Tingo Group Inc (TIO) 2023 Q2 法說會逐字稿

Greetings, and welcome to the Tingo Group second-quarter 2023 financial results conference call. (Operator Instructions) As a reminder, this conference is being recorded.

Before we begin the formal presentation, I would like to remind everyone that statements made on the call and webcast may include forecasts, estimates, or other information that might be considered forward looking. While these forward-looking statements represent our current judgment on what the future holds, they are not guarantees and are subject to risks and uncertainties that could cause actual results to differ materially.

You are cautioned not to place undue reliance on these forward-looking statements, which reflect our opinions only as of the date of this presentation. Please keep in mind that we are not obligating ourselves to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events.

Throughout today's discussion, we will attempt to present some important factors relating to our business that may affect our predictions. You should also review our most recent Form 10-Q filed today and Form 10-K for more complete discussion of these factors and other risks, particularly under the heading risk factors. A press release detailing these results crossed the wire this morning at 7:15 AM Eastern Time and is available in the Investor Relations section of our company's website, tingogroup.com.

Your hosts today, Darren Mercer, Tingo Group's Chief Executive Officer; Dozy Mmobuosi, Tingo Mobile and Tingo Foods Founder and CEO; and Kevin Chen, Tingo Group Chief Financial Officer. We'll present results of operations for the quarter ended June 30, 2023.

At this time, I'll turn the call over to Tingo Group Chief Executive Officer, Darren Mercer. Please go ahead.

Thank you, operator, and good morning, everybody. I am pleased to welcome you to today's second-quarter 2023 financial results conference call.

Despite the challenges we've encountered over the past few months, namely the short seller attack in June, significant devaluation of Nigeria's currency following the lifting of certain foreign exchange restrictions, a period of economic stagnation in Nigeria following the government elections in February of 2023, and subsequently changes with presidential administrations in May, I am delighted with our progress and achievements over the past three months and extremely excited about our prospects for the remainder of the year and beyond.

For those of you joining us for the first time, I would like to take a moment to introduce Tingo Group. Tingo Group is a diverse fintech and agri-fintech group of companies, with operations in Africa, Southeast Asia, and Middle East. We significantly expanded on somewhat transformed the company when we acquired 100% of Tingo Mobile Ltd. on November 30, 2022, and then acquired Tingo Foods Plc on February 7, 2023, before subsequently changing our name to Tingo Group on February 27, 2023.

As of today, the Tingo Group is comprised of the following businesses. Tingo Mobile, which is a leading fintech and agri-fintech business in Africa. It operates through device-as-a-service and smartphone USSD platform model. Tingo Foods, which uptakes crops from the Tingo Mobile substantial and growing customer base of farmers and processes those crops into finished food and beverage products. Tingo DMCC, which operates a commodity trading platform on export business from the Dubai Multi Commodity Center and deals in both more agricultural commodities from our Tingo Mobile farmers and finished good products in Tingo Foods.

TingoPay. We had developed and recently begins to operate a beta version of the TingoPay Super-App, supported by our Pan-African partnership with Visa. The full version of TingoPay, which will be rolled out later this year, provides payment services and e-wallet in the range of value-added services to customers. TingoPay in partnership with Visa also offers a range of merchant services to businesses.

We also have a number of fintech verticals that have today being focused on the Southeast Asian market. Within the past few months, however, we focus on maximizing shareholder value and leveraging the most profitable and value parts of the Tingo Group, we are currently restructuring this part of the business and winding down or disposing of any operations that do not achieve our target contribution metrics. Our group of businesses and synergistic ecosystem they create, places us in a remarkable position from which we can expand both in our current markets and internationally and deliver significant further growth.

Despite the challenges I mentioned earlier, which we believe are temporary on short-term issues that will ultimately benefit the company in the long term, we achieved quarter-over-quarter revenue growth in the second quarter of 14.8%. What is important to note is that this was against the backdrop of a 66.3% devaluation of Nigeria's currency during the second quarter, and a period of economic stagnation in Nigeria following governments election and subsequent change in presidential administrations.

It is worth noting the significant devaluation in Nigeria's currency occurred as a result of the Central Bank of Nigeria's removal of foreign exchange restrictions, which we believe will deliver significant long-term benefits to our business, including the acceleration of the dollarization of our business and making our export and commodity trading activities more profitable.

Furthermore, once the policies of Nigeria's new government have been fully implemented, we do expect Nigeria's currency to appreciate and this economy to rebound strongly, which should be hugely beneficial to the company and our shareholders.

Following the completion of our acquisition of Tingo Mobile on November 30, 2022, we have been highly profitable and continued to grow strongly since, including through the subsequent acquisition of Tingo Foods and the commencement of export trades through Tingo DMCC. We have also achieved organic growth, including through our partnership with the All Farmers Association of Nigeria and our launch into Ghana. This growth is set to continue following the delivery of 6 million new handsets that we plan to distribute new AFAN customers.

Our financial results highlights for the group is shown on this slide. Once again, all representative of our strong financial performance since the completion of our acquisition of Tingo Mobile on November 30, 2022, and our subsequent acquisition of Tingo Foods.

For the quarter ended June 30, 2023, the company generated over USD977 million in revenue, USD346 million in gross profit, USD283 million in EBITDA, and nearly USD182 million in income before tax. Furthermore, our high levels of operational cash flow enabled us to invest just under USD1 billion in the quarter on purchasing 6 million mobile phone handsets for distribution to new customers and on inventory payments for both Tingo Food and Tingo DMCC businesses.

Slide 5, our mission. As mentioned previously, our reason why Tingo Group is very important to us, for those of you that have listened to or read our presentation are most likely already aware of our mission statements.

For those of you not familiar, our overarching mission at Tingo Group is to foster digital and financial inclusion through our fintech platforms and to drive social and economic upliftment. In our agri-fintech businesses, our mission includes our commitment to make a significant difference in improving global food supply and tackling the world's food security crisis by delivering farmer empowerment, improved crop yields, a reduction in post-harvest losses, and better access to both foreign and domestic markets. At a regional level, we also aim to support Africa and its farmers to achieve sustainable food self-sufficiency, bringing an end to Africa's food insecurity and poverty.

Slide 6, acquisition and recent developments. By way of a recap, we entered into a merger agreement to acquire Tingo Mobile on May 10, 2022. Following this, we immediately appointed a team of some of the world's largest and most reputable professional advisors to undertake extensive due diligence and financial analysis. Amongst others, the team included Big 4 accounting firm; a number-one US law firm who's the largest in Africa; and as I said, other professional advisers too.

We announced on June 15, 2022, the due diligence exercise had been completed and that the findings were positive with no material concerns. The original merger agreement was amended and restated in October of 2022 to facilitate the expedited acquisition of 100% of Tingo Mobile, as well as an improvement in the terms for the company's shareholders. The acquisition was subsequently completed on November 30, 2022.

With the benefits of the companies and Tingo Mobile's collaboration, the fourth quarter of 2022 mark the beginning of the geographical expansion of Tingo Mobile with the opening of offices in Ghana, Malawi, and Dubai. The fourth quarter also saw and launched the Tingo DSCC commodities trading platform and export business. And a soft launch of the beta version of the TingoPay Super App in partnership with Visa.

By January of 2023, we began to pivot the company's insurance and fintech verticals to better complement the Tingo businesses with the goal of leveraging its already established brands and larger customer base. Then on February 7, 2023, we acquired the Tingo Foods and beverage processing business to further strengthen the Tingo seed-to-sale ecosystem.

Also on November 27, 2023, we changed our corporate name and ticker symbol to better reflect the importance of the Tingo brands to the business and provide improved clarity to our external stakeholders, including current and prospective partners, customers, and investors.

Our reporting of full 2022 financial results on March 31, 2023 was followed in April by the announcements of Tingo Mobile exclusive partnership agreement with PCX and AFAN. On May 30th, we completed our first commodity export trades through Tingo DMCC, marking a major milestone in our strategy to dollarize the company's net earnings.

Lastly, earlier today, we announced the commencement of a quarterly dividend, payable to the holders of both our common stock and Series B convertible preferred shares on the adoption of a dividend policy. The first dividend payments has provisionally been agreed in the amounts of USD20 million, which we aim to set the record date for as soon as practicable and all classified as relating to our second-quarter results.

By way of the recap and updates on the Tingo Mobile business that I founded about 22 years ago, we'll begin with the Tingo Mobile business as a service model and then more so, NWASSA agri-fintech platform, which we believe is a leading agri-fintech platform in Africa. Following the signing of the definitive merger agreement with MICT in October of 2022, we set about accelerating growth strategy.

In November and December 2022, we signed cleared agreements with two major partners with the aim of quickly expanding Tingo Mobile's customer base from 9.3 million to unexpected 30 million. We signed a partnership with signed a partnership with the All Farmers Association of Nigeria, which included a commitment to enroll a minimum of 20 million new customers to Tingo Mobile. We also launched in Ghana and sign it with agreement with Kingdom of Ashanti, which concluded a commitment to enroll a minimum of 2 million new customers to Tingo Mobile, on the target goal of enrolling more than 4 million new customers.

Soon afterwards, we launched into Malawi and have made progress towards several partnerships, with the goal of establishing a base to rollout in the future across the East Africa, including Tanzania, Mozambique, and Zambia. Looking further ahead, we plan to expand in the future into other parts of Africa as well as into Asia and other advanced markets in the world. Through our businesses within the Tingo family, mainly Tingo Foods and Tingo DMCC, we aim to increase offtake and demand for produce from Tingo Mobile's farmers, thereby treating with ourselves for enforcement cycle.

In April 2023, as part of the further strengthening of our ecosystem, Tingo Mobile entered into a tripartite agreement at PCX and AFAN, which I will discuss in more detail shortly. Lastly, as we look to expand the reach of our North America platform, we are making good progress in testing and further developing the forthcoming NWASSA web platform and NWASSA app, which we intend to launch later this year to complement the already successful years of the GSM platform.

Slide 8, Tingo Foods. Tingo Food was acquired by the group on February 7, 2023. This is a business of Dozi Mmobousi have been developing for some time outside of Tingo Mobile. Tingo Foods is launched as a standalone company in September of 2022, focusing on supplying a relatively small range of products to several large distribution and wholesale businesses. Tingo Foods creates significant demand and offtake with Tingo Mobile's farmers, while at the same time creating supply with Tingo DMCC's commodity trading and export business.

In the first five months of trading since we acquired Tingo Foods Plc in February of 2023, the businesses generated revenues of USD983.7 million and delivered an operating profit of USD203.8 million. The US dollar conversion of the revenues and earnings and Tingo Foods was adversely impacted by the significant devaluation of Nigeria's currency against the US dollar in June of 2023, when the Central Bank of Nigeria removed certain foreign exchange restrictions. We believe that these actions will ultimately be beneficial for the company, including helping to accelerate the dollarization of the business and for the growth and profit margins of our export business.

The Tingo Foods business was also impacted by the economic stagnation in Nigeria that ensued around the time of the change in presidential administration, which resulted in several customer delaying orders. Tingo Foods is set to multiply capacity and revenue for the new state-of-the-art USD1.6-billion-food processing facility in the Delta State of Nigeria. Our joint venture construction partner has confirmed the project is on track to enabled Tingo Food to commence processing operations on-site by mid-2024.

On February 22, 2023, Tingo Foods signed a partnership with Evtec Energy Plc, to build a USD150-million, 110-megawatt solar plant to power the facility, which aim is to achieve net zero carbon emissions and deliver reduce energy costs. We believe Africa's farmers and agricultural sector will benefit from the significant expansion of the continent's own processing capabilities, increasing crop demand, reducing post-harvest losses, ensuring fairer selling prices for farmers, and delivering financial upliftment.

Slide 9, Tingo DMCC agri-commodity platform. In December 2022, we launched Tingo DMCC, which is an agricultural commodity platform and export business in partnership with the Dubai Multi Commodity Center or DMCC. As part of achieving our ecosystem, Tingo DMCC was already becoming a significant source of offtake of raw crops from Tingo Mobile's farmers and is also expected to be a major customer of Tingo Foods in the future as it looks to export their finished food and beverage products.

Having spent several months working with AFAN, our farmers is on the aggregation of both volumes and produce, we completed our first export trades on May 30, 2023 and delivered USD348 million of export revenues in the second quarter through the farmers of Nigeria, which are estimated to total around 60 million. And with the addition of Ghana, Malawi, and certain other territories in the future, we now have access to several billion US dollars per annum of agricultural produce for our export business.

Furthermore, our exclusive partnership with PCX and AFAN, which strengthens our supply chain and goods-handling capabilities and gives us priority access to PCX commodity trading platform, is already proven to be valuable as we develop the business and build a strong foundation. The Tingo DMCC export business is expected to dollarize and globalize Tingo Group, whilst at the same time providing Tingo Mobile's farmers and Tingo Foods' direct access to international markets.

Slide 10, PCX and AFAN. On April 26, 2023, it was announced that Tingo Mobile had partnered with PCX and AFAN, for the exclusive use of AFAN's existing network of 2,322 warehouses across Nigeria for a minimum term of 30 years. This strategic partnership uniquely positioned Tingo to monetize Nigeria's crop ecosystem across this population of 213 million and the global export markets.

Under the terms of the agreements, Tingo Mobile has the rights of first refusal to purchase or trade any of the produce stored in the AFAN warehouses, which intends to use primarily to serve the Tingo Foods' food processing business and the Tingo DMCC commodity trading and export business.

PCX has installed its leading-edge e-warehouse receipt system in all of the partnership's warehouses, enabling crops and other produce to be commoditized and traded by Tingo from the date of delivery. Tingo Mobile is also to be granted a priority position on the PCX commodity trading platform, enabling Tingo DMCC to trade farming produce under the commodities on spot, futures, physical, and the derivative basis.

AFAN, umbrella body for Nigeria's farming sector, has committed to coordinate all of its agricultural cooperatives and members to utilize the partnership's warehouses to handle their produce. In addition, the partnership has committed to a targeted increase in the number of warehouses to 80,000 over the next few years. Tingo Mobile also has the right to sublet the warehouse space to pre-approve third parties, such as e-commerce businesses and wholesale businesses.

As mentioned previously, this partnership with AFAN and PCX is expected to considerably increase our offtake of crops and other properties from farmers, which we believe will help to satisfy a substantial future input requirements of our food processing and commodity trading and export business. Importantly, the agreements also further augments our seed-to-sale model, helping us to achieve our objectives of reducing post-harvest losses, crop wastage, whilst also increasing food production levels and meaningfully improving food security.

For those of you joining us for the first time, TingoPay, which is currently being tested in beta version is super app that have a full range of value-added services and partnership with Visa. Such services include digital Visa card, e-wallet payment services, marketplace, e-commerce, insurance and finance. As a full market, B2C and B2B offering, the TingoPay Super App and Visa partnership is helping us to diversify and expanding into new sectors, with the aim of making TingoPay and also Tingo household names as widely recognized as Visa itself. To assist us in achieving market penetration, our Pan-Africa partnership with Visa includes the provision of marketing and customer acquisition support.

As I mentioned, all business sectors will benefit from a new range of Tingo-Visa merchant services, and TingoPay business puddle and smaller farmer customers will see significant additional advantages through the integration of TingoPay with our NWASSA agri marketplace platform. The TingoPay business partner and Tingo-Visa merchant services enable subscribers, farmers, and businesses in all sector to easily and securely accept payments and to make online transactions in the domestic or foreign currencies, as well as to manage the card's setup for recurring impairments and access transactional shipments.

The test of the beta version of the TingoPay app is progressing well as the technical development team is constantly making improvements ahead of its rollout. Such improvements include the addition of new functions and several new value-added services. Our current target is to launch the full-scale TingoPay by the end of the third quarter.

The Tingo Mobile, Nwassa, TingoPay, Tingo Food, and Tingo DMCC, we have created a full agri-fintech ecosystem, which is at the very heart of our business. We communicate with the services to our farmers through the smartphone handsets we supply to them. The farmers can then use Nwassa to purchase inputs for their farming business, to purchase other services, to make payments, and to sell their produce.

Tingo Foods forms an important part of the ecosystem for both the valuable customer and the source of offtake for Tingo Mobile's farmers, processing now raw crops into finished food and beverage products. Finally, Tingo DMCC is in a position to trade and export both the raw crops of Tingo Mobile farmers and the finish food and beverage products of Tingo Foods, which it is able to sell into a global market where demand significantly outstrip supply.

This already strong seed-to-sale ecosystem is now strengthened further by the recently signed deal between Tingo Mobile, PCX, and AFAN. The partnership provides us access to a substantial nationwide network of warehouse facilities as well as securing a considerable increase in produce supply and offering those enhanced commodity trading opportunities.

In total, the Tingo ecosystem creates a reinforcing loop, a financial and digital inclusion. alongside an increase in food supply and the reduction in post-harvest losses, which in turn improves food security and reduce poverty. Ultimately, these factors deliver financial and social investment not only to our farmers, but also to our stakeholders.

Slide 13, environment, social and governance. At the center of everything we do, all our core values, and our commitment to our environmental, social, and governance goals. We fought digital and financial inclusion through our technology platforms, driving the social and economic upliftments of our customers. We meaningfully improve the global food supply and help tackle the world's food security crisis by empowering the farmer, helping them increase crop yields, reduce post-harvest losses, gain from improved access to markets, and benefit from fairer pricing.

Our technology and platforms also deliver significant environmental benefits, reducing crop wastage, improving farming and food production efficiency, promoting sustainable farming techniques, and reducing freight miles. As part of our commitment towards the environment and social investment, we are focused on adopting a mature ESG framework underpin and guided by the United Nations' Sustainable Development Goals.

I will now turn the call over to Tingo Group's CFO, Kevin Chen, to discuss our second-quarter 2023 financial results as reported in this morning's 10-Q filing.

Thank you, Darren. I am very pleased to present our financial results for the second quarter ended June 30, 2023. A full breakdown of our financial results is available in our regulatory filings and in the press release that crossed the wire earlier this morning.

Before going into numbers, it is important to note the significant impact of the acquisition of Tingo Foods, which closed on February 2023 and has resulted in the consolidation of Tingo Foods financial results into our own from the date of completion. In other words, the result of Tingo Group for the first quarter ended March 31, 2023, include the results of Tingo Foods for approximately two months.

Now turning to some of the key figures. Net revenues for the six months ended June 30, 2023, for [$1.83 billion] compared to $21.5 million for the six months ended June 30, 2022, an increase of 8,396%. The increase is mainly attributed to the acquisition of Tingo Mobile and the Tingo Foods acquisition implementation completed on December 1, 2022, and February 9, 2023, respectively; and the commencement of export trades to a Tingo DMCC in May 2023.

Gross profit for the six months ended June 30, 2023 was $732.9 million or 40% of revenues compared to $3.3 million or 15.5% of revenues for the six months ended June 30, 2022. The increase is mainly attributed to the addition of Tingo Mobile and Tingo Foods acquisition completed on December 1, 2022, and February 9, 2023, respectively. And the commencement of export trades for Tingo DMCC in May 2023.

Selling and marketing expenses for the six months ended June 30, 2023, were $174.2 million as compared to $3.5 million for six months ended June 30, 2022. General and administrative expenses for the six months ended June 30, 2023, were $53.0 million cost compared to $21.0 million for the six months ended June 30, 2022, mainly attributed to the addition of costs from Tingo Mobile and Tingo Foods.

Operating profit for the six months ended June 30, 2023, was $442.4 million versus the operating loss of $23.7 million for the six months ended June 30, 2022. The increase being mainly attributed to the acquisition of Tingo Mobile and Tingo Foods and the commencement of export trade to Tingo DMCC as explained above.

Net income for the six months ended in June 30, 2023, was $273.2 million compared to a net loss of $23.0 million for the six months ended June 30, 2022. Consolidated EBITDA for the first half of 2023 $655.3 million compared to consolidated EBITDA loss of $21.2 million for the six months ended in June 30, 2022. Tingo Group invested heavily in the growth of of Tingo Mobile, Tingo Foods, and Tingo DMCC during the quarter, including making an upfront payment of $434.2 million of on the purchase of 6 million handsets from for the new AFAN customers.

Prepaying AFAN for the produce for Tingo Food and settling their brought forward payables resulted in a total net outlay of USD336.1 million. And a self-funding stock purchases of $225.8 million for Tingo DMCC's export sales. The revenue for which are scheduled to be received during the third quarter.

In addition, tax payments totaling $174.0 million were made Tingo Mobile, in its tax, both earnings for fiscal year 2022, and the company also incurred a loss from foreign exchange. As a result, the balance of cash and cash equivalents ended June 30, 2023, decreased to $53.2 million compared to $76.1 million at June 30, 2022.

Earlier today, we announced the commencement of quarterly dividends payable to the holders of both of common stock and the Series B convertible preferred shares. The first dividend payment has provisionally been agreed in the amount of $20 million, which we aim to set the record date for as soon as practicable and will classify as leading to our second-quarter results. Our goal is to increase the amount of quarterly dividends as we grow our earnings and cash balances.

A summary of the income statement of Tingo Group for the three months and six months ended June 2023 as compared to June 2022 is provided on page 15 of the presentation. A reconciliation of GAAP operating income or loss to the non-GAAP EBITDA for the three months and six months ended June 2023 compared to June 2022 is provided on page 16 of the presentation.

A summary of the most notable investment and cash expenditures items made by the company during the second quarter is provided on page 17 of the presentation. A summary of the balance sheet highlights is provided on page 18 of the presentation. A summary of the income statement of Tingo Group for the three months and the six months and dated June 2023 compared to June 2022 is provided on page 19 of the presentation.

I'll now hand the call back to Darren.

Thank you, Kevin. My Board and I believe Tingo Group continues to be uniquely and strongly positioned as a company and as an attractive investment proposition. We are fast growth and highly profitable Nasdaq-listed company, having generated revenues of USD1.83 billion and earnings before interest tax, depreciation, amortization of USD655.3 million in the first half of 2023.

We have a strong balance sheet and our operations are significantly cash flow positive. Earlier today, we announced the commencement of a quarterly dividend payments. We have a high growth, high margin, and sticky revenue model with low customer acquisition cost and lower attrition. We have a full agri and food ecosystem from seed to sale, creating a virtuous circle for both us and our customers.

Our food processing and commodity export business has a vast potential, and we are making a difference towards addressing the global food shortage and food security crises, and we are a benefactor of price inflation. Our Visa-Tingo partnership and TingoPay Super App are well positioned to expand Tingo significantly into new B2C and B2B markets.

We have proven proprietary fintech platform, which are replicable in new geographical markets and new sectors. We have a vast addressable global market. And we believe we have a significant ESG impact that can grow considerably further in the future.

Thank you, everybody. Operator, my colleagues and I from Tingo are now ready to take questions from the participants.

Our first question asked, congratulations on another strong quarter and the initiation of a dividend program, which I am delighted to see. You mentioned that you would expect a significant increase in the level of dividend payment in third quarter, which is also great to hear. Can you explain more on this?

Yes, sure. As explained in our results, our CapEx and investment into inventory in Q2 was just under USD1 billion. And of course, added to which during the quarter we also paid out our annual tax on Tingo Mobile of have another circa $170 million. Having made all this investment in outlay last quarter, we can now expect the inventory we purchased to be converting back into cash and our export business to fund itself.

So in addition, the 6 million mobile phones we also bought will begin to generate significant revenues and earnings. So when you take all of that into account, and the growth that we expect to deliver in our export business, we expect to be able to significantly increase our dividend payments in Q3 and then again in Q4, and hopefully, with increases in each quarter thereafter.

It should be remembered that with the new significant number of handsets being deployed from as early as next month, that those phones will in turn generate very significant revenues on the additional contribution to group profits almost immediately. So in short, yes, we expect significant increase in dividend from Q3 onwards. And yes, it's the aim of the company to deliver quarter-on-quarter dividend increases.

Thank you, team. The next question asks, while the results are once again very impressive indeed, clearly the floating of the Naira and its devaluation has had a material impact on the results when converted into US dollars. What long-term impact, if any, do you foresee on the company as a result of the new exchange rate going forward?

Yes, it's a very good question. I think the first thing to point out is that the Nigerian government's new foreign exchange policy now means that the Naira of earnings that we have are now much more readily exchangeable into US dollars. And this means that from this moment forward, our company can now value its Naira cash balance as a liquid US dollar equivalent asset. And furthermore, any valuation discount that was previously applied against our Naira earnings can now be removed.

Whilst the current devaluation has some negative impacts on the existing Tingo Mobile revenues, the benefits of a freely exchangeable currency is something that we strongly believe outweighed the negatives. And as for those negatives, they may be short term in nature anyway, particularly given the new economic policies of Nigeria's government. There's much talk about the Naira recovering large parts of lost ground in valuation terms over the coming months ahead.

Furthermore, if I turn to other parts of the business, there are some notable immediate benefits that the devaluation of the Naira brings. I mean, in particular, in connection with our export business, where the price of the produce we purchased from Nigeria is significantly reduced. And as such, our produce now has a key price and competitive advantage over produce from other parts of the world. And we're already now seeing the benefits of this. And I'm sure that in the future, as we go forward and as we report future quarters numbers, we very much believe that we will see noticeable increases in our margin of export produce.

Thank you, team. The next question asks, I believe it was a major development for Tingo's prospects and valuation when Nigeria's new president and its central bank removed certain foreign exchange restrictions on the Naira, especially bearing in mind that these longstanding restrictions had detrimentally affected the country's economy and investment appeal for so long. Can you comment further on what the lifting of the restrictions means for the company and us as shareholders?

Yeah. Look, I think I've covered much of that in the previous answer. But again, I think for the benefit of all of our shareholders, we should recognize that for the first time since we acquired Tingo Mobile and Tingo Foods, for the first time we are now able to readily apply to convert our Naira cash balances and earnings into US dollars.

Naturally, we need to achieve the right balance of reinvesting a portion of our earnings into further growth and acceleration of the business, just as you've seen us do in Q2. But we can now also commence to distribute a meaningful portion of our earnings to shareholders as dividends. And I think we've demonstrated that with the initiation of our dividend program today.

Thank you, team. The next question asked. The press release statement talks about the purchase of 6 million new phones for AFAN's farmers. I'm interested to know if AFAN already has the demand for these phones, or will it take time to deploy them and start to generate the related earnings? Also, what level of earnings and profitability can we expect from the phones?

Quite a lot to answer that. Does AFAN has demand for 6 million new phones? Yeah, absolutely. In fact, they have considerable pen up demand, which means that as soon as we can source more handsets, they can be distributed almost immediately. And it's not just we have demand through AFAN in Nigeria, but also through the Ashanti Investment Trust in Ghana. We also have considerable demand too.

As to when they'll be deployed. Well, I mentioned it earlier, AFAN and Tingo will start the process as soon as the phones are delivered. And the great thing is that as soon as those phones are delivered to the customer, they start to generate revenue. Not just from the lease payments, but also through the value-added services that we offer on the USSD platform.

Of course with the platform, we earn commissions or fees straight away on the transactions that customers make over the platform, and that includes anything from direct time top up through the commissions on arranging loans and insurance and even commissions on the agricultural sales and farming inputs.

And to the revenues on those phones. Well, at the current exchange rate, the typical average revenue per user or ARPU per farmer is between $6 and $6.50 a month, of which typically $3 comes or circa $3 comes from the lease elements and the balance comes from the NWASSA platform.

Now, to give you an idea of what the margin is on those sales, on the $3 of lease payments, we are looking at around a 30% margin. And on the $3.50 or thereabouts, so there was the contribution, we're looking at a 98% margin. And so, we're looking at revenues per handset of an excessive $6 and over $4 of what would be gross profit on each of those handsets per month.

So not only are these handsets very profitable in their own right, they also connect us to more farmers. And as we look to achieve significant farmers in our platform again through AFAN and Ashanti and whoever, and we look to grow that number towards the $30 million by the year end, we'll now also gain access to considerably more produce. And that produce in turn will support our export business as well as Tingo Foods. I have to say we're really proud of this business model.

Thank you, team. The next question asks, through today's announcement of the purchase of a further 6 million phones, am I correct in thinking that will take your total number of phones to around 15 million and that you then have another 3 million or so farmers on the NWASSA platform that use their phones? And are there any further plans to increase the number of farmers on your platform beyond the 18 million?

Yeah, the short answer I guess is yes and yes. And once the 6 million new mobile phone handsets are delivered to farmers, it will take our number of farmers to around 18 million or so. But I can tell you, and I think we said it today on one or two occasions, that our goal is to increase the number of farmers on our platform to 30 million or so by the end of this year. Now, the plans to do this are through our partnership with AFAN in Nigeria who've committed to add 20 million new farmers to the platform, and our partnership with the Ashanti Investment Trust in Ghana, who themselves are committed to add between 2 million and 4 million new farmers this year.

I think for those of you who aren't aware who AFAN are or who AFAN is, this is the All Farmers Association of Nigeria, which is the umbrella body that sits above all of these 56 agriculture and commodity cooperatives in Nigeria. Now, they have a remit from the Nigerian government to ultimately enroll all of the 60 million or so farmers in Nigeria and develop and modernize the country's agricultural sector. And so they're doing this by improving access to better farming inputs, providing education, delivering access to finance, and so on.

And it's their partnership with us, which is most valuable, and which is really focused on making those initiatives a reality. And we're already making a real difference, which in turn we are seeing through results increasing in crop yields, food production levels, and of course reducing post-harvest losses. I mean, I believe such as the extent of our impact that we're not only helping Nigeria's farmers feed their own country, but it's through the initiatives that we have with AFAN, which help us put us in a position to export significant or larger quantities of produce through the rest of continental Africa and to other parts of the world.

Thank you, team. From today's results, I can see that the export business of Tingo has generated significant revenues in the first quarter of trading. Is this level of growth sustainable and do you have access to enough produce to satisfy demand?

Yes, that's a very good question. I think I said earlier the impacts of the liberation of the exchange rate controls will only make Nigeria's produce even more attractive in international markets. And with our partnerships with AFAN and Ashanti, we aim to fully capitalize on the opportunity we have in front of us.

Success in this area will deliver a significant increase in income to our farmers. And the benefit is, of course, in AFAN, that enables them to invest more into their land and their farming inputs, increasing their crop yields and production levels, and thereby creating more produce for us to buy from them. And this is illustrative really of the strength of our ecosystem and the virtuous circle or loop that it creates.

The partnership we signed with AFAN and the Prime Commodity Exchange, or PCX, as you've seen as we refer to it, really enhances and strengthens our position and our ability to grow our export business. Not only does the partnership give us unrightful logistics and goods handling capabilities in Nigeria, but it also gives us improved access to huge quantities of produce and prime access to the PCX commodity trading platform, which is one of only a number of small commodity exchanges in Nigeria.

With more than 12 million farmers currently in our platform, and with 6 million about to be added, rising to 13 million by year end, our access to substantial quantities of produce, again, puts us in a strong position to grow this area to grow our export business and capitalize on the ever-increasing global demand. I think the final point I'll make on this subject is that, at the beginning of June, we made a small announcement that we'd agreed to a loan facility arrangement with AFAN, which will be made available to their farmers and passed on to their farmers to enable them to cultivate new farming land and increase food production levels.

I think for people to understand why we did that. As we're all too aware, it's very important for a farmer to know that he or she has reliable access to credit or funding. to enable them to purchase the inputs they needed for their farming. Now historically, the Nigerian government would pledge loans to the farming communities, but more often than not, these loans turned up rather late. Now, the impact of that was that the money came in too late for the farmer to be inside to plant their harvest. And now, of course, we have to bear in mind that crops are seasonal.

So the program that we've introduced today in partnership with AFAN overcomes that issue. It ensures the farmers receive the necessary funding and at the appropriate time. And so that all the inputs they purchase are the right ones to grow the right crops for that particular land and the specific conditions that are prevalent from that location.

So with this first loan facility, which we intend to do much more of, we are now able to ensure that thousands of acres of new farming land are cultivated, and thousands of additional metric tons of crops are produced each season. So this not only has a huge positive impact in the lives of the farmers, obviously, but also it further increases the levels of produce that we can access and significantly strengthens our supply chain.

So look, when you put all of these things together, I think we're in a very strong position. And as you can see from the statement today, $340 million-plus of revenues in the export division in Q2, rising, we believe, to $1 billion or more of revenue per quarter before the end of this year.

Thank you, team. Our next question asks, you reported export sales in your Q2 results of USD348 million, and that you expect that to increase to USD1 billion per quarter in Q3. Are you able to tell us what parts of the world you are now exporting to?

Yeah. The exports we transacted in Q2 were to other countries in Africa. And whilst we will continue to make exports within the African continent, we're also expanding into other parts of the world, including, primarily including in the Middle East, where demand significantly outstrips local supply.

I think I said earlier that the competitive cost of our produce now, given the devaluation of the Naira, is opening up a number of new markets tours in other parts of the world.

Thank you, team. The next question asks, can you explain in more detail the reason for the significant reduction in the company's cash balance at June 30th, compared to the previous two quarters? My own expectation was actually to see a further increase in cash.

Well, that's a question I'm sure most people are interested in. Look, we touched on the explanation already, but I agree. I think it's worth going into a bit more detail.

As Kevin mentioned just a short while ago in his presentation, our investments in outlay into capital expenditure and inventory during Q2 was approaching $1 billion, of which $460 million was spent approximately on the new mobile phone handsets, and more than $500 million was spent on inventory payments to support both Tingo Foods and our export business. And let's not forget on top of that, we also paid out about $170 million of tax in April on the Tingo Mobile profits of 2022.

But as Kevin pointed out, whilst cash reserves fell to a little over $50 million at the quarter end, which by the way would've equated close to $90 million on the old exchange rate, our receivables and the export deals are loan amounted to almost $350 million on the balance sheet. Now all of that flows back into cash during the current quarter.

And of course, the outlay to the inventory suppliers for Tingo Foods, which we outlaid at the end of Q2, also has generated a positive cash flow inflow in the third quarter. And as I've said on a number of occasions today, the investment we made into the new mobile phone handsets, it started generating revenues and profits from September. And let's not forget the inflow from those mobile phones is something that we expect to see over the next three years on a monthly basis.

Thank you, Team. The next question asks, I know this question has been asked before, but I'm still confused as to why the NWASSA app is on a USSD platform, and it's not a standard app as you would see in the App Store or Google Play?

Okay, let me try and square this circle once and for all. So look, first thing we need to understand that Nigeria's telecoms and internet infrastructure, it's just not as well developed as countries like the United States, or the United Kingdom, or developed Europe. And as such, 4G, 5G, even Wi-Fi, sometimes even 3G are only available in the largest cities, and certainly not in most of Nigeria's rural areas.

In fact, where many of our farmers are located, they don't have access to data coverage. And as such, a web-based app that we would typically expect to see on our handsets in the US or the UK or Europe, for example, it just simply won't work in those areas. As such the USSD platform, which is similar to the old WAP services that some of you may well remember, was used commonly on mobile phones when the displays were in monochrome, which is primarily text-based. But this is the only type of platform that's accessible to many of Nigeria's farmers.

It is not just Tingo that offers USSD platform in Nigeria. In fact, nearly every bank, insurance company, telco, public service provider, they all operate a USSD platform because of those very issues. All of that being said, I mean, Nigeria is developing at pace. A network and data coverage will continue to get better over time, which is the reason why we are now developing NWASSA web-based app, which once launched will be operated in parallel with our USSD version.

Look, I think it's when we launch the full version of the TingoPays app, which is web based, that you'll see a platform that resembles what you are used to seeing in the United States and Europe. But remember the difference here, is that's aimed at the middle classes in Nigeria's cities and towns, such as Lagos and Abuja. And it isn't aimed at the farming communities, in the rural parts of the country.

Thank you, team. Our next question asks, is it clear that the new food processing plant being built for Tingo Foods will have a material contribution to group revenues and profitability. However, given the plant is not scheduled to come online for around another 12 months, can you comment on the plans for Tingo Foods in the meantime?

Yeah look, it is true that we expect -- that whether we have considerable expectations around the new food processing plant. Its's going to give us a state-of-the-art facility that can process a whole wide range of food types and produce a multitude of food and beverage products. And it's something we've said publicly. We expect it to contribute a multi-billion dollars of revenue on an annual basis each year.

But notwithstanding the fact we're waiting for this plant to come online, I'm delighted to tell you that Tingo Foods continues to expand. In fact, during the second quarter, we added two major product groups to our range; one was based on around wheat, and the other was based around the maze. And at the time, and whilst I'm speaking today, it's fair to say that those quantities are fairly small.

But what this has enabled us to do is to plan around forthcoming harvest, to enable us to build our supply chain and then thereby get far greater quantities of crops from the farmers to process into food producers, and so that where we know there is considerable demand for.

But that progress wasn't just on the supply side. During the quarter we also onboarded a major new wholesale customer. When given how late it was in the quarter that we won the customer and the time I gave them to book their orders, the amounts we delivered, again, were relatively small. But given the size of this particular customer in the market in which it operates, we're very confident that this customer will become a very large account for Tingo Foods by the end of this year.

But what's really pleasing, I think, about these developments in particular, is that we managed to achieve them in spite of a period of what I called earlier in the presentation, an economic stagnation, where the people of Nigeria had reduced their discretionary spend and wholesalers to restaurants and hotels and other customers had reduced their inventory levels whilst we were monitoring what was going on within the political situation in Nigeria.

You've heard me reference before about the presidential election that took place in February of this year. Following this, there was some speculation that the election results were going to be challenged by opposition leaders, and that is what created this period of instability and stagnation.

But with the new president was inaugurated at the end of May and with him now in place, we're witnessing a recovery in consumer confidence and business confidence, which to be fair, has been underpinned and held by the new government's focus on creating jobs and modernizing and stabilizing the economy. And the benefit of course of that we mentioned earlier was this liberalizing supporting of its currency. But all of these points really indicate that the economic recovery in Nigeria is upon us, which of course bodes well for the rest of our business.

And we're also making progress with further developments in the current quarter, including in terms of continuing to expand our product range. In particular into areas where produce that requires more heavily processed products such as sources. And we expect these developments also to generate a significant contribution in Q4 and beyond.

Thank you, team. And our final question asks, today's news about the commencement of a quarterly dividend is very welcome indeed. I am sure it will go a long way to redress the clearly undervalued share price. However, does the board not consider that those funds will be better spent on a share buyback?

Yeah, whilst you understand the sentiment I think behind the question, I think it's really important to put into perspective the considerations we have as a Board and ensuring that we do our best to deliver and then protect shareholder value. Because I mentioned earlier, the company spent almost $1 billion on investments into CapEx and inventory during the quarter. Of course, not to mention the $170 million that we paid the tax then.

And that investment was made, but the primary purpose of growing the three key divisions of the group. Tingo Mobile that we spent $460 million in new handsets on, but we've said we expect to start receiving significant revenues from at the end of Q3. Tingo DMCC, where we completed our first export transactions of almost $350 million during the quarter. And Tingo Foods where we've secured huge quantities OF produce that we're going to see the benefits from, again, in Q3.

You've heard me say earlier that we expect to start paying much higher dividends from Q3 onwards, without the [$1 billion] of expenditure we had and we're just spending in Q2, the dividend almost certainly would've been somewhat higher this quarter.

Look, our priority -- our first priority as a board is maximizing shareholder return. And all shareholders we believe will reap the benefits of that $1 billion we've just spent, or just invested. And as a result of that we expect our cash balances to be significantly higher at the end of Q3 than they were in Q2. And that's what gives this Board the confidence that we will be in a position to increase our dividends from Q3 onwards.

Now look, all of that said, it's not lost on management or the board that our share price at these levels. It's significantly below where we think it should be. Bear in mind that we've generated around $1.8 billion of revenue and $600 million of EBITDA during the first half of this year.

This dividend payment today, as I've said on several occasions, is the start of an ongoing regular course of the dividend program. We believe it's the message that will help us expand and grow the number of institutional shareholders on our shareholder list. Regular quarterly dividends that have a high dividend cover and offer very attractive yields, we believe are the ingredients that help us attract a new investor audience, including those institutional income funds and pension funds alike. And as such, we hope that gets reflected into the share price.

However, should our share price continue to languish below a fair value, as we approach the end of Q3, the Board if it so chooses, may well consider a meaningful share buyback. Alongside a significant increase in dividend payments because what is clear is that we will, we believe, will have sufficient cash reserve to accommodate both.

Thank you, team. That concludes our question-and-answer session. I would now like to turn the call back over to Mr. Mercer for his closing remarks.

Thank you, operator. I would like to thank each of you for joining our earnings conference call today, and I look forward to continuing to update you on our ongoing progress and growth. If we were unable to answer any questions, please reach out to our to our IR firm, MZ Group, who will be more than happy to assist. Thank you and goodbye.

Ladies and gentlemen, this concludes today's event. You may disconnect your lines and log off the webcast at this time and enjoy the rest of your day.