Half-year Report

Inqo Investments

24/11/2016 07:00

RNS Number : 9767P

Inqo Investments Limited

24 November 2016

INQO INVESTMENTS LIMITED

UNAUDITED GROUP RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2016

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 period since October 2014 to date has been a period of consolidation and over this period the group has negotiated loan settlements with our two institutional lenders that have resulted in a R30 million interest saving. The final DBSA transaction was settled in April 2016 and as a result, an interest write-back of R14 million was processed to the income statement. The loan with ECDC was settled in September 2016.

The results for the six month period reflected a profit after tax for the six month period of R6,989,880 (August 2015 six month period: Loss of R3,035,766) equating to R0.60 per share with revenues of R5,324,300 (2015: R3,228,177), a rise of 65%. The improved group results reflected in this six month period to 31 August 2016 have come about as a result of the improved trading at Kuzuko Lodge and the finalisation of the loan restructuring package entered into.

INVESTEE COMPANIES

Kuzuko Lodge

The Lodge traded at a loss for the six months to date reflecting a loss of R1,862,500 (August 2015 six month period: R2,497,774). Trading in the six month period to date has improved year on year. The first six months of our business cycle are the quieter ones and we expect to see substantially improved trading results in the second half of the financial year through the improved occupancies and rates trends that we have experienced and that we see in current advance bookings. Annual occupancy to date at 31 August 2016 shows a 30% improvement compared to 2015.

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 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

Inqo invested US$60,000 in Bee Sweet Honey Limited, a Zambian exporter of honey. Bee Sweet currently have 66,000 bee hives in the field managed by 13,000 farmers. The farmers earned US$108,438 in the May/June season of 2016. Inqo expects to earn its first revenue from the sale of honey in the 2017/8 year. In the period under review 110 tons of honey was sold internationally and 33 tons sold locally.

Medical Diagnostech

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

The company produced 450,000 test kits in the six months to 31 August 2016.

OUTLOOK

Inqo expects to continue to benefit from the improved trading at Kuzuko Lodge while first revenues from its Bee Sweet Honey investment will accrue in the 2017/8 year.

The improved room rates that have been achieved and the increased occupancies experienced at Kuzuko Lodge in the first six months of the current year and the balance of 2016/7 are continuing on the back of the fact that the Rand remains weak against other currencies, making South Africa an attractive destination for tourists.

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 employee 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.

 450,000 low cost medical diagnostic tests for infectious diseases manufactured and supplied in the six months ended 31 August 2016.

 66,000 beehives in the field providing 13,000 farmers with increased income. Farmers earned an average of US$55 in the six month trading period to date.

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 month period ended 31 August 2016. KPMG has performed a review of the condensed consolidated interim financial statements for the six months ended 31 August 2016. A copy of these condensed consolidated interim financial statements and KPMG's review report will be available at the company's registered office by 30 November 2016.

DIVIDEND

The company has not declared a dividend for the period ended 31 August 2016.

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

23 November 2016

Enquiries

Inqo Investments Limited
Mr Chris Bertie, Chief Financial Officer
and Chief Operating Officer
Tel: +27 (0)83 625 4069
Shard Capital Partners LLP
ISDX Corporate Adviser and Broker
Dr Wang Chong
Tel: +44 (0)20 7186 9948

Inqo Investments Limited Group

Unaudited interim financial information for the six months ended 31 August 2016

Basis of preparation

The interim financial statements are prepared in accordance with International Financial Reporting Standards, IAS 34 Interim Financial Reporting, the SAICA Financial Reporting Guides issued by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council and the requirements of the Companies Act of South Africa.

The accounting policies applied in the preparation of these interim financial statements are in terms of International Financial Reporting Standards and are consistent with those applied in the previous annual 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 was prepared under the supervision of Mr C Bertie CA(SA), in his capacity as group financial director.

Inqo Investments Limited Group

Statement of comprehensive income

for the six months ended 31 August 2016

Group
(Reviewed)
Six Months ended 31 August 2016
(Reviewed)
Six Months ended 31 August 2015
(Audited)
Year ended 29 February
2016
(6 months)
R
(6 months)
R
(12 months)
R
Revenue
5324 300
3228 177
10 650 195
Cost of sales
(909 201)
(603 995)
(1 649 670)
Gross profit
4415 099
2624 182
9 000 525
Other income
13976 887
2058 205
867 241
Selling and administrative expenses
(8250 713)
(8107915)
(14 795 348)
Operating profit / (loss)
10141 273
(3425528)
(4 927 582)
Fair value adjustment
-
-
267 200
Net financing income / (costs)
468 675
389 762
(57 889)
Finance income
495 125
1242 660
996 893
Finance costs
(26 450)
(852 898)
(1 054 782)
Profit / (loss) before taxation
10609 948
(3035766)
(4 718 271)
Taxation
(3620068)
-
259 385
Profit / (loss) for the year
6989 880
(3035766)
(4458886)
Other comprehensive income
-
-
(2896203)
Revaluation of land
-
-
-
Deferred tax on revaluation
-
-
(2896203)
Total comprehensive income for the period
6 989 880
(3035 766)
(7355 089)
Earnings/(loss) per share (cents)
0.60
(0.53)
(0.62)
Diluted earnings/(loss) per share (cents)
0.60
(0.39)
(0.59)


Inqo Investments Limited Group

Statement of financial position
at 31 August 2016
Group
(Reviewed)
31 August 2016
(Reviewed)
31 August 2015
(Audited)
29 February
2016
Assets
R
R
R
Non-current assets
120064 534
118007 481
119 109 761
Property, plant and equipment
119088 580
117975 185
119 081 602
Intangible assets
21 660
32 296
28 159
Investment
954 294
-
-
Current assets
11305 982
17974 452
31 803 519
Inventories
583 599
725 038
389 211
Trade and other receivables
2377 775
2109 548
4 806 513
Biological assets
3023 500
2683 000
2 950 200
Cash and cash equivalents
5321 108
12456 866
23 657 595
Total assets
131370 516
135981 933
150 913 280


Equity and liabilities
Capital and reserves
Ordinary share capital
58 198 075
28813 042
58 198 075
Share premium
58227 703
13265 727
58 227 703
Revaluation reserve
60199 652
63095 855
60 199 652
Accumulated loss
(58881 154)
(64581 006)
(65871 034)
Equity attributable to equity holders of Inqo Investments Limited
117744 276
40593 618
110754 396
Non-controlling interest
(132561)
531
(132 561)
Total equity
117611 715
40594 149
110621 835
Non-current liabilities
7416 089
81076 217
17759 198
Loans from related parties
413 779
27 960 525
413779
Other long term loans - convertible
551 967
33945 348
538 257
Interest bearing loans and borrowings
-
18976 887
13 976 887
Deferred taxation
6256 886
-
2636 818
Debentures
193 457
193 457
193 457
Current liabilities
6342 712
14311 567
22 532 247
Trade and other payables
5087 579
2956 799
6 277 114
Provision
251 796
352 543
251 796
Interest bearing loans and borrowings - current portion
1003 337
11002 225
16 003 337
Total liabilities
13758 801
95387 784
40291 445
Total equity and liabilities
131 370 516
135981 933
150 913 280


Inqo Investments Limited Group

Summarised financial information

For the six months ended 31 August 2016

(Reviewed)
Six Months ended 31 August 2016
(Reviewed)
Six Months ended 31 August 2015
(Audited)
Year ended 29 February
2016
(6 months)
(6 months)
(12 months)
Earnings/(loss) per share
Earnings/(loss) per share (cents)
0.60
(0.53)
(0.62)
Diluted earnings/(loss) per share (cents)
0.60
(0.39)
(0.59)
Profit/(loss) attributable to equity shareholders
6989 880
(3035766)
(7221997)
Weighted average number of shares in issue for normalised EPS calculation
11639615
5762606
11555340
Weighted average number of shares in issue for diluted normalised EPS calculation
11677 473
7873156
12093580


This information is provided by RNS

The company news service from the London Stock Exchange

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