Inqo Investments Ltd - Inqo Investments Ltd HY Results to 31 August 2019
RNS Number : 5679U
Inqo Investments Limited
26 November 2019
 

Inqo Investments Limited

 

Unaudited Group Results for the six month period ended 31 August 2019

 

CHAIRMAN AND CHIEF EXECUTIVE STATEMENT

 

Inqo Investments Limited ("Inqo" or "the Group") 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 in Sub-Saharan Africa.

 

COMMENTARY

 

The Group remains in a strong financial position with minimal debt.  Cash reserves for the investment stood at R21 million, with total assets of R179 million on the balance sheet.

 

The results for the six months under review showed revenues of R8.739m (August 2018: R8.367m) but a loss after tax of R5.147m (August 2018: a loss of R4.118m).  The loss for the period is reported after accounting for the following operating costs:

 

 

Depreciation

Listing expenses

Directors fees

Professional fees

August 2019

1 531 521

421 117

388 563

248 887

August 2018

1 268 207

115 145

393 759

212 958

 

Inqo's revenues are derived primarily from its main subsidiary, Kuzuko Lodge.  In the six month period under review, revenue grew from R8.367m to R8.738m, a rise of 4% during the low season where turnovers are traditionally low and having closed for a three week period for annual renovations.  The marketing efforts that kicked off in 2016 to boost room occupancy and revenues have continued to be effective, resulting in improved revenues this year to date.  We expect this trend to be maintained into the high season during the next 6 months.

 

During the last two financial years some of the Inqo shareholders committed to a private placement of shareholder funds of £2.5 million.  The final instalment of these funds was received during the period under review.

 

INVESTEE COMPANIES

 

Kuzuko Lodge (South Africa)

 

The Lodge traded at a loss for the six months to date reflecting a loss of R3.390m (August 2018: R3.640m). The negative impact of the Cape Town water shortage experienced in the 2019/20 year has been overcome and trading experienced by the lodge has returned to expected levels, with the lodge operating as financially budgeted.

 

The dining area of the lodge building was extended by 260 square metres during the winter period. Concurrently with the building improvements substantial sums were also spent on repairs and maintenance to the lodge. The combined impact of the building upgrade and the repairs and maintenance led to some reservation cancellations which caused lower than expected revenues for the year to date. Improved occupancy levels are anticipated for the rest of 2019/20 high season as reflected by a strong level of advanced bookings currently in the system and already prepaid.

 

 

Spekboom Trading (South Africa)

 

We continue our interaction with the Department of Environmental Affairs (DEA) and interested 3rd parties to obtain funding to extend the planting of spekboom on the Kuzuko Game Reserve.  When an agreement is reached we will create some 100 new jobs in the local community.  To date, the company has replanted 500 acres of spekboom on degraded land.

 

The company is currently embarking on further experiments to test alternative planting methodologies for spekboom for future plantings.

 

Bee Sweet Honey (Zambia)

 

Bee Sweet Honey Limited is a Zambian commercial producer of honey with 85 000 bee hives and around 10,000 farmers in its program.  The bee hives are harvested twice a year in May and November each year.

 

Inqo initially invested in Bee Sweet in 2016 when the right to the income flow from 3,000 hives were bought.  In 2018 a second investment was made when the income flow from 3,500 hives was acquired.  The half-year harvest yield in May was 285 tonnes (2018: 262 tonnes) of honey. 

 

Four-One Financial Services Limited (Uganda)

 

Inqo has made two investments into Four-One Financial Services Limited, a Ugandan based micro-pensions and small business loans company, which manages the Mazima Voluntary Individual Retirement Benefits Scheme.  The bulk of the investment was by way of interest bearing loans.

 

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 using its proprietary online mobile banking platform. This pilot scheme currently has over 2,200 savers and UGX1.6b in cumulative savings.

 

In the last 6 months, Four One Financials launched a short-term loan scheme for small businesses called MayiCard Business Loan using its proprietary online platform. This pilot has shown some initial success with over 800 loans and a UGX400m loan book since launch.

 

Both pilot schemes are ready to be scaled and the company will be looking for additional investments in Q4 2019.  

 

South Lake Medical Centre - SLMC (Kenya)

 

SLMC is a private healthcare provider in the Naivasha region of Kenya serving predominantly low-income flower farm workers. SLMC operate a 'hub and spoke' model around a 27-bed private referral-level hospital with smaller satellite clinics based on surrounding flower farms and in nearby population centres.

 

This hospital receives around 64,000 patient visits per annum with the capacity to treat three times this number. Currently, SLMC offers a range of in and outpatient services including consultations, laboratory testing, radiology and pharmacy services. Following this investment, SLMC will be expanded to include a surgical unit making it the most advanced hospital at the southern end of Lake Naivasha.  The Naivasha region in Kenya is predominantly populated by low income workers working in the horticultural, agricultural and tourism industries.

 

OUTLOOK

 

Inqo expects to continue benefitting from the improved trading of the Kuzuko Lodge operation and the revenue flow from its three investments in Kenya, Zambia and Uganda as they move into profitability. Inqo is evaluating further new investment opportunities in these countries.

 

The occupancies and average room rates currently achieved at Kuzuko Lodge in the second six months of the 2018/9 year are very strong with the Lodge experiencing good occupancy levels in the final quarter of 2019.  The trend is expected to continue into 2020 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 a number of countries who have not visited the property before including North American.

 

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 65 full-time and 12 part-time and contracted staff employed.  51 of the full-time staff are employed from local communities.

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

·      Conservation of 3 endangered species.

·   50 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.

·    85,000 beehives in the field providing 10,000 farmers with increased income.  Inqo has acquired the right to the income generated from 6 500 of these hives.

·     The Mazima Retirement Plan now has some 2,200 active members having grown from 430 active members in August 2016.  Members are earning an average return of 11.5% on their investments currently. The MayiCard Business Loan has 800 clients since launch.

·    In September 2018, Kuzuko Lodge partnered with the Ashia Foundation in a project that set out to re-wild captive cheetah and return them to the cheetah metapopulation.  We are pleased to report that the first two cheetahs in this program have been fully wilded and been released in third party reserves in South Africa under the guidance of the Endangered Wildlife Trust.

 

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 Group financial statements for the six months ended 31 August 2019. KPMG has performed a review of the condensed consolidated interim financial statements for the six months ended 31 August 2019.  A copy of these condensed interim financial statements and KPMG's review report will be available at the Company's offices on 25 November 2019.

DIVIDEND

 

The company has not declared a dividend for the period ended 31 August 2019.

 

 

K.S Tan                                                                       C.J Bertie

Chairman                                                                 Chief Financial Officer

 

 

Enquiries:

 

Inqo Investments Limited

 

Chris Bertie, Chief Financial Officer and Chief Operating Officer

Tel: +27 (0)83 6254069

 

 

Shard Capital Partners LLP

 

ISDX 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 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Group

 

 

 

 

(Reviewed)

 

(Reviewed)

 

(Audited)

 

 

Six Months

 

Six Months

 

Year ended

 

 

ended 31

 

ended 31

 

28 February

 

 

August 2019

 

August 2018

 

2019

 

 

 

 

 

 

 

 

 

(6 months)

 

(6 months)

 

(12 months)

 

 

R'000

 

R'000

 

R'000

 

 

 

 

 

 

 

Revenue

 

8 739

 

             8 371

Cost of sales

 

(1 199)

 

          (1 456)

Gross profit

 

7 540

 

             6 915

 

 

 

Other income

 

137

 

                   197  

Personnel expenses

(4 048)

 

 

Depreciation

(1 532)

 

 

Listing expenses

(421)

 

 

Professional fees

(249)

 

 

Directors emoluments

(389)

 

 

Selling and administrative expenses

(6 883)

 

        

Operating loss

 

(5 845)

 

          (4 624)

 

 

 

Fair value adjustment

 

                   -  

 

                   -  

 

 

 

Net financing income                              

 

248

 

                  509

Finance income

 

340

 

559

Finance costs

 

(92)

 

(50)

 

 

 

 

Loss before taxation

 

(5 597)

 

          (4 115)

Taxation

 

450

 

(4)

Loss for the year

 

(5 147)

 

          (4 119)

Other comprehensive income

 

 

 

                                    

 

                   -  

 

                   -  

Revaluation of land

 

                   -  

 

                   -  

Deferred tax on revaluation

 

                   -  

 

                   -  

 

 

 

Total comprehensive income for the period

 

(5 147)

 

          (4 119)

 

 

 

 

Loss per share (cents)

 

(0.29)

 

(0.24)

 

Diluted Loss per share (cents)

 

-

 

(0.24)

 

 

Inqo Investments Limited Group

 

 

 

 

 

 

Condensed consolidated statement of financial position

 

 

 

 

At 31 August 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Group

 

 

 

 

(Reviewed)

 

(Reviewed)

 

(Audited)

 

 

31 August

 

31 August

 

28 February

 

 

2019

 

2018

 

2019

 

 

R'000

 

R'000

 

R'000

Assets

 

 

 

 

 

 

Non-current assets

 

145 211

 

Property, plant and equipment

 

137 833

 

Intangible assets

 

11

 

Right of use asset

 

997

 

Other Investments

 

3 359

 

Loan Receivables

 

3 011

 

 

 

 

 

Current assets

 

33 595

 

Inventories

 

866

 

Trade and other receivables

 

3 573

 

Biological assets

 

7 937

 

Cash and cash equivalents

 

21 219

 

 

 

 

 

Total assets

 

178 806

 

 

 

 

 

Equity and liabilities

 

 

 

 

Capital and reserves

 

 

 

 

Ordinary share capital

 

71 809

 

Share premium

 

86 294

 

Revaluation reserve

 

73 153

 

Accumulated loss

 

(69 796)

 

Equity attributable to equity holders of Inqo Investments Limited

 

161 460

 

Non-controlling interest

 

(101)

 

Total equity

 

161 359

 

 

 

 

 

Non-current liabilities

 

8 284

 

Loans from related parties

 

168

 

Other long term loans

 

647

 

Deferred taxation

 

6 436

 

Debentures

 

193

 

Finance lease liability

 

840

 

 

 

 

 

Current liabilities

 

9 163

 

Trade and other payables

 

8 240

 

Finance lease liability

 

166

 

Provision

 

757

 

 

 

 

 

Total liabilities

 

17 447

 

 

 

 

 

Total equity and liabilities

 

178 806

 

 

 

 

 

 

 

 

 

Inqo Investments Limited Group

Unaudited interim financial information for the six months ended 31 August 2019

 

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 conjunction with the Group's last annual consolidated financial statements as at and for the year ended 28 February 2019 ('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 information has been extracted from Inqo's unaudited condensed consolidated interim financial statements for the six months ended 31 August 2019.

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 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Group

 

 

 

 

(Reviewed)

 

(Reviewed)

 

(Audited)

 

 

Six Months

 

Six Months

 

Year ended

 

 

ended 31

 

ended 31

 

28 February

 

 

August 2019

 

August 2018

 

2019

 

 

 

 

 

 

 

 

 

(6 months)

 

(6 months)

 

(12 months)

 

 

 

 

 

 

 

Earnings/(loss) per share

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss per share (cents)

 

(0.29)

 

Diluted loss per share (cents)

 

-

 

Loss attributable to equity shareholders (R'000)

 

(4 236)

 

Weighted average number of shares in issue for normalised EPS calculation

 

14 361 839

 

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

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                 

 

 


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