TIDMINQO
RNS Number : 5176X
Inqo Investments Limited
28 August 2020
Inqo Investments Limited
Audited Group Results for the year ended
29 February 2020
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 R15,671,786 with total assets
of R179,402,703 on the balance sheet.
The results for the year under review showed revenue of
R24,422,881 (2019: R23,795,780) but a reflected loss after tax of
R4,788,716 (2019: a loss of R1,862,282), EBITDA at Company level
was -R4,567,788
(-R534,135 in 2019) and at Group level was -R2,016,741(-R653,170
in 2019). The Group loss for the year is reported after accounting
for the following operating costs and accounting adjustments.
February 2020 February 2019
Operating costs (Group)
Depreciation 3,210,687 2,697,401
Listing expenses 596,132 834,420
Directors fees and salaries 867,880 896,947
Professional fees 601,048 621,023
Accounting adjustments
Reduction (2019 an increase) in carrying 1,451,190 (1,178,484)
value of game.
The bulk of the Group's revenue is earned from its main
operating subsidiary, Kuzuko Lodge. In the year under review, the
revenue of the lodge grew from R23,795,780 to R24,422,881 - a year
on year increase of 2.5%. Kuzuko Lodge has retained its policy of
annually increasing its rates annually that was started in 2016 to
boost average rates and room revenue.
The directors of the holding company review the valuation placed
on all income carrying assets to ensure that they reflect their
fair value. The assets that have traditionally resulted in
valuation movements have been the game animals owned by Inqo. The
game prices showed a downward trend during the 2019/20 financial
year resulting in a negative adjustment of R1,451,190 this year
compared to the positive revaluation in 2019 of R1,178,484.
INVESTEE COMPANIES
Kuzuko Lodge (South Africa)
The company showed a small increase in year on year turnover
(2.5%) but showed a loss for the year of R1,716,462 (2019: Loss of
R409,995). The company started the year with very strong forward
bookings but unfortunately cancellations of a large series of tour
bookings from the United Kingdom and cancellations from Australian
guests who decided not to travel during the Australian bush fires
reduced turnover resulting in the trading loss the company
suffered.
Kuzuko Lodge ("KUZUKO") closed down in early April 2020 due to
the lockdown restrictions in South Africa. Prior to the Covid-19
Pandemic Kuzuko was performing well with strong bookings in place
for 2020. The Covid-19 Pandemic has had a severe effect on the
tourism industry globally and at this stage it is unclear what the
full impact will be. Inqo anticipates that disruption through
travel restrictions and the depression on sales due to the Covid-19
related economic downturn will last for a minimum of two years.
Travel restrictions currently predominantly apply to international
travel with the internal travel ban in South Africa was lifted on
the 18(th) of August 2020. Inqo anticipates a pickup in local
bookings, however, these will unfortunately not replace the level
of international bookings normally enjoyed by the property. In an
effort to protect the going concern of the business many fixed
costs have been renegotiated to new lower cost structures and
unfortunately 24% of the workforce has had to be retrenched. Inqo
directors and the management company, Legacy Hotels and Resorts,
are working closely with the Kuzuko management team to control
costs efficiently to protect the viability of the business.
Spekboom Trading (South Africa)
The company has to date replanted some 500 acres of degraded
land with spekboom, an indigenous shrub that naturally sequesters
exceptionally high levels carbon, creating 100 job opportunities in
the process.
The spekboom thicket restoration at Kuzuko is planned to restart
once the Covid-19 pandemic crisis has passed and restoration work
can commence. A memorandum of understanding is being negotiated
with a leading carbon fund to restore 12,500 acres of spekboom on
the Kuzuko property in order to generate carbon credits.
There has recently been a renewed interest in the carbon markets
in response to the growing global awareness of the impact of
climate change with nature-based solutions, such as spekboom, being
a high priority. Inqo anticipates scaling up spekboom restoration
activities once the Covid-19 pandemic situation has resolved
providing valuable employment opportunities as well as a positive
environmental benefit.
A small-scale trial plot has just been planted to test the best
method for growing spekboom based on the latest scientific
research. The next step is to undertake large-scale trials over 40
hectares to refine the cost model of the investment. This will take
place as soon as it is feasible (in the context of Covid-19
lockdowns) to run the trials.
Bee Sweet Honey (Zambia)
Inqo made an initial investment into Bee Sweet Honey's
commercial honey production operation in 2016 with further
investments in 2018 and 2019. Bee Sweet Honey contracts with rural
farmers to manage hives placed on the farmer's land in return for a
share of the harvest.
The Bee Sweet operation has placed 85,512 bee hives in the field
with 10,000 farmers in its programme so far. Inqo has invested in
14,150 hives and receives a return on investment as a profit share
on the yield produced by these hives.
The hives are harvested twice a year, generally in May and
November. The harvest in the 2019/20 year was one of the largest
harvests every yielded.
Inqo earned R260,423 as its share of revenue in the 2019/20
financial year (2019: R178,417).
Four-One Financial Services Limited (Uganda)
Inqo made an initial investment in 2017 and a further investment
in 2018 in Four-One Financial Services Limited, a Ugandan based
company that provides micro-pension, savings and short-term loan
products to the informal sector.
Prior to the Covid-19 pandemic Four-One was performing well
having endured challenging operating conditions for the previous 18
months. The impact of the lockdown and subsequent economic downturn
is likely to be severe in Uganda and so for Four-One. The senior
management team have a strong track record in navigating a
difficult business environment through lean operations and have
developed an agile response to market demands.
Inqo earned interest on its investment in the Four-One Financial
Services operation of R230,236 in 2020 (2019:R218,932).
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. Inqo
invested in SLMC in the current 2019/20 year.
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.
The impact of Covid-19 will be economically challenging for
SLMC. The major industry in the area is cut flowers for the
European market - a sector that has dropped off in the current
climate but with the resumption of international flights sales
levels are returning. In addition, there is a strong vegetable
growing industry in Naivasha that continues to trade and provide
medical appointments for SLMC.
Inqo earned interest of R48,340 on its investment in SLMC in
this 2019/20 year.
Kentegra Biotechnology Limited (Kenya)
Kentegra is a Kenyan based biotechnology firm owned by the US
holding company, Kentegra Biotechnology Holdings LLC. Kentegra
produces pyrethrum, a natural active ingredient from the
chrysanthemum flower, for the use in biocide, agricultural and
pharmaceutical pesticide markets. The chrysanthemum flowers must be
grown in specific conditions in order to produce pyrethrum - these
conditions are found only in a few places around the world,
predominantly East Africa (Tanzania, Uganda, Rwanda and Kenya) and
Australia. With ideal growing conditions, Kenya was once the
largest producer of pyrethrum in the world until management issues
and synthetic alternatives led to a major decline in the
nationalised industry in the early 2000s. In 2013 the Kenyan
government liberalised the pyrethrum sector in a concerted effort
to revive the industry and support the growing worldwide "organic"
movement. Kentegra is one of the six companies in Kenya with a
licence to produce pyrethrum.
Kentegra continues to operate in a scaled down manner and still
report demand during the Covid-19 pandemic. They have recently
installed a new factory that is in the process of being
commissioned ready for production. The senior management team have
responded quickly and professionally drawing up well considered
contingency plans for all eventualities and are re-evaluating the
situation on a continual basis. Kentegra has shown a strong
commitment to both their smallholder farmer partners and their
employees during this time going above and beyond to minimise the
economic impact while ensuring safety for the organisation.
STOCK EXCHANGE LISTING
Aquis Exchange PLC (AIM:AQX) acquired the NEX Exchange in March
2020, which has now been renamed The Aquis Stock Exchange (AQSE).
Shares on AQSE will remain exempt from Capital Gains Tax and
Inheritance Tax as they were on the NEX Exchange.
OUTLOOK
Kuzuko Private Game Reserve - The Lodge saw high occupancy rates
before the Covid-19 pandemic. Once international tourism
re-commences, we are confident that Kuzuko will make a good
recovery although it will take time for confidence to return to the
tourism industry in South Africa.
Spekboom Trading - The Covid-19 pandemic has meant that
re-planting activity had to cease. However, discussions have been
on-going with a number of environment focussed investment funds to
start re-planting of spekboom when lockdown is relaxed
Four-One Financial Services - This business has been especially
hard hit because it serves the informal sector in Uganda with
savings and short-term loans products. The Covid-19 pandemic has
brought the informal sector to a complete standstill with many
traders going out of business. We are pessimistic about the outlook
given the overall economic impact of the pandemic in Uganda.
South Lake Medical Centre - As an essential service, SLMC has
been able to continue trading though footfall to the hospital
declined with patients hesitant about attending the hospital for
treatment due to fear of being infected with COVID.
Kentegra Biotechnology - As an agri business, Kentegra was
deemed an essential service by the Kenyan government and has been
able to continue operations during the lockdown. During this
period, the company has on-boarded a significant number of new
out-grower farmers as well as installed and commissioned their new
factory and made their first export sale.
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 by Kuzuko year on year,
currently 68 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.
-- Re-wild, bred and released 6 cheetahs with new genetics into
the metapopulation in South Africa
-- Reforestation of 500 acres of degraded land with spekboom
providing work for 100 part time staff and sequestering carbon
-- 85,512 beehives in the field with positive impact on bee
populations and retention of forests
-- 2,100+ voluntary low-income savers in micro-pension and loan schemes
-- 74,582 patient visits between January and December 2019
including 110 safe deliveries, 299 HIV patients receiving care and
counselling, 658 infants immunised, 658 mothers receiving nutrition
advice and 1,277 people receiving health education including, COVID
education, through community outreach in Kenya
-- Increased the economic livelihoods of over 17,000 farmers and
their families in Zambia and Kenya
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 29 February 2020. A copy of these
audited financial statements will be available on the company
website by 28 August 2020.
DIVID
The company has not declared a dividend for the year ended 29
February 2020.
K.S Tan C.J Bertie
Chairman Chief Financial Officer
Enquiries
Inqo Investments Limited Tel: +27 (0)83 6254069
Chris Bertie, Chief Financial Officer Email: cbertie@acland.co.za
and Chief Operating Officer
Hobart Capital Markets LLP
AQSE Corporate Adviser and Broker Tel: +44 (0)20 7070 5665
Dr Wang Chong Email: wang.chong@hobartcapital.com
Inqo Investments Limited Group
Condensed consolidated statement of profit or loss and
other comprehensive income
For the year ended 29 February 2020
Audited Audited
Year ended Year ended
29 February 28 February
2020 2019
R R
Revenue 24,422,881 23,795,780
Cost of sales (2,965,088) (3,458,913)
------------- ------------------------
Gross profit 21,457,793 20,336,867
Other income 1,005,940 853,457
Personnel expenses (8,662,421) (8,176,415)
Depreciation (3,210,687) (2,697,401)
Listing expenses (596,132) (834,420)
Professional fees (601,048) (621,023)
Impairment (170,373) (45,900)
Selling and administrative
expenses (14,444,355) (13,344,220)
------------- ------------------------
Operating Loss (5,221,283) (4,529,055)
Inventory write-down (1,442,485) -
Fair value adjustment (6,146) 1,178,484
Net financing income 544,627 849,854
Finance income 713,645 1,060,337
Finance costs (169,018) (210,483)
Loss before taxation (6,125,287) (2,500,717)
Taxation 1,336,571 638,435
-------------
Loss for the year (4,788,716) (1,862,282)
------------- ------------------------
Other comprehensive
income
- 2,378,659
Revaluation of land - 3,065,283
Deferred tax on revaluation - (686,624)
Total comprehensive
income for the period (4,788,716) 516,377
============= ========================
Loss per share (rands) (0.33) (0.15)
Diluted Loss per share
(rands) (0.33) (0.15)
Inqo Investments Limited
Group
Condensed consolidated statement of
financial position
At 29 February 2020
Audited Audited
29 February 28 February
2020 2019
Reclassified*
R R
Assets
Non-current assets 146,063,205 137,200,760
Property, plant and equipment 134,430,943 135,554,591
Intangible assets 9,062 14,853
Right of use asset 893,597 -
Other Investments 10,729,603 1,631,316
Loan receivable - -
------------- --------------
Current assets 27,644,153 43,689,793
Inventories 4,763,430 5,553,630
Trade and other receivables 4,150,071 23,513,461
Biological assets 3,058,866 3,065,012
Cash and cash equivalents 15,671,786 11,557,690
Non-Current Assets held
for sale 5,695,345 -
------------- --------------
Land held for sale 5,695,345 -
------------- --------------
Total Current Assets 33,339,498 43,689,793
-------------
Total assets 179,402,703 180,890,553
============= ==============
Equity and liabilities
Capital and reserves
Ordinary share capital 71,809,195 70,559,195
Share premium 86,294,138 83,428,888
Revaluation reserve 73,152,702 73,152,702
Accumulated loss (70,311,858) (65,557,058)
------------- --------------
Equity attributable to
equity holders of Inqo
Investments Limited 160,944,177 161,583,727
Non-controlling interest 773,635 807,551
--------------
Total equity 161,717,812 162,391,278
Non-current liabilities 7,328,094 7,872,392
------------- --------------
Loans from related parties 167,845 167,846
Other long term loans 668,210 625,139
Deferred taxation 5,549,379 6,885,950
Debentures 193,457 193,457
Finance lease liability 749,203 -
------------- --------------
Current liabilities 10,356,797 10,626,883
------------- --------------
Trade and other payables 9,494,844 10,037,122
Provision 686,559 589,761
Lease liability 175,394
------------- --------------
Total liabilities 17,684,891 18,499,275
Total equity and liabilities 179,402,703 180,890,553
============= ==============
* Game reclassification. Refer notes 14 and 26 in unabridged
Annual Financial Statements
Inqo Investments Limited Group
Statements of cash flows
For the year ended 29 February 2020
Audited Audited
2020 2019 Reclassified*
R R
Cash utilised by operations 14,346,086 (5,953,072)
Finance income 713,645 1,060,377
Finance expense (169,018) (210,483)
------------- --------------------
Net cash outflow from operating
activities 14,890,713 (5,103,218)
------------- --------------------
Cash flows from investing activities
Acquisition of other investments (5,546,279) -
Loan advanced to other investments (1,521,732) (175,493)
Acquisition of property, plant
and equipment (7,786,536) (5,507,255)
Acquisition of intangible
assets - (10,443)
Proceeds on disposal of property,
plant and equipment 26,087 86,422
Net cash outflow from investing
activities (14,828,460) (5,606,769)
------------- --------------------
Cash flows from financing activities
Proceeds from share issue 4,115,250 19,352,305
Repayment of finance lease (106,477) -
Loans and borrowings received - -
Loans from related parties
received 43,070 9,569
------------- --------------------
Net cash inflow from financing
activities 4,051,843 19,361,874
------------- --------------------
Net movement in cash and cash equivalents 4,114,096 8,651,887
Cash and cash equivalents at beginning
of year 11,557,690 2,905,803
Cash and cash equivalents
at end of year 15,671,786 11,557,690
============= ====================
* Game reclassification. Refer notes 14 and 26 in unabridged
Annual Financial Statements
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
NEXFLFEETDITFII
(END) Dow Jones Newswires
August 28, 2020 12:01 ET (16:01 GMT)
Inqo Investments (AQSE:INQO)
Historical Stock Chart
From Apr 2024 to May 2024
Inqo Investments (AQSE:INQO)
Historical Stock Chart
From May 2023 to May 2024