Inqo Investments Ltd - Inqo Investments Ltd HY Results to 31 August 2018
RNS Number : 4084G
Inqo Investments Limited
06 November 2018
 

Inqo Investments Limited

 

Unaudited Group Results for the six month period ended

31 August 2018

 

 

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 no debt. Cash reserves for investment stood at R12m with total assets of R154m on the balance sheet.

 

The results for the six months under review showed a loss, after tax of R4 118 883 (August 2017: a loss of R4 045 783) of which R1 261 577 (2017: R1 029 799) was depreciation.

 

Inqo's revenues are derived primarily from its main subsidiary, Kuzuko Lodge.  In the six month period under review the revenues have grown from R7 605 499 to R8 367 664, a rise of 10% even during the low season  where turnovers are traditionally low and having closed for a three week period for annual maintenance. The marketing efforts that kicked off in 2016 to boost room occupancy have resulted in improved revenues this year. We expect this to flow through into the high season during the next 6 months.

  

 

INVESTEE COMPANIES

 

Kuzuko Lodge (South Africa)

 

The Lodge traded at a loss for the six months to date reflecting a loss of R3 640 938 (August 2017: six month period R2 006 939). Tourism to South Africa generally has been affected by the water shortage in Cape Town for the past 12 months. This has also had some negative effect on Kuzuko's trading.

 

Substantial sums were spent on repairs and maintenance on the property contributing to the increase loss compared to 2017. Improved occupancy levels are anticipated for the rest of 2018/9 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) 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 replanted 500 acres of spekboom on degraded land.

 

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

   

Bee Sweet Honey (Zambia)

 

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 harvest yield in May was 262 tonnes (2017: 133 tonnes) of honey. Inqo's share of the May 2018 crop was 19.7 tonnes (2017: 7.4 tonnes).

 

Four-One Financial Services Limited (Uganda)

 

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

 

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 savings schemes. The Uganda government has licensed Mazima to provide a voluntary savings scheme for such low income earners. Mazima is supervised by a group of 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 their own account managed by the custodian bank, Housing Finance Bank. The investments are managed by AA Financial, a regulated advisor.

 

 

OUTLOOK

 

Inqo expects to continue benefitting from the improved trading of the Kuzuko Lodge operation, the revenue flow from Bee Sweet Honey and the interest flow from Four-One Financial Services Limited.

 

The occupancies and average room rates currently anticipated at Kuzuko Lodge in the second six months of the 2017/8 year are very strong with the Lodge experiencing very good occupancy levels in the final quarter of 2018. The trend is expected to continue into 2019 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 65 fulltime and 12 part-time and contracted staff employed. 51 of the fulltime 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 and nearby farm schools hosted 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.  Inqo has acquired the right to the income generated from 6 500 of these hives.

·      The Mazima Retirement Plan now has some 1200 active members having grown from 430 active members in August 2016. Members are earning an average return of 11.5% on their investments currently.

 

 

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 2018. KPMG has performed a review of the condensed consolidated interim financial statements for the six months ended 31 August 2018. A copy of these condensed interim financial statements and KPMG's review report will be available at the Company's offices on 5 November 2018.

 

 

DIVIDEND

 

The company has not declared a dividend for the period ended 31 August 2018.

 

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

 

 

 

 

 

 

 

 

 

Condensed consolidated statement of profit or loss and other comprehensive income

For the six months ended 31 August 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Group

 

 

 

 

(Reviewed)

 

(Reviewed)

 

(Audited)

 

 

Six Months

 

Six Months

 

Year ended

 

 

ended 31

 

ended 31

 

28 February

 

 

August 2018

 

August 2017

 

2018

 

 

 

 

 

 

 

 

 

(6 months)

 

(6 months)

 

(12 months)

 

 

R'000

 

R'000

 

R'000

 

 

 

 

 

 

 

Revenue

 

             8 371

 

                 7 652

 

            22 963

Cost of sales

 

          (1 456)

 

(1160)

 

            (3 046)

Gross profit

 

             6 915

 

                 6 492

 

            19 917

 

 

 

 

 

 

 

Other income

 

                   197  

 

               -

 

            146

Selling and administrative expenses

        (11 736)

 

              (11 095)

 

          (24 141)

Operating (loss) / profit

 

          (4 624)

 

               (4 603)

 

              (4078)

 

 

 

 

 

 

 

Fair value adjustment

 

                   -  

 

                     -  

 

                 (2052)

 

 

 

 

 

 

 

Net financing income                              

 

                  509

 

                   86

 

                 135

Finance income

 

559

 

                   101

 

166

Finance costs

 

(50)

 

(15)

 

(31)

 

 

 

 

 

 

 

(Loss) / profit before taxation

 

          (4 115)

 

               (4 517)

 

            (5 995)

Taxation

 

(4)

 

              471  

 

            1 720  

(Loss) / profit for the year

 

          (4 119)

 

                 (4 046)

 

              (4 275)

Other comprehensive income

 

 

 

 

 

 

                                       

 

                   -  

 

                     -  

 

            -

Revaluation of land

 

                   -  

 

                     -  

 

            -

Deferred tax on revaluation

 

                   -  

 

                     -  

 

            -

 

 

 

 

 

 

 

Total comprehensive income for the period

 

          (4 119)

 

                 (4 046)

 

            (4 275)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss)/earnings per share (cents)

 

(0.24)

 

(0.29)

 

(0.41)

Diluted (loss)/earnings per share (cents)

 

(0.24)

 

(0.29)

 

(0.41)

 

 

 

 

 

 

 

   

  

 

Inqo Investments Limited Group

 

 

 

 

 

 

Condensed consolidated statement of financial position

 

 

 

 

At 31 August 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Group

 

 

 

 

(Reviewed)

 

(Reviewed)

 

(Audited)

 

 

31 August

 

31 August

 

28 February

 

 

2018

 

2017

 

2018

 

 

R'000

 

R'000

 

R'000

Assets

 

 

 

 

 

 

Non-current assets

 

        135 355

 

          132 849

 

         131 196

Property, plant and equipment

 

        131 629

 

          131 266

 

         129 725

Intangible assets

 

                 16

 

                  14

 

                 15

Other Investments

 

            1 691

 

                1013

 

                1 456

Loan Receivables

 

               2019

 

                  556  

 

                  -  

 

 

 

 

 

 

 

Current assets

 

            18 702

 

            7 291

 

           28 767

Inventories

 

               881

 

                663

 

                730

Trade and other receivables

 

            2 870

 

              2 267

 

             22 668

Biological assets

 

            2 618

 

              3 605

 

             2 463

Cash and cash equivalents

 

               12 333

 

              756

 

             2 906

 

 

 

 

 

 

 

Total assets

 

        154 057

 

          140 140

 

         159 963

 

 

 

 

 

 

 

Equity and liabilities

 

 

 

 

 

 

Capital and reserves

 

 

 

 

 

 

Ordinary share capital

 

          65 004

 

            58 198

 

           65 004

Share premium

 

          70 774

 

            58 228

 

           70 774

Revaluation reserve

 

          70 774

 

            70 774

 

           70 774

Accumulated loss

 

       (66 672)

 

         (62 186)

 

         (63 546)

Equity attributable to equity holders of Inqo Investments Limited

 

        139 880

 

          125 014

 

         143 006

Non-controlling interest

 

            (334)

 

              (472)

 

659

Total equity

 

        139 546

 

          124 542

 

         143 665

 

 

 

 

 

 

 

Non-current liabilities

 

            7 810

 

              9 296

 

             7 815

Loans from related parties

 

               165

 

                436

 

                189

Other long term loans

 

               610

 

                580

 

                595

Deferred taxation

 

            6 842

 

              8 087

 

             6 838

Debentures

 

               193

 

                193

 

                193

 

 

 

 

 

 

 

Current liabilities

 

            6 701

 

              6 302

 

             8 483

Trade and other payables

 

            5 878

 

              6 050

 

             8 336

Provision

 

               823

 

                252

 

                147

Interest bearing loans and borrowings - current portion

 

                 -  

 

-              

 

                  -  

 

 

 

 

 

 

 

Total liabilities

 

          14 511

 

            15 598

 

           16 298

 

 

 

 

 

 

 

Total equity and liabilities

 

        154 057

 

          140 140

 

         159 963

 

 

 

 

 

 

 

 

 

 

Inqo Investments Limited Group

Unaudited interim financial information for the six months ended 31 August 2018

 

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 2018 ('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 2018.

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 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Group

 

 

 

 

(Reviewed)

 

(Reviewed)

 

(Audited)

 

 

Six Months

 

Six Months

 

Year ended

 

 

ended 31

 

ended 31

 

28 February

 

 

August 2018

 

August 2017

 

2018

 

 

 

 

 

 

 

 

 

(6 months)

 

(6 months)

 

(12 months)

 

 

 

 

 

 

 

Earnings/(loss) per share

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss)/earnings per share (cents)

 

(0.24)

 

(0.29)

 

(0.41)

Diluted (loss)/earnings per share (cents)

 

(0.24)

 

(0.29)

 

(0.41)

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

 

 (3 125)

 

           (3 401)

 

            (4761)

Weighted average number of shares in issue for normalised EPS calculation

 

 13 000 727

 

   11 639 615

 

    11 688 093

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

 

 13 610 618

 

   11 755 656

 

    12 282 834

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                 

 

 


This information is provided by RNS, the news service of the . RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
 
END
 
 
NEXEAXFSELAPFFF ]]>