TIDMINQO
RNS Number : 5679U
Inqo Investments Limited
26 November 2019
Inqo Investments Limited
Unaudited Group Results for the six month period ended 31 August
2019
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 minimal
debt. Cash reserves for the investment stood at R21 million, with
total assets of R179 million on the balance sheet.
The results for the six months under review showed revenues of
R8.739m (August 2018: R8.367m) but a loss after tax of R5.147m
(August 2018: a loss of R4.118m). The loss for the period is
reported after accounting for the following operating costs:
August 2019 August 2018
Depreciation 1 531 521 1 268 207
Listing expenses 421 117 115 145
Directors fees 388 563 393 759
Professional fees 248 887 212 958
Inqo's revenues are derived primarily from its main subsidiary,
Kuzuko Lodge. In the six month period under review, revenue grew
from R8.367m to R8.738m, a rise of 4% during the low season where
turnovers are traditionally low and having closed for a three week
period for annual renovations. The marketing efforts that kicked
off in 2016 to boost room occupancy and revenues have continued to
be effective, resulting in improved revenues this year to date. We
expect this trend to be maintained into the high season during the
next 6 months.
During the last two financial years some of the Inqo
shareholders committed to a private placement of shareholder funds
of GBP2.5 million. The final instalment of these funds was received
during the period under review.
INVESTEE COMPANIES
Kuzuko Lodge (South Africa)
The Lodge traded at a loss for the six months to date reflecting
a loss of R3.390m (August 2018: R3.640m). The negative impact of
the Cape Town water shortage experienced in the 2019/20 year has
been overcome and trading experienced by the lodge has returned to
expected levels, with the lodge operating as financially
budgeted.
The dining area of the lodge building was extended by 260 square
metres during the winter period. Concurrently with the building
improvements substantial sums were also spent on repairs and
maintenance to the lodge. The combined impact of the building
upgrade and the repairs and maintenance led to some reservation
cancellations which caused lower than expected revenues for the
year to date. Improved occupancy levels are anticipated for the
rest of 2019/20 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) and interested 3(rd) parties to obtain funding to
extend the planting of spekboom on the Kuzuko Game Reserve. When an
agreement is reached 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 further experiments to
test alternative planting methodologies for spekboom for future
plantings.
Bee Sweet Honey (Zambia)
Bee Sweet Honey Limited is a Zambian commercial producer of
honey with 85 000 bee hives and around 10,000 farmers in its
program. The bee hives are harvested twice a year in May and
November each year.
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 half-year harvest yield in May was 285 tonnes (2018:
262 tonnes) of honey.
Four-One Financial Services Limited (Uganda)
Inqo has made two investments into Four-One Financial Services
Limited, a Ugandan based micro-pensions and small business loans
company, which manages the Mazima Voluntary Individual Retirement
Benefits Scheme. The bulk of the investment was by way of interest
bearing loans.
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 using its proprietary online mobile banking platform. This
pilot scheme currently has over 2,200 savers and UGX1.6b in
cumulative savings.
In the last 6 months, Four One Financials launched a short-term
loan scheme for small businesses called MayiCard Business Loan
using its proprietary online platform. This pilot has shown some
initial success with over 800 loans and a UGX400m loan book since
launch.
Both pilot schemes are ready to be scaled and the company will
be looking for additional investments in Q4 2019.
South Lake Medical Centre - SLMC (Kenya)
SLMC is a private healthcare provider in the Naivasha region of
Kenya serving predominantly low-income flower farm workers. SLMC
operate a 'hub and spoke' model around a 27-bed private
referral-level hospital with smaller satellite clinics based on
surrounding flower farms and in nearby population centres.
This hospital receives around 64,000 patient visits per annum
with the capacity to treat three times this number. Currently, SLMC
offers a range of in and outpatient services including
consultations, laboratory testing, radiology and pharmacy services.
Following this investment, SLMC will be expanded to include a
surgical unit making it the most advanced hospital at the southern
end of Lake Naivasha. The Naivasha region in Kenya is predominantly
populated by low income workers working in the horticultural,
agricultural and tourism industries.
OUTLOOK
Inqo expects to continue benefitting from the improved trading
of the Kuzuko Lodge operation and the revenue flow from its three
investments in Kenya, Zambia and Uganda as they move into
profitability. Inqo is evaluating further new investment
opportunities in these countries.
The occupancies and average room rates currently achieved at
Kuzuko Lodge in the second six months of the 2018/9 year are very
strong with the Lodge experiencing good occupancy levels in the
final quarter of 2019. The trend is expected to continue into 2020
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 a number of countries
who have not visited the property before including North
American.
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
full-time and 12 part-time and contracted staff employed. 51 of the
full-time 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 entertained 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.
-- 85,000 beehives in the field providing 10,000 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 2,200 active members
having grown from 430 active members in August 2016. Members are
earning an average return of 11.5% on their investments currently.
The MayiCard Business Loan has 800 clients since launch.
-- In September 2018, Kuzuko Lodge partnered with the Ashia
Foundation in a project that set out to re-wild captive cheetah and
return them to the cheetah metapopulation. We are pleased to report
that the first two cheetahs in this program have been fully wilded
and been released in third party reserves in South Africa under the
guidance of the Endangered Wildlife Trust.
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 2019. KPMG
has performed a review of the condensed consolidated interim
financial statements for the six months ended 31 August 2019. A
copy of these condensed interim financial statements and KPMG's
review report will be available at the Company's offices on 25
November 2019.
DIVID
The company has not declared a dividend for the period ended 31
August 2019.
K.S Tan C.J Bertie
Chairman Chief Financial Officer
Enquiries:
Inqo Investments Limited
Chris Bertie, Chief Financial Officer and Tel: +27 (0)83 6254069
Chief Operating Officer
Shard Capital Partners LLP
ISDX Corporate Adviser and broker
Dr Wang Chong Tel: +44 (0)20 7186
9948
Inqo Investments Limited
Group
Condensed consolidated statement of profit or loss and other comprehensive
income
For the six months ended 31 August
2019
Group
(Reviewed) (Reviewed) (Audited)
Six Months Six Months Year ended
ended 31 ended 31 28 February
August 2019 August 2018 2019
(6 months) (6 months) (12 months)
R'000 R'000 R'000
Revenue 8 739 8 371 23 796
Cost of sales (1 199) (1 456) (3 459)
-------------------- ---------------------- ---------------------
Gross profit 7 540 6 915 20 337
Other income 137 197 853
Personnel expenses (4 048) (4 109) (8 176)
Depreciation (1 532) (1 268) (2 697)
Listing expenses (421) (115) (834)
Professional fees (249) (213) (621)
Directors emoluments (389) (394) (896)
Selling and administrative
expenses (6 883) (5 637) (12 495)
-------------------- ---------------------- ---------------------
Operating loss (5 845) (4 624) (4 529)
Fair value adjustment - - 1 178
Net financing income 248 509 850
Finance income 340 559 1 060
Finance costs (92) (50) (210)
Loss before taxation (5 597) (4 115) (2 501)
Taxation 450 (4) 638
-------------------- ----------------------
Loss for the year (5 147) (4 119) (1 863)
-------------------- ---------------------- ---------------------
Other comprehensive
income
- - 2 379
Revaluation of land - - 3 065
Deferred tax on revaluation - - (687)
Total comprehensive
income for the period (5 147) (4 119) 516
==================== ====================== =====================
Loss per share (cents) (0.29) (0.24) (0.15)
Diluted Loss per share
(cents) - (0.24) (0.15)
Inqo Investments Limited
Group
Condensed consolidated statement of
financial position
At 31 August 2019
Group
(Reviewed) (Reviewed) (Audited)
31 August 31 August 28 February
2019 2018 2019
R'000 R'000 R'000
Assets
Non-current assets 145 211 135 355 137 201
Property, plant and
equipment 137 833 131 629 135 555
Intangible assets 11 16 15
Right of use asset 997 - -
Other Investments 3 359 1 691 1 631
Loan Receivables 3 011 2019 -
Current assets 33 595 18 702 43 690
Inventories 866 881 911
Trade and other receivables 3 573 2 870 23 513
Biological assets 7 937 2 618 7 708
Cash and cash equivalents 21 219 12 333 11 558
Total assets 178 806 154 057 180 891
=========== ===================== =====================
Equity and liabilities
Capital and reserves
Ordinary share capital 71 809 65 004 70 559
Share premium 86 294 70 774 83 429
Revaluation reserve 73 153 70 774 73 153
Accumulated loss (69 796) (66 672) ( 65 557)
----------- --------------------- ---------------------
Equity attributable
to equity holders of
Inqo Investments Limited 161 460 139 880 161 584
Non-controlling interest (101) (334) 808
--------------------- ---------------------
Total equity 161 359 139 546 162 32
Non-current liabilities 8 284 7 810 7 872
----------- --------------------- ---------------------
Loans from related parties 168 165 168
Other long term loans 647 610 625
Deferred taxation 6 436 6 842 6 886
Debentures 193 193 193
Finance lease liability 840 - -
----------- --------------------- ---------------------
Current liabilities 9 163 6 701 10 627
----------- --------------------- ---------------------
Trade and other payables 8 240 5 878 10 037
Finance lease liability 166 - -
Provision 757 823 590
Total liabilities 17 447 14 511 18 499
Total equity and liabilities 178 806 154 057 180 891
=========== ===================== =====================
Inqo Investments Limited Group
Unaudited interim financial information for the six months ended 31
August 2019
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 2019 ('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 2019.
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 2019
Group
(Reviewed) (Reviewed) (Audited)
Six Months Six Months Year ended
ended 31 ended 31 28 February
August 2019 August 2018 2019
(6 months) (6 months) (12 months)
Earnings/(loss) per share
Loss per share (cents) (0.29) (0.24) (0.15)
Diluted loss per share
(cents) - (0.24) (0.15)
Loss attributable to equity
shareholders (R'000) (4 236) (3 125) (2011)
Weighted average number
of shares in issue for 13 000
normalised EPS calculation 14 361 839 727 13 000 727
Weighted average number
of shares in issue for
diluted normalised EPS 13 610
calculation - 618 -
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END
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