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DJ Inqo Investments Limited Final Results

TIDMINQO

RNS Number : 4472F

Inqo Investments Limited

27 July 2016

Inqo Investments Limited

("Inqo" or the "Company")

Preliminary results for the year ended 29 February 2016

CHAIRMAN AND CHIEF EXECUTIVE STATEMENT

Inqo Investments Limited (ISDX: INQO) 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 at the base of the economic pyramid in Sub-Saharan Africa.

COMMENTARY

The period since October 2014 to date has been one of consolidation for Inqo. Between October 2014 and April 2016, we renegotiated loans with institutions which will result in a total saving of R30 million in interest repayments and during this period we listed Inqo on the ISDX Growth Market in London.

The results for this year reflect a loss before tax for the year of R4,718,271 (2015: Profit of R8,974,270) equating to 0.62 cents per share with revenues of R10,650,195 (2015: R11,249,300). The company incurred listing expenses amounting to R1.5 million during the year and these are viewed as once-off costs that will not recur each year. Finance costs during the year amounted to R1.1 million mainly related to the convertible loans which were converted to equity before year end and this is also a non-recurring expense. The loan negotiations and the convertible loan restructuring has resulted in the company being free of any borrowings and loans.

Investee companies

Kuzuko Lodge

The trading losses at Inqo group level are mainly attributable to losses at Kuzuko Lodge, Inqo's main trading subsidiary of R950,638 (2014: R1,992,798). Whilst the lodge operation has essentially been profitable, conservation and habitat rehabilitation work on the reserve continues to require funding, resulting in losses. Kuzuko Lodge continues to see improvements in its trading position reflecting a reduced loss in comparison to the previous year. Our main thrust with Kuzuko Lodge in the 2015/6 year was to increase the average rate achieved per room to provide a platform to get the operation to profitability. We are pleased to report that while the annual occupancy decreased by 8% due to changes in visitor visa requirements affecting the whole industry, the average room rate achieved increased by 30%. We are pleased to report that this trend has continued in the first quarter of 2016/7. Kuzuko Lodge is now in its 8(th) season and we expect to see further improvements as we continue to build its reputation.

Spekboom Trading

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 agreement is reached with the DEA we will create some 100 new jobs in the local community. To date, the company has re-planted 500 acres of spekboom on degraded land.

Bee Sweet Honey

We concluded negotiations in the first quarter with Bee Sweet Honey Limited a Zambian commercial producer of honey with 60,000 beehives and 12,000 farmers in its programme. Output for 2016 is expected to be 200 tons of honey for export. Inqo invested an initial tranche of US$60 000 in this venture that will allow Bee Sweet to acquire and supply an additional 5,000 hives and recruit 500 new farmers to the honey production programme. The bee hives are harvested twice a year and Inqo expects to earn its first revenues in the next financial year.

Medical Diagnostech

The company manufactures rapid point-of-care (POC) tests for HIV/AIDS, malaria, drugs of abuse and pregnancy.

The company produced 800,000 test kits in 2015/6.

OUTLOOK

In the current year Inqo expects to benefit from the improved trading at Kuzuko Lodge and first revenues from its Bee Sweet Honey investment.

The improved room rates that have been achieved and the increased occupancies experienced at Kuzuko Lodge in the latter part of the 2015/6 year and the first quarter of 2016/7 are expected to continue on the back of the fact that the Rand remains weak against other currencies, making South Africa an attractive destination for tourists.

A factor that must be borne in mind in the current 2016/7 year is that the DBSA long term loan was settled in April 2016, being the final part of the restructuring exercise that the group entered into in 2015. The settlement of R15 million made and the resulting write back of interest historically charged of a further R14 million that will arise as a result of the loan settlement will strengthen the financial position of the company and reflect positively on the groups trading results for the 2016/7 year.

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 income tax paid year on year, currently 55 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. 

-- Reforestation of 500 acres of degraded land with spekboom providing work for 81 part time staff.

-- 800,000 low cost medical diagnostic tests for infectious diseases manufactured and supplied.

   --      60,000 beehives in the field providing 12,000 farmers with increased income. 

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

During the year the group and company identified that the revaluation reserve has always excluded deferred tax relating to the land revaluation, whereas the revaluation reserve should have been reflected net of deferred tax. In prior years, the company and group had been in an overall deferred tax asset position which was not recognised due to the uncertainty of the timing of future taxable income. However, due to the change in the capital gains tax rate notified in the South African February 2016 budget speech, the company and group moved into a deferred tax liability position at 29 February 2016.

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 2016. A copy of these audited financial statements will be available on the company website by 31 July 2016.

DIVIDEND

The company has not declared a dividend for the year ended 29 February 2016.

 
 K.S Tan    C.J Bertie 
 Chairman   Chief Financial Officer 
 

For further information please contact:

 
 Inqo Investments Limited 
 Chris Bertie, Chief Financial Officer   Tel: +27 (0)83 
                                          6254069 
 and Chief Operating Officer 
 
 Shard Capital Partners LLP 
 ISDX Corporate Adviser and Broker       Tel: +44 (0)20 
                                          7186 9948 
 Dr Wang Chong 
 

Statement of comprehensive income

for the year ended 29 February 2016

 
                                                    Restated 
                                     Audited        Audited 
                                    Year ended     Year ended 
                                    29 February    28 February 
                                       2016           2015 
                                      R'000          R'000 
 Revenue                                 10 650         11 249 
 Cost of Sales                          (1 650)        (1 799) 
 Gross profit                             9 000          9 450 
 Other income                             1 134         14 977 
 Selling and administrative 
  expenses                             (14 795)       (15 809) 
                                  -------------  ------------- 
 Operating (loss)/profit                (4 661)          8 618 
 Net financing (costs)/income              (57)            356 
                                  -------------  ------------- 
 (Loss)/profit before 
  taxation                              (4 718)          8 974 
 Taxation                                   259            905 
                                  -------------  ------------- 
 (Loss)/profit for 
  the year                              (4 459)          9 879 
 Other comprehensive 
  income                                (2 896)          3 946 
                                  -------------  ------------- 
 Revaluation of 
  land                                        -          4 851 
 Deferred tax on 
  revaluation                           (2 896)          (905) 
                                  -------------  ------------- 
 
 Total comprehensive 
  income for the year                   (7 355)         13 825 
                                  =============  ============= 
 
 (Loss)/earnings 
  per share (cents)                      (0.62)           0.48 
 
 Diluted (loss)/earnings 
  per share (cents)                      (0.59)           0.41 
 

Statement of financial position

(MORE TO FOLLOW) Dow Jones Newswires

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DJ Inqo Investments Limited Final Results -2-

at 29 February 2016

 
 
                                                Restated 
                                  Audited        Audited 
                                29 February    28 February 
                                   2016           2015 
 Assets                           R'000          R'000 
 Non-current assets                 119 110        118 714 
                             --------------  ------------- 
 Property, plant 
  and equipment                     119 082        118 687 
 Intangible assets                       28             27 
 
 Current assets                      31 803         23 078 
                             --------------  ------------- 
 Inventories                            389            742 
 Trade and other 
  receivables                         4 806          2 828 
 Biological assets                    2 950          2 683 
 Cash and cash 
  equivalents                        23 658         16 825 
                             --------------  ------------- 
 
 Total assets                       150 913        141 792 
                             ==============  ============= 
 Equity and liabilities 
 Capital and reserves 
 Ordinary share 
  capital                            58 198         28 813 
 Share premium                       58 228         13 266 
 Revaluation reserve                 60 200         63 096 
 Accumulated loss                  (65 871)       (61 546) 
                             --------------  ------------- 
 Equity attributable 
  to equity holders 
  of Inqo Investments 
  Limited                           110 755         43 629 
 Non-controlling 
  interest                            (133)              1 
                             --------------  ------------- 
 Total equity                       110 622         43 630 
 
 Non-current liabilities             17 759         82 950 
                             --------------  ------------- 
 Loans from related 
  parties                               414         28 153 
 Other long term 
  loans                                 538         34 617 
 External loans 
  and borrowings                     13 977         19 987 
 Deferred tax                         2 637              - 
  liability 
 Debentures                             193            193 
 
 Current liabilities                 22 532         15 212 
                             --------------  ------------- 
 Trade and other 
  payables                            6 277          3 849 
 Provision                              252            353 
 External loans and 
  borrowings - current 
  portion                            16 003         11 010 
                             --------------  ------------- 
 Total liabilities                   40 291         98 162 
 Total equity 
  and liabilities                   150 913        141 792 
                             ==============  ============= 
 

Statement of changes in equity

for the year ended 29 February 2016

 
                     Share capital   Share premium   Revaluation   Accumulated   Non-controlling   Total 
                                                       reserve         loss          interest 
                         R'000           R'000          R'000         R'000           R'000                    R'000 
 Restated balance 
  at 
  28 February 2015          28 813          13 266        63 096      (61 546)                 1              43 630 
 Shares issued              29 385          44 962             -             -                 -              74 347 
 Loss for the year               -               -       (2 896)       (4 325)             (134)             (7 355) 
 Balance at 29 
  February 
  2016                      58 198          58 228        60 200      (65 871)             (133)             110 622 
                    ==============  ==============  ============  ============  ================  ================== 
 
 Restated balance 
  at 
  28 February 2014          28 813          13 266        59 150      (71 425)                 1              29 805 
                                                    ------------  ------------                    ------------------ 
 Opening balance 
  as 
  previously 
  reported                                                72 726      (85 001)                                29 805 
 Prior year error                                       (13 576)        13 576                                     - 
                                                    ------------  ------------                    ------------------ 
 
 Loss for the year               -               -             -         9 879                                 9 879 
                                                                  ------------                    ------------------ 
 Loss as 
  previously 
  reported                                                               8 974                                 8 974 
 Prior year error                                                          905                                   905 
                                                                  ------------                    ------------------ 
 Other 
  comprehensive 
  income                                                   3 946             -                                 3 946 
                                                    ------------                                  ------------------ 
 Other 
  comprehensive 
  income as 
  previously 
  reported                                                 4 851             -                 -               4 851 
 Prior year error                -               -         (905)             -                 -               (905) 
                                                    ------------                                  ------------------ 
 
 Restated balance 
  at 
  28 February 2015          28 813          13 266        63 096      (61 546)                 1              43 630 
                    ==============  ==============  ============  ============  ================  ================== 
 

Statement of cash flows

for the year ended 29 February 2016

 
                                  Audited 
                                     for           Audited 
                                     the             for 
                                    year          the year 
                                    ended           ended 
                                 29 February     28 February 
                                    2016            2015 
                                   R'000           R'000 
 
 Cash (utilised) /generated 
  by operations                      (3 938)           9 744 
 Net cash (outflow)/inflow 
  from operating activities          (3 938)           9 744 
                               -------------  -------------- 
 
 Cash flows from investing 
  activities 
 Acquisition of biological 
  assets                                   -           (107) 
 Acquisition of property, 
  plant and equipment 
  and intangible assets              (1 758)         (1 424) 
 Net cash outflow from 
  investing activities               (1 758)         (1 531) 
                               -------------  -------------- 
 
 Cash flows from financing 
  activities 
 Loans and borrowings 
  received/(repaid)                       29        (19 916) 
 Shares issued to new 
  shareholder for cash                12 500               - 
 Loans from related 
  parties repaid                           -         (2 738) 
                               ------------- 
 Net cash inflow/(outflow) 
  from financing activities           12 529        (22 654) 
                               -------------  -------------- 
 Net movement in cash 
  and cash equivalents                 6 833        (14 441) 
 Cash and cash equivalents 
  at beginning of year                16 825          31 266 
 Cash and cash equivalents 
  at end of year                      23 658          16 825 
                               =============  ============== 
 

This information is provided by RNS

The company news service from the London Stock Exchange

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