Inqo Investments Ltd - Half-year Report
RNS Number : 9999U
Inqo Investments Limited
01 November 2017
 

INQO INVESTMENTS LIMITED

 

UNAUDITED GROUP RESULTS FOR THE PERIOD ENDED 31 AUGUST 2017

 

CHAIRMAN AND CHIEF EXECUTIVE STATEMENT

 

Inqo Investments Limited ('Inqo' or 'the Company') is a South African based social impact company that acquires and invests in businesses that tackle poverty and the social needs of  low income earners at the base of the economic pyramid in Sub-Saharan Africa.

 

COMMENTARY

 

The process that the group started in 2014 to consolidate its financial position was concluded in the 2016/7 year which meant that the group started this 2017/8 financial year with no debt leading to the group being able to produce a stronger balance sheet.

 

The results for the six months reflected a loss after tax of R4,045,783 (August 2016: a profit of R6,989,880) of which R1,029,799 was for depreciation. The results for the first half of the last financial year 2016/7 were buoyed by a once off write back of interest on renegotiated loans, which were settled in April 2016.

 

Inqo's revenues are derived primarily from its main subsidiary, the Kuzuko Lodge. In the first six months of this year, revenues have grown to R7,605,499 (2016: R5,324,300) a rise of 43%. This is a marked improvement in trading given that these financial results cover the low season period.

 

INVESTEE COMPANIES

 

Kuzuko Lodge (South Africa)

The Lodge traded at a loss for the six months to date reflecting a loss of R2,006,939 (August 2016 six month period: R1,864,204).  Trading in the six month period to date has improved year on year and improved occupancy levels are anticipated for the rest of the 2017/8 high season as shown by the advanced bookings currently in the system and already prepaid.

 

Annual occupancy to date at 31 August 2017 reflects a 20% improvement compared to 2016 while the average room rate shows a 51% improvement over 2016.

 

The Kuzuko Foundation supported 100 pupils from township schools on a day visit to the Kuzuko Educational Park. The Foundation is supported by donors as well as guests at Kuzuko Lodge.

 

Spekboom Trading (South Africa)

We continue our interaction with the Department of Environmental Affairs (DEA) to obtain a further reforestation grant to extend the planting of spekboom on the Kuzuko Game Reserve.  When an agreement is reached with the DEA we will create some 100 new jobs in the local community. To date, the company has re-planted 500 acres of spekboom on degraded land.

 

Bee Sweet Honey (Zambia)

Inqo invested US$60,000 in Bee Sweet Honey Limited, a Zambian exporter of honey. Bee Sweet currently have 90,000 bee hives in the field managed by 13,000 farmers. The harvest for the May 17 crop was 133 Metric tonnes with Inqo's share being 7.4 tonnes. Inqo earned its first revenue from the honey harvested in May 17.

 

Four-One Financial Services Limited (Uganda)

In April 2017, the company made an investment in Four-One Financial Services Limited, a Ugandan based company which manages the Mazima Voluntary Individual Retirement Benefits Scheme.

 

The Mazima Retirement Plan is the trading name of Mazima Voluntary Individual Retirement Benefits Scheme (MVIRBS). It is a retirement savings scheme for low income earners in the informal sector of the economy. The poor and informal workers do not currently have any formal retirement for such low income earners. Mazima is supervised by a group trustees and is licensed and regulated by the Uganda Retirements Benefits Regulatory Authority (URBRA), the government body that regulates all pension and retirement benefits schemes. Four-One Financial Services is the management company responsible for marketing and administration of the Mazima retirement scheme.

 

Savers register online and pay through mobile banking or e-banking through the bank. No cash is used. Each saver has his/her own account managed by the custodian bank, Housing Finance Bank. The investments are managed by AA Financial, a regulated advisor.

 

OUTLOOK

 

Inqo expects to benefit from improved trading from the Kuzuko Lodge operation and revenues from each of the Bee Sweet Honey Operation and the Four-One Financial Services Investment.

 

The occupancies and average room rates currently achieved at Kuzuko Lodge in the second six months of the 2017/8 year are very strong, with the Lodge experiencing higher than ever occupancy levels in the final quarter of 2017. This trend is expected to continue into 2018 on the back of the fact that the Rand remains weak against other currencies making South Africa an attractive destination of travel. Kuzuko Lodge is situated in a malaria free area and this factor is proving to be positive to the business as the Lodge is now experiencing a higher level of enquiries from potential North American visitors.

 

SUMMARY OF SOCIAL & ENVIRONMENTAL METRICS SINCE PROJECT COMMENCEMENT

 

·      39,000 acres of former farmland restored as a game reserve in a region of endemic poverty in the poorest province in South Africa.

·      Increased VAT and income tax paid year on year, currently 55 fulltime and 12 part-time and contracted staff employed.

·      All staff living at Kuzuko in standard housing with flush toilets, power, water and solar panels.

·      Conservation of 3 endangered species.

·      100 pupils from township schools entertained on a day visit to the Kuzuko Educational Centre to learn about conservation in the period from June to August

·      Reforestation of 500 acres of degraded land with spekboom providing work for 100 part time staff.

·      90,000 beehives in the field providing 13,000 farmers with increased income. 3000 of these hives are the property of Inqo.

·      The Mazima Retirement Plan now has 830 active members having grown from 430 active members in August 2016.

 

STAFF

 

The directors would like to take this opportunity to thank all the operating staff in the group for their contribution and commitment to the group's objectives.

 

FINANCIAL INFORMATION

 

The financial information set out in this announcement does not constitute statutory financial statements. This financial information has been extracted from Inqo's unaudited condensed consolidated financial statements for the six months ended 31 August 2017.

KPMG has performed a review of the condensed consolidated interim financial statements for the six months ended 31 August 2017.

A copy of these condensed consolidated interim financial statements and KPMG's review report will be available at the Company's offices on 1 November 2017.

 

DIVIDEND

 

The company has not declared a dividend for the period ended 31 August 2017.

 

K.S Tan

Chairman

 

C.J Bertie

Chief Financial Officer

 

ENQUIRIES

Inqo Investments Limited

 

Mr Chris Bertie, Chief Financial Officer

 

and Chief Operating Officer

Tel: +27 (0)83 625 4069

 

 

Shard Capital Partners LLP

 

NEX Exchange Corporate Adviser and Broker

 

Dr Wang Chong

Tel: +44 (0)20 7186 9948

 

 

Inqo Investments Limited Group

 

 

 

 

 

 

Condensed consolidated statement of profit or loss and other comprehensive income

For the six months ended 31 August 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Group

 

 

 

 

(Reviewed)

 

(Reviewed)

 

(Audited)

 

 

Six Months

 

Six Months

 

Year ended

 

 

ended 31

 

ended 31

 

28 February

 

 

August 2017

 

August 2016

 

2017

 

 

 

 

 

 

 

 

 

(6 months)

 

(6 months)

 

(12 months)

 

 

R'000

 

R'000

 

R'000

 

 

 

 

 

 

 

Revenue

 

             7 652

 

                 5 324

 

            17 026

Cost of sales

 

          (1 160)

 

(909)

 

            (2 390)

Gross profit

 

             6 492

 

                 4 415

 

            14 636

 

 

 

 

 

 

 

Other income

 

                   -  

 

               13 977

 

            14 042

Selling and administrative expenses

        (11 095)

 

              (8 251)

 

          (19 457)

Operating (loss) / profit

 

          (4 603)

 

               10 141

 

              9 221

 

 

 

 

 

 

 

Fair value adjustment

 

                   -  

 

                     -  

 

                 502

 

 

 

 

 

 

 

Net financing income                              

 

                  86

 

                   469

 

                 536

Finance income

 

101

 

                   495

 

581

Finance costs

 

(15)

 

(26)

 

(45)

 

 

 

 

 

 

 

(Loss) / profit before taxation

 

          (4 517)

 

               10 610

 

            10 259

Taxation

 

471

 

 

            (2 868)

(Loss) / profit for the year

 

          (4 046)

 

 

              7 391

Other comprehensive income

 

 

 

 

 

 

                                       

 

                   -

 

                     -  

 

            10 575

Revaluation of land

 

                   -

 

                     -  

 

            13 627

Deferred tax on revaluation

 

                   -

 

                     -  

 

            (3 052)

 

 

 

 

 

 

 

Total comprehensive income for the period

 

          (4 046)

 

                 6 990

 

            17 966

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss)/earnings per share (cents)

 

(0.29)

 

0.65

 

0.61

Diluted (loss)/earnings per share (cents)

 

-

 

0.65

 

0.58

 

 

 

 

 

 

 

 

 

 

Inqo Investments Limited Group

 

 

 

 

 

 

Condensed consolidated statement of financial position

 

 

 

 

At 31 August 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Group

 

 

 

 

(Reviewed)

 

(Reviewed)

 

(Audited)

 

 

31 August

 

31 August

 

28 February

 

 

2017

 

2016

 

2017

 

 

R'000

 

R'000

 

R'000

Assets

 

 

 

 

 

 

Non-current assets

 

        132 849

 

          120 065

 

         132 870

Property, plant and equipment

 

        131 266

 

          119 089

 

         131 898

Intangible assets

 

                 14

 

                  22

 

                 18

Other Investments

 

            1 013

 

                954

 

                954

Loan Receivables

 

               556

 

                  -  

 

                  -  

 

 

 

 

 

 

 

Current assets

 

            7 291

 

            11 306

 

           10 655

Inventories

 

               663

 

                584

 

                486

Trade and other receivables

 

            2 267

 

              2 378

 

             3 115

Biological assets

 

            3 605

 

              3 023

 

             3 512

Cash and cash equivalents

 

               756

 

              5 321

 

             3 542

 

 

 

 

 

 

 

Total assets

 

        140 140

 

          131 371

 

         143 525

 

 

 

 

 

 

 

Equity and liabilities

 

 

 

 

 

 

Capital and reserves

 

 

 

 

 

 

Ordinary share capital

 

          58 198

 

            58 198

 

           58 198

Share premium

 

          58 228

 

            58 228

 

           58 228

Revaluation reserve

 

          70 774

 

            60 200

 

           70 774

Accumulated loss

 

       (62 186)

 

         (58 319)

 

         (58 786)

Equity attributable to equity holders of Inqo Investments Limited

 

        125 014

 

          118 307

 

         128 414

Non-controlling interest

 

            (472)

 

              (695)

 

173

Total equity

 

        124 542

 

          117 612

 

         128 587

 

 

 

 

 

 

 

Non-current liabilities

 

            9 296

 

              7 416

 

             9 753

Loans from related parties

 

               436

 

                414

 

                436

Other long term loans

 

               580

 

                552

 

                566

Deferred taxation

 

            8 087

 

              6 257

 

             8 558

Debentures

 

               193

 

                193

 

                193

 

 

 

 

 

 

 

Current liabilities

 

            6 302

 

              6 343

 

             5 185

Trade and other payables

 

            6 050

 

              5 088

 

             4 933

Provision

 

               252

 

                252

 

                252

Interest bearing loans and borrowings - current portion

 

                 -  

 

              1 003

 

                  -  

 

 

 

 

 

 

 

Total liabilities

 

          15 598

 

            13 759

 

           14 938

 

 

 

 

 

 

 

Total equity and liabilities

 

        140 140

 

          131 371

 

         143 525

 

 

 

 

 

 

 

 

 

 

Inqo Investments Limited Group

Unaudited interim financial information for the six months ended 31 August 2017

 

Basis of preparation

 

The interim financial statements are prepared in accordance with IAS 34 Interim Financial Statements and the requirements of the Companies Act of South Africa and should be read in conjuction with the Group's last annual consolidated financial statements as at and for the year ended 28 February 2017 ('last annual financial statements'). They do not include all of the information required for a complete set of IFRS financial statements.
 

The condensed financial information has been presented on the historical cost basis, except for financial instruments carried at fair value, and are presented in Rands which is Inqo Investment Ltd's functional and presentation currency.
 

This financial inforamtion has been extracted from Inqo's unaudited condensed consolidated interim financial statements for the six months ended 31 August 2017.
 

This financial information was prepared under the supervision of Mr C Bertie CA(SA), in his capacity as group financial director.

 

 

  

Inqo Investments Limited Group

 

 

 

 

 

 

Summarised financial information

 

 

 

 

 

 

For the six months ended 31 August 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Group

 

 

 

 

(Reviewed)

 

(Reviewed)

 

(Audited)

 

 

Six Months

 

Six Months

 

Year ended

 

 

ended 31

 

ended 31

 

28 February

 

 

August 2017

 

August 2016

 

2017

 

 

 

 

 

 

 

 

 

(6 months)

 

(6 months)

 

(12 months)

 

 

 

 

 

 

 

Earnings/(loss) per share

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss)/earnings per share (cents)

 

(0.29)

 

0.65

 

0.61

Diluted (loss)/earnings per share (cents)

 

-

*

0.65

 

0.58

(Loss)/profit attributable to equity shareholders (R'000)

 

 (3 401)

 

           7 551

 

            7 085

Weighted average number of shares in issue for normalised EPS calculation

 

 11 639 615

 

   11 639 615

 

    11 639 615

Weighted average number of shares in issue for diluted normalised EPS calculation

 

 11 755 656

 

   11 677 473

 

    12 205 410

 

 

 

 

 

 

 

 

 

 

 

 

 

 

*  Computation of the diluted earnings per share is anti-dilutive and therefore has not been computed.

 

 

 

 

 

 

 

                 

 


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