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Inqo Investments Ltd (INQO)

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Thursday 24 November, 2016

Inqo Investments Ltd

Half-year Report

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)

Six Months ended 31 August 2016


(Reviewed)

Six Months ended 31 August 2015


(Audited)

Year ended 29 February

2016


                                                          



(6 months)

R

 


(6 months)

R


(12 months)

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)











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)

31 August 2016


(Reviewed)

31 August 2015


(Audited)

29 February

2016

 

Assets



R


R


R

 

Non-current assets



120 064 534


118 007 481


119 109 761


Property, plant and equipment



119 088 580


117 975 185


119 081 602

 

Intangible assets



21 660


32 296


28 159


Investment



954 294


-


-











Current assets



11 305 982


17 974 452


31 803 519


Inventories



583 599


725 038


389 211


Trade and other receivables



2 377 775


2 109 548


4 806 513


Biological assets



3 023 500


2 683 000


2 950 200


Cash and cash equivalents



5 321 108


12 456 866


23 657 595











Total assets



131 370 516


135 981 933


150 913 280


 

Equity and liabilities









Capital and reserves









Ordinary share capital



58 198 075


28 813 042


58 198 075


Share premium



58 227 703


13 265 727


58 227 703


Revaluation reserve



60 199 652


63 095 855


60 199 652


Accumulated loss



(58 881 154)


(64 581 006)


 (65 871 034)


Equity attributable to equity holders of Inqo Investments Limited



 

117 744 276


 

40 593 618


 

110 754 396


Non-controlling interest



(132 561)


531


 (132 561)


Total equity



117 611 715


40 594 149


110 621 835











Non-current liabilities



7 416 089


81 076 217


17 759 198


Loans from related parties



413 779


27 960 525


413 779 


Other long term loans - convertible



551 967


33 945 348


538 257


Interest bearing loans and borrowings



 

-


 

18 976 887


 

13 976 887


Deferred taxation



6 256 886


-


2 636 818


Debentures



193 457


193 457


193 457











Current liabilities



6 342 712


14 311 567


22 532 247


Trade and other payables



5 087 579


2 956 799


6 277 114


Provision



251 796


352 543


251 796


Interest bearing loans and borrowings - current portion



1 003 337


11 002 225


16 003 337











Total liabilities



13 758 801


95 387 784


40 291 445











Total equity and liabilities



131 370 516


135 981 933


150 913 280


 

Inqo Investments Limited Group

Summarised financial information

For the six months ended 31 August 2016

 




(Reviewed)

Six Months ended 31 August 2016


(Reviewed)

Six Months ended 31 August 2015


(Audited)

Year ended 29 February

2016




(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 to equity shareholders


6 989 880


 

   (3 035 766)

 

(7 221 997)

 


Weighted average number of shares in issue for normalised EPS calculation


11 639 615


 

     5 762 606

 

11 555 340

 


Weighted average number of shares in issue for diluted normalised EPS calculation


11 677 473


 

     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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