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DJ Inqo Investments Limited Inqo Investments Ltd Audited Group Results FY2017

TIDMINQO

RNS Number : 5113I

Inqo Investments Limited

20 June 2017

INQO INVESTMENTS LIMITED

AUDITED GROUP RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2017

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 group started a process of consolidating its financial position in 2014 and we are pleased to report that the various negotiations entered into with lender institutions have been concluded resulting in a R14m write-back and a stronger balance sheet with no debt.

The results for the year reflect a profit before tax of R10,259,510 (2016: Loss of R4,718,271) equating to R0.61 cents per share. Revenues increased by 59% from R10,650,195 in 2016 to R17,026,098 in 2017.

The Selling & Administration expenses for the group amounted to R19,456,853 in 2016/7, the Kuzuko costs amounted to R13,837,149 while those of Inqo amounted to R5,869,837. The Kuzuko costs are traditional costs incurred by an operating unit in the game lodge hospitality industry. The material cost contributors for Inqo were depreciation R2,082,399, listing costs R572,019, directors emoluments R636,000, audit & professional fees R642,169 and impairments R629,169.

Investee companies

Kuzuko Lodge (South Africa)

The improved profitability 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 R783,706 (2016: Loss of R950,638).

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 ninth season of trading we expect this profit turnaround achieved in 2016/7 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.

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.

We are currently investigating other opportunities to continue the reforestation program.

Bee Sweet Honey (Zambia)

We concluded negotiations in the first quarter with Bee Sweet Honey Limited a Zambian commercial producer of honey. The number of beehives placed by the company increased by 50% taking the total to 90,000 beehives with 13,000 farmers in its programme. Output for 2016 was around 220 tons of honey for export. Inqo invested an initial tranche of US$60,000 in this venture to allow Bee Sweet to acquire and supply an additional 3,000 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.

Four One Financial Services Limited (Uganda)

In April 2017, we 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.

OUTLOOK

Inqo expects to benefit from the improved trading from the Kuzuko Lodge operation and the first revenues from each of the Bee Sweet Honey and Four One Financial Services Investment.

The improved room rates that have been achieved and the increased occupancies experienced at Kuzuko Lodge in the latter part of the 2016/7 year and the first quarter of 2017/8 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 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 100 part time staff.

   --      90,000 beehives in the field providing 13,000 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

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 2017. A copy of these audited financial statements will be available on the company website by 21 June 2017.

DIVIDEND

The company has not declared a dividend for the year ended 28 February 2017.

   K.S Tan                                                                       C.J Bertie 

Chairman Chief Financial Officer

19 June 2017

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

Statements of profit or loss and other comprehensive income

for the year ended 28 February 2017

 
 
 
                                   Audited     Audited 
                                    28 Feb     29 Feb 
                                      17          16 
                                    R'000       R'000 
 Revenue                             17 026      10 651 
 Cost of Sales                      (2 390)     (1 650) 
 Gross profit                        14 636       9 001 
 Other income                        14 042         867 
 Selling and administrative 
  expenses                         (19 457)    (14 796) 
                                  ---------  ---------- 
 Operating profit/(loss)              9 221     (4 928) 
 Fair value adjustment                  502         268 
 Net financing 
  income/(costs)                        536        (58) 
                                  ---------  ---------- 
 Finance income                         581         997 
 Finance expense                       (45)     (1 055) 
                                  ---------  ---------- 
 
 Profit/(loss) 
  before taxation                    10 259     (4 718) 
 Taxation                           (2 868)         259 
                                  ---------  ---------- 
 Profit/(loss) 
  for the year                        7 391     (4 459) 
                                  ---------  ---------- 
 
   Profit/(loss) 
   attributable 
   to: 
 Equity holders                       7 085     (4 326) 
 Non-controlling 
  interest                              306       (133) 
                                  ---------  ---------- 
                                      7 391     (4 459) 
                                  ---------  ---------- 
 Other comprehensive 
  income 
                                     10 575     (2 896) 
                                  ---------  ---------- 
 Revaluation                         13 627           - 
  of land 
 Deferred tax 
  on revaluation                    (3 052)     (2 896) 
                                  ---------  ---------- 
 
 Total comprehensive 
  income/(loss) 
  for the year                       17 966     (7 355) 
                                  =========  ========== 
 
 Total comprehensive 
  income attributable 
  to: 
 Equity holders                      17 660     (7 222) 
 Non-controlling 
  interest                              306       (133) 
                                  ---------  ---------- 
 
                                     17 966     (7 355) 
                                  =========  ========== 
 
 
 Earnings/(loss) 
  per share (cents)                    0.61      (0.53) 
 
   Diluted earnings/(loss) 
   per share (cents)                   0.58      (0.50) 
 

Statements of financial position

(MORE TO FOLLOW) Dow Jones Newswires

June 20, 2017 02:00 ET (06:00 GMT)

DJ Inqo Investments Limited Inqo Investments Ltd -2-

for the year ended 28 February 2017

 
 
 
                               Audited     Audited 
                               28 Feb      29 Feb 
                                  17          16 
                                R'000       R'000 
 Assets 
 Non-current 
  assets                        132 870     119 110 
                             ----------  ---------- 
 Property, plant 
  and equipment                 131 898     119 082 
 Intangible assets                   18          28 
 Loans to subsidiaries                -           - 
 Other investments                  954           - 
 Investments                          -           - 
  in subsidiaries 
                             ----------  ---------- 
 Current assets                  10 655      31 803 
                             ----------  ---------- 
 Inventories                        486         389 
 Trade and other 
  receivables                     3 115       4 806 
 Biological assets                3 512       2 950 
 Cash and cash 
  equivalents                     3 542      23 658 
                             ----------  ---------- 
 
 Total assets                   143 525     150 913 
                             ----------  ---------- 
 
 Equity and liabilities 
 Capital and 
  reserves 
 Ordinary share 
  capital                        58 198      58 198 
 Share premium                   58 228      58 228 
 Revaluation 
  reserve                        70 774      60 200 
 Accumulated 
  loss                         (58 786)    (65 871) 
                             ----------  ---------- 
 Equity attributable 
  to equity holders 
  of Inqo Investments 
  Limited                       128 414     110 755 
 Non-controlling 
  interest                          173       (133) 
                             ----------  ---------- 
 Total equity                   128 587     110 622 
 Non-current 
  liabilities                     9 753      17 759 
                             ----------  ---------- 
 Loans from related 
  parties                           436         414 
 Other long term 
  loans                             566         538 
 External loans 
  and borrowings                      -      13 977 
 Deferred tax 
  liability                       8 558       2 637 
 Debentures                         193         193 
                             ----------  ---------- 
 Current liabilities              5 185      22 532 
                             ----------  ---------- 
 Trade and other 
  payables                        4 933       6 277 
 Provision                          252         252 
 External loans 
  and borrowings 
  - current portion                   -      16 003 
                             ----------  ---------- 
 Total liabilities               14 938      40 291 
                             ----------  ---------- 
 Total equity 
  and liabilities               143 525     150 913 
                             ----------  ---------- 
 

Statements of changes in equity

for the year ended 28 February 2017

 
                     Share capital   Share premium   Revaluation   Accumulated   Non-controlling   Total 
                                                       reserve         loss          interest 
                         R'000           R'000          R'000         R'000           R'000                    R'000 
 Balance at 28 
  February 
  2016                      58 198          58 228        60 200      (65 871)             (133)             110 622 
 Profit for the 
  year                           -               -        10 574         7 085               306              17 965 
 Balance at 28 
  February 
  2017                      58 198          58 228        70 774      (58 786)               173             128 587 
                    ==============  ==============  ============  ============  ================  ================== 
 
 Restated balance 
  at 
  28 February 2015          28 813          13 266        63 096      (61 545)                 -              43 630 
 Share issue                29 385          44 962             -             -                 -              74 347 
 Loss for the year               -               -       (2 896)       (4 326)             (133)             (7 355) 
                            58 198          58 227        60 199       (65 871                               110 621 
                               075             703           652          034)         (132 561)                 835 
                    --------------  --------------  ------------  ------------  ----------------  ------------------ 
 Restated balance 
  at 
  29 February 2016          58 198          58 228        60 200      (65 871)             (133)             110 622 
                    ==============  ==============  ============  ============  ================  ================== 
 

Statements of cash flows

for the year ended 28 February 2017

 
 
                                  Audited    Audited 
                                   28 Feb    29 Feb 
                                     17         16 
                                   R'000      R'000 
 
 Cash utilised by operations         (986)   (4 004) 
 Net cash outflow from 
  operating activities               (986)   (4 004) 
                                 ---------  -------- 
 
 Cash flows from investing 
  activities 
 Increase in loans to 
  subsidiary                             -         - 
 Acquisition of other                (954)         - 
  investments 
 Acquisition of property, 
  plant and equipment 
  and intangible assets            (2 288)   (1 757) 
 Disposal of property,                  66         - 
  plant and equipment 
 Net cash outflow from 
  investing activities             (3 176)   (1 757) 
                                 ---------  -------- 
 
 Cash flows from financing 
  activities 
 Loans and borrowings 
  (repaid)/ received              (15 976)        94 
 Shares issued to new 
  shareholder for cash                   -    12 500 
 Loans from related 
  parties received                      22         - 
                                 ---------  -------- 
 Net cash (outflow)/inflow 
  from financing activities       (15 954)    12 594 
                                 ---------  -------- 
 Net movement in cash 
  and cash equivalents            (20 116)     6 833 
 Cash and cash equivalents 
  at beginning of year              23 658    16 825 
 Cash and cash equivalents 
  at end of year                     3 542    23 658 
                                 =========  ======== 
 

This information is provided by RNS

The company news service from the London Stock Exchange

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