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DJ Inqo Investments Limited Half-year Report

TIDMINQO

RNS Number : 9767P

Inqo Investments Limited

24 November 2016

INQO INVESTMENTS LIMITED

UNAUDITED GROUP RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2016

CHAIRMAN AND CHIEF EXECUTIVE STATEMENT

Inqo Investments Limited ('Inqo' or 'the Company') 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 a period of consolidation and over this period the group has negotiated loan settlements with our two institutional lenders that have resulted in a R30 million interest saving. The final DBSA transaction was settled in April 2016 and as a result, an interest write-back of R14 million was processed to the income statement. The loan with ECDC was settled in September 2016.

The results for the six month period reflected a profit after tax for the six month period of R6,989,880 (August 2015 six month period: Loss of R3,035,766) equating to R0.60 per share with revenues of R5,324,300 (2015: R3,228,177), a rise of 65%. The improved group results reflected in this six month period to 31 August 2016 have come about as a result of the improved trading at Kuzuko Lodge and the finalisation of the loan restructuring package entered into.

INVESTEE COMPANIES

Kuzuko Lodge

The Lodge traded at a loss for the six months to date reflecting a loss of R1,862,500 (August 2015 six month period: R2,497,774). Trading in the six month period to date has improved year on year. The first six months of our business cycle are the quieter ones and we expect to see substantially improved trading results in the second half of the financial year through the improved occupancies and rates trends that we have experienced and that we see in current advance bookings. Annual occupancy to date at 31 August 2016 shows a 30% improvement compared to 2015.

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 an 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

Inqo invested US$60,000 in Bee Sweet Honey Limited, a Zambian exporter of honey. Bee Sweet currently have 66,000 bee hives in the field managed by 13,000 farmers. The farmers earned US$108,438 in the May/June season of 2016. Inqo expects to earn its first revenue from the sale of honey in the 2017/8 year. In the period under review 110 tons of honey was sold internationally and 33 tons sold locally.

Medical Diagnostech

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

The company produced 450,000 test kits in the six months to 31 August 2016.

OUTLOOK

Inqo expects to continue to benefit from the improved trading at Kuzuko Lodge while first revenues from its Bee Sweet Honey investment will accrue in the 2017/8 year.

The improved room rates that have been achieved and the increased occupancies experienced at Kuzuko Lodge in the first six months of the current year and the balance of 2016/7 are continuing on the back of the fact that the Rand remains weak against other currencies, making South Africa an attractive destination for tourists.

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 employee 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.

-- 450,000 low cost medical diagnostic tests for infectious diseases manufactured and supplied in the six months ended 31 August 2016.

-- 66,000 beehives in the field providing 13,000 farmers with increased income. Farmers earned an average of US$55 in the six month trading period to date.

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 month period ended 31 August 2016. KPMG has performed a review of the condensed consolidated interim financial statements for the six months ended 31 August 2016. A copy of these condensed consolidated interim financial statements and KPMG's review report will be available at the company's registered office by 30 November 2016.

DIVIDEND

The company has not declared a dividend for the period ended 31 August 2016.

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

23 November 2016

Enquiries

 
 Inqo Investments Limited 
 Mr Chris Bertie, Chief 
  Financial Officer 
 and Chief Operating Officer   Tel: +27 (0)83 625 4069 
 
 Shard Capital Partners 
  LLP 
 ISDX Corporate Adviser 
  and Broker 
 Dr Wang Chong                 Tel: +44 (0)20 7186 9948 
 

Inqo Investments Limited Group

Unaudited interim financial information for the six months ended 31 August 2016

Basis of preparation

The interim financial statements are prepared in accordance with International Financial Reporting Standards, IAS 34 Interim Financial Reporting, the SAICA Financial Reporting Guides issued by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council and the requirements of the Companies Act of South Africa.

The accounting policies applied in the preparation of these interim financial statements are in terms of International Financial Reporting Standards and are consistent with those applied in the previous annual 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 was prepared under the supervision of Mr C Bertie CA(SA), in his capacity as group financial director.

Inqo Investments Limited Group

Statement of comprehensive income

for the six months ended 31 August 2016

 
                                                                           Group 
                                                    (Reviewed)           (Reviewed)           (Audited) 
                                                 Six Months ended     Six Months ended      Year ended 29 
                                                  31 August 2016       31 August 2015          February 
                                                                                                 2016 
                                                    (6 months)           (6 months)          (12 months) 
                                                         R                    R                    R 
 Revenue                                                 5 324 300            3 228 177           10 650 195 
 Cost of sales                                           (909 201)            (603 995)          (1 649 670) 
                                               -------------------  -------------------  ------------------- 
 Gross profit                                            4 415 099            2 624 182            9 000 525 
 Other income                                           13 976 887            2 058 205              867 241 
 Selling and administrative expenses                   (8 250 713)          (8 107 915)         (14 795 348) 
                                               -------------------  -------------------  ------------------- 
 Operating profit / (loss)                              10 141 273          (3 425 528)          (4 927 582) 
 Fair value adjustment                                           -                    -              267 200 
 Net financing income / (costs)                            468 675              389 762             (57 889) 
                                               -------------------  -------------------  ------------------- 
 Finance income                                            495 125            1 242 660              996 893 
 Finance costs                                            (26 450)            (852 898)          (1 054 782) 
                                               -------------------  -------------------  ------------------- 
 
 Profit / (loss) before taxation                        10 609 948          (3 035 766)          (4 718 271) 
 Taxation                                              (3 620 068)                    -              259 385 
                                               -------------------  -------------------  ------------------- 
 Profit / (loss) for the year                            6 989 880          (3 035 766)          (4 458 886) 
                                               -------------------  -------------------  ------------------- 
 Other comprehensive income 
                                                                 -                    -          (2 896 203) 
                                               -------------------  -------------------  ------------------- 
 Revaluation of land                                             -                    -                    - 
 Deferred tax on revaluation                                     -                    -          (2 896 203) 

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DJ Inqo Investments Limited Half-year Report -2-

                                               -------------------  -------------------  ------------------- 
 
 Total comprehensive income for the period               6 989 880          (3 035 766)          (7 355 089) 
                                               ===================  ===================  =================== 
 
 
 Earnings/(loss) per share (cents)                            0.60               (0.53)               (0.62) 
 Diluted earnings/(loss) per share (cents)                    0.60               (0.39)               (0.59) 
 

Inqo Investments Limited Group

 
 Statement of financial 
  position 
 at 31 August 2016 
                                                              Group 
                                          (Reviewed)       (Reviewed)        (Audited) 
                                           31 August        31 August        29 February 
                                              2016             2015 
                                                                                2016 
 Assets                                       R                R                 R 
                                             120 064          118 007            119 109 
 Non-current assets                              534              481                761 
                                         -----------      -----------      ------------- 
 Property, plant and                         119 088          117 975            119 081 
  equipment                                      580              185                602 
 Intangible assets                            21 660           32 296             28 159 
 Investment                                  954 294                -                  - 
 
                                              11 305           17 974             31 803 
 Current assets                                  982              452                519 
                                         -----------      -----------      ------------- 
 Inventories                                 583 599          725 038            389 211 
                                               2 377            2 109              4 806 
 Trade and other receivables                     775              548                513 
                                               3 023            2 683              2 950 
 Biological assets                               500              000                200 
                                               5 321           12 456             23 657 
 Cash and cash equivalents                       108              866                595 
                                         -----------      -----------      ------------- 
 
                                             131 370          135 981            150 913 
 Total assets                                    516              933                280 
                                         ===========      ===========      ============= 
 
 
 Equity and liabilities 
 Capital and reserves 
                                 58 198     28 813      58 198 
 Ordinary share capital             075        042         075 
                                 58 227     13 265      58 227 
 Share premium                      703        727         703 
                                 60 199     63 095      60 199 
 Revaluation reserve                652        855         652 
                                (58 881    (64 581    (65 871 
 Accumulated loss                  154)       006)     034) 
                             ----------  ---------  ---------- 
 Equity attributable 
  to equity holders 
  of Inqo Investments           117 744     40 593     110 754 
  Limited                           276        618       396 
 Non-controlling                                        (132 
  interest                    (132 561)        531      561) 
                             ----------  ---------  ---------- 
                                117 611     40 594     110 621 
 Total equity                       715        149         835 
 
                                  7 416     81 076      17 759 
 Non-current liabilities            089        217         198 
                             ----------  ---------  ---------- 
 Loans from related                         27 960 
  parties                       413 779        525     413 779 
 Other long term                            33 945 
  loans - convertible           551 967        348     538 257 
 
 Interest bearing                           18 976      13 976 
  loans and borrowings                -        887         887 
                                  6 256                  2 636 
 Deferred taxation                  886          -         818 
 Debentures                     193 457    193 457     193 457 
                                                    ---------- 
 
                                  6 342     14 311      22 532 
 Current liabilities                712        567         247 
                             ----------  ---------  ---------- 
 Trade and other                  5 087      2 956       6 277 
  payables                          579        799         114 
 Provision                      251 796    352 543     251 796 
 Interest bearing 
  loans and borrowings            1 003     11 002      16 003 
  - current portion                 337        225         337 
                             ----------  ---------  ---------- 
 
                                 13 758     95 387      40 291 
 Total liabilities                  801        784         445 
 
 Total equity and               131 370    135 981     150 913 
  liabilities                       516        933         280 
                             ==========  =========  ========== 
 

Inqo Investments Limited Group

Summarised financial information

For the six months ended 31 August 2016

 
                                        (Reviewed)           (Reviewed)              (Audited) 
                                         Six Months           Six Months             Year ended 
                                           ended                ended                29 February 
                                         31 August            31 August                 2016 
                                            2016                 2015 
                                        (6 months)           (6 months)             (12 months) 
 
  Earnings/(loss) per 
   share 
  Earnings/(loss) per 
   share (cents)                                 0.60                  (0.53)               (0.62) 
  Diluted earnings/(loss) 
   per share (cents)                             0.60                  (0.39)               (0.59) 
  Profit/(loss) attributable                    6 989 
   to equity shareholders                         880          (3 035 766)             (7 221 997) 
  Weighted average 
   number of shares 
   in issue for normalised                     11 639 
   EPS calculation                                615            5 762 606              11 555 340 
  Weighted average 
  number of shares 
  in issue for diluted                         11 677 
  normalised EPS calculation                      473            7 873 156              12 093 580 
 
 

This information is provided by RNS

The company news service from the London Stock Exchange

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