Myanmar Investments International Limited
Annual Report 2020

Plain-text annual report

A N N U A L R E P O R T 2 0 2 0 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 was to build a diversified portfolio of businesses which would benefit from Myanmar’s emergence from military rule. While Myanmar has made progress and the long-term potential for development of the economy exists, the pace of change has been slow. The Directors therefore suggested in last year’s AGM to amend the existing investment strategy of the Company to start planning for an orderly disposal of our three investments with a view to ultimately winding up the Company. The AGM voted in favour of this proposal on 24 October 2019. Since then the Directors have taken action to implement this new strategy: • We sold our investment in Medicare International Health & Beauty (“Medicare”) for US$1 million to our main joint venture partner in November 2019. The transaction was completed in December 2019. • We are in the advanced stages of selling our investment in Myanmar Finance International Limited (“MFIL”). • We have continued to streamline our operations and as a result reduced our overheads. As part of the cost reduction process, we closed our office in Yangon and laid-off our local staff as of 31 March 2020. The investment in Apollo Towers, which was exchanged into shares in AP Towers, will most likely continue to be held until such time as our joint venture partners are able to create an exit opportunity. CONTENTS 2 Chairmen’s Letter 5 Executive Director’s Review 8 Business Review 12 Board of Directors 14 Directors’ Report 29 Directors’ Report on Remuneration Issues 30 Statement of Directors’ Responsibilities 31 Key Audit Matters 32 Financial Contents 19 Chairman’s Statement on Corporate Governance 73 Notice of Annual General Meeting The Myanmar Kyat exchange rate was MMK 1,300 to US$1.00 as at 30 September 2020 References to “today” are to 27 November 2020 being the date of printing of this document The Company is currently invested in two businesses: AP Towers / Apollo Towers • • The Company had invested US$21 million in Apollo Towers. The share exchange with AP Towers was completed in January 2020. • Under the share exchange, the Company swapped its indirect interest of 9.1 per cent of Apollo Towers for an indirect interest of 4.1 per cent of AP Towers. • The share exchange effectively brought Apollo Towers and Pan Asia Towers, another Myanmar independent tower company, under the common ownership of AP Towers. • AP Towers has a portfolio of 3,245 towers hosting 6,658 tenants and a Lease-up-Rate of 2.05x. • As of 30 September 2020, AP Towers annualised adjusted “run rate” revenue and EBITDA has increased to US$104.5 million and US$83.4m, respectively. This represents an increase of 2.6 per cent and 6.6 per cent, respectively over the same period last year. • Future growth will be driven by some increase in the tower portfolio and also by an increase in tenancies as co- location rates rise together with the sale of more power services to existing tenants. Myanmar Finance International Limited (“MFIL”) • The Company invested US$2.7 million for a 37.5 per cent shareholding. • MFIL is one of Myanmar’s leading microfinance companies. • Strong growth in its borrower base and loan book at 30 September 2020 at 48,000 and US$17.5 million, respectively representing CAGR of 42 per cent and 115 per cent since investment. • MFIL focuses on urban and semi-rural lending in Yangon, Bago, Ayewady and Mon State. • The Company is in the process of selling this investment. On 1 April 2020, the Company announced that it has accepted an offer to sell its shareholding in MFIL subject to the purchaser’s AGM approving the purchase, lender’s consent, and Myanmar regulatory approval. Subsequent to that announcement, the purchaser’s AGM on 23 April 2020 has approved the transaction and the lenders have given their consent. However, because of Covid-19 which, inter alia, has stopped all commercial air travel between Myanmar and Thailand, little progress has been made in obtaining regulatory approval. Assuming a level of normalcy returns over the next few months we expect completion to take place within the next 4 to 6 months. 1 MYANMAR INVESTMENTS INTERNATIONAL LIMITEDANNUAL REPORT 2020CHAIRMEN’S LETTER Dear fellow shareholder MYANMAR: COVID-19 AND NOVEMBER ELECTIONS Myanmar experienced its first Covid-19 case in late March 2020 and by early April the country went into its first lockdown. When we published of our interim results on 29 June 2020 there were 299 positive cases and 6 deaths. The situation remained under control and by mid-August the number of cases was only 374 with no increase in deaths. Whereas Thailand and Singapore had seen the number of cases increasing to over 3,500 and 55,000, respectively but starting to level off. However, since then there has been a significant increase. As at 20 November, the number of positive cases is more than 77,750 with over 1,722 deaths. Yangon, accounts for three quarters of this increase. A second, and more stringent, lockdown has been in effect since September. This has disrupted commerce and investments. International air travel, apart from relief flights, in and out of the country has been significantly reduced and border trade disrupted. This is likely to continue, at least, until the new year. Against this backdrop, in September 2020, the Asian Development Bank has forecast that GDP growth in 2020 will reduce to 1.8 percent. This compares favourably to Thailand or Singapore which are forecast to shrink by 8.0 and 6.2 percent, respectively. While the headline figure shows a level of resilience, primarily due to Myanmar being an exporter of much needed commodities such as gas, rice, beans and pulses to neighbouring countries, it masks the reality on the ground that many small businesses especially in the hospitality and manufacturing sector have been severely affected with layoffs and closures. In turn significantly impacting consumer spending power. However, the Directors do not see a significant impact on our two investments. Contrary to other industries, the telecommunication sector has not suffered greatly due to the outbreak of Covid-19. Regarding MFIL there is no indicator of impairment on our investment, because the minimum consideration for selling this investment will be calculated based on a pre-agreed formula of 2 times the audited book value of MFIL at closing once conditions have been satisfied, according to the Binding Offer from the Purchaser. In the middle of the pandemic, on 8 November 2020, Myanmar held a general election. The mood was subdued with few rallies and limited canvassing because of the lockdown. The house of Representatives has 440 members of which 110 (25%) is appointed by the military. Out of 330 contested constituencies Daw Aung San Suu Kyi’s party, The National League for Democracy (“NLD”) won 258 seats giving it an outright majority of 38. This is an increase over the party’s 255 seats in the 2015 election. However, with its 25 percent, the military will continue to be able to veto changes that are not to its liking. With the same popular mandate Daw Aung San Suu Kyi is unlikely to make significant changes to her policies. A new government will be sworn in on 1 April 2021 and we wait to see the composition of the new cabinet. Will there be new faces in the line up? Will she be bolder? At 75 she is less likely to lead the party into the 2025 general election and therefore will she begin to broaden the party’s executive committee and bring in younger blood? Without her leadership will NLD hold together as one unified party? All these questions will dictate Myanmar’s progress over the next five years. BOARD CHANGES William Knight our former Chairman who had held this position since the Company’s launch in 2013, retired on 18 August 2020 having reached the Company’s compulsory retirement age. The Board of Directors elected Henrik Bodenstab to become the new Chairman who has been an independent non-executive Director of the Company since 2016. Also, our former Managing Director, Craig Martin stepped down as both Managing Director and a Director of the Company as of 31 October 2019 and Michael Dean, our former Finance Director, stepped down as both Finance Director and a Director of the Company as of 31 October 2019. On behalf of the Board, we should like to thank William, Craig and Mike for their considerable contribution to the Company and its shareholders. 2 MYANMAR INVESTMENTS INTERNATIONAL LIMITEDANNUAL REPORT 2020“ We have implemented the changes to our strategy as mandated by the shareholders last year. ” Nick Paris, formerly a non-independent non-executive Director, became Managing Director as of 1 November 2019 and Rudolf Gildemeister joined the Board of Directors as an independent non-executive Director as of 1 November 2019. The Board of Directors would like to welcome Nick and Rudolf to their new roles. REPORTING PERIOD As announced on 2 September 2019, to conform with the need to change the Company’s year-end to bring it in line with the new Myanmar government mandated year end of 30 September the Company issued 6-month interim accounts for the period to 30 September 2019 (announced on 28 November 2019) and 6-month interim accounts for the period to 31 March 2020 (announced on 29 June 2020). Both sets of interim accounts were reviewed by BDO LLP, the Company’s statutory auditors. Therefore, this report with a full audited set of financial statements comprises the 18-month period from 1 April 2019 (the last full audited set of financial statements) to 30 September 2020. CHAIRMEN’S LETTER CHANGE IN STRATEGY last year’s Annual General Meeting (“AGM”) At shareholders approved a resolution to amend the investment objective and policies of the Company as follows: “The Company will seek to realise the Company’s investments in an orderly manner, such realisations to be effected at such times, on such terms and in such manner as the Directors (in their absolute discretion) may determine. Following such realisations, the Company will make periodic returns of surplus capital to Shareholders on such terms and in such manner as the Directors (in their absolute discretion) may determine. The Company shall not make any new investments in projects to which it is not already committed. However, this will not preclude the Directors (in their absolute discretion) from: (a) authorising the expenditure of such capital as is necessary to: (i) complete arrangements pertaining to the Company’s existing investments; or (ii) carry out any activities that the Directors (in their absolute discretion) deem appropriate to ensure the sale ability of any existing investment; or (b) entering into any contract or other arrangement with any third party to realise all or any part of the Company’s existing investments. Following the disposal of all of the Company’s existing investments, the Directors intend to put a winding up proposal to the Shareholders.” Important steps have been made to implement this new strategy: • We sold our investment in Medicare International Health & Beauty (“Medicare”) for US$1 million to our main joint venture partner in November 2019. The transaction was completed in December 2019. This represented a loss of US$1.1 million on the cost of the investment which largely reflects our share of the operating losses from opening a chain of new stores in Myanmar. 3 MYANMAR INVESTMENTS INTERNATIONAL LIMITEDANNUAL REPORT 2020CHAIRMEN’S LETTER • We are in the advanced stages of selling our investment in Myanmar Finance International Limited (“MFIL”). On 1 April 2020 we announced that we have accepted an offer to sell our shareholding in MFIL to a Thai based company subject to the purchaser’s AGM approving the purchase, lender’s consent, and Myanmar regulatory approval. The minimum consideration for this transaction will be calculated based on a pre-agreed formula of 2 times the audited book value of MFIL at closing once these conditions have been satisfied. Subsequent to that announcement, the purchaser’s AGM on 23 April 2020 approved the transaction and the lenders to MFIL have given their consent. However, because of Covid-19 which, inter alia, has stopped all commercial air travel between Myanmar and Thailand, obtaining regulatory approval for the transaction has been delayed. We have agreed an extension to the transaction closing with the buyer and expect to complete the transaction within the next 4 to 6 months. • We have continued to streamline our operations and as a result reduced our overheads with most of the reductions coming towards the end of this reporting period. As part of the cost reduction process, we closed our office in Yangon and laid-off our local staff as of 31 March 2020. The annualised core cash- based overheads for the 6-month period from 1 April 2020 to 30 September 2020 are 43 % lower than for the 12-month period from 1 April 2019 to 31 March 2020 and even 55 % lower than for the 12-month period from 1 April 2018 to 31 March 2019. Our investment in Apollo Towers was swapped for an interest in AP Towers Holdings Pte Ltd (“AP Towers”) in January 2020. Under this share exchange, MIL’s 66.6 per cent subsidiary, MIL 4 Limited (“MIL4”), exchanged its existing 13.7 per cent shareholding in Apollo Towers for a shareholding of 6.2 per cent in AP Towers, of which 4.1 per cent is attributable to MIL. The share exchange effectively brought Apollo Towers and Pan Asia Towers, another Myanmar ITC, under the common ownership of AP Towers which now manages one of the largest network of towers in Myanmar. This investment should not require additional funding. We also believe that in due course the resultant investment in AP Towers can be exited by way of a sale to a strategic investor or a listing on one of the region’s stock exchanges. CORPORATE GOVERNANCE The Company seeks to uphold the fundamental principles of good corporate governance and has adopted the Quoted Companies Alliance 2018 Corporate Governance Code. The Chairman’s Statement on Corporate Governance provides greater detail on how the Board itself operates as well as the steps taken to ensure that its staff adhere to principles such as compliance with the UK anti-bribery legislation. On behalf of the Board, we should like to take this opportunity to thank a number of our key stakeholders: our staff for their professionalism and commitment; our business partners for all of their advice and contributions; and our shareholders for their continued support. We are now holding around US$2.4 million of cash and when the sale of MFIL completes we will seek to return surplus capital to our shareholders. We will also be able to streamline our operations further as by then we will only have one investment left. We will thereby continue to reduce our operating expenses. HENRIK BODENSTAB Chairman 27 November 2020 AUNG HTUN Deputy Chairman 27 November 2020 4 MYANMAR INVESTMENTS INTERNATIONAL LIMITEDANNUAL REPORT 2020EXECUTIVE DIRECTOR’S REVIEW Business Review During the past 18 months our net asset value (“NAV”) has increased by 6.0 per cent and was US$35.3 million as at 30 September 2020. This change is mainly attributable to the increase in the assessed value of the Company’s investments in AP Towers (up US$4.3 million to US$28.3 million) which is offset by the loss on disposing of our investment in Medicare (US$215,000) and the operating expenses for the reporting period (US$2.1 million). During the past 18 months we drastically reduced our operating “run rate” costs from US$1.3 million per annum to the equivalent of US$0.7 million per annum by the period-end. Overall, our businesses have performed well despite disruption in Myanmar from the impact of the Covid-19 virus during 2020: • AP Towers: the Company swapped its interest in Apollo Towers for an interest in AP Towers in January 2020. The share exchange effectively brought Apollo Towers and Pan Asia Towers, another ITC under the common ownership of AP Towers which now manages one of the largest network of towers in Myanmar; and • MFIL: with additional equity investment and additional debt facilities in place the business has grown well in size, product mix and geographic reach. This growth has however been tempered by an increase in non- performing loans which, pre-Covid-19, had risen to around 1.9% due to borrower over-indebtedness and excessive competition. In April 2020, we announced the agreement by ourselves and our partners to sell 100% of this business to a Thai based company but the completion of this transaction has been delayed by the suspension of international flights to and from Myanmar which has prevented the completion of our application for regulatory approval. Covid-19 has led to two lockdowns but MFIL, having taken quick action, emerged at the end of September with PAR 30+ at 3.1 per cent. However, it is too early to forecast how the industry will emerge in January 2021 from the FRD’s collection suspension directive. In all cases, Myanmar Investment’s team have worked closely with these businesses to provide strategic advice as well as hands-on local knowledge. “ We have reduced our operating “run-rate” costs from US$1.3 million p.a. to US$0.7 million p.a. ” Financial Review NET ASSET VALUE The Directors assess the Group’s NAV attributable to the shareholders of the Company as at 30 September 2020 to be US$35.3 million, an increase of 6.0 per cent compared with the Group’s NAV as at 31 March 2019. This represents US$0.93 per share, based on the number of shares in issue at the year-end. This change principally reflects the net changes in the Directors’ assessment of the values of the Company’s investments, described in more detail below, less the Group’s running costs for the year. As at 30 September 2020 the Group’s NAV consisted of: • • an investment in AP Towers, the telecommunication tower business, of US$28.3 million, excluding the non-controlling interests, determined using a comparable EBITDA multiple methodology; an investment in MFIL, the microfinance business, of US$4.4 million, determined using a price to book value methodology; and • cash and other net assets/liabilities of US$2.6 million. 5 MYANMAR INVESTMENTS INTERNATIONAL LIMITEDANNUAL REPORT 2020EXECUTIVE DIRECTOR’S REVIEW AP TOWERS / APOLLO TOWERS MEDICARE As at 31 March 2019 the Directors had assessed that if the share exchange had been completed by 31 March 2019, the Company’s attributable shareholding in AP Towers, excluding the non-controlling interests attributable to the minority shareholders of MIL 4, would have been worth US$30 million as at that date, using a comparable EBITDA multiple methodology. The share exchange was completed in January 2020. Using the same methodology as at 30 September 2020 the Directors have assessed the value of this investment to be US$28.3 million. The downward revision in valuation of US$1.7 million compared with the in-principle valuation of the AP Towers investments done in 31 March 2019, is mainly attributable to the increase in EBITDA over the period being offset by a decrease in the valuation multiple. This value of AP Towers represents an unrealised gain of US$7.5 million over the cost of the investment and an IRR since the initial investment in July 2015 of 6.2 per cent. MFIL As at 31 March 2019 the Directors had assessed the value of the Group’s investment in MFIL to be US$4.4 million, using the price to book value methodology. However, unlike in previous reports, given that we have received a firm offer for the company we have applied the offer’s multiple but with a discount to reflect trading conditions for the valuation as at 30 September 2020. Therefore, the Directors have assessed the value of this investment to still be US$4.4 million as at 30 September 2020. This value of MFIL represents an unrealised gain of US$1.7 million over the cost of the investment. This equates to an IRR since the initial investment in September 2014 of 10.7 per cent. Given the Company’s strategy of looking to realise its investments, coupled with Medicare’s continued operating losses that needed funding as well as the capex needed to get Medicare to achieve critical mass, the Directors concluded that it was preferable to exit from this investment sooner rather than later. As a result, the Company agreed with the owners of Medicare Vietnam, its main joint venture partner, to sell this investment for US$1 million in November 2019. This represented a loss of US$1.1 million on the cost of the investment which largely reflects MIL’s share of the operating losses to date. The Company had booked US$1.5 million as its share of results of this joint venture (equity method). Therefore, the sales price of US$1 million represents a gain on the disposal of this investment of US$0.4 million. As at 31 March 2019 this investment had been valued by the Directors at US$1.2 million. SUMMARY OF NAV In the attached audited financial statements, the NAV attributable to shareholders differs from the above stated value of US$35.3 million due to the following adjustment: NAV per the audited financial statements MFIL (Note 1) NAV per the Directors’ valuation US$ 33.4 1.9 35.3 Note 1: In accordance with IFRS 11 Joint Arrangements, the investment in MFIL was accounted for as an investment in a joint venture (as the result of the ongoing transaction to sell the Group’s 37.5% equity interest in MFIL, the entire carrying amount of the Group’s investment in MFIL has been reclassified as non- current asset held for sale as at 30 September 2020) using the equity method. Whereas in accordance with the Group’s Valuation Policy the Directors’ valuation for MFIL is determined by reference to the International Private Equity and Venture Capital Guidelines. 6 MYANMAR INVESTMENTS INTERNATIONAL LIMITEDANNUAL REPORT 2020EXECUTIVE DIRECTOR’S REVIEW FINANCIAL RESULTS CHANGE OF YEAR END For the 18-month period to 30 September 2020 the Group’s audited profit after tax was US$1.6 million. Compared with the 12-month period to 31 March 2019 the Group’s audited loss after tax was US$2.4 million. This is a significant improvement on last year’s result. The profit per share is US cents 4.24 compared with a loss per share of US cents 6.42 for the 12-month period to 31 March 2019. We have continued to streamline our operations and as a result reduced our overheads with most of the reductions coming towards the end of this reporting period. As part of the cost reduction process, we closed our office in Yangon and laid-off our local staff as of 31 March 2020. The annualised core cash-based overheads (including the costs of being a quoted company but excluding discretionary compensation, share option expenses and transaction costs) for the 6-month period from 1 April 2020 to 30 September 2020 (US$0.7 million) are 43 % lower than for the 12-month period from 1 April 2019 to 31 March 2020 (US$1.3 million) and even 55 % lower than for the 12-month period from 1 April 2018 to 31 March 2019 (US$1.6 million). Outside of our overheads the most significant items were: • • • our share of Medicare’s losses up to the date that we sold it which were US$576,000 compared to last year’s US$603,000; our share of MFIL’s losses which were US$350,000 compared to last year’s profits of US$112,000; costs for sale of our investments and the legal fees for the share swap from Apollo Towers to AP Towers. The Myanmar Government had announced that all Myanmar companies must change their financial year end to 30 September of each year, commencing in 2019. As such all of the Company’s investee companies changed their year end and therefore the Company did the same. Therefore, the Company issued interim accounts for the six months to 30 September 2019 (announced on 28 November 2019) and also for the six months to 31 March 2020 (announced on 29 June 2020). The two sets of interim accounts were reviewed by BDO LLP, the Company’s statutory auditors. As a consequence, this report with a full audited set of financial statements comprises the 18-month period from 1 April 2019 (the last full audited set of financial statements) to 30 September 2020. DIVIDENDS Based on the above the Directors do not recommend payment of a dividend at this time. WORKING CAPITAL Based as of the date of this report the Group has adequate financial resources to cover its working capital needs for the next 12 months. NICK PARIS Managing Director 27 November 2020 7 MYANMAR INVESTMENTS INTERNATIONAL LIMITEDANNUAL REPORT 2020BUSINESS REVIEW AP TOWERS HOLDINGS PTE LTD (“AP TOWERS”) / APOLLO TOWERS HOLDINGS LIMITED (“APOLLO TOWERS”) BACKGROUND AP Towers is one of the largest ITC companies in Myanmar. The Company swapped its interest in Apollo Towers for an interest in AP Towers in January 2020. Under this share exchange, MIL’s 66.6 per cent subsidiary, MIL 4 Limited (“MIL4”), exchanged its existing 13.7 per cent shareholding in Apollo Towers for a shareholding of 6.2 per cent in AP Towers, of which 4.1 per cent is attributable to MIL. The share exchange effectively brings Apollo Towers and Pan Asia Towers, another Myanmar ITC, under the common ownership of AP Towers which now manages one of the largest network of towers in Myanmar. Apollo Towers and Pan Asia Towers provide tower and power services to all of Myanmar’s mobile network operators (“MNOs”) being Telenor, Ooredoo, MPT and Viettel-led consortium, MyTel. MIL initially invested in Apollo Towers in July 2015 when it led a consortium of investors that invested US$30 million for a 14.2 per cent shareholding in Apollo Towers. It co-invested alongside TPG Growth (“TPG”), part of one of the world’s largest alternative asset managers with assets under management of US$83 billion. A representative of MIL4 sits on the board of AP Towers and contributes to the strategy and growth of the company. 8 MYANMAR INVESTMENTS INTERNATIONAL LIMITEDANNUAL REPORT 2020BUSINESS REVIEW AP TOWERS HOLDINGS PTE LTD (“AP TOWERS”) / APOLLO TOWERS HOLDINGS LIMITED (“APOLLO TOWERS”) Update • The Myanmar telecoms sector generally continues to grow. Myanmar’s mobile penetration rate continues to grow with estimates currently as high as 107 per cent though this is based on SIM cards and not unique subscribers. Coupled with this is the prevalence of data enabled devices. Smartphones are estimated to account for approximately 80 per cent of the mobile phones in use in the country and data demand drives the need for connectivity. Connectivity requires an extensive network of telecom towers with reliable power. Myanmar currently has 20,000 towers, of which 11,000 are owned by ITCs, and is expected to reach 22,000 towers within the next few years. • Apollo Towers and Pan Asian Towers have both built strong reputations in the market for their valuable site locations, operational excellence and strong customer focus. AP Towers will look to leverage the best practices of both companies in providing a full suite of services that are commercially attractive to the customers of both businesses. • However, although the broader Myanmar telecom market continues to grow, the Myanmar telecom tower sector, following a period of rapid growth, has continued to slow in the last 12 months in terms of both new towers and new co-locations. This follows the entry of Myanmar’s fourth mobile operator, MyTel, into the market who have pursued a policy of undercutting their competitors. As a result, the other MNOs have taken a more cautious approach to extending their networks and at the same time are focussing more on cost management. • As a result, whilst there has still been growth in the demand for both new towers and new tenancies the market has seen a reduction in the rate of growth whilst the other MNOs re-assess their strategies in light of this evolution. • Contrary to other industries, the telecoms sector has not suffered greatly due to the outbreak of Covid-19. • As at 30 September 2020, Apollo Towers and Pan Asia Towers together had an aggregated portfolio of 3,245 towers, 6,658 tenants and a co-location ratio (“Lease-up-Rate” or “LUR”) of 2.05x. This compares to an LUR of 2.04x at 30 September 2019 and 2.05x at 31 March 2020. • By adding additional tenants to existing towers, the yield on invested capital can significantly improve, making each additional tenant highly accretive in terms of EBITDA and eventually enterprise value. Market analysis for Myanmar points to an expected LUR of 2.2x or higher over the next few years. • As of 30 September 2020, AP Towers annualised adjusted “run rate” revenue and EBITDA has increased to US$104.5 million and US$83.4m, respectively. This represents an increase of 2.6 per cent and 6.6 per cent, respectively over the same period last year. • Going forward, AP Towers will be looking to increase the number of tenancies either from new “Build to Suit” towers or from adding co-locations to its existing towers. Given its existing undrawn debt facilities, coupled with cash flows from operations, there will be available capital to build further towers over the next few years without the need to seek additional funding. • AP Towers’ net debt was US$429.3 million as at the end of September 2020, an increase of US$ 57.7 million since 31 March 2020. The application of IFRS 16 caused an increase of net debt by US$62.0 million. Excluding the effect of IFRS 16, net debt decreased by US$ 4.3 million since 31 March 2020. • On 7 April 2020 APTH refinanced approximately $140m of mezzanine debt that had originally been raised by Apollo. That has resulted in a significant reduction in the cost of that borrowing that will benefit shareholders going forward. 9 MYANMAR INVESTMENTS INTERNATIONAL LIMITEDANNUAL REPORT 2020BUSINESS REVIEW MYANMAR FINANCE INTERNATIONAL LIMITED (“MFIL”) BACKGROUND MFIL is one of the leading microfinance operators in Myanmar and provides loans of between US$ 150 and US$5,000 to individuals and small-scale business operators in rural and semi-urban areas in Yangon, Bago, Ayeyawady and Mon. MFIL was established as a microfinance joint venture in September 2014 by MIL and Myanmar Finance Company Limited (“MFC”). In November 2015, the Norwegian Investment Fund for Developing Countries (“Norfund”), the Norwegian development finance institution, also became a shareholder such that the shareholdings today are MIL 37.5 per cent, MFC 37.5 per cent and Norfund 25 per cent, with a total paid up capital of over US$7 million. MIL’s total investment cost to date is US$2.7 million. A representative of MIL sits on the board of MFIL and works closely with the management and shareholders on strategy, in strengthening the business and assisting with securing debt finance. 10 MYANMAR INVESTMENTS INTERNATIONAL LIMITEDANNUAL REPORT 2020BUSINESS REVIEW MYANMAR FINANCE INTERNATIONAL LIMITED (“MFIL”) Update • MFIL is a well-established microfinance company that has a positive impact on the lives and economic well-being of its clients. • In our last update we reported that in the six months to 31 March 2020 MFIL had incurred a loss of MMK449 million primarily due to having maintained high liquidity and therefore having negative net interest margin. Although toward the end of the period MFIL had started to increase its loan book and operating profits on a monthly basis. However, in the subsequent 6 months we had to contend with the first Covid-19 lockdown in April and May and now a second lockdown which, as at the time of writing, is still in effect. Arguably the second lockdown has been more challenging. Consequently, for the full year to 30 September 2020 (12 months) MFIL made a net loss of MMK735 million (US$565 K). Our shareholders funds at yearend was MMK8.4 billion (US$6.5 million) and the loan book was MMK22.8 billion (US$17.5 million) with PAR 30+ of 3.1%. MFIL is a strong and liquid microfinance company, with cash of MMK16.8 Billion (US$12.9 million). This will allow it to navigate its way through the current downturn and to start selectively expanding again when appropriate. • MFIL currently has over 48,000 borrowers in three product lines; SME loans (53% of loan book), Ordinary Group loans (34%) and General Staff loans (13%). Loans are made from 15 branches; Yangon (5 branches), Bago (7), Mon (2) and Ayawaddy (1). In October 2020, the Financial Regulatory Department (FRD), the microfinance industry’s regulatory body awarded MFIL a license to open branches in Mandalay, Myanmar’s second most populous region. • Over the last 2 years MFIL has been increasing its focus on SME loans and now has over 6,200 clients averaging MMK1.9 million (US$1,430) per borrower. Clients operate in a wide range of businesses from trading to teashops. • Ordinary Group loans are loans to individual borrowers that are organized into groups of 8 to 13 clients who cross guarantee each other. The average loan size is MMK230,000 (US$174) per borrower. • General Staff loans are predominantly lent to civil servants typically around MMK300,000 (US$227) per borrower. • At the time or our last report of 31 March 2020 Covid-19 had just reached Myanmar with the first positive case reported on 23 March. By early April Myanmar went into its first lockdown with both the land borders and airports closed to international travel and domestic travel and activities curtailed. This had a major and direct impact on our clients. MFIL immediately gave all clients a three-months principal-only holiday while we undertook an evaluation of all of our SME clients to assess the impact on their businesses. We also reviewed the capacity of our Ordinary Group loan clients. Following the evaluation, we were able to categorize clients into different groups and provide appropriate solutions. By working closely and quickly with clients during the three months period when the first lockdown eased in July, we were able to resume normal operations with PAR 30+ of around 2%. • Between March and mid-August Myanmar had managed to keep the number of positive Covid-19 cases to 370 and deaths to 6, compared to Thailand which had over 3,500 positive cases and 55 deaths. However, from mid-August to 20 November the number of positive cases in Myanmar has risen sharply to over 77,750 with 1,722 deaths. • Consequently, in mid-September the country started to go into a second lockdown. The immediate effect on MFIL was to severely reduce our ability to meet clients and make collections. We ended the year with a PAR 30+ of 3.1 percent. • The two regions most affected by Covid-19 are Yangon and Bago, where MFIL has 12 branches and accounts for over 90 percent of our loan book. FRD has instructed all microfinance companies operating in these two regions to suspend collection of repayments for the months of November and December and only to resume normal operations in January 2021. Interest and principal due in those 2 months are to be collected in 6 instalments from May 2021. In return for this the government is providing microfinance companies with an interest free loan for 12 months. • The immediate impact of the collection suspension is that it will make a closing audit, a condition precedent, in the sale and purchase agreement for the sale of MFIL difficult to complete efficiently. The purchaser has therefore agreed to extend the offer to early 2021 and we have also extended the exclusivity period. We intend to complete the sale as soon as it is practical to conduct the closing audit. 11 MYANMAR INVESTMENTS INTERNATIONAL LIMITEDANNUAL REPORT 2020 BOARD OF DIRECTORS HENRIK ONNE BODENSTAB MAUNG AUNG HTUN Independent Non-Executive Chairman Deputy Chairman 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 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 Science from the University of Michigan and an MBA from the Harvard Business School. Mr Htun is half Myanmar and is 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. 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. 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. 12 MYANMAR INVESTMENTS INTERNATIONAL LIMITEDANNUAL REPORT 2020BOARD OF DIRECTORS NICHOLAS JOHN PARIS RUDOLF GILDEMEISTER Managing Director Independent Non-executive Director Over the past 30 years, Mr Paris has gained extensive experience as a stockbroker and fund manager with a particular emphasis on closed end funds and hedge funds. He has held senior positions with institutions such as American Express Asset Management, Credit Lyonnais Securities Asia, Santander Securities and Baring Securities. In his current position at LIM Advisors he invests in closed end funds with a principal focus on funds investing in Asia. Mr Paris is a Fellow of The Institute of Chartered Accountants in England & Wales and holds a Bachelor of Science with Honours in Agricultural Economics from the University of Newcastle-Upon- Tyne. Mr Paris was appointed to the Board on 27 December 2018. Mr Paris is a director and portfolio manager with LIM Advisors (London) Limited. One of the funds managed by the LIM Advisors Group, LIM Asia Special Situations Master Fund Limited (“LIM”), owns more than 10 per cent of the Company’s ordinary share capital and because of his association with LIM, Mr Paris is considered a non-independent director. Mr Gildemeister was appointed to the Board of Directors on 1 November 2019 and is co-founder and Managing Partner of All Myanmar Advisors, a Myanmar focused corporate finance and strategy advisory boutique. He has over 20 years’ leadership experience in successfully building, growing and restructuring businesses across industries, mostly in Asia. Before working in Myanmar, he was Managing Director and Asia-Pacific lead of CS Solution Partners for Credit Suisse, based in Hong Kong. He started his career at Nestlé where he held various brand management and business development functions in Hong Kong and South-East Asia, which included establishing Nestlé’s sales and marketing activities in Myanmar. Mr Gildemeister is on the Harvard Business School Global Advisory Board and a Director of several private companies in Hong Kong and Myanmar. He holds a BSc in Economics from Bristol University and an MBA from the Harvard Business School. 13 MYANMAR INVESTMENTS INTERNATIONAL LIMITEDANNUAL REPORT 2020DIRECTORS’ REPORT The Directors present their annual report and audited consolidated financial statements of the Group for the financial period from 1 April 2019 to 30 September 2020. 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. As of 30 September 2020, the Company held: • • a 66.7 per cent shareholding in MIL 4 Limited (“MIL4”) a BVI company which in turn holds a 6.2 per cent shareholding in AP Towers Holdings Pte Ltd (“AP Towers”) a Singapore incorporated telecom tower company; and a 100 per cent shareholding in Myanmar Investments Limited (“MIL”) a Singapore company which in turn holds a 37.5 per cent shareholding in Myanmar Finance International Limited (“MFIL”), a Myanmar incorporated microfinance joint venture company. The above companies highlighted in bold type comprise the Myanmar Investments International Limited Group (the “Group”). As the Company closed its office in Yangon as at 31 March 2020, the process of voluntary liquidation of the management company in Myanmar, MIL Management Co., Ltd., has been initiated. Fund raisings During the 18 months to 30 September 2020 no ordinary shares were issued, and no warrants were converted into ordinary shares. Investment Policy At the Company’s Annual General Meeting (AGM) held at The British Club, Yangon, Myanmar on 24 October 2019 the shareholders approved a resolution to amend the investment objective and policies of the Company as set out below: “The Company will seek to realise the Company’s investments in an orderly manner, such realisations to be effected at such times, on such terms and in such manner as the Directors (in their absolute discretion) may determine. Following such realisations, the Company will make periodic returns of surplus capital to Shareholders on such terms and in such manner as the Directors (in their absolute discretion) may determine. The Company shall not make any new investments in projects to which it is not already committed. However, this will not preclude the Directors (in their absolute discretion) from: (a) authorizing the expenditure of such capital as is necessary to: (i) complete arrangements pertaining to the Company’s existing investments; or (ii) carry out any activities that the Directors (in their absolute discretion) deem appropriate to ensure the sale ability of any existing investment; or (b) entering into any contract or other arrangement with any third party to realise all or any part of the Company’s existing investments. Following the disposal of all of the Company’s existing investments, the Directors intend to put a winding up proposal to the Shareholders.” The Directors proposed that the Investment Policy of the Company be amended to enable the return of capital to shareholders with the ultimate aim to wind up the Company in due course. In the event that capital is returned to the shareholders, in accordance with the warrant instrument the Board will exercise its discretion, with the advice of the Company’s auditors, to determine the adjustment that should be made to the number of Ordinary Shares that could be subscribed for or the subscription price for those shares as a consequence of the reduction in capital. 14 MYANMAR INVESTMENTS INTERNATIONAL LIMITEDANNUAL REPORT 2020 DIRECTORS’ REPORT Results and dividends The Directors assess the Group’s net asset value attributable to the shareholders of the Company as at 30 September 2020 to be US$35.3 million (31 March 2019: US$33.3million), a 6.0 per cent increase over the reporting period of 18 months. The net asset value per share as of 30 September 2020 was US$0.93 per share (31 March 2019: US$0.87 per share) based on the shares in issue at that time. This change is mainly attributable to the increase in the assessed value of the Company’s investments in AP Towers (up US$4.3 million to US$28.3 million) which is offset by the loss on disposing the investment in Medicare (US$215,000) and the operating expenses for the reporting period (US$ 2.1 million). For the 18 months to 30 September 2020 the Group’s audited profit after tax was US$1.6 million. The Group’s audited loss after tax for the 12 months to 31 March 2019 was US$2.4 million. The results for the 18 months to 30 September 2020 are set out in more detail in the Executive Director’s Review and in the consolidated statement of comprehensive income. The Directors do not recommend the payment of a dividend for the financial period ended 30 September 2020. Review of the Company’s Business and Future Outlook The Chairmen’s Letter and the Executive Director’s Report provide further details as to the development of the business in the period under review as well as the future outlook, especially the proposal to commence an orderly disposal of the Company’s investments and to return surplus capital to shareholders. Ultimately the Directors expect to put a winding up proposal to Shareholders. Directors The members of the Board are listed in the section headed “Board of Directors”. During the 18-month financial period under review: • Aung Htun served as Deputy Chairman; • Craig Martin served as Managing Director until his retirement on 31 October 2019; • Michael Dean served as Finance Director until his retirement on 31 October 2019; • William Knight served as independent Non-Executive Chairman until his retirement on 18 August 2020; • Henrik Bodenstab served as an independent Non-Executive Director. He became independent Non-Executive Chairman on 18 August 2020; • Nicholas Paris became Managing Director on 1 November 2019 having previously been a non-independent Non- Executive Director; • Rudolf Gildemeister was appointed as an independent Non-Executive Director on 1 November 2019. In accordance with the Company’s articles of association, Rudolf Gildemeister retires by rotation and offers himself for re- election at the Company’s Annual General Meeting. The means by which the Board administers its responsibilities are set out in detail in the Chairman’s Statement on Corporate Governance. 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 was as follows: Director Aung Htun Henrik Bodenstab Nicholas Paris 1 Rudolf Gildemeister Ordinary Shares 677,000 585,849 - - Warrants 123,000 181,159 - - Share Options 899,626 35,000 - - 1 Nicholas Paris is a director and portfolio manager with LIM Advisors (London) Limited. One of the funds managed by LIM Advisors, LIM Asia Special Situations Master Fund Limited, is a substantial shareholder in the Company and its interests are disclosed in the Directors Report under “Substantial Interests”. 15 MYANMAR INVESTMENTS INTERNATIONAL LIMITEDANNUAL REPORT 2020 DIRECTORS’ REPORT Share Option Plan On its admission to trading on AIM, the Company established a 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 during the financial year the Board decided that no further options would be granted, though the existing options will remain in place. Until 10 November 2020 the Share Option Plan was administered by the Remuneration Committee. It is now administered by the Board of Directors. 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 per cent 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$1.10. Share options can be exercised at any time after the first anniversary and any time up to the tenth anniversary of the grant of the share options (as may be determined by the Board of Directors (since 10 November 2020) in its absolute discretion). Share options will not be admitted to trading on AIM but application will be made for ordinary shares that are issued upon the exercise of the share options to be admitted to trading on AIM. Series Series 1 Series 2 Series 3 Series 4 Series 5 Placing Admission December 2014 July 2015 September 2016 June 2017 Number of share options Options granted as at 30 September 2020 Exercise price (US$) 584,261 361,700 1,734,121 324,546 618,112 3,622,740 579,728 357,200 1,653,599 - - 2,590,527 1.100 1.155 1.265 1.430 1.298 In conjunction with the introduction of the Carried Interest Plan (as further detailed below), the Board has cancelled the balance of 1,032,213 unissued options. 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 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 was 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. • A hurdle rate of 10 per cent, compounded annually, will be applied. The Carried Interest Plan will receive 10 per cent of any resultant excess profit and this will be allocated between the beneficiaries as determined by the points allocated by the Remuneration Committee and since 10 November by the Board of Directors as the Remuneration Committee was dissolved on that date in order to streamline operations. 16 MYANMAR INVESTMENTS INTERNATIONAL LIMITEDANNUAL REPORT 2020DIRECTORS’ REPORT 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 per cent or more of the issued ordinary share capital had been notified to the Group: Name LIM Asia Special Situations Master Fund Limited Metage Funds Limited Probus Opportunities SA SICAV-FIS – Mekong Fund Red Oak Operations Limited Chasophie Group Limited Alpha Investments Asia FCP-SIF Fund Finanzverwaltungs GbR Langen II Alam Investments Limited Going Concern Number of Ordinary Shares Percentage of Issued Capital 7,718,665 3,252,693 2,118,644 2,105,569 1,601,086 1,449,475 1,443,051 1,147,874 20.3% 8.5% 5.6% 5.5% 4.2% 3.8% 3.8% 3.0% 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. 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; Countering the Financing of Terrorism; Anti-Bribery procedures; Whistleblowing procedures; Politically Exposed Persons; Confidentiality; Share Dealing; and Social and environmental considerations. 17 MYANMAR INVESTMENTS INTERNATIONAL LIMITEDANNUAL REPORT 2020 DIRECTORS’ REPORT 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 counterparties 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. 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 virtual Annual General Meeting and ask further questions ahead of the meeting which will be answered in the Annual General Meeting. 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. 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 Henrik Bodenstab Chairman 27 November 2020 Nick Paris Managing Director 27 November 2020 18 MYANMAR INVESTMENTS INTERNATIONAL LIMITEDANNUAL REPORT 2020 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 Chairman 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 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 At the Company’s Annual General Meeting (AGM) held at The British Club, Yangon, Myanmar on 24 October 2019 the shareholders approved a resolution to amend the investment objective and policies of the Company as set out below: “The Company will seek to realise the Company’s investments in an orderly manner, such realisations to be effected at such times, on such terms and in such manner as the Directors (in their absolute discretion) may determine. Following such realisations, the Company will make periodic returns of surplus capital to Shareholders on such terms and in such manner as the Directors (in their absolute discretion) may determine. The Company shall not make any new investments in projects to which it is not already committed. However, this will not preclude the Directors (in their absolute discretion) from: (a) authorising the expenditure of such capital as is necessary to: (i) complete arrangements pertaining to the Company’s existing investments; or (ii) carry out any activities that the Directors (in their absolute discretion) deem appropriate to ensure the sale ability of any existing investment; or (b) entering into any contract or other arrangement with any third party to realise all or any part of the Company’s existing investments. Following the disposal of all of the Company’s existing investments, the Directors intend to put a winding up proposal to the Shareholders.” 19 MYANMAR INVESTMENTS INTERNATIONAL LIMITEDANNUAL REPORT 2020CHAIRMAN’S STATEMENT ON CORPORATE GOVERNANCE The Company’s strategy until 24 October 2019 was to establish a business development and investment platform that seeks to make sensible investments in Myanmar, to capitalise on the growth opportunities there. In essence the Company was seeking to make capital gains and/or derive income from investments in Myanmar. The key challenges were 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 sought 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. Due to the Shareholders’ resolution on 24. October 2019 the Company is not hiring any new staff; • Maintaining and developing an active presence on the ground in Yangon. Due to the Shareholders’ resolution on 24. October 2019 the Company closed its office in Yangon on 31 March 2020; • 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. Due to the Shareholders’ resolution on 24. October 2019 no new investments will be made; • 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. Due to the Shareholders’ resolution on 24. October 2019 all staff was laid-off as of 31 March 2020; and • Proactively looking for opportunities to add value to each of the investee companies. Due to the Shareholders’ resolution on 24. October 2019 the Company will seek to realise the Company’s investments in an orderly manner. 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; • the Company’s investor forums which have been held in Yangon; and • maintaining an active social media communications platform through LinkedIn (over 1,500 followers), Twitter (over 2,000 followers) and Facebook (over 5,000 followers). Due to the Shareholders’ resolution on 24. October 2019, the Company has now terminated its social media presence. 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. 20 MYANMAR INVESTMENTS INTERNATIONAL LIMITEDANNUAL REPORT 2020CHAIRMAN’S STATEMENT ON CORPORATE GOVERNANCE In terms of communication, shareholders and potential investors can use the dedicated email address enquiries@ myanmarinvestments.com or directly contact Michael Rudolf, the CFO on michaelrudolf@myanmarinvestments.com. or Henrik Bodenstab (Chairman) Aung Htun (Deputy Chairman) Nick Paris (Managing Director) henrik@bodenstab.de aunghtun@myanmarinvestments.com nickparis@myanmarinvestments.com 3. Take into account wider stakeholder and social responsibilities and their implications for long-term success The Board sought 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 sought to engage with include: • Employees – the Company sought 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 provided extensive training for its staff, including on the job training that was supplemented by more formal training courses that are run in-house or by external trainers, including on-line training schemes; ◦ ◦ the Company considered itself to be ‘gender blind’ in its approach to its employees: it did 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 were 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 sought 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: ◦ AP 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 (the Company is in the process of selling this investment); and ◦ Medicare aims at providing a wider range of international and authentic brands of health and 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. The Company sold this investment for US$ 1 million in December 2019. • 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. Our 2018 calendar featured 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. 21 MYANMAR INVESTMENTS INTERNATIONAL LIMITEDANNUAL REPORT 2020 CHAIRMAN’S STATEMENT ON CORPORATE GOVERNANCE 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 maintains the Audit Committee whose members comprise of independent Directors. Investment Committee During the financial period under review the following served on the Investment Committee: Craig Martin (until 31 October 2019), Henrik Bodenstab (who became Chairman from 1 June 2018), Aung Htun, Michael Dean (until 31 October 2019) and Rudolf Gildemeister (from 1 November 2019). On 10 November 2020, the Board of Directors dissolved this committee in order to streamline operations and now reviews the investments directly. During the period under review there were 26 meetings of the Investment Committee and all members of the committee attended all of the meetings. The Investment Committee was the principal manager of the Company’s exposure to risk that might arise from within the Company’s core investing activities. The Investment Committee had 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 period under review, the Investment Committee carried out regular evaluations of each of the investments. The Investment Committee made recommendations to the Board regarding making investments and was responsible for computing the Company’s net asset value for the Board’s consideration. Audit Committee During the financial period under review the following served on the Audit Committee: Craig Martin (until 31 October 2019), William Knight (who was Chairman until 18 August 2020), Henrik Bodenstab, Nicholas Paris (until 31 October 2019) and Rudolf Gildemeister (from 1 November 2019 and who became Chairman from 18 August 2020). During the period under review there were two meetings of the Audit Committee and all 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 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. 22 MYANMAR INVESTMENTS INTERNATIONAL LIMITEDANNUAL REPORT 2020CHAIRMAN’S STATEMENT ON CORPORATE GOVERNANCE 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 was no longer subject to monitoring by the FATF. In September 2018 Myanmar completed its MER (mutual evaluation report). Since then Mynamar has proactively made progress on a number of its MER recommended actions to improve technical compliance and effectiveness. On 21 February 2020, the FATF put Myanmar on its list of jurisdictions under increased monitoring (grey list). Myanmar made a high-level political commitment to work with the FATF and APG to strengthen the effectiveness of its AML/CFT regime. 5. Maintain the board as a well-functioning, balanced team led by the Chairman 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 four directors, the Board comprises of one executive director (Nick Paris as the Managing Director), one non-executive non-independent director (Aung Htun) and two non-executive independent directors (Henrik Bodenstab and Rudolf Gildemeister). 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 Executive Director. 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. 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 was supported by the Investment Committee, the Audit Committee, the Remuneration Committee and the Nomination and Corporate Governance Committee until 10 November 2020 when all bar the Audit Committee were dissolved by the Board in order to streamline operations. Since Admission, these committees have been established with clear terms of reference and they regularly reviewed 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. 23 MYANMAR INVESTMENTS INTERNATIONAL LIMITEDANNUAL REPORT 2020CHAIRMAN’S STATEMENT ON CORPORATE GOVERNANCE 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 6 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 26 meetings; the Audit Committee held two meetings; the Remuneration Committee held four meetings; and the Nomination and Corporate Governance Committee (“NCGC”) held one meeting. 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. Maung Aung Htun, Non-Independent Deputy Chairman Mr 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. Henrik Onne Bodenstab, Independent Non-Executive Chairman Mr Bodenstab has over 25 years of relevant professional experiences which he brings to the Company in his role as an Independent Non-executive Chairman. 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. 24 MYANMAR INVESTMENTS INTERNATIONAL LIMITEDANNUAL REPORT 2020CHAIRMAN’S STATEMENT ON CORPORATE GOVERNANCE 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. After Mr Knight’s retirement as a Director and Chairman on 18 August 2020 the Board of Directors elected Mr Bodenstab to be the new Chairman of the Company. Nicholas John Paris, Managing Director Mr Paris has specialised in the launch and ongoing trading of closed end Investment funds since he joined Baring Securities in 1994 and throughout his career on the sell-side and the buy-side of the investment markets and he has had a particular focus on funds that were invested in Asia. Also, throughout his career he has focussed on the corporate governance rights of shareholders in closed end funds and both of these skill sets are of relevance to the Company and its shareholders as it navigates the winding down of its portfolio and ultimately of the Company. In addition, he is a Portfolio Manager within the LIM Advisors Group one of whose clients is a substantial shareholder in the Company having invested at the Company’s launch and which is also a co-investor in AP Towers through its shareholding in the Company’s subsidiary, MIL4. Mr Paris is also a Chartered Accountant in England and Wales and a Chartered Alternative Investment Analyst and is able to apply the skills and knowledge gained from these qualifications for the benefit of the Company. Mr Paris changed his role from Non-independent Non-executive Director to become the Managing Director of the Company on 1 November 2019. Rudolf Gildemeister, Independent Non-executive Director Mr Gildemeister was appointed to the Board of Directors on 1 November 2019 and is co-founder and Managing Partner of All Myanmar Advisors, a Myanmar focused corporate finance and strategy advisory boutique. He has over 20 years’ leadership experience in successfully building, growing and restructuring businesses across industries, mostly in Asia. Before working in Myanmar, he was Managing Director and Asia-Pacific lead of CS Solution Partners for Credit Suisse, based in Hong Kong. He started his career at Nestlé where he held various brand management and business development functions in Hong Kong and South-East Asia, which included establishing Nestlé’s sales and marketing activities in Myanmar. Mr Gildemeister is on the Harvard Business School Global Advisory Board and a Director of several private companies in Hong Kong and Myanmar. He holds a BSc in Economics from Bristol University and an MBA from the Harvard Business School. 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 and can 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 (until 10 November 2020) has retained the services of external advisers to assist it in the formulation of compensation arrangements for the Executive Directors. The NCGC (until 10 November 2020) 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. 25 MYANMAR INVESTMENTS INTERNATIONAL LIMITEDANNUAL REPORT 2020CHAIRMAN’S STATEMENT ON CORPORATE GOVERNANCE 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 financial year under review the following served on the NCGC: Henrik Bodenstab (who became Chairman from 1 November 2018), William Knight (until 18 August 2020), Aung Htun and Craig Martin (until 31 October 2019). On 10 November 2020, this committee was dissolved by the Board to streamline operations. During the year under review, there was one meeting of the NCGC and all members of the committee attended the meeting. The NCGC was 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 assessed 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 included 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. 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 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 had confirmed that their Committees are adequately staffed to discharge their duties. The NCGC 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 considered 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 three independent directors. To date all independent directors have been affirmed as being independent. As of the date of this report the Board consists of four Directors. 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. 26 MYANMAR INVESTMENTS INTERNATIONAL LIMITEDANNUAL REPORT 2020CHAIRMAN’S STATEMENT ON CORPORATE GOVERNANCE 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 had 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 was 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 Director. These are conveyed to our staff and other the stakeholders through our business practices. 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 Director who is 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. He is also 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. He is supported regarding these tasks by the CFO. In discharging this responsibility, the Board had 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. 27 MYANMAR INVESTMENTS INTERNATIONAL LIMITEDANNUAL REPORT 2020CHAIRMAN’S STATEMENT ON CORPORATE GOVERNANCE Remuneration Committee During the financial year under review the following served on the Remuneration Committee: William Knight (who was Chairman until 18 August 2020), Henrik Bodenstab , Nicholas Paris (until 31. October 2019) and Rudolf Gildemeister (from 1 November 2019). During the year under review there were four meetings of the Remuneration Committee and all members of the committee attended all of the meetings. The Remuneration Committee was responsible for establishing a formal and transparent procedure for developing policy on executive remuneration and to set the remuneration packages of individual Directors. This included agreeing with the Board the framework for remuneration of the Managing Director and such other members of the executive management of the Company as it is designated to consider. This included the administration of the Share Option Plan and the Carried Interest Plan and the allocation of the benefits from those schemes amongst the Board and management team. It was also responsible for determining the total individual remuneration packages of each Director including, where appropriate, bonuses, incentive payments and allocation of share options and Carried Interest Plan points. No Director plays a part in any decision about his own remuneration. The Directors’ Report on Remuneration Issues (after the Remuneration Committee was dissolved on 10 November 2020) for the year is included within this Annual Report. Given the fact that the Board consists of only 4 members after the retirement of William Knight, the Board decided on 10 November 2020 to dissolve the Investment Committee, the Nomination and Corporate Governance Committee and the Remuneration Committee. The tasks of these committees will be handled directly by the Board from 10 November 2020 onwards. 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, the Company has been applying the QCA Corporate Governance Code. 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-committee and the Executive Director; 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 (henrik@bodenstab.de) or the Executive Director at his email address listed above in Section 2. Yours faithfully Henrik Bodenstab Chairman of the Board 27 November 2020 28 MYANMAR INVESTMENTS INTERNATIONAL LIMITEDANNUAL REPORT 2020DIRECTORS’ REPORT ON REMUNERATION ISSUES Remuneration Policy The Remuneration Committee was responsible for determining the Remuneration Policy of the Company until 10 November 2020 when it was dissolved by the Board of Directors who now manages this area directly. 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 financial periods ended 30 September 2020 and 31 March 2019 respectively was (all amounts in US dollars): Director William Knight Aung Htun Michael Dean Craig Martin 3 Christopher Appleton Henrik Bodenstab Nicholas Paris 3 Rudolf Gildemeister 2020 2019 Directors’ fees Short term employee benefits [1,2] Directors’ fees Short term employee benefits [1,2] 24,789 22,793 10,000 13,167 70,749 192,823 267,209 26,333 73,333 24,375 7,500 12,333 20,000 2,500 141,156 284,008 58,250 559,698 66,708 483,414 1 2 3 The short-term employee benefits also include rental expenses paid for the Directors’ accommodation. The short-term employee benefits include bonuses totalling US$50,000. No bonuses were paid for 2019. During the financial year ended 31 March 2019 Craig Martin was the Managing Director and Nick Paris was a non-executive director. On 31 October 2019 Craig Martin stepped down as both Managing Director and a Director of the Company and Nick Paris became Managing Director as of 1 November 2019. The remuneration of the Executive Directors was determined by the Remuneration Committee. The remuneration of the Non-Executive Directors was determined by the Remuneration Committee, but no director may vote on his own compensation arrangements. From 10 November 2020 onwards, these tasks will be handled by the Board of Directors. No additional sums were paid in the year to Directors for work on behalf of the Company outside their normal duties. There were no further cash payments or benefits provided to Directors. 29 MYANMAR INVESTMENTS INTERNATIONAL LIMITEDANNUAL REPORT 2020  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 (this year for the 18-month period from 1 April 2019 to 30 September 2020) 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 (this year for the 18-month period from 1 April 2019 to 30 September 2020) 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 our website 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 Henrik Bodenstab Chairman of the Board 27 November 2020 30 MYANMAR INVESTMENTS INTERNATIONAL LIMITEDANNUAL REPORT 2020KEY AUDIT MATTERS During the year, the Audit Committee (“AC”) received semi-annually, 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 (this year for the 18-month period from 1 April 2019 to 30 September 2020) financial statements for the financial period from 1 April 2019 to 30 September 2020. Valuation of Available-for-sale Financial Assets Refer to Notes 3.2 and 11 of the financial statements. As at 30 September 2020 the Group held an equity instrument at fair value through profit or loss, being its investment in AP Towers and this is reflected at its fair value as at that date. The AC considered the fair value for AP Towers. In doing this the AC reviewed: • • • • the Investment Committee’s evaluations and the Board’s approval of the same; suitable valuation methodologies; comparable market-based valuation data and benchmarks; the basis for key assumptions applied by management principally the run rate EBITDA and comparable EV/EBITDA multiples. The AC discussed these with the MIL management team and is satisfied that these are appropriate. The AC concurred with the fair value of AP Towers as determined by the MIL management team and the Investment Committee. The AC also reviewed the adequacy of the disclosures in respect of this investment in Notes 3.2 and 11. 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 period from 1 April 2019 to 30 September 2020, as well as the Independent Auditor’s Report thereon prior to their submission to the Board of Directors for approval. 31 MYANMAR INVESTMENTS INTERNATIONAL LIMITEDANNUAL REPORT 2020Report of the directors and fi nancial statements 33 Director’s Statement 36 Independent Auditor’s Report 39 Consolidated Statement of Comprehensive Income 40 Consolidated Statement of Financial Position 41 Consolidated Statement of Changes in Equity 43 Consolidated Statement of Cash Flows 44 Notes to the Consolidated Financial Statements 73 Notice of Annual General Meeting 75 Directors and Advisers 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 period from 1 April 2019 to 30 September 2020. The Group and the Company changed the reporting period end to 30 September during the current fi nancial period. 1. Opinion of the Directors In the opinion of the Board of Directors, (a) the 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 consolidated fi nancial position of the Group as at 30 September 2020 and consolidated fi nancial performance, consolidated changes in equity and consolidated cash fl ows of the Group for the fi nancial period from 1 April 2019 to 30 September 2020; and (b) at the date of this statement, there are reasonable grounds to believe that the Group and 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: Maung Aung Htun Henrik Onne Bodenstab Nicholas John Paris Rudolf Gildemeister (Appointed on 1 November 2019) 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 period 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. 4. Directors’ interests in shares or debentures The following directors, who held offi ce at the end of the fi nancial period, 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 Maung Aung Htun Henrik Onne Bodenstab Number of warrants to subscribe for ordinary shares of the Company Maung Aung Htun Henrik Onne Bodenstab Number of share options to subscribe for ordinary shares of the Company Maung Aung Htun Henrik Onne Bodenstab Shareholdings registered in name of director or nominee At 30 September 2020 At 1 April 2019 677,000 585,849 123,000 181,159 899,626 35,000 677,000 585,849 123,000 181,159 899,626 35,000 MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2020 33 DIRECTORS’ STATEMENT 5. Share option plan 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 period were:    Christopher William Knight (Retired on 18 August 2020) Henrik Onne Bodenstab Nicholas John Paris 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 arose as a result of the new ordinary shares being issued in connection with the Company’s Admission to the AIM market of the London Stock Exchange in June 2013 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 period, there were 3,622,740 share options available for issue of which 2,590,527 have been issued. The Directors do not intend to issue any further share options. There were no new share options granted to Directors and employees during the fi nancial period. There were no shares issued during the fi nancial period 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 period Aggregate options exercised since commencement of the Plan to the end of fi nancial period Aggregate options lapsed since commencement of the Plan to the end of fi nancial period Aggregate options outstanding as at end of the fi nancial period Options granted during the fi nancial period – – 899,626 35,000 – – – – 899,626 35,000 Name of Director Maung Aung Htun Henrik Onne Bodenstab 34 MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2020 DIRECTORS’ STATEMENT 6. Independent auditor The independent auditor, BDO LLP, has expressed its willingness to accept re-appointment. On behalf of the Board of Directors Nicholas John Paris Director 27 November 2020 Maung Aung Htun Director MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2020 35 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 30 September 2020; 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 period from 1 April 2019 to 30 September 2020; 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 30 September 2020, and of the consolidated fi nancial performance, consolidated changes in equity and consolidated cash fl ows of the Group for the fi nancial period from 1 April 2019 to 30 September 2020. 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 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. KEY AUDIT MATTER AUDIT RESPONSE 1 Valuation of Equity Instrument at Fair Value through Profi t or Loss The investment in equity instrument at fair value through profi t or loss (“FVTPL”) represents a 6.2% equity interest in AP Towers Holdings Pte. Ltd. (“AP Towers”). AP Towers owns and operates a telecommunication tower business in Myanmar, through its subsidiaries, Apollo Towers Myanmar Limited and Pan Asia Majestic Eagle Limited. As at 30 September 2020, the carrying amount of the Group’s investment in equity instrument at FVTPL was US$42.5million, which represented 89.1% of the total assets of the Group. A market-based valuation methodology is used in the valuation of AP Towers. 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 equity instrument at FVTPL, taking into account that the fair value was measured using signifi cant unobservable inputs (Level 3) such as EV/EBITDA of public comparable companies. Refer to Notes 3.2 and 11 to the fi nancial statements. Our procedures on the valuation of the equity instruments at FVTPL included, amongst others, the following:     Discussed with management the assumptions used in the valuation process; Reviewed and analysed reasonableness of the EBITDA of AP Towers used by comparing to the latest available audited fi nancial statements of Apollo Towers Myanmar Limited and Pan Asia Majestic Eagle Limited; With the assistance of our internal valuation specialist, assessed and the methodology used in the valuation and the reasonableness of the EV/EBITDA multiplier used; and reviewed Assessed the adequacy of the disclosure in the fi nancial statements with respect to the valuation of the investment. 36 MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2020 INDEPENDENT AUDITOR’S REPORT To the Members of Myanmar Investments International Limited 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. 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. MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2020 37 INDEPENDENT AUDITOR’S REPORT To the Members of Myanmar Investments International Limited Auditor’s Responsibilities for the Audit of the Financial Statements (Continued)   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. 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 Ng Kian Hui. BDO LLP Public Accountants and Chartered Accountants Singapore 27 November 2020 38 MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2020 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the Financial Period from 1 April 2019 to 30 September 2020 Revenue Other item of income Finance income Gain on disposal of a joint venture Fair value gain on investment at fair value through profi t or loss Items of expense Employee benefi ts expense Depreciation expense Other operating expenses Finance costs Share of results of joint ventures, net of tax Profi t/(Loss) before income tax Income tax expense Profi t/(Loss) for the fi nancial period/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 Other comprehensive income for the fi nancial period/year, net of tax Total comprehensive income/(loss) for the fi nancial period/year Profi t/(Loss) attributable to: Owners of the parent Non-controlling interests Total comprehensive income/(loss) attributable to: Owners of the parent Non-controlling interests Earnings/(Loss) per share (cents) - Basic and diluted 4 10 11 5 12 6 10 7 8 10 13 13 9 Financial period from 1 April 2019 to 30 September 2020 US$ – Note Financial year ended 31 March 2019 US$ – 514 – – (916,343) (22,001) (1,006,933) (12,715) (491,290) (2,448,768) (436) (2,449,204) (263,584) (263,584) (2,712,788) (2,420,931) (28,273) (2,449,204) (2,684,515) (28,273) (2,712,788) 491 361,248 6,500,000 (898,323) (20,719) (1,325,262) (13,857) (926,004) 3,677,574 (1,306) 3,676,268 399,314 399,314 4,075,582 1,616,159 2,060,109 3,676,268 2,015,473 2,060,109 4,075,582 4.24 (6.42) The accompanying notes form an integral part of these fi nancial statements. MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2020 39 CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 30 September 2020 ASSETS Non-current assets Investments in joint ventures Equity instrument at fair value through profi t or loss Plant and equipment Total non-current assets Current assets Other receivables Cash and cash equivalents Non-current asset classifi ed as held for sale Total current assets Total assets EQUITY AND LIABILITIES Equity Share capital Share option reserve Accumulated losses Foreign exchange 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 30 September 2020 US$ 31 March 2019 US$ 10 11 12 14 15 16 17 18 13 19 – 42,500,000 – 42,500,000 268,834 2,364,166 2,552,467 5,185,467 3,717,909 36,000,000 38,103 39,756,012 178,775 3,720,521 – 3,899,296 47,685,467 43,655,308 40,569,059 1,358,913 (8,423,481) (76,560) 33,427,931 13,935,567 47,363,498 40,569,059 1,337,005 (10,039,640) (475,874) 31,390,550 11,875,458 43,266,008 304,053 17,916 321,969 372,410 16,890 389,300 47,685,467 43,655,308 The accompanying notes form an integral part of these fi nancial statements. 40 MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2020 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the Financial Period from 1 April 2019 to 30 September 2020 l a t o T $ 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 $ 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 8 6 2 6 7 6 , , 3 9 0 1 0 6 0 , , 2 9 5 1 , 6 1 6 1 , 9 5 1 , 6 1 6 , 1 – 4 1 3 , 9 9 3 4 1 3 , 9 9 3 – – 4 1 3 , 9 9 3 4 1 3 , 9 9 3 – – 4 1 3 , 9 9 3 4 1 3 , 9 9 3 2 8 5 5 7 0 , , 4 9 0 1 0 6 0 , , 2 3 7 4 , 5 1 0 2 , 9 5 1 , 6 1 6 , 1 4 1 3 , 9 9 3 – – – – 8 0 9 1 2 , 8 0 9 , 1 2 – – 8 0 9 , 1 2 8 0 9 , 1 2 – – – – 8 0 9 , 1 2 8 0 9 , 1 2 – – – – – – 8 0 0 , 6 6 2 , 3 4 8 5 4 , 5 7 8 , 1 1 0 5 5 , 0 9 3 , 1 3 ) 0 4 6 , 9 3 0 , 0 1 ( ) 4 7 8 , 5 7 4 ( 5 0 0 , 7 3 3 , 1 9 5 0 , 9 6 5 , 0 4 8 9 4 , 3 6 3 , 7 4 7 6 5 , 5 3 9 , 3 1 1 3 9 7 2 4 , , 3 3 ) 1 8 4 , 3 2 4 , 8 ( ) 0 6 5 , 6 7 ( 3 1 9 , 8 5 3 , 1 9 5 0 , 9 6 5 , 0 4 0 1 8 1 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 r e h t O d o i r e p l i a c n a n fi 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 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 d o i r e p l i a c n a n fi e h t 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 d o i r e p l i a c n a n fi o 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 d o i r e p l i a c n a n fi e h t r o f t fi o r P 9 1 0 2 l i r p A 1 t A 0 2 0 2 s r e n w o o 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 l a t o T 0 2 0 2 r e b m e t p e S 0 3 t A e s n e p x e s n o i t p o e r a h S s r e n w o . s t n e m e t a t s l i a c n a n fi 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 MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2020 41 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the Financial Period from 1 April 2019 to 30 September 2020 l a t o T $ 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 $ 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 ) 4 0 2 , 9 4 4 2 , ( ) 3 7 2 , 8 2 ( ) 1 3 9 , 0 2 4 2 , ( ) 1 3 9 , 0 2 4 , 2 ( – ) 4 8 5 , 3 6 2 ( ) 4 8 5 , 3 6 2 ( – – ) 4 8 5 , 3 6 2 ( ) 4 8 5 , 3 6 2 ( – – ) 4 8 5 , 3 6 2 ( ) 4 8 5 , 3 6 2 ( – ) 9 9 7 , 4 8 ( 6 1 9 , 1 9 4 8 9 4 , 9 3 1 5 1 6 , 6 4 5 – – – – – ) 9 9 7 4 8 , ( 6 1 9 1 9 4 , – 8 9 4 , 9 3 1 – – – 2 4 0 , 3 2 5 1 6 , 6 4 5 2 4 0 , 3 2 – – – – – ) , 8 8 7 2 1 7 2 , ( ) 3 7 2 8 2 , ( ) 5 1 5 , 4 8 6 2 , ( ) 1 3 9 , 0 2 4 , 2 ( ) 4 8 5 , 3 6 2 ( – – – – – – – – – – ) 9 9 7 , 4 8 ( 6 1 9 , 1 9 4 ) 2 4 0 , 3 2 ( 8 9 4 , 9 3 1 – – 6 5 4 , 6 1 1 7 1 1 , 7 0 4 1 8 1 2 3 4 , , 5 4 , 1 3 7 3 0 9 1 1 , , 0 5 4 8 2 5 3 3 , ) 1 5 7 , 1 4 6 , 7 ( ) 0 9 2 , 2 1 2 ( 9 4 5 , 0 2 2 , 1 2 4 9 , 1 6 1 , 0 4 8 0 0 , 6 6 2 , 3 4 8 5 4 , 5 7 8 , 1 1 0 5 5 0 9 3 , , 1 3 ) 0 4 6 , 9 3 0 , 0 1 ( ) 4 7 8 , 5 7 4 ( 5 0 0 , 7 3 3 , 1 9 5 0 , 9 6 5 , 0 4 0 1 7 1 7 1 8 1 8 1 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 r o f s s o l 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 e h t r o f s s o l i e v s n e h e r p m o c l a t o T e h t r o f s s o l 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 r a e y l i a c n a n fi o 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 r a e y l i a c n a n fi e h t r o f s s o L 8 1 0 2 l i r p A 1 t A 9 1 0 2 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 s r e n w o o 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 l a t o T 9 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 r e n w o 42 MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2020 . s t n e m e t a t s l i a c n a n fi 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 CASH FLOWS For the Financial Period from 1 April 2019 to 30 September 2020 Operating activities Profi t/(Loss) before income tax Adjustments for: Interest income Finance costs Depreciation of plant and equipment Gain on disposal of a joint venture Fixed assets written off Fair value gain on investment at fair value through profi t or loss Share options 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)/refund Net cash fl ows used in operating activities Investing activities Proceeds from disposal of investments Investments in joint ventures Advances to joint ventures Purchase of plant and equipment Net cash fl ows generated from/(used in) investing activities Financing activities Increase in short-term deposits pledged Net proceeds from issuance of shares Net cash fl ows (used in)/generated from fi nancing activities Net change in cash and cash equivalents Cash and cash equivalents at beginning of the period/year Cash and cash equivalents at the end of fi nancial period/year Financial period from 1 April 2019 to 30 September 2020 US$ Note Financial year ended 31 March 2019 US$ 3,677,574 (2,448,768) 4 6 12 10 7 11 18 10 4 6 10 10 10 12 17 15 (491) 13,857 20,719 (361,248) 17,384 (6,500,000) 21,908 926,004 (2,184,293) (90,059) (68,357) (2,342,709) 491 (13,857) (280) (2,356,355) 1,000,000 – – – 1,000,000 (216) – (216) (1,356,571) 3,673,110 2,316,539 (514) 12,715 22,001 – – – 139,498 491,290 (1,783,778) 15,809 (59,920) (1,827,889) 514 (12,715) 1,517 (1,838,573) – (500,000) (625,000) (5,353) (1,130,353) (11,267) 407,117 395,850 (2,573,076) 6,246,186 3,673,110 The accompanying notes form an integral part of these fi nancial statements. MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2020 43 NOTES TO THE FINANCIAL STATEMENTS For the Financial Period from 1 April 2019 to 30 September 2020 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 was established for the purpose of identifying and investing in, and disposing of, businesses operating in or with business exposure to Myanmar. The Company’s focus was to target businesses operating in sectors that the Directors believed had strong growth potential and thereby could be expected to provide attractive yields, capital gains or both. At the Annual General Meeting held on 24 October 2019, the Company’s shareholders approved a resolution to begin an orderly disposal of the Company’s investments and in due course look to return surplus capital to shareholders. The principal activities of the subsidiaries are disclosed in Note 13 to the fi nancial statements. The Group and the Company changed its reporting period end from 31 March to 30 September during the current fi nancial period. 1.1 Going concern After due and careful enquiries, the Directors have a reasonable expectation that the Group has adequate fi nancial resources to continue in operational existence for the foreseeable future. This expectation is based on a review of the Group’s existing fi nancial resources, its present and expected future commitments in terms of its overheads and running costs; and its commitments to its existing investments. Accordingly, the Directors have adopted the going concern basis in preparing the Group’s fi nancial statements. 2. Summary of signifi cant accounting policies 2.1 Basis of preparation of the fi nancial statements The 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 fi nancial statements have been prepared on an historical cost basis, except as disclosed in the accounting policies below. The individual fi nancial statements of each entity in the Group are measured and presented in the currency of the primary economic environment in which the entity operates (its functional currency). The fi nancial statements of the Group are presented in United States dollar (“US$”), which is the functional currency of the Company and the presentation currency for the fi nancial statements of the Group. For the purpose of IFRS 8 Operating Segments, the Group has only one segment, being “Investments” which comprise investments in joint ventures and equity instrument at fair value through profi t or loss as disclosed in Notes 10 and 11 to the fi nancial statements respectively. No further operating segment fi nancial information is therefore disclosed. The preparation of the 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 period/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. 44 MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS For the Financial Period from 1 April 2019 to 30 September 2020 2. Summary of signifi cant accounting policies (Continued) 2.1 Basis of preparation of the fi nancial statements (Continued) Revisions to accounting estimates are recognised in the fi nancial period/year in which the estimate is revised if the revision affects only that fi nancial period/year, or in the fi nancial period/year of the revision and future fi nancial years if the revision affects both current and future fi nancial period/years. Critical accounting judgements and key sources of estimation uncertainty used that are signifi cant to the fi nancial statements are disclosed in Note 3 to the fi nancial statements. Changes in accounting policies New standards, amendments and interpretations effective from 1 April 2019 The standards, amendments to standards, and interpretations, issued by International Accounting Standards Board (“IASB”) that will apply for the fi rst time by the Group are not expected to impact the Group as they are either not relevant to the Group’s business activities or require accounting which is consistent with the Group’s current accounting policies, except as detailed below. IFRS 16 Leases IFRS 16 supersedes IAS 17 Leases and IFRIC 4 Determining whether an Arrangement Contains a Lease. IFRS 16 provides a single lessee accounting model which eliminates the distinction between operating and fi nance leases for lessees. IFRS 16 requires lessee to capitalise all leases on the consolidated statement of fi nancial position by recognising a ‘right-of-use’ asset and a corresponding lease liability for the present value of the obligation to make lease payments, except for certain short-term leases and leases of low-value assets. Subsequently, the right-of-use assets will be amortised and the lease liabilities will be measured at amortised cost. From the perspective of a lessor, the classifi cation and accounting for operating and fi nance leases remains substantially unchanged under IFRS 16. The Group applied IFRS 16 retrospectively with the cumulative effect of initially applying this standard as an adjustment to the opening retained earnings as at 1 April 2019 (the “date of initial application”). The Group elected to apply the practical expedient to not reassess whether a contract is, or contains a lease at the date of initial application. Contracts entered into before the transition date that were not identifi ed as leases under IAS 17 and IFRIC 4 were not reassessed. The defi nition of lease under IFRS 16 was applied only to contracts entered into or changed on or after 1 April 2019. In applying the modifi ed retrospective approach, the Group has taken advantage of the following practical expedient: • Leases with a remaining term of twelve months from the date of initial application have been accounted for as short-term leases (i.e. not recognised on statement of fi nancial position) even though the initial term of the leases from lease commencement date may have been more than twelve months; As the date of initial application, all of the Group’s existing lease contracts were accounted for as short- term leases as the remaining lease terms from the date of initial application were less than 12 months. In addition, there was no additional lease contracts entered into during the current fi nancial period. As such, there is no material impact to the Group’s fi nancial statements upon adoption of IFRS 16. MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2020 45 NOTES TO THE FINANCIAL STATEMENTS For the Financial Period from 1 April 2019 to 30 September 2020 2. Summary of signifi cant accounting policies (Continued) 2.1 Basis of preparation of the fi nancial statements (Continued) Changes in accounting policies (Continued) New standards, amendments and interpretations issued but 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 10, IAS 28 (Amendments) IFRS 3 IAS 1, IAS 8 IFRS 9, IAS 39, IFRS 7 (Amendments) Various Amendments Sale or Contribution of Assets between an Investor and its Associate or Joint Venture Defi nition of a Business Defi nition of Material Interest Rates Benchmark Reform References to the Conceptual Framework in IFRS Standards IFRS 16 (Amendments) Covid-19-Related Rent Concessions IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 (Amendments) Interest Rates Benchmark Reform – Phase 2 IFRS 3 (Amendments) References to the Conceptual Framework IAS 16 (Amendments) Property, Plant and Equipment - Proceeds before Intended Use IAS 37 (Amendments) Onerous Contracts – Cost of Fulfi lling a Contract Various Annual Improvements to IFRSs 2018-2020 IAS 1 (Amendments) Classifi cation of Liabilities as Current or Non-current IFRS 17 and amendments to IFRS 17 Insurance Contracts Effective date (annual periods beginning on or after) To be determined 1 January 2020 1 January 2020 1 January 2020 1 January 2020 1 June 2020 1 January 2021 1 January 2022 1 January 2022 1 January 2022 1 January 2022 1 January 2023 1 January 2023 Consequential amendments were also made to various standards as a result of these new or revised standards. 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 fi nancial statements. 2.2 Basis of consolidation The consolidated financial statements comprise the financial statements of the Company and its subsidiaries. Subsidiaries are entities over which the Group has control. The Group controls an investee if the Group has power over the investee, exposure to variable returns from its involvement with the investee, and the ability 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. Subsidiaries are consolidated from the date on which the Group obtains control over the investee and cease from consolidation when the control is lost. Control is reassessed whenever the facts and circumstances indicate that they may be a change in the elements of control. 46 MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS For the Financial Period from 1 April 2019 to 30 September 2020 2. Summary of signifi cant accounting policies (Continued) 2.2 Basis of consolidation (Continued) All intra-group balances and transactions and any unrealised income and expenses arising from intra-group transactions are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides an impairment indicator of the transferred asset. The fi nancial statements of the subsidiaries are prepared for the same reporting period as that of the Company, using consistent accounting policies. Where necessary, accounting policies of subsidiaries are changed to ensure consistency with the policies adopted by the Group. Non-controlling interests Non-controlling interests represents the equity in subsidiaries which is not attributable directly or indirectly to the equity owners of the parent. They are shown separately in the consolidated statements of comprehensive income, consolidated statement of changes in equity and consolidated statement of fi nancial position. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a defi cit balance. Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions (i.e. transactions with owners). 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, it derecognises the assets and liabilities of the subsidiary and any non-controlling interest. 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 retained earnings) 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 IFRS 9 or, when applicable, the cost on initial recognition of an investment in an associate or joint venture. 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 (Note 2.2). 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. MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2020 47 NOTES TO THE FINANCIAL STATEMENTS For the Financial Period from 1 April 2019 to 30 September 2020 2. Summary of signifi cant accounting policies (Continued) 2.3 Joint arrangements (Continued) 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 In preparing the fi nancial statements of the individual entities, transactions in currencies other than the entity’s functional currency are recorded at the rate of exchange prevailing on the date of the transaction. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing as of the end of the reporting period. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences arising on the settlement of monetary items, and on retranslation of monetary items are included in profi t or loss for the period. Exchange differences arising on the retranslation of non- monetary items carried at fair value are included in 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. For such non-monetary items, any exchange component of that gain or loss is also recognised directly in equity. 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 period/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. 2.6 Income tax Income tax expense comprise current tax expense and deferred tax expense. Current income tax Current income tax expense is the amount of income tax payable in respect of the taxable profi t for a period. Current income tax liabilities for the current and prior periods shall be measured at the amount expected to be paid to the taxation authorities, using the tax rates and interpretation to applicable tax laws in the countries where the Group operates, that have been enacted or substantively enacted by the end of the reporting period. Management evaluates its income tax provisions on periodical basis. Current income tax expenses are recognised in profi t or loss, except to the extent that the tax relates to items recognised outside profi t or loss, either in other comprehensive income or directly in equity. 48 MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS For the Financial Period from 1 April 2019 to 30 September 2020 2. Summary of signifi cant accounting policies (Continued) 2.6 Income tax (Continued) Deferred tax Deferred tax is recognised on all temporary differences between the carrying amounts of assets and liabilities in the fi nancial statements and the corresponding tax bases of asset and liabilities, except when the temporary difference arises from the initial recognition of goodwill or other assets and liabilities that is not a business combination and affects neither the accounting profi t nor taxable profi t. Deferred tax liabilities are recognised for all taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the timing of reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets are recognised for all deductible temporary differences to the extent that it is probable that taxable profi t will be available against which the temporary difference can be utilised. The carrying amount of deferred tax assets is reviewed at the end of each reporting period 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 deferred tax asset to be utilised. Deferred tax assets and liabilities are measured using the tax rates expected to apply for the period when the asset is realised or the liability is settled, based on tax rate and tax law that have been enacted or substantially enacted by the end of reporting period. The measurement of deferred tax refl ects the tax consequences that would follow from the manner in which the Group expects to recover or settle its assets and liabilities, except for investment properties at fair value which are presumed to be recovered through sale. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis. Deferred tax is recognised in profi t or loss, except when it relates to items recognised outside profi t or loss, in which case the tax is also recognised either in other comprehensive income or directly in equity, or where it arises from the initial accounting for a business combination. Deferred tax arising from a business combination, is taken into account in calculating goodwill on acquisition. 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. MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2020 49 NOTES TO THE FINANCIAL STATEMENTS For the Financial Period from 1 April 2019 to 30 September 2020 2. Summary of signifi cant accounting policies (Continued) 2.7 Plant and equipment (Continued) 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 period/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 fi nancial statements. 2.8 Impairment of non-fi nancial assets At the end of each reporting period, the Group reviews the carrying amounts of its non-fi nancial assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. The recoverable amount of an asset or cash-generating unit is the higher of its fair value less costs to sell and its value in use. In assessing value in use, the estimated future cash fl ows are discounted to their present value using a pre-tax discount rate that refl ects current market assessments of the time value of money and the risks specifi c to the asset. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profi t or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease. Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profi t or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase. 50 MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS For the Financial Period from 1 April 2019 to 30 September 2020 2. Summary of signifi cant accounting policies (Continued) 2.9 Non-current assets held-for-sale Non-current assets are classifi ed as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classifi cation. Non-current assets classifi ed as held for sale are measured at the lower of the asset’s previous carrying amount and fair value less costs to sell. The assets are not depreciated or amortised while classifi ed as held for sale. Any impairment loss on initial classifi cation and subsequent measurement is recognised as an expense. Any subsequent increase in fair value less costs to sell (not exceeding the accumulated impairment loss that has been previously recognised) is recognised in profi t or loss. 2.10 Financial Instruments The Group recognises a fi nancial asset or a fi nancial liability in its statement of fi nancial position when, and only when, the Group becomes party to the contractual provisions of the instrument. Financial assets The Group classifi es its fi nancial assets into one category, at amortised cost, depending on the Group’s business model for managing the fi nancial assets as well as the contractual terms of the cash fl ows of the fi nancial asset. The Group shall reclassify its affected fi nancial assets when and only when the Group changes its business model for managing these fi nancial assets. The Group’s accounting policy for fi nancial assets at amortised cost is as follows: Amortised cost These assets arise principally from the provision of goods and services to customers (e.g. trade receivables), but also incorporate other types of fi nancial assets where the objective is to hold these assets in order to collect contractual cash fl ows and the contractual cash fl ows are solely payments of principal and interest. 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. Interest income from these fi nancial assets is included in interest income using the effective interest rate method. Impairment provisions for trade receivables are recognised based on the simplifi ed approach within IFRS 9 using the provision matrix to determine the lifetime expected credit losses. For trade receivables, which are reported net, such provisions are recorded in a separate provision account with the loss being recognised within administrative expenses in the statement of comprehensive income. On confi rmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision. Impairment provisions for other receivables and cash and cash equivalents are recognised based on a forward looking expected credit loss model. The methodology used to determine the amount of the provision is based on whether at each reporting date, there has been a signifi cant increase in credit risk since initial recognition of the fi nancial asset. For those where the credit risk has not increased signifi cantly since initial recognition of the fi nancial asset, twelve month expected credit losses along with gross interest income are recognised. For those for which credit risk has increased signifi cantly, lifetime expected credit losses along with the gross interest income are recognised. For those that are determined to be credit impaired, lifetime expected credit losses along with interest income on a net basis are recognised. The Group’s financial assets measured at amortised cost comprise other receivables (excluding prepayments) and cash and cash equivalents in the statement of fi nancial position. MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2020 51 NOTES TO THE FINANCIAL STATEMENTS For the Financial Period from 1 April 2019 to 30 September 2020 2. Summary of signifi cant accounting policies (Continued) 2.10 Financial Instruments (Continued) Financial assets (Continued) Equity instruments at fair value through profi t or loss (“FVTPL”) For equity instruments that are either held for trading or irrevocable election to measure the fair value changes through other comprehensive income has not been made, the fair value changes are recognised in profi t or loss. 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. Financial liabilities and equity instruments Financial liabilities 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 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 in the consolidated statement of fi nancial position comprise cash and bank balances and short-term deposit which are readily convertible to known amounts of cash and are subject to insignifi cant risk of changes in value. 2.12 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. 52 MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS For the Financial Period from 1 April 2019 to 30 September 2020 2. Summary of signifi cant accounting policies (Continued) 2.12 Share-based payments (Continued) 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. 3. Signifi cant accounting judgements and estimates The preparation of the Group’s 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 Critical judgements made in applying the entity’s 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. 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 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 equity instrument at fair value through profi t or loss The Group’s equity instrument at fair value through profi t or loss 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 being the EV/EBITDA multiple. In estimating the fair value of an asset or a liability, the Group uses market-observable data to the extent it is available. Where Level 1 inputs are not available, the Group engages internal 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 Investment Committee reports its 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 unquoted equity instrument at fair value through profi t or loss are disclosed in Note 11 to the fi nancial statements. MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2020 53 NOTES TO THE FINANCIAL STATEMENTS For the Financial Period from 1 April 2019 to 30 September 2020 3. Signifi cant accounting judgements and estimates (Continued) 3.2 Key sources of estimation uncertainty (Continued) (ii) Impairment of investments in joint ventures The Group follows the guidance of IAS 36 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 before classifi cation as non-current asset held for sale 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 18 to the fi nancial statements. 4. Finance income Interest income 5. Employee benefi ts expense Salaries, wages and other staff benefi ts Bonuses Share options expense (Note 18) Financial period from 1 April 2019 to 30 September 2020 US$ 491 Financial period from 1 April 2019 to 30 September 2020 US$ 826,415 50,000 21,908 898,323 Financial year ended 31 March 2019 US$ 514 Financial year ended 31 March 2019 US$ 739,024 37,821 139,498 916,343 The employee benefi ts expense includes the remuneration of Directors as disclosed in Note 20 to the fi nancial statements. 54 MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS For the Financial Period from 1 April 2019 to 30 September 2020 6. Finance costs Finance costs represent bank charges for the fi nancial period/year. 7. Profi t/(Loss) before income tax In addition to the charges and credits disclosed elsewhere in the notes to the fi nancial statements, the above includes the following charges: Auditor’s remuneration Consultants fees Fixed assets written off Operating lease expenses Short term leases Professional fees Travel and accommodation 8. Income tax expense Current income tax - current fi nancial period/year - over-provision in prior fi nancial year Financial period from 1 April 2019 to 30 September 2020 US$ 103,397 218,999 17,384 – 84,206 599,324 54,572 Financial year ended 31 March 2019 US$ 61,278 268,564 – 91,381 – 287,288 59,769 Financial period from 1 April 2019 to 30 September 2020 US$ Financial year ended 31 March 2019 US$ 3,703 (2,397) 1,306 1,574 (1,138) 436 A reconciliation of income tax applicable to profi t/(loss) before income tax at the statutory income tax rate of 25% (2019: 25%) in Myanmar is as follows: Profi t/(Loss) before income tax Share of results of joint venture, net of tax (Note 10) Financial period from 1 April 2019 to 30 September 2020 US$ 3,677,574 926,004 4,603,578 Financial year ended 31 March 2019 US$ (2,448,768) 491,290 (1,957,478) MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2020 55 NOTES TO THE FINANCIAL STATEMENTS For the Financial Period from 1 April 2019 to 30 September 2020 8. Income tax expense (Continued) Income tax at the applicable tax rates Effects of different income tax rates in other countries Over-provision in prior fi nancial year Tax effects of expenses not deductible for tax purposes Income tax exemption Income tax for the fi nancial period/year 9. Earnings/(Loss) per share Financial period from 1 April 2019 to 30 September 2020 1,150,895 (1,151,928) (2,397) 5,741 (1,005) 1,306 Financial year ended 31 March 2019 (489,370) 489,905 (1,138) 1,039 – 436 Basic earnings or loss per share is calculated by dividing the profi t or loss for the fi nancial period/year attributable to owners of the parent by the weighted average number of ordinary shares outstanding during the fi nancial period/year. The following refl ects the profi t or loss and share data used in the basic and diluted earnings or loss per share computation: Financial period from 1 April 2019 to 30 September 2020 Financial year ended 31 March 2019 Profi t/(Loss) for the fi nancial period/year attributable to owners of the Company (US$) 1,616,159 (2,420,931) Weighted average number of ordinary shares during the fi nancial period/year applicable to basic profi t or loss per share 38,097,037 37,685,988 Earnings/(Loss) per share Basic and diluted (cents) 4.24 (6.42) Diluted earnings or loss per share is the same as the basic earnings or loss per share because the potential ordinary shares to be converted arising from share options and warrants are anti-dilutive. 56 MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS For the Financial Period from 1 April 2019 to 30 September 2020 10. Investments in joint ventures Investments in joint ventures Unquoted equity investments, at cost Share of post-acquisition results of joint venture, net of tax Share of post-acquisition foreign currency translation reserve Disposal of joint venture during the fi nancial period/year Advances to joint ventures Reclassifi ed to non-current asset held-for-sale Movement during the period/year Balance at beginning of fi nancial period/year Investments during the fi nancial period/year Share of results of joint ventures, net of tax Share of foreign currency translation reserve Advances during the fi nancial period/year Disposal of joint venture during the fi nancial period/year Reclassifi ed to non-current asset held-for-sale Balance at end of fi nancial period/year 30 September 2020 US$ 4,815,000 (1,547,221) (76,560) 3,191,219 (638,752) – (2,552,467) – 3,717,909 – (926,004) 399,314 – (638,752) (2,552,467) – 31 March 2019 US$ 4,190,000 (621,217) (475,874) 3,092,909 – 625,000 – 3,717,909 3,347,783 500,000 (491,290) (263,584) 625,000 – – 3,717,909 Medicare International Health and Beauty Pte. Ltd. and its subsidiary (“MIHB Group”) On 28 November 2019, the Group disposed its entire investment in MIHB Group for US$1,000,000. For the period from 1 April 2019 to 28 November 2019 (date of disposal), the Group recorded share of losses from its investment in MIHB Group amounting to US$576,305. The carrying amount of the Group’s investment in MIHB Group as at the date of disposal was US$638,752. As a result, the Group recognised a gain on disposal of US$361,248. 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. MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2020 57 NOTES TO THE FINANCIAL STATEMENTS For the Financial Period from 1 April 2019 to 30 September 2020 10. Investments in joint ventures (Continued) Myanmar Finance International Ltd. (Continued) In the previous fi nancial year, MFIL issued 1,000,000 shares for a consideration of US$1,000,000 for which the Group subscribed for 375,000 shares and MFIL capitalised the previous year’s advance of US$375,000. MFIL is a well-established provider of microfi nance loans to small-scale business operators in rural and urban areas of Yangon, Bago and Mon State. MFIL is deemed to be a joint venture of the Group 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 details 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. (Singapore) Provider of beauty, health, and pharmaceutical products Myanmar Finance International Limited (Myanmar) Provider of microfi nance loans Effective equity interest held by the Group 2019 % 2020 % – – 48.6 37.5 On 26 February 2020, MIL together with each of the other shareholders of MFIL, have received a Binding Offer (“BO”) to sell the entire share capital of MFIL to Thitikorn Plc (“TK”) (the “Purchaser”), a consumer fi nance company incorporated in Thailand and listed on the Stock Exchange of Thailand. The original BO was executed on 17 March 2020 with the intention of agreeing and executing the Sale and Purchase Agreement (“SPA”) within a month. However, due to the outbreak of Covid-19, the regulatory approval could not be obtained in time. Therefore, the BO has been extended for several times and the latest BO has been extended to 5 December 2020. Management expects it to further extend to early 2021. In accordance with the BO, the minimum consideration for this transaction will be calculated based on a pre- agreed formula of 2 times the audited book value of MFIL at closing once conditions above have been satisfi ed. As the result of the ongoing transaction above, the entire carrying amount of the Group’s investment in MFIL has been reclassifi ed as non-current asset held for sale as at 30 September 2020 (Note 16). 58 MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS For the Financial Period from 1 April 2019 to 30 September 2020 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 Group’s share of those amounts), adjusted for differences in accounting policies between the Group and the joint venture. Myanmar Finance International Limited 2019 US$ 8,018,244 14,267,838 431,547 22,717,629 185,859 22,903,488 16,549,637 – 16,549,637 6,353,851 – 6,353,851 Medicare International Health and Beauty Pte. Ltd. and its subsidiary 2019 US$ 524,854 – 17,562 542,416 1,857,808 2,400,224 20,893 – 20,893 2,379,331 100,000 2,479,331 Total 2019 US$ 8,543,098 14,267,838 449,109 23,260,045 2,043,667 25,303,712 16,570,530 – 16,570,530 8,733,182 100,000 8,833,182 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 Investments in joint ventures 37.5% 48.6% 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 2,382,852 120,000 2,502,852 1,215,057 – 1,215,057 3,597,909 120,000 3,717,909 3,802,329 213,565 (1,799,148) (57,283) (1,619,374) (242,073) 298,016 185,072 – (1,426,185) – – – (1,241,113) 3,987,401 213,565 (3,225,333) (57,283) (1,619,374) (242,073) (943,097) Share of results of joint ventures, net of tax 111,764 (603,054) (491,290) MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2020 59 NOTES TO THE FINANCIAL STATEMENTS For the Financial Period from 1 April 2019 to 30 September 2020 11. Equity instrument at fair value through profi t or loss 30 September 2020 US$ 31 March 2019 US$ Investment in unquoted equity instrument, at fair value 42,500,000 36,000,000 The Group, through its 66.67% subsidiary, MIL 4 Limited (“MIL 4”) invested in a 6.2% equity interest in unquoted share capital of AP Towers Holdings Pte. Ltd. (“AP Towers”) (31 March 2019: 13.7% equity interest in Apollo Towers Holdings Limited (“Apollo Towers”)). On 23 January 2020, MIL 4 exchanged its investment in Apollo Towers for shares in AP Towers which owns Pan Asia Majestic Eagle Limited (“Pan Asia Towers”), another Myanmar independent tower company. Under the share swap, MIL 4 has exchanged its existing 13.7 per cent shareholding in Apollo Towers for a shareholding of 6.2 per cent in AP Towers. The share swap effectively brings Apollo Towers and Pan Asia Towers under common ownership of AP Towers. Movement in the investment in unquoted equity instrument is as follows: Balance at beginning of fi nancial period/year Fair value gain during the fi nancial period/year Balance at end of fi nancial period/year 30 September 2020 US$ 36,000,000 6,500,000 42,500,000 31 March 2019 US$ 36,000,000 – 36,000,000 The Group intends to hold these investments for long-term appreciation in value as well as strategic investment purposes. Management engaged their internal valuation specialists to perform a valuation on the investment. The valuation of the unquoted investment is categorised into Level 3 (2019: 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 30 September 2020 Unquoted equity investments 31 March 2019 Unquoted equity investments Valuation technique used Signifi cant unobservable inputs Comparable company analysis - Earnings Before Interest, Tax, Depreciation and Amortisation (“EBITDA”) of US$83.4million - Enterprise Value (“EV”) per EBITDA multiple of 13.1x Inter-relationship between key unobservable inputs and fair value Increase EBITDA and EV/ EBITDA multiple will increase the fair value of the fi nancial asset. Comparable company analysis - Earnings Before Interest, Tax, Depreciation and Amortisation (“EBITDA”) of US$32.2million Increase EBITDA and EV/ EBITDA multiple will increase the fair value of the fi nancial asset. - Enterprise Value (“EV”) per EBITDA multiple of 15.4x 60 MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS For the Financial Period from 1 April 2019 to 30 September 2020 Computer equipment US$ Offi ce equipment US$ Furniture and fi ttings US$ 10,852 (10,852) – 6,865 2,326 (9,191) – 1,118 (1,118) – 1,118 – (1,118) – 56,469 (56,469) – 22,353 18,393 (40,746) – Total US$ 68,439 (68,439) – 30,336 20,719 (51,055) – – – – – 9,983 869 10,852 3,472 3,393 6,865 3,987 1,118 – 1,118 796 322 1,118 51,985 4,484 56,469 4,067 18,286 22,353 63,086 5,353 68,439 8,335 22,001 30,336 – 34,116 38,103 12. Plant and equipment 2020 Cost Balance at 1 April 2019 Written off Balance at 30 September 2020 Accumulated depreciation Balance at 1 April 2019 Depreciation for the fi nancial period Written off Balance at 30 September 2020 Carrying amount Balance at 30 September 2020 2019 Cost Balance at 1 April 2018 Additions Balance at 31 March 2019 Accumulated depreciation Balance at 1 April 2018 Depreciation for the fi nancial year Balance at 31 March 2019 Carrying amount Balance at 31 March 2019 MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2020 61 NOTES TO THE FINANCIAL STATEMENTS For the Financial Period from 1 April 2019 to 30 September 2020 13. Investment in subsidiaries Details of the subsidiaries are as follows: Name of subsidiaries Country of incorporation/ principal place of business Principal activities Myanmar Investments Limited(1) Singapore Investment holding company Proportion of ownership interest held by the Group 2019 2020 % % 100 100 MIL Management Pte. Ltd.(1) Singapore Provision of management services to the Group 100 100 Proportion of ownership interest held by non-control interests 2020 % 2019 % – – – – MIL 4 Limited(1) British Virgin Islands Investment holding company 66.67 66.67 33.33 33.33 Held by MIL Management Pte. Ltd. MIL Management Co., Ltd(2) (1) (2) Audited by BDO LLP, Singapore. In the process of striking off. Non-controlling interests Myanmar Provtision of management services to the Group 100 100 – – The summarised financial information before intra-group elimination of the subsidiary that has material non-controlling interests as at the end of each reporting period is as follows: Assets and liabilities Non-current assets Current assets Current liabilities Net assets Accumulated non-controlling interests Revenue Other income Administrative expenses Profi t/(Loss) and total comprehensive income/(loss) for the fi nancial period/year Profi t/(Loss) and total comprehensive income/(loss) allocated to non-controlling interests Operating cash fl ows before working capital changes Working capital changes Net cash used in operating activities Net change in cash and cash equivalents MIL 4 Limited 30 September 2020 US$ 31 March 2019 US$ 42,500,000 71,067 (764,373) 41,806,694 36,000,000 72,896 (446,529) 35,626,367 13,935,567 11,875,458 – 6,500,000 (319,673) – – (84,822) 6,180,327 (84,822) 2,060,109 (319,673) 319,673 – – (28,273) (84,822) 84,822 – – 62 MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS For the Financial Period from 1 April 2019 to 30 September 2020 14. Other receivables Other receivables Deposits Prepayments Other receivables are denominated in United States dollar. 15. Cash and cash equivalents Cash and bank balances Short-term deposit 30 September 2020 US$ 211,962 9,061 47,811 268,834 31 March 2019 US$ 123,099 23,310 32,366 178,775 30 September 2020 US$ 2,316,539 47,627 2,364,166 31 March 2019 US$ 3,673,110 47,411 3,720,521 The short-term deposit bears interest at an average rate of between 0.95% to 1.40% (31 March 2019: 0.35% to 0.95%) per annum, has a tenure of approximately 12 months (31 March 2019: 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 30 September 2020 US$ 2,232,114 129,031 3,021 2,364,166 31 March 2019 US$ 3,562,238 148,419 9,864 3,720,521 For the purpose of the statement of cash fl ows, cash and cash equivalents comprise the following at the end of the fi nancial period/year: Bank balances Less: short-term deposits pledged 30 September 2020 US$ 2,364,166 (47,627) 2,316,539 31 March 2019 US$ 3,720,521 (47,411) 3,673,110 MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2020 63 NOTES TO THE FINANCIAL STATEMENTS For the Financial Period from 1 April 2019 to 30 September 2020 16. Non-current asset classifi ed as held for sale As the result of the ongoing transaction to sell the Group’s 37.5% equity interest in MFIL (Note 10), the entire carrying amount of the Group’s investment in MFIL has been reclassifi ed as non-current asset held for sale as at 30 September 2020. Details of assets in non-current asset classifi ed as held-for-sale are as follows: Investment in joint venture – 37.5% equity interest in Myanmar Finance International Limited 2,552,467 The summarised fi nancial information below refl ects the amounts presented in the fi nancial statements of the MFIL (and not the Group’s share of those amounts), adjusted for differences in accounting policies between the Group and MFIL. At 30 September 2020 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 The Group’s equity interest in MFIL Share of net assets Premium paid Myanmar Finance International Limited At 30 September 2020 US$ 12,906,791 17,469,857 671,005 31,047,653 324,734 31,372,387 18,228,173 6,657,692 24,885,865 6,486,522 6,486,522 37.5% 2,432,467 120,000 2,552,467 64 MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS For the Financial Period from 1 April 2019 to 30 September 2020 16. Non-current asset classifi ed as held for sale (Continued) Myanmar Finance International Limited Financial period from 1 April 2019 to 30 September 2020 US$ 7,582,599 744,308 (4,446,815) (133,743) (4,680,419) 1,539 (932,531) (349,699) Income and expenses Revenue Other income Operating expense Depreciation Interest expense Tax credit Loss after income tax Share of results of MFIL, net of tax, before classifying as non-current asset held for sale 17. Share capital Issued and fully-paid share capital: Ordinary shares at the beginning of the fi nancial period/ year Exercise of warrants during the fi nancial period/year Share issuance expenses 30 September 2020 US$ 31 March 2019 US$ 40,569,059 – – 40,569,059 40,161,942 491,916 (84,799) 40,569,059 Equity Instruments in issue At the beginning of the fi nancial period/year Exercise of warrants during the fi nancial period/year At the end of the fi nancial period/year 2020 2019 Ordinary shares Warrants Ordinary shares Warrants 38,097,037 14,128,387 37,432,291 15,346,507 – 38,097,037 – 14,128,387 664,746 38,097,037 (1,218,120) 14,128,387 The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share without restriction at meetings of the Company. MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2020 65 NOTES TO THE FINANCIAL STATEMENTS For the Financial Period from 1 April 2019 to 30 September 2020 17. Share capital (Continued) In the previous fi nancial year, 202,905 and 377,486 warrants were exercised at a price of US$0.75 and US$0.90 respectively by the parties that held them for cash consideration of US$152,179 and US$339,737. In addition, 637,729 warrants were exercised on a cashless basis at a ratio of 7.56 warrants for an ordinary share resulting in a new issue of 84,356 ordinary shares. All the shares have been admitted to trading on AIM under the ticker MIL. The new ordinary shares issued in the previous 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 period. On 16 September 2016, the Company allotted 811,368 warrants pursuant to the Fourth Subscription. The Company had agreed that for every four Ordinary Shares subscribed for by a subscriber they would receive one warrant at nil cost. The warrants entitle the holder to subscribe for an Ordinary share at an exercise price of US$0.75. The warrants may be exercised during each 15 Business Day period commencing on the fi rst day of each Quarter during the Subscription Period (from 21 June 2015 to 21 June 2018). On 22 May 2018, the Company amended the existing warrants to extend the exercise period for warrants that remained outstanding at 21 June 2018: a) b) the exercise period for the warrants was extended such that the warrants can be exercised until 31 December 2021, but at a higher exercise price of US$0.90; and in the extended period, warrantholders will have the option to exercise their warrants on a cashless basis in certain circumstances. All warrants have been admitted to trading on AIM under the ticker MILW. 18. Share option reserve Details of the Share Option Plan (the “Plan”) The Plan allows for the total number of shares issuable under share options to constitute a maximum of one tenth of the number of the total number of ordinary shares in issue (excluding shares held by the Company as treasury shares and shares issued to the Founders prior to Admission). Any future issuance of shares will give rise to the ability of the Remuneration Committee to award additional share options. Such share options will be granted with an exercise price set at a 10 percent premium to the subscription price paid by shareholders on the relevant issue of shares that gave rise to the availability of each tranche of share options. Share options can be exercised any time after the 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. 66 MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS For the Financial Period from 1 April 2019 to 30 September 2020 18. Share option reserve (Continued) As at 30 September 2020, there were 3,622,740 (2019: 3,622,740) share options available for issue under the Plan of which 2,590,527 (2019: 2,590,527) had been granted. These granted share options have a weighted average exercise price of US$1.214 (2019: US$1.214) per share and a weighted average contractual life of 5 years (2019: 6.5 years). The 3,622,740 share options available were created under the following series: Series/Date Occasion Series 1/June 2013 Series 2/ December 2014 Series 3/ July 2015 Series 4/ September 2016 Series 5/ June 2017 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 The following share-based payment arrangements were in existence during the current fi nancial period: Option series Number of share options Grant date Expiry date Series 1 Series 1 Series 1 Series 2 Series 1 Series 2 Series 3 Series 3 Series 1 Series 2 Series 3 410,000 25,000 132,261 23,500 10,200 331,700 921,600 180,000 2,267 2,000 551,999 2,590,527 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 Exercise price (USD) 1.100 1.100 1.100 1.155 1.100 1.155 1.265 1.265 1.100 1.155 1.265 Fair value at grant date 153,487 19,015 62,937 14,365 6,235 193,562 490,120 125,863 1,363 1,149 289,752 1,357,848 Share options that are allocated to a Participant are subject to a three year vesting period during which the rights to the share options will be transferred to the Participant in three equal annual instalments provided, save in certain circumstances, that they are still in employment with or engaged by the Company. Fair value of share options granted in the fi nancial period No share options were granted during the fi nancial period. The weighted average fair value of the share options granted in the previous fi nancial year was US$0.569. Share options were priced using Black-Scholes option pricing model. Where relevant, the expected life used in the model was adjusted based on management’s best estimate for the effects of non-transferability, exercise restrictions (including the probability of meeting market conditions attached to the option), and behavioural considerations. Expected volatility was based on historical share price volatility from the date of grant of the share options. MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2020 67 NOTES TO THE FINANCIAL STATEMENTS For the Financial Period from 1 April 2019 to 30 September 2020 18. Share option reserve (Continued) Fair value of share options granted in the fi nancial period (Continued) The Black-Scholes option pricing model uses the following assumptions: Grant date share price (US$) Exercise price (US$) Expected volatility Option life Risk-free annual interest rates Grant date 28 June 2016 19 October 2016 19 October 2016 19 October 2016 1.628 1.265 22.47% 10 years 1.46% 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$21,908 (2019: US$139,498) related to equity-settled share-based payment transactions during the fi nancial period/year. Movement in share option during the fi nancial period/year The following reconciles the share options outstanding at the start of the period/year and at the end of the period/ year. 2020 2019 Weighted average exercise price US$ Number 1.213 – 1.213 2,640,862 (50,335) 2,590,527 Number 2,590,527 – 2,590,527 Balance at start of the fi nancial period/year Forfeited Balance at end of fi nancial period/year No share options were exercised during the fi nancial period/year. Movement in share option reserve during the fi nancial period/year Balance at start of the fi nancial period/year Share options expense Cancellation of share options Balance at end of fi nancial period/year 30 September 2020 US$ 1,337,005 21,908 – 1,358,913 Weighted average exercise price US$ 1.214 1.265 1.213 31 March 2019 US$ 1,220,549 139,498 (23,042) 1,337,005 68 MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS For the Financial Period from 1 April 2019 to 30 September 2020 19. Other payables Accruals Other payables Other payables are denominated in the following currencies: Singapore dollar United States dollar British pound Euro Myanmar Kyat 30 September 2020 US$ 113,294 190,759 304,053 30 September 2020 US$ 58,793 224,553 3,119 11,199 6,389 304,053 31 March 2019 US$ 287,262 85,148 372,410 31 March 2019 US$ 47,474 289,963 34,973 – – 372,410 20. Signifi cant related party disclosures For the purposes of these 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. During the current fi nancial period, in addition to the information disclosed elsewhere in these fi nancial statements, there was no other signifi cant transactions with related parties. Compensation of key management personnel During the current fi nancial period, 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. MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2020 69 NOTES TO THE FINANCIAL STATEMENTS For the Financial Period from 1 April 2019 to 30 September 2020 20. Signifi cant related party disclosures (Continued) Compensation of key management personnel (Continued) The remuneration of Directors for the fi nancial period/year were as follows: Financial period from 1 April 2019 to 30 September 2020 Executive directors Maung Aung Htun Anthony Michael Dean Craig Robert Martin Nicholas John Paris Non-executive directors Christopher William Knight Henrik Onne Bodenstab Rudolf Gildemeister Financial year ended 31 March 2019 Executive directors Maung Aung Htun Anthony Michael Dean Craig Robert Martin Non-executive directors Christopher William Knight Christopher David Appleton Nicholas John Paris Henrik Onne Bodenstab Directors’ fee US$ Short term employee benefi ts US$ – – – 10,000 24,789 22,793 13,167 70,749 – – 7,500 24,375 12,333 2,500 20,000 66,708 192,823 267,209 26,333 73,333 – – – 559,698 141,156 284,008 58,250 – – – – 483,414 Share option plan US$ 5,115 5,115 1,201 – 1,201 1,136 – 13,768 41,038 38,984 8,629 8,629 5,752 – 3,736 106,768 Total US$ 197,938 272,324 27,534 83,333 25,990 23,929 13,167 644,215 182,194 322,992 74,379 33,004 18,085 2,500 23,736 656,890 21. Dividends The Directors of the Company do not recommend any dividend in respect of the fi nancial period from 1 April 2019 to 30 September 2020 (31 March 2019: Nil). 22. 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. 70 MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS For the Financial Period from 1 April 2019 to 30 September 2020 22. Financial risk management objectives and policies (Continued) The Group’s principal fi nancial instruments consist of equity instrument at fair value through profi t or loss, other receivables (excluding prepayments), cash and cash equivalents and other payables. The main risks arising from the Group’s fi nancial instruments and the policies for managing each of these risks are summarised below. 22.1 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 statement of fi nancial position. The Group has a nominal level of debtors and as such the Group 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. 22.2 Market risks Foreign currency risk 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 United States dollar. The main currencies giving rise to this risk are the Singapore Dollar, Euro, 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. 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 2020 US$ 129,031 – 3,021 – 132,052 2019 US$ 148,419 – 9,864 – 158,283 2020 US$ 58,793 11,199 6,389 3,119 79,500 2019 US$ 47,474 – – 34,973 82,447 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 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. 22.3 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. The Group’s exposure to liquidity risk is represented by its other payables, which are payable within one year from the reporting date. MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2020 71 NOTES TO THE FINANCIAL STATEMENTS For the Financial Period from 1 April 2019 to 30 September 2020 22. Financial risk management objectives and policies (Continued) 22.4 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. 22.5 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 period from 1 April 2019 to 30 September 2020 and the fi nancial year ended 31 March 2019. 23. Impact of novel coronavirus (“Covid-19”) on the Group’s operations On 31 January 2020, the World Health Organisation (“WHO”) announced that the novel coronavirus (“Covid-19”) outbreak as a global health emergency. The outbreak of Covid-19, coupled with the prolonged global trade tension, had led to the deterioration of the global economic conditions. The pandemic had already caused many industries to shut down and trade and travel worldwide were seriously disrupted. Although the situation continues to evolve with signifi cant level of uncertainty, the Group does not foresee a huge impact on its own operation. Regarding its investment in MFIL, the Group is of the view that the microfi nance industry has been impacted by Covid-19. Depending on the speed of recovery from Covid-19, MFIL’s book value at closing of the on-going transaction to sell (Note 10) may decrease. Shareholders of the Purchaser’s has approved the transaction during the annual general meeting held on 23 April 2020. However, because of the outbreak of Covid-19 which, inter alia, has stopped all commercial air travel between Myanmar and Thailand, little progress has been made in obtaining regulatory approval. Assuming a level of normalcy returns over the next few months, the completion of the transaction is expected to take place within the next 4 to 6 months. Nonetheless, the Group is of the view that there is no indicator of impairment on its investment in MFIL, because the minimum consideration for this transaction will be calculated based on a pre-agreed formula of 2 times the audited book value of MFIL at closing once conditions above have been satisfi ed, according to the Binding Offer from the Purchaser. Regarding the Group’s other investment in AP Towers, the Group is of the view that contrary to other industries, the telecommunication sector has not suffered greatly due to the outbreak of Covid-19. 24. Authorisation of fi nancial statements The fi nancial statements of the Group for the fi nancial period from 1 April 2019 to 30 September 2020 were approved by the Board of Directors on 27 November 2020. 72 MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2020 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. Due to current restrictions on the way in which we all conduct business and in particular on public gatherings related to the Covid-19 outbreak, the Directors have decided to facilitate holding the AGM remotely, while still endeavouring to create a forum for the conduct of the formal business set out in the notice of the Annual General Meeting and providing an opportunity for shareholders to raise questions of the Directors. As such, notice is hereby given that the 2020 Annual General Meeting of Myanmar Investments International Limited (the “Company”) will be held as a virtual meeting at 2.30 p.m. (Myanmar time) on 12 January 2021 for the purpose of considering and if thought fi t, passing the resolutions below (the “AGM”). The Company will offer shareholders the option to participate in the meeting remotely via a Zoom webinar that can be accessed from any computer with internet access. This facility will be used to respond to questions and for the formal business as set out in the notice of the AGM to be conducted. Questions should be submitted via email to ‘enquiries@ myanmarinvestments.com’ before 4 January 2021. Any questions submitted will be answered during the AGM. Shareholders will not be able to ask additional questions during the meeting. Shareholders will not be able to vote at the meeting if they attend via the Zoom conference call. The Board therefore encourages shareholders to submit proxy forms to appoint the Chairman of the meeting as their proxy with their voting instructions. As such, please fi ll in the proxy form sent to you with this document and return it to our registrars as soon as possible. Members who want to attend the virtual AGM by Zoom conference have to mark this on the proxy form and are requested to provide an email address which the company can use to circulate the dial in information for the Zoom conference. Ordinary Resolutions Each of the following resolutions will be proposed as an ordinary resolution: 1. 2. 3. 4. To receive and adopt the Company’s annual accounts for the fi nancial period from 1 April 2019 to 30 September 2020 together with the directors’ report and auditors’ report on those accounts. 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. To authorise the directors to determine the remuneration of BDO LLP as auditors of the Company. To reappoint Rudolf Gildemeister, who retires by rotation as required by Article 8.5 of the Articles of Association of the Company, as a non-executive director of the Company. By Order of the Board OCORIAN Corporate Services (BVI) Limited Secretary 27 November 2020 Registered Offi ce: Jayla Place Wickhams Cay 1 Road Town Tortola VG1110 British Virgin Islands MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2020 73 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 4 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. Due to restrictions related to the Covid-19 outbreak, the meeting will be held remotely via a Zoom conference call. If you wish to use this facility, please note your intention on the proxy form and you will be provided with the necessary dial in details in due course. Please note that shareholders will not be able to use this facility to actively participate in the meeting by voting on the resolutions or asking questions. All proxy appointments should be received by no later than 17:30 BST on 07 January 2021. CREST members are strongly recommended to vote electronically through the CREST electronic proxy appointment service as your vote will automatically be counted. Shareholders are encouraged to submit any question that you would like to be answered at the meeting by emailing such questions to enquiries@myanmarinvestments.com, so that it is received by no later than 12 midnight on 03 January 2020. The Company will endeavour to respond to all questions received from shareholders at the AGM or within seven days following the AGM. Voting at the meeting will be conducted by means of a poll on all resolutions, with each shareholder having one vote for each share held, thereby allowing all those proxy votes submitted and received prior to the meeting to be counted. 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. 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 05 January 2021. For holders of ordinary shares, 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 07 January 2021 with the Company’s registrars, Link Asset Services, PXS 1, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4ZF. 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 08 January 2021, 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. As at the close of business on the date immediately preceding this notice the Company’s issued share capital comprised 38,097,037 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 38,097,037. 10. CREST members who wish to appoint the Chairman of the AGM 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 07 January 2021, 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). Members can only cast their votes by appointing the Chairman of the AGM to act as their proxy. If a shareholder appoints someone else as their proxy, that proxy will not be able to attend the AGM in person or cast the shareholder’s vote. 11. 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 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 AGM or any adjourned meeting. If you attempt to revoke your proxy appointment but the revocation is received after the time specifi ed then, subject to the paragraph directly below, your proxy appointment will remain valid. 74 MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2020 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 Henrik Onne Bodenstab, Independent Non-Executive Chairman Maung Aung Htun, Deputy Chairman Nicholas John Paris, Managing Director Rudolf Gildemeister, 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 EC2A 1AG 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 British Virgin Islands law) Appleby Jayla Place Wickhams Cay I Road TownTortola 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: Ng Kian Hui (Appointed since the fi nancial period ended 30th September 2020) Warrant Registrar Link Market Services Limited The Registry 34 Beckenham Road Beckenham Kent BR3 4TU United Kingdom Myanmar Offi ce Offi ce@36th No. 129, 36th Street, Middle block, Words 3, Kyauktada Township Yangon, Myanmar Telephone: +95 1 387 947 Broker fi nnCap Ltd 60 New Broad Street London EC2M 1JJ 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 Company Secretary OCORIAN Corporate Services (BVI) Limited Jayla Place Wickhams Cay I Road Town Tortola 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 MYANMAR INVESTMENTS INTERNATIONAL LIMITED ANNUAL REPORT 2020 75 

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