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
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