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AFRICAN BANK INVESTMENTS LIMITED - Condensed Audited Financial Results for the Year Ended 30 September 2016

Release Date: 21/12/2016 11:15
Code(s): ABL ABLP     PDF:  
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Condensed Audited Financial Results for the Year Ended 30 September 2016

AFRICAN BANK INVESTMENTS LIMITED
Incorporated in the Republic of South Africa
(Registration number 1946/021193/06)
Ordinary share code: ABL ISIN: ZAE000030060
Hybrid instrument code: ABLP ISIN: ZAE000065215

CONDENSED AUDITED FINANCIAL RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2016

INTRODUCTION

Shareholders are referred to the Notice of Annual General Meeting distributed to shareholders on
8 August 2016 in respect of, inter alia, the change of name of the Company from African Bank
Investments Limited to African Phoenix Investments Limited (“Name Change”). Shareholders are
further referred to the SENS announcements pertaining to the “Proposed Change of Name” dated
18 August 2016, setting out the salient dates and times in respect of the Name Change, the “Results
of Annual General Meeting” dated 6 September 2016 wherein shareholders were advised that, inter
alia, the resolution approving the Name Change was passed by the requisite majority of shareholders,
and the “Update Regarding the Proposed Change of Name” dated 23 September 2016, wherein
shareholders were advised, inter alia, that the previously published salient dates and times pertaining
to the Name Change were no longer applicable as the Company was still awaiting registration of the
relevant resolution (“Special Resolution”) by the Companies and Intellectual Property Commission
(“CIPC”).

Shareholders are hereby advised that the Special Resolution, together with all prescribed documents,
has been registered by CIPC.

Accordingly, shareholders are advised that the Company is working with the JSE Limited (“JSE”) to
ensure the lifting of the suspension in the trading of its ordinary and preference shares as soon as
practicably possible, which at the request of the Board, will resume under the new Company name.

Shareholders will therefore be advised of the salient dates and times pertaining to, inter alia, the last
day to trade in ABIL shares, the date of the lifting of the suspension of securities and the resumption
of trading in the ordinary and preference shares on the JSE under the new JSE codes, together with
the new ISIN numbers in respect thereof.

References to “the Company” or “the Group” in these condensed audited financial results for the year
ended 30 September 2016 relate to African Bank Investments Limited (“ABIL”) and African Phoenix
Investments Limited (“African Phoenix”), being the new name of the Company, as the case may be.

OVERVIEW

On 19 May 2016, the joint business rescue practitioners of the Company filed notice of substantial
implementation of the business rescue plan, following which, control of the Company reverted to the
directors of ABIL (“the Board”).

The 100% owned, Standard General Insurance Company Limited (“Stangen”) is the Company’s only
operating subsidiary.

Since the previous year end, there were no changes in status of the Company’s investments with
Residual Debt Services Limited (formerly African Bank Limited), still in curatorship, and Ellerine
Holdings Limited (“Ellerines”), still under business rescue.
The Board is pleased to present consolidated annual financial statements for the years ended
30 September 2015 and 30 September 2016. African Phoenix, with dispensation granted by the JSE,
did not previously publish consolidated financial statements for the financial year ended 30
September 2015.

FINANCIAL PERFORMANCE

The Company recorded a profit after tax of R491 million (2015: R1,287 million). The significant change
in earnings was mainly due to Stangen exiting its relationship with African Bank Limited.

Included in the income statement is a R189 million discretionary actuarial liability (2015: R0). This is
raised to allow for the shortfall in the exposure margins recovered from the in-force policy book
compared to the future budgeted expenses envisaged in growing the insurance portfolio and
generating new products and business. The continuing operations are therefore profitable if one
compares continuing operations premiums to the R14 million in actual claims, excluding the
discretionary actuarial liability.

The continuing operations generated a profit for the year of R84 million (2015: R69 million) before
taking into account the discretionary actuarial liability.

GOING CONCERN

The Board has considered the following factors in deciding whether the Group is a going concern:
    -   The Group has sufficient cash resources to pay its creditors as and when they fall due and meet
        its operating costs for the foreseeable future;
    -   The Group’s only operating subsidiary, Stangen, is a going concern; and
    -   The Group has available cash resources to deploy in developing existing operations or investing in
        new opportunities.

Based on the above, the Board considers the preparation of the annual financial statements as a going
concern as appropriate as the Group has sufficient assets and cash to settle its commitments in the
normal course of business for a period of not less than one year from the date of approval of these
consolidated annual financial statements.

DIVIDENDS

No ordinary or preference dividends were declared in the current financial year.

DIRECTORATE

The directors who resigned or retired from the Board during the current and previous financial years
are set out below:

    -   Mutle Constantine Mogase resigned as independent non-executive Chairman on 6 September
        2016;
    -   Robert John Symmonds retired as an independent non-executive director at the Annual
        General Meeting held on 6 September 2016;
    -   Nicolas Adams retired as an independent non-executive director at the Annual General
        Meeting held on 6 September 2016;
    -   Nomalizo Beryl Langa-Rroyds retired as an independent non-executive director at the Annual
        General Meeting held on 6 September 2016; and
    -   Adv. Mojankunyane Florence Gumbi retired as an independent non-executive director at the
        Annual General Meeting held on 6 September 2016;


At 30 September 2016, the Board was comprised of:

    -   Enos Banda (Independent non-executive Chairman) – Appointed 6 September 2016;
    -   Daniel Vlok (Independent non-executive director) – Appointed 6 September 2016;
    -   Althea Conrad (Independent non-executive director) – Appointed 6 September 2016;
    -   Morris Mthombeni (Independent non-executive director) – Appointed 16 September 2013
        and re-elected 6 September 2016; and
    -   Isaac Shongwe (Independent non-executive director) – Appointed 20 September 2016.


Subsequent to the end of the reporting period:

    -   Enos Banda was appointed as Executive Chairman on 1 October 2016 and then Chief
        Executive Officer on 14 December 2016,
    -   John Evans was appointed as Financial Director on 1 October 2016, and
    -   Isaac Shongwe was appointed as Lead Independent non-executive director on
        28 October 2016 and subsequently Chairman on 14 December 2016.
Due to the fact that the Company was in business rescue in the year under review, the Board did not
comprise any executive directors in the 2016 financial year.

DISCONTINUED OPERATIONS

Stangen concluded an agreement and financial settlement with African Bank Limited and Residual
Debt Services Limited in respect of its run-down credit life portfolio effective 1 April 2016. The
agreement passes 100% of the risk and benefit in that credit life book to Guardrisk Life Limited
(“Guardrisk”) until such time as the run-down credit life book is transferred to Guardrisk. The transfer
is subject to regulatory approval and is expected mid-2017.

LOOKING AHEAD

The Board is pursuing its adopted strategy to become a premier South African investment holdings
business.

On behalf of the Board.

Isaac Shongwe
Independent Non-Executive Chairman


Condensed consolidated statement of comprehensive income
for the year ended 30 September 2016

R million                                              Audited              Audited
                                             30 September 2016    30 September 2015
Continuing operations
Insurance income                                            86                   83
Interest received                                          114                   98
Total income                                               200                  181
Insurance claims and discretionary actuarial liability   (203)                 (20)
Operating costs                                           (91)                 (92)
Impairment of financial instruments                        (9)                    -
Profit before taxation                                   (103)                   69
Direct taxation: Normal                                      7                 (40)
(Loss) / profit for the year                              (96)                   29
Profit for the year from discontinuing operations          587                1,258
Total comprehensive income for the year                    491                1,287

Reconciliation between basic earnings and headline earnings
Profit for the year                                        491                1,287
Preference share dividend                                    -                    -
Basic earnings attributable to ordinary shareholders       491                1,287
Adjusted for: Loss of transfer of business                  14                    -
Headline earnings                                          505                1,287

Earnings per share
Basic earnings per ordinary share                         33.0                 85.7
Headline earnings per ordinary share                      34.0                 85.7

Weighted average number of shares in issue (million)   1,485.7              1,501.9

Earnings per share - continuing operations
Basic and diluted (loss) / earnings per ordinary share   (6.5)                  1.9
Headline (loss) / earnings per ordinary share            (6.5)                  1.9


Condensed consolidated statement of financial position
as at 30 September 2016

R million                                             Audited               Audited
                                            30 September 2016     30 September 2015
Assets
Short-term deposits and cash                            1,833                 2,367
Other assets                                               60                   512
Reinsurance assets                                          -                    47
Equipment                                                   1                     -
Intangible assets                                           -                    30
Taxation                                                    1                     -
Disposal Group                                            267                     -
Total assets                                            2,162                 2,956

Liabilities and equity
Taxation                                                    1                    26
Deferred taxation                                           -                    16
Policyholder liabilities under insurance contracts        191                   762
Borrowings                                                 23                   470
Reinsurance creditor                                        -                    50
Other liabilities                                          40                   483
Disposal group                                            267                     -
Total liabilities                                         522                 1,807

Ordinary shareholders' equity                              510                   19
Preference shareholders' equity                          1,130                1,130
Total equity (capital and reserves)                      1,640                1,149
Total liabilities and equity                             2,162                2,956

Tangible net asset value per ordinary share (cents)       35.7                (0.7)
Net asset value per ordinary share (cents)                35.7                  1.3
Number of shares in issue                              1,427.8              1,501.9


Condensed consolidated statement of changes in equity
for the year ended 30 September 2016

                                              Ordinary   Distributable       Share   Preference
                                         shareholders'        reserves     capital        share
                                                equity                         and  capital and
R million                                                                  premium      premium     Total
Balance at 30 September 2014                    14,650        (15,918)     (1,268)        1,130     (138)
Total comprehensive profit for the year              -           1,287       1,287            -     1,287
Balance at 30 September 2015                    14,650        (14,631)          19        1,130     1,149
Total comprehensive profit for the year              -             491         491            -       491
Balance at 30 September 2016                    14,650        (14,140)         510        1,130     1,640


Condensed consolidated statement of cash flows
for the year ended 30 September 2016

R million                                              Audited              Audited
                                             30 September 2016    30 September 2015
Cash (utilised) in operations /
generated from operations                                (119)                   88
Cash receipts                                              650                  555
Cash paid                                                (769)                (467)

Indirect and direct taxation paid                        (263)                (519)

Cash outflow from continuing operations                  (382)                (431)
Cash inflow from discontinuing operations                  492                1,918
Net cash inflow from operations                            110                1,487

Cash outflow from investing in continuing operations       (2)                    -
Acquisition of property and equipment                      (2)                    -
 
Cash outflow from investing in discontined operations    (191)                    -
Acquisition of property and equipment                    (191)                    -

Cash outflow from financing activities                   (451)                    -
Cash outflow from financing continuing activities        (451)                    -

(Decrease) / increase in cash and cash equivalents       (534)                1,487
Funds held at African Bank Limited                           -                (402)
Cash and cash equivalents at the beginning of the year   2,367                1,282
Cash and cash equivalents at the end of the year         1,833                2,367

NOTES TO THE FINANCIAL STATEMENTS

AUDITORS' REPORT

The accompanying financial information is extracted from the audited financial statements but is itself
not audited. The auditors have expressed an unqualified opinion on the financial statements of the
Group. The financial statements have been audited by Grant Thornton Johannesburg Partnership.

As consolidated financial statements were not previously published for the period ended
30 September 2015 the auditors have also expressed an unqualified opinion on the consolidated
financial statements of the Group as at 30 September 2015.

The full audit reports are available for inspection at the Company's registered office. The auditors’
report does not necessarily report on all of the information contained in these financial results.
Shareholders are therefore advised that in order to obtain a full understanding of the nature of the
auditors’ engagement they should obtain a copy of the auditors’ report together with the
accompanying financial information from the issuer’s registered office.

BASIS OF PREPARATION

The preparation of this financial information was supervised by John Evans CA (Aus).
This financial information has been prepared in accordance with the framework concepts and the
measurement and recognition requirements of the International Financial Reporting Standards (IFRS)
adopted by the International Accounting Standards Board, Interpretations issued by the International
Financial Reporting Interpretations Committee (IFRIC) of the IASB, IAS 34 "Interim Financial
Reporting", the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee
and Financial Reporting Pronouncements as issued by Financial Reporting Standards Council, the
requirements of the Companies Act of South Africa (Act 71 of 2008) as well as the Listings
Requirements of the JSE.

All accounting policies and their application are consistent with those used for the Group’s 2015
annual financial statements.

The directors take full responsibility for the preparation of these financial results and confirm that the
financial information has been correctly extracted from the underlying financial statements.


Illovo
21 December 2016


Board of directors
Independent non-executive: M Mthombeni, L Conrad, I Shongwe, D Vlok
Executive: E Banda, J Evans

Registered office
1st Floor, Grant Thornton Building, Wanderers Office Park, 52 Corlett Drive, Illovo, 2196

Sponsor
Merchantec Capital
2nd Floor, North Block
Hyde Park Office Towers
Corner 6th Road and Jan Smuts Avenue
Hyde Park, 2196

Transfer secretaries
Link Market Services South Africa Proprietary Limited
13th Floor, Rennie House, 19 Ameshoff Street, Braamfontein
PO Box 4844, Johannesburg, 2000.
Telephone: +27 11 713 0800
Telefax: +27 86 674 4381

Company secretary
Acorim Proprietary Limited
2nd Floor, North Block
Hyde Park Office Towers
Corner 6th Road and Jan Smuts Avenue
Hyde Park, 2196

Website
www.abil.co.za

Date: 21/12/2016 11:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
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