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DJ Inqo Investments Limited Inqo Investments Ltd HY Results to 31 August 2018

TIDMINQO

RNS Number : 4084G

Inqo Investments Limited

06 November 2018

Inqo Investments Limited

Unaudited Group Results for the six month period ended

31 August 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 remains in a strong financial position with no debt. Cash reserves for investment stood at R12m with total assets of R154m on the balance sheet.

The results for the six months under review showed a loss, after tax of R4 118 883 (August 2017: a loss of R4 045 783) of which R1 261 577 (2017: R1 029 799) was depreciation.

Inqo's revenues are derived primarily from its main subsidiary, Kuzuko Lodge. In the six month period under review the revenues have grown from R7 605 499 to R8 367 664, a rise of 10% even during the low season where turnovers are traditionally low and having closed for a three week period for annual maintenance. The marketing efforts that kicked off in 2016 to boost room occupancy have resulted in improved revenues this year. We expect this to flow through into the high season during the next 6 months.

INVESTEE COMPANIES

Kuzuko Lodge (South Africa)

The Lodge traded at a loss for the six months to date reflecting a loss of R3 640 938 (August 2017: six month period R2 006 939). Tourism to South Africa generally has been affected by the water shortage in Cape Town for the past 12 months. This has also had some negative effect on Kuzuko's trading.

Substantial sums were spent on repairs and maintenance on the property contributing to the increase loss compared to 2017. Improved occupancy levels are anticipated for the rest of 2018/9 high season as reflected by a strong level of advanced bookings currently in the system and already prepaid.

Spekboom Trading (South Africa)

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 replanted 500 acres of spekboom on degraded land.

The company is currently embarking on a series of experiments to test alternative planting methodologies for spekboom for future plantings.

Bee Sweet Honey (Zambia)

Inqo initially invested in Bee Sweet in 2016 when the right to the income flow from 3 000 hives were bought. In 2018 a second investment was made when the income flow from 3 500 hives was acquired. The harvest yield in May was 262 tonnes (2017: 133 tonnes) of honey. Inqo's share of the May 2018 crop was 19.7 tonnes (2017: 7.4 tonnes).

Four-One Financial Services Limited (Uganda)

Inqo has made two investments into Four-One Financial Services Limited, a Ugandan based micro-pensions and savings company which manages the Mazima Voluntary Individual Retirement Benefits Scheme. The bulk of the investment was by way of interest bearing loan accounts.

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 their own account managed by the custodian bank, Housing Finance Bank. The investments are managed by AA Financial, a regulated advisor.

OUTLOOK

Inqo expects to continue benefitting from the improved trading of the Kuzuko Lodge operation, the revenue flow from Bee Sweet Honey and the interest flow from Four-One Financial Services Limited.

The occupancies and average room rates currently anticipated at Kuzuko Lodge in the second six months of the 2017/8 year are very strong with the Lodge experiencing very good occupancy levels in the final quarter of 2018. The trend is expected to continue into 2019 on the back of the fact that the Rand remains weak against other currencies making South Africa an attractive destination of travel. Kuzuko Lodge is situated in a malaria free area and this factor is proving to be positive to the business as the Lodge is now experiencing a higher level of enquiries from potential North American visitors.

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 65 fulltime and 12 part-time and contracted staff employed. 51 of the fulltime staff are employed from local communities.

-- All staff living at Kuzuko in standard housing with flush toilets, power, water and solar panels.

   --      Conservation of 3 endangered species. 

-- 50 pupils from township schools and nearby farm schools hosted on a day visit to the Kuzuko Educational Centre to learn about conservation in the period from June to August.

-- 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. Inqo has acquired the right to the income generated from 6 500 of these hives.

-- The Mazima Retirement Plan now has some 1200 active members having grown from 430 active members in August 2016. Members are earning an average return of 11.5% on their investments currently.

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 months ended 31 August 2018. KPMG has performed a review of the condensed consolidated interim financial statements for the six months ended 31 August 2018. A copy of these condensed interim financial statements and KPMG's review report will be available at the Company's offices on 5 November 2018.

DIVIDEND

The company has not declared a dividend for the period ended 31 August 2018.

K.S Tan

Chairman

C.J Bertie

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 
 
 
 
 Condensed consolidated statement of profit or loss and other comprehensive 
  income 
 For the six months ended 31 August 
  2018 
 
                                                                  Group 
                                      (Reviewed)               (Reviewed)                (Audited) 
                                      Six Months               Six Months                Year ended 
                                       ended 31                 ended 31                28 February 
                                      August 2018              August 2017                  2018 
 
                                      (6 months)               (6 months)               (12 months) 
                                         R'000                    R'000                    R'000 
 
 Revenue                                         8 371                     7 652                   22 963 
 Cost of sales                                 (1 456)                    (1160)                  (3 046) 
                                ----------------------  ------------------------  ----------------------- 
 Gross profit                                    6 915                     6 492                   19 917 
 
 Other income                                      197                         -                      146 
 Selling and administrative 
  expenses                                    (11 736)                  (11 095)                 (24 141) 
                                ----------------------  ------------------------  ----------------------- 
 Operating (loss) / 
  profit                                       (4 624)                   (4 603)                   (4078) 
 
 Fair value adjustment                               -                         -                   (2052) 
 
 Net financing income                              509                        86                      135 
 Finance income                                    559                       101                      166 
 Finance costs                                    (50)                      (15)                     (31) 
 
 (Loss) / profit before 
  taxation                                     (4 115)                   (4 517)                  (5 995) 
 Taxation                                          (4)                       471                    1 720 
                                ----------------------  ------------------------ 
 (Loss) / profit for 
  the year                                     (4 119)                   (4 046)                  (4 275) 
                                ----------------------  ------------------------  ----------------------- 
 Other comprehensive 
  income 

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DJ Inqo Investments Limited Inqo Investments Ltd HY -2-

                                                     -                         -                        - 
 Revaluation of land                                 -                         -                        - 
 Deferred tax on revaluation                         -                         -                        - 
 
 Total comprehensive 
  income for the period                        (4 119)                   (4 046)                  (4 275) 
                                ======================  ========================  ======================= 
 
 
 (Loss)/earnings per 
  share (cents)                                 (0.24)                    (0.29)                   (0.41) 
 Diluted (loss)/earnings 
  per share (cents)                             (0.24)                    (0.29)                   (0.41) 
 
 
 
 
 
    Inqo Investments Limited 
    Group 
 Condensed consolidated statement of 
  financial position 
 At 31 August 2018 
 
                                                                Group 
                                       (Reviewed)             (Reviewed)             (Audited) 
                                       31 August              31 August             28 February 
                                          2018                   2017                   2018 
                                         R'000                  R'000                  R'000 
 Assets 
 Non-current assets                            135 355                132 849                131 196 
 Property, plant and 
  equipment                                    131 629                131 266                129 725 
 Intangible assets                                  16                     14                     15 
 Other Investments                               1 691                   1013                  1 456 
 Loan Receivables                                 2019                    556                      - 
 
 Current assets                                 18 702                  7 291                 28 767 
 Inventories                                       881                    663                    730 
 Trade and other receivables                     2 870                  2 267                 22 668 
 Biological assets                               2 618                  3 605                  2 463 
 Cash and cash equivalents                      12 333                    756                  2 906 
 
 Total assets                                  154 057                140 140                159 963 
                                 =====================  =====================  ===================== 
 
 Equity and liabilities 
 Capital and reserves 
 Ordinary share capital                         65 004                 58 198                 65 004 
 Share premium                                  70 774                 58 228                 70 774 
 Revaluation reserve                            70 774                 70 774                 70 774 
 Accumulated loss                             (66 672)               (62 186)               (63 546) 
                                 ---------------------  ---------------------  --------------------- 
 Equity attributable 
  to equity holders of 
  Inqo Investments Limited                     139 880                125 014                143 006 
 Non-controlling interest                        (334)                  (472)                    659 
                                                        ---------------------  --------------------- 
 Total equity                                  139 546                124 542                143 665 
 
 Non-current liabilities                         7 810                  9 296                  7 815 
 Loans from related parties                        165                    436                    189 
 Other long term loans                             610                    580                    595 
 Deferred taxation                               6 842                  8 087                  6 838 
 Debentures                                        193                    193                    193 
 
 Current liabilities                             6 701                  6 302                  8 483 
 Trade and other payables                        5 878                  6 050                  8 336 
 Provision                                         823                    252                    147 
 Interest bearing loans                              -                                             - 
  and borrowings - current 
  portion                                                                   - 
 
 Total liabilities                              14 511                 15 598                 16 298 
 
 Total equity and liabilities                  154 057                140 140                159 963 
                                 =====================  =====================  ===================== 
 
 
 
   Inqo Investments Limited Group 
    Unaudited interim financial information for the six months ended 31 August 
     2018 
 
    Basis of preparation 
 
    The interim financial statements are prepared in accordance with IAS 34 
     Interim Financial Statements and the requirements of the Companies Act 
     of South Africa and should be read in conjunction with the Group's last 
     annual consolidated financial statements as at and for the year ended 
     28 February 2018 ('last annual financial statements'). They do not include 
     all of the information required for a complete set of IFRS 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 has been extracted from Inqo's unaudited condensed 
     consolidated interim financial statements for the six months ended 31 
     August 2018. 
    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 
 Summarised financial information 
 For the six months ended 31 
  August 2018 
 
                                                          Group 
                                      (Reviewed)       (Reviewed)           (Audited) 
                                      Six Months       Six Months          Year ended 
                                       ended 31         ended 31           28 February 
                                      August 2018      August 2017            2018 
 
                                      (6 months)       (6 months)          (12 months) 
 
 Earnings/(loss) per share 
 
 (Loss)/earnings per share 
  (cents)                                  (0.24)              (0.29)              (0.41) 
 Diluted (loss)/earnings 
  per share (cents)                        (0.24)              (0.29)              (0.41) 
 (Loss)/profit attributable 
  to equity shareholders 
  (R'000)                                 (3 125)             (3 401)              (4761) 
 Weighted average number 
  of shares in issue for                   13 000 
  normalised EPS calculation                  727          11 639 615          11 688 093 
 Weighted average number 
  of shares in issue for 
  diluted normalised EPS                   13 610 
  calculation                                 618          11 755 656          12 282 834 
 
 
 
 
 
 

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