MIL.L Regulatory News (MIL)

Myanmar Investments International Limited

Audited financial results for the year to 31 March 2018

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 2018.

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

Highlights

Operational review

The Company's three businesses all performed well during the year:

Apollo Towers

(MIL has invested US$21 million for a 9.0% shareholding)

· Apollo Towers is the second largest independent telecom tower company ("ITC") in Myanmar.

· The telecoms sector continues to grow strongly with an increase in the number of subscribers and data usage.

· The entry of "MyTel", the fourth mobile network operator ("MNO") has added further drive to the sector.

· Apollo Towers produced stand-alone EBITDA of US$24.2 million, a year on year ("YoY") increase of 20%.

· It is being reorganised to come under common ownership with Pan Asia Towers, the fourth largest ITC in Myanmar.

· Together the two businesses will have a 20% market share of the independent Myanmar tower market.

· Future growth will be driven by an increase in the tower portfolio and also by increase in tenancies as co-location rates rise.

Myanmar Finance International Limited ("MFIL")

(MIL has invested US$2.3 million for a 37.5% shareholding)

· One of Myanmar's leading microfinance companies.

· Strong growth in its borrower base and loan book at 31 March 2018 at 54,000 and US$9 million, representing compound annual growth rates ("CAGR") of 60% and 97% respectively since investment.

· Solid increase in profitability, up 67% over the previous year making three years of consecutive profitability.

· Today it has secured US$12 million in Kyat-denominated debt facilities.

· MFIL focuses on urban and semi-rural lending in Yangon and Bago but plans to expand to other states during the coming year.

Medicare

(MIL has invested US$1.4 million for a 48.1% shareholding)

· A start-up pharmaceutical, health and beauty franchise retailer.

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

· Today it has 14 stores in operation with more under development.

· A joint venture with Medicare, Vietnam's leading pharmacy, health and beauty retail group.

In addition, the Company has a strong proprietary pipeline targeting business opportunities in consumer or B2B sectors such as education, healthcare and financial services.

Financial review

The past year has been an encouraging one: our net asset value appreciated by 30% to US$37.9 million and our overheads remained flat at US$2.9 million, with our loss per share reducing 12% compared to the prior year.

During the financial year, MIL raised US$7.3 million (before costs) through a share placing in June 2017 to a range of institutional investors, family offices and high net worth individuals.

Prospects

Our proprietary network continues to produce a number of interesting investment opportunities. However, evaluating, negotiating, structuring and executing a new business investment properly requires a significant level of commitment in terms of human resources and, as a result, overheads. Often these opportunities are small, 'venture capital' or start-up opportunities that will take time to get to scale.

Whilst there is no change to the Company's underlying investment policy, we have adopted a more selective approach in reviewing new investment opportunities. It is therefore expected that new investments will be those that are larger, already generating profit and requiring less start-up development work than has been the case in the past. As a result, the Board believes it will be able to operate a more streamlined business model with a significantly lower level of overheads.

Country highlights

· Myanmar is emerging from decades of stagnation and has the economic foundations for a period of strong growth.

· Myanmar has undergone an unprecedented transformational reform process, initiated by the U Thein Sein administration in 2011.

· The elections in 2015 were the first democratic elections in 50 years.

· This remarkable change has not been without its difficulties and the situation in Rakhine state, which stems from a complex and historically charged background, remains un-remedied.

· The Advisory Commission, led by the late former UN Secretary-General Kofi Annan, on the Rakhine State crisis has provided an important framework which can provide the foundations for addressing the distressing situation there.

· During the year the Foreign Investment law was revised and a new Companies Act enacted, both of which will assist in foreign investment

· Myanmar's competitive advantages include:

- Fast growing economy: IMF projects GDP growth for Myanmar to average 7.2% p.a. through 2023

- Population of 54 million people (26th most populous country in the world) with huge growth potential as Myanmar, the last so-called frontier economy in Asia, increases economic liberalisation

- Large workforce with a high literacy rate of 90%

- 68% of the population is of working age

- 28% of the population is under 24 which will provide strong consumer demand

- Significant natural resources: hydrocarbons, fertile land, minerals, precious stones, forests and water

- Strategically situated in one of the world's most economically dynamic regions amid the intersection of India, China and South East Asia

- Critical to China's 'One Belt One Road' strategy providing direct access to the Indian Ocean

Mike Dean, co-founder of MIL, commented:

"The past year has been one of solid development. Our net asset value appreciated by 30% to US$37.9 million whilst our overheads remained flat at US$2.9 million, with our loss per share reducing 12% compared to the prior year.

Since the year end we have refined our operations to focus on developing our three core businesses whilst at the same time taking a more selective approach in reviewing new investment opportunities with a significantly lower level of overheads. As a result, we feel that the Company is in an optimal position: a solid portfolio; adequate cash reserves for on-going overheads; and a front row seat for the opportunities that lie ahead."

William Knight, Chairman of MIL, added:

"Chris Appleton has advised us of his intention to step down as a non-executive director at the end of October 2018. We thank him for all his sterling efforts over the past six years and wish him well in his future endeavours."

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

For further information please contact:

For more information about MIL, please visit www.myanmarinvestments.com

CHAIRMEN'S LETTER

Dear fellow shareholder

It has been another solid year of progress for the Company, in which our three businesses have all experienced solid growth and we have proactively re-shaped our strategy for the future.

As you will be aware, over the last seven years Myanmar has undergone a transition from military dictatorship to civilian government, a situation which has allowed MIL to make strategic investments as the country has started to develop. However, this remarkable change has not been without its difficulties. The situation in Rakhine state, which stems from a complex and historically charged background, remains unremedied. We expect this issue to reduce near term capital inflows, as well as tourist arrivals from western countries.

In addition, although Myanmar's economy has rebounded and macroeconomic imbalances have stabilised as the country has emerged from its isolation, Myanmar is still at an early stage of its growth and has limited foreign exchange reserves and tax base. A significant depreciation of the Kyat from an average of MMK 1,356 per US$1.00 in 2017/18 could lead to inflationary pressure.

While banking regulation and practices have been strengthened over the last few years, there has been a significant increase in bank lending over the same period and now there are emerging signs of some stresses in the economy which could lead to a rise in non performing loans and slower credit growth in the coming years.

During the year the updated Foreign Investment law and Companies Act were promulgated and, whilst there have been a number of significant advances, there is still opportunity for further improvement.

Your Board continues to be a strong believer in Myanmar's long term potential as a new and growing market in the broader vibrant ASEAN economy. We have built a solid platform for sourcing, managing and executing investment opportunities. However, from our on-the-ground presence we know that the next few years will see additional challenges. We have therefore adapted our approach to ensure we protect and grow our existing investments with a leaner structure that will still allow us to take advantage of meaningful opportunities as and when they arise.

Your Company has made significant and impactful investments in businesses active in the telecom towers, microfinance and retail pharmacy sectors. The telecom towers and microfinance businesses are now well established businesses with good track records and strong positions in their sectors; they are now poised to see even more significant growth. The retail pharmacy franchise business is a greenfield venture we started from scratch this past year and the roll-out of stores is progressing well.

Impact investing

Each of our businesses is an impact investment. Collectively they employ around 500 people.

Apollo Towers has built almost 12% of the country's independent telecoms towers. Estimating the number of subscribers that benefit from this is not possible but clearly they number in the millions. So utilising Apollo Towers' towers, these citizens can now readily communicate and access information. This not only brings education and enrichment to their lives but also supports their, and the country's, economic advancement.

MFIL today has over 65,000 borrowers. That is 65,000 households which have been economically empowered (without resorting to loan sharks) to expand their businesses (small shops, trading businesses, food stalls etc) through MFIL's ethical lending practices. MFIL's rural outreach is 37% of its business and this has a significant impact on enabling rural communities to access legitimate funds. MFIL also strongly believes in women's empowerment: 86% of its borrowers are women, while internally 55% of its management are women.

Medicare aims at providing affordable health and beauty products to its customers. Every Medicare store adheres to Good Pharmacy Practice ('GPP') to contribute to health improvement and to help customers with health problems make the best use of genuine, quality and affordable medicines. This means they have been shipped and stored properly; that the correct medicine has been dispensed as treatment for the relevant ailment; and that the medicine is still within its 'sell-by date'. Simple concepts but not ones that are widespread in Myanmar today.

Outlook

We are pleased with the progress our existing businesses have made. We certainly expect both Apollo Towers and MFIL to go from strength to strength and are greatly encouraged by the strong start that Medicare has made. 

Additionally, the Company continues to evaluate a pipeline of business opportunities that we believe will benefit from Myanmar's inherent long term potential.

On behalf of the Board, we should like to take this opportunity to thank a number of our key stakeholders: our staff for their professionalism and commitment; our business partners for all of their advice and inputs; and our shareholders for their continued support. Chris Appleton will be stepping down at this year's AGM and we thank him for all his sterling efforts over the past six years.

EXECUTIVE DIRECTORS' REVIEW

BUSINESS REVIEW

The past year has been an encouraging one: our net asset value appreciated by 30% to US$37.9 million and our overheads remained flat at US$2.9 million, with our loss per share reducing 12% compared to the prior year.

Our two established businesses both performed strongly:

· Apollo Tower: the long-planned increase in co-locations finally kicked in with a significant increase in EBITDA; and

· MFIL: the core business continued to grow strongly once we were able to secure additional debt facilities to properly leverage the investment.

Our new start-up business, Medicare has got off to a strong start with 14 branches already operational today in Yangon and more under development.

In all cases, Myanmar Investment's team have been closely embedded in these businesses to provide strategic advice as well as hands-on local knowledge.

Our proprietary network continues to produce a number of interesting investment opportunities. However, evaluating, negotiating, structuring and executing a new business investment properly requires a significant level of commitment in terms of human resources and, as a result, overheads. Often these opportunities are small, 'venture capital' or start-up opportunities that will take time to get to scale. Whilst there is no change to the Company's underlying investment policy, we have adopted a more selective approach in reviewing new investment opportunities. It is therefore expected that new investments will be those that are larger, already generating profit and requiring less start-up development work than has been the case in the past. As a result, the Board believes it will be able to operate a more streamlined business model with a significantly lower level of overheads.

FINANCIAL REVIEW

Net Asset Value

The Directors assess the Group's net asset value ("NAV") (attributable to the shareholders of the Company) as at 31 March 2018 to be US$37.9 million, a year-on-year increase of 29.6%. This represents US$1.01 per share, based on the number of shares in issue at the year-end. This change principally reflects the increases in the Director's assessment of the values of Apollo Towers and MFIL together with the proceeds from the fund raising in June 2017, less the Group's running costs for the year.

As at 31 March 2018 the Group's NAV consisted of:

· an investment in Apollo Towers, the telecommunication tower business, of US$24 million, excluding the non-controlling interests, determined using a discounted cashflow methodology;

· an investment in MFIL, the microfinance business, of US$6.3 million, determined using a price to forward book value methodology;

· the investment in Medicare, the pharmaceutical, health and beauty retail franchise business, of US$1.4 million, determined based on the price of recent investment; and

· cash and other net assets/liabilities of US$6.2 million.

Apollo Towers

As at 31 March 2017 the Directors had assessed the value of the Group's investment in Apollo Towers, excluding the non-controlling interests attributable to the minority shareholders of MIL 4, to be US$20.8 million, this being the cost of the investment as at that date. In assessing the value of the investment in Apollo Towers as at 31 March 2018, the Directors have decided to move to a discounted cashflow basis of valuation.

The revised value of Apollo Towers represents an increase of 15.4% and equates to an IRR since the initial investment in July 2015 of 5.5%.

In selecting the discounted cashflow basis of valuation the Directors recognise that this is the product of a number of key variables, where small changes in one or more inputs can have a significant impact on the resulting valuation. However, the Directors recognise that Apollo Towers has achieved certain milestones during the year by securing co-location agreements with key customers and it would be inappropriate to continue to hold the investment at cost given that the initial investment was made three years ago. The Directors believe the assumptions they have used to be reasonable. However, the impact of the sensitivity of this method of valuation must be recognised.

MFIL

As at 31 March 2017 the Directors had assessed the value of the Group's investment in MFIL to be US$5.5 million, this being determined using the price to forward book value methodology. In assessing the value of the investment in MFIL as at 31 March 2018, the Directors have maintained the same methodology and have determined the value of the Group's investment in MFIL as at 31 March 2018 to be US$6.3 million.

The revised value of MFIL represents an increase over the year of 14.5% and equates to an IRR since the initial investment in September 2014 of 40.4%.

Medicare

The investment in Medicare was made during the financial year.

As at 31 March 2018 the Directors have assessed the value of the Group's investment in Medicare to be US$1.4 million, this being determined using the price of recent investment methodology.

The book value of Medicare reflects a loss during the year of US$327,000, being MIL's share of the start-up losses. This is broadly in line with the Directors' expectations as this new venture looks to establish itself as the first retail pharmaceutical, health and beauty chain in Myanmar.

Summary of NAV

In the attached audited financial statements, the NAV attributable to shareholders differs from the above stated value of US$37.9 million due to the following differences:

Note 1: In accordance with IFRS 11 Joint Arrangements, the investments in MFIL and Medicare are accounted for as an investment in a joint venture using the equity method. Whereas in accordance with the Group's Valuation Policy the Directors' valuation for MFIL is determined using the price to forward book value methodology and for Medicare is determined using the price of recent investment methodology, both as described in the International Private Equity and Venture Capital Guidelines.

Financial results

For the year to 31 March 2018 the Group's audited loss after tax was US$3.07 million, a modest increase on last year's US$2.83 million whilst the loss per share decreased 12% YoY.

Note that this loss excludes the US$3.1 million fair value gain attributable to the shareholders on the Company's investment in Apollo Towers.

This loss therefore represents:

· our share of MFIL's profits; less

· our share of Medicare's start-up losses; less

· the overheads associated with running the Group's business; less

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

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

Whilst MFIL's contribution increased YoY this was offset by the start-up losses incurred by Medicare.

Within this, the core cash-based overheads (excluding discretionary compensation, share option expenses and transaction costs) amounted to US$2.2 million compared to US$2.1 million the previous year, a YoY increase of 6.6%.

As previously announced, the Board has set in motion a series of cost cutting measures to reduce our overheads with a target of getting to a monthly level of costs significantly lower than 2017/18's costs by the end of March 2019.

Dividends

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

Fund raising

During the financial year, MIL raised US$7.3 million (before costs) through a share placing in June 2017 to a range of institutional investors, family offices and high net worth individuals.

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

Working Capital

As of the date of this report the Group has adequate financial resources to cover its working capital needs for the next 12 months.

SHAREHOLDER MATTERS

Corporate Governance 

The Company seeks to uphold the fundamental principles of good corporate governance and is guided by the responsibilities laid down for AIM quoted companies. The Chairman's Statement on Corporate Governance provides more details on how the Board itself operates as well as the steps taken to ensure that its staff adhere to principles such as compliance with the UK anti-bribery legislation.

Annual General Meeting 

This year's Annual General Meeting will be held at The British Club, Yangon, Myanmar at 9.00am (Myanmar time) on Thursday 18 October 2018. Shareholders who cannot attend the Annual General Meeting in person are encouraged to use their proxy votes. Shareholders who hold their shares through CREST are able to lodge their votes electronically. Details are set out in the Notice of the Annual General Meeting at the end of this report.

PROSPECTS

We expect all three of our businesses will continue to perform well over the coming year and beyond:

· Apollo Towers: teaming up with Pan Asia Towers represents a very exciting and transformative opportunity. Together they will have the largest tower portfolio in Myanmar and will be well placed and well-funded to take advantage of new tower construction opportunities, add additional co-locating tenants on to their already significant portfolio of towers and extract both operational and financial efficiencies arising from the significant step up in scale.

· MFIL: with additional debt facilities in the pipeline combined with no apparent let-up in demand for our products as well as an expansion of our branch network, we expect profitability to continue to grow. MFIL is also tightening its lending standards in response to signs of short-term over-indebtedness in some of the areas in which it operates. Looking further ahead, the business is likely to need to expand its capital base once we have drawn down all the planned debt facilities. As such we will most likely be looking to raise additional funds for MIL's share.

· Medicare: the roll-out of stores has been very impressive and we expect to continue the same pace of expansion through the rest of 2018. Assuming we then continue to expand in 2019, MIL will also most likely be looking to raise additional funds for its share of the roll-out funding.

There remains an expectation in the business community of a slowdown in new business activity as the government continues to take time to formulate and prioritise its various strategies and determine how best to implement them. Additionally, as we move towards the elections in 2020 we expect 2019 will see a significant increase in political activity with a possible corresponding decrease in economic and business activity. We do not expect this to filter through to the everyday demand for our three business lines but it may have an impact on the overall FDI environment.

With this backdrop we have scaled back our overheads so that we can ensure that we continue to maximise value from our existing investments whilst at the same time being well placed to take advantage of suitable opportunities.

As a result, we feel that the Company is in an optimal position: a solid portfolio; adequate cash reserves for on-going overheads; and a front row seat for the opportunities that lie ahead.

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Notes to the financial statements

1. Summary of significant accounting policies

The Company's accounting policies are available in the full audited financial statements, a copy of which can be found on the Company's website at www.myanmarinvestments.com.

2. Significant accounting judgements and estimates

The Company's significant accounting judgements and estimates used in the preparation of these financial statements are available in the full audited financial statements, a copy of which can be found on the Company's website at www.myanmarinvestments.com.

3. Significant accounting judgements and estimates

The preparation of the Group's consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the accompanying disclosures, and the disclosure of contingent liabilities at the reporting date. Uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future periods.

3.1 Judgements made in applying accounting policies

In the process of applying the Group's accounting policies, management is of the opinion that there are no critical judgements involved that have a significant effect on the amounts recognised in the financial 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 significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Group based its assumptions and estimates on parameters available when the consolidated financial 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 reflected in the assumptions when they occur.

(i) Fair value of unquoted available-for-sale financial assets

The Group's available-for-sale financial assets are measured at fair value for financial reporting purposes. The Board of Directors of the Company has set up an Investment Committee to determine the appropriate valuation techniques and inputs for fair value measurements.

In estimating the fair value of an asset or a liability, the Group uses market-observable data to the extent it is available. Where Level 1 inputs are not available, the Group engages internal qualified valuers to perform the valuation. The Investment Committee works closely with the qualified internal valuers to establish the appropriate valuation techniques and inputs to the model. The Finance Director reports the Investment Committee's findings to the Board of Directors of the Company on a periodic basis to explain the cause of fluctuations in the fair value of the assets and liabilities.

Information about the valuation techniques and inputs used in determining the fair value of the available-for-sale financial assets are disclosed in Note 11 to the financial statements.

(ii) Impairment of investments in joint ventures

The Group follows the guidance of IAS 39 in determining whether investments in joint ventures are impaired. This determination requires significant 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 financial 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 financing cash flows. The carrying amounts of investments in joint ventures are disclosed in Note 10 to the financial statements.

(iii) Employee share option plan

The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. Estimating fair value for share-based payment transactions requires determining the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determining the most appropriate inputs to the valuation model including expected life of the share option, volatility and dividend yield and making assumptions about them. The carrying amount and assumptions and model for estimating fair value for share-based payment transactions are set out in Note 17 to the financial statements.

4. Other income

5. Employee benefits expense

The employee benefits expense includes the remuneration of Directors as disclosed in Note 20 to the financial statements.

6. Finance costs

Finance costs represent bank charges for the financial year.

7. Loss before income tax

In addition to the charges and credits disclosed elsewhere in the notes to the consolidated financial statements, the above includes the following charges:

8. Income tax

A reconciliation of income tax applicable to loss before income tax at the statutory income tax rate of 25% (2017: 25%) in Myanmar is as follows:

9. Loss per share

Basic loss per share is calculated by dividing the loss for the financial year attributable to owners of the parent by the weighted average number of ordinary shares outstanding during the financial year.

The following reflects the loss and share data used in the basic and diluted loss per share computation:

Diluted loss per share is the same as the basic loss per share because the potential ordinary shares to be converted are anti-dilutive as the effect of the shares conversion would be to decrease the loss per share.

10. Investments in joint ventures

Medicare International Health and Beauty Pte. Ltd. and its subsidiary

In the previous financial year, the Company's carrying amount of investment in its subsidiary, Medicare International Health and Beauty Pte. Ltd. (formerly known as MIL No. 2 Pte. Ltd.) ("Medicare") amounted to US$3,600. During the financial year, Medicare issued 1,895,000 shares for a consideration of US$1,796,400 for which the Company subscribed for 890,000 shares and paid a consideration of US$791,400. The Company has also provided advances to the shareholders of Medicare's joint operator of US$100,000 which is recognised as part of cost of investment in Medicare.

The Company also provided advances of US$500,000 to Medicare during the financial year for which 500,000 shares in Medicare were only issued subsequent to year end on 6 April 2018. These advances have been classified as investments in joint ventures as the nature of the advances were quasi-equity in nature and were converted to equity shares subsequent to the year end. The effective equity interest in Medicare is 48.1% as at 31 March 2018.

Myanmar Finance International Ltd.

On 26 August 2014 the Company's wholly-owned subsidiary, Myanmar Investments Limited ("MIL"), signed a joint venture agreement ("JVA") with Myanmar Finance Company Limited ("MFC") in which, the two parties agreed to establish a Myanmar microfinance joint venture company, Myanmar Finance International Ltd. ("MFIL").

Under the terms of the JVA, MFC injected its existing microfinance 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, reflecting MFC's injected microfinance 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 final tranche of the initial capital specified under the JVA was called from MIL and MFC and MIL invested an additional US$140,833 bringing its total capital contribution of US$1,920,000. Following Norfund's investment and the capital contributions by MIL and MFC, MIL's and MFC's shareholdings in MFIL were each reduced to 37.5%, while Norfund now has a 25% shareholding in MFIL. Arising from the dilution of equity interest in MFIL, a gain of US$20,909 was recognised to the consolidated statement of comprehensive income.

On 2 January 2018, MIL provided advances of US$375,000 to MFIL for which 375,000 shares in MFIL were only issued subsequent to year end on 4 April 2018. These advances have been classified as investments in joint ventures as the nature of the advances were quasi-equity in nature and were converted to equity shares subsequent to the year end. There is no change to the effective equity interest in MFIL.

MFIL is a well-established provider of microfinance loans to small-scale business operators in rural and urban areas of Yangon and neighbouring Bago.

MFIL is deemed to be a joint venture of the Company as the appointment of its directors and the allocation of voting rights for key business decisions require the unanimous approval of all its shareholders.

The detail of the joint ventures are as follows:

(1) Audited by BDO LLP, Singapore

(2) Audited by JF Group Audit Firm, Yangon, Myanmar.

The summarised financial information below reflects the amounts presented in the financial statements of the joint ventures (and not the Company's share of those amounts), adjusted for differences in accounting policies between the Company and the joint venture.

11. Available-for-sale financial assets

As disclosed in Note 13 to the financial statements, MIL 4 Limited ("MIL 4") was incorporated by the Company to acquire shares in Apollo Towers Pte. Ltd. ("Apollo"), an unquoted Singapore incorporated company.

On 29 July 2015, MIL 4 acquired a 14.18% stake in Apollo for a purchase consideration of US$30,182,725.

On 24 December 2015, Apollo held a further round of fund raising in which MIL 4 only invested US$1,202,797 into Apollo, resulting in a dilution of MIL 4's equity interest to 13.48%.

On 16 June 2016, MIL 4 purchased a warrant for a total consideration of US$10,000, allowing MIL 4 to purchase for a nominal amount 1.56% of Apollo's total capital stock on a fully diluted basis. The warrant has not been exercised by MIL 4 as of 31 March 2018.

On 23 June 2017, a reorganisation took place as a result of which a new holding company was created to own all of the shares in Apollo and MIL 4's shareholding was exchanged for shares in the new holding company, Apollo Towers Holdings Limited ("Apollo Towers").

Following other changes in the composition of Apollo Towers share structure, as at 31 March 2018 MIL 4's shareholding was 13.45% (fully diluted).

As at 31 March 2018, the investment in available-for-sale financial assets ("AFS assets") represents an effective 13.45% equity interest in the unquoted share capital of Apollo Towers.

Apollo Towers owns and operates a telecommunication tower business in Myanmar through its wholly-owned subsidiary, Apollo Towers Myanmar Limited.

In the previous financial year, the investment in AFS assets was stated at cost as the management had assessed and concluded that the fair value of the AFS assets could not be determined reliably till Apollo achieved certain in-progress milestones due to the number of key variables involved in each of the valuation methodologies and the wide spread of assumptions that could reasonably be used for each variable.

In the current financial year, the investment in AFS assets is measured at fair value as the Apollo Towers business has achieved certain milestones by securing telecommunication co-location agreements with key customers. The investment is denominated in United States Dollars.

Management engaged their internal valuation specialists to perform a valuation on the investment. The valuation of the unquoted investment is categorised into Level 3 of the fair value hierarchy. The information on the significant unobservable inputs and the inter-relationship between key unobservable inputs and fair value are as follows:

12. Plant and equipment

13. Investment in subsidiaries

Details of the subsidiaries are as follows:

(1) Audited by BDO LLP, Singapore.

(2) Not required to be audited as the subsidiary is dormant since the date of its incorporation.

(3) Audited by JF Group Audit Firm, Yangon, Myanmar.

Incorporation of a subsidiary

On 9 July 2015, the Company incorporated a 100.00% owned subsidiary, MIL 4 for a cash consideration of US$5,000, in the British Virgin Islands for the purpose of investing into Apollo as disclosed in Note 11 to the financial statements.

On 29 July 2015, the Company and new shareholders injected an amount of US$19,995,000 and US$10,000,000 respectively into Mil 4, which resulted in the dilution of the Company's equity interest in the subsidiary to 66.67%.

On 24 December 2015, the Company and MIL 4's other shareholders further increased their investment in MIL 4 by US$801,864 and US$400,933 respectively and the Company's equity interest in MIL 4 remained at 66.67% during this round of additional investment.

Dilution of interest of a subsidiary

As disclosed in Note 10 to the financial statements, the Company diluted its equity interest in Medicare International Health and Beauty Pte. Ltd. (formerly known as MIL No. 2 Pte. Ltd.) ("Medicare") to 48.1% during the financial year and Medicare was classified as a joint venture.

Non-controlling interests

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:

14. Other receivables

Other receivables are denominated in the following currencies:

15. Cash and cash equivalents

The short-term deposit bears interest at an average rate of 0.25% (2017: 0.25%) per annum, has a tenure of approximately 12 months (2017: 12 months) and is pledged to bank to secure credit facilities.

Cash and cash equivalents are denominated in the following currencies:

For the purpose of the statement of cash flows, cash and cash equivalents comprise the following at the end of the financial year:

16. Share capital

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share without restriction at meetings of the Company.

In June 2017, the Company allotted 6,181,123 Ordinary Shares at US$1.18 per share (total of US$7,293,725) pursuant to a subscription for new shares (the "Fifth Subscription").

On 16 September 2016, the Company allotted 3,245,447 Ordinary Shares at US$1.30 per share (total of US$4,219,081) pursuant to a subscription for new shares (the "Fourth Subscription").

During the financial year, a total of 694,375 (2017: 10,513) warrants were exercised at a price of US$0.75 by the parties that held them for cash consideration of US$520,781 (2017: US$7,885).

All the shares have been admitted to trading on AIM under the ticker MIL.

The new ordinary shares issued during the financial year ranked pari passu in all respects with the existing ordinary shares of the Company.

Warrants

No new warrants were issued during the year.

On 16 September 2016, the Company allotted 811,368 Warrants pursuant to the Fourth Subscription. The Company had agreed that for every four Ordinary Shares subscribed for by a subscriber they would receive one Warrant at nil cost.

The Warrants entitle the holder to subscribe for an Ordinary share at an exercise price of US$0.75. The Warrants may be exercised during each 15 Business Day period commencing on the first day of each Quarter during the Subscription Period (from 21 June 2015 to 21 June 2018). The terms of the warrants were amended after the year end as described in Note 24 to the financial statements.

All Warrants have been admitted to trading on AIM under the ticker MILW.

17. Share options

Details of the Share Option Plan are available on the Company's website.

18. Fair value reserve

Fair value reserve represents the cumulative fair value changes, net of tax, of available-for-sale financial assets until they are disposed of or impaired.

19. Other payables

Other payables are denominated in the following currencies:

20. Significant related party disclosures

For the purposes of these consolidated financial 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 significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and the Company and the party are subject to common control or common significant influence. Related parties may be individuals or other entities.

Compensation of key management personnel

For the financial year ended 31 March 2018, no emoluments were paid by the Group to the Directors as an inducement to join or upon joining the Group or as compensation for loss of office.

The remuneration of Directors for the financial years ended 31 March 2018 and 31 March 2017 was as follows:

(1) The short term employee benefits also includes rental expenses paid for the Director's accommodation.

21. Commitments

Operating lease commitments - as lessee

The Group leases the Yangon office and accommodation for Directors under non-cancellable operating leases. The operating lease commitments are based on rental rates as specified in the lease agreements. The Group has the option to renew certain agreements on the leased premises for another one year.

In accordance with prevailing market conditions in Yangon, lease payments are paid in advance.

22. Dividends

The Directors of the Company do not recommend any dividend in respect of the financial year ended 31 March 2018 (2017: Nil).

23. Financial risk management objectives and policies

The Group has risk management policies that systematically manage the risks that could prevent it from achieving its objectives. These policies are intended to manage risks identified 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 identified each risk and are responsible for coordinating and continuously improving risk strategies, processes and measures in accordance with the Group's established business objectives.

The Group's principal financial instruments consist of available-for-sale financial assets, other receivables, cash and cash equivalents and other payables. The main risks arising from the Company's financial instruments and the policies for managing each of these risks are summarised below.

23.1 Credit risk

Credit risk is the risk of loss associated with the counterparty's inability to fulfil its obligations. The Group's credit risk is primarily attributable to other receivables and cash and cash equivalents with the maximum exposure being the reported balance in the consolidated statement of financial position. The Group has a nominal level of debtors and as such the Company believes that the credit risk to these is minimal. The Group holds available cash with licensed established banks. The Group considers the credit ratings of banks in which it holds funds in order to reduce exposure to credit risk.

23.2 Market risks

Foreign currency risks

The Group incurs foreign currency risk on transactions and balances that are denominated in currencies other than its functional currency, the United States dollar. The main currencies giving rise to this risk are the Singapore dollar, Myanmar kyat and British Pound. Exposure to foreign currency risk is monitored on an on-going basis to ensure that the net exposure is at an acceptable level.

The Group monitors its foreign currency exchange risks closely and maintains funds in various currencies to minimise currency exposure. Currency translation risk arises when commercial transactions, recognised assets and liabilities and net investment in foreign operations are denominated in the currency that is not the entity's functional currency.

The carrying amounts of the Group's foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period were as follows: