Inqo Investments (AQUIS:INQO) — Interim Results

0:01 Good afternoon, and welcome to INQO INVESTMENTS LIMITED interim results investor presentation. Throughout this recording meeting, investors will be in listen only mode. Questions are encouraged, could be submitted any time by the Q and A tab situated in the right hand corner of your screen. Just click Q and A, type in your question, and press send. The company may not be in a position to answer every question received during the meeting itself. However, the company can review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, we'd like to submit the following poll.

0:27 I'd now like to hand you over to Kim Dan, chairman. Good afternoon, sir. Well, hello, everyone, and good morning, good afternoon, and and good evening, wherever you may be, which time whatever time zone you may be in. So thank you for joining, this presentation. And my name is is Kim Tan, and joining me on this presentation is Robin Steen, who is our chief financial officer. Greetings, everybody. So on this first slide, basically, it tells you what INQO INVESTMENTS, is about. We're a social, impact company focusing on the environment, conservation, and rural enterprise, development in Sub Saharan Africa. Primarily three countries currently, South Africa, Uganda, and and Kenya.

1:27 So the premise for the company is that we believe that enterprise is a far more effective way of tackling, endemic poverty. There will always be a place for charity and aid, particularly in humanitarian crises. But for long term transformation of communities and countries, we think that, enterprise solutions, work better. And to that end, we are intentionally, investing, in businesses that covers social, environmental, as well as for financial returns. And we are intentional about creating jobs, in rural and amongst, disadvantaged communities.

2:17 So that's a little, background to, the company. And these are our key investments, and I will take you briefly through each one of them. So our early investments some twenty years ago was to in this project to create a safari game reserve in the Eastern Cape of South Africa. We acquired almost 40,000 acres of degraded farmland, removed tons of metal and fencing, fenced about 75 kilometers of elephant proof fencing to create and restore the land and rewild the land and eventually building a five star lodge together with Estab Village.

3:15 This is a region that is malaria free and the poorest province in South Africa. Province itself has about a 70% unemployment rate and in our district even higher than that. And so the thesis was that in a region as desperately poor with endemic poverty as this, what can a philanthropist do apart from building a school, a clinic, an orphanage, also good things to do, and we need to do more of it. We felt that the only way to bring change was to make significant investment into that district, and this is what this project was about.

4:07 And in the process, not only have we got a a lodge that's been open over the last ten years now, we've engaged with a number of conservation projects. There's been a a rewilding project around cheetahs. And we have, I think, the years now, bred and and rewild something like eighteen, nineteen cheetahs to just with new genetics to distribute around, the country. And these are some of other species, that are there, for for guests when they when they come on safari with us. The other project that we have going on the game reserve involves restoring the land.

5:00 This is a plant called spegboom. It's a small leaf plant, that captures carbon, that is eaten by, goats all the way up to elephants, indigenous to the district.

5:18 And in the last few years, we've been learning how to grow this shrub more efficiently. And in the last two years, in partnership with AFRICarbon, with funding from reforest action in France, we've been able to launch a large reforestation program using spec boom. And so in the last two years, we've planted 30,000,000 of these cuttings onto 12,000 acres. And in the process, we've employed some 350 people. I'd like to pause now to sort of run a a short video clip to show you the spectrum project.

6:10 More than 1,000,000 hectares of South Africa's Eastern Cape has been intensely overgrazed over the past two centuries. Extreme overstocking with goats has degraded large parts of the area past the point of natural recovery, turning it from a lush thicket of trees into a desert like environment.

6:41 Afrikarbond is restoring this thicket over 5,200 hectares by replanting the foundation of this ecosystem, the speckboam tree. As the speckboam grows, it captures large amounts of carbon, attracts wildlife to the previously barren landscape, and facilitates the establishment of other indigenous plant species. Speckboam also preserves the topsoils, ensuring more water enters the soil and flows into aquifers. Over the course of 2023, AfriCarbon has grown 30,000,000 specboam plants in a nursery and then planted them out across 5,200 hectares of degraded thicket in Kuzuko Private Game Reserve. This operation involved more than 400 workers in the nursery and field and will sequester 2,400,000 tons of c o two over the next fifty years.

7:33 This is an example of a planting trial done in 2008. This restoration, implemented by AFRICarbon, will generate more than 2,400,000 carbon credits using the VERA and CCB methodologies. The exceptional social and biodiversity benefits of the project enable it to obtain its CCB gold status. Afrocarbon's goal is to restore hundreds of thousands of hectares of degraded speckboam thicket by 2030. The 5200 hectares planted at Kazuko Private Game Reserve over the course of 2023 provides proof of concept that such scaling is achievable. We are currently looking for funding partners to join us on our journey to restore vast landscapes of degraded specked boam thicket in the Eastern Cape of South Africa.

8:25 Please contact us at [email protected] for more information.

8:39 Well, hi, everyone again. That was a project that was completed to towards tail end of last year, and, we're just looking forward to more, areas that can be suitable for planting with with the spectrum. And it's all been pre financed by by Carbon Trade.

9:04 Alongside the Kuzugou Game Reserve, we support a foundation. We were aware very early on that a lot of our children in South Africa have never seen game in a while. They've seen game on in books, and on television, but have never seen game in a while because these reserves are still the preserve of those who can afford, to go to them. So we fence about a 500 acres just outside of the reserve to create an educational park with the idea of bringing children on day trips, on day outings to learn about conservation, to have an experience with game.

9:51 And whilst the Lodge contributes to it, we also encourage guests who have enjoyed an experience with us to also donate to to the foundation.

10:09 So here you see some of these, kids, who come for for the day outing, and they they get fed as well, of course. And we have a a building there that has stuffed animals and dung and bones and skulls, and and and this is how we encourage and and teach the children about the conservation. And also on the park itself, there are four, five hundred year old cave paintings. This is all part of the heritage of these young people, and and and we wanna educate them about their heritage. Moving on. This is the conservation of rural enterprise, which we call CARE, our CARE project in Uganda. We've taken learnings from South Africa now to Uganda.

11:08 And here is a forest, 800 square kilometer forest, which is home to 600 chimpanzees, but that is experiencing, deforestation. And the reason that that the deforestation is happening here is because of poverty, because the communities surrounding this forest are poor, and they have to chop trees to sell charcoal in order to put food on the table. We take, are currently taking a holistic view to say the only way to solve this problem and protect the forest and the the wildlife is to create real jobs into the community. And to that end, we are investing in these three businesses, a lodge, a luxury lodge in the forest itself, and then, two more factories, light industrial factories into the community with a target of of of creating something like a 150 jobs. And the the question then is if we did create these number of jobs, over the next three to five years, will we see transformation?

12:22 Will we provide an alternative livelihood so that they don't have to chop trees and set traps for for wildlife.

12:37 This project is, in partnership with Belmont University who are doing the socioeconomic, survey for us, and Surrey University who are doing the satellite imaging of the forest for us. And it's been funded by, TRT, the Temple and Religion Trust. So this is a grant that has come from TRT. And this slide just very quickly shows what the kind of environment we are working in. So the average family in South Africa is about five, but in the Bodongo area where we are working, it's average number of six members of per family.

13:24 77% are headed by fathers. 23% of these households headed by mothers. Over 50% of these families still live in mud houses. 77% of them have some kind of, primary education. But what is really concerning is the average income of these families, only about 300 US dollars per year. So we're talking about real poverty, and and the question then is if we did create these kinds of jobs, will we see change happening over a number of years.

14:13 This is where we're at. Currently, the the top panel shows you the lodge. This is a photo from last month, and, we expect to be open, with, at least eight of these luxury tents, around, April, May of next year. So that's that's where we are at. And then the left bottom panel shows you the five and a half acres of land that we've acquired and now cleared and leveled to turn to a light industrial park. And the middle panel shows you the

14:59 one of the ventures that we'll be locating on this industrial park. It's a business called Flybox. And what they do is they, use the black soldier fly to, produce larvae. And these larvae will feed on waste and convert convert waste into organic fertilizer, and the lava can then also be used as a protein substitute in animal feed. So they're just dropping, five containers for us in the next couple of weeks, on on-site. And then the other factory is one that will make, biomass pellets for cooking fuel.

15:51 So we have lots of biomass, in the area from sugarcane, from coffee, and all these biomass can be used to make pellets for cooking fuel that are more efficient and are cheaper than charcoal. So, these are with the two initial factories that will be, up and running, in December, January. Turning now to our other investments. This is Kantegra, which is a company based in Kenya. And what Kantegra does is that it works with about 20,000 or so of growers to grow a chrysanthemum flower which can be harvested every two weeks, and the farmers dry them and they bring, them to a meeting point where they are weighed and are paid by mobile money.

16:54 And the flowers are then brought into these two factories to extract pyrithrum. Pyrithrum is the organic insecticide that's used in mosquito sprays and mosquito coils and so on. So this is a a significant business for the the country of Kenya and

17:17 and and now has has two factories with more and more people growing Pyrithium. Synergy or Regen Organics is also based in Kenya. This is a a business tackling the problem of sanitation in the slums. This is in Kabiru Slum, which is, one of the largest slums that we have, in Africa, sadly. And this is a a franchise toilet model. It's franchise to largely these women. People pay, to use. And currently, there are about 5,000 of these toilets serving over 270,000 people daily.

18:05 And the the so there's some income for for these entrepreneurs, but in terms of the the business, just that income alone is just insufficient to make it profitable. So the only way to make it profitable is to take the waste away daily to process into two products. One is the black sojourn fly protein. So that's the image there of the factory that is there in Kenya that will process the waste into

18:43 insect protein that can then be dried, harvested and dried, the larvae, and bagged, and then sold as a protein substitute for for animal feed. And then the waste product is organic fertilizer, which can then also be sold. The third, and final, investment that we have is in a business called Southlake Medical Center, also based in Kenya, but it's in the middle of Kenya, on the South Side of Lake Nyvasher. This hospital is a cottage hospital, serves about 50,000 flower farm workers in around, the lake.

19:31 And in the last few years, together with COINVESTMENTS, we've been able to build a minor surgical unit initially and now have built a major surgical unit, into that, Cottage Hospital so that we can now have full major surgical procedures. In the last year or so, we've seen almost, 95 or so thousand, patient visits. And, what for me is particularly pleasing is in the last year or so, we've been able to screen over twenty thousand women for cervical cancers. And out of that, have been able to provide vaccination, for over seven hundred of these, young girls.

20:22 HPV is is is is a very, very important, preventative measure to prevent cervical cancers in these women. So that that's been a great thing to be able to to have to have done in the last year or so. And now I'll turn over to Robin to say a little about the financials. Thank you, Kim. So Kim gets to speak about the exciting projects that we do and but for INQOID to deliver and to do what it wants to do, The businesses need to be sustainable, and we need to be sustainable. So we do need to look at profitability. What I did want to bring up was just our history since 2019.

21:09 Kuzuko Lodge forms part about 80% of our revenue. And you can see, if you look at the revenue line, that the hospitality industry was heavily hit by COVID, and our revenues just dropped in 2021 and 2022. But I'm pleased to to present and to say that we've turned that corner, and we are excited about our future, and we can see the change, and our revenues are picking up steadily. I do want to point out that our the hospitality industry is seasonal, and our first six months are part of our low season. So when we report our interim results, they are lower than we expect our year end results to be. If I compare 2024 to our interim results for August 24, and we look to our final results and our forecasts, what was significant in 2024 was that Kuzuko has since its inception been run by a hotel management company.

22:17 And toward the end of last calendar year, Kuzuko left and has been independent since then and has been flourishing in its independence and managing its own marketing and sending its a very personal message to the market, and we're seeing the benefit of that.

22:37 So I'm gonna move across to our financial position. Our biggest asset is our property, and and really, this is the the building, the Kuzuko Building and the reserve, and we revalue this every two years by an independent evaluator. So this is the fair value of the proper team. Our investments are split. You will see that our investments have grown significantly in to the interim result. The The increase is in the care projects, which those joint ventures have taken off this year. And so the CHF 7,000,000 difference there is our share investment into those three JVs that Kim spoke about and the shareholder funding that we've put through so that those investors investments can be operationalized and go ahead.

23:32 What I'd like to point out, too, is our cash reserves. We have increased our cash reserves in the current year twofold. One is we issued additional shares this year, which attracted we managed to get 29,000,000 through that additional share issue. Part of it was through a conversion of a a loan note, and you'll see the drop in the conversion loan notes in the credit loan notes under the liabilities. Our our care project, we receive funding through the Belmont University, and this is also to show that we have under the unutilized grant funding, we have ZAR 40,000,000 available to spend on those projects. So not only for the three projects that we have initiated, but for additional projects.

24:29 And the idea is that we will use our shareholder funding to start these businesses. And as these business take off and the fund the capital returns to us, we can then reinvest in additional funding going forward. We're very positive about our future and and these investments in Uganda and our South African investments. Thank you. Thank you, Robin. And this is just a a summary slide of all the environmental and social metrics, that we've been achieved over the last, ten or so years. And and hopefully with the care project coming on stream in Uganda, we'll see three new businesses with three new revenue streams come coming the coming year as as well as further environmental and and and social impact.

25:34 And the final slide is is really a little about the information on the company. Company is listed on the Aquis stock exchange, and those are the the details. Code is INQO. To our knowledge, currently, there's only one online trading platform to trade the shares, and it's AJ Bell with the link there. You you can buy shares and trade shares through brokers, but currently, probably only over the phone. So AG Bell, to our knowledge, is the only online trading platform currently for for for the shares. And our corporate adviser and broker is doctor Wang Chong at Hobart Capital Markets.

26:31 So thank you for for joining us and, for your your interest, in, this interesting, journey that we're on to tackle both environmental and social issues in a scalable and profitable way. Thank you. Fantastic. Kim, Robin, thank you indeed for the presentation. Ladies and gentlemen, do please continue to submit your questions using the Q and A tab just situated on the right hand corner of your screen. Just while the team take a few moments to review those questions submitted today, I'd like to remind you the recording of the presentation, along with a copy of the slides and the published Q and A, can be accessed via your investor dashboard. Kim, I think perhaps just returning back to you. As you can see, we had a number of questions both pre submitted and throughout today's presentation, and thank you to all the investors for submitting those. If I may just ask you to click on that Q and A tab and where appropriate to do so, read out the question or direct it to Robin, I'll pick up from you at the end. Okay.

27:28 Thank you and thank you for submitting the questions. The first question is what does the name INQO mean? Well, it's, old Xhosa, meaning rhino or rhinoceros. And and we've actually butchered the name because the the Corsa language has a click, and I just can't do it. So it should be INQO. So that that's that's what it means. Which other forest do you have in mind for future expansion? I think that the next one that we're looking at is probably down also in Uganda, but in Bundi where there are 400 gorillas, left in that forest, and again, with unsustainable deforestation.

28:18 So so that may be, the next kinda area to to take this kinda care, project to, build a lodge into the forest and then build, industries, into the into the village. Why only AJ I think we've answered that. I think to our knowledge, AJ Bell is the only broker currently that you can do online trading. Everybody else, you gotta phone up and and and give instructions. Here's a question.

29:06 How there's a lot of moving parts in the business. Can you give a sense of the revenue and profit opportunities and management and management in each business? And do you own all the the lodges? I think the answer is yes. We do own the lodges. And in in terms of opportunities, there are only a few places in Africa where you can go and see chimpanzees and and gorillas. So there's there's there's a huge demand for for that kind of tourism. And so we expect to to see a significant uptick in revenue once the lodge in in Uganda comes on stream.

30:02 There's a question here. When do you expect to be profitable and pay a a dividend? I I think we have discussed dividend policies at at board level recently, and we intend to be a dividend paying, company. So, and and we would like to do it sooner rather than later depending on, cash position. Someone has asked here a question. I'm new to this. How can I start the journey? I think start the journey by coming on a safari visit, to to Kuzuku. That'd be a good place to start.

30:51 And and furthermore, maybe, you know, join us in in becoming a shareholder and and come on this journey with us, and that may be a good way to to to start on this journey. How do you see the business scaling? Will you look to re replicate across other regions? And what are the limiting factors to expansion? I think we've mentioned that. So we are looking really at other vulnerable forests and and seeing whether we can take this, you know, holistic approach to to to tackle both the environmental as well as the social, needs of these forests. So definitely, we we we would like to scale. While the limiting factor is probably capital, and people.

31:48 We need always need good people on the ground. Mhmm. There's a question here. What specific strategies are you implementing to further grow revenues beyond seasonal tourism fluctuations? I think we are diversifying the the revenue stream. So I think our experience is that tourism alone, just running a lodge, doesn't create that many jobs. Certainly not enough jobs unless it's at a really large scale, to to really impact the community. So we need to diversify, the the the revenue streams, and also diversify the job opportunities for the people in in the community.

32:42 Will you move on to AIM? I think the answer is probably not in our thinking at the moment. I think, you know, we we'll see we'll continue seeing on at on the Aquis exchange for a while, but we need to be much larger than where we are before we can con consider going on AIM or maybe onto one of the European exchanges. How does does INQO own a 100% of these projects or minority interest? Some are minority, but we we we tend to, with the lodges, tend either to be joint ventures where we have around a 50% stake so that we can then consolidate it into our accounts.

33:30 But where we are investing in other businesses, we tend to be in the minority. I don't see any, any further questions. You've covered off every question we've had through, Kim. Thank you very much. Thank you for the investors for those questions. Of course, any further questions that we do get through, the team will be able to review those, and we'll publish responses where appropriate to do so on the INVESTMENTS company platform. Kim, perhaps before redirecting investors to provide you with their feedback, which I is gonna be particularly important to you and the team, could I just ask you for a few closing comments, please? Yeah. So, again, to thank everybody for participating and joining this webinar and for your interest. We we are really very intentional about what we are wanting to do to apply investments that can tackle both social and environmental issues.

34:29 I think that the message that we've what we learned is that, you know, the environment isn't a problem. Humans are the problem. And unless we solve the human problem, we'll never be able to solve the environmental problem. And unless we provide alternative livelihoods to people in the community surrounding these vulnerable forests, we shouldn't stand in judgment. And and we should really think about how we can provide, these kinds of alternative livelihoods, for the people. And then maybe one final thing. You know, buying shares in in this company is no longer gonna make you rich. It it you know, this is this is not for people who wanna sort of grow rich on on investments, but this is for for people who wanna see if they can use some of their capital to effect change, particularly in Sub Saharan Africa with us. So thank you again for for joining us.

35:33 Fantastic. Thank you again, Kim, Robin, for updating investors Thank you. Could I please ask investors not to close the session? It should be automatically redirected to provide your feedback in order the management team can better understand your views and expectations. This will only take a few moments to complete, and I know it will be greatly valued by the company. On behalf of the management team of INQO INVESTMENTS LIMITED, we'd like to thank you for attending today's presentation, and good afternoon to you all. Thank you. Thank you.