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Condensed Audited Consolidated Financial Results For The Year Ended 30 September 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”)
CONDENSED AUDITED CONSOLIDATED FINANCIAL RESULTS FOR THE YEAR ENDED
30 SEPTEMBER 2017
SALIENT FEATURES
Total equity of R1.83 billion (2016: R1.64 billion)
Total cash and cash equivalents of R1.88 billion (2016: R1.83 billion)
Earnings / (loss) per share from continuing operations: 13.7 cents (2016: (6.5) cents)
Headline earnings / (loss) per share from continuing operations: 13.7 cents (2016: (6.5) cents)
Earnings per share: 13.0 cents (2016: 33.0 cents)
Headline earnings per share: 13.0 cents (2016: 34.0 cents)
Net asset value per ordinary share: 48.8 cents (2016: 35.7 cents)
INTRODUCTION
On 3 February 2017, the name of the company was changed from African Bank Investments Limited
to African Phoenix Investments Limited (“name change”). Shareholders are referred to the SENS
announcement pertaining to the name change, dated 24 January 2017.
References to “the company” or “the group” in these condensed audited consolidated financial
results for the year ended 30 September 2017 relate 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
the company’s only trading subsidiary.
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 under
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 R186 million for the year ended 30 September 2017 (2016:
R491 million). The trading profits were mainly generated by Stangen, but also include recognition of
the fair value of the Residual Debt Services Senior Stub Notes (R48 million) and recoveries from
Ellerine Furnishers Proprietary Limited (in business rescue) (“EF”) of R45 million in respect of fully
impaired claims against EF.
Basic and Headline earnings per share was 13.0 cents for the year ended 30 September 2017 (2016:
33.0 cents and 34.0 cents respectively). Earnings per share from continuing operations improved
from a loss per share of 6.5 cents in 2016 to an earnings per share of 13.7 cents for the year ended
30 September 2017.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Total shareholder’s equity as at 30 September 2017 is R1.83 billion (2016: R1.64 billion). The group
remains both solvent and liquid and has cash reserves of R1.88 billion.
The group statement of financial position as at 30 September 2016 included a R189 million special
actuarial liability 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 trading performance and sales volumes achieved by Stangen in the year under review, the
special actuarial liability has been reduced to R127 million as at 30 September 2017.
INVESTMENT IN DIFFERENT LIFE PROPRIETARY LIMITED
During the year under review, Stangen invested in a 15% equity stake in Different Life Proprietary
Limited for a cash consideration of R20 million. A further issuance of shares by Different Life
Proprietary Limited, as anticipated at the time of investing, diluted the company’s effective holding
to 13%.
For accounting and disclosure purposes, the investment in Different Life is categorised as available
for sale held at fair value through other comprehensive income (level 3 in terms of the fair value
hierarchy) and except for this financial asset, there were no transfers to or from level 3 in the current
or prior year.
The fair value of the investment has been determined by inputs that are not based on observable
market data. The budgeted future expected cash flows from the underlying entity have been
discounted at the company’s expected rate of return over a three year period, taking inflationary
growth into account. Other unobservable inputs noted in the calculation relate to lead costs, average
premium, NTU rates, strike factors and various cost assumptions.
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, with an operative date of 30 June 2017.
Stangen therefore has no credit life exposure and has resolved all the legacy matters following the
termination of relationships with RDS and African Bank Limited.
CONTINGENT LIABILITIES
A number of 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. Accordingly, the group has not
provided for this contingent liability. The parties, including Phoenix, have agreed to settlement via
arbitration, which process has commenced and is ongoing.
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: Rnil).
DIRECTORATE
The following directors were appointed to the board of directors of Phoenix (“Board”) during the
year under review.
John Evans (date appointed: 1 October 2016)
Carmen Le Grange (date appointed: 28 March 2017)
Peter Mountford (date appointed: 28 March 2017, resigned 19 July 2017)
Isaac Shongwe (date resigned: 31 July 2017)
Samuel Sithole (date appointed: 22 September 2017)
Nonzukiso Siyotula (date appointed: 22 September 2017)
Oyama Mabandla (date appointed: 22 September 2017)
Isaac Shongwe resigned as chairman and director of Phoenix on 31 July 2017 and was replaced as
chairman by Morris Mthombeni, initially in an acting capacity and subsequently on a permanent basis
on 25 August 2017.
Subsequent to the end of the reporting period, Enos Banda’s term as group chief executive officer
ended on 30 November 2017. However, Enos will remain on the Board as a non-executive director
of Phoenix.
LOOKING AHEAD
Our goal is to create long term value by actively investing in a diversified group of businesses. In
pursuit of our goal, we aim to appoint a management team with demonstrable skills in deploying
capital, generating shareholder value and an ability to utilise our unique structuring opportunity.
On behalf of the Board
Morris Mthombeni
Chairman
CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 SEPTEMBER 2017
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
Consolidated results
R million Audited for Audited for
the year the year
ended ended
30 Sep 17 30 Sep 16
Insurance income 64 86
Interest received 140 114
Other income 47 -
Total income 251 200
Insurance claims 38 (203)
Operating costs (93) (91)
Reversal of impairment / (impairment) of financial instruments 46 (9)
Profit / (loss) before taxation 242 (103)
Direct taxation: Normal (47) 7
Profit / (loss) for the year from continuing operations 195 (96)
(Loss) / profit for the year from discontinuing operations (9) 587
Profit for the year 186 491
Reconciliation between basic earnings and headline earnings
Profit / (loss) for the year from continuing operations 195 (96)
(Loss) / profit for the year from discontinuing operations (9) 587
Profit for the year 186 491
Basic earnings attributable to ordinary shareholders 186 491
Adjusted for:
Loss on transfer of business - 14
Headline earnings 186 505
Earnings and headline earnings per share
Basic earnings / (loss) per ordinary share - continued operations 13.7 (6.5)
Basic (loss) / earnings per ordinary share - discontinued operations (0.6) 39.5
Basic earnings per ordinary share - total 13.0 33.0
Headline earnings / (loss) per ordinary share - continued operations 13.7 (6.5)
Headline (loss) / earnings per ordinary share - discontinued operations (0.6) 40.5
Headline earnings per ordinary share - total 13.0 34.0
Weighted number of shares in issue (million) 1,427.0 1,485.7
CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
Consolidated results
R million Audited for Audited for
the year the year
ended ended
30 Sep 17 30 Sep 16
Profit for the year 186 491
Other comprehensive income - -
Total comprehensive profit for the year 186 491
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Consolidated results
R million Audited as at Audited as at
30 Sep 17 30 Sep 16
Assets
Intangible assets 13 -
Equipment 1 1
Financial assets 20 -
Other assets 101 60
Taxation 1 1
Deferred tax asset 1 -
Cash and cash equivalents 1,881 1,833
Disposal group - 267
Total assets 2,018 2,162
Equity and liabilities
Ordinary shareholders' equity 696 510
Preference shareholders' equity 1,130 1,130
Total equity (capital and reserves) 1,826 1,640
Taxation 3 1
Policyholders' liabilities under insurance contracts 128 191
Borrowings 23 23
Other liabilities 38 40
Disposal group - 267
Total liabilities 192 522
Total equity and liabilities 2,018 2,162
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Consolidated audited results
Ordinary shares
R million Share
capital Ordinary Preference share
and Distributable Shareholders' capital and premium
premium Reserves equity Total
Balance at 30 September 2015 14,650 (14,631) 19 1,130 1,149
Total comprehensive income for
the year - 491 491 - 491
Balance at 30 September 2016 14,650 (14,140) 510 1,130 1,640
Total comprehensive income for
the year - 186 186 - 186
Balance at 30 September 2017 14,650 (13,954) 696 1,130 1,826
CONSOLIDATED STATEMENT OF CASH FLOWS
Consolidated results
R million Audited for Audited for
the year the year
ended ended
30 Sep 17 30 Sep 16
Cash generated from / (utilised by) operations 131 (119)
Cash receipts 251 650
Cash paid (120) (769)
Direct taxation paid (43) (263)
Cash inflow / (outflow) from continuing operations 88 (382)
Cash (outflow) / inflow from discontinuing operations (12) 492
Net cash inflow from operations 76 110
Cash outflow from investing in continued operations (28) (2)
Acquisition of property and equipment - (2)
Acquisition of intangible assets (14) -
Investment (20) -
Decrease in other assets 6 -
Cash outflow from investing in discontinued operations - (191)
Payment on reinsurance transaction - (191)
Cash outflow from financing activities - (451)
Cash outflow from funding activities - (451)
Increase / (decrease) in cash and cash equivalents 48 (534)
Cash and cash equivalents at the beginning of the year 1,833 2,367
Cash and cash equivalents at the end of the year 1,881 1,833
NET ASSET VALUE PER SHARE
Audited as Audited as at
at 30 Sep 16
30 Sep 17
Total equity 1,826 1,640
Less: Preference shareholders equity (1,130) (1,130)
Equity attributable to ordinary shareholders 696 510
Total number of ordinary shares in issue (million) 1,427.0 1,427.0
NAV per ordinary share (cents) 48.8 35.7
CONSOLIDATED SEGMENTAL REVENUE AND RESULTS
Consolidated audited results
30 September 2017 Insurance Corporate Total
R million
Income (continuing operations) 182 69 251
EBITDA (continuing operations) 37 67 104
Interest received 116 24 140
Reversal of impairment of financial instruments - 46 46
Loss before taxation from discontinuing operations (12) - (12)
Profit before taxation from continuing operations 151 91 242
Total assets
1,548 470 2,018
Total liabilities 140 52 192
30 September 2016 Insurance Corporate Total
R million
Income (continuing operations) 174 26 200
EBITDA (continuing operations)
(142) (58) (200)
EBITDA (discontinuing operations) 787 - 787
Interest received (continuing operations) 88 26 114
Interest received (discontinuing operations) 30 - 30
Impairment of financial instruments - (9) (9)
Profit before taxation from discontinuing operations 815 - 815
Loss before taxation from continuing operations (52) (51) (103)
Total assets (including discontinued operations) 1,786 376 2,162
Total liabilities (including discontinued operations) 468 54 522
AUDITORS' REPORT
The accompanying financial information is extracted from the audited financial statements but is in
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.
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(SA), CA(Aus).
The financial information contained herein 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 Limited.
All accounting policies and their application are consistent with those used for the group’s 2016
annual financial statements.
The directors take full responsibility for the preparation of these financial results and information.
Johannesburg
8 December 2017
SPONSOR
Merchantec Capital
BOARD OF DIRECTORS
Independent non-executive: M Mthombeni (Chairman); ABA Conrad; CL Le Grange; N Siyotula;
O Mabandla; DJJ Vlok
Non-executive: E Banda; S Sithole
Executive: 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: 08/12/2017 08:15:00 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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