Group Results for the year ended 29 February 2024
Inqo Investments Limited
Group Results for the year ended 29 February 2024
CHAIRMAN AND CHIEF EXECUTIVE'S STATEMENT
Inqo Investments Limited ("Inqo" or "the Group") is a South African based social impact company that invests in businesses that tackle poverty and environmental challenges in Sub-Saharan Africa.
COMMENTARY
The Group remains in a strong financial position with total assets of R214 million including cash and cash equivalents of R43.77 million and minimal debt.
The results for the year under review showed revenue of R20.6 million (2023: R11.7 million) with a loss after tax of R5.31 million (2023: Profit of R3.77 million). The Group incurred a loss during the current year, largely due to its Kuzuko subsidiary as the tourism sector in South Africa is still recovering post-Covid. However, trading has significantly improved by 51.24% from 2023. The fair value of the buffalo herd has been marked down due to a drop in the published auction prices for the year.
Kuzuko completed the planting of 30 million spekboom plants on 5,185 hectares (~12,800 acres) of land during this financial year. The total cost of planting the spekboom on the reserve through the Reforest Action carbon credit contract was R118 million. This has not been recognised in the accounts because its long-term value has not been crystallised.
Like businesses around the world, the Group has been heavily impacted by the Covid-19 pandemic with reduced earnings and implementation of cost saving measures. The severity of the impact and corresponding speed of recovery has varied across investee companies. Despite the challenges being faced, the directors of the Company have assessed the Company and its subsidiaries and agree that the operating units will continue as a going concern.
Inqo had been given grant funding of US$4 million over a three-year period for its Conservation and Rural Enterprise (CARE) project in Uganda. The first tranche of US$2 million was received in January 2023. The purpose of the CARE project is to address the interrelated issues of poverty and environmental degradation by infusing private capital into the economy of vulnerable rural communities through investments in sustainable small and medium-sized enterprises (SMEs).
Subsequent to year-end, Inqo has formalised two of its CARE investments in Uganda, namely:
Pabidi Lodge Budongo Limited was formed in June 2023 and the company has a 51% equity stake in the business. The shareholders' agreement has been finalised. The lodge will be the only luxury accommodation offering sustainable ecotourism to guests within the Budongo Forest.
A company, Flybox Budongo (BSF) Farm Limited was registered in Uganda subsequent to year-end and the company has a 49% equity stake in the business. Flybox will set up a factory in Budongo to produce Black Soldier Fly (BSF) eggs and 5-day old larvae (called seedlings) using a modular containerised system. The business will initially sell larvae and eggs to farmers to grow to maturity by feeding on market and organic waste. These larvae can then be harvested for use as protein substitute in animal feed.
We expect that these investments will be operational in the Q4 2024.
SHARE ISSUE
In April 2024, the company issued 1,854,646 new ordinary shares, raising gross capital of R 29,985,428. This includes the conversion of two credit loan notes of USD 1,000,000 and R 2,000,000 respectively into equity by the lenders exercising their conversion rights.
FINANCIAL RESULTS
The audited financial results for the year ended 29 February 2024 are as follows:
|
|
February 2024 R'000 |
February 2023 R'000 |
|
Revenue |
20,611 |
11,730 |
|
(Loss) / Profit for the year |
(5,304) |
3,775 |
|
Earnings per share |
(0.36) |
0.27 |
|
|
|
|
|
Total Assets |
214,460 |
210,257 |
|
|
|
|
|
Unutilised Grant Funding |
32,847 |
35,067 |
|
Total Liabilities excl Unutilised Grant Funding |
29,995 |
18,268 |
|
|
|
|
|
Net Assets |
151,618 |
156,922 |
|
(Loss) / Profit from operating activities includes the following items |
||
|
Spekboom Credit Contract |
Nil |
9,090 |
|
Grant income |
1,697 |
Nil |
|
Depreciation |
(2,937) |
(3,791) |
|
Personnel Costs |
(5,386) |
(4,854) |
|
Directors' Fees and Salaries |
(1,610) |
(959) |
|
Listing Expenses |
(933) |
(761) |
|
Professional Fees |
(370) |
(594) |
|
Impairments of loans: Four One |
(1,921) |
(108) |
|
Fair value adjustment of the buffalo herd |
(1,811) |
1,030 |
A copy of this announcement and the full audited financial statements will be available on the Company's website at Inqo.co.za.
INVESTEE COMPANIES: FINANCIAL, ENVIRONMENTAL AND SOCIAL PERFORMANCE COMMENTARY
· Kuzuko Lodge (Pty) Ltd (South Africa)
Kuzuko Lodge is a subsidiary entity that operates a five-star luxury game lodge in the Eastern Cape. Kuzuko combines job creation, conservation and transformation in an eco-tourism environment. Kuzuko has been creating sustainable jobs for 20 years.
Despite incurring a loss in the current year, Kuzuko has experienced a 51% increase in revenues and related occupancy levels. Kuzuko transitioned from a hotel management group to independent management, intensified its marketing efforts and implemented key personnel changes, new systems and new cost control measures. These strategic changes will position Kuzuko for a positive financial outlook in the coming years.
· Inqo Africa (Pty) Ltd (South Africa), is a wholly owned subsidiary formed on 27 October 2020 to facilitate with the acquisition of investments in Kenya and Uganda. The group investment in Sanergy Incorporated is held by Inqo Africa (Pty) Ltd.
· Spekboom Trading (Pty) Ltd (South Africa) is owned by Inqo Investments (50.1%) and AfriCarbon (49.9%), a company specialising in facilitating and implementing investments in ecosystem restoration projects with a positive impact for carbon and community.
The Kuzuko Thicket Restoration Project commenced in September 2022 after an agreement was reached with an international third party, Re'Forest Action, to finance the project through forward sold carbon credit rights. The project will restore damaged ecosystems, benefit poor communities through job creation and capture carbon from the atmosphere. At 31 December 2023, the planting project was successfully concluded having planted 30 million spekboom cuttings across 5,185 hectares. The total cost of planting these cuttings amounted to R118M. During the height of the project, 350 people were involved in the project of which 250 people were housed and fed on the property. Planters were trained not only on the skills required for the project but also life skills.
· Four One Financial Services Limited (Uganda) is a financial services company offering specially designed products for the underserved low-income demographic in Uganda. Four One was particularly hard hit by the pandemic with its loan portfolio highly impaired resulting in a pivot towards property development. We are pessimistic about the outlook of the company due to the damage to their loan portfolio. We have now provided for a full impairment of the convertible loan note and the loans payable.
· Kentegra (Kenya) is a Kenyan based biotechnology firm owned by the US holding company, Kentegra Biotechnology Holdings LLC, producing pyrethrum, a natural biocide and pesticide. The company has seen significant growth over the last 12 months and has now built and commissioned a second extraction factory in the Naivasha Export Processing Zone (EPZ).
In terms of the unaudited management accounts, Kentegra realised a positive EBITDA in 2023 and revenue increased by 100% from 2022 to 2023. Kentegra employs 300 people and have contracted to 26,000 farmers. Two surveys were commissioned to measure the impact of the company on the contracted farms during the financial year. The studies revealed that:
o 60% of the farmers' main source of income was from pyrethrum.
o 60% of the farmers have commenced other income generating projects from the pyrethrum income.
o 96% of the farmers would recommend Kentegra to a friend.
· South Lake Medical Centre - SLMC (Kenya) is a private healthcare provider in the Naivasha region of Kenya serving predominantly low-income flower farm workers. SLMC operate a 'hub and spoke' model around a 27-bed private referral-level hospital with 5 satellite health posts in nearby population centres.
SLMC's unaudited management accounts for 2023 reflect a positive EBITDA, 5% higher than 2022. Despite ongoing challenges regarding delays in the payments from the National Health Insurance, SLMC performed well against their KPIs year on year; most notably safe deliveries 217 (2022: 156); surgeries 205 (2022: 61); patient visits 98,719 (2022: 82,387) and community outreach 69,726 (2022: 44,505). Declines noted include antenatal care (ANC) to safe delivery of 39% and HIV program of 25%.
Through Pfizer, SLMC successfully implemented a cervical cancer screening and HPV vaccination project aimed at enabling access to 2,000 women. By January 2024, 83% of the target had been met. In addition, 20 healthcare workers had been trained, 9 clinics were operationalised, the program was integrated into SLMCs service delivery for sustainability and extensive collaboration with communities, health care clinics and government had taken place.
· Sanergy Incorporated (Kenya) operates an innovative circular economy approach to recycling organic waste by feeding the waste to Black Soldier Flies (BSF) to produce a high protein animal feed in the form of BSF larvae. Organic fertilizer and biomass briquettes are also produced as a by-product of this process.
Sanergy's Fresh Life toilets are now in Nairobi, Kisumu and Eldoret serving 270,000 people daily and has created 500 direct jobs. Its RegenOrganics operation that produces the BSF insect protein and organic fertiliser supplies 8,000 farms and has 500 full time equivalent employees (FTEs) and 2,000 indirect jobs.
· Kuzuko Foundation Trust (South Africa)
Kuzuko Private Game Reserve was founded with the expressed aim of creating jobs in an area of exceptionally high unemployment. Kuzuko Foundation Trust (KFT) was established to continue and further that social mission through environmental education, mentoring, youth empowerment, job preparedness training, supporting local schools and supporting our local communities.
The Kuzuko Foundation manages the 14,414 hectares, which makes up the Kuzuko Private Game Reserve. The land is managed for conservation with the aim of rewilding and restoring the land to its natural state, fostering the return of native flora and fauna and creating a self-sustaining ecosystem.
Additionally, the Kuzuko Foundation works actively in the surrounding communities to further Kuzuko's social goals through an environmental education program, a mentoring scheme, work preparedness training, support for local farm schools and developing and supporting positive community initiatives. Kuzuko Lodge and Inqo continue to support the important work of the Kuzuko Foundation Trust.
SUMMARY OF SOCIAL & ENVIRONMENTAL METRICS SINCE PROJECT COMMENCEMENT
· Kuzuko Lodge
o 35,617 acres (14,414 hectares) of former farmland restored and protected as a game reserve
o 70 km of game fencing erected
o 45 FTE staff at Kuzuko in standard housing with flush toilets, power, water and solar panels
o 120 fixed term jobs
o Conservation of 2 endangered species, 8 endangered species protected, 23 species introduced
o Re-wilded 18 adult cheetahs with diverse genetics to bolster the meta-population in southern Africa
· Southlake Medical Centre
o 98,719 patient visits including 386 HIV patients receiving care and counselling, 5,599 people receiving health education including through community outreach, 217 safe deliveries, 205 surgeries, 2,000 cervical cancer screens and 700+ HPV vaccinations
· Kentegra
o 300 FTE and 26,000 contracted out-growers
· Sanergy
o 1,000 FTE, 2,000 indirect jobs, 5,000 toilets serving 270,000 people Nairobi, Kisumu and Eldoret
· Spekboom Trading
o 5,185 hectares degraded land planted with 30 million spekboom; 350 fixed term jobs
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 during this challenging time.
KS Tan
Chairman
Issued on: 30 August 2024
Enquiries
|
Inqo Investments Limited |
Tel: +44 7768 613346 |
|
Dr Kim Tan, Chairman |
Email: kimtan2@springhilluk.com |
|
|
|
|
Hobart Capital Markets LLP |
|
|
AQSE Corporate Adviser and Broker |
Tel: +44 (0)20 7070 5665 |
|
Dr Wang Chong |
Email: wang.chong@hobartcapital.com |
Condensed consolidated and separate Annual Financial Statements for the year ended 29 February 2024
Statements of Financial Position
|
|
Group |
Group |
Company |
Company |
|
|
|
Figures in R |
|
2024 |
2023 |
2024 |
2023 |
|
|
Assets Non-current assets |
|
|
|
|
|
|
|
Property, plant and equipment |
|
151,980,925 |
154,054,726 |
150,894,906 |
152,888,843 |
|
|
Right-of-use assets |
|
68,147 |
236,171 |
|
|
|
|
Intangible assets |
|
840 |
1,840 |
|
|
|
|
Investments in subsidiaries |
|
|
|
1,503 |
1,503 |
|
|
Trade and other receivables |
|
|
|
238,570 |
849,417 |
|
|
Other investments |
|
7,306,227 |
9,017,656 |
5,638,507 |
7,349,936 |
|
|
Loans to subsidiaries |
|
|
|
22,059,056 |
14,990,626 |
|
|
Total non-current assets |
|
159,356,139 |
163,310,393 |
178,832,542 |
176,080,325 |
|
|
Current assets |
|
|
|
|
|
|
|
Inventories |
|
4,295,937 |
4,862,236 |
3,702,582 |
4,194,454 |
|
|
Trade and other receivables |
|
6,059,424 |
3,124,989 |
4,306,972 |
1,710,486 |
|
|
Biological assets |
|
977,000 |
2,788,980 |
977,000 |
2,788,980 |
|
|
Cash and cash equivalents |
|
43,771,590 |
36,170,112 |
41,873,765 |
35,729,803 |
|
|
Total current assets |
|
55,103,951 |
46,946,317 |
50,860,319 |
44,423,723 |
|
|
Total assets |
|
214,460,090 |
210,256,710 |
229,692,861 |
220,504,048 |
|
|
|
Group |
Group |
Company |
Company |
|
|
|
Figures in R |
|
2024 |
2023 |
2024 |
2023 |
|
|
Equity and liabilities |
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
Ordinary share capital |
|
72,584,925 |
72,584,925 |
72,584,925 |
72,584,925 |
|
|
Share premium |
|
87,585,270 |
87,585,270 |
87,585,270 |
87,585,270 |
|
|
Accumulated loss |
|
(95,364,654) |
(90,101,796) |
(77,755,359) |
(72,960,353) |
|
|
Revaluation reserve |
|
86,693,347 |
86,693,347 |
86,693,347 |
86,693,347 |
|
|
Total equity attributable to owners of the parent |
|
151,498,888 |
156,761,746 |
169,108,183 |
173,903,189 |
|
|
Non-controlling interests |
|
119,507 |
160,218 |
|
|
|
|
Total equity |
|
151,618,395 |
156,921,964 |
169,108,183 |
173,903,189 |
|
|
Liabilities |
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
|
|
Deferred tax liabilities |
|
3,809,117 |
4,814,985 |
3,809,117 |
4,814,985 |
|
|
Loans from related parties |
|
3,423,672 |
4,511,589 |
3,423,672 |
4,363,278 |
|
|
Other loans |
|
18,931,500 |
|
18,931,500 |
|
|
|
Lease liabilities |
|
|
76,859 |
|
|
|
|
Total non-current liabilities |
|
26,164,289 |
9,403,433 |
26,164,289 |
9,178,263 |
|
|
Current liabilities |
|
|
|
|
|
|
|
Trade and other payables |
|
3,683,552 |
8,503,452 |
1,573,818 |
2,355,670 |
|
|
Lease liabilities |
|
80,155 |
214,080 |
|
|
|
|
Unutilised grant funding |
|
32,846,571 |
35,066,926 |
32,846,571 |
35,066,926 |
|
|
Bank overdraft |
|
67,128 |
146,855 |
|
|
|
|
Total current liabilities |
|
36,677,406 |
43,931,313 |
34,420,389 |
37,422,596 |
|
|
Total liabilities |
|
62,841,695 |
53,334,746 |
60,584,678 |
46,600,859 |
|
|
Total equity and liabilities |
|
214,460,090 |
210,256,710 |
229,692,861 |
220,504,048 |
|
Statements of Profit or Loss and Other Comprehensive Income
|
Group |
Group |
Company |
Company |
|
Figures in R 2024 |
2023 |
2024 |
2023 |
|
Revenue |
|
20,610,801 |
11,730,190 |
5,159,563 |
952,647 |
|
|
Cost of sales |
|
(2,421,823) |
(1,514,608) |
|
|
|
|
Gross profit |
|
18,188,978 |
10,215,582 |
5,159,563 |
952,647 |
|
|
Other income |
|
3,630,200 |
11,198,922 |
1,944,872 |
10,076,244 |
|
|
Personnel expenses |
|
(6,420,077) |
(5,813,170) |
(921,973) |
(905,084) |
|
|
Depreciation and amortisation |
|
(2,936,964) |
(3,790,520) |
(2,617,434) |
(3,395,008) |
|
|
Listing expenses |
|
(933,451) |
(760,765) |
(933,451) |
(760,765) |
|
|
Professional fees |
|
(945,650) |
(593,633) |
(945,650) |
(593,633) |
|
|
Bad debt |
|
|
(231,385) |
|
(231,385) |
|
|
Provision for doubtful debts |
|
(319,841) |
(286,490) |
(2,429,904) |
(1,286,490) |
|
|
Impairment and fair value adjustment |
|
(1,920,552) |
(107,993) |
(1,920,552) |
(1,584,875) |
|
|
Other expenses |
|
(12,836,487) |
(9,339,646) |
(2,236,734) |
(1,938,776) |
|
|
(Loss) / profit from operating activities |
|
(4,493,844) |
490,902 |
(4,901,263) |
332,875 |
|
|
Inventory write (down)/up |
|
(832,272) |
767,774 |
(832,272) |
767,774 |
|
|
Fair value adjustment |
|
(1,811,980) |
1,029,940 |
(1,811,980) |
1,029,940 |
|
|
Finance income |
|
995,676 |
506,642 |
1,807,315 |
1,087,555 |
|
|
Finance costs |
|
(167,020) |
(169,675) |
(62,675) |
(41,293) |
|
|
(Loss) / profit before tax |
|
(6,309,440) |
2,625,583 |
(5,800,875) |
3,176,851 |
|
|
Income tax credit |
|
1,005,869 |
1,149,324 |
1,005,869 |
1,149,324 |
|
|
(Loss) / profit for the year |
|
(5,303,571) |
3,774,907 |
(4,795,006) |
4,326,175 |
|
|
|
Group |
Group |
Company |
Company |
|
|
|
Figures in R |
|
2024 |
2023 |
2024 |
2023 |
|
|
(Loss) / profit for the year attributable to: |
|
|
|
|
|
|
|
Owners of Parent |
|
(5,262,858) |
3,862,532 |
(4,795,006) |
4,326,175 |
|
|
Non-controlling interest |
|
(40,713) |
(87,625) |
|
|
|
|
|
|
(5,303,571) |
3,774,907 |
(4,795,006) |
4,326,175 |
|
|
Earnings per share from continuing and discontinuing |
|
|
|
|
|
|
|
operations attributable to owners of the parent during |
|
|
|
|
|
|
|
the year |
|
|
|
|
|
|
|
Basic earnings per share |
|
|
|
|
|
|
|
Basic (loss)/ earnings per share |
|
(0.36) |
0.27 |
(0.33) |
0.30 |
|
|
Diluted earnings per share |
|
|
|
|
|
|
|
Diluted (loss)/ earnings per share |
|
(0.36) |
0.27 |
(0.33) |
0.30 |
|
|
Other comprehensive income net of tax |
|
|
|
|
|
|
|
Components of other comprehensive income that will not |
|
|
|
|
|
|
|
be reclassified to profit or loss |
|
|
|
|
|
|
|
Revaluation of land and buildings |
|
|
18,904,001 |
|
18,904,001 |
|
|
Deferred taxation |
|
|
(4,226,189) |
|
(4,226,189) |
|
|
Total other comprehensive income that will not be reclassified to profit or loss |
|
|
14,677,812 |
|
14,677,812 |
|
|
Total comprehensive income |
|
(5,303,571) |
18,452,719 |
(4,795,006) |
19,003,987 |
|
|
Comprehensive income attributable to: |
|
|
|
|
|
|
|
Comprehensive income, attributable to owners of parent |
|
(5,262,858) |
18,540,344 |
(4,795,006) |
19,003,987 |
|
|
Comprehensive income, attributable to non-controlling interests |
|
(40,713) |
(87,625) |
|
|
|
|
|
|
(5,303,571) |
18,452,719 |
(4,795,006) |
19,003,987 |
|
|
Statements of Cash Flows |
|
|||
|
|
Group |
Group |
Company |
Company |
|
Figures in R |
2024 |
2023 |
2024 |
2023 |
|
Net cash flows (used in)/ from operations |
(11,800,817) |
(1,449,746) |
(7,620,425) |
734,120 |
|
Interest paid |
(143,656) |
(169,674) |
(62,675) |
(41,293) |
|
Interest received |
995,676 |
506,642 |
952,982 |
504,453 |
|
Net cash flows (used in)/ from operating activities |
(10,948,797) |
(1,112,778) |
(6,730,118) |
1,197,280 |
|
Cash flows from/ (used in) investing activities |
|
|
|
|
|
Proceeds from sales of property, plant and equipment |
(17,103) |
|
(17,011) |
|
|
Purchase of property, plant and equipment |
(677,038) |
(269,388) |
(606,486) |
(200,904) |
|
Proceeds from sales of biological assets |
|
150,000 |
|
150,000 |
|
Increase in loans to subsidiary |
|
|
(6,214,097) |
(3,350,470) |
|
Loans (extended to)/repaid by other investments |
|
1,214,514 |
|
1,136,490 |
|
Grant funding received |
1,397,799 |
33,409,740 |
1,397,799 |
33,409,740 |
|
Cash flows from/ (used in) investing activities |
703,658 |
34,504,866 |
(5,439,795) |
31,144,856 |
|
Cash flows from financing activities |
|
|
|
|
|
Payments to related parties |
(1,087,917) |
|
(939,606) |
|
|
Loans received related parties |
17,786,900 |
2,839,253 |
17,786,900 |
2,818,616 |
|
Repayments of finance lease |
(234,148) |
(191,564) |
|
|
|
Cash flows from financing activities |
16,464,835 |
2,647,689 |
16,847,294 |
2,818,616 |
|
Net increase in cash and cash equivalents before effect of exchange rate changes |
6,219,696 |
36,039,777 |
4,677,381 |
35,160,752 |
|
Effect of exchange rate changes on cash and cash |
|
|
|
|
|
equivalents |
1,461,509 |
|
1,466,581 |
|
|
Net increase in cash and cash equivalents |
7,681,205 |
36,039,777 |
6,143,962 |
35,160,752 |
|
Cash and cash equivalents at beginning of the year |
36,023,257 |
(16,520) |
35,729,803 |
569,051 |
|
Cash and cash equivalents at end of the year |
|
|
|
|
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