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Reviewed Condensed Consolidated Financial Results for the 6 Month Period Ended 31 March 2017
AFRICAN PHOENIX INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1946/021193/06)
(Ordinary share code: AXL) (ISIN: ZAE000221370)
(Hybrid instrument share code: AXLP) (ISIN: ZAE000221388)
(“Phoenix” or “the Group” or “the Company”)
REVIEWED CONDENSED CONSOLIDATED FINANCIAL RESULTS FOR THE 6 MONTH PERIOD ENDED
31 MARCH 2017
SALIENT FEATURES
Total equity of R1.70 billion (H1 2016: R1.59 billion)
Total cash and cash equivalents of R1.83 billion (H1 2016: R1.94 billion)
Earnings per share from continuing operations: 4.8 cents (H1 2016: 0.6 cents)
Headline earnings per share from continuing operations: 4.8 cents (H1 2016: 0.6 cents)
Earnings per share: 4.1 cents (H1 2016: 29.5 cents)
Headline earnings per share: 4.1 cents (H1 2016: 29.5 cents)
Net asset value per ordinary share: 39.9 cents (H1 2016: 30.8 cents)
INTRODUCTION
On 3 February 2017, the name of the Company was changed to African Phoenix Investments Limited
from African Bank Investments Limited (“Name Change”). Shareholders are further referred to the
SENS announcements pertaining to the Name Change dated 24 January 2017.
References to “the Company” or “the Group” in these reviewed condensed consolidated financial
results for the period ended 31 March 2017 relate to African Bank Investments Limited (“ABIL”) and
to African Phoenix Investments Limited (“Phoenix”).
The suspension on trading in the shares of the Company was lifted on 1 February 2017.
BACKGROUND
The Company owns 100% of The Standard General Insurance Company Limited (“Stangen”) which is
now the Company’s only trading subsidiary. Stangen remains with excess regulatory capital as at 31
March 2017 to enable it to grow.
Since the previous year end, there were no changes in the status of the Company’s investments in
Residual Debt Services Limited (formerly African Bank Limited) (“RDS”) which is still in curatorship.
There was also no change in the status of the Company’s investment in Ellerine Holdings Limited,
which is in business rescue. Both of these investments were impaired in full in previous financial
periods.
FINANCIAL PERFORMANCE
SUMMARY OF CONSOLIDATED FINANCIAL RESULTS
The Group reported net profit after tax of R59 million for the six-month period ended 31 March 2017
(H1 2016: R443 million). The trading profits were generated exclusively by Stangen.
Headline earnings per share was 4.1 cents for the six months ended 31 March 2017 (H1 2016: 29.5
cents).
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Total shareholder’s equity amounts to R1.70 billion as at 31 March 2017 (H1 2016: R1.59 billion). The
resultant solvency and liquidity ratios confirm the financial stability of the Group.
The Group balance sheet as at 30 September 2016 included a R189 million special actuarial liability
(30 September 2015: R nil) for Stangen. This special actuarial liability was raised to ensure sufficient
provision was made for forecast maintenance expenses given the uncertainty at the time, of the
amount of new business the company would be able to generate following the lifting of the section
12 restrictions imposed by the Financial Services Board (“FSB”) on the company’s licence when its
erstwhile sister company, African Bank Limited, went under curatorship in August 2014.
Based on sales volumes achieved by Stangen in the period under review, the special actuarial liability
has been reduced to R150 million as at 31 March 2017 (R189 million as at 30 September 2016).
INVESTMENT IN DIFFERENT LIFE
During the period under review, Stangen invested in a 15% equity stake in Different Life Proprietary
Limited for a cash consideration of R20.0 million.
DISCONTINUED OPERATIONS
Stangen concluded an agreement and financial settlement with African Bank Limited and RDS in
respect of its run-down credit life portfolio effective 1 April 2016. The agreement passed 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 of the run-down credit life portfolio to Guardrisk, arising from the settlement with the
banking parties, was approved by the FSB on 8 June 2017. Stangen therefore will have no credit life
exposure from the operative date being 30 June 2017, and have resolved all the legacy matters
following the termination of relationships with the banking parties.
CONTINGENT LIABILITIES
A number of Ellerines Furnishers Proprietary Limited (in business rescue) (“EF”) employees have
claimed amounts due to them from EF and Ellerines Holdings Limited (in business rescue). The
amounts claimed by the employees amount to R42.6 million. The employees are also seeking to
recover this amount from Phoenix. The legal opinion obtained by the Group states that the Group is
not liable for payment of the amounts claimed and accordingly the Group has not provided for this
contingent liability.
Stangen sold a level life product together with credit life from 1997 to 2006 on certain loan products.
The level life product provided cover in the event of death equal to the loan value up to a maximum
of R10 000 payable to a nominated beneficiary. The historical level life claims contingent liability of
approximately R125 million (2016: R125 million) is highly unlikely to materialise and no provisions
were previously raised for these benefits. Based on the very low number (< 0.6%) of claims
materialising and also that the last recorded level life claim was in the 2009 financial year, the liability
is not recognised. However, in the unlikely event that a claim is submitted, the policy benefits would
be recognised in profit or loss.
EVENTS AFTER THE REPORTING PERIOD
Phoenix entered into a settlement agreement with EF in relation to Phoenix’s participation as a
creditor in the business rescue of EF. This relates to the settlement by Phoenix of EF liabilities to its
bankers in terms of Guarantees provided by Phoenix. EF has, during May 2017, paid Phoenix an
amount of R45.4 million in respect of distributions already declared and paid to its creditors. Phoenix
will participate in any further distributions that the business rescue practitioners of EF may at a future
date pay to its creditors.
GOING CONCERN
The Board concluded that the preparation of the financial information on a going concern basis is
appropriate.
DIVIDENDS
No ordinary or preference dividends were declared in the current period (2016: R nil).
DIRECTORATE
The following directors were appointed to the board of Directors of Phoenix (“Board”) during the
period under review.
John Evans (date appointed: 1 October 2016)
Carmen Le Grange (date appointed: 28 March 2017)
Peter Mountford (date appointed: 28 March 2017)
LOOKING AHEAD
The Board continues to pursue its adopted strategy to become a premier South African investment
holdings business.
On behalf of the Board
Isaac O Shongwe
Chairman
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS
Audited
twelve
Reviewed Reviewed months
six months six months ended 30
ended 31 ended 31 September
R million March 2017 March 2016 2016
Insurance income 32 48 86
Interest received 71 52 114
Total income 103 100 200
Insurance claims 27 (15) (203)
Operating costs (33) (38) (91)
Impairment of financial instruments - (21) (9)
Profit before taxation 97 26 (103)
Direct taxation: Normal (29) (17) 7
Profit for the period / year from continuing operations 68 9 (96)
(Loss) / Profit for the period / year from discontinuing operations (9) 434 587
Profit for the period / year 59 443 491
Reconciliation between basic earnings and headline earnings
Profit for the period / year from continuing operations 68 9 (96)
(Loss) / Profit for the period / year from discontinuing operations (9) 434 587
Profit for the period / year 59 443 491
Preference share dividend - - -
Basic earnings attributable to ordinary shareholders 59 443 491
Adjusted for: loss on transfer of business - - 14
Headline earnings 59 443 505
Earnings and headline earnings per share
Basic earnings per ordinary share - continued operations 4.8 0.6 (6.5)
Headline earnings per ordinary share - continued operations 4.8 0.6 (6.5)
Basic earnings per ordinary share - total 4.1 29.5 33.0
Headline earnings per ordinary share - total 4.1 29.5 34.0
Weighted number of shares in issue (million) 1,427.0 1,501.1 1,485.7
Diluted earnings and headline earnings per share
Diluted earnings per ordinary share - continued operations 4.8 0.6 (6.5)
Diluted headline earnings per ordinary share - continued
operations 4.8 0.6 (6.5)
Diluted earnings per ordinary share - total 4.1 29.5 33.0
Diluted headline earnings per ordinary share - total 4.1 29.5 34.0
Number of shares in issue (million) 1,427.0 1,501.1 1,485.7
CONDENSED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
Audited
twelve
Reviewed Reviewed months
six months six months ended 30
ended 31 ended 31 September
R million March 2017 March 2016 2016
Profit for the period / year 59 443 491
Other comprehensive income - - -
Total comprehensive profit for the period / year 59 443 491
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Audited
twelve
Reviewed Reviewed months
six months six months ended 30
ended 31 ended 31 September
R million March 2017 March 2016 2016
Assets
Short-term deposits and cash 1,833 1,935 1,833
Other assets 54 460 60
Investment in subsidiaries - - -
Investment 20 - -
Equipment 1 1 1
Intangible assets 8 - -
Taxation - - 1
Discontinued operation 143 132 267
Total assets 2,059 2,528 2,162
Liabilities and equity
Taxation 10 105 1
Deferred taxation - 9 -
Policyholder liabilities under insurance contracts 151 13 191
Borrowings 23 197 23
Other liabilities 33 153 40
Discontinued operation 143 459 267
Total liabilities 360 936 522
Ordinary shareholders' equity 569 462 510
Preference shareholders' equity 1,130 1,130 1,130
Total equity (capital and
reserves) 1,699 1,592 1,640
Total liabilities and equity 2,059 2,528 2,162
Tangible net asset value per ordinary share (cents) 39.3 30.8 35.7
Net asset value per ordinary share (cents) 39.9 30.8 35.7
Number of shares in issue (million) 1,427.0 1,501.1 1,427.0
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Ordinary shares
Preference
Share Ordinary share
capital and Distributable shareholders' capital and
R million premium reserves equity premium Total
Balance at 30 September 2015 14,650 (14,631) 19 1,130 1,149
Total comprehensive income for the
period - 443 443 - 443
Balance at 31 March 2016 14,650 (14,188) 462 1,130 1,592
Total comprehensive income for the
period - 48 48 - 48
Balance at 30 September 2016 14,650 (14,140) 510 1,130 1,640
Total comprehensive income for the
period - 59 59 - 59
Balance at 31 March 2017 14,650 (14,081) 569 1,130 1,699
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
Audited
twelve
Reviewed Reviewed months
six months six months ended 30
ended 31 ended 31 September
R million March 2017 March 2016 2016
Cash generated / (utilised) from operations 57 (44) (119)
Cash receipts 109 956 650
Cash paid (52) (1,000) (769)
Indirect and direct taxation paid (17) (113) (263)
Cash inflow / (outflow) from continuing operations 40 (157) (382)
Cash (outflow) / inflow from discontinuing operations (12) - 492
Net cash inflow / (outflow) from operations 28 (157) 110
Cash outflow from investing in continued operations (28) (2) (2)
Acquisition of property and equipment - (2) (2)
Acquisition of intangible assets (8) - -
Investment (20) - -
Cash outflow from investing in discontinued operations - - (191)
Payment on reinsurance transaction - - (191)
Cash outflow from financing activities - (273) (451)
Cash outflow from funding activities - (273) (451)
(Decrease) / increase in cash and cash equivalents - (432) (534)
Cash and cash equivalents at the beginning of the
period / year 1,833 2,367 2,367
Cash and cash equivalents at the end of the period /
year 1,833 1,935 1,833
NOTES TO THE FINANCIAL STATEMENTS
NET ASSET VALUE PER SHARE
Audited
twelve
Reviewed Reviewed months
six months six months ended 30
ended 31 ended 31 September
March 2017 March 2016 2016
Total
equity 1,699 1,592 1,640
Less: Preference shareholders
equity (1,130) (1,130) (1,130)
Equity attributable to ordinary shareholders 569 462 510
Total number of ordinary shares in issue (million) 1,427.0 1,501.1 1,427.0
NAV per ordinary share (cents) 39.9 30.8 35.7
CONDENSED CONSOLIDATED SEGMENTAL REVENUE AND RESULTS
31 March 2017
R million Insurance Corporate Total
Income (continuing operations) 93 10 103
EBITDA (continuing operations) 37 (10) 27
Interest received 60 11 71
Loss before taxation from discontinuing operations (12) - (12)
Profit before taxation from continuing operations 96 1 97
Total assets 1,679 380 2,059
Total liabilities 310 50 360
31 March 2016
R million Insurance Corporate Total
Income (continuing operations) 85 15 100
EBITDA (continuing operations) 22 (47) (25)
Interest received 38 14 52
Impairment of financial instruments - (21) (21)
Profit before taxation from discontinuing operations 603 - 603
Profit before taxation from continuing operations 59 (33) 26
Total assets 1,827 701 2,528
Total liabilities 591 345 936
AUDITORS' REPORT
These interim condensed consolidated financial statements for the period ended 31 March 2017
have been reviewed by Grant Thornton Johannesburg Partnership who expressed an unmodified
review conclusion.
The auditor’s report does not necessarily report on all the information contained in these financial
results. Shareholders are therefore advised that in order to obtain a full understanding of the nature
of the auditor’s engagement they should obtain a copy of the auditor’s report together with the
accompanying financial information from the issuer’s registered office.
A copy of the auditor’s review report is available for inspection at the Company’s registered office
together with the financial statements identified in the auditor’s report.
BASIS OF PREPARATION
The preparation of this financial information was supervised by the financial director, John Evans
CA(Aus).
This condensed 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, Listings Requirements of the JSE Limited and Financial Reporting Pronouncements as
issued by the Financial Reporting Standards Council and the requirements of the Companies Act of
South Africa (Act 71 of 2008) as amended.
The accounting policies, methods of computation and their application are in accordance with
International Financial Reporting Standards and are consistent with those of the previous annual
financial statements.
Johannesburg
23 June 2017
SPONSOR
Merchantec Capital
BOARD OF DIRECTORS
Independent non-executive: IO Shongwe (Chairman); ABA Conrad; CL Le Grange; PW Mountford;
M Mthombeni; DJJ Vlok
Executive: Dr EN Banda (CEO); JF Evans (FD)
AFRICAN PHOENIX INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1946/021193/06)
(Ordinary share code: AXL) (ISIN: ZAE000221370)
(Hybrid instrument code: AXLP) (ISIN: ZAE000221388)
REGISTERED OFFICE
52 Corlett Drive, Wanderers Office Park, Illovo, South Africa, 2196
Private Bag X31, Northlands, South Africa, 2116
COMPANY SECRETARY
Acorim Proprietary Limited
SHARE 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
WEBSITE
www.phoenixinvestments.co.za
Date: 23/06/2017 04:00:00 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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indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
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