TIDMINQO
RNS Number : 6331V
Inqo Investments Limited
25 July 2018
Inqo Investments Limited
Audited Group Results for the Year ended 28 February 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 has continued its process of consolidating its
financial position that started in 2014 and remains in a good
financial position with no debt.
The Group consolidated revenues showed a 35% increase to
R22,962,689 from R17,026,098 in 2017. The Inqo group results for
the year to date reflect a loss after tax of R4,274,616 (2017: a
profit of R7,390,986 due to a large write back on the settlement of
a loan). The loss takes into account depreciation of R2,447 768 and
operating costs incurred during the year with listing costs of
R721,820, directors emoluments of R676,000 and audit and
professional fees of R675,554. The loss for the year equates to a
loss of R0.41 cents per share.
In Inqo company results, the loan to Kuzuko has historically
been fully impaired due to losses incurred by this main subsidiary
company. However since Kuzuko has achieved two years of profits and
forecasts that it will continue to be profitable, the Kuzuko loan
impairment has been reduced by R3,500,000 in the 2018 year. The
Group annually reviews the value of its income earning assets to
ensure that they reflect fair value. The assets which have
traditionally resulted in valuation movements have been Biological
Assets (game animals owned by Inqo). The market for game has been
very volatile in South Africa and as a result, game prices have
reduced substantially which has resulted in an impairment charge of
R2,052,000 in 2018.
During this financial year, 3 current Inqo shareholders
committed to funding of GBP2.5m payable in 2 equal tranches through
a private placement. The first tranche of funding was received in
the current financial year and the second tranche will be received
in the 2018/9 financial year. These funds will be used for new
investments in our growing pipeline of social impact opportunities
in 2018 and 2019.
INVESTEE COMPANIES
Kuzuko Lodge (South Africa)
The continued financial improvement 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
R1,051,644 (2017: profit of R783,706). Sales increased to
R22,946,724 (2017: R17,026,098) with operating costs of R21,929,592
(2017: R16,227,023). The Kuzuko costs are traditional costs
incurred by a business operating in the hospitality industry.
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 tenth season of trading we expect this
profit turnaround achieved in the last two years of trading 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 from our breeding camps.
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.
Analysis has been undertaken to record survival rates and
efficiency of the different experimental methods of planting and
these learnings will be used in the next re-planting phase.
We are currently investigating other opportunities to continue
the reforestation program.
Bee Sweet Honey (Zambia)
This operation is based in Zambia and operates as a commercial
producer of honey. The company operates in an environment where it
collects and purifies honey with a desire to maximise holistic
benefits to farmers, investors, customers and local
communities.
The Bee Sweet operation has placed 90,000 bee hives in the field
with 13,000 farmers in its program. Inqo earns its return on
investment from the yield of 3 000 hives.
The hives are harvested twice a year, generally in May and
November. Inqo earned revenue from the May 2017 harvest but not
from the November/December harvest because torrential rain damaged
the bulk of the honey crop. From its first harvest, Inqo earned
R41,438 as its share of revenue from the proceeds of the May 2017
honey crop.
Four One Financial Services Limited (Uganda)
In April 2017, Inqo 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.
Over the 18 months since its launch, the scheme has attracted
over 1,100 savers with a fund size of UGX 800m. Mazima has entered
into an agreement with Pride Microfinance Limited, the largest
microfinance institution in Uganda, to roll out its services to its
500,000 micro-finance clients. In addition, the company has entered
into an agreement with MTN, Uganda's largest mobile operator, to
jointly promote the Mazima scheme to its 10 million Mobile Money
subscribers.
Inqo earned interest on its investment in the Four One Financial
Services operation of R90,529 (2017: Nil).
OUTLOOK
Inqo will continue to benefit from the improved trading of the
Kuzuko operation and revenues earned from investments in the Bee
Sweet operation in Zambia and the management by Four One Financial
Services of the Maxima Benefits Scheme.
The improved room rates being achieved by Kuzuko with increased
occupancies experienced in the latter part of 2017/8 and the first
quarter of 2018/9 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 51
fulltime and 11 part-time and contracted staff employed. 51 of the
workforce of Kuzuko Lodge are drawn from local communities.
-- 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.
-- 1,100 voluntary savers in micro-pension scheme.
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 2018. A copy of these
audited financial statements will be available on the company
website by 17 August 2018.
DIVID
The company has not declared a dividend for the year ended 28
February 2018.
K.S Tan C.J Bertie
Chairman 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
Inqo Investments Limited Group
Condensed consolidated statement of profit or loss and
other comprehensive income
For the year ended 28 February 2018
(Audited) (Audited)
Year ended Year ended
28 February 28 February
2018 2017
R'000 R'000
Revenue 22 963 17 026
Cost of sales (3 046) (2 390)
---------------------------- -----------------------
Gross profit 19 917 14 636
Other income 146 14 042
Depreciation (2 448) (2 262)
Directors compensation (676) (636)
Selling and administrative
expenses (21 016) (16 559)
---------------------------- -----------------------
Operating (loss) /
profit (4 077) 9 221
Fair value adjustment (2 052) 502
Net financing income 135 536
Finance income 166 581
Finance costs (31) (45)
(Loss) / profit before
taxation (5 994) 10 259
Taxation 1 720 (2 868)
----------------------------
(Loss) / profit for
the year (4 274) 7 391
---------------------------- -----------------------
Other comprehensive
income
- 10 575
Revaluation of land - 13 627
Deferred tax on revaluation - (3 052)
Total comprehensive
income for the year (4 274) 17 966
============================ =======================
(Loss)/earnings per
share (cents) (0.41) 0.61
Diluted (loss)/earnings
per share (cents) (0.41) 0.58
Inqo Investments Limited
Group
Condensed consolidated statement of
financial position
At 28 February 2018
(Audited) (Audited)
28 February 28 February
2018 2017
R'000 R'000
Assets
Non-current assets 131 196 132 870
Property, plant and
equipment 129 725 131 898
Intangible assets 15 18
Other Investments 1 456 954
Current assets 28 767 10 655
Inventories 730 486
Trade and other receivables 22 668 3 115
Biological assets 2 463 3 512
Cash and cash equivalents 2 906 3 542
Total assets 159 963 143 525
==================== ===================
Equity and liabilities
Capital and reserves
Ordinary share capital 65 004 58 198
Share premium 70 774 58 228
Revaluation reserve 70 774 70 774
Accumulated loss (63 546) (58 786)
-------------------- -------------------
Equity attributable
to equity holders of
Inqo Investments Limited 143 006 128 414
Non-controlling interest 659 173
-------------------
Total equity 143 665 128 587
Non-current liabilities 7 815 9 753
Loans from related parties 189 436
Other long term loans 595 566
Deferred taxation 6 838 8 558
Debentures 193 193
Current liabilities 8 483 5 185
Trade and other payables 8 336 4 933
Provision 147 252
Total liabilities 16 298 14 938
Total equity and liabilities 159 963 143 525
==================== ===================
Inqo Investments Limited Group
Condensed consolidated statements of cash flows
For the year ended 28 February 2018
(Audited) (Audited)
Year ended Year ended
28 February 28 February
2018 2017
R'000 R'000
Cash generated/(utilised)
by operations 1 337 (986)
------------- -------------
Net cash inflow/(outflow)
from operating activities 1 337 (986)
------------- -------------
Cash flows from investing activities
Acquisition of other
investments (59) (954)
Loan advanced to other (443) -
investments
Acquisition of property,
plant and equipment (1 193) (2 228)
Acquisition of intangible (7) -
assets
Acquisition of biological
assets (93) (60)
Proceeds on disposal
of property, plant
and equipment 40 66
Net cash outflow from
investing activities (1 755) (3 176)
------------- -------------
Cash flows from financing activities
Loans from related parties repaid (269) -
Loans and borrowings
repaid - (16 003)
Loans and borrowings
received 29 27
Loans from related
parties received 22 22
------------- -------------
Net cash outflow from
financing activities (218) (15 954)
------------- -------------
Net movement in cash and cash
equivalents (636) (20 116)
Cash and cash equivalents at
beginning of year 3 542 23 658
Cash and cash equivalents
at end of year 2 906 3 542
============= =============
Inqo Investments Limited
Condensed consolidated statement of changes in equity
For the year ended 28 February 2018
Ordinary Share premium Revaluation Accumulated Non-controlling Total
share capital reserve loss interest
R'000 R'000 R'000 R'000 R'000 R'000
Balance at 1
March 2016 58 198 58 228 60 200 (65 871) (133) 110 622
Profit for the
year - - - 7 085 306 7 391
Other
comprehensive
income
for the year - - 10 574 - - 10 574
Balance at 28
February 2017 58 198 58 228 70 774 (58 786) 173 128 587
=============== ============== ============ ============ ================ ==================
Balance at 1
March 2017 58 198 58 228 70 774 (58 786) 173 128 587
Shares Issued 6 806 12 546 - - - 19 352
Loss for the
year - - - (4 760) 486 (4 274)
Balance at 28
February 2018 65 004 70 774 70 774 (63 546) 659 143 665
=============== ============== ============ ============ ================ ==================
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