chairman of the Board
21 September 2018
42
MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2018
RemuneRAtion Committees’ RePoRt
REMUNERATION POLICY
The Remuneration Committee is responsible for determining the Remuneration Policy of the Company.
It is the Group’s policy to ensure that compensation arrangements are appropriate and are fairly applied
across the Group.
The Group’s long term incentive plan was initially embodied within the Share Option Plan. With effect from
17 September 2018 this has been supplemented by the carried interest plan. Details of both the share option
plan and the carried interest plan are provided in the Directors Report section of this annual report. Both of
them are fundamentally driven around the principle of aligning interests with our shareholders. The Group’s
share option plan and carried interest plan are described in the Directors’ Report.
DIRECTORS’ REMUNERATION
The Directors’ remuneration for each of the years ended 31 March 2018 and 2017 was (all amounts in US dollars):
Director
William Knight
Aung Htun(2)
Michael Dean
Craig Martin(2)
Christopher Appleton
Henrik Bodenstab
2018
2017
Directors’ fees
40,000
-
-
30,000
30,000
30,000
130,000
Short term employee
benefits(1)
-
455,893
458,610
-
-
-
914,503
Directors’ fees
40,000
-
-
30,000
30,000
26,200
126,200
Short term employee
benefits(1)
-
456,747
434,784
-
-
-
891,531
1. The short-term employee benefits also include rental expenses paid for the Directors’ accommodation and bonuses totalling
US$225,000 (2017: US$200,000) for the Executive Directors as determined by the Remuneration Committee.
2. During the financial year ended 31 March 2018 Aung Htun was the Managing Director and Craig Martin was a non-executive
director. On 1 June 2018 Aung Htun became Deputy Chairman and Craig Martin became Managing Director.
The remuneration of the Executive Directors is determined by the Remuneration Committee. The
remuneration of the Non-Executive Directors is determined by the Remuneration Committee, but no director
may vote on his own compensation arrangements.
No additional sums were paid in the year to Directors for work on behalf of the Company outside their normal
duties.
The Remuneration Committee notes that the following Directors subscribed for shares in the share placing
ANNUAL REPORT 2018 MYANMAR INVESTMENTS INTERNATIONAL LIMITED
43
RemuneRAtion Committees’ RePoRt
undertaken in June 2017:
Director
Aung Htun
Michael Dean
Craig Martin
Christopher Appleton
Henrik Bodenstab
Share Subscription US$
358,720
220,660
50,000
50,000
50,000
729,380
There are no further cash payments or benefits provided to Directors.
Each of the Non-Executive Directors of the Company, William Knight, Aung Htun, Christopher Appleton and
Henrik Bodenstab have entered into a letter of appointment with the Company under the terms of which they
each agreed to act as a Non-Executive Director of the Company. Each Non-Executive Director’s appointment
is subject to retirement by rotation in accordance with the Articles and is terminable by either party on one
month’s notice.
44
MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2018
stAtement oF
DiReCtoRs’ ResPonsiBiLities
The Directors are responsible for preparing the Annual Report, the Directors’ Remuneration Report and the
financial statements in accordance with applicable law and regulations.
BVI Company law requires the Directors to prepare financial statements for each financial year. Under that
law the directors have elected to prepare the financial statements in accordance with International Financial
Reporting Standards (“IFRS”) as adopted by the European Union.
Under BVI company law the Directors must not approve the financial statements unless they are satisfied
that, taken as a whole, the annual report and accounts provide the information necessary for the
Shareholders to assess the Company’s performance, business model and strategy and that they give a true
and fair view of the state of affairs of the Company for that period. The Directors are also required to prepare
financial statements in accordance with the AIM Rules for Companies.
In preparing these financial statements, the Directors are required to:
select suitable accounting policies and then apply them consistently;
make judgments and accounting estimates that are reasonable and prudent;
state whether they have been prepared in accordance with IFRS as adopted by the European Union,
subject to any material departures disclosed and explained in the financial statements; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that
the company will continue in business.
The Board confirms that the annual report and accounts taken as a whole are fair, balanced and
understandable and provide the information necessary for Shareholders to assess the performance, business
model and strategy of the Company. The Directors are responsible for keeping proper accounting records
that are sufficient to show and explain the Company’s activities and disclose with reasonable accuracy at
any time the financial position of the Company and ensure that the financial statements and the Directors’
Remuneration Report comply with the BVI Business Companies Act, 2004. They also are responsible for
safeguarding the assets of the Company and therefore for taking reasonable steps for the prevention of fraud
and other irregularities.
Under the applicable law and regulations, the Directors are also responsible for preparing a Directors’ Report
and Statement of Corporate Governance that comply with that law and those regulations.
The accounts are published on www.myanmarinvestments.com which is maintained by the Company. The
Company is responsible for the integrity of the website as far as it relates to the Company.
Each of the Directors, whose names and functions are listed in the Directors’ Report confirms to the best of
his knowledge:
the financial statements, which have been prepared in accordance with IFRS give a true and fair view of
the assets, liabilities, financial position of the Company; and
the Directors’ Report includes a fair review of the development and performance of the business and the
position of the Company, together with a description of the principal risks and uncertainties that it faces.
Legislation in the British Virgin Islands governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
For and on behalf of the Board of Directors
WILLIAM KNIGHT
Chairman
21 September 2018
ANNUAL REPORT 2018 MYANMAR INVESTMENTS INTERNATIONAL LIMITED
45
KeY AuDit mAtteRs
During the year, the Audit Committee (“AC”) received, at least quarterly, financial statements together
with supporting analyses and papers prepared by Management. These were reviewed in detail and the
AC considered, with input from the independent auditors, the appropriateness of the critical accounting
estimates and judgments made in preparing the annual financial statements.
In particular, the AC reviewed the following matter which it considers to be the sole “key audit matter” during
its review of the annual financial statements for the financial year ended 31 March 2018.
Valuation of Available-for-sale Financial Assets
Please refer to Notes 3.2 and 11 of the financial statements.
As at 31 March 2018 the Group held an available-for-sale financial asset, being its investment in Apollo
Towers Holdings Limited (“Apollo Towers”) and this is reflected at its fair value as at that date.
The AC considered the fair value for Apollo Towers.
In doing this the AC reviewed:
the Investment Committee’s evaluations and the Board approvals of the same;
the work done and advice provided from external professionals;
Apollo Towers’ business plans detailing its expectations of its future cash flows and its methodologies
used in determining the estimates used;
suitable valuation methodologies;
comparable market-based valuation data and benchmarks;
the basis for key assumptions applied by management such as:
long-term revenue growth rates for both anchor tenancies and co-location tenancies;
discount rates; and
terminal value determinants.
The AC discussed these with the management team and is satisfied that these are appropriate.
The AC concurred with the fair value of Apollo Towers as determined by management and the Investment
Committee.
The AC also reviewed the adequacy of the disclosures in respect of this investment in Notes 3.2 and 11 of
the financial statements.
The independent auditor’s description of the key audit matter is included in the section “Independent
Auditor’s Report”.
Other than the key audit matter described above, the AC reviewed the balance sheet of the Company and
the consolidated financial statements of the Group for the financial year ended 31 March 2018, as well as the
Independent Auditor’s Report thereon prior to their submission to the Board of Directors for approval.
46
MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2018
48 Director’s Statement
52 Independent Auditor’s Report
56 Consolidated Statement of Comprehensive Income
57 Consolidated Statement of Financial Position
58 Consolidated Statement of Changes in Equity
60 Consolidated Statement of Cash Flows
61 Notes to the Consolidated Financial Statements
93 Notice of Annual General Meeting
96 Directors and Advisers
RePoRt oF tHe DiReCtoRs AnD
FinAnCiAL stAtements
47
DIRECTORS’
STATEMENT
The Directors of Myanmar Investments International Limited (the “Company”) present their statement to the members
together with the audited fi nancial statements of the Company and its subsidiaries (the “Group”) for the fi nancial year
ended 31 March 2018.
1.
Opinion of the Directors
In the opinion of the Board of Directors,
(a)
the consolidated fi nancial statements of the Group together with notes thereon are properly drawn up in
accordance with International Financial Reporting Standards so as to give a true and fair view of the state
of affairs of the Group as at 31 March 2018 and consolidated fi nancial performance, consolidated changes
in equity and consolidated cash fl ows of the Group for the fi nancial year then ended; and
(b)
at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay
its debts as and when they fall due.
2.
Directors
The Directors of the Company in offi ce at the date of this statement are:
Christopher William Knight
Maung Aung Htun
Anthony Michael Dean
Craig Robert Martin
Christopher David Appleton
Henrik Onne Bodenstab
3.
Arrangements to enable directors to acquire shares and debentures
Except as disclosed in paragraphs 4 and 5 below, neither at the end of nor at any time during the fi nancial
year was the Company a party to any arrangement whose object was to enable the Directors of the Company
to acquire benefi ts by means of the acquisition of shares in or debentures of the Company or any other body
corporate.
48
MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2018
DIRECTORS’
STATEMENT
4.
Directors’ interests in shares or debentures
The following directors, who held offi ce at the end of the fi nancial year, had interests in shares in the Company
(other than wholly-owned subsidiaries) as stated below:
Name of directors and companies
in which interests are held
Company
Myanmar Investments International Limited
Number of ordinary shares
Christopher William Knight
Maung Aung Htun
Anthony Michael Dean
Craig Robert Martin
Christopher David Appleton
Henrik Onne Bodenstab
Number of warrants to subscribe for ordinary shares
of the Company
Christopher William Knight
Maung Aung Htun
Anthony Michael Dean
Craig Robert Martin
Christopher David Appleton
Henrik Onne Bodenstab
Number of share options to subscribe for ordinary shares
of the Company
Christopher William Knight
Maung Aung Htun
Anthony Michael Dean
Craig Robert Martin
Christopher David Appleton
Henrik Onne Bodenstab
5.
Share option plan
Shareholdings registered
in name of director or nominee
At
1 April 2017
At
31 March 2018
28,000
373,000
223,000
195,000
148,000
543,477
3,000
123,000
98,000
145,000
98,000
181,159
157,005
899,626
815,626
167,005
177,005
35,000
28,000
677,000
410,000
237,372
190,372
585,849
3,000
123,000
98,000
145,000
98,000
181,159
157,005
899,626
815,626
167,005
177,005
35,000
The Company has established a Share Option Plan (the “Plan”) for the employees, Directors and advisers of the
Group, as well as the employees, directors and advisers of its Investee Companies (“Participants”).
The Plan is administered by the Remuneration Committee whose members during the fi nancial year were:
Christopher William Knight (Chairman)
Craig Robert Martin
Christopher David Appleton
Henrik Bodenstab
ANNUAL REPORT 2018 MYANMAR INVESTMENTS INTERNATIONAL LIMITED
49
DIRECTORS’
STATEMENT
5.
Share option plan (Continued)
The Plan in respect of unissued ordinary shares in the Company was adopted by the Company on
21 June 2013.
The Plan is designed to reward a Participant only if there is an appreciation in value of the Company’s share price.
The Plan provides that share options granted by the Company under the terms of the Plan shall constitute a
maximum of one-tenth of the number of the total number of ordinary shares in issue on the date preceding the
date of grant.
Any issue of ordinary shares by the Company will enable the Remuneration Committee to grant further share
options which will be granted with an exercise price set at a 10 percent premium to the subscription price paid
by shareholders for the issue of ordinary shares that gave rise to the availability of each tranche of the share
options. However, the share options that arise as a result of the new ordinary shares being issued in connection
with admission have an exercise price of US$1.10.
Share options can be exercised at any time after the fi rst anniversary and before the tenth anniversary of the grant
(as may be determined by the remuneration committee in its absolute discretion) of the respective share options.
Any share options which have not been allocated or which have not vested will not be eligible for conversion
into ordinary shares. Where a Participant ceases to be in the employment of or engaged by the Group entities
before their Share Options have fully vested, then in the case of a ‘good leaver’, the Remuneration Committee
shall determine in its absolute discretion whether any unvested share options shall continue to be retained by the
Participant or lapse without any claim against the Company. The Remuneration Committee has the discretion to
re-allocate the number of ordinary shares underlying the portion of any lapsed or unvested share options to be the
subject of further options granted under the Plan, subject to certain conditions.
At the end of the fi nancial year, there were 3,622,740 share options available for issue. There were no new share
options granted to Directors and employees during the fi nancial year.
There were no shares issued during the fi nancial year by virtue of the exercise of options to take up unissued
shares of the Company or its subsidiaries.
The information on Directors of the Company participating in the Plan is as follows:
Aggregate
options
granted since
commencement
of the Plan
to the end of
fi nancial year
Aggregate
options
exercised since
commencement
of the Plan
to the end of
fi nancial year
Aggregate
options
lapsed since
commencement
of the Plan to
the end of
fi nancial year
Aggregate
options
outstanding as
at end of the
fi nancial year
Options granted
during the
fi nancial year
–
–
–
–
–
–
157,005
899,626
815,626
167,005
177,005
35,000
–
–
–
–
–
–
–
–
–
–
–
–
157,005
899,626
815,626
167,005
177,005
35,000
Name of Director
Christopher William Knight
Maung Aung Htun
Anthony Michael Dean
Craig Robert Martin
Christopher David Appleton
Henrik Onne Bodenstab
50
MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2018
DIRECTORS’
STATEMENT
6.
Independent auditor
The independent auditor, BDO LLP, has expressed its willingness to accept reappointment.
On behalf of the Board of Directors
Anthony Michael Dean
Director
21 September 2018
Maung Aung Htun
Director
ANNUAL REPORT 2018 MYANMAR INVESTMENTS INTERNATIONAL LIMITED
51
INDEPENDENT
AUDITOR’S REPORT
To the Members of Myanmar Investments International Limited
Report on the Audit of the Financial Statements
Opinion
We have audited the fi nancial statements of Myanmar
Investments International Limited (the “Company”) and
its subsidiaries (the “Group”), which comprise:
the consolidated statement of fi nancial position of
the Group as at 31 March 2018;
the consolidated statement of comprehensive
income, consolidated statement of changes in
equity, and consolidated statement of cash fl ows
of the Group for the fi nancial year then ended;
and
notes to the financial statements, including a
summary of signifi cant accounting policies.
Basis for Opinion
In our opinion, the accompanying consolidated
fi nancial statements of the Group are properly drawn
up in accordance with International Financial Reporting
Standards (“IFRSs”) so as to give a true and fair view
of the consolidated fi nancial position of the Group as
at 31 March 2018, and of the consolidated fi nancial
performance, consolidated changes in equity and
consolidated cash fl ows of the Group for the fi nancial
year ended on that date.
We conducted our audit in accordance with International Standards on Auditing (“ISAs”). Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial
Statements section of our report. We are independent of the Group in accordance with the International Ethics
Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code), and we have fulfi lled our
other ethical responsibilities in accordance with the IESBA Code. We believe that the audit evidence we have obtained
is suffi cient and appropriate to provide a basis for our opinion.
Key Audit Matter
Key audit matters are those matters that, in our professional judgment, were of most signifi cance in our audit of the
fi nancial statements of the current period. These matters were addressed in the context of our audit of the fi nancial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
52
MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2018
INDEPENDENT
AUDITOR’S REPORT
To the Members of Myanmar Investments International Limited
Key Audit Matter (Continued)
KEY AUDIT MATTER
AUDIT RESPONSE
Our procedures on the valuation of the AFS assets
included, amongst others, the following:
We discussed with management the assumptions
used in the valuation process;
in
We evaluated management’s processes
estimating the expected discounted future
cash fl ows of the investment and checked the
computation of the model applied;
the assistance of our
We, with
internal
valuation specialist, assessed and reviewed
the methodology used in the valuation and the
reasonableness of the key assumptions and
estimates used by management for the projected
revenue growth rates, discount rate and terminal
value; and
We also assessed the adequacy of the disclosure
in the fi nancial statements with respect to the
valuation of the investment.
1
Valuation of Available-for-sale Financial Assets
The investment in available-for-sale financial assets
(“AFS assets”) represents a 13.45% equity interest
in Apollo Towers Holdings Limited (“Apollo Towers”).
Apollo Towers owns and operates a telecommunication
tower business in Myanmar through its wholly-owned
subsidiary, Apollo Towers Myanmar Limited.
As at 31 March 2018, the carrying amount of the Group’s
investment in AFS assets was US$36 million, which
represented 78.5% of the total assets of the Group.
During the fi nancial year, the carrying amount of the
investment in AFS assets increased by US$4.6 million
due to a valuation uplift.
The investment in AFS assets, which was previously
stated as cost, was measured at fair value as Apollo
Towers’ business had achieved certain milestones by
securing telecommunication co-location agreements with
key customers. Management had engaged its internal
valuation specialists to derive the fair value of the AFS
assets.
We focused on this area as a key audit matter as
a considerable amount of judgment is involved in
determining the fair value of the AFS assets, taking
into account that the fair value was measured using
significant unobservable inputs (Level 3) such as
projected revenue growth rates, discount rate and
terminal value.
Refer to Notes 3.2 and 11 to the fi nancial statements.
Other Information
Management is responsible for the other information. The other information comprises the information included in the
annual report, but does not include the fi nancial statements and our auditor’s report thereon.
Our opinion on the fi nancial statements does not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the fi nancial statements, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the fi nancial statements or our knowledge
obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we
conclude that there is a material misstatement of this other information, we are required to report that fact. We have
nothing to report in this regard.
ANNUAL REPORT 2018 MYANMAR INVESTMENTS INTERNATIONAL LIMITED
53
INDEPENDENT
AUDITOR’S REPORT
To the Members of Myanmar Investments International Limited
Responsibilities of Management and Directors for the Financial Statements
Management is responsible for the preparation of fi nancial statements that give a true and fair view in accordance with
IFRSs, and for devising and maintaining a system of internal accounting controls suffi cient to provide a reasonable
assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly
authorised and that they are recorded as necessary to permit the preparation of true and fair fi nancial statements and to
maintain accountability of assets.
In preparing the fi nancial statements, management is responsible for assessing the Group’s ability to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic
alternative but to do so.
The directors are responsible for overseeing the fi nancial reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the fi nancial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to infl uence the economic
decisions of users taken on the basis of these fi nancial statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism
throughout the audit. We also:
Identify and assess the risks of material misstatement of the fi nancial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is suffi cient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
signifi cant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s report to the related disclosures in the fi nancial
statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the
Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the fi nancial statements, including the disclosures, and
whether the fi nancial statements represent the underlying transactions and events in a manner that achieves fair
presentation.
54
MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2018
INDEPENDENT
AUDITOR’S REPORT
To the Members of Myanmar Investments International Limited
Auditor’s Responsibilities for the Audit of the Financial Statements (Continued)
Obtain suffi cient appropriate audit evidence regarding the fi nancial information of the entities or business
activities within the Group to express an opinion on the consolidated fi nancial statements. We are responsible for
the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and
signifi cant audit fi ndings, including any signifi cant defi ciencies in internal control that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to
bear on our independence, and where applicable, related safeguards.
From the matters communicated with the directors, we determine those matters that were of most signifi cance
in the audit of the fi nancial statements of the current period and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when,
in extremely rare circumstances, we determine that a matter should not be communicated in our report because the
adverse consequences of doing so would reasonably be expected to outweigh the public interest benefi ts of such
communication.
The engagement partner on the audit resulting in this independent auditor’s report is Adrian Lee Yu-Min.
BDO LLP
Public Accountants and
Chartered Accountants
Singapore
21 September 2018
ANNUAL REPORT 2018 MYANMAR INVESTMENTS INTERNATIONAL LIMITED
55
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
For the fi nancial year ended 31 March 2018
Revenue
Other item of income
Other income
Items of expense
Employee benefi ts expense
Depreciation expense
Other operating expenses
Finance costs
Share of results of joint ventures, net of tax
Loss before income tax
Income tax expense
Loss for the fi nancial year
Other comprehensive income:
Items that may be reclassifi ed subsequently to profi t or loss:
Exchange gain/(loss) arising on translation of foreign operations
Fair value gain on available-for-sale fi nancial assets
Other comprehensive income for the fi nancial year, net of tax
Total comprehensive income for the fi nancial year
Loss attributable to:
Owners of the parent
Non-controlling interests
Total comprehensive income attributable to:
Owners of the parent
Non-controlling interests
Loss per share (cents)
- Basic and diluted
Note
4
5
12
6
10
7
8
10
11
13
13
9
2018
US$
–
530
2017
US$
–
174
(1,601,194)
(8,789)
(1,252,959)
(15,211)
(190,949)
(1,867,297)
(12,941)
(1,016,672)
(13,887)
85,933
(3,068,572)
(2,824,690)
(6,164)
(8,390)
(3,074,736)
(2,833,080)
57,051
4,604,478
4,661,529
1,586,793
(188,209)
–
(188,209)
(3,021,289)
(3,049,533)
(25,203)
(3,074,736)
(2,828,540)
(4,540)
(2,833,080)
77,170
1,509,623
1,586,793
(3,016,749)
(4,540)
(3,021,289)
(8.57)
(9.74)
The accompanying notes form an integral part of these consolidated fi nancial statements.
56
MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2018
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
As at 31 March 2018
ASSETS
Non-current assets
Investments in joint ventures
Available-for-sale fi nancial assets
Plant and equipment
Total non-current assets
Current assets
Other receivables
Cash and cash equivalents
Total current assets
Total assets
EQUITY AND LIABILITIES
Equity
Share capital
Share option reserve
Accumulated losses
Foreign exchange reserve
Fair value reserve
Equity attributable to owners of the parent
Non-controlling interests
Total equity
LIABILITIES
Current liabilities
Other payables
Income tax payable
Total current liabilities
Total equity and liabilities
Note
2018
US$
2017
US$
10
11
12
14
15
16
17
18
13
19
3,347,783
36,000,000
54,751
39,402,534
194,584
6,282,330
6,476,914
45,879,448
40,161,942
1,220,549
(10,711,403)
(212,290)
3,069,652
33,528,450
11,903,731
45,432,181
1,711,681
31,395,522
12,510
33,119,713
198,504
3,303,327
3,501,831
36,621,544
32,656,994
866,390
(7,669,565)
(269,341)
–
25,584,478
10,394,108
35,978,586
432,330
14,937
447,267
45,879,448
632,738
10,220
642,958
36,621,544
The accompanying notes form an integral part of these consolidated fi nancial statements.
ANNUAL REPORT 2018 MYANMAR INVESTMENTS INTERNATIONAL LIMITED
57
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
For the fi nancial year ended 31 March 2018
l
a
t
o
T
$
S
U
$
S
U
$
S
U
$
S
U
$
S
U
$
S
U
s
t
s
e
r
e
t
n
i
t
n
e
r
a
p
e
h
t
s
e
s
s
o
l
e
v
r
e
s
e
r
e
v
r
e
s
e
r
g
n
i
l
l
o
r
t
n
o
c
f
o
s
r
e
n
w
o
o
t
l
d
e
t
a
u
m
u
c
c
A
e
u
a
v
l
r
i
a
F
e
g
n
a
h
c
x
e
-
n
o
N
l
e
b
a
t
u
b
i
r
t
t
a
y
t
i
u
q
E
i
n
g
e
r
o
F
$
S
U
e
r
a
h
S
n
o
i
t
p
o
e
v
r
e
s
e
r
$
S
U
e
r
a
h
S
l
a
t
i
p
a
c
e
t
o
N
1
8
1
,
2
3
4
,
5
4
1
3
7
,
3
0
9
,
1
1
0
5
4
,
8
2
5
,
3
3
)
3
0
4
,
1
1
7
0
1
,
(
2
5
6
,
9
6
0
3
,
)
0
9
2
2
1
2
,
(
9
4
5
0
2
2
,
,
1
2
4
9
1
6
1
,
,
0
4
1
5
0
,
7
5
–
1
5
0
,
7
5
8
7
4
,
4
0
6
,
4
6
2
8
,
4
3
5
,
1
2
5
6
,
9
6
0
,
3
9
2
5
,
1
6
6
,
4
6
2
8
,
4
3
5
,
1
3
0
7
,
6
2
1
,
3
–
–
–
6
8
5
,
8
7
9
,
5
3
8
0
1
,
4
9
3
,
0
1
8
7
4
,
4
8
5
,
5
2
)
5
6
5
,
9
6
6
7
,
(
)
6
3
7
,
4
7
0
,
3
(
)
3
0
2
,
5
2
(
)
3
3
5
,
9
4
0
,
3
(
)
3
3
5
,
9
4
0
3
,
(
–
–
–
,
2
5
6
9
6
0
3
,
–
–
1
5
0
,
7
5
2
5
6
9
6
0
,
,
3
1
5
0
,
7
5
–
1
8
7
,
0
2
5
)
8
5
5
,
9
0
3
(
4
5
8
,
1
6
3
5
2
7
,
3
9
2
,
7
2
0
8
,
6
6
8
,
7
–
–
–
–
–
–
–
1
8
7
,
0
2
5
)
8
5
5
,
9
0
3
(
4
5
8
,
1
6
3
5
2
7
,
3
9
2
,
7
–
–
–
–
5
9
6
,
7
2
0
8
,
6
6
8
,
7
5
9
6
,
7
–
–
–
–
–
–
–
–
–
–
–
–
3
9
7
,
6
8
5
,
1
3
2
6
,
9
0
5
,
1
0
7
1
,
7
7
)
3
3
5
,
9
4
0
,
3
(
2
5
6
9
6
0
,
,
3
1
5
0
,
7
5
–
–
–
–
–
–
–
–
4
5
8
,
1
6
3
)
5
9
6
7
,
(
–
–
–
–
–
–
–
1
8
7
0
2
5
,
)
8
5
5
9
0
3
,
(
5
2
7
3
9
2
,
,
7
0
1
1
1
6
1
6
1
6
1
7
1
7
1
9
5
1
4
5
3
,
8
4
9
4
0
5
,
,
7
l
n
o
i
t
a
s
n
a
r
t
n
o
i
g
n
s
i
r
a
i
n
a
g
e
g
n
a
h
c
x
E
e
m
o
c
n
i
i
e
v
s
n
e
h
e
r
p
m
o
c
r
e
h
t
O
r
a
e
y
l
i
a
c
n
a
n
fi
e
h
t
r
o
f
r
a
e
y
l
i
a
c
n
a
n
fi
e
h
t
r
o
f
s
s
o
L
l
e
a
s
-
r
o
f
-
e
b
a
l
s
n
o
i
t
a
r
e
p
o
i
n
g
e
r
o
f
f
o
l
i
a
v
a
n
o
i
n
a
g
e
u
a
v
l
r
i
a
F
s
t
e
s
s
a
l
i
a
c
n
a
n
fi
e
m
o
c
n
i
i
e
v
s
n
e
h
e
r
p
m
o
c
r
e
h
t
o
l
a
t
o
T
r
a
e
y
l
i
a
c
n
a
n
fi
e
h
t
r
o
f
r
o
f
e
m
o
c
n
i
i
e
v
s
n
e
h
e
r
p
m
o
c
l
a
t
o
T
r
a
e
y
l
i
a
c
n
a
n
fi
e
h
t
s
n
o
i
t
u
b
i
r
t
s
d
i
d
n
a
y
b
s
n
o
i
t
u
b
i
r
t
n
o
C
s
n
o
i
t
p
o
e
r
a
h
s
f
o
n
o
i
t
a
l
l
e
c
n
a
C
d
n
a
y
b
s
n
o
i
t
u
b
i
r
t
n
o
c
l
a
t
o
T
s
r
e
n
w
o
o
t
s
n
o
i
t
u
b
i
r
t
s
d
i
8
1
0
2
h
c
r
a
M
1
3
t
A
s
e
s
n
e
p
x
e
e
u
s
s
i
e
r
a
h
S
s
t
n
a
r
r
a
w
f
o
i
e
s
c
r
e
x
E
e
s
n
e
p
x
e
s
n
o
i
t
p
o
e
r
a
h
S
s
e
r
a
h
s
f
o
e
u
s
s
I
s
r
e
n
w
o
o
t
)
1
4
3
9
6
2
,
(
0
9
3
,
6
6
8
4
9
9
,
6
5
6
2
3
,
7
1
0
2
l
i
r
p
A
1
t
A
8
1
0
2
58
MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2018
.
s
t
n
e
m
e
t
a
t
s
l
i
a
c
n
a
n
fi
d
e
t
a
d
i
l
o
s
n
o
c
e
s
e
h
t
f
o
t
r
a
p
l
a
r
g
e
t
n
i
n
a
m
r
o
f
s
e
t
o
n
i
g
n
y
n
a
p
m
o
c
c
a
e
h
T
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
For the fi nancial year ended 31 March 2018
l
a
t
o
T
$
S
U
$
S
U
$
S
U
s
t
s
e
r
e
t
n
i
t
n
e
r
a
p
e
h
t
$
S
U
s
e
s
s
o
l
$
S
U
e
v
r
e
s
e
r
g
n
i
l
l
o
r
t
n
o
c
f
o
s
r
e
n
w
o
o
t
l
d
e
t
a
u
m
u
c
c
A
e
g
n
a
h
c
x
e
-
n
o
N
y
t
i
u
q
E
l
e
b
a
t
u
b
i
r
t
t
a
i
n
g
e
r
o
F
$
S
U
e
r
a
h
S
n
o
i
t
p
o
e
v
r
e
s
e
r
$
S
U
e
r
a
h
S
l
a
t
i
p
a
c
e
t
o
N
)
0
8
0
,
3
3
8
,
2
(
)
0
4
5
,
4
(
)
0
4
5
,
8
2
8
,
2
(
)
0
4
5
,
8
2
8
,
2
(
–
7
2
2
,
3
5
5
,
4
3
8
4
6
,
8
9
3
,
0
1
9
7
5
,
4
5
1
,
4
2
)
5
5
6
3
4
8
,
,
4
(
)
2
3
1
1
8
,
(
1
6
5
,
3
1
3
5
0
8
5
6
7
,
,
8
2
6
1
0
2
l
i
r
p
A
1
t
A
7
1
0
2
)
9
0
2
,
8
8
1
(
)
9
0
2
,
8
8
1
(
–
–
)
9
0
2
,
8
8
1
(
)
9
0
2
,
8
8
1
(
–
–
)
9
0
2
8
8
1
,
(
)
9
0
2
,
8
8
1
(
)
9
8
2
,
1
2
0
,
3
(
)
0
4
5
,
4
(
)
9
4
7
,
6
1
0
,
3
(
)
0
4
5
,
8
2
8
2
,
(
)
9
0
2
,
8
8
1
(
–
5
8
8
,
7
)
7
7
7
,
5
3
3
(
9
5
4
,
5
5
5
1
8
0
,
9
1
2
,
4
8
4
6
,
6
4
4
,
4
–
–
–
–
–
–
–
5
8
8
,
7
)
7
7
7
,
5
3
3
(
9
5
4
,
5
5
5
1
8
0
,
9
1
2
,
4
–
–
–
–
0
3
6
,
2
8
4
6
,
6
4
4
,
4
0
3
6
,
2
–
–
–
–
–
–
6
8
5
,
8
7
9
,
5
3
8
0
1
,
4
9
3
,
0
1
8
7
4
,
4
8
5
,
5
2
)
5
6
5
,
9
6
6
7
,
(
)
1
4
3
,
9
6
2
(
–
–
–
–
–
–
–
–
–
–
–
5
8
8
,
7
)
7
7
7
,
5
3
3
(
1
8
0
,
9
1
2
4
,
)
0
3
6
,
2
(
9
5
4
5
5
5
,
–
–
0
1
6
1
6
1
6
1
7
1
7
1
9
2
8
,
2
5
5
0
9
3
,
6
6
8
9
8
1
,
1
9
8
3
,
4
9
9
,
6
5
6
2
3
,
f
o
l
n
o
i
t
a
s
n
a
r
t
n
o
i
g
n
s
i
r
a
s
s
o
l
e
g
n
a
h
c
x
E
s
n
o
i
t
a
r
e
p
o
i
n
g
e
r
o
f
e
m
o
c
n
i
i
e
v
s
n
e
h
e
r
p
m
o
c
r
e
h
t
o
l
a
t
o
T
r
a
e
y
l
i
a
c
n
a
n
fi
e
h
t
r
o
f
e
h
t
r
o
f
e
m
o
c
n
i
i
e
v
s
n
e
h
e
r
p
m
o
c
l
a
t
o
T
r
a
e
y
l
i
a
c
n
a
n
fi
s
n
o
i
t
u
b
i
r
t
s
d
i
d
n
a
y
b
s
n
o
i
t
u
b
i
r
t
n
o
C
s
n
o
i
t
p
o
e
r
a
h
s
f
o
n
o
i
t
a
l
l
e
c
n
a
C
d
n
a
y
b
s
n
o
i
t
u
b
i
r
t
n
o
c
l
a
t
o
T
s
r
e
n
w
o
o
t
s
n
o
i
t
u
b
i
r
t
s
d
i
7
1
0
2
h
c
r
a
M
1
3
t
A
s
e
s
n
e
p
x
e
e
u
s
s
i
e
r
a
h
S
s
t
n
a
r
r
a
w
f
o
i
e
s
c
r
e
x
E
e
s
n
e
p
x
e
s
n
o
i
t
p
o
e
r
a
h
S
s
e
r
a
h
s
f
o
e
u
s
s
I
s
r
e
n
w
o
o
t
e
m
o
c
n
i
i
e
v
s
n
e
h
e
r
p
m
o
c
r
e
h
t
O
r
a
e
y
l
i
a
c
n
a
n
fi
e
h
t
r
o
f
s
s
o
L
r
a
e
y
l
i
a
c
n
a
n
fi
e
h
t
r
o
f
.
s
t
n
e
m
e
t
a
t
s
l
i
a
c
n
a
n
fi
d
e
t
a
d
i
l
o
s
n
o
c
e
s
e
h
t
f
o
t
r
a
p
l
a
r
g
e
t
n
i
n
a
m
r
o
f
s
e
t
o
n
i
g
n
y
n
a
p
m
o
c
c
a
e
h
T
ANNUAL REPORT 2018 MYANMAR INVESTMENTS INTERNATIONAL LIMITED
59
CONSOLIDATED STATEMENT OF
CASH FLOWS
For the fi nancial year ended 31 March 2018
Operating activities
Loss before income tax
Adjustments for:
Interest income
Finance costs
Depreciation of plant and equipment
Fixed assets written off
Share-based payment expense
Share of results of joint ventures, net of tax
Operating cash fl ows before working capital changes
Changes in working capital:
Other receivables
Other payables
Cash used in operations
Interest received
Finance costs paid
Income tax paid
Net cash fl ows used in operating activities
Investing activities
Investment in available-for-sale fi nancial assets
Investments in joint ventures
Advances to joint ventures
Purchase of plant and equipment
Net cash fl ows used in investing activities
Note
2018
US$
2017
US$
(3,068,572)
(2,824,690)
(530)
15,211
8,789
1,207
361,854
190,949
(174)
13,887
12,941
–
555,459
(85,933)
(2,491,092)
(2,328,510)
3,920
(200,408)
(106,754)
501,317
(2,687,580)
(1,933,947)
530
(15,211)
(1,447)
(2,703,708)
174
(13,887)
(7,697)
(1,955,357)
–
(10,000)
(895,000)
(875,000)
(52,237)
(1,822,237)
–
–
(8,564)
(18,564)
4
6
12
7
17
10
4
6
11
10
10
12
Financing activities
Net proceeds from issuance of shares representing net cash fl ows
generated from fi nancing activities
16
7,504,948
3,891,189
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at the end of fi nancial year
15
2,979,003
3,267,183
6,246,186
1,917,268
1,349,915
3,267,183
The accompanying notes form an integral part of these consolidated fi nancial statements.
60
MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
For the fi nancial year ended 31 March 2018
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 offi ce is at Jayla Place, Wickhams Cay I,
Road Town, Tortola, British Virgin Islands.
The Company’s ordinary shares and warrants are traded on the AIM market of the London Stock Exchange under
the ticker symbols MIL and MILW respectively.
The Company has been established for the purpose of identifying and investing in, and disposing of, businesses
operating in or with business exposure to Myanmar. The Company will target businesses operating in sectors that
the Directors believe have strong growth potential and thereby can be expected to provide attractive yields, capital
gains or both.
The principal activities of the subsidiaries are disclosed in Note 13 to the fi nancial statements.
The consolidated fi nancial statements of the Company and its subsidiaries (the “Group”) for the fi nancial year
ended 31 March 2018 were approved by the Board of Directors on 21 September 2018.
1.1 Going concern
After due and careful enquiries, the Directors have a reasonable expectation that the Company has
adequate fi nancial resources to continue in operational existence for the foreseeable future based on the
Company’s existing fi nancial resources and the equity fund raised amounting to US$7,293,725 during the
fi nancial year as disclosed in Note 16 to the fi nancial statements.
Accordingly, the Directors have adopted the going concern basis in preparing the consolidated fi nancial
statements.
2.
Summary of signifi cant accounting policies
2.1
Basis of preparation of the consolidated fi nancial statements
The consolidated fi nancial statements, which are expressed in United States dollars, have been prepared
in accordance with International Financial Reporting Standards (“IFRS”) issued by the International
Accounting Standards Board (“IASB”) which comprise standards and interpretations approved by IASB and
International Financial Reporting Interpretations Committee (“IFRIC”).
The consolidated fi nancial statements have been prepared on an historical cost basis, except as disclosed
in the accounting policies below.
For the purpose of IFRS 8 Operating Segments, the Group has only one segment, being “Investments”
which comprise investments in joint ventures and available-for-sale fi nancial assets as disclosed in Notes
10 and 11 to the fi nancial statements respectively. No further operating segment fi nancial information is
therefore disclosed.
ANNUAL REPORT 2018 MYANMAR INVESTMENTS INTERNATIONAL LIMITED
61
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
For the fi nancial year ended 31 March 2018
2.
Summary of signifi cant accounting policies (Continued)
2.1
Basis of preparation of the consolidated fi nancial statements (Continued)
The preparation of the consolidated fi nancial statements in conformity with IFRS requires the management
to exercise judgement in the process of applying the Group’s accounting policies and requires the use
of accounting estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the end of the reporting period, and the reported
amounts of revenue and expenses during the fi nancial year. Although these estimates are based on the
management’s best knowledge of historical experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances, actual results may ultimately differ from
those estimates. The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the fi nancial year in which the estimate is revised if the
revision affects only that fi nancial year, or in the fi nancial year of the revision and future fi nancial years if the
revision affects both current and future fi nancial years.
Critical accounting judgements and key sources of estimation uncertainty used that are signifi cant to the
consolidated fi nancial statements are disclosed in Note 3 to the fi nancial statements
In the current fi nancial year, the Group and the Company adopted all the new or revised IFRS that are
relevant to their operations and effective for the current fi nancial year. The adoption of the new or revised
IFRS did not result in any changes to the Group’s and the Company’s accounting policies and has no
material effect on the amounts reported for the current and prior fi nancial years.
New or amended standards and interpretations that have been issued but are not yet effective
At the date of authorisation of these fi nancial statements, the following IFRS that are relevant to the Group
were issued but not yet effective, and have not been adopted early in these fi nancial statements:
IFRS 2 (Amendments)
IFRS 9
IFRS 10 and IAS 28 (Amendments)
IFRIC 22
Clarifi cation of Classifi cation and Measurement of Share-
based Payment Transactions2
Financial Instruments2
Sale or Contribution of Assets between an Investor and its
Associate or Joint Venture1
Foreign Currency Transactions and Advance Consideration
issued2
Annual Improvements 2014-2016 Cycle2
1 To be determined
2 Effective for annual periods beginning on or after 1 January 2018
Consequential amendments were also made to various standards as a result of these new or revised
standards.
62
MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
For the fi nancial year ended 31 March 2018
2.
Summary of signifi cant accounting policies (Continued)
2.1
Basis of preparation of the consolidated fi nancial statements (Continued)
New or amended standards and interpretations that have been issued but are not yet effective
(Continued)
The Directors have considered the above and are of the opinion that the above Standards and
Interpretations will have no material impact on the Group’s consolidated fi nancial statements, except as
discussed below.
IFRS 9 Financial Instruments
IFRS 9 supersedes IAS 39 Financial Instruments: Recognition and Measurement with new requirements
for the classifi cation and measurement of fi nancial assets and liabilities, impairment of fi nancial assets and
hedge accounting.
Under IFRS 9, fi nancial assets are classifi ed into fi nancial assets measured at fair value or at amortised cost
depending on the Group’s business model for managing the fi nancial assets and the contractual cash fl ow
characteristics of the fi nancial assets. Fair value gains or losses will be recognised in profi t or loss except
for certain equity investments, for which the Group will have a choice to recognise the gains and losses in
other comprehensive income. A third measurement category has been added for debt instruments – fair
value through other comprehensive income. This measurement category applies to debt instruments that
meet the “Solely Payments of Principal and Interest” contractual cash fl ow characteristics test and where
the Group is holding the debt instrument to both collect the contractual cash fl ows and to sell the fi nancial
assets.
IFRS 9 carries forward the recognition, classifi cation and measurement requirements for fi nancial liabilities
from IAS 39, except for fi nancial liabilities that are designated at fair value through profi t or loss, where the
amount of change in fair value attributable to change in credit risk of that liability is recognised in other
comprehensive income unless that would create or enlarge an accounting mismatch. In addition, IFRS 9
retains the requirements in IAS 39 for de-recognition of fi nancial assets and fi nancial liabilities.
IFRS 9 introduces a new forward-looking impairment model based on expected credit losses to replace
the incurred loss model in IAS 39. This determines the recognition of impairment provisions as well as
interest revenue. For fi nancial assets at amortised cost or fair value through other comprehensive income,
the Group will always recognise (at a minimum) 12 months of expected losses in profi t or loss. Lifetime
expected losses will be recognised on these assets when there is a signifi cant increase in credit risk after
initial recognition.
IFRS 9 also introduces a new hedge accounting model designed to allow entities to better refl ect their risk
management activities in their fi nancial statements.
The Group plans to adopt IFRS 9 in the fi nancial year beginning on 1 April 2018 with retrospective effect in
accordance with the transitional provisions and elects not to restate comparatives for the previous fi nancial
year. On adoption of IFRS 9, the Group will measure its available-for-sale fi nancial assets at fair value
through profi t or loss. Accordingly, the Group will also transfer the fair value reserve to retained earnings on
adoption of IFRS 9.
ANNUAL REPORT 2018 MYANMAR INVESTMENTS INTERNATIONAL LIMITED
63
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
For the fi nancial year ended 31 March 2018
2.
Summary of signifi cant accounting policies (Continued)
2.2
Basis of consolidation
Where the Company has control over an investee, it is classifi ed as a subsidiary. The Company controls
an investee if all three of the following elements are present: power over the investee, exposure to variable
returns from the investee, and the ability of the investor to use its power to affect those variable returns.
Control is reassessed whenever facts and circumstances indicate that there may be a change in any of
these elements of control.
Inter-company transactions, balances, income and expenses between group companies are eliminated.
Accounting policies of subsidiaries are changed where necessary to ensure consistency with the policies
adopted by the Group.
The consolidated fi nancial statements present the results of the Company and its subsidiaries as if they
formed a single entity. Intercompany transactions and balances between group companies are therefore
eliminated in full.
Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for
as equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests
are adjusted to refl ect the changes in their relative interests in the subsidiary. Any difference between the
amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or
received is recognised directly in equity and attributed to owners of the parent.
When the Group loses control of a subsidiary, the profi t or loss on disposal is calculated as the difference
between (i) the aggregate of the fair value of the consideration received and the fair value of any retained
interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the
subsidiary and any non-controlling interests. Amounts previously recognised in other comprehensive
income in relation to the subsidiary are accounted for (i.e. reclassifi ed to profi t or loss or transferred
directly to accumulated profi ts) in the same manner as would be required if the relevant assets or
liabilities were disposed of. The fair value of any investments retained in the former subsidiary at the date
when control is lost is regarded as the fair value on initial recognition for subsequent accounting under
IAS 39 Financial Instruments: Recognition and Measurement or, when applicable, the cost on initial
recognition of an investment in an associate or joint venture.
Non-controlling interests in subsidiaries relate to the equity in subsidiaries which is not attributable directly
or indirectly to the owners of the parent. They are shown separately in the consolidated statements of
comprehensive income, fi nancial position and changes in equity.
Non-controlling interests in the acquiree that are a present ownership interest and entitle its holders to a
proportionate share of the entity’s net assets in the event of liquidation may be initially measured either
at fair value or at the non-controlling interests’ proportionate share of the fair value, of the acquiree’s
identifi able net assets. The choice of measurement basis is made on an acquisition-by-acquisition basis.
Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests
at initial recognition plus the non-controlling interests’ share of subsequent changes in equity. Total
comprehensive income is attributed to non-controlling interests even if this results in the non-controlling
interests having a defi cit balance.
64
MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
For the fi nancial year ended 31 March 2018
2.
Summary of signifi cant accounting policies (Continued)
2.3
Joint arrangements
The Group is a party to a joint arrangement when there is a contractual arrangement that confers joint
control over the relevant activities of the arrangement to the Group and at least one other party. Joint
control is assessed under the same principles as control over subsidiaries.
The Group classifi es its interests in joint arrangements as either:
-
-
Joint ventures
Joint operations
: where the Group has rights to only the net assets of the joint arrangement.
: where the Group has both the rights to assets and obligations for the
liabilities of the joint arrangement.
In assessing the classifi cation of interests in joint arrangements, the Group considers:
-
-
-
-
The structure of the joint arrangement.
The legal form of joint arrangements structured through a separate vehicle.
The contractual terms of the joint arrangement agreement.
Any other facts and circumstances (including any other contractual arrangements).
The Group’s interest in joint ventures are accounted for using the equity method. Under the equity method,
the investments in joint ventures are carried in the consolidated statement of fi nancial position at cost plus
post-acquisition changes in the Group’s share in net assets of the joint ventures. The share of results of
the joint ventures are recognised in profi t or loss. Where there have been a change recognised directly to
equity of the joint ventures, the Group recognises its share of such changes. After application of the equity
method, the Group determines whether it is necessary to recognise any additional impairment loss with
respect to the Group’s net investment in the joint ventures.
The Group’s share of results and reserves of a joint venture acquired or disposed of are included in the
fi nancial statements from the date of acquisition up to the date of disposal or cessation of joint control over
the relevant activities of the arrangements.
2.4
Revenue recognition
Interest income
Interest income is recognised on an accruals basis using the effective interest rate (“EIR”) method. EIR is
the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the
fi nancial instrument or a shorter period, where appropriate, to the net carrying amount of the fi nancial asset
or liability.
2.5
Foreign currency translation
Transactions in currencies other than US dollars, which is the functional currency of all of the respective
Group entities, are recorded at the rate of exchange prevailing on the date of the transactions.
At the end of each reporting period, monetary assets and liabilities that are denominated in foreign
currencies are retranslated at the rate prevailing at the end of the reporting period.
ANNUAL REPORT 2018 MYANMAR INVESTMENTS INTERNATIONAL LIMITED
65
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
For the fi nancial year ended 31 March 2018
2.
Summary of signifi cant accounting policies (Continued)
2.5
Foreign currency translation (Continued)
For the purpose of presenting consolidated fi nancial statements, the assets and liabilities of the Group’s
foreign operations (including comparatives) are expressed in United States dollars using exchange
rates prevailing at the end of the fi nancial year. Share of results of joint venture, net of tax (including
comparatives) are translated at the average exchange rates for the period, unless exchange rates fl uctuated
signifi cantly during that period, in which case the exchange rates at the dates of the transactions are used.
Exchange differences arising, are recognised initially in other comprehensive income and accumulated in
the Group’s foreign exchange reserve.
Non-monetary items carried at fair value which are denominated in foreign currencies are translated at the
rates prevailing at the date when the fair value was determined. Foreign exchange gains and losses arising
on the settlement of monetary items, and on the retranslation of monetary items, are included in net profi t
or loss for the period, except for differences arising on the retranslation of non-monetary items in respect of
which gains and losses are recognised directly in equity in which cases, the exchange differences are also
recognised directly in equity.
2.6
Income tax
Income tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on the taxable profi t for the year. Taxable profi t differs from net profi t as
reported in profi t or loss if it excludes items of income or expense that are taxable or deductible in other
years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax
is calculated using tax rates that have been enacted or substantively enacted at the end of the fi nancial
year.
Deferred tax is recognised on all temporary differences between the carrying amounts of assets and
liabilities in the consolidated fi nancial statements and the corresponding tax bases used in the computation
of taxable profi t, and is accounted for using the balance sheet liability method.
Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets
are recognised to the extent that it is probable that taxable profi ts will be available against which deductible
temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary
difference arises from goodwill or from the initial recognition (other than in a business combination) of other
assets and liabilities in a transaction that affects neither the tax profi t nor the accounting profi t.
The carrying amount of deferred tax assets, if any, is reviewed at each reporting date and reduced to the
extent that it is no longer probable that suffi cient taxable profi ts will be available to allow all or part of the
asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is
settled or the asset is realised based on the tax rates (and tax laws) that have been enacted or substantially
enacted by the end of the fi nancial year. Deferred tax is charged or credited in profi t or loss, except when
it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in
equity.
66
MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
For the fi nancial year ended 31 March 2018
2.
Summary of signifi cant accounting policies (Continued)
2.7
Plant and equipment
Plant and equipment are all stated at cost less accumulated depreciation and any impairment losses. Cost
includes expenditure that is directly attributable to the acquisition of the items.
The cost of an asset comprises its purchase price and any directly attributable costs of bringing the
asset to its working condition and location for its intended use. Expenditure incurred after the plant and
equipment have been put into operation, such as repairs and maintenance, is normally charged to profi t
or loss in the period in which it is incurred. In situations where it can be clearly demonstrated that the
expenditure has resulted in an increase in the future economic benefi ts expected to be obtained from the
use of the plant and equipment, the expenditure is capitalised as an additional cost of that asset.
Subsequent expenditure on an item of plant and equipment is added to the carrying amount of the item if it
is probable that future economic benefi ts associated with the item will fl ow to the Group and the cost can
be measured reliably. All other costs of servicing are recognised in profi t or loss when incurred.
Disposals
An item of property, plant and equipment is derecognised upon disposal or when no future economic
benefi ts are expected from its use or disposal.
The gain or loss arising from disposal of an asset is determined as the difference between the sales
proceeds and the carrying amount of the asset and is recognised in profi t or loss.
Depreciation
Depreciation is provided to write off the cost of plant and equipment, using the straight line method, over
their useful lives. The principal annual rates are as follows:
Offi ce equipment
Computer equipment
Furniture and fi ttings
Years
3
3
3
The residual values, useful lives and depreciation method are reviewed at each fi nancial year-end to ensure
that the residual values, period of depreciation and depreciation method are consistent with previous
estimates and the expected pattern of consumption of the future economic benefi ts embodied in the items
of plant and equipment.
Fully depreciated assets still in use are retained in the consolidated fi nancial statements.
2.8
Impairment of non-fi nancial assets
The carrying amounts of non-fi nancial assets are reviewed at the end of each reporting period to determine
whether there is any indication of impairment loss and whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. If any such indication exists, or when annual
impairment testing for an asset is required, the asset’s recoverable amount is estimated.
ANNUAL REPORT 2018 MYANMAR INVESTMENTS INTERNATIONAL LIMITED
67
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
For the fi nancial year ended 31 March 2018
2.
Summary of signifi cant accounting policies (Continued)
2.8
Impairment of non-fi nancial assets (Continued)
An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit
exceeds its recoverable amount. A cash-generating unit is the smallest identifi able asset group that
generates cash fl ows that largely are independent from other assets and groups of assets.
Impairment losses are recognised in profi t or loss, unless they reverse a previous revaluation, credited to
other comprehensive income, in which case they are charged to other comprehensive income up to the
amount of any previous revaluation.
The recoverable amount of an asset or cash-generating unit is the higher of a) its fair value less costs to sell
and b) its value in use. Recoverable amount is determined for individual assets, unless the asset does not
generate cash infl ows that are largely independent of those from other assets or groups of assets. If this is
the case, the recoverable amount is determined for the cash-generating unit to which the assets belong.
The fair value less costs to sell is the amount obtainable from the sale of an asset or cash-generating
unit in an arm’s length transaction between knowledgeable, willing parties, less costs of disposal. Value in
use is the present value of estimated future cash fl ows expected to be derived from the continuing use of
an asset and from its disposal at the end of its useful life, discounted at pre-tax rate that refl ects current
market assessment of the time value of money and the risks specifi c to the asset or cash-generating unit
for which the future cash fl ow estimates have not been adjusted.
An assessment is made at the end of each reporting period as to whether there is any indication that an
impairment loss recognised in prior periods for an asset may no longer exist or may have decreased. If
such indication exists, the recoverable amount is estimated. An impairment loss recognised in prior periods
is reversed only if there has been a change in the estimates used to determine the recoverable amount
since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is
increased to its recoverable amount.
An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the
carrying amount that would have been determined, net of depreciation or amortisation, if no impairment
loss has been recognised. Reversals of impairment loss are recognised in profi t or loss unless the asset
is carried at revalued amount, in which case the reversal in excess of impairment loss recognised in profi t
or loss in prior periods is treated as a revaluation increase. After such a reversal, the depreciation or
amortisation is adjusted in future periods to allocate the asset’s revised carrying amount, less any residual
value, on a systematic basis over its remaining useful life.
2.9
Financial assets
The Group classifi es its fi nancial assets as loans and receivables or available-for-sale depending on the
purpose of which the assets was acquired. The Group has not classifi ed any of its fi nancial assets as held
to maturity and fair value through profi t or loss.
The Group’s accounting policy for each category is as follows:
Loans and receivables
These assets are non-derivative fi nancial assets with fi xed or determinable payments that are not quoted
in an active market. They are initially recognised at fair value plus transaction costs that are directly
attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective
interest rate method, less provision for impairment.
68
MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
For the fi nancial year ended 31 March 2018
2.
Summary of signifi cant accounting policies (Continued)
2.9
Financial assets (Continued)
Loans and receivables (Continued)
Impairment provisions are recognised when there is objective evidence (such as signifi cant fi nancial
diffi culties on the part of the counterparty or default or signifi cant delay in payment) that the Group will be
unable to collect all of the amounts due under the terms receivable, the amount of such a provision being
the difference between the net carrying amount and the present value of the future expected cash fl ows
associated with the impaired receivable. The carrying amount of the asset is reduced through the use of an
allowance account. The amount of the loss is recognised in profi t or loss.
If, in a subsequent year, the amount of the impairment loss decreases and the decrease can be related
objectively to an event occurring after the impairment loss was recognised, the previously recognised
impairment loss is reversed either directly or by adjusting an allowance account. Any subsequent reversal
of an impairment loss is recognised in profi t or loss, to the extent that the carrying amount of the asset
does not exceed its amortised cost at the reversal date.
The Group’s loans and receivables comprise other receivables excluding prepayments and cash and cash
equivalents in the consolidated statement of fi nancial position.
Available-for-sale fi nancial assets
Non-derivative fi nancial assets not included in the above categories are classifi ed as available-for-sale and
comprise principally the Group’s strategic investments in entities not qualifying as subsidiaries, associates
or jointly controlled entities. They are carried at fair value with changes in fair value, other than those arising
due to exchange rate fl uctuations and interest calculated using the effective interest rate, recognised in
other comprehensive income and accumulated in the available-for-sale reserve. Exchange differences on
investments denominated in a foreign currency and interest calculated using the effective interest rate
method are recognised in profi t or loss.
Where there is a signifi cant or prolonged decline in the fair value of an available-for-sale fi nancial asset
(which constitutes objective evidence of impairment), the full amount of the impairment, including any
amount previously recognised in other comprehensive income, is recognised in profi t or loss.
Purchases and sales of available-for-sale fi nancial assets are recognised on settlement date with any
change in fair value between trade date and settlement date being recognised in the available-for-sale
reserve.
On sale, the cumulative gain or loss recognised in other comprehensive income is reclassifi ed from the
available-for-sale reserve to profi t or loss.
Equity instruments without active quoted market prices and whose fair value cannot be reliably measured
are measured at cost less impairment. For available for sale equity investment that is carried at cost, the
amount of impairment loss is measured as the difference between the carrying amount of the asset and
the present value of estimated future cash fl ows discounted at the current market rate of return for a similar
fi nancial asset. Such impairment loss is not reversed.
ANNUAL REPORT 2018 MYANMAR INVESTMENTS INTERNATIONAL LIMITED
69
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
For the fi nancial year ended 31 March 2018
2.
Summary of signifi cant accounting policies (Continued)
2.9
Financial assets (Continued)
Derecognition of fi nancial assets
The Group derecognises a fi nancial asset only when the contractual rights to the cash fl ows from the asset
expire, or it transfers the fi nancial asset and substantially all the risks and rewards of ownership of the asset
to another entity.
On derecognition, any difference between the carrying amount and the sum of proceeds received and
amounts previously recognised in other comprehensive income is recognised in profi t or loss.
2.10 Financial liabilities
Financial liabilities are classifi ed as other fi nancial liabilities.
The accounting policies adopted for other fi nancial liabilities are set out below:
Other payables
Other payables are initially measured at fair value, net of transaction costs, and are subsequently measured
at amortised cost, where applicable, using the effective interest method.
Financial liabilities are recognised on the consolidated statement of fi nancial position when, and only when,
the Group becomes parties to the contractual provisions of the fi nancial instruments.
Derecognition of fi nancial liabilities
The Group derecognises fi nancial liabilities when, and only when, the Group’s obligations are discharged,
cancelled or they expire. The difference between the carrying amount and the consideration paid is
recognised in profi t or loss.
2.11 Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits held at call with banks and other short-term
highly liquid investments with original maturities of three months or less.
2.12 Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after
deducting all of its liabilities.
Ordinary shares are classifi ed as equity and recognised at the fair value of the consideration received.
Incremental costs directly attributable to the issuance of new equity instruments are shown in equity as a
deduction from the proceeds.
70
MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
For the fi nancial year ended 31 March 2018
2.
Summary of signifi cant accounting policies (Continued)
2.13 Share-based payments
Where equity settled share options are awarded to employees, the fair value of the options at the date of
grant is charged to the consolidated statement of comprehensive income over the vesting period. Non-
market vesting conditions are taken into account by adjusting the number of equity instruments expected
to vest at each reporting date so that, ultimately, the cumulative amount recognised over the vesting
period is based on the number of options that eventually vest. Non-vesting conditions and market vesting
conditions are factored into the fair value of the options granted. As long as all other vesting conditions
are satisfi ed, a charge is made irrespective of whether the market vesting conditions are satisfi ed. The
cumulative expense is not adjusted for failure to achieve a market vesting condition or where a non-vesting
condition is not satisfi ed.
Where the terms and conditions of options are modifi ed before they vest, the increase in the fair value of
the options, measured immediately before and after the modifi cation, is also charged to the consolidated
statement of comprehensive income over the remaining vesting period.
Where equity instruments are granted to persons other than employees, the consolidated statement of
comprehensive income is charged with the fair value of goods and services received.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation,
and any expense not yet recognised for the award is recognised immediately. However, if a new award is
substituted for the cancelled award, and is designated as a replacement award on the date that is granted,
the cancelled and new awards are treated as if they were a modifi cation of the original award, as described
in the previous paragraph. All cancellation of equity-settled transaction awards are treated equally.
Fair value is measured using the Black-Scholes option pricing model. The expected life used in the model
has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise
restrictions and behavioural considerations.
2.14 Operating leases
When the Group is the lessee of operating leases
Leases of assets in which a signifi cant portion of the risks and rewards of ownership are retained by the
lessor are classifi ed as operating leases. Payments made under operating leases are recognised in profi t or
loss on a straight-line basis over the period of the lease.
When an operating lease is terminated before the lease period has expired, any payment required to be
made to the lessor by way of penalty is recognised as an expense in the fi nancial year in which termination
takes place.
2.15 Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of a
past event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can
be made of the amount of the obligation.
ANNUAL REPORT 2018 MYANMAR INVESTMENTS INTERNATIONAL LIMITED
71
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
For the fi nancial year ended 31 March 2018
2.
Summary of signifi cant accounting policies (Continued)
2.15 Provisions (Continued)
The amount recognised as a provision is the best estimate of the consideration required to settle
the present obligation at the end of the fi nancial year, taking into account the risks and uncertainties
surrounding the obligation. Where a provision is measured using the cash fl ows estimated to settle the
present obligation, its carrying amount is the present value of those cash fl ows.
When some or all of the economic benefi ts required to settle a provision are expected to be recovered
from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be
received and the amount of the receivable can be measured reliably.
Changes in the estimated timing or amount of the expenditure or discount rate are recognised in profi t or
loss when the changes arise.
2.16 Contingent liabilities
A contingent liability is:
(a)
a possible obligation that arises from past events and whose existence will be confi rmed only by the
occurrence or non-occurrence of one or more uncertain future events not wholly within the control of
the Group; or
(b)
a present obligation that arises from past events but is not recognised because:
(i)
it is not probable that an outfl ow of resources embodying economic benefi ts will be required
to settle the obligation; or
(ii)
the amount of the obligation cannot be measured with suffi cient reliability.
Contingent liabilities are not recognised on the consolidated statement of fi nancial position of the Group.
3.
Signifi cant accounting judgements and estimates
The preparation of the Group’s consolidated fi nancial statements requires management to make judgements,
estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and
the accompanying disclosures, and the disclosure of contingent liabilities at the reporting date. Uncertainty about
these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying
amount of the asset or liability affected in the future periods.
3.1
Judgements made in applying accounting policies
In the process of applying the Group’s accounting policies, management is of the opinion that there are
no critical judgements involved that have a signifi cant effect on the amounts recognised in the fi nancial
statements.
72
MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
For the fi nancial year ended 31 March 2018
3.
Signifi cant accounting judgements and estimates (Continued)
3.2
Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting
date, that have a signifi cant risk of causing a material adjustment to the carrying amounts of assets
and liabilities within the next fi nancial year, are described below. The Group based its assumptions and
estimates on parameters available when the consolidated fi nancial statements were prepared. Existing
circumstances and assumptions about future developments, however, may change due to market changes
or circumstances arising beyond the control of the Group. Such changes are refl ected in the assumptions
when they occur.
(i)
Fair value of unquoted available-for-sale fi nancial assets
The Group’s available-for-sale fi nancial assets are measured at fair value for fi nancial reporting
purposes. The Board of Directors of the Company has set up an Investment Committee to determine
the appropriate valuation techniques and inputs for fair value measurements.
In estimating the fair value of an asset or a liability, the Group uses market-observable data to the
extent it is available. Where Level 1 inputs are not available, the Group engages internal qualifi ed
valuers to perform the valuation. The Investment Committee works closely with the qualifi ed internal
valuers to establish the appropriate valuation techniques and inputs to the model. The Finance
Director reports the Investment Committee’s fi ndings to the Board of Directors of the Company on a
periodic basis to explain the cause of fl uctuations in the fair value of the assets and liabilities.
Information about the valuation techniques and inputs used in determining the fair value of the
available-for-sale fi nancial assets are disclosed in Note 11 to the fi nancial statements.
(ii)
Impairment of investments in joint ventures
The Group follows the guidance of IAS 39 in determining whether investments in joint ventures are
impaired. This determination requires signifi cant judgement. The Group evaluates, among other
factors, the duration and extent to which the recoverable amounts of investments in joint ventures
are less than their carrying amounts and the fi nancial health of and near-term business outlook for
investments in joint ventures, including factors such as industry and sector performance, changes in
technology and operational and fi nancing cash fl ows. The carrying amounts of investments in joint
ventures are disclosed in Note 10 to the fi nancial statements.
(iii)
Employee share option plan
The Group measures the cost of equity-settled transactions with employees by reference to the fair
value of the equity instruments at the date at which they are granted. Estimating fair value for share-
based payment transactions requires determining the most appropriate valuation model, which is
dependent on the terms and conditions of the grant. This estimate also requires determining the
most appropriate inputs to the valuation model including expected life of the share option, volatility
and dividend yield and making assumptions about them. The carrying amount and assumptions and
model for estimating fair value for share-based payment transactions are set out in Note 17 to the
fi nancial statements.
ANNUAL REPORT 2018 MYANMAR INVESTMENTS INTERNATIONAL LIMITED
73
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
For the fi nancial year ended 31 March 2018
4.
Other income
Interest income
5.
Employee benefi ts expense
Salaries, wages and other staff benefi ts
Bonuses
Share options expense (Note 17)
2018
US$
530
2017
US$
174
2018
US$
1,104,340
135,000
361,854
1,601,194
2017
US$
1,061,838
250,000
555,459
1,867,297
The employee benefi ts expense includes the remuneration of Directors as disclosed in Note 20 to the fi nancial
statements.
6.
Finance costs
Finance costs represent bank charges for the fi nancial year.
7.
Loss before income tax
In addition to the charges and credits disclosed elsewhere in the notes to the consolidated fi nancial statements,
the above includes the following charges:
Auditor’s remuneration
Consultants fees
Fixed assets written off
Operating lease expenses
Professional fees
Travel and accommodation
Transaction costs
2018
US$
54,815
349,911
1,207
64,042
68,291
156,875
168,856
2017
US$
52,071
377,240
–
74,273
59,098
63,779
30,447
74
MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
For the fi nancial year ended 31 March 2018
8.
Income tax
Current income tax
- current fi nancial year
- over-provision in prior fi nancial year
2018
US$
6,164
–
6,164
2017
US$
9,631
(1,241)
8,390
A reconciliation of income tax applicable to loss before income tax at the statutory income tax rate of 25% (2017:
25%) in Myanmar is as follows:
Loss before income tax
Share of results of joint venture, net of tax (Note 10)
Income tax at the applicable tax rates
Effects of different income tax rates in other countries
Under-provision in prior fi nancial year
Tax effects of expenses not deductible for tax purposes
Income tax exemption
Income tax for the fi nancial year
9.
Loss per share
2018
US$
2017
US$
(3,068,572)
190,949
(2,877,623)
(2,824,690)
(85,933)
(2,910,623)
(719,406)
720,343
–
6,310
(1,083)
6,164
(727,655)
732,756
(1,241)
4,530
–
8,390
Basic loss per share is calculated by dividing the loss for the fi nancial year attributable to owners of the parent by
the weighted average number of ordinary shares outstanding during the fi nancial year.
The following refl ects the loss and share data used in the basic and diluted loss per share computation:
2018
2017
Loss for the fi nancial year attributable to owners of the Company (US$)
(3,049,533)
(2,828,540)
Weighted average number of ordinary shares during the fi nancial year
applicable to basic loss per share
35,570,618
29,049,372
Loss per share
Basic and diluted (cents)
(8.57)
(9.74)
Diluted loss per share is the same as the basic loss per share because the potential ordinary shares to be
converted are anti-dilutive as the effect of the shares conversion would be to decrease the loss per share.
ANNUAL REPORT 2018 MYANMAR INVESTMENTS INTERNATIONAL LIMITED
75
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
For the fi nancial year ended 31 March 2018
10.
Investments in joint ventures
Investments in joint ventures
At 1 April
Investments during the year
Share of results of joint ventures, net of tax
Foreign exchange adjustment
At 31 March
Advances
2018
US$
2017
US$
1,711,681
895,000
(190,949)
57,051
2,472,783
875,000
3,347,783
1,813,957
–
85,933
(188,209)
1,711,681
–
1,711,681
Medicare International Health and Beauty Pte. Ltd. and its subsidiary
In the previous financial year, the Company’s carrying amount of investment in its subsidiary, Medicare
International Health and Beauty Pte. Ltd. (formerly known as MIL No. 2 Pte. Ltd.) (“Medicare”) amounted to
US$3,600. During the fi nancial year, Medicare issued 1,895,000 shares for a consideration of US$1,796,400 for
which the Company subscribed for 890,000 shares and paid a consideration of US$791,400. The Company has
also provided advances to the shareholders of Medicare’s joint operator of US$100,000 which is recognised as
part of cost of investment in Medicare.
The Company also provided advances of US$500,000 to Medicare during the fi nancial year for which 500,000
shares in Medicare were only issued subsequent to year end on 6 April 2018. These advances have been
classifi ed as investments in joint ventures as the nature of the advances were quasi-equity in nature and were
converted to equity shares subsequent to the year end. The effective equity interest in Medicare is 48.1% as at
31 March 2018.
Myanmar Finance International Ltd.
On 26 August 2014 the Company’s wholly-owned subsidiary, Myanmar Investments Limited (“MIL”), signed a joint
venture agreement (“JVA”) with Myanmar Finance Company Limited (“MFC”) in which, the two parties agreed to
establish a Myanmar microfi nance joint venture company, Myanmar Finance International Ltd. (“MFIL”).
Under the terms of the JVA, MFC injected its existing microfi nance business into the joint venture which is jointly
managed by MIL and MFC. The two partners agreed to a four-phased contribution of US$4.8 million in capital
(MIL’s share being US$2.84 million) with MIL owning 55% of the new company and MFC holding the remaining
45%.
On 7 August 2015, MIL invested an additional US$266,667 in MFIL (which included US$120,000 as premium paid,
refl ecting MFC’s injected microfi nance business) and the Company’s equity interest in MFIL remained at 55%.
On 16 November 2015, The Norwegian Investment Fund for Developing Countries (“Norfund”) subscribed for new
shares in MFIL for a total consideration of US$1,430,720. Concurrent with Norfund’s investment, the fourth and
fi nal tranche of the initial capital specifi ed under the JVA was called from MIL and MFC and MIL invested an
additional US$140,833 bringing its total capital contribution of US$1,920,000. Following Norfund’s investment and
the capital contributions by MIL and MFC, MIL’s and MFC’s shareholdings in MFIL were each reduced to 37.5%,
while Norfund now has a 25% shareholding in MFIL. Arising from the dilution of equity interest in MFIL, a gain of
US$20,909 was recognised to the consolidated statement of comprehensive income.
76
MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
For the fi nancial year ended 31 March 2018
10.
Investments in joint ventures (Continued)
Myanmar Finance International Ltd. (Continued)
On 2 January 2018, MIL provided advances of US$375,000 to MFIL for which 375,000 shares in MFIL were
only issued subsequent to year end on 4 April 2018. These advances have been classifi ed as investments in
joint ventures as the nature of the advances were quasi-equity in nature and were converted to equity shares
subsequent to the year end. There is no change to the effective equity interest in MFIL.
MFIL is a well-established provider of microfi nance loans to small-scale business operators in rural and urban
areas of Yangon and neighbouring Bago.
MFIL is deemed to be a joint venture of the Company as the appointment of its directors and the allocation of
voting rights for key business decisions require the unanimous approval of all its shareholders.
The detail of the joint ventures are as follows:
Name of joint ventures
(Country of incorporation/place of business)
Principal activities
Medicare International Health and Beauty Pte. Ltd.(1)
(Singapore) (“Medicare”)
Provider of beauty, health, and
pharmaceutical products
Effective equity
interest held by
the Company
2018
%
48.1
2017
%
–
Myanmar Finance International Limited(2)
(Myanmar) (“MFIL”)
(1) Audited by BDO LLP, Singapore
(2) Audited by JF Group Audit Firm, Yangon, Myanmar.
Provider of microfi nance loans
37.5
37.5
ANNUAL REPORT 2018 MYANMAR INVESTMENTS INTERNATIONAL LIMITED
77
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
For the fi nancial year ended 31 March 2018
10.
Investments in joint ventures (Continued)
The summarised fi nancial information below refl ects the amounts presented in the fi nancial statements of the joint
ventures (and not the Company’s share of those amounts), adjusted for differences in accounting policies between
the Company and the joint venture.
Medicare
International
Health and
Beauty Pte.
Ltd. and its
subsidiary
2018
US$
Myanmar
Finance
International
Limited
2018
US$
Myanmar
Finance
International
Limited
2017
US$
Total
2018
US$
Assets and liabilities
Cash and cash equivalents
Trade receivables
Other current assets
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Advances
571,733
9,128,395
213,525
9,913,653
134,686
10,048,339
4,289,214
–
4,289,214
5,759,125
–
5,759,125
707,050
53,436
21,496
781,982
1,369,142
2,151,124
30,140
540
30,680
2,120,444
100,000
2,220,444
1,278,783
9,181,831
235,021
10,695,635
1,503,828
12,199,463
4,319,354
540
4,319,894
7,879,569
100,000
7,979,569
Investments in joint ventures
37.5%
48.1%
Share of net assets
Premium paid
Income and expenses
Revenue
Other income
Operating expense
Depreciation
Interest expense
Tax expense
Profi t/(loss) after income tax
2,159,672
120,000
2,279,672
1,068,111
–
1,068,111
3,227,783
120,000
3,347,783
2,256,491
106,700
(1,328,892)
(50,924)
(499,184)
(121,689)
362,502
53,436
270
(733,261)
–
–
–
(679,555)
2,309,927
106,970
(2,062,153)
(50,924)
(499,184)
(121,689)
(317,053)
504,649
5,898,757
192,680
6,596,086
119,763
6,715,849
1,998,898
472,468
2,471,366
4,244,483
–
4,244,483
37.5%
1,591,681
120,000
1,711,681
1,557,162
77,692
(1,063,140)
(54,429)
(198,359)
(89,770)
229,156
Share of results of joint ventures, net of tax
135,938
(326,887)
(190,949)
85,933
78
MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
For the fi nancial year ended 31 March 2018
11.
Available-for-sale fi nancial assets
At 1 April
Addition
Fair value gain on available-for-sale fi nancial assets
At 31 March
2018
US$
31,395,522
–
4,604,478
36,000,000
2017
US$
31,385,522
10,000
–
31,395,522
As disclosed in Note 13 to the fi nancial statements, MIL 4 Limited (“MIL 4”) was incorporated by the Company to
acquire shares in Apollo Towers Pte. Ltd. (“Apollo”), an unquoted Singapore incorporated company.
On 29 July 2015, MIL 4 acquired a 14.18% stake in Apollo for a purchase consideration of US$30,182,725.
On 24 December 2015, Apollo held a further round of fund raising in which MIL 4 only invested US$1,202,797 into
Apollo, resulting in a dilution of MIL 4’s equity interest to 13.48%.
On 16 June 2016, MIL 4 purchased a warrant for a total consideration of US$10,000, allowing MIL 4 to purchase
for a nominal amount 1.56% of Apollo’s total capital stock on a fully diluted basis. The warrant has not been
exercised by MIL 4 as of 31 March 2018.
On 23 June 2017, a reorganisation took place as a result of which a new holding company was created to own all
of the shares in Apollo and MIL 4’s shareholding was exchanged for shares in the new holding company, Apollo
Towers Holdings Limited (“Apollo Towers”).
Following other changes in the composition of Apollo Towers share structure, as at 31 March 2018 MIL 4’s
shareholding was 13.45% (fully diluted).
As at 31 March 2018, the investment in available-for-sale fi nancial assets (“AFS assets”) represents an effective
13.45% equity interest in the unquoted share capital of Apollo Towers.
Apollo Towers owns and operates a telecommunication tower business in Myanmar through its wholly-owned
subsidiary, Apollo Towers Myanmar Limited.
In the previous fi nancial year, the investment in AFS assets was stated at cost as the management had assessed
and concluded that the fair value of the AFS assets could not be determined reliably till Apollo achieved certain in-
progress milestones due to the number of key variables involved in each of the valuation methodologies and the
wide spread of assumptions that could reasonably be used for each variable.
In the current fi nancial year, the investment in AFS assets is measured at fair value as the Apollo Towers business
has achieved certain milestones by securing telecommunication co-location agreements with key customers.
The investment is denominated in United States Dollars.
ANNUAL REPORT 2018 MYANMAR INVESTMENTS INTERNATIONAL LIMITED
79
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
For the fi nancial year ended 31 March 2018
11.
Available-for-sale fi nancial assets (Continued)
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 signifi cant
unobservable inputs and the inter-relationship between key unobservable inputs and fair value are as follows:
Financial assets
Valuation
technique used
Signifi cant
unobservable inputs
Unquoted equity
investments
Discounted
cash fl ow
- Projected revenue growth
rates (range between 11%
to 18% per annum, average
14.6% per annum)
- Discount rate (14.2%)
Inter-relationship between
key unobservable inputs and
fair value
Increase in projected revenue
growth rates based on anchor
and co-location tenancy growth
rates will increase the fair value of
the fi nancial asset.
Increase in discount rate will
decrease the fair value of the
fi nancial asset.
-
Terminal value based on
EBITDA multiplier of 11.9
times (from a range of 9.9 to
25.5)
Increase in terminal value based
on EBITDA multiplier will increase
the fair value of the fi nancial
asset.
80
MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
For the fi nancial year ended 31 March 2018
12.
Plant and equipment
2018
Cost
Balance at 1 April 2017
Additions
Written off
Balance at 31 March 2018
Accumulated depreciation
Balance at 1 April 2017
Depreciation for the fi nancial year
Written off
Balance at 31 March 2018
Carrying amount
Balance at 31 March 2018
2017
Cost
Balance at 1 April 2016
Additions
Balance at 31 March 2017
Accumulated depreciation
Balance at 1 April 2016
Depreciation for the fi nancial year
Balance at 31 March 2017
Carrying amount
Balance at 31 March 2017
Computer
equipment
US$
Offi ce
equipment
US$
Furniture
and fi ttings
US$
17,410
3,931
(11,358)
9,983
11,753
3,077
(11,358)
3,472
4,895
–
(3,777)
1,118
3,012
1,038
(3,254)
796
34,733
48,306
(31,054)
51,985
29,763
4,674
(30,370)
4,067
Total
US$
57,038
52,237
(46,189)
63,086
44,528
8,789
(44,982)
8,335
6,511
322
47,918
54,751
13,739
3,671
17,410
7,649
4,104
11,753
4,580
315
4,895
1,599
1,413
3,012
30,155
4,578
34,733
22,339
7,424
29,763
48,474
8,564
57,038
31,587
12,941
44,528
5,657
1,883
4,970
12,510
ANNUAL REPORT 2018 MYANMAR INVESTMENTS INTERNATIONAL LIMITED
81
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
For the fi nancial year ended 31 March 2018
13.
Investment in subsidiaries
Details of the subsidiaries are as follows:
Name of subsidiaries
Country of
incorporation/
principal place
of business
Principal
activities
Proportion of
ownership
interest
held by
the Group
Proportion of
ownership
interest
held by
non-control
interests
2018
%
2017
%
2018
%
2017
%
Myanmar Investments Limited(1)
Singapore
MIL Management Pte. Ltd.(1)
Singapore
Medicare International Health
and Beauty Pte. Ltd. (formerly
known as MIL No. 2 Pte. Ltd.)(1)
Singapore
Investment
holding
company
Provision of
management
services to the
Group
Investment
holding
company
100
100
100
100
–
100
MIL No. 3 Pte. Ltd.(2)
Singapore
Dormant
100
100
–
–
–
–
–
–
–
–
MIL 4 Limited(1)
British Virgin
Islands
Investment
holding
company
66.67
66.67
33.33
33.33
MIL Tower Ventures Limited(2)
British Virgin
Islands
Dormant
100
–
Held by MIL Management Pte. Ltd.
MIL Management Co., Ltd(3)
Myanmar
100
100
Provision of
management
services to the
Group
–
–
–
–
(1) Audited by BDO LLP, Singapore.
(2) Not required to be audited as the subsidiary is dormant since the date of its incorporation.
(3) Audited by JF Group Audit Firm, Yangon, Myanmar.
82
MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
For the fi nancial year ended 31 March 2018
13.
Investment in subsidiaries (Continued)
Incorporation of a subsidiary
On 9 July 2015, the Company incorporated a 100.00% owned subsidiary, MIL 4 for a cash consideration of
US$5,000, in the British Virgin Islands for the purpose of investing into Apollo as disclosed in Note 11 to the
fi nancial statements.
On 29 July 2015, the Company and new shareholders injected an amount of US$19,995,000 and US$10,000,000
respectively into Mil 4, which resulted in the dilution of the Company’s equity interest in the subsidiary to 66.67%.
On 24 December 2015, the Company and MIL 4’s other shareholders further increased their investment in MIL
4 by US$801,864 and US$400,933 respectively and the Company’s equity interest in MIL 4 remained at 66.67%
during this round of additional investment.
Dilution of interest of a subsidiary
As disclosed in Note 10 to the fi nancial statements, the Company diluted its equity interest in Medicare
International Health and Beauty Pte. Ltd. (formerly known as MIL No. 2 Pte. Ltd.) (“Medicare”) to 48.1% during the
fi nancial year and Medicare was classifi ed as a joint venture.
Non-controlling interests
The summarised fi nancial information before intra-group elimination of the subsidiary that has material non-
controlling interests as at the end of each reporting period is as follows:
Assets and liabilities
Non-current assets
Current assets
Current liabilities
Net assets
Accumulated non-controlling interests
Revenue
Administrative expenses
Loss for the fi nancial year
Other comprehensive income for the fi nancial year
Total comprehensive income for the fi nancial year
Loss allocated to non-controlling interests
Other comprehensive income allocated to non-controlling interests
Total comprehensive income allocated to non-controlling interests
Net cash used in operating activities
Net cash used in investing activity
Net cash generated from fi nancing activities
Net change in cash and cash equivalents
MIL 4 Limited
2018
US$
2017
US$
36,000,000
74,918
(363,729)
35,711,189
31,395,522
89,778
(302,977)
31,182,323
11,903,731
10,394,108
–
(75,610)
(75,610)
4,604,478
4,528,868
(25,203)
1,534,826
1,509,623
(139)
–
139
–
–
(13,620)
(13,620)
–
(13,620)
(4,540)
–
(4,540)
(96,567)
(10,000)
106,567
–
ANNUAL REPORT 2018 MYANMAR INVESTMENTS INTERNATIONAL LIMITED
83
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
For the fi nancial year ended 31 March 2018
14. Other receivables
Other receivables
Deposits
Prepayments
Other receivables are denominated in the following currencies:
United States dollar
Myanmar kyat
15. Cash and cash equivalents
Cash and bank balances
Short-term deposit
2018
US$
121,433
29,562
43,589
194,584
2018
US$
194,584
–
194,584
2017
US$
136,974
12,502
49,028
198,504
2017
US$
192,254
6,250
198,504
2018
US$
6,246,186
36,144
6,282,330
2017
US$
3,267,183
36,144
3,303,327
The short-term deposit bears interest at an average rate of 0.25% (2017: 0.25%) per annum, has a tenure of
approximately 12 months (2017: 12 months) and is pledged to bank to secure credit facilities.
Cash and cash equivalents are denominated in the following currencies:
United States dollar
Singapore dollar
Myanmar kyat
2018
US$
6,139,626
132,048
10,656
6,282,330
2017
US$
3,164,896
134,075
4,356
3,303,327
For the purpose of the statement of cash fl ows, cash and cash equivalents comprise the following at the end of
the fi nancial year:
Bank balances
Less: short-term deposits pledged
2018
US$
6,282,330
(36,144)
6,246,186
2017
US$
3,303,327
(36,144)
3,267,183
84
MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
For the fi nancial year ended 31 March 2018
16.
Share capital
Issued and fully-paid share capital:
Ordinary shares at the beginning of the fi nancial year
Issuance of ordinary shares during the fi nancial year
Exercise of warrants during the fi nancial year
Share issuance expenses
2018
US$
2017
US$
32,656,994
7,293,725
520,781
(309,558)
40,161,942
28,765,805
4,219,081
7,885
(335,777)
32,656,994
2018
2017
Ordinary
shares
Warrants
Ordinary
shares
Warrants
Equity Instruments in issue
At the beginning of the fi nancial year
Issuance during the fi nancial year
Exercise of warrants during the fi nancial
year
At the end of the fi nancial year
30,556,793
6,181,123
16,040,882
–
27,300,833
3,245,447
15,240,027
811,368
694,375
37,432,291
(694,375)
15,346,507
10,513
30,556,793
(10,513)
16,040,882
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.
In June 2017, the Company allotted 6,181,123 Ordinary Shares at US$1.18 per share (total of US$7,293,725)
pursuant to a subscription for new shares (the “Fifth Subscription”).
On 16 September 2016, the Company allotted 3,245,447 Ordinary Shares at US$1.30 per share (total of
US$4,219,081) pursuant to a subscription for new shares (the “Fourth Subscription”).
During the fi nancial year, a total of 694,375 (2017: 10,513) warrants were exercised at a price of US$0.75 by the
parties that held them for cash consideration of US$520,781 (2017: US$7,885).
All the shares have been admitted to trading on AIM under the ticker MIL.
The new ordinary shares issued during the fi nancial year ranked pari passu in all respects with the existing
ordinary shares of the Company.
Warrants
No new warrants were issued during the year.
On 16 September 2016, the Company allotted 811,368 Warrants pursuant to the Fourth Subscription. The
Company had agreed that for every four Ordinary Shares subscribed for by a subscriber they would receive one
Warrant at nil cost.
The Warrants entitle the holder to subscribe for an Ordinary share at an exercise price of US$0.75. The Warrants
may be exercised during each 15 Business Day period commencing on the fi rst day of each Quarter during the
Subscription Period (from 21 June 2015 to 21 June 2018). The terms of the warrants were amended after the year
end as described in Note 24 to the fi nancial statements.
All Warrants have been admitted to trading on AIM under the ticker MILW.
ANNUAL REPORT 2018 MYANMAR INVESTMENTS INTERNATIONAL LIMITED
85
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
For the fi nancial year ended 31 March 2018
17.
Share option reserve
Details of the Share Option Plan (the “Plan”)
The Plan allows for the total number of shares issuable under share options to constitute a maximum of one tenth
of the number of the total number of ordinary shares in issue (excluding shares held by the Company as treasury
shares and shares issued to the Founders prior to Admission).
Any future issuance of shares will give rise to the ability of the Remuneration Committee to award additional share
options. Such share options will be granted with an exercise price set at a 10 percent premium to the subscription
price paid by shareholders on the relevant issue of shares that gave rise to the availability of each tranche of share
options.
Share options can be exercised any time after the fi rst anniversary and before the tenth anniversary of the grant
(as may be determined by the Remuneration Committee in its absolute discretion) of the respective share options.
Share options are not admitted to trading on AIM but application will be made for shares that are issued upon the
exercise of the share options to be admitted to trading on AIM.
As at 31 March 2018, there were 3,622,740 (2017: 3,004,628) share options available for issue under the Plan
of which 2,640,862 (2017: 2,673,028) had been granted. These granted share options have a weighted average
exercise price of US$1.214 (2017: US$1.214) per share and a weighted average contractual life of 7.50 years
(2017: 8.51 years).
The 3,622,740 share options available were created under the following series:
Series/Date
Occasion
Series 1
Series 2
Series 3
Series 4
Series 5
Admission Placing and Subscription
Second Subscription
Third Subscription
Fourth Subscription
Fifth Subscription
Exercise price
(USD)
1.100
1.155
1.265
1.430
1.298
Number
584,261
361,700
1,734,121
324,546
618,112
3,622,740
86
MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
For the fi nancial year ended 31 March 2018
17.
Share option reserve (Continued)
Details of the Share Option Plan (the “Plan”) (Continued)
The following share-based payment arrangements were in existence during the current fi nancial year:
Option
series
Series 1
Series 1
Series 1
Series 2
Series 1
Series 2
Series 3
Series 3
Series 1
Series 2
Series 3
Number of
share options
Grant date
Expiry date
Exercise price
(USD)
Fair value at
grant date
410,000
25,000
132,261
23,500
10,200
331,700
954,933
181,667
2,267
2,000
567,334
2,640,862
27 June 2013
9 December 2013
25 September 2014
2 June 2015
15 January 2016
15 January 2016
15 January 2016
28 June 2016
19 October 2016
19 October 2016
19 October 2016
26 June 2023
8 December 2023
24 September 2024
1 June 2025
14 January 2026
14 January 2026
14 January 2026
27 June 2026
18 October 2026
18 October 2026
18 October 2026
1.100
1.100
1.100
1.155
1.100
1.155
1.265
1.265
1.100
1.155
1.265
153,487
19,015
62,937
14,365
6,235
193,562
507,847
127,028
1,363
1,149
297,802
1,384,790
Share options that are allocated to a Participant are subject to a three year vesting period during which the rights
to the share options will be transferred to the Participant in three equal annual instalments provided, save in
certain circumstances, that they are still in employment with or engaged by the Company.
Fair value of share options granted in the fi nancial year
No share options were granted during the fi nancial year.
The weighted average fair value of the share options granted in the previous fi nancial year is US$0.569. Share
options were priced using Black-Scholes option pricing model. Where relevant, the expected life used in the
model has been adjusted based on management’s best estimate for the effects of non-transferability, exercise
restrictions (including the probability of meeting market conditions attached to the option), and behavioural
considerations. Expected volatility is based on historical share price volatility from the date of grant of the share
options.
The Black-Scholes option pricing model uses the following assumptions:
Grant date share price (US$)
Exercise price (US$)
Expected volatility
Option life
Risk-free annual interest rates
28 June
2016
1.628
1.265
22.47%
10 years
1.46%
Grant date
19 October
2016
19 October
2016
19 October
2016
1.388
1.100
22.25%
10 years
1.76%
1.388
1.155
22.25%
10 years
1.76%
1.388
1.265
22.25%
10 years
1.76%
The Group recognised a net expense of US$361,854 (2017: US$555,459) related to equity-settled share-based
payment transactions during the fi nancial year.
ANNUAL REPORT 2018 MYANMAR INVESTMENTS INTERNATIONAL LIMITED
87
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
For the fi nancial year ended 31 March 2018
17.
Share option reserve (Continued)
Movement in share option during the fi nancial year
The following reconciles the share options outstanding at the start of the year and at the end of the year.
2018
2017
Weighted
average
exercise
price
US$
1.214
–
1.226
1.214
Number
2,673,028
–
(32,166)
2,640,862
Weighted
average
exercise
price
US$
1.194
1.263
1.117
1.214
Number
1,894,661
783,267
(4,900)
2,673,028
Balance at start of the fi nancial year
Granted
Forfeited
Balance at end of fi nancial year
No share options were exercised during the fi nancial year.
Movement in share option reserve during the fi nancial year
Balance at start of the fi nancial year
Share options expense
Cancellation of share options
Balance at end of fi nancial year
18.
Fair value reserve
2018
US$
866,390
361,854
(7,695)
1,220,549
2017
US$
313,561
555,459
(2,630)
866,390
Fair value reserve represents the cumulative fair value changes, net of tax, of available-for-sale fi nancial assets
until they are disposed of or impaired.
Balance at start of the fi nancial year
Fair value gain on available-for-sale fi nancial assets (Note 11)
Less: Attributable to non-controlling interest (Note 13)
Balance at end of fi nancial year
2018
US$
–
4,604,478
(1,534,826)
3,069,652
2017
US$
–
–
–
–
88
MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
For the fi nancial year ended 31 March 2018
19. Other payables
Accruals
Other payables
Other payables are denominated in the following currencies:
Singapore dollar
United States dollar
British pound
Euro
Myanmar kyat
20.
Signifi cant related party disclosures
2018
US$
395,577
36,753
432,330
2018
US$
113,414
228,612
90,304
–
–
432,330
2017
US$
596,032
36,706
632,738
2017
US$
47,179
523,791
50,976
2,667
8,125
632,738
For the purposes of these consolidated fi nancial statements, parties are considered to be related to the Group and
the Company if the Group and the Company have the ability, directly or indirectly, to control the party or exercise
signifi cant infl uence over the party in making fi nancial and operating decisions, or vice versa, or where the Group
and the Company and the party are subject to common control or common signifi cant infl uence. Related parties
may be individuals or other entities.
Compensation of key management personnel
For the fi nancial year ended 31 March 2018, no emoluments were paid by the Group to the Directors as an
inducement to join or upon joining the Group or as compensation for loss of offi ce.
The remuneration of Directors for the fi nancial years ended 31 March 2018 and 31 March 2017 was as follows:
Financial year ended 31 March 2018
Executive directors
Maung Aung Htun
Anthony Michael Dean
Independent non-executive directors
Christopher William Knight
Craig Robert Martin
Christopher David Appleton
Henrik Onne Bodenstab
Directors’
fee
US$
Short term
employee
benefi ts(1)
US$
–
–
40,000
30,000
30,000
30,000
130,000
455,893
458,610
–
–
–
–
914,503
Share
option
plan
US$
106,744
100,967
21,906
21,906
21,906
8,493
281,922
Total
US$
562,637
559,577
61,906
51,906
51,906
38,493
1,326,425
ANNUAL REPORT 2018 MYANMAR INVESTMENTS INTERNATIONAL LIMITED
89
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
For the fi nancial year ended 31 March 2018
20.
Signifi cant related party disclosures (Continued)
Compensation of key management personnel (Continued)
Financial year ended 31 March 2017
Executive directors
Maung Aung Htun
Anthony Michael Dean
Independent non-executive directors
Christopher William Knight
Craig Robert Martin
Christopher David Appleton
Henrik Onne Bodenstab
Directors’
fee
US$
Short term
employee
benefi ts(1)
US$
–
–
40,000
30,000
30,000
26,200
126,200
456,747
434,784
–
–
–
–
891,531
Share
option
plan
US$
179,327
165,913
34,352
34,453
34,554
5,051
453,650
Total
US$
636,074
600,697
74,352
64,453
64,554
31,251
1,471,381
(1) The short term employee benefi ts also includes rental expenses paid for the Director’s accommodation.
21. Commitments
Operating lease commitments - as lessee
The Group leases the Yangon offi ce and accommodation for Directors under non-cancellable operating leases.
The operating lease commitments are based on rental rates as specifi ed in the lease agreements. The Group has
the option to renew certain agreements on the leased premises for another one year.
In accordance with prevailing market conditions in Yangon, lease payments are paid in advance.
22. Dividends
The Directors of the Company do not recommend any dividend in respect of the fi nancial year ended 31 March
2018 (2017: Nil).
23.
Financial risk management objectives and policies
The Group has risk management policies that systematically manage the risks that could prevent it from achieving
its objectives. These policies are intended to manage risks identifi ed in such a way that opportunities to deliver
the Group’s objectives are achieved. The Group’s risk management takes place in the context of day-to-day
operations and normal business processes such as strategic and business planning and are kept under review
by the Directors. The Directors have identifi ed each risk and are responsible for coordinating and continuously
improving risk strategies, processes and measures in accordance with the Group’s established business
objectives.
90
MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
For the fi nancial year ended 31 March 2018
23.
Financial risk management objectives and policies (Continued)
The Group’s principal fi nancial instruments consist of available-for-sale fi nancial assets, other receivables, cash
and cash equivalents and other payables. The main risks arising from the Company’s fi nancial instruments and the
policies for managing each of these risks are summarised below.
23.1 Credit risk
Credit risk is the risk of loss associated with the counterparty’s inability to fulfi l its obligations. The Group’s
credit risk is primarily attributable to other receivables and cash and cash equivalents with the maximum
exposure being the reported balance in the consolidated statement of fi nancial position. The Group has
a nominal level of debtors and as such the Company believes that the credit risk to these is minimal. The
Group holds available cash with licensed established banks. The Group considers the credit ratings of
banks in which it holds funds in order to reduce exposure to credit risk.
23.2 Market risks
Foreign currency risks
The Group incurs foreign currency risk on transactions and balances that are denominated in currencies
other than its functional currency, the United States dollar. The main currencies giving rise to this risk are
the Singapore dollar, Myanmar kyat and British Pound. Exposure to foreign currency risk is monitored on an
on-going basis to ensure that the net exposure is at an acceptable level.
The Group monitors its foreign currency exchange risks closely and maintains funds in various currencies
to minimise currency exposure. Currency translation risk arises when commercial transactions, recognised
assets and liabilities and net investment in foreign operations are denominated in the currency that is not
the entity’s functional currency.
The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary
liabilities at the end of the reporting period were as follows:
Assets
Liabilities
2018
US$
132,048
–
16,906
–
148,954
2017
US$
134,075
–
10,606
–
144,681
2018
US$
113,414
–
–
90,304
203,718
2017
US$
47,179
2,667
8,125
50,976
108,947
Singapore dollar
Euro
Myanmar kyat
British pound
Foreign currency sensitivity analysis
No sensitivity analysis was performed as the exposure to foreign currency risk is not signifi cant to the
consolidated fi nancial statements.
Interest rate risk
The Group does not have any signifi cant exposure to interest rate risk as the Group does not have any
signifi cant interest bearing liabilities and its interest earning assets are producing relatively low yields.
ANNUAL REPORT 2018 MYANMAR INVESTMENTS INTERNATIONAL LIMITED
91
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
For the fi nancial year ended 31 March 2018
23.
Financial risk management objectives and policies (Continued)
23.3 Liquidity risk
The Group is exposed to liquidity risk to the extent that it holds investments that it may not be able to sell
quickly at close to fair value.
The risk is managed by the Group by means of cash fl ow planning to ensure that future cash requirements
are anticipated and, where fi nancial instruments have to be sold to meet these requirements, the process is
carried out in a controlled manner intended to minimise the liquidity risk involved.
As at 31 March 2018, the Group’s principal fi nancial assets consist mainly of cash and cash equivalents
and available-for-sale fi nancial assets.
23.4 Fair value of fi nancial assets and fi nancial liabilities
The carrying amounts of the Group’s fi nancial assets and fi nancial liabilities approximate their respective
fair values due to the short term maturity of these fi nancial instruments except as disclosed in Note 11 to
the fi nancial statements.
23.5 Capital management
The Group manages its capital to ensure that the Group is able to continue as going concern and to
maintain an optimal capital structure so as to maximise shareholders’ value.
Management regards total equity attributable to owners of the parent as capital.
The management constantly reviews the capital structure to ensure the Group is able to service any debt
obligations and contracted overheads based on its operating cash fl ows. At present the Group has taken
on no debt obligations, other than other payables, and therefore has no diffi culties in settling its debts as
they fall due.
The Group is not subjected to any externally imposed capital requirements for the fi nancial years ended 31
March 2018 and 31 March 2017.
24.
Subsequent events
i)
Apollo Towers reorganisation
As announced on 21 September 2018, MIL 4 agreed to exchange its investment in Apollo Towers for shares
in Towers (M) Holdings Pte. Ltd. (“Towers Holdings”) which owns Pan Asia Majestic Eagle Limited (“Pan
Asia Towers”) another Myanmar independent tower company. Upon completion of this reorganisation,
MIL 4’s existing 13.45 per cent shareholding in Apollo Towers will be exchanged for a shareholding of
approximately 6.2 per cent in Towers Holdings, of which approximately 4.2 per cent will be indirectly held
by MIL.
ii)
Amendments to the terms of the Company’s Warrants
As announced on 22 May 2018, the Company’s shareholders and warrant holders approved resolutions to
amend the terms of the Company’s existing warrants as follow:
the warrants can be exercised at US$0.75 on or before 21 June 2018, in line with their original
terms; and
in relation to any warrants that remain outstanding at 21 June 2018:
a)
b)
the exercise period for the warrants will be automatically extended such that the warrants can
be exercised until 31 December 2021, but at a higher exercise price of US$0.90; and
in the extended period, warrant holders will have the option to exercise their warrants on a
cashless basis in December of each year in certain circumstances.
92
MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2018
NOTICE OF
ANNUAL GENERAL MEETING
Myanmar Investments International Limited (Company Number 1774652)
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION
If you are in any doubt as to what action you should take, you are recommended to seek your own fi nancial
advice from your stockbroker or other independent adviser.
If you have recently sold or transferred all of your shares in Myanmar Investments International Limited, please
forward this document, together with the accompanying documents, as soon as possible either to the purchaser
or transferee or to the person who arranged the sale or transfer so they can pass these documents to the person
who now holds the shares.
Notice is hereby given that the 2018 Annual General Meeting of Myanmar Investments International Limited (the
“Company”) will be held at the British Club, Yangon, Myanmar at 9.00 a.m. (Myanmar time) on Thursday 18 October
2018 for the purpose of considering and, if thought fi t, passing the following resolutions:
Ordinary Resolutions
Each of the following resolutions will be proposed as an ordinary resolution:
1.
2.
3.
4.
5.
To receive and adopt the Company’s annual accounts for the fi nancial year ended 31 March 2018 together with
the directors’ report and auditors’ report on those accounts.
To reappoint Maung Aung Htun, who retires by rotation as required by Article 8.5 of the Articles of Association of
the Company, as a director of the Company.
To reappoint Craig Robert Martin, who retires by rotation as required by Article 8.5 of the Articles of Association of
the Company, as a director of the Company.
To reappoint Henrik Onne Bodenstab, who retires by rotation as required by Article 8.5 of the Articles of
Association of the Company, as a director of the Company.
To reappoint BDO LLP as the auditors of the Company to hold offi ce from the conclusion of the AGM to the
conclusion of the next meeting at which the annual accounts are laid before the Company.
6.
To authorise the directors to determine the remuneration of BDO LLP as auditors of the Company.
By Order of the Board
Estera Corporate Services (BVI) Limited
Secretary
21 September 2018
Registered Offi ce:
Jayla Place
Wickhams Cay 1
Road Town
Tortola VG1110
British Virgin Islands
ANNUAL REPORT 2018 MYANMAR INVESTMENTS INTERNATIONAL LIMITED
93
NOTICE OF
ANNUAL GENERAL MEETING
Myanmar Investments International Limited (Company Number 1774652)
NOTES
1.
2.
3.
4.
5.
6.
7.
8.
9.
Resolutions 1 to 6 will be passed if approved by more than fi fty per cent. of the votes of those members entitled to vote and
voting on the resolutions.
A member entitled to attend and vote at the meeting convened by this notice is entitled to appoint one or more proxies to attend
and, on a poll, vote in his place. A proxy need not be a member of the Company but must attend the meeting to represent the
relevant member.
A member may appoint one or more proxies in relation to the AGM provided that each proxy is appointed to exercise the rights
attached to a different share or shares held by that member. A member may not appoint more than one proxy to exercise rights
attached to any one existing ordinary share. If a member wishes to appoint more than one proxy, please contact the Company’s
Share Registrars, Link Asset Services at +44 371 664 0300. Lines are open from 09:00 to 17:30 BST Monday to Friday, excluding
public holidays. Alternatively you may write to Link Asset Services, PXS 1, The Registry, 34 Beckenham Road, Beckenham, Kent,
BR3 4ZF for additional proxy forms and for assistance.
The form of proxy must be signed by the appointor or his attorney duly authorised in writing. In the case of joint holders, the
signature of only one of the joint holders is required on the form of proxy. However, if more than one holder is present at the
meeting, the vote of the fi rst named on the register of members of the Company will be accepted to the exclusion of other joint
holders. If the appointor is a corporation, the form of proxy should be signed on its behalf by an attorney or duly authorised offi cer
or executed as a deed or executed under common seal.
Forms of Direction from holders of depositary interests must be deposited at the offi ce of the Depositary, Link Market Services
Trustees Limited, PXS 1, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4ZF, United Kingdom not later than 17:30
BST on 12 October 2018.
Any corporation which is a member of the Company can appoint one or more corporate representatives who may exercise on its
behalf all of its powers as a member provided that they do not do so in relation to the same existing ordinary share.
To appoint a proxy you may use the form of proxy enclosed with this notice of AGM. Please carefully read the instructions on
how to complete the form of proxy. To be valid, the form of proxy, together with the power of attorney or other authority (if any)
under which it is signed or a notarially certifi ed or offi ce copy of the same, must be deposited by 17:30 BST on 15 October 2018
with the Company’s registrars, Link Asset Services, PXS 1, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4ZF. The
completion and return of a form of proxy will not preclude a Member from attending the AGM and voting in person if he or she
so wishes. If a member has appointed a proxy and attends the AGM in person, such proxy appointment will automatically be
terminated.
The Company, pursuant to regulation 41 of the Uncertifi cated Securities Regulations 2001, specifi es that only those shareholders
registered in the register of members of the Company by close of business on 15 October 2018, or, if the meeting is adjourned, 48
hours before the time fi xed for the adjourned meeting (excluding any part of a day that is not a business day), shall be entitled to
attend or vote at the meeting in respect of the number of ordinary shares registered in their name at that time. Changes in entries
on the relevant register of members after such time and date shall be disregarded in determining the rights of any person to attend
or vote at this meeting.
Any member may insert the full name of a proxy or the full names of two alternative proxies of the member’s choice in the space
provided with or without deleting “the Chairman of the meeting”. The person whose name appears fi rst on the form of proxy and
has not been deleted will be entitled to act as proxy to the exclusion of those whose names follow. If this proxy form is signed
and returned with no name inserted in the space provided for that purpose, the Chairman of the meeting will be deemed to
be the appointed proxy. Where a Member appoints as his/her proxy someone other than the Chairman, the relevant member is
responsible for ensuring that the proxy attends the meeting and is aware of the member’s voting intentions. Any alteration, deletion
or correction made in the form of proxy must be initialled by the signatory/ies.
10. As at the close of business on the date immediately preceding this notice the Company’s issued share capital comprised
37,635,196 ordinary shares. Each ordinary share carried the right to one vote at the AGM and, therefore, the total number of voting
rights in the Company as at the close of business immediately preceding this notice is 37,635,196.
11. CREST members who wish to appoint a proxy or proxies through the CREST Electronic Proxy Appointment Service may do so for
the AGM and any adjournment(s) thereof by following the procedures described in the CREST manual. All messages relating to
the appointment of a proxy or an instruction to a previously-appointed proxy, which are to be transmitted through CREST, must be
received by Link Asset Services (Crest ID RA10) no later than 17:30 BST on 15 October 2018, or, if the meeting is adjourned, 48
hours before the time fi xed for the adjourned meeting (excluding any part of a day that is not a business day).
94
MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2018
NOTICE OF
ANNUAL GENERAL MEETING
Myanmar Investments International Limited (Company Number 1774652)
12.
In order to revoke a proxy instruction, you will need to inform the Company by sending a signed hard copy notice clearly stating
your intention to revoke your proxy appointment to the Registrars. In the case of a member which is a company, the revocation
notice must be executed in accordance with note 4 above. Any power of attorney or any other authority under which the
revocation notice is signed (or a duly certifi ed copy of such power or authority) must be included with the revocation notice and
must be received by Link Asset Services not less than 48 hours (excluding any part of a day that is not a business day) before the
time fi xed for the holding of the Meeting or any adjourned Meeting (or in the case of a poll before the time appointed for taking
the poll) at which the proxy is to attend, speak and to vote. If you attempt to revoke your proxy appointment but the revocation is
received after the time specifi ed then your proxy appointment will remain valid.
ANNUAL REPORT 2018 MYANMAR INVESTMENTS INTERNATIONAL LIMITED
95
DIRECTORS AND
ADVISERS
Company data
Website: www.myanmarinvestments.com
Email: enquiries@myanmarinvestments.com
Listed on the AIM market of the London Stock Exchange:
Ticker symbol for the Ordinary Shares
Ticker symbol for the Warrants
MIL
MILW
The Company is incorporated in the British Virgin Islands with registration number 1774652
Directors
Christopher William Knight, Independent Non-Executive Chairman
Maung Aung Htun, Deputy Chairman
Craig Robert Martin, Managing Director
Anthony Michael Dean, Finance Director
Henrik Onne Bodenstab, Independent Non-Executive Director
Christopher David Appleton, Independent Non-Executive Director
Registered Offi ce
Jayla Place
Wickhams Cay I
Road Town
Tortola VG1110
British Virgin Islands
Nominated Adviser
Grant Thornton UK LLP
30 Finsbury Square
London EC2P 2YU
United Kingdom
Myanmar Offi ce
Suite 1205
Sakura Tower
Bogyoke Aung San Road
Kyauktada Township
Yangon, Myanmar
Telephone: +95 1 391 804
Broker
fi nnCap Ltd
60 New Broad Street
London EC2M 1JJ
United Kingdom
Legal Advisers to the Company (as to English Law)
Reed Smith LLP
The Broadgate Tower
20 Primrose Street
London EC2A 2RS
United Kingdom
Legal Advisers to the Company (as to Myanmar Law)
DFDL Legal & Tax
134A Thanlwin Road
Golden Valley Ward (1)
Bahan Township
Yangon, Myanmar
Legal Advisers to the Company
(as to British Virgin Islands law)
Appleby
Jayla Place
Wickhams Cay I
Road Town
Tortola VG1110
British Virgin Islands
Independent Auditor
BDO LLP
Public Accountants and Chartered Accountants
600 North Bridge Road
#23-01 Parkview Square
Singapore 188778
Partner-in-charge: Adrian Lee Yu-Min
(Appointed since the fi nancial period ended
31st March 2014)
Warrant Registrar
Link Market Services Limited
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
United Kingdom
Company Secretary
Estera Corporate Services (BVI) Limited
Jayla Place
Wickhams Cay I
Road Town
Tortola VG1110
British Virgin Islands
Registrars
Link Market Services (Guernsey) Limited
Mont Crevelt House
Bulwer Avenue
St. Sampson
Guernsey GY2 4LH
Depository
Link Market Services Trustees Limited
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
United Kingdom
96
MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2018