Final Results

Inqo Investments

27/07/2016 17:44

RNS Number : 4472F

Inqo Investments Limited

27 July 2016

Inqo Investments Limited

("Inqo" or the "Company")

Preliminary results for the year ended 29 February 2016

CHAIRMAN AND CHIEF EXECUTIVE STATEMENT

Inqo Investments Limited (ISDX: INQO) 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 period since October 2014 to date has been one of consolidation for Inqo. Between October 2014 and April 2016, we renegotiated loans with institutions which will result in a total saving of R30 million in interest repayments and during this period we listed Inqo on the ISDX Growth Market in London.

The results for this year reflect a loss before tax for the year of R4,718,271 (2015: Profit of R8,974,270) equating to 0.62 cents per share with revenues of R10,650,195 (2015: R11,249,300). The company incurred listing expenses amounting to R1.5 million during the year and these are viewed as once-off costs that will not recur each year. Finance costs during the year amounted to R1.1 million mainly related to the convertible loans which were converted to equity before year end and this is also a non-recurring expense. The loan negotiations and the convertible loan restructuring has resulted in the company being free of any borrowings and loans.

Investee companies

Kuzuko Lodge

The trading losses at Inqo group level are mainly attributable to losses at Kuzuko Lodge, Inqo's main trading subsidiary of R950,638 (2014: R1,992,798). Whilst the lodge operation has essentially been profitable, conservation and habitat rehabilitation work on the reserve continues to require funding, resulting in losses. Kuzuko Lodge continues to see improvements in its trading position reflecting a reduced loss in comparison to the previous year. Our main thrust with Kuzuko Lodge in the 2015/6 year was to increase the average rate achieved per room to provide a platform to get the operation to profitability. We are pleased to report that while the annual occupancy decreased by 8% due to changes in visitor visa requirements affecting the whole industry, the average room rate achieved increased by 30%. We are pleased to report that this trend has continued in the first quarter of 2016/7. Kuzuko Lodge is now in its 8th season and we expect to see further improvements as we continue to build its reputation.

Spekboom Trading

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 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

We concluded negotiations in the first quarter with Bee Sweet Honey Limited a Zambian commercial producer of honey with 60,000 beehives and 12,000 farmers in its programme. Output for 2016 is expected to be 200 tons of honey for export. Inqo invested an initial tranche of US$60000 in this venture that will allow Bee Sweet to acquire and supply an additional 5,000 hives and recruit 500 new farmers to the honey production programme. The bee hives are harvested twice a year and Inqo expects to earn its first revenues in the next financial year.

Medical Diagnostech

The company manufactures rapid point-of-care (POC) tests for HIV/AIDS, malaria, drugs of abuse and pregnancy.

The company produced 800,000 test kits in 2015/6.

OUTLOOK

In the current year Inqo expects to benefit from the improved trading at Kuzuko Lodge and first revenues from its Bee Sweet Honey investment.

The improved room rates that have been achieved and the increased occupancies experienced at Kuzuko Lodge in the latter part of the 2015/6 year and the first quarter of 2016/7 are expected to continue on the back of the fact that the Rand remains weak against other currencies, making South Africa an attractive destination for tourists.

A factor that must be borne in mind in the current 2016/7 year is that the DBSA long term loan was settled in April 2016, being the final part of the restructuring exercise that the group entered into in 2015. The settlement of R15 million made and the resulting write back of interest historically charged of a further R14 million that will arise as a result of the loan settlement will strengthen the financial position of the company and reflect positively on the groups trading results for the 2016/7 year.

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 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.

 Reforestation of 500 acres of degraded land with spekboom providing work for 81 part time staff.

 800,000 low cost medical diagnostic tests for infectious diseases manufactured and supplied.

 60,000 beehives in the field providing 12,000 farmers with increased income.

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

During the year the group and company identified that the revaluation reserve has always excluded deferred tax relating to the land revaluation, whereas the revaluation reserve should have been reflected net of deferred tax. In prior years, the company and group had been in an overall deferred tax asset position which was not recognised due to the uncertainty of the timing of future taxable income. However, due to the change in the capital gains tax rate notified in the South African February 2016 budget speech, the company and group moved into a deferred tax liability position at 29 February 2016.

The financial information set out in this announcement does not constitute statutory financial statements. This financial information has been extracted from Inqo's audited group financial statements for the year ended 29 February 2016. A copy of these audited financial statements will be available on the company website by 31 July 2016.

DIVIDEND

The company has not declared a dividend for the year ended 29 February 2016.

K.S Tan
C.J Bertie
Chairman
Chief Financial Officer

For further information please contact:

Inqo Investments Limited
Chris Bertie, Chief Financial Officer
Tel: +27 (0)83 6254069
and Chief Operating Officer
Shard Capital Partners LLP
ISDX Corporate Adviser and Broker
Tel: +44 (0)20 7186 9948
Dr Wang Chong


Statement of comprehensive income

for the year ended 29 February 2016

Restated
Audited
Year ended 29 February
2016
Audited
Year ended 28 February
2015
R'000
R'000
Revenue
10650
11249
Cost of Sales
(1650)
(1799)
Gross profit
9000
9450
Other income
1 134
14 977
Selling and administrative expenses
(14795)
(15809)
Operating (loss)/profit
(4661)
8618
Net financing (costs)/income
(57)
356
(Loss)/profit before taxation
(4718)
8974
Taxation
259
905
(Loss)/profit for the year
(4 459)
9879
Other comprehensive income
(2896)
3946
Revaluation of land
-
4851
Deferred tax on revaluation
(2896)
(905)
Total comprehensive income for the year
(7 355)
13825
(Loss)/earnings per share (cents)
(0.62)
0.48
Diluted (loss)/earnings per share (cents)
(0.59)
0.41


Statement of financial position

at 29 February 2016

Audited
29 February
2016
Restated
Audited
28 February
2015
Assets
R'000
R'000
Non-current assets
119110
118714
Property, plant and equipment
119082
118687
Intangible assets
28
27
Current assets
31803
23078
Inventories
389
742
Trade and other receivables
4806
2828
Biological assets
2950
2683
Cash and cash equivalents
23658
16825
Total assets
150913
141792
Equity and liabilities
Capital and reserves
Ordinary share capital
58198
28813
Share premium
58228
13266
Revaluation reserve
60200
63096
Accumulated loss
(65 871)
(61546)
Equity attributable to equity holders of Inqo Investments Limited
110 755
43629
Non-controlling interest
(133)
1
Total equity
110 622
43630
Non-current liabilities
17 759
82950
Loans from related parties
414
28153
Other long term loans
538
34617
External loans and borrowings
13977
19987
Deferred tax liability
2 637
-
Debentures
193
193
Current liabilities
22532
15212
Trade and other payables
6277
3849
Provision
252
353
External loans and borrowings - current portion
16003
11010
Total liabilities
40 291
98162
Total equity and liabilities
150913
141792

Statement of changes in equity

for the year ended 29 February 2016

Share capital
Share premium
Revaluation reserve
Accumulated loss
Non-controlling interest
Total
R'000
R'000
R'000
R'000
R'000
R'000
Restated balance at 28 February 2015
28813
13266
63096
(61546)
1
43630
Shares issued
29385
44962
-
-
-
74347
Loss for the year
-
-
(2896)
(4 325)
(134)
(7 355)
Balance at 29 February 2016
58198
58228
60200
(65 871)
(133)
110 622
Restated balance at 28 February 2014
28813
13266
59150
(71425)
1
29805
Opening balance as previously reported
72726
(85001)
29 805
Prior year error
(13576)
13576
-
Loss for the year
-
-
-
9 879
9879
Loss as previously reported
8974
8974
Prior year error
905
905
Other comprehensive income
3946
-
3946
Other comprehensive income as previously reported
4851
-
-
4851
Prior year error
-
-
(905)
-
-
(905)
Restated balance at 28 February 2015
28813
13266
63096
(61546)
1
43630

Statement of cash flows

for the year ended 29 February 2016

Audited for the year ended 29 February
2016
Audited
for the year ended 28 February 2015
R'000
R'000
Cash (utilised) /generated by operations
(3938)
9744
Net cash (outflow)/inflow from operating activities
(3938)
9744
Cash flows from investing activities
Acquisition of biological assets
-
(107)
Acquisition of property, plant and equipment and intangible assets
(1758)
(1424)
Net cash outflow from investing activities
(1758)
(1531)
Cash flows from financing activities
Loans and borrowings received/(repaid)
29
(19916)
Shares issued to new shareholder for cash
12500
-
Loans from related parties repaid
-
(2738)
Net cash inflow/(outflow) from financing activities
12529
(22654)
Net movement in cash and cash equivalents
6833
(14441)
Cash and cash equivalents at beginning of year
16825
31266
Cash and cash equivalents at end of year
23658
16825


This information is provided by RNS

The company news service from the London Stock Exchange

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