Unaudited Group Results for the half-year period ended 31 August 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 R234,859,780 and minimal debt.

The results for the half-year period under review showed revenue of R8,199,813 (August 2023: R7,366,899). The hospitality and tourism industry is characterised by seasonal fluctuations, with the interim period aligning with the off-peak season, which historically results in lower occupancy rates and revenue. The Group generates 80% of its revenue from the hospitality and tourism sector. The Group earned a profit after tax of R532,516 (August 2023: loss after tax R4,069,070).

In April 2024, the company issued 1,854,646 new ordinary shares, raising gross capital of R 29,984,428. 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.

In 2023, Inqo was awarded a US$4 million grant over three years to fund its Conservation and Rural Enterprise (CARE) project in Uganda. To date, Inqo has received US$3 million of this grant. During the period, the Group formalised three CARE investments in Uganda, namely Flybox Budongo (BSF) Farm Limited, Pabidi Lodge Budongo Limited and Empower Clean Cooking Limited.  In the current period, grant funding utilised amounted to R5,143,989 (August 2023: Rnil).

Whilst there has been no change in the company's shareholding in Spekboom Trading (Pty) Limited, a shift in the voting rights has occurred. As a result, the company has ceased consolidation and now recognises the investment under the equity method.

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 half-year period ended 31 August 2024.

FINANCIAL RESULTS

The unaudited financial results for the half-year period ended 31 August 2024 are as follows:

In August 2024, the directors of Inqo reviewed the valuation placed on all income earning assets to ensure that they reflect their fair value.  Following the reviews, the directors are of the view that Group assets as stated in the Statement of Financial Position are reflected at fair value.  The only non-South African company where Inqo held investments that required assessment from a fair value adjustment perspective was Four One Financial Services Limited. The company has struggled financially but managed to remain operational, however in the process has defaulted on loan and interest repayments.  For this reason, the loan including interest amounting to R4,005,264 remains impaired in full.

INVESTEE COMPANIES: FINANCIAL, ENVIRONMENTAL AND SOCIAL PERFORMANCE COMMENTARY

Beyond the specific changes outlined below, there have been no other material developments or significant events impacting the investee companies during the period.

Kuzuko Lodge (Pty) Limited (South Africa)

After exiting the hotel management company approximately one year ago, Kuzuko Lodge has implemented a focused strategy to improve operational efficiency and increase revenue. These efforts have resulted in a turnaround, with a loss of R4,013,271 in August 2023 shifting to a loss of R743,774 in August 2024. This positive trajectory can be attributed to a combination of cost containment measures and targeted marketing initiatives. The directors anticipate that Kuzuko will continue to build on this momentum and achieve profitability by the end of the year, particularly as the peak tourism season approaches.

CARE Investees

·   Flybox Budongo (BSF) Farm Limited (Uganda) forms part of the Uganda CARE project. Inqo has partnered with Mana Biosystems Limited (United Kingdom) (FlyBox UK) to implement the Black Soldier Fly project in Uganda.  The purpose of insect farming is to upcycle organic waste into animal protein and compost.  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.  At reporting date, Flybox UK had been commissioned to build modular insect farms due for delivery in Uganda in December 2024.  No further business activity has commenced.

·     Pabidi Lodge Budongo Limited (Uganda) forms part of the Uganda CARE project. Pabidi Lodge is currently under construction and it is expected to open in May 2025. The lodge will be the only luxury accommodation offering sustainable ecotourism to guests in the Budongo Forest. The Lodge will be operated by Great Lakes Safaris, one of the leading tour operators in Uganda. Great Lakes Safaris hold the sole conservancy in the Budongo Forest, an 825 sq km forest that is home to more than 600 chimpanzees.  The founder and CEO of Great Lake Safaris is the majority shareholder of Budongo-Eco Lodge Limited, Inqo's joint venture partner. The site clearance and construction of the lodge commenced during the reporting period.

·     Empower Clean Cooking Limited (Uganda) forms part of the Uganda CARE project. Empower Clean Cooking Limited is a joint venture between Inqo and East African Power Limited.  Empower Clean Cooking Limited will be managed and operated by East Africa Power, a highly experienced renewable energy developer and operator with hydro and solar plants in Rwanda, Uganda, DRC, Zambia, Zimbabwe and Kenya. The objective of the company is to safeguard the environment through providing clean cooking solutions to local environments. The joint venture will manufacture biomass pellets for cooking fuel as an alternative to wood and charcoal and to explore clean cooking solutions for the local community.  The company has not commenced operations.

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 in 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.

K.S Tan                                                                                              R.H Steyn

Chairman                                                                                       Chief Financial Officer

Issued on: 27 November 2024

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