TIDMINQO
RNS Number : 8017G
Inqo Investments Limited
27 November 2020
Inqo Investments Limited
Unaudited Group Results for the period ended 31 August 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 minimal
debt. Cash reserves for investment stood at R7 072 767 with total
assets of R169 973 016 on the balance sheet.
The results for the six months under review showed revenue of R1
746 170 (August 2019: R8 738 816) but a loss after tax of R4 760
046 (August 2019 a loss of R5 147 304). The loss for the period is
reported after accounting for the following operating costs:
August 2020 August 2019
Depreciation 1 743 117 1 531 521
Listing expenses 528 106 421 117
Directors fees and salaries 300 540 388 563
Professional fees 259 942 248 887
Like businesses around the world, the Group has been heavily
impacted by the Covid-19 pandemic. The result of this pandemic has
been that all the businesses in the Group have reported reduced
earnings and are taking extensive steps to reduce operating costs
to the absolute minimum while the businesses operate in a holding
mode as the world waits to see how the Covid-19 pandemic plays
out.
The directors of the holding company review the valuation placed
on all income carrying assets to ensure that they reflect their
fair value. This review was done at 31 August 2020 and having
conducted the review, the directors are of the view that the
Group's assets are reflected at fair value.
INVESTEE COMPANIES
Kuzuko Lodge (South Africa)
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 due to
reduced travel and the depression on sales due to the Covid-19
related economic downturn will last for a minimum of two years.
Restrictions on local inter-provincial leisure travel was lifted on
12 August 2020, giving Kuzuko the opportunity to open to the rest
of the country for bookings. On 11 November 2020 South Africa
relaxed restrictions on international travel, allowing
international bookings. 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. A foodbank has been established for those
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 currently has 85,512 bee hives in the
field with 10,000 farmers in its programme. Inqo has invested in
the income that will accrue from 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.
Inqo earned R42 102 as its share of revenue in the period ended
31 August 2020 from the May 2020 harvest (2019: R136 821).
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 R149 634 in the period ended 31 August 2020
(2019: R116 578).
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 424 on its investment in SLMC in the
period ended 31 August 2020 (2019: R8 295).
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 but has
reported demand during the Covid-19 pandemic. They have recently
installed a new factory that is in the process of being
commissioned and 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. The directors do not expect this
recovery to start before the latter part of 2021.
Bee Sweet Honey - The market in which Bee Sweet is currently
operating is very challenging but management is making headway on
both the production and sales fronts. Currently the company is
negotiating with international third parties to buy the stock on
hand of some 400 tons. The company's production facilities have
been upgraded through the internal promotion of a senior employee
to General Manager. The General Manager will be responsible for the
management of both production and field work. The crop of honey
harvested in May this year was smaller than in 2019 but the
business is very happy with the quality of the stock.
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-19.
International flower sales have resumed and this has had a positive
impact on the operation of SLMC.
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 46 fulltime staff employed.
-- All staff living at Kuzuko in standard housing with flush
toilets, power, water and solar panels.
-- Conservation of 3 endangered species.
-- Re-wilded, 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-19 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 during this challenging
time.
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 period ended 31 August 2020.
DIVID
The company has not declared a dividend the period ended 31
August 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
Condensed consolidated statement of profit or loss and other
comprehensive income
for the six months ended 31 August 2020
Six Months ended Six Months ended
31 August 2020 31 August 2019
R R
Revenue 1 746 170 8 738 816
Cost of Sales (240 331) (1 198 952)
----------------- -----------------
Gross profit 1 505 839 7 539 864
Other income 1 252 416 136 821
Personnel expenses (2 400 248) (4 048 171)
Depreciation (1 743 117) (1 531 521)
Listing expenses (528 106) (421 117)
Professional fees (259 942) (248 887)
Directors emoluments (300 540) (388 563)
Selling and administrative expenses (2 921 969) (6 883 256)
----------------- -----------------
Operating loss (5 395 667) (5 844 830)
Net financing income 355 206 247 879
----------------- -----------------
Finance income 424 966 340 465
Finance costs (69 760) (92 586)
----------------- -----------------
Loss before taxation (5 040 461) (5 596 951)
Taxation credit 280 415 449 647
----------------- -----------------
Loss for the period (4 760 046) (5 147 304)
----------------- -----------------
Loss attributable to:
Equity holders (3 587 714) (4 236 248)
Non-controlling interest (1 172 332) (911 056)
----------------- -----------------
(4 760 046) (5 147 304)
----------------- -----------------
Other comprehensive income:
Other comprehensive income - -
Total comprehensive income for the period (4 760 046) (5 147 304)
----------------- -----------------
Total comprehensive income attributable to:
Equity holders (3 587 714) (4 236 248)
Non-controlling interest (1 172 332) (911 056)
----------------- -----------------
(4 760 046) (5 147 304)
----------------- -----------------
Condensed consolidated statement of financial position
as at 31 August 2020
Reviewed Audited
31 August 28 February
2020 2020
R R
Assets
Non-current assets 145 802 368 146 063 205
------------- -------------
Property, plant and equipment 133 575 459 134 430 943
Intangible assets 6 847 9 062
Right of use asset 790 490 893 597
Other investments 11 429 572 10 729 603
Current assets 18 475 303 27 644 153
------------- -------------
Biological assets 3 058 866 3 058 866
Inventories 4 863 586 4 763 430
Trade and other receivables 3 480 084 4 150 071
Cash and cash equivalents 7 072 767 15 671 786
------------- -------------
Assets held for sale 5 695 345 5 695 345
------------- -------------
Land held for sale 5 695 345 5 695 345
------------- -------------
Total assets 169 973 016 179 402 703
============= =============
Equity and liabilities
Capital and reserves
Ordinary share capital 71 809 195 71 809 195
Share premium 86 294 138 86 294 138
Revaluation reserve 73 152 702 73 152 702
Accumulated loss (73 899 572) (70 311 858)
------------- -------------
Equity attributable to equity holders
of: 157 356 463 160 944 177
Inqo Investments Limited
Non-controlling interest (398 697) 773 635
------------- -------------
Total equity 156 957 766 161 717 812
Non-current liabilities 6 971 713 7 328 094
------------- -------------
Loans from related parties 167 846 167 845
Other long term loans 687 580 668 210
Deferred taxation 5 268 973 5 549 379
Debentures 193 457 193 457
Lease liability 653 857 749 203
-------------
Current liabilities 6 043 537 10 356 797
------------- -------------
Trade and other payables 5 114 032 9 494 844
Provision 744 006 686 559
Lease liability 185 499 175 394
------------- -------------
Total liabilities 13 015 250 17 684 891
-------------
Total equity and liabilities 169 973 016 179 402 703
============= =============
Condensed consolidated statement of cash flows
for the six months ended 31 August 2020
Six months Six months
ended 31 August ended 31 August
2020 2019
R R
Cash flows from operating activities
Net loss before tax (5 040 461) (5 596 951)
Amortisation 2 215 3 457
Depreciation 1 637 795 1 493 705
Depreciation of right of use asset 103 107 34 370
Finance cost on lease liability 50 055 19 218
Loss on disposal of motor vehicle 22 385 -
Net working capital changes
Inventory (100 156) 44 802
Trade payables (4 323 365) (1 629 147)
Trade receivables 669 987 (299 633)
Net cash outflow from operating activities (6 978 438) (5 930 179)
----------------- -----------------
Cash flows from investing activities
Acquisition of investments (699 969) (1 727 606)
Acquisition of biological assets - (229 459)
Acquisition of property, plant and equipment
and intangible assets (990 368) (3 772 495)
Proceeds from disposal of property, plant 185 682 -
and equipment and intangible assets
Finance lease payments (135 296) (45 099)
Loans advanced to Associates - (980 735)
----------------- -----------------
Net cash outflow from investing activities (1 639 951) (6 755 394)
----------------- -----------------
Cash flows from financing activities
Proceeds of shares issued - 4 115 250
Proceeds of shares issued during the
prior period - 18 210 000
Loans and borrowings raised 19 370 21 428
Net cash inflow from financing activities 19 370 22 346 678
----------------- -----------------
Net movement in cash and cash equivalents (8 599 019) 9 661 105
Cash and cash equivalents at beginning
of period 15 671 786 11 557 690
Cash and cash equivalents at end of
period 7 072 767 21 218 795
================= =================
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
NEXPPGGGGUPUGCM
(END) Dow Jones Newswires
November 27, 2020 12:00 ET (17:00 GMT)
Inqo Investments (AQSE:INQO)
Graphique Historique de l'Action
De Déc 2024 à Jan 2025
Inqo Investments (AQSE:INQO)
Graphique Historique de l'Action
De Jan 2024 à Jan 2025
