RNS Number : 5113I
Inqo Investments Limited
20 June 2017
INQO INVESTMENTS LIMITED
AUDITED GROUP RESULTS FOR THE YEAR ENDED 28 FEBRUARY 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 group started a process of consolidating its financial position in 2014 and we are pleased to report that the various negotiations entered into with lender institutions have been concluded resulting in a R14m write-back and a stronger balance sheet with no debt.
The results for the year reflect a profit before tax of R10,259,510 (2016: Loss of R4,718,271) equating to R0.61 cents per share. Revenues increased by 59% from R10,650,195 in 2016 to R17,026,098 in 2017.
The Selling & Administration expenses for the group amounted to R19,456,853 in 2016/7, the Kuzuko costs amounted to R13,837,149 while those of Inqo amounted to R5,869,837. The Kuzuko costs are traditional costs incurred by an operating unit in the game lodge hospitality industry. The material cost contributors for Inqo were depreciation R2,082,399, listing costs R572,019, directors emoluments R636,000, audit & professional fees R642,169 and impairments R629,169.
Investee companies
Kuzuko Lodge (South Africa)
The improved profitability of the group is mainly attributable to the Kuzuko Lodge operation, Inqo's main trading subsidiary which earned a profit before tax for the year of R783,706 (2016: Loss of R950,638).
The profit turnaround has come about from the business being able to achieve both improved occupancies and improved average room rates. As Kuzuko enters its ninth season of trading we expect this profit turnaround achieved in 2016/7 to continue into the future.
Conservation costs remain high as Kuzuko continues to rehabilitate the game reserve as well as the gradual introduction of more animals.
Spekboom Trading (South Africa)
The contract entered into with the Department of Environmental Affairs (DEA) to fund the planting of Spekboom on the Kuzuko Game Reserve to achieve reforestation of the Reserve and to create jobs in the local community has come to an end. During the term of the contract some 500 acres of degraded land were replanted with Spekboom and in the process 100 job opportunities were created.
We are currently investigating other opportunities to continue the reforestation program.
Bee Sweet Honey (Zambia)
We concluded negotiations in the first quarter with Bee Sweet Honey Limited a Zambian commercial producer of honey. The number of beehives placed by the company increased by 50% taking the total to 90,000 beehives with 13,000 farmers in its programme. Output for 2016 was around 220 tons of honey for export. Inqo invested an initial tranche of US$60,000 in this venture to allow Bee Sweet to acquire and supply an additional 3,000 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.
Four One Financial Services Limited (Uganda)
In April 2017, we 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 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 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 the improved trading from the Kuzuko Lodge operation and the first revenues from each of the Bee Sweet Honey and Four One Financial Services Investment.
The improved room rates that have been achieved and the increased occupancies experienced at Kuzuko Lodge in the latter part of the 2016/7 year and the first quarter of 2017/8 are expected to continue on the back of the fact that the Rand remains weak against other currencies making South Africa an attractive destination of travel.
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.
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.
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 audited group financial statements for the year ended 28 February 2017. A copy of these audited financial statements will be available on the company website by 21 June 2017.
DIVIDEND
The company has not declared a dividend for the year ended 28 February 2017.
K.S Tan C.J Bertie
Chairman Chief Financial Officer
19 June 2017
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
Statements of profit or loss and other comprehensive income
for the year ended 28 February 2017
Audited
Audited
28 Feb 17
29 Feb 16
R'000
R'000
Revenue
17026
10651
Cost of Sales
(2390)
(1650)
Gross profit
14636
9001
Other income
14042
867
Selling and administrative expenses
(19457)
(14796)
Operating profit/(loss)
9221
(4928)
Fair value adjustment
502
268
Net financing income/(costs)
536
(58)
Finance income
581
997
Finance expense
(45)
(1055)
Profit/(loss) before taxation
10259
(4718)
Taxation
(2 868)
259
Profit/(loss) for the year
7 391
(4459)
Profit/(loss) attributable to:
Equity holders
7 085
(4 326)
Non-controlling interest
306
(133)
7 391
(4459)
Other comprehensive income
10575
(2896)
Revaluation of land
13627
-
Deferred tax on revaluation
(3052)
(2896)
Total comprehensive income/(loss) for the year
17 966
(7355)
Total comprehensive income attributable to:
Equity holders
17 660
(7222)
Non-controlling interest
306
(133)
17 966
(7355)
Earnings/(loss) per share (cents)
0.61
(0.53)
Diluted earnings/(loss) per share (cents)
0.58
(0.50)
Statements of financial position
for the year ended 28 February 2017
Audited
Audited
28 Feb 17
29 Feb 16
R'000
R'000
Assets
Non-current assets
132 870
119110
Property, plant and equipment
131 898
119082
Intangible assets
18
28
Loans to subsidiaries
-
-
Other investments
954
-
Investments in subsidiaries
-
-
Current assets
10655
31803
Inventories
486
389
Trade and other receivables
3 115
4806
Biological assets
3512
2950
Cash and cash equivalents
3542
23658
Total assets
143525
150913
Equity and liabilities
Capital and reserves
Ordinary share capital
58198
58198
Share premium
58228
58228
Revaluation reserve
70774
60200
Accumulated loss
(58786)
(65871)
Equity attributable to equity holders of Inqo Investments Limited
128414
110755
Non-controlling interest
173
(133)
Total equity
128587
110622
Non-current liabilities
9753
17759
Loans from related parties
436
414
Other long term loans
566
538
External loans and borrowings
-
13977
Deferred tax liability
8558
2637
Debentures
193
193
Current liabilities
5185
22532
Trade and other payables
4933
6277
Provision
252
252
External loans and borrowings - current portion
-
16003
Total liabilities
14938
40291
Total equity and liabilities
143525
150913
Statements of changes in equity
for the year ended 28 February 2017
Share capital
Share premium
Revaluation reserve
Accumulated loss
Non-controlling interest
Total
R'000
R'000
R'000
R'000
R'000
R'000
Balance at 28 February 2016
58198
58228
60200
(65871)
(133)
110622
Profit for the year
-
-
10574
7 085
306
17 965
Balance at 28 February 2017
58198
58228
70 774
(58 786)
173
128587
Restated balance at 28 February 2015
28813
13266
63096
(61545)
-
43630
Share issue
29385
44962
-
-
-
74347
Loss for the year
-
-
(2 896)
(4 326)
(133)
(7355)
58198 075
58227 703
60199 652
(65871 034)
(132561)
110621 835
Restated balance at 29 February 2016
58198
58228
60200
(65871)
(133)
110622
Statements of cash flows
for the year ended 28 February 2017
Audited
Audited
28 Feb 17
29 Feb 16
R'000
R'000
Cash utilised by operations
(986)
(4004)
Net cash outflow from operating activities
(986)
(4004)
Cash flows from investing activities
Increase in loans to subsidiary
-
-
Acquisition of other investments
(954)
-
Acquisition of property, plant and equipment and intangible assets
(2288)
(1757)
Disposal of property, plant and equipment
66
-
Net cash outflow from investing activities
(3176)
(1757)
Cash flows from financing activities
Loans and borrowings (repaid)/ received
(15976)
94
Shares issued to new shareholder for cash
-
12500
Loans from related parties received
22
-
Net cash (outflow)/inflow from financing activities
(15954)
12594
Net movement in cash and cash equivalents
(20 116)
6833
Cash and cash equivalents at beginning of year
23658
16825
Cash and cash equivalents at end of year
3 542
23658
This information is provided by RNS
The company news service from the London Stock Exchange
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