Myanmar Investments Intl Ltd Audited results for the year to 31 March 2017 (6366R)

Share Name	Share Symbol	Market	Type	Share ISIN	Share Description
Myanmar Investments International Limited	LSE:MIL	London	Ordinary Share	VGG636111004	ORD NPV

	Price Change	% Change	Share Price	Bid Price	Offer Price	High Price	Low Price	Open Price	Shares Traded	Last Trade
	0.00	0.00%	0.03	0.0235	0.04				0.00	01:00:00

Industry Sector	Turnover	Profit	EPS - Basic	PE Ratio	Market Cap
	0	0		N/A	0

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RNS Number : 6366R

Myanmar Investments Intl Ltd

25 September 2017

This announcement contains inside information

Myanmar Investments International Limited

Audited financial results for the year to 31 March 2017

Myanmar Investments International Limited [AIM: MIL] ("MIL" or the "Company"), the Myanmar focused investment company, today announces its audited financial results for the year to 31 March 2017.

Highlights

Myanmar Update

-- The new Government, led by U Htin Kyaw of the National League for Democracy ("NLD"), assumed power on 1 April 2016 with Daw Aung San Suu Kyi acting as State Counsellor.

                   --     The process of national reconciliation has begun with the establishment of the 21st Century Panglong Conference.

-- In October 2016, the United States lifted all remaining economic sanctions on the country, and readmitted the country into its preferred tariff system.

-- Myanmar was removed from the FATF "black" and "grey" lists noting significant progress in addressing strategic anti-money laundering deficiencies.

-- MyTel, a joint venture including Viettel Global of Vietnam, received a licence to operate the fourth mobile network in Myanmar in January 2017.

   --     International brand names such as Uber and GrabTaxi commenced operations in Myanmar.

-- The Companies Act is advancing through parliament and is expected to be set into law by the end of 2017.

Myanmar Investments International Limited Update

   --     MIL has raised over US$40 million since Admission, including:

o US$4.2 million raised in September 2016; and

o US$7.3 million raised in June 2017.

   --     Apollo Towers, one of Myanmar's leading telecom tower companies, continues to grow strongly:

o 13.4% market share of the Myanmar tower market;

o High quality EBITDA (from Grade A international telecom companies) has more than doubled over the past year; and

o US$250 million loan secured from the Overseas Private Investment Corporation ("OPIC") of the United States.

-- Myanmar Finance International Limited ("MFIL"), our leading microfinance joint venture, continues to scale up:

o Strong growth in its borrower base and loan book at 43,000 and US$6 million, representing Compound Annual Growth Rates ("CAGR") of 77% and 145% since investment, respectively;

o Secured US$3 million in Kyat-denominated debt facilities with more on the way; and

o Solid increase in profitability, up nearly 380% over the prior year.

-- MIL formed a three-way joint venture, Medicare, a pharmacy, health and beauty franchise business, alongside industry veterans and utilising a proven regional business model:

o Designed to capitalise on both an expected rise in consumer spending power and a notable absence of modern retail outlets with similar offerings; and

o Partners include Medicare Vietnam, the largest pharmacy, health, beauty and personal care retail group in Vietnam and Randy Guttery, an industry veteran with decades of experience in retail businesses in nine countries around Asia.

-- MIL signed a memorandum of understanding with a well-established local tour operator and travel agent to set up a joint venture company that will develop the business further as well as invest in tourism related assets.

-- The Company is continuing to progress a pipeline of potential business opportunities targeting sectors such as education, healthcare, food retailing and financial services.

   --     An additional stock exchange listing in Asia is being considered.

Aung Htun, MIL's Managing Director commented, "It has been a busy and rewarding year for Myanmar Investments. We have established a new pharmacy, health and beauty retail franchise business; our existing microfinance and telecom tower businesses have grown well; our pipeline is exciting with a few imminent prospects; and we have raised significant funds for our future expansion. As anticipated when building businesses in emerging economies there will be challenges, but I strongly believe that the rewards will be great and outweigh the risks. MIL is well placed to continue to succeed in our vision of building a diversified, but focused, stable of businesses that will benefit from Myanmar's emergence."

For further information please contact:

 
Aung Htun                         Michael Dean 
 Managing Director                 Finance Director 
 Myanmar Investments               Myanmar Investments 
 International Ltd                 International Ltd 
 +95 (0) 1 391 804                 +95 (0) 1 391 804 
 +95 (0) 94 0160 0501              +95 (0) 94 2006 4957 
 aunghtun@myanmarinvestments.com   mikedean@myanmarinvestments.com 
 
  Nominated Adviser                 Broker 
  Philip Secrett / Jamie            Andrew Pinder / David 
  Barklem/                          Herring 
  Carolyn Sansom                    Alistair Roberts (Hong 
  Grant Thornton UK LLP             Kong) 
  +44 (0) 20 7383 5100              Investec Bank plc 
                                    +44 (0) 20 7597 4000 
 
  Public Relations 
  Julian Bosdet / Dr. 
  Jenny Lee / Alejandra 
  Campuzano 
  Abchurch Communications 
  +44 (0) 20 7398 7714

Copies of the Company's annual report and accounts will be sent to shareholders and warrantholders shortly and will also be available to download from the Company's website www.myanmarinvestments.com.

CHAIRMAN'S STATEMENT

The year to 31 March 2017 has seen the Company grow and perform strongly. Post year-end the Company entered its third business and has raised a total of US$11.5 million from two rounds of fund raising in September 2016 and June 2017.

MIL's investment case is underpinned by Myanmar's continued and impressive development as a country with great potential. It is undergoing a complex transition from decades of military rule to that of a democratic country. The pace of reform under U Thein Sein's administration inevitably slowed towards the end and has remained as such whilst the new government under the leadership of Daw Aung San Suu Kyi finds its feet.

Of specific note for Myanmar Investments, the past year has witnessed:

-- strong growth at Apollo Towers, one of Myanmar's leading telecommunication tower companies, in which the Company has a 9.3% interest;

-- Apollo Towers securing a landmark US$250 million loan from the United States' Government's Overseas Private Investment Corporation ("OPIC");

-- profits up nearly 380% and greater traction in raising debt finance for Myanmar Finance International Limited ("MFIL"), our 37.5% joint venture micro-finance company;

-- an equity fund raising in September 2016 and another post year-end in June 2017, which together raised a total of US$11.5 million;

   --     further growth in developing a pipeline of exciting new business opportunities; 
   --     enhancing our network of contacts in Myanmar as well as in neighbouring countries; and 
   --     continued development of our Myanmar-based human resources capacity.

Shortly after the year end we established a retail pharmacy, healthcare and beauty franchise business with Medicare, Vietnam's leading pharmacy chain, in which we have a 45% shareholding.

Strategy

Our vision is to build a diversified but focused stable of businesses that will benefit from Myanmar's emergence.

After four years on the ground in Myanmar, the Company's overall strategy remains unchanged. However, drawing on the team's deep experience here, we have refined our approach further to achieve our goals. We therefore have a number of key criteria that we look for in any business opportunity and these are more fully described in the section "Investment Strategy Overview". These criteria can rarely be satisfied immediately with the opportunities that are available. It is therefore a case of us rolling up our sleeves and setting to work to close the gaps in those situations that we think are most of the way there, or can provide a compelling investment upside.

So when we engage in a business it may already be up and running or it may be a completely new venture. Either way, we will have formed a partnership made up of a winning combination. We work with local entrepreneurs looking for capital and expertise to grow their businesses, as well as with proven foreign players looking to bring international concepts and capability to Myanmar.

We continue to apply our efforts as an active management team, eschewing the reactive approach of a passive fund manager operating from outside the country. Our team lives and works in Myanmar, immersed and actively engaged in-country - there is nothing passive about how our business strategy is executed.

Since our admission to trading on AIM in 2013, our strategy has been to raise capital in line with our ability to deploy it. Therefore, in accordance with the strategy set out in the Company's admission document, MIL will consider raising additional equity to fund further businesses. Where appropriate we may also bring in like-minded co-investors thereby generating fee income for the Company.

As at the date of this announcement we own influential shareholdings in three businesses and have a strong pipeline, which has picked up after an initial slow down around the time of the election in Myanmar. The details of the three businesses, referred to above, are reported in detail in the Executive Directors' Review.

Corporate and Social Responsibility

The Board is fully cognisant of the responsibility that it carries in ensuring that all of our businesses operate in a manner that fully reflects our corporate and social responsibility to all our stakeholders. We therefore seek opportunities that positively impact Myanmar during its unprecedented period of re-emergence. Our strategy therefore includes an up-front evaluation of the economic, social and environmental aspects of prospective businesses.

At the corporate level we support worthwhile causes, such as the educational and healthcare development of the country or humanitarian relief efforts through charitable donations - next year's calendar will highlight this. At the business level we strongly encourage all our partners to identify and adopt practices which will help to develop the workforce, suppliers and customers in their local communities.

Impact Investing

More fundamentally, our investments have all had a significant positive impact on the lives of Myanmar citizens. To date we have established businesses in microfinance, telecommunications and healthcare, all of which are providing a positive and sustainable benefit to Myanmar and its citizens.

MFIL

MFIL today has over 48,000 borrowers. That is 48,000 households who have been economically empowered (without resorting to loan sharks) to expand their businesses (small shops, trading businesses, food stalls etc.) through MFIL's ethical lending practices. MFIL's rural outreach is 37% of its business and amplifies MFIL's impact by enabling rural communities to access formal financial services. MFIL also strongly believes in women's empowerment: 85% of its borrowers are women, while internally 62% of its management are women. More broadly, since MIL's investment, MFIL has created about 150 new jobs within the company, providing employment for young people in the areas in which MFIL operates.

Apollo Towers

Apollo Towers has built almost 15% of the country's telecoms towers. With a penetration rate of close to 80% that suggests Apollo is enabling access to mobile telephony and data for around 6.3 million people. Simple maths maybe, but the picture is clear: ordinary Myanmar citizens can now readily communicate and access information. This not only brings education and enrichment to their lives but also supports the country's productivity and economic development.

Medicare

Medicare's business practices make sure that all products provided to our customers are genuine, safe and comply with prevailing regulations. This means they have been shipped and stored properly; that the correct medicine has been dispensed as treatment for the relevant ailment; and that the medicine is still within its "sell-by date". Medicare aims at providing affordable health and beauty necessities to help customers stay healthy. Every Medicare store adheres to Good Pharmacy Practice ("GPP") to contribute to health improvement and to help customers with health problems to make the best use of genuine, quality and affordable medicines. These may seem like simple practices but they are not widespread in Myanmar today.

Financial performance

The Directors have assessed the Group's net asset value as at 31 March 2017 to be US$29.2 million, representing a year on year increase of 20.3% (see "Net Asset Value" in the Financial Review section of the Executive Directors' Review below). This is equivalent to US$0.96 per share, based on the number of shares in issue at that time.

For the year to 31 March 2017 the Company's loss after tax was US$2.8 million. Excluding non-recurrent costs and non-cash items the loss was only US$2.0 million and principally represents the overheads associated with running the Company's business. This compares with US$1.9 million for the year to 31 March 2016, a year-on-year increase of only 6.6%.

In this context, given the tremendous work that has been done this past year in adding value to our tower and microfinance businesses, in starting up our pharmacy business and in further developing our pipeline, the Executive Directors are commended for keeping the Company's running costs under control.

Subsequent to the year-end, the Company successfully closed a further equity issue, raising US$7.3 million and added a number of new shareholders to our register.

Outlook

The past year has been a very productive one for the management and staff of the Company. The US$250 million loan from the US Government's Overseas Private Investment Corporation ("OPIC") to Apollo Towers was one of the landmark events in the country's business landscape. In addition, we have seen solid growth in the development of our microfinance joint venture's customer base, loan book and, more significantly, its borrowings from leading financial institutions. The establishment of the new Medicare joint venture is also especially noteworthy given that it demonstrates the commitment of our management team when it identifies an opportunity, even if it has to be built from scratch.

The Company has built up its pipeline of new business opportunities and we expect to close a number of these in the not too distant future.

Despite the new government moving ahead cautiously with its reform programmes, the country still benefits from strong economic growth. We expect this growth to continue for some time because it is rooted in the real and pressing need to reconstruct the economy and backed by substantial natural resources. It can only be amplified by any new initiatives that the government introduces.

We are closely monitoring the tragic events in Rakhine state which, to date, are localized and have had no impact on the Company's operations.

The Board wants to thank you, our shareholders, for your continued support and encouragement. Given our existing strong foundations in core sectors of the economy, coupled with our pipeline of new business opportunities, I have every confidence for the future development of the Company in the year ahead.

William Knight

Chairman

22 September 2017

EXECUTIVE DIRECTORS' REVIEW

BUSINESS LINES

As at 31 March 2017 we had interests in two businesses in different sectors that are important to the re-emerging Myanmar: Telecommunications, through Apollo Towers Pte Ltd, Myanmar's second largest independent telecommunications tower company by number of towers, and Financial Services through Myanmar Finance International Co. Ltd, one of the country's leading microfinance companies.

After the year end, in May 2017, we entered into the equally important Healthcare sector with the formation of a joint venture in the pharmacy, health and beauty space.

Apollo Towers Pte Ltd ("Apollo Towers")

Before opening its telecoms sector to foreign investment in 2013, Myanmar had only one significant Mobile Network Operator ("MNO") and was ranked equally with North Korea for having Asia's lowest mobile penetration rate at about 7%. After a highly competitive and transparent bidding process, two winners emerged: Norway's Telenor and Ooredoo from Qatar and this has led to the mobile phone penetration rate surging to over 70%. The foundation for this boom was the unprecedented rollout of infrastructure as seen by the increase in telecommunication towers from fewer than 3,000 in 2013 to over 13,000 in 2017.

As one of Myanmar's leading tower companies, Apollo continues to play a key role in the country's burgeoning telecommunications sector by constructing, managing and leasing tower and power infrastructure to the country's MNOs. Although all three MNO's now cover the country's most populous areas, the nationwide telecoms infrastructure rollout continues as the MNOs seek to expand geographical coverage and increase the capacity of their networks as they introduce 4G/LTE technology and respond to increasing data consumption. The pending launch of the fourth MNO, "MyTel", a joint venture between Vietnam's Viettel and a consortium of Myanmar companies, will further increase demand for telecommunications infrastructure.

MyTel's entry and the existing MNOs' network densification is likely to lead to additional tower orders and also a significant industrywide growth in the number of tenancies per tower, known as "co-location", which brings higher-margin revenues where a tower with capacity is already available. MyTel is expected to rely on the existing tower infrastructure for at least 2,500 sites and may place orders for an additional 3,000 sites as it rolls out its network. Independent experts estimate that Myanmar will need 23,000 towers by 2021 and, as a country, will boast one of the region's highest co-location rates. With only about 50% of the tower infrastructure in place, Myanmar's telecoms sector holds ample growth opportunities for the country's tower companies.

Since MIL's investment in July 2015, Apollo has almost doubled its tower portfolio, which now stands at approximately 1,800 towers, and Apollo plans to build an additional 2,000 towers over the coming years. Apollo reached a major milestone in June 2016 when it secured financing for its business through a US$250 million debt facility made available by the United States' Overseas Private Investment Corporation ("OPIC"), which was the organisation's first investment in the country. In addition, Apollo continues to explore additional financing options to strengthen its balance sheet to accommodate further growth.

The expansion of Apollo's tower portfolio and its growing co-location rate has endowed the company with a high-quality EBITDA-stream which, with most of its customers being Grade A international telecom companies, has more than doubled over the past year on the back of revenue increasing 46% to US$46 million. MIL's team will continue its involvement on the company's board as well as its close working relationship with the Yangon-based management team to support the next phase of Apollo's growth. With a proven rollout capability in a challenging environment, and with long term financing in place, Apollo will continue to be a key player in the ongoing rollout and will profit from the telecom industry's high-paced growth.

Apollo was founded in 2013 by Sanjiv Ahuja and TPG Growth, the middle market and growth equity investment platform of TPG (formerly Texas Pacific Group), the leading global private investment firm with approximately US$70 billion of assets under management. Mr Ahuja is a global telecoms veteran and the former CEO of Orange S.A. and has founded several successful telecommunications infrastructure businesses around the world.

On 31 July 2015, MIL led a US$30 million investment into Apollo in return for a 14.2% interest in that company. Of this, MIL contributed US$20 million for a 9.46% indirect shareholding with LIM Asia Special Situations Master Fund Limited ("LIM"), which is itself a substantial shareholder in MIL, contributing US$9.8 million for a 4.63% indirect shareholding. The remaining 0.09% was contributed by an unconnected third-party. All three investors made the investment through a special purpose vehicle, MIL 4 Limited. As at 31 March 2017 MIL's total invested cost in Apollo was US$21 million (2016: US$21 million) for an indirect interest of 9.3% (2016: 9.0%).

Myanmar Finance International Co. Ltd ("MFIL")

MFIL is one of the leading microfinance operators in Myanmar and provides small loans (US$137 on average per borrower, but it can be as high as US$7,300) to small-scale business operators in rural and semi-urban areas in Yangon and Bago. MFIL is controlled jointly by MIL together with our local partners Myanmar Finance Company Limited ("MFCL") and the Norwegian Government's Investment Fund for Developing Countries ("Norfund"). As at 31 March 2017 MIL has invested US$1.92 million (2016: US$1.92 million) for a 37.5% (2016: 37.5%) stake.

During the financial year, significant regulatory reforms were announced by the industry regulator, the Financial Regulatory Department ("FRD") under the Ministry of Planning and Finance. The most significant of these include the relaxation of constraints on borrowings by microfinance companies, as well as the introduction of a revised, more stringent deposit-taking license regulatory regime.

As a result, MFIL has, as of today, secured a total of US$3 million in debt facilities (2016: nil), made up of US$2 million from Malayan Banking Berhad Yangon Branch and US$1 million through Symbiotics S.A., a leading investment company specialising in emerging, sustainable and inclusive finance. Furthermore, MFIL has been approved to continue as a deposit-taking microfinance institution ("DMI"), currently one of only eight thus approved out of 162 microfinance institutions.

On the back of these developments MFIL made significant strides during the financial year in expanding its business, and as of 31 March 2017, had built up its customer base to 43,000 borrowers (2016: 32,000) with a loan portfolio of US$6 million (2016: US$4 million). The loan portfolio has grown at a CAGR of 145% since MIL's initial investment in September 2014 and the number of borrowers has grown at a CAGR of 77% over the same period.

The year to 31 March 2017 was MFIL's second full-year of net profitability, generating MMK 288 million (US$229,156) of net profit after-tax for the year. Now that MFIL has clearly passed breakeven point, with increased gearing we expect net profitability to grow rapidly as we move forward.

MFIL also opened one more branch in each of Yangon and Bago, bringing its branch network to eight branches in total (five in Yangon and three in Bago) (2016: six branches; four in Yangon and two in Bago). MFIL has now expanded beyond its core group-lending product, having launched a micro-business loan product across all its branches.

Ever since its investment into MFIL in 2014, MIL has played a key role in supporting the buildout and expansion of the MFIL business. In 2015 and 2016 MIL's efforts were more focused on immediate needs such as the recruitment of a seasoned CEO, the introduction of new systems and procedures, the strengthening of the governance of the MFIL board, and the establishment of the internal audit function. While in this financial year we have shifted our focus to longer-term, strategic support aimed at expansion. This has included continuing efforts to raise debt financing for the company, as well as product and channel development.

In the coming years, MIL expects to continue working closely with MFIL management to take on further debt facilities, to prepare for and launch new products and to expand geographically. It may also be that as the industry consolidates, MFIL will take a lead role in acquiring smaller competitors.

Medicare International Health & Beauty Pte Ltd ("Medicare")

Since the year end we have established a third business.

We have long been excited at the prospects for the pharmacy, health, beauty and personal care retail. The present supply from the existing retail offering is mainly from small, single site pharmacies which often offer out of date or poorly stored medicines. There are few independent chains and therefore very few professional retailers in this space. Coupled with this, we foresee that demand for health and beauty products will grow strongly given the expected rise in consumer spending power, as well as greater emphasis on quality and reliability that comes from the ethical dispensing of medicines and their proper storage. McKinsey has predicted that the Middle and Affluent Classes ("MAC") in Myanmar are set to boom in the coming years, with the segment growing to 19 million people by 2030, and tripling consumer spending from US$35 billion to US$100 billion.

Having investigated the sector in Myanmar, MIL concluded that there was a significant gap in the market for a modern and professional retail business offering pharmaceutical, health and beauty products, and that the best way to approach this opportunity is to set up a franchise with experienced partners.

In May 2017, MIL set up Medicare with two partners to introduce the pharmacy, health, beauty and personal care chain store franchise concept in Myanmar which is already well-proven in ASEAN countries like Thailand and Vietnam. The two partners are as follows:

                  --     Medicare Vietnam, which is the largest pharmacy, health, beauty and personal care retail group with over 55 outlets                throughout Vietnam. The store concept is informative, friendly and bright with an energetic, smart and modern                image. Medicare first opened its doors in Vietnam in 2001 with a 600 square metre store in Ho Chi Minh City. It was                the first and only modern health and beauty retail brand in Vietnam for over 10 years until 2011 when                competition appeared. The business has built up a reputation with customers for genuine, affordable everyday                health and beauty necessities.

-- Randy Guttery, a highly experienced senior executive with many decades of experience in leadership roles at Asian-based retailers in nine countries including Wal-Mart in Korea and India, VinMart in Vietnam and Reliance Markets in India.

Medicare Vietnam brings a proven franchise operating model to Medicare with all the supporting marketing skills, inventory and supply chain management, HR development, operating systems, know-how, technical support and training. The well-known "Medicare" brand name gives Medicare a head start, especially when coupled with their exclusive products.

Medicare will work with local businesses to set up six stores in the first year of operation. After these stores have been proven Medicare will then roll out additional stores over the next five years.

Since the year end, MIL has invested US$500,000 and holds a 45% stake in Medicare. We plan to invest US$5 million more over the next few years as we roll out this exciting franchise across Myanmar.

MIL has been actively engaged both strategically and operationally including on the ground support, especially in site selection and staff recruitment. MIL has also seconded its financial system adviser to Medicare to work with them in setting up the financial systems and controls for the company.

Memorandum of Understanding

In March 2017, MIL signed a Memorandum of Understanding with a well-established local tour operator and travel agency to set up a joint venture company that will develop the business further as well as invest in tourism related assets.

The tourism sector in Myanmar is experiencing rapid growth with the number of arrivals growing at a CAGR of 40% between 2010 and 2016 to six million and continued growth over the next several years.

MIL is in the process of negotiating final terms and is aiming to finalise contracts for this investment within the next few months.

The proposed joint venture tour operator and travel agency is profitable and will act as a spring board for further investments that will benefit from the growth in tourist arrivals.

INVESTMENT ACTIVITIES

Our investment strategy is set out in more detail in the section "Investment Strategy Overview". The execution of that strategy is based on our on-the-ground experience built up over the past four years.

Sectoral focus

We are open to investing in most sectors of the economy. However, to meet our demanding criteria, certain sectors have proven to be more attractive than others.

For example, businesses that cater to the growing domestic consumer demand are of great interest and these could be in retail, education, healthcare, telecommunications, financial services or entertainment, to name just a few.

These are fast-growing sectors in Myanmar, often with a limited number of mainly small competitors. We have witnessed elsewhere in Asia the significant growth in such businesses. In some cases, the business lines may not yet exist in Myanmar, so we will start new businesses to fill these vacuums, building the brands of tomorrow in otherwise empty spaces.

In others, the supply side may be fragmented and of variable quality. When these are combined with the predicted growth of the MAC and the expected growth in their disposable income it produces a very attractive business case.

Similarly, we believe that the tourism sector will produce attractive business opportunities. At present, Myanmar attracts relatively few tourists when compared to its Asian neighbours. Given the range of attractions and experiences that Myanmar can provide, we are confident that this is again a sector where demand will drive exceptional growth. This is also an important foreign exchange earner for the country and will benefit from strong government support, in some ways mirroring Thailand where tourism contributes 18% of GDP.

Another key sector that we focus on is the business to business ("B2B") sector. This may often be an indirect upstream play on the consumer sector. With poor logistics, distribution, services and manufacturing in Myanmar there are many businesses that can benefit from the adoption of more efficient business models similar to those which have already been embraced in neighbouring countries.

One of the features of all these business opportunities is that many of them only require a modest initial investment that can then be scaled up as the business develops. This is certainly the case in our recent investment in Medicare, where we have started with only a US$500,000 investment but plan to invest 10 times that amount as we roll out the franchise network.

As a proactive investment holding company our objective is to develop market-leading businesses that can be listed on a stock exchange, held for yield or sold in three to five years. We build businesses.

Management

When assessing any business opportunity, first and foremost, we consider the quality of management and their integrity. However, in Myanmar there is a shortage of experienced local executives and there is often a need to bring in foreign expertise to augment the local team. This is where MIL has a distinct advantage through its network in the region. As a core component of the execution of our business strategy, we have assembled a panel of experienced Asian and other executives who we can bring in to assist with the initial investment assessment, or, if needed, can remain in the business as company executives, mentors or board members.

Business development

Very few opportunities come to us through intermediaries and 95% of the 200 plus deals that we have looked at over the past four years have been sourced directly by MIL's management.

These opportunities arise from numerous meetings with businessmen and women who have business plans that, whilst attractive, still need to be stress-tested and refined to make sure that they are both commercially feasible and capable of being executed in the Myanmar of today.

This is a time-consuming process which looks to de-risk each and every opportunity. It requires patience, knowledge and an extensive network of partners who we can engage with to address any of the business parts that might otherwise not work so well. It requires not only a disciplined professional assessment of the challenges that the business faces but also the ability to put in place real solutions. When we invested in MFIL it was only after MIL had conducted an extensive executive search for a proven microfinance Chief Executive. Our joint venture with Medicare Vietnam was a three-way JV with the CEO who would run the business.

Our experience building such businesses in Asia over the past 30 years puts us at a distinct advantage over many of the more passive, traditional "private equity" style investors who might be considering Myanmar.

To execute our strategy we have developed a strong team here in Yangon, where we presently have 10 investment professionals on the ground. They are a mix of international and Myanmar professionals with complementary backgrounds, skill sets and experiences.

FINANCIAL REVIEW

Fund raisings

In the past 12 months, MIL has completed two further equity fund raisings. On 16 September 2016, the Company raised US$4.2 million (before costs) and then more recently, on 27 June 2017, the Company closed a further round and raised US$7.3 million (before costs). In both cases, we placed shares to a wide range of institutional investors, family offices and high net worth individuals.

Net Asset Value

The Directors' assess the Group's net asset value (attributable to the shareholders of the Company) as at 31 March 2017 to be US$29.2 million, a year on year increase of 20.3%. This represents US$0.96 per share, based on the number of shares in issue at that time. This change principally reflects the increase in the appraised value of MFIL, the proceeds from the fund raising in September 2016 less the running costs for the year.

At that date the Group had:

-- an investment in Apollo Towers, the telecommunication tower business, of US$20.8 million, excluding the non-controlling interests, determined using the Price of a Recent Investment methodology;

-- an investment in MFIL, the microfinance business, of US$5.5 million, determined using the Price to Book methodology; and

   --     cash and other net assets of US$2.9 million.

Apollo Towers

As at 31 March 2016 the Directors had assessed the value of the Group's investment in Apollo Towers to be US$20.8 million, representing the Group's attributable interest in the investment, this being the cost of the investment as at that date. In assessing the value of the investment in Apollo Towers as at 31 March 2017, the Directors have decided to continue to hold the investment at this same value, it being the "Price of a Recent Investment", as defined by the International Private Equity and Venture Capital Valuation Guidelines.

The Directors believe however that additional value has been created in Apollo Towers since the investment was made. Whilst other methodologies indicate an uplift in value, these produce such a wide discrepancy in values that the Directors feel that selecting one methodology could render the re-valuation process misleading. This is due to the number of key variables involved in each of the valuation methodologies and the wide spread of assumptions that could reasonably be used for each variable.

The Directors believe that a more accurate re-valuation will be possible once Apollo Towers has achieved certain in-progress milestones. Therefore, the Group will continue to hold its Investment in Apollo Towers at the Price of a Recent Investment, but will revisit the Apollo Tower's valuation when there is greater clarity on the variables that determine the value of Apollo Tower's business.

MFIL

As at 31 March 2016 the Directors had assessed the value of the Group's investment in MFIL to be US$2.1 million, this being determined using the "Price of a Recent Investment" methodology. In assessing the value of the investment in MFIL as at 31 March 2017, the Directors have decided that given the sustainable growth in MFIL's underlying business it is appropriate to change the valuation methodology to "Price to Book Value".

Based on this methodology, the Directors have determined that the value of the Group's investment in MFIL as at 31 March 2017 to be US$5.5 million.

In the attached audited financial statements the net asset value differs from the above stated value of US$29.2 million due to the following differences:

 
                                          US$ 
 Net asset value per the audited 
  financial statements                 25,584,478 
 Apollo Towers (1)                      (192,884) 
 MFIL (2)                               3,832,469 
                                      ----------- 
 Net asset value per the Directors' 
  valuation                            29,224,063 
                                      ===========

Note 1: In accordance with IFRS 9 Financial Instruments, the investment in Apollo Towers is accounted for as an investment in available for sale securities. Whereas in accordance with the Group's Valuation Policy the Directors' valuation is determined using the Price of a Recent Investment methodology as described in the International Private Equity and Venture Capital Guidelines.

Note 2: In accordance with IFRS 11 Joint Arrangements, the investment in MFIL is accounted for as an investment in a joint venture using the equity method. Whereas in accordance with the Group's Valuation Policy the Directors' valuation is determined using the Price to Book methodology as described in the International Private Equity and Venture Capital Guidelines.

Overheads

For the year to 31 March 2017 the Group's audited loss after tax was US$2.8 million.

This represents:

   --     our share of MFIL's profits less; 
   --     the overheads associated with running the Group's business;

-- the impact of the share based payments arising from the Group's Employee Share Option Scheme; and

   --     transaction costs associated with investigating investments that did not come to fruition.

Within this, the core cash-based overheads, excluding discretionary compensation, share option expense and aborted transaction costs amounted to US$2.0 million compared to US$1.9 million the previous year, a year-on-year increase of just 6.6%.

Barring unforeseen circumstances, we do not expect the level of such running costs to fluctuate significantly in the foreseeable future.

Dividends

Based on the above we do not recommend payment of a dividend at this time.

SHAREHOLDER MATTERS

Corporate Governance

Myanmar Investments seeks to uphold the fundamental principles of good corporate governance and is guided by the responsibilities laid down for AIM quoted companies. The Annual Report section headed "Corporate Governance" will provide more details on how the Board itself operates as well as the steps taken to ensure that its staff adhere to principles such as compliance with the UK Anti-Bribery Law.

Secondary Listing

The Executive Directors are assessing the prospects for establishing a secondary listing for the Company in Asia. We believe that a listing nearer Myanmar could be of great benefit in both attracting regional investors and, equally importantly, in building up liquidity in the trading of the Company's shares and warrants.

Annual General Meeting

This year's Annual General Meeting will be held at The British Club, Yangon, Myanmar at 9.00am (Myanmar time) on Wednesday, 18 October 2017. Shareholders who cannot attend the Annual General Meeting in person are encouraged to use their proxy votes. Shareholders who hold their shares through CREST are able to lodge their votes electronically.

PROSPECTS

We are pleased with the progress we have made this year but mindful that these are only the first steps to building a strong foundation in a complex and transitioning society.

A successful fund raising in September, the work with Medicare Vietnam that culminated in the new joint venture just after the year end, a wide and exciting pipeline of new business opportunities, coupled with the strong fundamental performance of both of our existing investments in the past year: all illustrate that we have what it takes and that we are in the right place at the right time.

Barring unforeseen circumstances, we expect all our businesses to continue to grow strongly in the years ahead.

However, as noted above, there remains an expectation in the business community of a slowdown in business activity as the new government takes its time to formulate and prioritise its various strategies and determine how best to implement them.

In the sectors that we focus on, we have not seen any such slowdown in opportunities. We continue to identify attractive businesses. They will not all become MIL Group companies and the attrition rate of potential investee businesses not accepted in to the MIL Group is currently high. However, we are confident that we will soon add additional business lines to our already exciting stable of businesses.

From a fund raising perspective, we are encouraged by the two recent rounds of fund raising and this has affirmed our strategy of raising funds only in line with the growth in our business needs. We continue to assess the possibility of a secondary listing in Asia to enhance liquidity in our shares and also to make our shares more accessible to Asian investors. We will make further announcements on this as we develop this further.

 
 Aung Htun             Michael Dean 
 Managing Director     Finance Director 
 22 September 2017     22 September 2017

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME