Page 1 of 87 MANDALAY MYOTHA INDUSTRIAL DEVELOPMENT PUBLIC COMPANY, LIMITED (Company Registration No.: 5092 of 2012-2013) (Incorporated in the Republic of the Union of Myanmar on 27 February 2013) Public Offer in respect of up to 360,000 new Shares at Ks 100,000 for each Offer Share, payable in full on application. PROSPECTUS DATED APRIL 2013 ON THE DAY IT WAS SUBMMITTED TO CRO. THIS DOCUMENT IS IMPORTANT. IF YOU ARE IN ANY DOUBT AS TO THE ACTION YOU SHOULD TAKE, YOU SHOULD CONSULT YOUR LEGAL, FINANCIAL, TAX OR OTHER PROFESSIONAL ADVISERS. Application has been made to the Companies Registration Office (“CRO”) for this Public Offer of the new ordinary shares in the capital of Mandalay Myotha Industrial Development Public Co., Ltd. (the “Company”) (the “Offer Shares”). The dealing and settlement of all shares of the Company will be in Myanmar Kyats and will only be allotted to Myanmar citizens or companies wholly owned by Myanmar citizens. The CRO assumes no responsibility for the correctness of any of the statements made, opinions expressed or reports contained in this Prospectus. Permission by the CRO for the issuance of the Shares is not to be taken as an indication of the merits of the Invitation, our Company, our subsidiaries or our Shares. A copy of this Prospectus shall be filed with the CRO in accordance with Section 92 of the Companies Act . We have not lodged or registered any Prospectus or Information Memorandum in any other jurisdiction. INVESTING IN OUR SHARES INVOLVES RISKS WHICH ARE DESCRIBED IN THE SECTION “RISK FACTORS” OF THIS PROSPECTUS. The Shares have not been and will not be registered under the US Securities Act of 1933, as amended (the “US Securities Act”), and may not be offered or sold within the United States, except in transactions exempt from, or not subject to, the registration requirements of the US Securities Act.
Mandalay Myotha Industrial Development _ Prospectus (Dated APRIL 2013) _ English
Nov 08, 2014
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MANDALAY MYOTHA INDUSTRIAL DEVELOPMENT PUBLIC COMPANY, LIMITED (Company Registration No.: 5092 of 2012-2013) (Incorporated in the Republic of the Union of Myanmar on 27 February 2013) Public Offer in respect of up to 360,000 new Shares at Ks 100,000 for each Offer Share, payable in full on application.
PROSPECTUS DATED APRIL 2013 ON THE DAY IT WAS SUBMMITTED TO CRO. THIS DOCUMENT IS IMPORTANT. IF YOU ARE IN ANY DOUBT AS TO THE ACTION YOU SHOULD TAKE, YOU SHOULD CONSULT YOUR LEGAL, FINANCIAL, TAX OR OTHER PROFESSIONAL ADVISERS. Application has been made to the Companies Registration Office (“CRO”) for this Public Offer of the new ordinary shares in the capital of Mandalay Myotha Industrial Development Public Co., Ltd. (the “Company”) (the “Offer Shares”). The dealing and settlement of all shares of the Company will be in Myanmar Kyats and will only be allotted to Myanmar citizens or companies wholly owned by Myanmar citizens.
The CRO assumes no responsibility for the correctness of any of the statements made, opinions expressed or reports contained in this Prospectus. Permission by the CRO for the issuance of the Shares is not to be taken as an indication of the merits of the Invitation, our Company, our subsidiaries or our Shares. A copy of this Prospectus shall be filed with the CRO in accordance with Section 92 of the Companies Act. We have not lodged or registered any Prospectus or Information Memorandum in any other jurisdiction. INVESTING IN OUR SHARES INVOLVES RISKS WHICH ARE DESCRIBED IN THE SECTION “RISK FACTORS” OF THIS PROSPECTUS.
The Shares have not been and will not be registered under the US Securities Act of 1933, as amended (the “US Securities Act”), and may not be offered or sold within the United States, except in transactions exempt from, or not subject to, the registration requirements of the US Securities Act.
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Mandalay Myotha Industrial Development Public Co., Ltd. Central Myanmar’s first company with a large-scale industrial park, available for public offer.
Urbanized Impression of the MIP
OVERVIEW The following overview is qualified in its entirety by, and is subject to, the more detailed information contained or referred to elsewhere in this Prospectus. The meaning of terms not defined in this overview can be found in the section “DEFINITIONS”.
KEY INVESTMENT HIGHLIGHTS Introduction – Mandalay Myotha Industrial Development Public Co., Ltd. Mandalay Myotha Industrial Development Public Co. Ltd., (“MMID”) is the master developer responsible for the development of Myotha Industrial Park, (“MIP”), a large scale mixed-used industrial park covering 10,353 acres, and Semeikhon Port, (“SMP”), a jetty port along Ayeyarwady river covering 380 acres. MMID is part of the Royal Hi Tech Group (“RHGC”) founded by U Aung Win Khaing. RHGC started as a Shan tea merchant and subsequently expanded into cement manufacturing, wood processing, steel fabrication, construction, mining and recently, infrastructure development. U Aung Win Khaing has been the Chairman of the Mandalay Industrial Zone for the past 19 years since its inception and has made valuable contributions to the industrialisation and creation of employment opportunities for the people of the Mandalay Region. He is, and has been, one of the strong pillars of the business community in the Mandalay Region.
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Since 2010, U Aung Win Khaing and the founding members of MMID began their search for suitable locations to develop a river port along the Ayeyarwady River and an industrial park in the Mandalay Region. After many field trips and extensive research, the ideal port location was found at Semeikhon and suitable industrial land near Myotha. These locations are strategically placed and readily accessible for industrial and economic activities due to the close proximity to the Mandalay International Airport and Mandalay City.
Close proximity of the MIP from the Mandalay City, Mandalay International Airport and other cities
As the MIP location is on gently undulating land, it makes a logical site for a modern industrial park which caters both for industry as well as for commercial and residential spaces. It has great potential to become an idyllic place to work, live, play and learn. Furthermore, as the land is comparatively non-arable, there are not many farmers and villagers farming this land. It is therefore an ideal location for a new industrial park without displacing too many locals - a win-win situation for all. There is also substantial available land in the region so that when MIP is fully developed, expansion in all directions is possible.
Thereafter in July 2011, Singapore-based State & City Planning (“SCP”) Consultants was engaged to do a master plan for a total area of about 10,700 acres, which encompass the Myotha Industrial Park (“MIP”) and the Semeikhon Port (“SMP”). This master planning took more than ten months to complete and was adopted by Mandalay Region Government on 03 Jan 2013. Concurrently, other consultants had been engaged in the following capacity:
GEOCOMP (Myanmar) Ltd. conducted a land survey of SMP, MIP and the Port Link Road (“PLR”).
ERE Consulting Group Sdn. Bhd. (Malaysia) conducted an Initial Environmental Evaluation (“IEE”) Report.
Global Maritime and Port Services (GMAPS) Pte. Ltd. (Singapore) surveyed the SMP site and drafted the initial concept plan for the SMP.
U Min Sein, Advocate of the Supreme Court (Myanmar), prepared the legal documents for submission to the various government authorities.
U Hla Tun & Associates Ltd. (Myanmar) acted as the independent auditor for this Project.
P+Z Development Pte. Ltd. (Singapore) undertook the landscaping and other worksite monitoring work.
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After the Mandalay Region Government had approved the master plan in principal, RHGC began to get ready for the huge task of developing SMP and MIP. Foreign technical experts, with reliable track record, were hired to form the team to kick-start the work. Foreign senior advisors were also appointed to advise and guide the whole process of the development. RHGC went on to compensate affected farmers, apply for necessary permits, carry out initial site works and build cordial corporate relationships with local villages through community work. MMID was then incorporated to succeed RHGC to further capitalise and continue the Project. An Information Centre (“i-Centre”) was created to show investors, both local and international, interested parties and potential partners the development plans. The Information Centre was opened by the Chief Minister of Mandalay on 02 Jan 2013.
Opening ceremony of the i-Centre by the Chief Minister of Mandalay on 02 January 2013
At the corporate level, MMID is moving from the project office to its new headquarters. It is also gearing up for public placement of shares in order to involve the larger Myanmar public in this exciting and groundbreaking project. MMID is growing step by step from its humble beginnings of U Aung Win Khaing‟s dreams of industrialisation and job creation for the Mandalay community to the new reality of a model industrialised city in Central Myanmar. This is inline with the country‟s and people‟s aspirations of transforming Myanmar into a first-class industrialised nation.
MMID‟S VISION To be Myanmar's market leader in providing a sustainable, world-class, and eco-friendly environment to invest, live, work, and learn.
MMID‟s MISSION
To build and create a model international-standard industrial park and river port in Central Myanmar with a sustainable eco-friendly environment which is attractive for investments from local and overseas business communities.
To develop a conducive environment to create and provide employment opportunities and improve the living standards and quality of life in Central Myanmar.
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MMID‟s vision is to make Myanmar a first-class industralised nation that is on par with the other industralised countries in the world. MMID aims to stimulate economic growth in the Mandalay region through the proper implementation of a well-planned development, which will form the catalyst for national modernization, job-creation and business-sustainability for all stakeholders.
As a business entity, MMID aims to provide a platform for long-term, sustainable revenue growth and attractive return on investments for its prospective investors. The key revenue streams for the Company will be the sales of Land Use Rights within the MIP and the rental income from leasing the port to an established operator. The development will be carried out over 3 main phases, over a projected 15 years. While the focus during the initial years is on investment in infrastructure and logistics and warehousing facilities, significant revenue can be expected once the Company rolls out its land sales program. As a socially-responsible corporation, MMID strives to protect the environment in which it operates. The Company has engaged professionals to study the potential impact of the development of the MIP and the SMP on the environment. Where feasible, MMID intends to adopt good practices to conserve the environment.
Mandalay: An important logistics hub in Central Myanmar The Company strongly believes in Mandalay‟s role as an important logistics hub in Central Myanmar. This is not only due to Mandalay‟s excellent connectivity to the region and the rest of Myanmar by road, river and air, but also due to Mandalay‟s deep-seated historical and economic role in Myanmar. Mandalay‟s strategic location ensures that it has great potential to become the focal point of the Asian East-West Corridor. The Mandalay Region is also Myanmar‟s administrative subdivisions with the largest population.
Mandalay is well-connected to the other parts of Myanmar
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Overall proposed land use matrix for MIP The overall proposed land use matrix for MIP is as such:
Land Type Area (Acres) Percentage
Residential Land
Low density residential 617.76 5.97%
Medium density residential 2,097.92 20.27%
Mid-High density residential 439.85 4.24%
3,155.53 30.49%
Industrial Land
Business Park 219.92 2.11%
Business 1 2,305.49 22.27%
Business 2 869.81 8.41%
Logistics 237.22 2.30%
3,632.44 35.08%
Civic & Commercial
Civic 336.06 3.25%
Commercial 165.56 1.59%
Recreation, excluding Golf Club 118.61 1.16%
Golf club 252.05 2.43%
872.28 8.41%
Public green space 864.87 8.35%
Road 1,336.84 12.92%
Municipal Infrastructure 155.68 1.50%
Water body 336.08 3.25%
Total 10,353.72 100.00%
Net saleable area will be approximately 7,600 acres of land on a maximum lease of 70 + 10 +10 years. At the moment, there is no restriction on the allowable built-up area but MMID will impose relevant development guidelines and conditions in the future.
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Land use breakdown of MIP
Development Timetable Phase 1 Sub-Phase 1A1 300 Acres Infrastructure & logistics development
Constructing the initial infrastructure, golf course and the Port Link Road, as well as focusing on the development of logistics and warehousing facilities as a catalyst for industrial development.
(~ 5 years) Sub-Phase 1A2 Sub-Phase 1B
450 Acres 1,250 Acres
Phase 2 (~ 5 years)
4,375 Acres Housing and industry expansion Expanding the road networks, enhancing the commerce and logistics facilities, and developing residential areas and the Northern and Western industrial areas.
Phase 3 (~ 5 years)
3,978 Acres Higher level industries development Developing the business parks, the Eastern and Northern industrial areas to attract higher level industries and research and development companies.
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Developer’s impression of MIP
Developer’s impression of SMP
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Selected Financial Figures
PROPOSED MIP LAND SALES, IN PHASES *
PROPOSED INFRASTRUCTURE SPENDING, IN PHASES *
Phase 1A Phase 1B Phase 2 Phase 3
640 629
3,665
2,473
Phase 1A Phase 1B Phase 2 Phase 3
51.3
32.9
243.8
112.5
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PROJECTED NET INCOME BEFORE TAX *
PROJECTED DIVIDENDS **
FY 2014 FY 2015 FY 2016 FY 2017 FY 2018
1.7 3.5
17.8 16.0
124.9
FY 2014 FY 2015 FY 2016 FY 2017 FY 2018
0.8 1.7
8.9 8.0
74.9
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* The financial projections are based on the assumptions that the Company completes the necessary infrastructure and supporting facilities, and that development is implemented according to the proposed development timeline. The financial projections do not guarantee the actual financial performance of the Company. ** The dividends are projected based on 50% of net profit before tax from FY2014 to FY2018. In the event that the Company’s tax exemptions are not approved, the dividends will be paid out of net profit after tax. Dividends are not guaranteed.
MMID offers a great growth story that is unprecedented in the Central Myanmar region.
Unique growth model
Strong organic growth potential as MIP develops.
Well-conceived and strategically-planned development with more than 333 million square feet of saleable land with a maximum 70+10+10 lease.
Professional development and operational management.
Excellent infrastructure and connectivity will help to attract logistics operators and industries.
Full support from the Union and Regional Governments in terms of policies and incentives.
Attractive investment for investors and operators with a keen interest in Myanmar‟s growth.
Flexible Land Use Rights for shorter-term leases.
No immediate new competitors within the region.
Exposure to a fast-growing Myanmar economy
Myanmar is one of the world‟s most exciting emerging economies given its strategic geographical location and abundant natural resources.
Myanmar is poised to attract increased inflows of foreign direct investment following the passing of the foreign investment law in November 2012. This is expected to have a positive impact on projected sales and rental rates.
Myanmar‟s economy is expected to grow at a fast pace over the next few years, given the appropriate policies implementation. IMF‟s Fiscal Year 2012/2013 forecast for Real GDP Growth stands at 6 percent.
An improving political outlook, a conducive investment environment, essential financial reforms and a young demographic profile will contribute to sustainable long-term growth.
Rising demand for better logistics and industrial space in Central Myanmar Better-quality logistics, warehousing and connectivity will be the crucial element for MMID to be the
focal point in the East-West corridor of Central Myanmar.
Myanmar is likely to undergo rapid industrialisation given the availability of essential natural resources and relatively inexpensive domestic labour.
Strong demand from trade and manufacturing companies for industrial space.
Existing manufacturing companies are expected to undergo expansion plans within the next 3 to 5 years, and will require bigger facilities.
MMID‟s Competitive Advantages
MMID‟s competitive advantages are due to the following factors:
GIS analysis has shown that the land is mostly flat and the variation in gradient is moderate, providing an environment suitable for large-scale industrial, logistic, residential, commercial and recreational development. Furthermore, the land is free from encumbrances, and compensation to the farmers has been made in a fair and transparent manner.
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MMID has strong support from the Union Government and the Mandalay Regional Government, as well as good working relationship with the relevant Authorities.
MIP is well-connected to the Mandalay City, the Mandalay International Airport and nearby townships by road, and is located near the Kyaukpyu-Ruili oil and gas pipeline. It is also linked to the other Myanmar cities by the Ayeyarwady River and to the neighbouring countries by the Asian Highway network.
The proposed jetty port will become the first modernised and the largest port in Central Myanmar, providing a clear alternative to the current Mandalay main port and other river ports that lack essential modern supporting facilities and have significantly deteriorated over the years.
The Company has built and will continue to build a strong and effective management team with well-qualified and experienced executives.
The conceptualization, master planning and execution of the Project are carried out by highly qualified professionals and third-party experts in a systematic manner.
The Company has built up good rapport with the local village communities by improving their power distribution lines and roads, and through other corporate social responsibility (“CSR”) work.
Donating supplies to a school in Nga Zon Township Repairing roads for nearby villages
Public Offer Timetable
2nd
April 2013* 09.00 am Opening date and time for the Public Offer
11th
April 2013 or earlier** 12.00 pm Closing date and time for the Public Offer
10th
May 2013 or earlier 12.00 pm Allotment date
1st
August 2013 09.00 am Commencement of OTC trading
* Launching depends on the issuance of Commencement of Business by CRO. ** Allotment of Offer Shares is on a first-come-first-serve basis and allotment is at the sole discretion of the Company. In the event of over-subscription by the public beyond Ks 36 billion, the Company, at its sole discretion, may do the following:
a) Notify the current shareholders whether they are interested to offer their existing shares to
the applicants; and/or b) Increase the number of new Shares to be offered for public subscription.
Announcements regarding the early closure of the Public Offer and change in the Allotment Date will be published on the Company‟s website at http://www.mmidproject.com.
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TABLE OF CONTENTS
COVER PAGE ……………………………………………………………………………........
1
OVERVIEW …………………………………………………………………………………......
2 - 12
TABLE OF CONTENTS …………………………………………………………………........
13 – 14
NOTICE TO INVESTORS ……………………………………………………………………..
15 – 16
FORWARD-LOOKING STATEMENTS ………………………………………………………
16
CORPORATE INFORMATION ……………………………………………………………….
17 – 18
DEFINITIONS …………………………………………………………………………………..
19 – 22
SUMMARY OF PUBLIC OFFER ……………………………………………………………..
23 – 24
RISK FACTORS ………………………………………………………………………………..
24 – 26
SHARE CAPITAL STRUCTURE AND DETAILS OF SHARE ISSUE ……………………
27
DILUTION ……………………………………………………………………………………….
28
USE OF PROCEEDS ………………………………………………………………………….
28
BUSINESS AND STRATEGIC PLANS ………………………………………………………
28 – 33
MMID‟S COMPETITIVE ADVANTAGES …………………………………………………….
34
UNAUDITED PROFORMA FINANCIAL STATEMENTS …………………………………..
35
FINANCIAL FORECAST AND PROJECTION ………………………………………………
36 – 43
TAXATION ………………………………………………………………………………………
44
DIVIDENDS ……………………………………………………………………………………..
44
SHARES TRANSFER AND TRADING ………………………………………………………
44
DIRECTORS AND MANAGEMENT ………………………………………………………….
45 – 48
MMID‟S ORGANISATION CHART …………………………………………………………...
48
REMUNERATION OF DIRECTORS AND EXECUTIVE OFFICERS …………………….
49
CORPORATE GOVERNANCE, INTERESTED PERSON TRANSACTIONS AND TRANSPARENCY ……………………………………………………………………………...
49 – 51
GOVERNMENT APPROVALS AND AGREEMENTS ……………………………………...
51 – 52
ENVIRONMENTAL CONCERNS …………………………………………………………….
53 – 55
CORPORATE SOCIAL RESPONSIBILITY ………………………………………………….
56 – 57
EXPERTS ……………………………………………………………………………………….
58
STATUTORY INFORMATION AND COMPLIANCE………………………………………..
59 – 61
DISCLAIMER …………………………………………………………………………………... 61
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SIGNATURES OF THE DIRECTORS………………………………………………………..
62
APPENDIX A – CERTIFICATES & PERMITS
63 – 65
APPENDIX B – INDEPENDENT CONCEPTUAL PLANNING OF MMID REPORT
66 – 72
APPENDIX C – INDEPENDENT VALUATION REPORT
73 – 76
APPENDIX D – OBJECTS OF THE COMPANY
77
APPENDIX E – SUMMARY OF SELECTED ARTICLES OF ASSOCIATION
78 – 84
APPENDIX F – SAMPLE OF SHARE APPLICATION FORM 85 – 86
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NOTICE TO INVESTORS No person is authorised to give any information or to make any representation not contained in this Prospectus and any information or representation not so contained must not be relied upon as having been authorised by or on behalf of MMID. Neither the delivery of this Prospectus nor any offer, subscription, sale or transfer made hereunder shall under any circumstances imply that the information herein is correct as of any date subsequent to the date hereof or constitute a representation that there has been no change or development reasonably likely to involve a material adverse change in the affairs, conditions and prospects of MMID or the Shares since the date hereof. Where such changes occur and are material or required to be disclosed by law, the CRO and/or any other regulatory or supervisory body or agency, MMID will make an announcement of the same to the CRO, give reasonable public notice and, if required, issue and lodge a supplementary document or replacement document with the CRO. Investors should take notice of such announcements and documents and upon release of such announcements and documents shall be deemed to have notice of such changes. No representation, warranty or covenant, express or implied, is made by any of MMID, the Distribution Banks or Agents, or any of their respective affiliates, Directors, officers, employees, agents, representatives or advisers as to the accuracy or completeness of the information contained herein, and nothing contained in this Prospectus is, or shall be relied upon as, a promise, representation or covenant by the Distribution Banks or Agents, or their respective affiliates, Directors, officers, employees, agents, representatives or advisers. None of MMID, the Distribution Banks or Agents, or any of their respective affiliates, Directors, officers, employees, agents, representatives or advisers is making any representation or undertaking to any purchaser or subscriber of Shares regarding the legality of an investment by such purchaser or subscriber under appropriate legal, investment or similar laws. In addition, this Prospectus is issued solely for the purpose of the Offer and investors in the Shares should not construe the contents of this Prospectus as legal, business, financial or tax advice. Investors should be aware that they may be required to bear the financial risks of an investment in the Shares for an indefinite period of time. Investors should consult their own professional advisers as to the legal, tax, business, financial and related aspects of an investment in the Shares. This Prospectus includes market and industry data and forecasts that have been obtained from internal surveys, reports and studies, where appropriate, as well as market research, publicly available information and industry publications. Industry publications, surveys and forecasts generally state that the information they contain has been obtained from sources believed to be reliable, but there can be no assurance as to the accuracy or completeness of such information. While MMID has taken reasonable steps to ensure that the information is extracted accurately and in its proper context, MMID has not independently verified any of the data from third-party sources or ascertained the underlying economic assumptions relied upon therein. Copies of this Prospectus and the Application Forms may be obtained on request, subject to availability, from: MMID i-Centre, Mandalay (Main) A1, A2 62
nd Street, Ngwe Taw Gyi Kone Quarter, Pyi Gyi Tagon Township,
Mandalay, The Republic of the Union of Myanmar Tel: +95 (0) 2-72266; +95 (0) 2-65958. Email: [email protected] MMID Branch Office, Yangon No. 216/222 Room No. 7(B), Corner of Maha Bandhoola Road & Bo Myat Tun Road, Pazaungdaung Township, Yangon, The Republic of the Union of Myanmar Tel: +95 (0) 1-294535; +95 (0) 1-299625. Email: [email protected] A copy of this Prospectus is also available on the MMID website at http://www.mmidproject.com. All the Shares of the Company will only be allotted to Myanmar citizens. The distribution of this Prospectus and the Offer, subscription, purchase, sale or transfer of the Shares, which are the subject of the Offer in certain jurisdictions, may be restricted by law. MMID and the Distribution Banks or Agents require persons into whose possession this Prospectus comes, to inform themselves about and to
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observe any such restrictions at their own expense and without liability to MMID and the Distribution Banks or Agents. This Prospectus does not constitute an offer of, or an invitation to subscribe for any Shares in any jurisdiction in which such offer or invitation would be unlawful. Persons to whom a copy of this Prospectus has been issued shall not circulate to any other person, reproduce or otherwise distribute this Prospectus or any information herein for any purpose whatsoever nor permit or cause the same to occur.
FORWARD-LOOKING STATEMENTS
Certain statements in this Prospectus constitute “forward-looking statements”. This Prospectus also contains forward-looking financial information in the section “FINANCIAL FORECAST AND PROJECTION”. Such forward-looking statements and financial information involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of MMID, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements and financial information. Such forward-looking statements and financial information are based on numerous assumptions regarding MMID‟s present and future business strategies and the environment in which MMID will operate in the future. Because these statements and financial information reflect MMID‟s current views concerning future events, these statements and financial information necessarily involve risks, uncertainties and assumptions. Actual future performance could differ materially from these forward-looking statements and financial information. Among the important factors that could cause MMID‟s actual results, performance or achievements to differ materially from those in the forward-looking statements and financial information are the condition of, and changes in, the domestic, regional or global economies that result in reduced occupancy or rental rates for MMID‟s properties, changes in government laws and regulations affecting MMID, competition in the Mandalay property market, unfavorable interest rates, relations with service providers, relations with the government and the quality of tenants and other matters not yet known to MMID or not currently considered material by the Company. Additional factors that could cause actual results, performance or achievements to differ materially include, but are not limited to, those discussed under “Risk Factors”, “Financial Forecast and Projection”, “Forecast and Projected Statements of Total Return”, “The Industrial Property Markets in Myanmar and the Region”, “Strategy” and “Business and Properties”. These forward-looking statements and financial information are made only as of the date of this Prospectus. MMID expressly disclaims any obligation or undertaking to release publicly any updates of or revisions to any forward-looking statement or financial information contained herein to reflect any change in the Company‟s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement or information is based, subject to compliance with all applicable laws and regulations and/or any other regulatory or supervisory body or agency.
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CORPORATE INFORMATION Board of Directors : Chairman
U Aung Win Khaing, Myanmar No.(23), Between (26x27) Street, 64 Street Aung Taw Mu Yark – Chan Aye Thar Zan Township, Mandalay, Republic of the Union of Myanmar. Managing Director Dr Tun Tun Aung, Myanmar Shwe Nan Oo Chan, Between (19x20) and (65x66) Street, Nan Oo Lane, Ahnatetaw Yark, Aung Myay Thar Zan Township, Mandalay, Republic of the Union of Myanmar. Director U Kyaw Kyaw, Myanmar No.(216/222), Room No.7/B, Corner of Maharbandoola Street & Bomyathtun Street, Puzuntaung Township, Yangon, Republic of the Union of Myanmar. Director U Min Sein, Myanmar Pansodan Tower , Unit 7B, 189-195, Pansodan Street, Kyauktada Township, Yangon, Republic of the Union of Myanmar. Director U Kyaw Kyaw Win, Myanmar Sa-273/274, Between (59x60) Street and (34x35) Street, Shwe Yin Mon Quarter, Chan Aye Thar Zan Township, Mandalay, Republic of the Union of Myanmar. Director Daw May Gi Soe, Myanmar No.(141-149), Room No.(1003), Barkayar Condo/Barkayar Street, Sanchaung Township, Yangon, Republic of the Union of Myanmar. Director U Aung Zay Ya, Myanmar Block (800), 64 Street, Between (26x27) Street, Pyi Gyi Myet Hmun Quarter, Chan Aye Thar Zan Township, Mandalay, Republic of the Union of Myanmar. * Shareholdings as of 11 March 2013.
8,350 Shares* 6,950 Shares* Representing Hi-Tech Forest Industries Co., Ltd.‟s 7,700 Shares* Representing Myanmar Majestic Investment Co., Ltd.‟s 6,950 Shares* 6,950 Shares* 6,950 Shares* 6,150 Shares*
Registered Office : 26th Street, Between 58
th & 60
th Street,
Aung Myae Than Zan, Mandalay, Republic of the Union of Myanmar.
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Company Secretary : U Myat Noe Aung
Share Registration and Transfer Office Address
: 26th Street, Between 58
th & 60
th Street,
Aung Myae Than Zan, Mandalay, Republic of the Union of Myanmar.
Auditors & Reporting Accountants
: U Hla Tun & Associates Limited, Shwegon Plaza, 64(B) Komin Kochin Road, (1
st floor),
Bahan Township, Yangon, Republic of the Union of Myanmar. Director – in – charge: U Maung Maung Aung
Legal Adviser : U Min Sein, Advocate of the Supreme Court, Pansodan Tower, Unit 7B, 189-195, Pansodan Street, Kyauktada Township, Yangon Republic of the Union of Myanmar.
Principal Bankers
: Ayeyarwady Bank KBZ Bank Myanmar Apex Bank United Amara Bank
Independent Valuation Firm
: Chesterton Suntec International Pte. Ltd. 9 Temasek Boulevard, #06-01, Suntec Tower 2, Singapore 038989. Singapore.
Coordinating Firm : JFQ Capital Holdings Private Limited
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DEFINITIONS In this Prospectus and the accompanying Application Forms, the following definitions apply where the context so admits: Group Companies
“Asia Speed”
: Asia Speed Construction Co., Ltd.
“Company” or “MMID”
: Mandalay Myotha Industrial Development Public Co., Ltd.
“HFI”
: Hi-Tech Forest Industries Co., Ltd.
“HTMG” : Hi-Tech Mining Group
“MCI” : Mandalay Cement Industrial Co., Ltd.
“RHGC”
: Royal Hi-Tech Group Company Ltd.
Directors of the Company
“Chairman” or “AWK”
: U Aung Win Khaing.
“Managing Director” or “TTA”
: Dr Tun Tun Aung.
“Kyaw Kyaw”
: U Kyaw Kyaw.
“Min Sein” : U Min Sein
“KKW” : U Kyaw Kyaw Win
“MGS” : Daw May Gi Soe
“AZY” : U Aung Zay Ya
Key Executive Officers of the Company “Alan”
: Mr. Alan Tsang.
“Bruce”
: Mr. Bruce Reynolds.
“CMC” “FT”
: :
Central Management Committee, comprising of Alan, AWK, Bruce, Nyi Nyi, Peter, Rui, TTA and FT. Mr. Frankie Tan.
“Nyi Nyi”
: U Nyi Nyi Aung.
Other Corporations and Agencies
“Auditors”
: U Hla Tun & Associates Limited.
“CRO”
: Companies Registration Office.
“ERE”
: ERE Consulting Group Sdn. Bhd.
“Environmental Consultant” : ERE Consulting Group Sdn. Bhd.
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“Geocomp”
: GEOCOMP Myanmar Limited.
“GMAPS”
: Global Maritime and Port Services (GMAPS) Pte. Ltd.
“Independent Auditor”
: U Hla Tun & Associates Limited.
“Independent Valuer” : Chesterton Suntec International Pte. Ltd.
“Land Surveyor” : GEOCOMP Myanmar Limited.
“Legal Advisor”
: U Min Sein.
“Master Planner”
: State & City Planning Consultants.
“MIC”
: Myanmar Investment Commission.
“MIDA”
: Mandalay Industrial Development Authority.
“MRG”
: Mandalay Region Government.
“P+Z”
: P+Z Development Pte. Ltd.
“Peter”
: Mr. Peter Rousseau.
“Port Planner”
: Global Maritime and Port Services (GMAPS) Pte. Ltd.
“Rui”
: Mr. Rui Barreto.
“SCP”
: State & City Planning Consultants.
“Senior Technical Consultant”
: Mr. Rui Barreto.
“Union Government”
: Government of the Republic of the Union of Myanmar.
General
“Allotment Date” : 10 May 2013 or earlier, the date on which the allotment results of the subscription of the Offer Shares will be announced.
“Application Form”
: The printed application form to be used for the purpose of the Public Offer, which forms part of this Prospectus.
“Application List”
: The list of applications for subscription of the Offer Shares.
“Articles” or “Articles of Association”
: Articles of Association of the Company.
“Companies Act” : Myanmar Companies Act (1914), as amended, modified or supplemented from time to time.
“CSR”
: Corporate Social Responsibility.
“Distribution Agents”
: Ayeyarwady Bank No.1, Ywama Curve, Ba Yint Naung Road, 2 Ward, Hlaing Township, Yangon, Republic of the Union of Myanmar.
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Myanma Apex Bank No.207, Thein Phyu Road (Middle) Block, Botahtaung Township, Yangon, Republic of the Union of Myanmar. RV Management Services Co., Ltd. No.44, Than Lwin Road, Bahan Township, Yangon, Republic of the Union of Myanmar.
“Founding Members” : Chairman, TTA, FT and Nyi Nyi. “Issuer” : Mandalay Myotha Industrial Development Public Co., Ltd.
“Offer Shares”
: New shares of par value Ks 10,000 each to be offered to the public for subscription.
“Prospectus”
: Herein this set of document registered with the CRO for the purpose of Public Offer of new Shares in the Company
“Public Offer Period” : 2 April 2013 to 11 April 2013, or earlier, the period during which the Offer Shares are offered for subscription to the public. The Company may close the subscription earlier than 11 April 2013.
“Shareholders”
: Any individual, company, group of companies and/or associations that legally own shares of the Company in general.
Locations
“Branch Office”
: Branch Office located at No. 216/222 Room No. 7(B), Corner of Maha Bandhoola Road & Bo Myat Tun Road, Pazaungdaung Township, Yangon, Republic of the Union of Myanmar.
“i-Centre” : Information Centre located at A1, A2 62nd
Street, Ngwe Taw Gyi Kone Quarter, Pyi Gyi Tagon Township, Mandalay, Republic of the Union of Myanmar.
“Myotha Industrial Park” or “MIP”
: Industrial park of at least 10,000 acres located near to Myotha, at around Nawarat Village, Myingyan District.
“PLR”
: Port Link Road of 23 km between MIP and SMP.
“Semeikhon Port” or “SMP”
: River Port located between Semeikhon village, Naungbintha village and Nga Nan village.
Currencies, Units and Others
“Kyats” or “Ks”
: Myanmar Kyats.
“Land Use Rights”
: Right of use of land for development and to derive economic benefits for a pre determined number of years as granted by MMID.
“%”
: Per centum.
“sqf” : Square feet.
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References to persons shall include corporations. Any reference in this Prospectus and the Application Forms to any statute or enactment is a reference to that statute or enactment as for the time being amended or re-enacted. Any word defined under the Companies Act or any statutory modification thereof and used in this Prospectus and the Application Forms shall, where applicable, have the meaning assigned to it under the Companies Act or any statutory modification thereof, as the case may be. Any reference to a time of day in this Prospectus shall be a reference to Myanmar time unless otherwise stated. References in this Prospectus to “the Group”, “we”, “our”, and “us” or any grammatical variations thereof shall unless otherwise stated, refer to our Group, our Company or any member of our Group as the context requires. Any discrepancies in the tables included herein between the listed amounts and the totals thereof are due to rounding. Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.
“sqm”
: Square meter.
“US$” and “cents”
: United States dollars and cents respectively.
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SUMMARY OF PUBLIC OFFER
The Issuer Mandalay Myotha Industrial Development Public Co., Ltd. (MMID), a company incorporated with limited liability under the company acts of The Republic of the Union of Myanmar.
The Public Offer
Up to 360,000 Offer Shares offered by the Company at the Offer Price by way of an offer to the public in Myanmar during the Public Offer Period, subject to the Company having obtained the Commencement of Business Certificate from the CRO.
The Public Offer Period
2 April 2013 to 11 April 2013, or earlier, the period during which the Offer Shares are offered for subscription to the public. The Company may close the subscription earlier than 11 April 2013.
The Offer Shares The Offer Shares will consist of 360,000 new Shares of par value Ks 10,000 each. There is only one class of Share and each Share confers the right of voting at MMID‟s meetings. Each Share is equal to one vote.
Allotment The minimum total subscription amount is Ks 6.5 billion. No allotment shall be made unless the minimum total subscription amount is achieved or exceeded during the Public Offer Period. The Offer Shares will be allotted to subscribers at the sole discretion of MMID. The allotment results of the subscription of the Offer Shares will be announced on or before 10 May 2013.
Offer Price
100,000 Kyats for each Offer Share. Investors are required to pay in full the Offer price in Myanmar Kyats upon application.
Application Procedures for the Public Offer
Applications must be paid for in Kyats. The minimum application is for 10 Offer Shares. An applicant may apply for a larger number of shares in integral multiples of 10 Offer Shares. Investors applying for Shares in the Public Offer will pay the Offer Price on application, subject to a refund of the full amount or, as the case may be, the balance of the application monies (in each case, without interest or any share of revenue or other benefit arising there from) where: (i) an application is rejected or accepted in part only; or (ii) the Offer does not proceed for any reason. For the purpose of illustration, an investor who applies for 100 Offer Shares by way of an Application Form under the Public Offer will have to pay Myanmar Kyats 10,000,000 which is subject to a refund of the full amount or the balance thereof (without interest or any share of revenue or other benefit arising there from), as the case may be, upon the occurrence of any of the foregoing events. No other fee is payable by applicants.
Proceeds from the Offer Refer to “USE OF PROCEEDS” for further details.
Transfer Restrictions
There are currently no restrictions set forth for the transfer and resale by subscribers and/or investors of Offer Shares. All transfer and resale will be administered by the Company through an over-the-counter (“OTC”) platform.
Dividends The Company will pay dividends, if any, only out of its profits as
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permitted under the law. Dividends will be paid in Kyats. The Board of Directors of the Company has discretion to recommend payment of dividends. Any profits the Company declares as dividends will not be available to be reinvested in the operations. The Company cannot assure Investors that the Company will declare or pay out any dividends. Please refer to the section “DIVIDENDS” for a description of the Company dividend policy.
Risk Factors
Prospective investors should carefully consider certain risks connected with an investment in the Shares, as discussed under
the section “RISK FACTORS”.
RISK FACTORS An investment in the Shares involves risks. Investors should consider carefully the following risk factors and all other information contained in this Prospectus, before deciding to invest in our Shares as these may, inter alia, adversely affect the trading price of the Shares. The risks set forth below are not an exhaustive list of the risks facing MMID or that may develop in the future. Additional risks, whether known or unknown, may in the future have a material adverse effect on MMID or the Shares. This Prospectus also contains forward-looking statements (including a profit forecast) that involve risks, uncertainties and assumptions. The actual results of the Company could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks faced by MMID as described below and elsewhere in this Prospectus. As an investment in a business trust is meant to produce returns over the long-term, investors should not expect to obtain short-term gains. Investors should be aware that the price of the Shares may rise or fall. Investors should note that they may lose all or part of their investment in the Shares. Before deciding to invest in the Shares, prospective investors should seek professional advice from the relevant advisers about their particular circumstances. To the best of the Company Directors‟ belief and knowledge, the major risk factors that are material to investors to allow them to make an informed judgement in respect of investing in our Shares have been set out below.
MMID is dependent on the political, economic and social conditions of Myanmar. Myanmar‟s military government has only recently handed over power to a civilian government in 2010, and can be viewed as a country in transition. With the country‟s opening up, economic and social issues may arise. Any political, economic and social turmoil could adversely affect MMID‟s financial condition and performance.
MMID’s industrial park and river port may be subject to intense competition. With the opening up of Myanmar‟s economy, MMID may face direct competition from both local and foreign companies which may establish new industrial parks and river ports in central Myanmar. Industrial zones in other parts of Myanmar may also attract potential customers away from MMID.
Planned infrastructure, amenities and supporting facilities within MIP and SMP may be delayed or not completed. There is no assurance that amenities, transportation infrastructure and public services in MIP and SMP will not be delayed or completed. If such an event were to occur, it will adversely impact the accessibility and viability of the relevant Assets and Property and the attractiveness and marketability of the relevant Assets and Property to prospective purchasers and tenants.
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MMID may require significant capital expenditure beyond the Management’s current estimate and may not be able to secure funding. MMID may not be able to fund planned capital expenditure solely from capital raised and cash provided from its operating activities, and MMID may not be able to obtain additional equity or debt financing, on favourable terms or at all.
MMID depends on certain key personnel, and the loss of any key personnel may adversely affect its operations. MMID‟s performance depends, in part, upon the continued service and performance of key staff members of the Company. These key personnel may leave MMID in the future and compete with the Company. The loss of any of these individuals could have a material adverse effect on MMID‟s financial condition and the results of operations.
MMID’s execution of its business strategies is subjected to delays, which could have
material adverse effect on MMID’s costs management and revenue generation. MMID‟s business strategies could be delayed by natural disasters, such as unusually bad weather, floods or earthquakes, as well as human factors including, but not limited to, delays by consultants and contractors in completion of work, delays in receipt of payments from customers and delays in securing any additional approvals from the government.
MMID is subject to the risk of late payment or non-payment by our customers. Major sources of income for MMID will be from the operations of SMP and MIP, comprising, but not limited to, revenues from real estate asset sales, infrastructure provision and other related services. MMID‟s financial condition and performance may be adversely affected by the late or non-payment by our customers.
MMID’s business is subject to changes in relevant laws and regulations. Myanmar is rapidly improving its laws and regulations, and any unforeseen changes in relevant laws and regulations could adversely affect MMID‟s implementation of the Company‟s business strategies.
MMID is susceptible to losses due to foreign exchange fluctuations. MMID‟s assets and equity holdings are expressed and held in Kyats, but part of the Company‟s revenue will be received in U.S. Dollars. The foreign exchange fluctuations between U.S. Dollars and Kyats could adversely affect MMID‟s performance.
MMID may require raising of additional capital for the Company’s future growth plans and such capital raising may result in a dilution of shareholders’ equity holdings. MMID may raise additional capital by offering more Shares to fund the Company‟s future growth plans. The additional capital raising may dilute existing shareholders‟ equity holdings.
MMID may face risks associated with debt financing.
While there is no current debt borrowing by MMID, nor any intention to enter into debt financing in the near future, the Company will be subject to the risk of the financing terms undertaken in the event that any borrowings are incurred in the future. In addition, the Company may be subjected to certain covenants in connection with any future borrowings that may limit or otherwise adversely affect its operations and its ability to make dividends to Shareholders. Such covenants may also restrict the Company‟s ability to undertake other capital expenditure or may require it to set aside funds for maintenance or repayment of security deposits. Furthermore, if prevailing interest rates or other factors at the time of financing (such as the possible reluctance of lenders to make loans in relation to industrial parks or port operations located in Myanmar) result in high interest rates incurred, the interest expense relating to such indebtedness would increase, which would adversely affect the Company‟s cash flow and the amount of dividends it could make to Shareholders.
MMID’s assets might be adversely affected if no adequate management and maintenance services are provided.
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Should there be a lack of management and maintenance services, the value of the Company‟s assets might be adversely affected or if this results in a loss of future tenants, the Company‟s business may be adversely affected.
MMID may suffer material losses in excess of insurance proceeds. Assets in MIP and SMP face the risk of suffering physical damage caused by fire or natural disaster or other causes, as well as facing potential public liability claims, including claims arising from the operations of the assets, all of which may result in losses (including loss of rent and sales potential) and may not be fully compensated by insurance proceeds, in the event that an insurance is procured. MMID will remain liable for any debt or other financial obligation related to a particular asset if there are material losses in excess of insurance proceeds. No assurance can be given that material losses in excess of insurance proceeds will not occur in the future.
Market values of the assets and properties may differ from their appraised values as determined by the Independent Valuers. The valuation of the assets and properties was generally conducted using the direct comparison and residual method of valuation. Development valuations generally may include a subjective determination of certain factors relating to the relevant assets and properties such as their relative market positions, financial and competitive strengths, and conditions. In addition, the real estate market in Myanmar is characterised by a limited amount of publicly available data as compared to the data publicly available in other industrialised countries. The lack of data with respect to the Myanmar real estate market makes it relatively more difficult to assess the market value of real estate in Myanmar. The market values of the assets and properties may therefore differ from the appraised values of the properties as determined by the Independent Valuer. The appraised value of any of the assets and properties is not an indication of, and does not guarantee, a sale price at that value at present or in the future.
MMID’s net income may be adversely affected by increases in direct expenses and other operating expenses. MMID‟s ability to make dividends to shareholders could be adversely affected if direct expenses and other operating expenses increase without a corresponding increase in revenue. Factors which could lead to an increase in expenses include, but are not limited to, any of the following: increase the cost of compliance with laws, regulations or policies; increase in sub-contracted service costs; increase in management and labour costs; increase in repair and maintenance costs; and increase in the cost of utilities.
MMID may be unable to maintain safety and environmental standards. The Project requires the conversion of more than 10,000 acres of undeveloped or agricultural land to a large-scale industrial park. The construction work and subsequent operation of the industrial park may cause, among other things, depletion of ground water, soil erosion, removal of fertile topsoil, flooding due to intensive urbanization or pollution to the air, water and land.
MMID may violate health and safety regulations in Myanmar. Construction sites can be hazardous working environments and the rates of accidents and fatalities in the construction industry are high relative to other industries. Accidents and in particular, fatalities, may have an adverse impact on the Company‟s reputation and may result in fines imposed and/or investigations made by public authorities, as well as litigation by injured workers and/or their dependants.
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SHARE CAPITAL STRUCTURE AND DETAILS OF SHARE ISSUE
1. MMID was incorporated on 27 February 2013 as a public company with the Chairman, Managing Director and five other Directors as the first Directors. The Company is specifically incorporated to undertake the development and operation of SMP, MIP and PLR (“The Project”).
2. The first Directors have subscribed, in cash, to 50,000 shares of the Company in accordance with the Articles of Association, at the par value of Ks 10,000 per share on 11 March 2013.
3. RHGC, the holding company, has obtained various permits, approvals and agreement with MIDA. RHGC is the Hong Family‟s holding company for their interests in cement, wood, steel fabrication and other businesses including this Project. In March 2013, it was decided to segregate and streamline the development and operation of this Project, as a result, RHGC signed an Assignment Agreement and Contribution of the Rights of Use (“AACR”) as equity to MMID all assets and obligations, including the port site buildings and equipment, permits, approvals and agreements for MIP, SMP and PLR.
4. As this is an agreement between a holding company and its subsidiary, MMID has offered reimbursements to RHGC for all the time, efforts, financial resources used and the risks taken. These reimbursement costs, which were based on a substantial discount to the valuation conducted by the Independent Valuer, were to be satisfied by an issue of 1,210,000 new MMID shares, at Ks 100,000 each, to RHGC and its nominated parties. Hence, the total capitalisation of MMID is Ks 121.5 billion.
5. The value of Ks 121 billion was based mainly on an independent valuation done by Chesterton Suntec International Pte. Ltd. (“Independent Valuer”) of Singapore. Their report can be found in APPENDIX C of this Prospectus showing a valuation of US$236 million (or approximately Ks 200.6 billion) for MIP and US$51 million (or approximately Ks 43.35 billion) for SMP, on a realistic basis.
6. The AACR value of MIP and SMP, amounting to Ks 120 billion, represents a discount of 51% of the Independent Valuer‟s valuation.
7. RHGC and TTA have also undertaken to hold in trust, any current and future assets, permits, approvals and agreements for the benefit of MMID.
8. The Board of Directors and shareholders of MMID had also decided to issue up to 360,000 new shares of Ks 100,000 each by way of Public Offer.
9. In the event that all 360,000 new shares of MMID are fully subscribed, MMID‟s post-Public Offer capitalisation will be at Ks 156.42 billion.
10. On 15 March 2013, the Company has applied for the Commencement of Business in accordance to Section 103 of the Companies Act and MMID will be registering this Prospectus.
11. Upon successful completion of this fund-raising exercise, MMID proposes to have a Board of Directors consisting of at least 9 Directors, including at least one-third being Independent Directors, and an Audit Committee which will be chaired by an Independent Director.
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DILUTION
Pre-Public Offer Post-Public Offer
Shareholders No. of shares % No. of shares %
Current Shareholders 1,260,000 100.00 1,260,000 77.78
New Shareholders from Public Offer - - 360,000 22.22
Total No. of Shares 1,260,000 100.00 1,620,000 100.00
USE OF PROCEEDS The use of proceeds amounting to Ks 36.0 billion will be applied as follows:
Intended Use Amount in
Ks’000 Remarks
Port Infrastructure 6,737,000
Port Link Road 8,840,000
MIP Infrastructure 13,000,000
Professional Fees 2,000,000 Project-related professional fees
Working Capital 4,343,000
Commission, Printing & Other Costs 1,080,000 Includes 2% commission for distribution
Total Net Proceeds 36,000,000
MMID’S BUSINESS AND STRATEGIC PLANS Historically, Mandalay has been the centre of commerce and culture in Upper Myanmar and the surrounding countries. It is centrally located at the crossroads of 3 major routes of the Asian Highway Network (see map below), which links it to the surrounding countries of India, China, Laos and Thailand. Mandalay is also well connected to the other parts of Myanmar by railroad, river ways and roads. The 1,100-kilometer natural gas and crude oil pipelines, running from Kyaukpyu in Rakhine State in Myanmar to Ruili City in Yunnan, China, is expected to be completed in end-2013. These pipelines will pass through the Mandalay Region just South of the Mandalay International Airport, and are expected to have a positive externality effect on the area, encouraging the growth of supporting industries and population.
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Asian Highways (AH) AH1 : (China) Beijing-Guangzhou-Naning-(Vietnam) Hanoi-Ho Chi Minh-(Cambodia) Phnom Penh- (Thailand) Bangkok-Mae Sot- (Myanmar) Yangon-Mandalay-Mongwa-(Bangladesh) Dhaka-(India) New Delhi-(Pakistan) Islamabad-(Iran) Tehran-(Turkey) Istanbul AH2 : (Iran) Khosravi-Tehran-(India) New Delhi-(Bangladesh) Dhaka-(Myanmar) Mongwa-Mandalay-Meiktila-Kyaing Tong-(Thailand) Chiang Rai-Mae Sot-AH1-Bangkok-(Malaysia) Kuala Lumpur-Singapore AH14 : (Myanmar) Mandalay-(China) Kunming-AH3-Guiyang-Changsha-Nanchang-Hangzhou-Shanghai From a macro-economic viewpoint, Central Myanmar has a sizeable population that will provide a constant labor pool. The Mandalay Region (7.6 million), which has the largest population among Myanmar‟s administrative divisions, the Sagiang Region (5.3 million) and the Magway Region (4.4 million) have more than 17 million people collectively. Mandalay, Sagiang and Magway produce large amounts of agricultural products like rice, beans and pulses, sesame, cotton, tobacco and timber, especially teak. Most of these products are exported and some are transported by barges down the Ayeyarwady River to Yangon for export. Chinese imports, which make their way over the border, may also be shipped to other cities along the Ayeyarwady River. The river is also important for the import of materials, such as steel bars, machinery, equipment and fuel. Currently, there is an industrial zone within Mandalay City covering 1,249 acres. There are approximately 1,500 medium and small factories which are in various businesses such as beverage and furniture production, motor vehicle assembly, food processing and packaging, steel fabrication. Due to its connectivity, strategic location and established centre of economic activity, Mandalay is poised to become the new logistic hub of Central Myanmar for the Asian East-West Corridor.
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Mandalay is well-connected to the rest of Myanmar.
Kyaukphyu-Ruili oil and natural gas pipelines. Source: www.shwe.org/
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With this background, we have formulated our Business Strategies:
To build, market and operate an industrial park in accordance to international standards at prices comparable to other Indochina countries like Vietnam, Cambodia and Laos.
To build and operate a basic port to support the initial phase of the industrial park development, before leasing the port to an established and reliable port operator, in the subsequent phases, to develop into a full-facilities port for the efficient & secured handling of goods & cargo and proper warehouses for agricultural products and other materials.
To provide good, effective and reliable transportation for manufacturers and residents at a reasonable cost, covering river transport, road and air linkage.
To provide stable, uninterrupted utilities (electric power, water and waste treatment) and telecommunication at reasonable costs.
To assist the investors/manufacturers in applying for various incentives under the current laws of the country.
MMID intends to lease the Port to an established port operator during the later development phases, and to sign an agreement with the MIDA to Build-Operate-Transfer (B.O.T.) the Port Link Road. The Myotha Industrial Park will be a Joint Venture between MIDA and the Company where MMID will pay MIDA 20% of the proceeds from the sales of the MIP land. This agreement was signed on 9 Jan 2013 and the principal terms of this agreement are disclosed in the section “GOVERNMENT APPROVALS AND AGREEMENTS” in this Prospectus. The Company‟s i-Centre, which was officially opened on 2 Jan 2013 by the Chief Minister of Mandalay, allows all stakeholders and interested parties to visit, enquire and register their interests or comments.
Presentation during the opening ceremony of the i-Centre on 2 January 2013
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The i-Centre in Mandalay
It is the intention of the Company to start building the Port and operate by the 1
st Quarter of 2014 or
earlier. The Company will also actively seek an established and reliable port operator to lease the Port from MMID, and to develop and operate it from 2017 onwards. The site office, executive accommodation, staff quarters and canteen at the port are expected to be completed in March 2013. Refer to photographs below.
Site works and construction of site office at the SMP plot
Construction of accommodation at the SMP plot
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The PLR shall be levelled by the end of April 2013 such that a „Blade‟ road will link MIP to SMP. The Company has compensated the farmers for a road corridor of 200 feet wide for the purpose of building this road and any other utilities connections, if required.
Initial major earth works done for the construction of the PLR MIP covers an area of 10,353 acres and will be divided into 3 phases for launching – Phase 1 – 2,000 acres; Phase 2 – 4,375 acres and Phase 3 – 3,978 acres. The consultants and Company‟s executives are currently working on the Phase 1 detailed design to meet the target launching date of June. It is estimated that the industrial portion of Phase 1 will be 15% to 25% of the total saleable land area in MIP. It is intended that infrastructure will be provided in the form of proper roads, stable & uninterrupted power supply, water and waste treatment. MMID is considering forming a utility company to provide electricity, water and waste treatment. Applications will be submitted by MMID to apply for power generation, power distribution and permit to import fuel, i.e. coal. In the meantime, the Company intends to supply initial power by using HFO power barges moored at the SMP. Discussions have already begun in this respect. The Company is also in discussion with a few international leading industry players to jointly develop all or part of the business of the Company. In order to structure these transactions, the Company may form subsidiaries overseas to maximise terms and conditions for such joint development or joint operation. The Company is continuously reinforcing the management team as well as upgrading local staff skill so that as the Project moves into higher gear, there is sufficient human resource to complete the tasks. The Company is also exploring ways to help the Union Government and MRG in restructuring the technical training facilities in Mandalay so that more skilled workers are trained for the future demand when factories are set up in MIP. The Company is teaming up with RVi Institute, a well-known teaching and training institute, to provide appropriate technical training. We are aware that for foreign investments to come to Myanmar, the main criteria are:
1. Proper laws and regulations to protect and encourage foreign investments. 2. Good tax and other incentive policies to encourage foreign investments. 3. Reasonably cheap land cost, as compared to other countries in South East Asia. 4. Efficient government administration and procedures which are clearly spelt out. 5. Reliable, affordable and effective transportation system and key infrastructure such as power,
utilities and telecommunications. 6. Readily-available labour, both skilled and unskilled, at a cost lower than other Southeast Asian
countries. 7. Good and efficient banking and finance systems to facilitate the transfer of funds, conversion of
foreign currencies, as well as repatriation of profits and dividends. Most of the above have been included in the Foreign Investment Law passed on 2 November 2012.
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MMID’S COMPETITIVE ADVANTAGES MMID believes we have the competitive edge because of the following strengths:
Our Chairman and most of the Directors are well established businessmen in central Myanmar and particularly, in Mandalay.
We have in-depth knowledge of local market trends, and a wide network of government and industry contacts.
We have secured a lease period of 70 years + 10 years + 10 years for the entire MIP.
We have and will be continually building a strong and effective management team with well-qualified and experienced executives.
Our conceptualization, master planning and execution of the Project are carried out with highly qualified professionals and third-party experts in a systematic way.
We have good rapport with the local village communities by improving their electricity and road access, and other corporate social responsibility (“CSR”) work.
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UNAUDITED PROFORMA FINANCIAL STATEMENTS All pre-Public Offer expenses and investments have been capitalized in the unaudited Proforma Balance Sheet as shown:
Amount in Ks’000 Note Amount in Ks’000
Pre-Public Offer, as
at 29 March 2013 Post-Public Offer
ASSETS
Current Assets
Cash in Bank 500,000 35,420,000
Total Current Assets 500,000 35,420,000
Non-Current Assets
Preliminary Expenses 77,000 (1) 77,000
Investment Property (MIP) 103,000,000 (2) 103,000,000
Investment Property (SMP) 17,000,000 (3) 17,000,000
Buildings, Infrastructure & Equipment 1,000,000 (4) 1,000,000
Total Non-Current Assets 121,077,000 121,077,000
TOTAL ASSETS 121,577,000 156,497,000
LIABILITIES
Accounts Payable - Due to RHGC 77,000 77,000
TOTAL LIABILITIES 77,000 77,000
SHAREHOLDERS’ EQUITY
Paid-up Capital 12,600,000 (5) 16,200,000
Share Premium 108,900,000 141,300,000
Retained Earnings 0 (6) - 1,080,000
TOTAL SHAREHOLDERS’ EQUITY 121,500,000 156,420,000
TOTAL LIABILITIES & EQUITY 121,577,000 156,497,000
Notes to Unaudited Pro Forma Balance Sheet (1) The Preliminary Expenses include:
- U Hla Tun & Associates Ltd.: Ks 6.6 million (Ks 1.5 million + US$6,000) - U Min Sein: Ks 20 million - Chesterton Suntec International Pte. Ltd.: Ks 50.4 million
(2) Capitalised at 49% discount over Independent Valuer‟s valuation of US$236 million. (3) Capitalised at 61% discount over Independent Valuer‟s valuation of US$51 million. (4) Book value of site offices and basic infrastructure already completed (Refer to photographs of site
office). (5) 1,260,000 shares of par value at Ks 10,000 each. (6) Commission, printing and other Public Offer-related costs, including 2% commission for
Distribution Agents. Refer to section “USE OF PROCEEDS”.
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FINANCIAL FORECAST AND PROJECTION A) PROJECTION OF MIP LAND SALES BY DEVELOPMENT PHASES
Projected Years of Development 2013-2015 2015-2017 2017-2021 2022-2026 Total Population.
Population 16,000 33,000 165,000 79,000 284,000
Phases PHASE 1A PHASE 1B PHASE 2 PHASE 3
Myotha Industrial Park (MIP) Sales Sales Sales Sales Total Area Total Sales
Residential (US$‟000s) (US$‟000s) (US$‟000s) (US$‟000s) (acres) (US$‟000s)
Low-density Residence 23,085 18,218 114,477 20,547 617.76 176,327
Medium-density Residence - 18,486 454,096 322,220 2,097.92 794,802
Med-High-density Residence 9,094 20,897 54,108 97,133 439.85 181,232
Sub-total 32,179 57,601 622,681 439,900 3,155.53 1,152,361
Industrial (US$‟000s) (US$‟000s) (US$‟000s) (US$‟000s) (acres) (US$‟000s)
Business Park - - 19,823 72,051 219.92 91,874
Business 1 38,878 7,287 165,983 321,830 2,305.49 533,978
Business 2 3,460 34,429 42,487 99,431 869.81 179,807
Logistics - - 60,996 - 237.22 60,996
Sub-total 42,338 41,716 289,289 493,312 3,632.44 866,655
Civic and Commercial (US$‟000s) (US$‟000s) (US$‟000s) (US$‟000s) (acres) (US$‟000s)
Civic 1,772 3,806 39,575 12,712 336.06 57,865
Commercial - 12,967 20,604 - 165.56 33,571
Recreation - - 32,938 - 118.61 32,938
Sub-total 1,772 16,773 93,117 12,712 620.23 124,374
Total Saleable Acres 7,408.20
Gross MIP Land Sales Revenue 76,289 116,090 1,005,087 945,924 2,143,390
MIP Revenue Sharing for MIDA 15,258 23,218 201,017 189,185 428,678
Net Total Land Sales (MIP) Revenue 61,031 92,872 804,070 756,739 1,714,712
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Remarks/Assumptions: 1) All figures have been rounded down to the nearest thousand, and an USD/Kyat exchange rate of 1USD=Ks850 has been applied, where necessary. 2) Projected sales are assumed based on reasonable investment on infrastructure including, but not limited to, roads, power, water within SMP and MIP, as
well as the planned construction of the link roads from MIP to the Mandalay International Airport by the Mandalay Region Government. Please refer to “APPENDIX C - INDEPENDENT VALUATION REPORT” for the projected land sales prices. Increases in the land sales prices during the later phases of MIP is based on the Company‟s management‟s view of the future market.
3) Projection of sales of different types of land is based on the Master Planner‟s recommendations on the overall phasing of the MIP (Refer to “APPENDIX B – INDEPENDENT CONCEPTUAL PLANNING OF MMID REPORT”).
4) Sale of land is assumed to be spread evenly over the years of the planned development phases. 5) The planning for the Golf Club land is currently left out and the Company will decide at a later stage, the type of golf course development (which may
include exclusive residential developments) which will complement the MIP. 6) Projected sale prices of the land does not take into consideration the different leases available for different use of land. For example, while most of the
industrial land will be sold for leases of 50 years, 70 years or 70+10+10 years, the commercial land may be sold for shorter leases such as for hotel purposes. The land with the shorter leases is likely to be renewed upon expiration, the value of which is not reflected in these financial projections.
7) The detailed planning of the development phases with the Master Planner is a work-in-progress. As such, the actual details of the land use, and hence the financial projections, are subject to further changes. The financial projections do not guarantee the actual financial performance of the Company. Please refer to the sections “FORWARD LOOKING STATEMENTS” and “DISCLAIMER” for the full disclaimers.
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B) PROJECTION OF INFRASTRUCTURE COSTS BY DEVELOPMENT PHASES
Projected Years of Development 2013-2015 2015-2017 2017-2021 2022-2026 Total Pop.
Population 16,000 33,000 165,000 79,000 284,000
Phases PHASE 1A PHASE 1B PHASE 2 PHASE 3
Myotha Industrial Park (MIP) Costs Costs Costs Costs Total Costs
Infrastructure (US$‟000s) (US$‟000s) (US$‟000s) (US$‟000s) (US$‟000s)
Road and Land Clearance 22,249 21,844 127,245 85,862 257,200
Port Link Road 11,250 11,250
Water Treatment Plant 16,000 16,000
Water Supply Pipeline 631 620 3,612 2,437 7,300
Rainwater Pipeline 1,315 1,291 7,520 5,074 15,200
Waste Treatment Plant 28,000 28,000
Wastewater Pipeline 2,197 2,157 12,566 8,479 25,399
Power Distribution
66 kV Substation 6,000 6,000 12,000
230 kV Substation 31,620 31,620
High Voltage Line 211 207 1,207 815 2,440
Telecommunications
Satellite Telecom Station 107 53 160
Integrated Communication Centre 800 800
Telecommunication Pipeline 220 216 1,257 848 2,541
Natural Gas Storage & Distribution Centre
500 500
Refuse Transfer Station & Sanitary Parking
25 25 50
Fire Control Station 5,000 5,000 2,500 5,000 17,500
Cost of Planning 1,200 1,000 1,000 1,000 4,200
Project Management Cost 984 627 4,762 2,187 8,560
Total MIP Infrastructure 51,389 32,962 243,842 112,527 440,720
Semeikhon Port (SMP) Costs Costs Costs Costs Total Costs
Port Infrastructure (US$‟000s) (US$‟000s) (US$‟000s) (US$‟000s) (US$‟000s)
Mobilisation of Equipment 120 120
Wharf Structure 6,373 6,373
Slip Way, 180m x 30m 1,432 1,432
Total SMP Infrastructure 7,925 7,925
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Remarks/Assumptions: 1) All figures have been rounded down to the nearest thousand, and an USD/Kyat exchange rate of 1USD=Ks850 has been applied, where necessary. 2) The projected individual costs of infrastructure development is based on the Independent Valuer‟s estimates (Refer to “APPENDIX C –
INDEPENDENT VALUATION REPORT”) and the Master Planner‟s estimates. 3) The construction costs of each plant, substation, telecommunication station, fire control station, refuse transfer station are assumed to be the same. 4) The construction costs of the high voltage lines, water supply pipelines, rainwater pipelines, wastewater pipelines and telecommunication pipelines
are pro-rated with respect to the extent of construction of roads within each Phase. 5) The length of the PLR is taken to be 11.25 miles as measured from the Western edge of MIP to the Eastern boundary of the SMP. 6) The initial investment of about US$7.9 million is deemed to be sufficient to build a basic wharf to support the development of Phase 1 of MIP. 7) The Company is in discussions with various parties about the construction of power generation facilities to support the operation of the MIP and SMP.
The power generation facilities under discussions include, but are not limited to, a 240MW clean coal power plant and power barges. 8) The detailed planning of the development phases with the Master Planner is a work-in-progress. As such, the actual details of the land use, and
hence the financial projections, are subject to further changes. The financial projections do not guarantee the actual financial performance of the Company. Please refer to the sections “FORWARD LOOKING STATEMENTS” and “DISCLAIMER” for the full disclaimers.
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C) PROJECTION OF ANNUAL INCOME STATEMENT
Financial Year Ending 31 March 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Total
All annual figures are in ‘000s (US$) (US$) (US$) (US$) (US$) (US$) (US$) (US$) (US$) (US$) (US$) (US$) (US$) (US$) (US$)
RECURRING INCOME
Semeikhon Port (SMP)
Port Operating Income - 1,060 2,120 3,179
JV Income with Port Operator 9,241 9,241 9,241 9,241 9,241 9,241 9,241 9,241 9,241 9,241
Less: Operations Costs
- 530 1,060 1,590
Less: Depreciation of Buildings 157 157 157 157 157 157 157 157 157 157 157 157 157 157
Less: Depreciation of Infrastructure & Novated Book Value
416 416 416 416 416 416 416 416 416 416 416 416 416 416
Sub-total -573 -43 487 1,016 8,668 8,668 8,668 8,668 8,668 8,668 8,668 8,668 8,668 8,668
Myotha Industrial Park (MIP)
MIP Operating Income - - - - - - - - - - - - - -
Less: Salaries & Allowances 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
Less: Directors' Fees 300 300 300 400 400 400 500 500 500 500 500 500 500 500
Less: Commission due to Public Offer 1,271 - - - - - - - - - - - - -
Other Income
Interest Income
1,320 1,353 1,000 2,268 2,674 6,361 9,038 11,767 14,550 17,389 20,117 22,900 25,738 30,509 166,984
Sub-total -1,251 53 -300 868 1,274 4,961 7,538 10,267 13,050 15,889 18,617 21,400 24,238 29,009
TOTAL GROSS RECURRING INCOME -1,824 10 187 1,884 9,942 13,629 16,206 18,935 21,718 24,557 27,285 30,068 32,906 37,677 233,180
LAND SALES
Myotha Industrial Park (MIP)
Gross Land Sales of MIP Land
Phase 1A 25,430 25,430 25,430 - - - - - - - - - - -
Phase 1B - - 38,697 38,697 38,697 - - - - - - - - -
Phase 2 - - - - 201,017 201,017 201,017 201,017 201,017 - - - - -
Phase 3 - - - - - - - - - 189,185 189,185 189,185 189,185 189,185 2,143,391
Less: 20% for MIDA
5,086 5,086 12,825 7,739 47,943 40,203 40,203 40,203 40,203 37,837 37,837 37,837 37,837 37,837 428,676
Less: Selling Expenses
509 509 1,283 774 4,794 4,020 4,020 4,020 4,020 3,784 3,784 3,784 3,784 3,784 42,869
Total Land Sales in MIP
19,835 19,835 50,019 30,184 186,977 156,794 156,794 156,794 156,794 147,564 147,564 147,564 147,564 147,564 1,671,846
Less: Book Value & Infrastructure Cost 16,304 16,304 32,311 16,007 71,954 55,947 55,947 55,947 55,947 37,751 37,751 37,751 37,751 37,751 565,423
GROSS PROFIT FROM MIP LAND SALES 3,531 3,531 17,708 14,177 115,023 100,847 100,847 100,847 100,847 109,813 109,813 109,813 109,813 109,813 1,106,423
NET PROFIT BEFORE TAX 1,707 3,541 17,895 16,061 124,965 114,476 117,053 119,782 122,565 134,370 137,098 139,881 142,719 147,490 1,339,603
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Remarks/Assumptions: 1) All figures have been rounded down to the nearest thousand, and an USD/Kyat exchange rate of 1USD=Ks850 has been applied, where necessary. 2) SMP Operating Income is projected based on a) current port charges, including but not limited to vessel charges and cargo charges, as sourced from
the Myanma Port Authority, and b) the Master Planner‟s projection of port capacity during the different phases. SMP Operations is expected to generate income from Financial Year 2015 onwards.
3) The sale of land is assumed to be spread evenly over the years within each phase, and takes place as the infrastructure work is on-going. 4) Infrastructure development is assumed to take place early in the financial year, and subsequently sold during the later parts of the year. 5) The SMP is planned to be developed in Phase 1A as a basic port to support the development of Phase 1A of MIP, with a budget from the Public Offer
proceeds. Thereafter, in Phase 2, SMP is projected to be leased for a price of US$6 per sqm per annum, net of any other expenses, to an established operator who will further develop and operate SMP as a full facilities port.
6) The “Book Value & Infrastructure Cost” is obtained by pro-rating the sum of the book value of the MIP asset on the balance sheet and the total infrastructure cost, over the number of acres sold in the particular year against the total saleable number of acres in MIP.
7) Corporate tax on net profit has been omitted in this section due to on-going negotiations for tax incentives from the MIC and the tax authorities. The Company is confident that it will get corporate tax reliefs or exemption (for the initial years of the Project).
8) The detailed planning of the development phases with the Master Planner is a work-in-progress. As such, the actual details of the land use, and hence the financial projections, are subject to further changes. The financial projections do not guarantee the actual financial performance of the Company. Please refer to the sections “FORWARD LOOKING STATEMENTS” and “DISCLAIMER” for the full disclaimers.
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D) PROJECTION OF ANNUAL ACCOUNTING CASH FLOW
Financial Year Ending 31 March 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Total
All annual figures are in ‘000s (US$) (US$) (US$) (US$) (US$) (US$) (US$) (US$) (US$) (US$) (US$) (US$) (US$) (US$) (US$)
OPERATING ACTIVITIES
Net Profit Before Tax 1,707 3,541 17,895 16,061 124,965 114,476 117,053 119,782 122,565 134,370 137,098 139,881 142,719 147,490
Adjustments for:
Depreciation 573 573 573 573 573 573 573 573 573 573 573 573 573 573
Interest Income 1,320 1,353 1,000 2,268 2,674 6,361 9,038 11,767 14,550 17,389 20,117 22,900 25,738 30,509
Gross Profit from Land Sales in MIP 3,531 3,531 17,708 14,177 115,023 100,847 100,847 100,847 100,847 109,813 109,813 109,813 109,813 109,813
CASH FLOWS FROM OPERATING ACTIVITIES -2,571 -770 -240 189 7,841 7,841 7,741 7,741 7,741 7,741 7,741 7,741 7,741 7,741
INVESTING ACTIVITIES
MIP Infrastructure, including PLR -25,695 -25,695 -16,481 -16,481 -48,768 -48,768 -48,768 -48,768 -48,768 -37,509 -37,509 -37,509 - -
SMP Infrastructure -7,925 - - - - - - - - - - - - -
Proceeds from Land Sales in MIP, less 20% Sales Revenue for MIDA
19,835 19,835 50,019 30,184 186,977 156,794 156,794 156,794 156,794 147,564 147,564 147,564 147,564 147,564
CASH FLOWS FROM INVESTING ACTIVITIES -13,785 -5,860 33,538 13,703 138,209 108,026 108,026 108,026 108,026 110,055 110,055 110,055 147,564 147,564
FINANCING ACTIVITIES
Proceeds from Public Offer 42,353 - - - - - - - - - - - - -
Interest Income 1,320 1,353 1,000 2,268 2,674 6,361 9,038 11,767 14,550 17,389 20,117 22,900 25,738 30,509 166,984
Dividends -854 -1,771 -8,948 -8,031 -74,979 -68,686 -70,232 -71,869 -73,539 -80,622 -82,259 -83,929 -85,631 -88,494 -799,844
CASH FLOWS FROM FINANCING ACTIVITIES 42,819 -418 -7,948 -5,763 -72,305 -62,325 -61,194 -60,102 -58,989 -63,233 -62,142 -61,029 -59,893 -57,985
Net Increase/(Decrease) in Cash 26,463 -7,048 25,350 8,129 73,745 53,542 54,573 55,665 56,778 54,563 55,654 56,767 95,412 97,320
Cash Balance at beginning of Year 588 27,051 20,003 45,353 53,482
127,227
180,769
235,342
291,007
347,785
402,348
458,002
514,769
610,181
CASH BALANCE AT END OF YEAR 27,051 20,003 45,353 53,482 127,227 180,769 235,342 291,007 347,785 402,348 458,002 514,769 610,181 707,501
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Remarks/Assumptions:
1) All figures have been rounded down to the nearest thousand, and an USD/Kyat exchange rate of 1USD=Ks850 has been applied, where necessary. 2) It is assumed that there is full subscription and allotment of Offer Shares. 3) Interest income is calculated based on 5% annual interest of the previous financial year‟s cash balance at the end of the year. 4) It is assumed that the dividend payout ratio is 50% of annual net income before tax from financial years 2014-2017 and 60% from financial year 2018
onwards. In the event that MMID is not exempted from the corporate and commercial taxes by MRG, the dividends will be 50% of annual net income after tax from financial years 2014-2017 and 60% from financial year 2018 onwards.
5) The detailed planning of the development phases with the Master Planner is a work-in-progress. As such, the actual details of the land use, and hence the financial projections, are subject to further changes. The financial projections do not guarantee the actual financial performance of the Company. Please refer to the sections “FORWARD LOOKING STATEMENTS” and “DISCLAIMER” for the full disclaimers.
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TAXATION
The Company is in discussion with the tax authorities to be exempted from the corporate tax on its net profit. The Company is confident that it will get corporation tax reliefs or exemption (for the initial years of the Project).
DIVIDENDS
The Company will pay dividends, if any, only out of its profits, and subject to its cash flow, as permitted under the law. The expected dividend payout ratio is 50% of the Company‟s net profit before tax for financial years 2014-2017 and 60% from financial year 2018 onwards. In the event that MMID is not exempted from the corporate and commercial taxes (Refer to section “TAXATION”), the dividends will be 50% of annual net income after tax from financial years 2014-2017 and 60% from financial year 2018 onwards. Dividends will be paid in Kyats. The Board of Directors of the Company has the discretion to recommend the payment of dividends. The Company cannot assure Investors that the Company will declare or pay out any dividends.
SHARES TRANSFER AND TRADING
It is expected that Shareholders of the Company can buy, sell and transfer Shares over the counter (“OTC”) at the Company‟s i-Centre in Mandalay from 1 August 2013. There is no moratorium on Shareholders‟ transactions. Only Myanmar Nationals are allowed to own the Shares. The Company intends to outsource to, or partner with, a third party service-provider, to set up a „live‟ secured internet OTC platform for the buying and selling of the Company‟s Shares in the second half of 2013, in addition to the physical trading of Shares at the i-Centre. The Company also intends to engage the Myanmar banks to provide transaction settlement which is linked to the internet trading platform.
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DIRECTORS AND MANAGEMENT The Company and its Founding Members strongly believe that Professionalism and Sustainability are crucial to the success and longevity of this long term project. The Company‟s work must receive the endorsement and trust of the customers. Therefore, no efforts and expenses are spared in the planning, design and execution stages, so as to ensure that high quality products will be delivered to meet the expectations of the customers. The Company‟s top management is also reinforced by foreign expertise and consultants.
U Aung Win Khaing (“Chairman”), Myanmar citizen, age 65, is the Chairman and founder of the Royal Hi-Tech Group Co., Ltd. He was born in the Shan state, into an industrious, entrepreneurial Kokanese family near the Hobang Township. The family moved to Mandalay in 1968 to avoid the unrest at the border areas. As industries were nationalised by the military government, the business environment was poor and difficult. But it did not dissuade young U Aung Win Khaing from getting involved in the family business selling “The Hong‟s Best Kokan Green Tea” which is still for sale and very popular today. In 1973 he expanded the business to Yangon. During the long years of a poor and harsh business environment, the Chairman bided his time. His break came in 1989 when the military
government reformed the economy into a “market-oriented economy system”. He seized the opportunity and registered “Aung Hlaing Company”- the first to obtain an import license and 9
th with an export license
in Myanmar. By 1990 he had already established himself as an entrepreneur and was selected to attend the UNDP-sponsored “GSB preference” program, and became the only private sector representative from the Upper Myanmar region sent on a study tour of Europe. On his return, he proposed his ideas to the Regional Government and founded the Mandalay Industrial Zone. With the opening of the Myanmar economy, he foresaw the need for basic construction materials. AWK began to build his business empire called the Hi-Tech Group, beginning with producing value-added timber products, before starting a cement plant in 1994, and an iron foundry. In recognition of his vision and efforts, he was elected as the Vice Chairman of the Upper Myanmar Chamber of Commerce in 1996. He held this post till 2006 when he was elected its Chairman, a position he holds to this day. He is also the Chairman of the Management Committee of the Mandalay Industrial Zone, a position he held from its inception. He became and remains a Director of the Yadanabone Bank. In 2005 he became the Chairman of the Steel Foundry Casting Co. Ltd. By 2004, U Aung Win Khaing‟s business empire had grown substantially and he had ventured into several different areas besides the core construction material businesses. He created Royal Hi-Tech Group Co. Ltd (RHGC) as an umbrella over all his business interests. His entrepreneurial abilities were recognised by the Government and he was invited to sit on the regional and national ministerial committees to review and control the pricing of commercial products. Besides his business achievements, the Chairman is a well-respected member of the Mandalay community, in part because of his philanthropic efforts. He has, for decades, supported NGOs in the fields of poverty alleviation, education, health and religion. U Aung Win Khaing the visionary has been in the forefront for the betterment of the people in the Mandalay region. His efforts to create Semeikhon Port and Myotha Industrial Park were also motivated by his desire to create work opportunities and wealth for the local people. The Mandalay region is the dry zone of Myanmar. As such farmers eking out a living have always found it immensely difficult to make ends meet. The result is transmigration to the cities. His vision for the Industrial Park is to halt the drain and to bring the people back to the region, with jobs and opportunities. Like all his successful past ventures, Semeikhon Port and Myotha Industrial Park are the fruit of a business vision, conceived in years past, and seeing the light at its opportune time. U Aung Win Khaing‟s personal philosophy is to keep abreast of the Government‟s initiatives, not going ahead or falling behind. MMID‟s projects are not easy to develop, but are helmed by decades of tested entrepreneurial wisdom.
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Dr Tun Tun Aung (“TTA”), Myanmar citizen, age 42, is the Managing Director of MMID and RHGC. He is the third son of Chairman Aung Win Khaing. TTA has a Bachelor of Medicine, Bachelor of Surgery and a Diploma in Marketing. He has always been involved in the family business and served as the Executive Director of Hi-Tech Forest Industries Co. Ltd. the first value-added wood factory in the Mandalay Industrial Zone, He is also the Operations Director of Mandalay Cement Industrial Co., Ltd., the first private cement plant in Myanmar. True to his entrepreneurial heritage, TTA has shown keen business acumen, as evident in the companies he has started. Beginning from 2004, he created within the Royal Hi-Tech Group, numerous service-oriented companies. He
founded and headed the Pacific Asia Hi-Tech Group of Companies, which includes Asia Speed Construction Co., Ltd., Asia Speed General Services Co., Ltd., Asia Bright Way I.T. Co., Ltd., Chan Thar Thukha Hospital and Pacific Electric Co., Ltd. These are a diverse group of companies dealing with construction, IT infrastructure and even include power provision. Being a medical doctor by training and with a passion for healthcare, TTA has also started a hospital. TTA is also one of the Founding Members of MMID.
Kyaw Kyaw (“Kyaw Kyaw”), Myanmar citizen, age 48, is a Director of MMID. He is the eldest son of U Aung Win Khaing. Kyaw Kyaw has always been involved in the family business and is the Managing Director of Hi-Tech Forest Industries Co., Ltd., and Hi-Tech Mining Group. He is also a Director of Royal Hi-Tech Group, Mandalay Cement Industries Co Ltd and the Mandalay Trade Centre. Kyaw Kyaw graduated from Yangon University in 1986 with a Bachelor of Science in Botany. He then proceeded to the AUA Language Centre in Bangkok for further studies on the English language, and more importantly, learn about the intricacies of the timber business from the Thai timber industry. Armed with this knowledge, he went on to build up Hi-Tech Forest Industries
Co., Ltd. where he has been the Managing Director for over a decade.
Frankie Tan (“FT”), Singapore citizen, age 62, is the Chief Financial Officer of MMID. FT is an accountant by training and Fellow of the Association of Chartered Certified Accountants, FCCA. He has over 40 years of experience in investment banking, direct investment, trading in commodities, gold bullion and stocks & shares. He has lived and worked in 9 countries – Singapore, UK, Malaysia, Japan, New Zealand, US, Hong Kong, China (8 years) and the past 12 years in Myanmar. He retired as CEO of Serge Pun & Associates (Myanmar) Limited in October 2010 and is credited with the listing of Yoma Strategic Holdings Ltd on the Singapore Stock Exchange (SGX) in August 2006. He has held board positions in listed companies in Hong Kong and elsewhere. During his career,
he worked for Rothschild, Sun Hung Kai Securities & Sun Hung Kai Properties Groups and had managed Direct Investments Fund in China during 1990s. FT is also the advisor to Max Myanmar Group (“Max”) and is instrumental in Max‟s pending reverse takeover (RTO) of AUSSINO Limited which is listed on the SGX. At the end of 2010, he joined with Royal Hi-Tech Group to study the feasibility of a port and an industrial park near to Mandalay City. Frankie is also one of the Founding Members of MMID.
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Nyi Nyi Aung (“Nyi Nyi”), Myanmar citizen, age 44, is the Senior Finance Controller of MMID. He is the second son of chairman Aung Win Khaing. Nyi Nyi served as the General Manager (Overseas Marketing) for Hi-Tech Forest Industries Co. Ltd., a company that exports wood furniture during his stint in USA. Nyi Nyi attended the Rangoon Institute of Economics until 1988 and continued his studies in the U.S.A. before attaining his Business Administration degree. Thereafter, he worked for ten years as the General Manager for an American-Chinese restaurant chain. Like the rest of the family, Nyi Nyi is an entrepreneur at heart. After gaining experience in the restaurant chain, he successfully established his own restaurant business in the USA.
Nyi Nyi was recalled to Myanmar to help manage the family business empire when it became clear that Myanmar was opening its doors, and MMID was due to take off. Nyi Nyi is also one of the Founding Members of MMID.
Bruce Reynolds (“Bruce”), American citizen, age 60, is the Senior Project Officer and has thirty-six years of private and public sector professional experience managing a diverse range of projects. This includes more than twenty years working overseas, successfully leading projects in Myanmar, China, Thailand, Malaysia, India, Vietnam, Saudi Arabia, Kuwait and the United Arab Emirates. Mr. Reynolds‟ professional experience encompasses construction and development project team management from owner conception through to handover. Responsibilities on those projects have included industrial site selection location analysis, supervision of local project management teams,
coordination and liaison with international consultants, designers, engineering firms, construction firms, as well as government officials at the national, regional and local levels.
Alan Tsang Chi Kin (“Alan”), Singaporean, age 57, is the Senior Administration Officer, who also oversees Human Resources (HR) and Procurement. He has 33 years of working experience, beginning with the Government of Singapore‟s Public Works Department (PWD) where he became the Airport Project Manager constructing Terminal 2, at the world-acclaimed Changi International Airport. Thereafter Alan began to work for several major Singapore companies venturing overseas, in projects across Asia – from Thailand to Pakistan to Middle East. His latest overseas assignment was in Africa as a consultant. Alan is a qualified Quantity Surveyor -BSc (Building) and a Project Manager –
MSc (Project Management). He is a member of several professional institutes like Society of Project Managers, Singapore Institute of Surveyors and Valuers and Institute of Aerospace Engineers. Other than the key executives listed above, the Company has also contracted the services of 2 experienced professionals who have lived and worked in Myanmar for 10 years or more. They are:
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Rui Filipe Guedes da Silva Barreto, (“Rui”), Portuguese, age 59, is the Senior Technical Consultant and a member of the Central Management Committee (“CMC”) of the Company. Rui is an experienced architect who has lived and worked in Myanmar for the past fifteen years, starting as a Building Director under the French Total Group. Thereafter, he was the Managing Director (Spa Design) with Yoma Strategic Holdings, overseeing projects in Myanmar and China. Rui is also currently the Managing Director and Senior Architect for Spiral Architects in Myanmar and Criador Consulting Private Limited in Singapore.
Peter Rousseau, (“Peter”), American, age 57, is a Consultant and a member of the CMC. He assists MMID in the master planning, design, engineering and development processes. Peter is an expert in golf course design and construction, and has been working throughout South East Asia in Myanmar, Laos, Cambodia, Thailand and Singapore since 1991. He is currently the Managing Director of PZ Development Private Limited (Singapore), which has been involved in the architectural and engineering design, and construction management for various golf courses in Asia, such as the Twin Doves Golf Club (Ho Chi Minh, Vietnam), Long Thanh Golf Club (Vientiane, Laos) and Pun Hlaing Golf Estate (Yangon, Myanmar), among many others. Peter is also very experienced in golf course club operations and grounds management.
The Company is also in the process of employing a Marketing Officer.
MMID’S ORGANISATION CHART
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REMUNERATION OF DIRECTORS AND EXECUTIVE OFFICERS The compensation paid to our Directors and our Executive Officers by our Group during FY2012, and the estimated compensation to be paid to our Directors and our Executive Officers during FY2013 by our Group (on an aggregate basis and in remuneration bands) are as follows:
Remuneration per Month FY2013 (Projected)
Ks 1,500,000 AWK
Ks 1,300,000 TTA
Ks 1,000,000 Kyaw Kyaw, Min Sein, KKW, MGS, AZY
Ks 800,000 FT, Nyi Nyi, Bruce, Alan
The remuneration contract of the Managing Director will be signed by 30 April 2013.
CORPORATE GOVERNANCE, INTERESTED PERSON TRANSACTIONS AND TRANSPARENCY
Corporate governance refers to the processes and structure by which the business and affairs of a company are directed and managed, in order to enhance long-term shareholder value through enhancing corporate performance and accountability. Good corporate governance therefore embodies both enterprise (performance) and accountability (conformance). Our Directors recognise the importance of corporate governance and the offering of high standards of accountability to our Shareholders. Our Directors are of the view that there should be sufficient safeguards and checks to ensure that the process of decision-making by our Board is independent and based on collective decision-making without any Directors being able to exercise considerable power or over-dominant influence. Board of Directors Our Articles of Association provide that our Board will consist of not less than seven (7) Directors. The Company intends to have at least nine (9) Directors on our Board, comprising of the Chairman, Managing Director and other Directors, and at least one-third of the Board will be Independent Directors. Board Practices Our Directors are appointed by our Shareholders at a general meeting, and an election of Directors takes place annually. Each Director shall retire from office once every three years and for this purpose, at each annual general meeting, at least one-third of the Directors for the time being (or, if their number is not a multiple of three, the number nearest to but not less than one-third) shall retire from office by rotation (except for a managing director of our Company). A retiring Director shall be eligible for re-election at the meeting at which he retires. Proposed Audit Committee The Company intends to have an Audit Committee, represented in the organisation chart in the section “MMID‟S ORGANISATION CHART”, which reports to the Board of Directors. The Audit Committee will be chaired by an Independent Director and will also consist of 2 other Independent Directors. The Audit Committee will assist our Board of Directors with regards to discharging its responsibility to safeguard our Company‟s assets, maintain adequate accounting records, and develop and maintain effective systems of internal controls with an overall objective to ensure that our management has created and maintained an effective control environment in our Company, and that our management demonstrates and stimulates the necessary aspects of our Group‟s internal control structure among all parties.
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Our Audit Committee will meet periodically to discuss and review the following (non-exhaustive) functions where applicable: (a) review with the external auditors the audit plan, their evaluation of the system of internal controls, their audit report, their management letter and our management‟s response; (b) review with the internal auditors the internal audit plan and their evaluation of the adequacy of our internal control and accounting system before submission of the results of such review to our Board for approval prior to the incorporation of such results in our annual report; (c) review the financial statements before submission to our Board for approval, focusing in particular, on changes in accounting policies and practices, major risk areas, significant adjustments resulting from the audit, the going concern statement, compliance with accounting standards as well as compliance with statutory/regulatory requirements; (d) review the internal control and procedures and ensure co-ordination between the external auditors and our management, reviewing the assistance given by our management to the auditors, and discuss problems and concerns, if any, arising from the interim and final audits, and any matters which the auditors may wish to discuss (in the absence of our management where necessary); (e) review and discuss with the external auditors any suspected fraud or irregularity, or suspected infringement of any relevant laws, rules or regulations, which has or is likely to have a material impact on the Company‟s operating results or financial position, and our CMC‟s response; (f) review potential conflicts of interest (if any) and to set out a framework to resolve or mitigate any potential conflicts of interests; (g) conduct periodic review of foreign exchange transactions and hedging policies (if any) undertaken by our Group; and (h) consider the appointment or re-appointment of the external auditors and matters relating to resignation or dismissal of the auditors. Our Audit Committee shall also commission an annual internal controls audit until such time as our Audit Committee is satisfied that our Group‟s internal controls are robust and effective enough to mitigate the Company‟s internal control weaknesses (if any). Prior to the decommissioning of such annual internal controls audit, our Board is required to report on how the key internal control weaknesses have been rectified, and the basis for the Audit Committee‟s decision to decommission the annual internal controls audit. Thereafter, such audits may be initiated by our Audit Committee as and when it deems fit to satisfy itself that the Company‟s internal controls remain robust and effective. Upon completion of the internal controls audit, appropriate disclosure must be made on any material, price-sensitive internal controls weaknesses and any follow-up actions to be taken by the Board. In connection with the Public Offer, our Chief Financial Officer, Mr. Frankie Tan, has worked closely with various consultants in the preparation of the projected financial statements of the Company and the working group based on his knowledge of our Group‟s operations, accounting policies and financial position. Mr. Frankie Tan had also worked closely with the CMC to review the internal controls of the Company as part of the preparation of the Public Offer, reviewed their reports and recommendations and was involved in the implementation of their recommendations. The current Board of Directors Committee having (i) conducted an interview with Mr. Frankie Tan; (ii) considered the qualifications and past working experience of Mr. Frankie Tan (as described in the section “DIRECTORS AND MANAGEMENT” of this Prospectus), and (iii) observed his abilities, familiarity and diligence in relation to the financial matters and information of the Company, is of the view that Mr. Frankie Tan is suitable for the position of Chief Financial Officer. Mr. Frankie Tan, as the Chief Finance Officer has also provided an undertaking to our Board of Directors that he will spend at least 75% of his time in Mandalay or more, if required by the Company and is able to devote sufficient time to discharge his duties and responsibilities as the Chief Finance Officer of the Company.
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Apart from the duties listed above, our Audit Committee will also commission and review the findings of internal investigations into matters where there is any suspected fraud or irregularity, or failure of internal controls, or infringement of any relevant law, rule or regulation which has or is likely to have a material impact on our Company‟s operating results or financial position. In the event that a member of our Audit Committee is interested in any matter being considered by our Audit Committee, he will abstain from reviewing that particular transaction or voting on that particular transaction. In addition, all future transactions with related parties shall comply with the requirements of the proper disclosure. Our Directors shall also abstain from voting in any contract or arrangement or proposed contract/arrangement in which he has a personal material interest.
GOVERNMENT APPROVALS AND AGREEMENTS The Company has obtained the following approvals:
1. On 23 August 2012, MIC Permit No. MaNa Tha – 858/2012 was given to Dr Tun Tun Aung for construction of Ayeyarwady Jetty at Semeikhon and Stevedoring Services at Semeikhon Port. A copy of this Permit can be inspected at the i-Centre.
2. On 19 November 2012, MIC Permit No. MaNa Tha – 867/2012 was given to Dr Tun Tun Aung for
the construction of Industrial Park at Myotha. A copy of this Permit can be inspected at the i-Centre.
3. On 9 January 2013, an Agreement was signed between MIDA and MMID for the Joint Venture of MIP. The principal terms of this JV Agreement are:
a) MIDA will offer at least 10,000 acres at Myotha for the JV. b) In consideration, MIDA will get 20% of the income from the sales proceeds of land in MIP.
c) The tenure of the Agreement is 70 years starting from the date of approval by the MIC,
and may be extended two times for ten years each.
d) 3 members from MIDA and 6 from MMID will form the Investment Coordination Board, which will be chaired by one of the members from MIDA. The Investment Coordination Board will determine the commercial market rate for the plots.
e) MIDA shall assist in obtaining all necessary Government Permits for MIP.
f) MMID shall pay compensation at the rates stipulated by the authorities to the farmers or occupants of MIP.
4. On 27 February 2013, the Union Government has approved MMID to be incorporated as a Public
Company.
5. In March 2013, RHGC, TTA and MMID have signed an Assignment Agreement for RHGC and TTA to assign to MMID all assets and obligations, including the port site buildings and equipment, permits, approvals and agreements for MIP, SMP and PLR. RHGC and TTA have also undertaken to hold in trust any current or future assets, permits, approvals and agreements for the benefit of MMID.
6. The Company, together with RHGC and MIDA, will apply to the MIC for all approvals,
agreements and permits to be transferred to MMID.
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Agreement-signing ceremony with MIDA on 9 January 2013
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ENVIRONMENTAL CONCERNS Environmental Studies undertaken by ERE Consulting Group Sdn. Bhd. The study was commissioned and conducted by a team of environmental specialist in May and June 2012, when the whole development plan was in its early stage of conceptualisation, to identify potential environmental issues and concerns that may be expected to arise from the construction and operation of MIP and SMP and its possible impact. This is to assist MMID to better plan the Project and to minimise its environmental impacts, through the incorporation of appropriate mitigating or preventive measures at the early stage of the project design and implementation.
The following are the key extracts from the initial environmental assessment matrix where anticipated impact significance is deemed high, as presented in the study:
Industrial Park (MIP)
Anticipated Environmental Impacts Anticipated
Impact Recommended Mitigation/Protection
Measures 1 Landform and landscape changes High Minimise cut and fill to reduce land
disturbance and instability
2 Increased potential for erosion, slope failure and landslide
High Adopt engineering and non-engineering measures for slope protection
3 Increased potential for flash flooding, and soil, gully and river bank erosion
High Adopt flood mitigation plan incorporating flood retention basins, runoff diversions systems, silt retention ponds or silt traps etc
4 Silt and sand deposition along river and retention structures downstream. Use of wetland system for water quality improvement and retention of suspended sediment
High Adopt measures as in item (3). Retention and protection of river reserve on either side of the river (suggested min. 20-30m width) and adoption of engineering and non-engineering measures for river bank protection
5 Increase runoff due to increase in impermeable surface – flooding potential downstream
High Mitigation measures as proposed in item (3)
6 Increased flow of contaminated runoff to rivers
High Avoid the use of surface drains in industrial and urban areas, use of gross pollutant traps (GPT), retention ponds, and natural filter systems to minimise waste discharge to rivers
7 Visible turbidity and discolouring of river water due to suspended sediment
High Mitigation measures as proposed in items (1) and (3)
8 Availability of water for agriculture High Study the impacts of any river diversion and assess downstream water needs prior to construction. Adopt mitigation measures as proposed in items (3)
9 Contamination of soil and pollution of surface & ground water due to improper waste management (particular concern for Phaung Ga Daw Dam)
High Implementation of appropriate waste management systems such as: *Effective waste collection, treatment and disposal of solid wastes including the promotion of waste minimisation, reuse & recycle *Management system for toxic & hazardous wastes from industrial activities including disposal and treatment facilities *Effective sewerage system and industrial effluent treatment of effluents (apply interim discharge standards to be compiled)
10 Noise affecting local villages along transport route
High Avoid use of public roads that pass through local villages, use by-pass roads or new access roads during construction
11 Motor vehicle noise High Vehicle maintenance is one way to reduce emissions
12 Employment opportunities during construction
High Appropriate opportunities, where possible priority for employment for locals
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13 Opportunities for small business (e.g. food, cleaning service, transportation
High Appropriate opportunities for locals to be engaged in the provision of supplies and services as far as possible
14 Public health concerns from consumption of contaminated water & food due to: *inefficient waste collection, treatment & disposal *indiscriminate disposal *ineffective collection and treatment
High Mitigating measures as per item (9)
15 Competition for employment with migrants
High Provide, where possible, equal opportunities to local for employment, including the provision of training to those whose skills are lacking or inadequate
16 Competition for food, supplies, services and utilities
High Incorporate local needs for services and utilities (e.g. water supply and electricity) In the development plan in conjunction with the relevant local authorities as part of social responsibility
17 Change in local values, attitude etc due to new influences & exposure to new development
High Undertake effective public education and awareness programs to prepare local on the anticipated changes likely to arise from the development
River Port (SMP)
Anticipated Environmental Impacts Anticipated
Impact Recommended Mitigation/Protection
Measures 1 Site cleaning, land filling and related
earth works resulting in enhanced soil erosion and sediment in runoff
High Adopt and implement soil erosion control and protection plan and avoid earthworks during wettest monsoon period
2 Uncontrolled runoff from exposed areas resulting in localised flooding in adjacent areas
High Adopt a flood mitigation plan incorporating retention ponds, runoff diversions systems, silt retention etc
3 Construction of infrastructure, buildings and other structures resulting in increase in impermeable areas leading to increase in runoff with potential for flash flooding
High Mitigation measures as proposed in item (3)
4 Disposal of wastewater generated from port & industrial area resulting in contamination affecting other beneficial uses (irrigation, water supply etc)
High Avoid industries with high potential for water pollution or hazardous waste generation.
5 Noise generated from construction & related activities affecting surrounding area
High Avoid the use of noisy machinery or equipment (such as hydraulic or bored piles) near to sensitive receptors and undertake works during daytime only
6 Air pollutants from port industries High Avoid industries with high potential for air pollution and noise. Adopt interim air quality emission standards as control limits
7 Acquisition of land and loss of income from farming affecting villagers & local farmers
High Compensation mechanism satisfactory to affected villagers and agreed between the parties
8 Labour recruitment and supply High Provide appropriate opportunities for locals to be employed
9 Material and services supply High Appropriate opportunities for locals to be engaged in the provision of supplies and services as far as possible
10 Increase in demand for food, supplies, services and utilities resulting in competition
High Incorporate local needs for services and utilities (e.g. water supply and electricity) In the development plan in conjunction with the relevant local authorities as part of social responsibility
11 Disease transmission by migrants High Environmental health screening especially for migrant workers (which requires
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intervention by relevant health authority)
12 Disposal of solid, hazardous and liquid wastes resulting in public health concerns from consumption of contaminated water, food etc
High Adopt an environmental management plan for the port and associated developments to monitor the development and to minimise potential for health impacts to local residents
13 Change in local values, attitude etc due to new influences & exposure to new development
High Undertake effective public education and awareness programs to prepare local on the anticipated changes likely to arise from the development
PORT LINK ROAD
Anticipated Environmental Impacts
Anticipated Impact
Recommended Mitigation/Protection Measures
1 Site clearing and earthworks, including disposal of spoil and excess soil material near to river courses resulting in enhanced soil erosion, increase potential for slope failure, gulley erosion and top soil loss
High Adopt and implement a soil erosion control and protection plan and avoid earthworks during wettest monsoon period
2 Runoff discharge carrying silt and sediment into receiving rivers resulting in visible turbidity and discolouring of river water due to suspended sediment
High Mitigation as proposed in item (1)
3 Sedimentation and silting of rivers resulting in potential for flash flooding
High Mitigation as proposed in item (1)
4 Air pollutants generated from construction & related activities (Fugitive dust along construction path and material storage areas)
High Adopt dust control measures such as road wetting, restricted vehicular speed on unpaved roads, tyre washing facilities etc
5 Acquisition of land resulting in loss of property and farm land and potential loss of income
High Compensation mechanism satisfactory to affected villagers and agreed between the parties
6 Material and services supply High Appropriate opportunities for locals to be engaged in the provision of supplies and services as far as possible
7 Diversion of traffic flow away from existing main public roads resulting in isolation if traditional villages from the main traffic stream. Potential to create “ghost town”
High Consider link roads to some of the existing villages along the present Road 18(Mandalay to Myingyan) and the connector road from Nabuaing to Semeikhon to encourage connectivity with the villages to the new road and other developments (MIP & SMP)
For the complete Initial Environmental Examination Report and further details, please request in writing to: MMID i-Centre A1, A2 62
nd Street, Ngwe Taw Gyi Kone Quarter, Pyi Gyi Tagon Township, Mandalay, The Republic of
the Union of Myanmar. The value of the Project to the development of socio-economic conditions of the Mandalay division has never been in doubt, but should be responsibly balanced against the various environmental concerns and impacts, in order to achieve the Company‟s vision of environmental sustainability. Recommendations have been made as to how best possible environmental concerns can be addressed. The Company intends to implement an Environment Management Plan (“EMP”) which will be monitored constantly by in-house consultants, as well as audited regularly by external environment experts. MMID has set aside 150 acres for a wildlife reserve so that the residents and visitors can enjoy and observe the biodiversity of this region.
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CORPORATE SOCIAL RESPONSIBILITIES The Company has also practised good corporate citizenship by doing its share of Corporate Social Responsibility (“CSR”) through the following activities:
Repaired the road around Semeikhon during the rainy season.
Donated to the Semeikhon Monastery, the Sone Ywar Village Monastery and the Kaung Zin Village Monastery.
Built electricity transmission poles so that the villages get electricity.
Donated supplies to a Secondary School at Nga Zon Township.
Repairing of roads and building of electricity transmission poles around Semeikhon Compensation to the Farmers The Company has taken time to discuss and negotiate with the farmers to arrive at a mutually agreeable compensation amount. Agreements were signed between MIDA and the affected famers and the Company paid the compensation in accordance to the Agreement between MIDA and MMID.
1. In June 2012, negotiations were carried out with 299 farmers affected for the SMP site and over a period of discussions, the farmers agreed to the compensation amount and agreements were signed, witnessed and recorded.
2. In November 2012, negotiations were carried with 282 farmers affected for the Port Link Road of
268 acres and over a period of discussion, the farmers agreed to the compensation amount and agreements were signed, witnessed and recorded.
3. Since January 2013, MIDA has been in discussion and have reached substantive agreement with the farmers affected for the MIP site. Where there is illegal farming, the laws will apply. The applicable laws are the Farmland Laws (2012), and the Vacant, Fallow and Virgin Land Management Laws (2012). It is expected that all the compensation cases will be amicably resolved.
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Compensation to affected farmers The Company plans to set aside some land for the setting up of a nature reserve to conserve the natural floral and fauna of Central Myanmar. Central Myanmar is home to many fascinating wildlife, including numerous species of deer such as barking deer and Eld's deer (see photograph below), and primate species such as the rhesus macaque and Hoolock gibbon. There are also more than 300 recorded species of birds, including two rare wetland birds: the black stork and the woolly-necked stock. Reptiles include the Burmese python and the yellow tortoise.
Eld‟s deer spotted at the MIP site in March 2013
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EXPERTS Chesterton Suntec International Pte. Ltd., Singapore, (the “Independent Valuer”) was responsible for preparing the Independent Valuation Report in APPENDIX C of this Prospectus. U Hla Tun & Associates Ltd., Myanmar, (the “Independent Auditor”) was responsible for auditing the accounts of MMID for this Project. State & City Planning Consultants, Singapore, (the “Master Planner”) was responsible for (i) the master planning for a total area of 260,000 acres in the Mandalay Region which encompasses the Myotha Industrial Park and Semeikhon Port and for (ii) preparing the Independent Conceptual Planning of MMID Report in APPENDIX B of this Report. GEOCOMP Myanmar Ltd., Myanmar, (the “Land Surveyor”) was responsible for conducting a land survey of the Project sites for the Semeikhon Port, Myotha Industrial Park and the Port Link Road. ERE Consulting Group Sdn. Bhd., Malaysia, (the “Environmental Consultant”) was responsible for conducting preliminary studies and issuing an Initial Environmental Evaluation (“IEE”) Report. Global Maritime and Port Services (GMAPS) Pte. Ltd., Singapore, (the “Port Planner”) was responsible for surveying the Semeikhon Port site and drafting the initial concept plan for the port. U Min Sein, Advocate of the Supreme Court of Myanmar, (the “Legal Advisor”) was responsible for preparing the legal documents for submission to the various government authorities and vetting and translating all legal and other documents. P+Z Development Pte. Ltd., Singapore, (the “Site Coordinator”) is responsible for undertaking the landscaping and other monitoring work at the Project sites for the Semeikhon Port, Myotha Industrial Park and the Port Link Road. Royal Haskoning DHV, Holland, has been appointed to be the Company‟s overall Consultant for all technical aspects of SMP planning and development. JFQ Capital Holdings Pte. Ltd., Singapore, was commissioned to compile and design this Prospectus. Mr. Yeo Weng Chew, Malaysia, was appointed to be an external consultant to advise the Company on power generation and all matters relating to power supply and distribution. The Independent Valuer has given and has not withdrawn his written consent to the issue of this Prospectus with the inclusion herein of his name and his respective report and all references thereto in the form and context in which he respectively appear in this Prospectus and to act in such capacity in relation to this Prospectus. Each of State & City Planning Consultants, GEOCOMP Myanmar Ltd.,, ERE Consulting Group Sdn. Bhd., Global Maritime and Port Services (GMAPS) Pte. Ltd., U Min Sein, Myanmar, and P+Z Development Pte. Ltd. does not make, or purport to make, any statement in this Prospectus or any statement upon which a statement in this Prospectus is based and to the maximum extent permitted by law, expressly disclaims and takes no responsibility for any liability to any person which is based on, or arises out of, the statements, information or opinions in this Prospectus.
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STATUTORY INFORMATION AND COMPLIANCE
Clause 92 of Companies Act Compliance Corresponding Section of the Prospectus
Page No.
(1) Every prospectus shall be dated and that date shall be the date of publication.
Refer to the Cover Page 1
(2) A copy of every such prospectus, signed by the directors, shall be filed for registration with the Registrar on or before the date of publication.
Refer to “SIGNATURES OF THE DIRECTORS”
62
(3) The Registrar shall not register any prospectus unless it is signed and dated.
Refer to the Cover Page & “SIGNATURES OF THE DIRECTORS”
1 & 62
(4) Every prospectus shall state on its face that a copy has been filed for registration.
Refer to the Cover Page 1
Clause 93 of Companies Act Compliance Corresponding Section of the Prospectus
Page No.
Clause 93 (1)
a) Contents of the Memorandum with the names, descriptions, nationality and addresses of the signatories and the number of shares subscribed by them respectively.
Refer to “DEFINITIONS” & “DIRECTORS AND MANAGEMENT”
19 – 22 & 45 – 48
b) The number of shares (if any) fixed by the Articles as the qualification of a director, and any provision in the Articles as to the remuneration of the directors.
Refer to “REMUNERATION OF DIRECTORS AND EXECUTIVE OFFICERS”
49
c) The names, descriptions, nationality and addresses of the directors or proposed directors and of the managers or proposed managers and managing agents or proposed managing agents (if any), and any provision in the Articles or in any contract as to the appointment of managers or managing agents and the remuneration payable to them.
Refer to “DEFINITIONS”, “DIRECTORS AND MANAGEMENT” & “REMUNERATION OF DIRECTORS AND EXECUTIVE OFFICERS”
19 – 22, 45 – 48 & 49
d) The minimum subscription on which the directors may proceed to allotment, and the amount payable on application and allotment on each share.
Refer to “SUMMARY OF PUBLIC OFFER”
23 – 24
e) The number and amount of shares and debentures which within the two preceding years have been issued.
Refer to “SHARE CAPITAL STRUCTURE AND DETAILS OF SHARE ISSUE”
27
ee) where any issue of shares or debentures is underwritten, the names of the underwriters.
Not Applicable -
f) The names and addresses of the vendors of any property purchased or acquired, which is to be paid for wholly or partly out of the proceeds of the issue offered for subscription by the prospectus, or the purchase or acquisition of which has not been completed at the date of the issue of prospectus.
Refer to “SHARE CAPITAL STRUCTURE AND DETAILS OF SHARE ISSUE” & “GOVERNMENT APPROVALS AND AGREEMENTS”
27 & 51 – 52
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ff) where any property referred to in clause (f) has within the two years preceding the issue of the prospectus been transferred by sale, the amount paid by the purchaser at each such transfer so far as the information is available.
Refer to “SHARE CAPITAL STRUCTURE AND DETAILS OF SHARE ISSUE” & “GOVERNMENT APPROVALS AND AGREEMENTS”
27 & 51 – 52
g) The amount (if any) paid or payable as purchase-money, in cash, shares or debentures.
Refer to “SHARE CAPITAL STRUCTURE AND DETAILS OF SHARE ISSUE”
27
h) The amount (if any) paid within the two preceding years or Payable as commission for subscribing or agreeing to subscribe, or procuring or agreeing to procure, subscription for any shares In, or debentures of, the company.
Not Applicable -
i) The amount or estimated amount of preliminary expenses.
Refer to “UNAUDITED PRO FORMA FINANCIAL STATEMENTS”
35
j) No (j) in the Companies Act.
- -
k) The amount paid within the two preceding years or intended to be paid to any promoter, and the consideration for any such payment.
Not Applicable -
l) The dates of, and parties to, every material contract including contracts relating to the acquisition of property to which clause (f) applies, and a reasonable time and place at which any material contract or a copy thereof may be inspected.
Refer to “APPENDIX A: CERTIFICATES, CONTRACTS AND PERMITS” For inspection of the contracts or copies thereof, please visit: MMID i-Centre A1, A2 62
nd Street, Ngwe Taw
Gyi Kone Quarter, Pyi Gyi Tagon Township, Mandalay, The Republic of the Union of Myanmar.
63 – 65
m) The name and address of the auditors (if any) of the company.
Refer to “DEFINITIONS” 19 – 22
n) Full particulars of the nature and extent of the interest (if any) of every director in the promotion of, or in the property proposed to be acquired by the company.
Refer to “SHARE CAPITAL STRUCTURE AND DETAILS OF SHARE ISSUE” & “GOVERNMENT APPROVALS AND AGREEMENTS”
27 & 51 – 52
o) Where the company is a company having shares of more than one class, the right of voting at meetings of the company.
Refer to “SUMMARY OF PUBLIC OFFER”
23 – 24
p) Where the Articles of the company impose any restrictions upon the members of the company in respect of the right to attend, speak or vote at meetings of the company.
Not Applicable -
Clause 101 of Companies Act Compliance Corresponding Section of the Prospectus
Page No.
(1) No allotment shall be made unless the minimum Refer to “SUMMARY OF 23 – 24
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amount of share capital has been raised and at least five percent has been paid to or received in cash by the Company.
PUBLIC OFFER”
(2) The minimum amount of share capital raised must provide for: a) the purchase price of any property purchased; b) any preliminary expenses and commission
payable; c) repayment of any moneys borrowed by the
Company in respect of the foregoing matters; and
d) working capital.
Refer to “USE OF PROCEEDS” 28
DISCLAIMER The preparation of this Prospectus is solely for the purpose of providing information to potential investors or any other interested person. However, this Prospectus does not purport to contain all the information that a potential investor or any other interested party may require. It does not take into account the individual circumstances, financial situation, investment objectives or requirements of a potential investor or any other person. It is intended to be used as a guide only and does not constitute advice, including without limitation, investment, legal, tax and financial or any other type of advice. The Prospectus relied upon the property data supplied by MMID and other third parties which is assumed to be true and accurate. There is no responsibility for inaccurate data supplied by MMID and other third parties and subsequent conclusions related to such data. No representation, warranty or covenant, express or implied, is made to the accuracy or completeness of the information contained herein, and nothing in the Prospectus is, or shall be relied upon as, a promise, representation or covenant. There shall be no liability to any person for any loss, liability, damage or
expense arising from or connected in any way with any use of or reliance on such information.
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SIGNATURES OF THE DIRECTORS
Signed on 28 March 2013.
Name & Position Signature
Chairman, U Aung Win Khaing
Managing Director, Dr Tun Tun Aung
Director, U Kyaw Kyaw
Director, U Min Sein
Director, U Kyaw Kyaw Win
Director, Daw May Gi Soe
Director, U Aung Zay Ya
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APPENDIX A – CERTIFICATES & PERMITS
Incorporation Certificate for MMID
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Translated & Notarised MIC Permit for SMP
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Translated & Notarised MIC Permit for MIP
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APPENDIX B – INDEPENDENT CONCEPTUAL PLANNING OF MMID REPORT
Extracts of the Master Planner‟s report are shown here. For the full master planning report, please visit: MMID i-Centre A1, A2 62
nd Street, Ngwe Taw Gyi Kone Quarter, Pyi Gyi Tagon Township, Mandalay, The Republic of the Union of Myanmar.
Extract 1: Transport Planning Map Extract 2: Proposed Sewage Treatment Plant
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Extract 3: Proposed Water Treatment Plant Extract 4: Proposed Integrated Telecommunication Centre
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Extract 5: Proposed 66kv Substations Extract 6: Proposed 230kv Substation
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Extract 7: Waste Transfer Stations Extract 8: Proposed Fire Stations
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Extract 9: Master Land Use Map
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Extract 10: Proposed 6 precincts
－ Precinct A: Leisure Business Precinct
－ Precinct B: Hi-Tech Precinct A
－ Precinct C: Hi-Tech Precinct B
－ Precinct D: New Town Northern and Downtown Core Precinct
－ Precinct E: Industry & Logistics Precinct
－ Precinct F: New Town Southern Precinct
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Extract 11: Startup Planning Map (Phase 1A1), shaded in black
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APPENDIX C – INDEPENDENT VALUATION REPORT Extracts of the Independent Valuer‟s report are shown here. For the full master planning report, please request in writing to, or visit: MMID i-Centre A1, A2 62
nd Street, Ngwe Taw Gyi Kone Quarter, Pyi Gyi Tagon Township, Mandalay, The Republic of
the Union of Myanmar. PRELIMINARY INFRASTRUCTURE COSTS The preliminary estimated infrastructure cost for the MIP has been estimated by the Independent Valuer as follows:
S/N Infrastructure Estimated Project Investment
US$
1 Main road network
$ 257,200,000
2 Municipal Project
Water supply pipeline $ 7,300,000 Rainwater pipeline $ 15,200,000 Wastewater pipeline $ 25,400,000 Sewage treatment plant $ 10,000,000
3 Power Supply & Telecommunication
230 KV Substation $ 31,620,000 66 KV Substation $ 25,300,000 High Voltage Line $ 2,440,000 Integrated communication centre $ 800,000 Satellite Telecom Station $ 160,000 Telecommunication pipeline $ 2,540,000 Power Plant 240MW $ 240,000,000
4 Sanitary Engineering
Refuse Transfer Station $ 50,000
5 Gas Supply Engineering
Gas Reservoir $ 500,000
6 Other Cost
Cost of Planning $ 200,000 Cost of Management $ 450,000 Grand Total $ 619,160,000 say $ 620,000,000
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COMPARABLE LAND SALES IN REGIONAL COUNTRIES
The following is a listing showing the indicative industrial land price range in various industrial areas of
other surrounding countries:
Country / Location Indicative Price Range
(US$ psm)
Thailand
a) Industrial land in Bang Pu Industrial Estate,
Samut Prakan Province,
37 km south of Bangkok
b) Amata City Industrial Estate,
Rayong Province,
114 km east of Bangkok
$140 - $150
$120 - $130
Malaysia
a) Industrial land in Klang Valley,
Selangor State,
30 km west of Kuala Lumpur
b) Tampoi Industrial Estate,
Johor state,
10 km north of Johor Bahru
$70 - $80
$70 - $80
Vietnam
Average industrial land price (general)
$50 - $100
China
a) Industrial land in Shenzhen & Shanghai
(general)
b) Industrial land in Taizhou, Jiangsu Province
100 km east of Nanjing City
> $150
$70
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REVENUE The projected selling price for each land use type, in a prepared state and ready for construction, assuming all the necessary infrastructure is in place, is estimated as follows:
Land Use Type Land
Allocated (sq km)
Land Allocated
(sqm)
Conservative Moderate Optimistic
US$psm US$ US$psm US$ US$psm US$
Residential
Low Density 2.50 2,500,000 $37.40 $93,500,000 $43.01 $107,525,000 $48.62 $121,550,000
Medium Density 8.49 8,490,000 $39.10 $331,959,000 $44.97 $381,752,850 $50.83 $431,546,700
Medium-High Density 1.78 1,780,000 $44.20 $78,676,000 $50.83 $90,477,400 $57.46 $102,278,800
Sub Total 12.77 12,770,000 $39.48 $504,135,000 $45.40 $579,755,250 $51.32 $655,375,500
Industrial
Business Park 0.89 890,000 $51.00 $45,390,000 $58.65 $52,198,500 $66.30 $59,007,000
Business 1 9.33 9,330,000 $34.00 $317,220,000 $39.10 $364,803,000 $44.20 $412,386,000
Business 2 3.52 3,520,000 $30.60 $107,712,000 $35.19 $123,868,800 $39.78 $140,025,600
Logistics 0.96 960,000 $42.50 $40,800,000 $48.88 $46,924,800 $55.25 $53,040,000
Sub Total 14.70 14,700,000 $34.77 $511,122,000 $39.99 $587,795,100 $45.20 $664,458,600
Civic & Commercial
Civic 1.36 1,360,000 $27.20 $36,992,000 $31.28 $42,540,800 $35.36 $48,089,600
Commercial 0.67 670,000 $37.40 $25,058,000 $43.01 $28,816,700 $48.62 $32,575,400
Recreation, excluding Golf Club
0.48 480,000 $45.90 $22,032,000 $52.79 $25,336,800 $59.67 $28,641,600
Golf Club (unimproved state) 1.02 1,020,000 $0.85 $867,000 $0.98 $997,050 $1.11 $1,127,100
Sub Total 3.53 3,530,000 $24.00 $84,949,000 $27.67 $97,691,350 $31.28 $110,433,700
$1,100,206,000 $1,265,236,900 $1,430,267,800
$1,100,000,000 $1,265,000,000 $1,430,000,000
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Extract from Signed Valuation Report by the Independent Value
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APPENDIX D – OBJECTS OF THE COMPANY The objects for which the Company is established are:
(1) To carry out the following construction works, either solely on its own or in Joint Venture with any local or foreign Partners, in accordance with the existing laws, procedures, orders and instructions of the Government of the Republic of the Union of Myanmar. To carry out the pre-engineering works such as ground testing, drawing, cost estimation and construction, maintenance, renovation works of suitable sites, for the following construction works, in accordance with the regulation of relevant Ministries, City Development Committees, Division, District, District and Township Development Affair Departments. (a) Housing Buildings.
(b) Hospitals, Schools, Hostels.
(c) Offices, Factories, Mills, Workshops.
(d) Roads, Bridges, Air Fields and Air Port Buildings, Railway Stations, High-way Bus Stations,
Seaports, Jetties, Container Depots.
(e) Markets, Godowns, Ware Houses.
(f) Hotels, Motels, Inns, Guest-houses.
(g) Stations, Towers etc. of communication.
(h) Varieties of Stupas, Monuments, Monasteries, Meditation Centres, Damayones and religious buildings.
(i) Dams, Reservoirs.
(j) Water/Sanitation and Electrical installation works related to construction engineering.
(k) Other related construction engineering works.
(l) Construction of Port in Myinggyan Township (Seemeekhone) Ayeyarwady.
(m) Implementation of Mandalay Myo Tha, Industrial Garden City Project in Ngann Zun Township.
(2) To import machinery, spare parts, raw materials and others necessary for those activities
mentioned above and to sell wholesale and retail finished and semi-finished products locally and abroad.
(3) To sell and rent the completed buildings by opening sales centres.
(4) To borrow money for the benefit of the Company‟s business from any person, firm, company, bank and financial organization in the manner that the Company shall think fit.
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APPENDIX E – SUMMARY OF SELECTED ARTICLES OF ASSOCIATION The discussion below provides information about certain provisions of MMID‟s Memorandum and Articles of Association under the Myanmar Companies Act. This description is only a summary and is qualified by reference to MMID‟s Memorandum and Articles of Association. The instruments that constitute and define the Company are the Memorandum and Articles of Association of the Company. The following are extracts of the provisions. The complete copy of MMID‟s Memorandum and Articles of Association can be inspected at: MMID i-Centre A1, A2 62
nd Street, Ngwe Taw Gyi Kone Quarter, Pyi Gyi Tagon Township, Mandalay, The Republic of
the Union of Myanmar.
(a) CAPITAL AND SHARES
Article (5) The Authorised Capital of the Company shall be K. 100,000,000,000, (Kyats One Hundred Billion Only) divided into 10,000,000 (Ten million) Shares of K. 10,000 (Kyats Ten Thousand Only) each. The maximum shareholding of a member shall be limited to 250,000 (two hundred fifity thousand).
(b) CALLS ON SHARES
Article (12) The Directors may from time to time make calls upon the Members in respect of any moneys unpaid on their shares held by them respectively as the Directors may think fit or be payable at less than one month from the last call and fourteen clear days notice at least is given of each call; and each Member shall be liable to pay the amount of every call so made upon him to the company and at the time and places appointed by the Directors. A call may be made payable by instalments or may be revoked or postponed as the Directors may determine. A call shall be deemed to have been made at the time when the resolution of Directors authorizing the call was passed.
(c) FORFEITURE OF SHARES
Article (16) If a Member fails to pay in full or any part of any call made in accordance with these presents or instalment of a call on or before the day appointed for payment thereof, the Directors may at any time thereafter serve a notice on him requiring payment of so much of a call on instalment as is unpaid, together with interest and expenses which may have accrued Article (19) A share so forfeited or surrendered shall become the property of the Company and may be sold, re-allotted or otherwise disposed of either to the person who was before such forfeiture or surrender the holder thereof or entitled thereto, or to any other person, upon such terms and in such manner as the Directors shall think fit, and at any time before a sale, re-allotment or disposition of the forfeiture or surrender may be canceled on such terms as the Directors may think fit. The Directors may, if necessary, authorize some person to transfer a forfeited or surrendered share to any such other person as aforesaid. Article (20) A member whose share has been forfeited or surrendered share cease to be a Member in respect of the share, but shall notwithstanding the forfeiture or surrender remain liable to pay to the Company all moneys which at the date of forfeiture or surrender were presently payable to
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the Company in respect of the shares, with interest thereon at such rate as the Directors may determined from the date of forfeiture or surrender until payment, but the Directors may waive payment of such interest either wholly or in part and Directors may enforce payment without any allowance for the value of the shares at the time of forfeiture or surrender.
(d) LIEN ON SHARES
Article (21) The Company shall have a lien on every share (not being a fully-paid share) for all moneys, whether presently payable or not, called or payable at a fixed time in respect of such share; and the Company shall also have a first and paramount lien and change on all shares (other than fully paid shares) standing registered in the name of a single member for all the debts and liabilities of such member or his estate to the Company, and that whether the same shall have been incurred before or after notice to the Company of any equitable or other interest in any person other than such member, and whether the period for the payment or discharge of the same shall have actually arrived or not, and notwithstanding that the same are joint debts or liabilities of such member or his estate and any other person, whether a member of the Company or not the Directors may resolve that any share shall for some specified period be exempted from the provisions of this Article. Article (22) The Company may sell in such manner as the Directors think fit any share on which the Company has a lien, but no sale shall be made unless some sum in respect of which the lien exists is presently payable, nor until the expiration of thirty days after a notice in writing, stating and demanding payment of the sum presently payable, and giving notice of intention to sell in default, shall have been given to the holder for the time being of the share or the person entitled thereto by reason of his death, insolvency or bankruptcy. Article (23) The net proceeds of such sale after payment of the costs of such sale shall be applied in or towards payment or satisfaction of the debt or liability in respect whereof the lien exists, so far as the same is presently payable, and any residue shall (subject to a lien for debts or liabilities not presently payable as existed upon the shares prior to the sale) be paid to the person entitled to the shares at the time of the sale. For giving effect to any such sale the Directors may authorize some person to transfer the share sold to the purchaser.
(e) ISSUANCE OF SHARE-WARRANTS
Article (40) The Company may issue share-warrants, and accordingly the Directors may in their discretion, with respect to any share which is fully paid up, on application in writing signed by the person registered as holder of the share, and authenticated by such evidence (if any) as the Directors may from time to time require as to the identity of the person signing the request, and on receiving the certificate (if any) of the share and the amount of the stamp duty on the warrant and such fee as the Directors may from time to time require, issue under the Company‟s seal a warrant, duly stamped, stating that the bearer of the warrant is entitled to the shares therein specified, and may provide by coupons or otherwise for the payment of dividends or other moneys on the shares included in the warrant.
(f) ALTERATION OF CAPITAL
Article (45) The Company may from time to time by special resolution increase its capital by such sum to be divided into shares of such amounts as the resolution prescribes. Article (46) All new shares shall be subject to the provisions of these presents with reference to allotment, payment of calls, lien transfer, transmission, forfeiture and otherwise.
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Article (47) The Company may by Ordinary Resolution: (a) consolidate and divide all or any of its share capital into shares of larger amount than its
existing shares; (b) cancel any shares which at the date of the passing of the resolution, have not been taken
or agreed to be taken by any person and diminish the amount of its capital by the amount of the shares so cancelled.
Article (48) The Company may, by a Special Resolution, reduce its capital in any manner with and subject to any incident authorized and consent required by law.
(g) VOTES OF MEMBERS
Article (67) Subject to any special rights or restrictions as to voting for the time being affection any special class of shares, on a show of hands every member present personally or by proxy and entitled to vote shall have only one vote. On a poll, every member shall have one vote for every share held by him. Article (68) In the case of joint holder of a share the vote of the senior who tenders a vote, whether in person or proxy, shall be accepted to the exclusion of the votes of the other joint holders and for this purpose seniority shall be determined by the order in which the names stand in the Register of Members in respect of the joint holding. Article (69) A Member of unsound mind, or in respect of whom an order has been made by any count having jurisdiction in lunacy may vote, whether on a show of hands or on a poll, by his committee, curator bonis or other person in the nature of a committee or curator bonis appointed by such court, provided that such evidence as the Directors may require of the authority of the person claiming to vote shall have been deposited at the Office not less than forty-eight hours before the time appointed for holding the meeting.
Article (70) Subject to the provisions of these presents no Member shall, unless the Directors otherwise determine, be entitled to vote at a General Meeting either personally or by proxy, or to exercise any privilege as a Member unless all calls or other sums presently payable by him in respect of shares in the Company have been paid. Article (71) No objection shall be raised to the qualification of any voter except at the meeting or adjourned meeting at which the vote objected to is given or tendered, and every vote not disallowed at such meeting shall be valid for all purposes. Any such objection made in due time shall be referred to the Chairman of the meeting whose decision shall be final and conclusive. Article (72) On a poll, votes may be given either personally or by proxy, and a person entitled to more than one vote may appoint more than one proxy and need not use all his votes or cast all the votes he uses in the same way.
(h) APPOINTMENT, RETIRING AND RE-ELECTION OF DIRECTORS
Article (79) The number of Director shall not be less than (7) and not more than (20) including the Chairman. Article (80)
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A Chairman shall be elected by the Directors for such period or periods as the Board may determine. The Chairman shall devote his full attention to the affairs of the Company, shall receive from the Company such salary and allowances and be subject to such terms and conditions of service as may be determined by the Board. Save as otherwise provided in the regulations made by the Board under the section on the General Powers of the Directors, such Chairman shall have full powers to transact all the business of the Company which may be transacted by the Board. Article (81) The Directors shall be elected by the shareholders at the Annual General Meeting except that the first Directors shall be those as stated in the Article of Association. Article (82) The Directors shall have power at any time and from time to time to appoint any person to be a Director to fill a casual vacancy. Any Director so appointed shall hold office only until the next General Meeting to be held and shall then be eligible for re-election. Article (83) The qualification of a Director shall be the holding of at least (5,000) shares in the Company in his or in her own name, and it shall be his duty to comply with the provision of Section (85) of the Myanmar Companies Act. Companies, co-operatives or other legally constituted entities may also nominate any person by nomination letter to be elected as Director provided the said entities hold the qualification shares. Article (84) At the first ordinary meeting of the Company, the whole of the Directors shall retire from office, and at the ordinary meeting in every subsequent year one-third of the Directors for the time being or, if their number is not three or a multiple of three, then the number nearest to one-third shall retire from office. Article (85) The Director to retire by rotation every year shall be those who have been longest in office since their last election, but as between persons who become Directors on the same day those who are to retire shall (unless they otherwise agree among themselves) be determined by lot. Article (86) A retiring Director shall be eligible for re-election. Article (87) The Company at the General Meeting at which a Director retires in manner aforesaid may fill up the vacated office by electing a person thereto. Article (88) If at any meeting at which an election of Director ought to take place, the place of the vacating Directors are not filled up, the meeting shall stand adjourned till the same day in next week at the same time and place, and if at the adjourned meeting the place of the vacating Directors are not filled up, the vacating Directors or such of them as have not had their place filled up shall be deemed to have been re-elected at the adjourned meeting. Article (89) No person, not being a retiring Director, shall be eligible for election to the office of Director at any General Meeting, unless he or his authorized agent has, at least 14 clear days before the meeting, left at the office in writing under his hand or under the hand of such agent signifying assent to his candidature for the office of Director. Article (93) The Company may depute, nominate or appoint any Director or officer of the Company to fill any post or office in any company promoted by the Company or in which the Company may be interested as shareholder or otherwise, and unless otherwise agreed shall not be accountable for any remuneration or other benefits received by him in respect of such post or office.
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Article (94) The Directors may entrust to and confer upon a Director holding executive office any of the power exercisable by them as Directors upon such terms and conditions and with such restrictions as they think fit, and either collaterally with or to the exclusion of their own powers, and may from time to time revoke, withdraw, alter or vary all or any of such powers.
(i) REMUNERATION OF DIRECTORS
Article (90) The Directors may be paid a reasonable remuneration, which the Board of Directors may from time to time determine. Article (91) Directors may repay to any Director all such reasonable expenses as he may incur in attending and returning from meetings of the Directors or of the Committee of the Directors, or General Meetings or which he may otherwise incur in or about the business of the Company. Article (92) The Directors may contribute to any scheme or fund or compensation or pay premium to provide for any such benefit to the widow or dependents of any Director who may hold or have held any executive office under the Company in the event of his death or incapacity in the service of the Company so recognized. The Directors may from time to time determine such recognition of service.
(j) REMOVAL OF DIRECTORS
Article (95) The office of a Director shall be vacated in any of the following events, namely:- (a) if he is adjudged bankrupt or insolvent; (or) (b) if he is found lunatic or to be of unsound mind by a Court of competent jurisdiction or
become so incapacitated as to be unable to attend meetings of Directors or otherwise perform his duties as a Director; (or)
(c) if he is absent from three consecutive meetings of the Directors or from all meetings of the Directors for a continuous period of three months whichever is longer without leave of absence from the Board of Directors; (or)
(d) if by notice in writing to the Company he resigns his office and his resignation is duly accepted by the Board of Directors; (or)
(e) if he is convicted by a Court in the Republic of the Union of Myanmar and is punished with rigorous imprisonment for a term, exceeding six months; (or)
(f) if he acts in contravention of Section 86 D and 86 F of the Act.
(k) GENERAL POWERS OF DIRECTORS
Article (106) The overall business of the Company shall be managed by the Directors, who may pay all expenses incurred in forming and registering the Company, and may exercise all such powers of the Company as are not by the statutes or by these presents required to be exercised by the Company in General Meeting, subject, nevertheless, to any regulations of these presents, to the provisions of the Statutes, and to such regulations, being not inconsistent with the aforesaid regulations or provisions, as may be prescribed by a special resolution of the Company, but no regulations so made by the Company shall invalidate any prior act of the Director which would have been valid if such regulation had not been made. The general powers given by this Article shall not be limited or restricted by any special authority or power given to the Directors by any other Article. Article (107)
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The Directors may establish any local Boards or Agencies for managing any of the affairs of the Company, either in the Republic of the Union of Myanmar or elsewhere, and may appoint any persons to be member of such Local Boards, or any Managers or Agents, and may fix their remuneration, and may delegate to any Local Board, Manager or Agent any of the powers, authorities and discretion vested in the Directions, with powers to sub delegate, and may authorize the members of any Local Boards, or any of them, to fill any vacancies therein, and to act notwithstanding vacancies, and any such appointment or delegation may be made upon such terms and subject to such conditions as the Directors may think fit, and the Directors may remove any person so appointed, and may annul or vary any such delegation, but no person dealing in good faith and without notice of any such annulment shall be affected hereby.
(l) BORROWING POWERS EXERCISABLE BY DIRECTORS
Article (108) The Directors may from time to time at their discretion borrow any sum or sums of money for the purposes of the Company. Article (109) The Directors shall cause a proper register to be kept in accordance with the provisions of section 123 of the Act of all mortgages, and charges specifically affecting the property of the Company; and shall cause the requirements of sections 109 to 125 of the said Act in that behalf to duly complied with so far as they fail to be complied with by the Company. Article (110) The Directors may from time to time and at any time by power of attorney under the seal appoint any company, firm or person or any fluctuating body of persons, whether nominated directly or indirectly by the Directors, to be the Attorney of the Company for such purposes and with such powers, authorities and direction (not exceeding those vested in or exercisable by the Directors under these presents) and for such period and subject to such conditions as they may think fit, and any such power of attorney may contain such provisions for the protection and convenience of persons dealing with any such Attorney as the Directors may think fit, and may also authorize any such Attorney to sub-delegate all or any of the powers, authorities and discretion vested in him.
(m) AUTHENTICATION OF DOCUMENTS
Article (116) Any Director or General Manager or any person appointed by the Directors for the purposes shall have power to authenticate any documents affecting the constitution of the Company and any resolutions passed by the Company or the Directors, and any books, records, documents and accounts relating to the business of the Company, and to certify copies thereof or extracts therefrom true copies or extract; and where any books records, documents or accounts are elsewhere than at the office the local manager or other officer of the Company having the custody shall be deemed to be a person appointed by the Directors as aforesaid. Article (117) A document purporting to be a copy of a resolution of the Directors or any extract from the minutes of a meeting of the Directors which is certified as such in accordance with the provisions of the last preceding Articles shall be conclusive evidence in favour of all persons dealing with the Company upon the faith thereof that such resolution has been duly passed or, as the case may be that such extract is a true and accurate record of a duly constituted meeting of the Directors.
(n) KEEPING ACCOUNTS AND APPOINTMENT OF AUDITORS
Article (133)
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The Directors shall cause to be kept such books of accounts as are necessary to comply with the provisions of the Statutes. Article (134) The books of accounts shall be kept at the office or at such other place within the Republic of the Union of Myanmar as the Directors think fit, and shall always be open to the inspection of the Directors. No member (other than a Director) shall have any right of inspection any account of book or document of the Company except as conferred by the Statutes, authorized by the Directors or by ordinary resolution of the Company. Article (135) The Directors shall from time to time in accordance with the provisions of the Statutes cause to be prepared and to be laid before a General Meeting of the Company such Statement of Income, balance sheet, group accounts (if any) and reports as may be necessary. Every balance sheet and Statement of Income shall give a true and fair view of the state of affairs of the Company. Article (136) The Statement of Income in addition to matters referred in the Statutes should show arranged under the most convenient heads the amounts of gross income, distinguishing the several sources from which it has been derived, and the amount of gross expenditure, distinguishing the expenses of the establishment, salaries and other like matters. Every item of expenditure fairly chargeable against the year's income shall be brought into the accounts, so that a just balance of profit and loss may be laid before the General Meeting, and, in cases where any item of expenditure which may in fairness be distributed over several years, has been incurred in any one year, the whole amount of such items shall be stated together with a statement of the reasons why only a portion of such expenditure is charged against the income of the year. Article (137) A copy of every balance sheet, statement of income, income and expenditure accounts which is to be laid before a General Meeting of the Company (including every document required by law to be annexed thereto) together with a copy of every report of the Auditors relating thereto and of the Directors report shall not less than fourteen days before the date of the meeting be sent to every member of the Company and to every other person who is entitled to receive notices from the Company under the provisions of the Statutes or of these presents: provided that this Article shall not require a copy of these documents to be sent to any person of whose address the Company is not aware or to more than one of joint holder, but any member to whom a copy of these documents has not been sent shall be entitled to receive a copy free of charge on application at the office. Article (138) Auditors shall be appointed in accordance with the Myanmar Companies Act and their duties regulated in accordance with the provisions of the Statutes, but so that the remuneration of the external auditors may be fixed by the Directors.
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APPENDIX F – SAMPLE OF SHARE APPLICATION FORM
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- End of Prospectus -
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MANDALAY MYOTHA INDUSTRIAL DEVELOPMENT PUBLIC CO., LTD. 26
th Street, Between 58
th & 60
th Street
Aung Myae Than Zan, Mandalay Republic of the Union of Myanmar
www.mmidproject.com Printed by:
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