Transcription
2012 Annual ReportNurturing Growth
Enterprise Group LimitedFinancial statementsfor the year ended 31 December 20122ENTERPRISE GROUP LIMITED2012 Annual Report
Enterprise Group LimitedFinancial statementsfor the year ended 31 December 2012ContentsReviewNotice and Agenda of Annual General MeetingFive - Year Financial SummaryCorporate InformationChairman’s StatementBoard of DirectorsChief Executive Officer’s ReviewExecutive Director’s Review (EIC)Executive Director’s Review (ELAC)Executive Director’s Review (ETL)General Manager’s Review porate Governance StatementSustainability ReportReport of the Directors25-2627-2930-313Financial StatementsReport of the independent auditorStatement of financial positionIncome statementStatement of Comprehensive IncomeStatements of Changes in EquityStatements of Cash FlowsNotes to the Financial StatementsShareholders’ InformationCertificate of Solvency in Respect of the Life BusinessResolutionsProxy FormENTERPRISE GROUP LIMITED2012 Annual Report3334-40353637-394041-878889-909192-93
Enterprise Group LimitedFinancial statementsfor the year ended 31 December 2012Notice and Agenda of Annual General MeetingNOTICE IS HEREBY GIVEN THAT the Third Annual General Meeting of Enterprise Group Limited will be held at the Ghana Collegeof Physicians and Surgeons, Accra, on Wednesday, May 22, 2013 at 10.30 a.m. for the following purposes:ORDINARY BUSINESS1. To receive the Report of the Directors and the Financial Statements together with the Report of the Auditors thereon forthe year ended 31st December 2012.2. To declare a final dividend3. To re-elect retiring Directors4. To authorise the Directors to fix the remuneration of the Auditors5. To approve Directors’ RemunerationBy Order of the BoardAbena Bonsu, Company SecretaryDated the 8th Day of April, 2013.4NOTE: A member of the Company entitled to attend and vote is entitled to appoint a proxy to attend and vote instead of him/her. Aproxy need not also be a member. In order to be valid, the PROXY FORM must be deposited at the Office of the Registrar, NTHCLimited, 1st Floor, Martco House, Adabraka or NTHC Limited, P.O. Box KIA 9563, Airport – Accra NOT LESS THAN 48 HOURSbefore the time of the holding of the meeting.ENTERPRISE GROUP LIMITED2012 Annual Report
Enterprise Group LimitedFinancial statementsfor the year ended 31 December 2012Five Year Financial Summary(All amounts are expressed in thousands of Ghana 435,316Net premium114,99881,41055,77937,24823,890Net Premium )(20,357)(14,333)(11,143)(7,180)Operating estment income27,46712,75213,47015,6582,646Profit before Tax32,66223,3099,1794,1977,238Profit for the Year29,89523,7348,3532,2364,414Total Equity and Surplus106,53575,30256,89834,12026,879Total 150.060.0170.034Dividend per share0.0320.0000.0100.0090.008Return on Assets15.6%12.5%7.3%3.03%7.35%Return on Equity26.1%25.3%14.7%6.55%16.42%Share Price (Market) (GH )0.480.380.500.4400.628Price Earning Ratio3.246.675.9725.8818.47Gross Premium5Number of SharesEarnings per Share attributableto equity shareholdersENTERPRISE GROUP LIMITED2012 Annual Report
Enterprise Group LimitedFinancial statementsfor the year ended 31 December 2012Corporate InformationBoard of DirectorsTrevor Trefgarne – ChairmanGeorge Otoo– Chief Executive OfficerKen Ofori-AttaKeli GadzekpoH. E. (Mrs.) Margaret Clarke-KwesieMartin Eson-BenjaminEmmanuel IdunSecretaryAbena Bonsu (Ms.)Enterprise Group LimitedNo. 11 High StreetP. O. Box GP 50AccraSolicitorsSam Okudzeto & AssociatesTotal House, 3rd FloorLiberia RoadP O Box 5520Accra-NorthIndependent Auditor6PricewaterhouseCoopersChartered AccountantsNo. 12 Airport CityUna Home 3rd FloorPMB CT 42CantonmentsAccra, GhanaRegistrarNTHC1st Floor, Martco House,AdabrakaP. O. Box KIA 9563Airport, AccraRegistered OfficeEnterprise HouseNo. 11 High StreetP. O. Box GP 50AccraBankersBarclays Bank of Ghana Limited.Standard Chartered BankENTERPRISE GROUP LIMITED2012 Annual Report
Enterprise Group LimitedFinancial statementsfor the year ended 31 December 2012Chairman’s ReviewTrevor TrefgarneChairman, Enterprise Group LimitedIn a very competitive environment, the Group continued to deliver strongrevenue growth, again demonstrating the great potential in our business sector.7Dear ShareholderIntroduction2012 was a good year for the Enterprise Group, which achievedabove market growth rates in both revenues and profits,accompanied by the strong cash flows required to supportnew ventures expected to deliver future growth. Based on thisperformance, the board wishes to propose a final dividend ofGHS 0.016, bringing the full year payout to GHS 0.032 per share.2012 Ghana Economic ReviewGhana’s economic growth remained robust in 2012, with GDPgrowth estimated at 7.3%. Growth was driven by the industrialsector which achieved a 13.6%, on the back of the new oil sectorand expansion in mining. The seemingly good industry sectorgrowth hides the concern and fact that the underlying consumerdriven manufacturing base in Ghana is in steep decline, and thisdoes not auger well for the growth of commercial insurance inthe General insurance business. Services delivered growth of 6%,powered by construction and Telecoms, but lower than the lasttwo years. Agricultural growth was slower, at 3% growth, and wasimpacted by poor forestry and fishing performance. The Industryand services sectors drove the Group’s revenues.Inflation remained in the single digit zone at 8.8%, again drivenby low single digit food inflation of 3.9%, accounting for 45% ofthe total inflation basket. Non-food inflation of 11.6% contributed78% of total inflation and was driven by transport cost inflationof 20.6%, transportation alone contributing 15% of total inflation.This had an adverse impact on motor claims in our Generalbusiness which derives a significant proportion of its revenuefrom motor premiums.ENTERPRISE GROUP LIMITEDEconomic and political uncertainty prior to the 2012 elections,weakened the Ghanaian Cedi which depreciated against the US by 20%. The management of the public debt remains a concernand is estimated to have risen to 51% of GDP as at year end 2012.Economic prospects 20132013 will be challenging. Heightened expectations following theelections and the emergence of Ghana as an oil economy willtest the capabilities of the economic management team. Thesevere inadequacies in national infrastructure, in terms of powergeneration; water; roads; social services; education facilities etc. tosupport economic growth, coupled with the need to reduce thefiscal deficit will require exceptional management skills.We expect continued political stability going forward, and thiswill buttress the strong economic growth seen in recent years.On the positive side the relatively stable prices for exportcommodities provides some certainty around revenue flowsResolution of some of the infrastructure and social amenity gapscould represent an exceptional source of business opportunityacross the Enterprise Group.Delivering on our StrategyIn our 2011 annual report, we went into some detail on thestrategic direction of the Enterprise Group. I am pleased to reportthat we made good progress on our main aims.Net revenues grew by 51.9%, whilst profit after tax advancedby 16.1%. Total assets and shareholder funds grew by 46.2% and41.5% respectively. This is a strong performance by any standards.2012 Annual Report
Enterprise Group LimitedFinancial statementsfor the year ended 31 December 2012Chairman’s Review (continued)Through internally generated resources, we recapitalized both ourGeneral and Life businesses to the statutory US 5 million each,and met a capital call to improve liquidity in the new pensionscompany, Enterprise Trustees Limited. We anticipate an early startto the Group’s first significant real estate commercial developmentproject through our wholly owned subsidiary, EnterpriseProperties Limited. The equity component of this investment willbe funded through internal resources. However, you can remainconfident that in bringing partners, we will continue to focus onextracting synergies and efficiencies from the new corporatestructure. This is a major change from which the benefits can beseen already, but will take time to reach maturity.Business Performance & DividendsIn a very competitive environment, the Group continued todeliver strong revenue growth, again demonstrating the greatpotential in our business sector. Profit after tax attributable to EGLshareholders improved to GHS 19.4m, against prior year’s GHS19m, due to our contnued investment in growth. With earningsper share, return on assets and return on equity of GHS 0.148;15.6% and 26.1%, the Group’s fortunes are steadily improving andwe are confident that our strategy will continue to deliver thedesired results.8In May 2012, we paid an interim dividend of GHS 0.016 per share.We propose a final dividend for 2012 payable in June 2013 ofGHS 0.016 per share, bringing the total 2012 payout to GHS0.032 per share or a total of GHS 4.2m.This clearly demonstratesthat your board is fully committed to delivering sustainableshareholder value.ENTERPRISE GROUP LIMITEDShare Price Performance on the Ghana Stock ExchangeThe Ghana Stock Exchange regained some of the losses sustainedin the last quarter of 2011. Enterprise Group’s share price wasa beneficiary of this recovery, closing the year with a share priceof GHS 0.48 per share and a market capitalization of GHS 61.4m,representing a price earnings ratio of 3.24. Our balance sheetwith total assets of GHS 223.6m and net assets of GHS 0.67 pershare provides support for the profitable opportunities we see inthe Ghanaian economy.Management & StaffOnce again the dedicated and loyal management and staff of theEnterprise Group have not disappointed us. On behalf of theBoard and shareholders I wish to express our thanks to themanagement and staff of the Group for the excellent resultsdelivered.2013 ProspectsWe go into 2013 with confidence in the future of the EnterpriseGroup. There are of course some risks in the competitive andeconomic environment. We believe however that we have thecapabilities necessary to mitigate the impact of these risks.Trevor TrefgarneChairman, Enterprise Group Limited2012 Annual Report
Enterprise Group LimitedFinancial statementsfor the year ended 31 December 2012Board of Directors - Enterprise Group LimitedTrevor TrefgarneChairmanGeorge OtooGroup Chief Executive OfficerH. E. Mrs. Margaret Clarke-KwesieDirectorKeli GadzekpoDirectorEmmanuel IdunExecutive Director,FinanceMartin Eson-BenjaminDirectorKen Ofori-AttaDirector9Non-Executive Directors of Subsidiary CompaniesCharles Paul OdeiDirector - EIC & ETLMargaret DawesDirector - ELAC & ETLMatilda Obeng–AnsongDirector - ELACKwabena AsanteDirector - EPLGloria AkuffoDirector - ELACFiifi KwakyeDirector - ETLENTERPRISE GROUP LIMITED2012 Annual ReportJosh WrenchDirector - ETL
Enterprise Group LimitedFinancial statementsfor the year ended 31 December 2012Group Chief Executive Officer’s ReviewGeorge Otoo,Group Chief Executive Officer.Enterprise Group LimitedThe overall results were achieved through the excellent top line revenuegrowth, good performance on investment income, significant market relatedfair value gains, and positive underwriting results in the insurance businesses10 Group Chief Executive Officer’s ReportIntroduction2012 was a rewarding year as we nurtured the growth of theGroup. We continued to translate our strategic plans into action,and achieved a large measure of success as evidenced by thequality of results achieved. These achievements were against theback drop of a fiercely competitive environment, the extendedpolitical season and some turbulence in the economy.Business, competitive and regulatory environmentThe Group met the proposed regulatory minimum capitalizationrequirement of US 5 million each in Enterprise InsuranceCompany Limited and Enterprise Life Assurance CompanyLimited.The total reserves and assets transferred into stated capitalin these two businesses amounted to GHS13.3m. Additionally,we met a capital call from Enterprise Trustees Limited of US 1million.The proposed new insurance regulatory legislation comprisingof a new Solvency Framework, a new Insurance Act, InsuranceRegulations and Insurance Code, Corporate governance and riskmanagement codes failed to materialize into law. This offers theinsurance industry a further opportunity to make inputs aimedat ensuring that any new legislation promotes the growth of theindustry.a key role in business acquisition as opposed to real innovationand service quality. The new NIC rules around the granting ofcredit and management of debtors in the industry, appearedslow in application.Progress on delivering the Group StrategyThe Group made significant progress on its strategy. Mostprominent amongst these achievements were the outstandinggrowth in both our net revenue and profits, which achievedgrowth rates of 51.9% and 16.1% respectively.These achievementswere made possible through product and channel innovation;improved channel reach and higher yields on investments. ROEand ROA improved to 26.1% and 15.9% against prior year’s25.3% and 12.5% respectively.Total AssetsThe industry remained fiercely competitive. There were 2 newentrants, bringing the total number of industry players to 24 inGeneral and 18 in Life. Discipline remained an issue in the industry,with pricing, particularly in the General insurance business, playingENTERPRISE GROUP LIMITED2012 Annual Report
Enterprise Group LimitedFinancial statementsfor the year ended 31 December 2012Group Chief Executive Officer’s Review (continued)Our first offshore venture in the Gambia is looking promising.Together with the potential in our home market, we see goodprospects for the future.Gross PremiumWe made good progress in properties and expect to start ourfirst major office development by the start of the 4th quarter2013. Further, we expect our current redevelopment jointventure with Taysec, to come to a successful conclusion by theend of September, 2013.Despite the delay by the National Pensions Regulatory Authority,[NPRA] in implementing fully the provisions of the Pensions Act,three years after its enactment, we see great benefits for bothbusiness and fund contributors, once all stakeholders begin to liveup to their commitments fully.Investment IncomeGood cash generation and a strong reserves position enabledus meet the statutory capitalization requirement for both theGeneral and Life Insurance businesses of US 5m each, and alsorecapitalized Enterprise Trustees Limited.Total capitalization in theGroup amounted to GHS 15.3m.11Going forward, we envisage further substantial capital fundingrequirements in respect of new redevelopment projects inProperties and the proposed funeral business. We expect tocontinue to fund substantial proportions of these new ventureswith internally generated funds together with some medium termdebt financing as may be necessary. Naturally, this will be donewithout jeopardizing other business demands and commitments.Initiatives aimed at extracting efficiencies and synergies from theGroup structure and shared services continued. These focusedon major projects to improve the quality of business information,and a higher exploitation level of technology and shared services.These projects are medium to long term in nature, in terms ofrealizing the benefits of these initiatives. Aligned to this is the“One Enterprise” project which seeks to pull the energies andcreativity of our over 300 strong employees, in a single direction.We will continue to seek Strategic partners in our business wherewe believe this will bring increased growth and profitability.We see change as a necessary and continuous process in ourevolution into a key player in financial services within the subregion. We will therefore remain dynamic in responding to theneeds of our potential and existing customers.Financial Performance ReviewRevenuesWe delivered another year of outstanding revenue growthof 51.9%. in 2012. This was primarily driven by the Generaland Life insurance businesses, which delivered growth rates of25.4% and 45% respectively. Investment income and fair valuegains accelerated net revenue growth to 51.9% to GHS 145.7magainst prior year’s GHS 95.9m, with investment income and fairgains contributing 23.2% of total net income, versus prior year’scomparative of 17.0%.The significant lift in the share of investmentincome to Net income can be attributed to the good performanceof shares on the Ghana Stock Exchange, which delivered an indexENTERPRISE GROUP LIMITEDgrowth of 23.8% in 2012; the high yields on Government paperand the very significant capital appreciation in the values of primeproperties in Accra. Overall, the insurance businesses contributed91.5% of net revenue, with the remainder originating from newventures and the holding company, Enterprise GroupOperating CostsTotal net expenses of GHS 113.0m, representing a growth overprior year of 60.4% was driven primarily by provisions to thelife fund of GHS 32.7m, representing 27.7% of total group netexpenses.The 149% growth in this provision was mainly the resultof the exceptional returns on investments in the year, and whichultimately accrued to policy holders.Overall claims grew by 38.8% against prior year, impacted bypolicy surrenders and part encashment, in the Life business. Policyholders increasingly see their policies as a pool of savings to beaccessed in emergencies.Commission growth of 38.8% reflected the increased numberof agents and channels, necessary to push forward our growthagenda.Operating cost growth of 41.9% reflected incremental costsassociated with headcount growth and one off costs associatedwith new initiatives within the Group.Relative to net income, net expenses rose marginally to 77.6%against the 73.5% achieved in prior year mainly on account ofour pursuance of growth; the accelerated actuarial charges in theyear, and projects associated with the Group’s diversification andchange agenda, such as rebranding.2012 Annual Report
Group Chief Executive Officer’s Review (continued)We expect some continuing “one-off ” significant charges in themedium term, however we expect that over the medium to longterm, the benefits of these investments will lead to a progressivelymore efficient organization and an overall reduction in operatingcosts relative to revenues.ProfitsOur insurance businesses continued to generate positiveunderwriting margins, in line with our overall strategy of creatingoperating efficiencies which made this possible. Group profit aftertax and before minority interest was GHS 29.9m, against prioryear’s GHS 25.7m, representing an improvement of 16.1%. Profitattributable to Enterprise Group shareholders was GHS 19.4mversus GHS 19.0m achieved in 2011.These overall results were achieved through the excellent topline revenue growth, good performance on investment income,significant market related fair value gains, and positive underwritingresults in the insurance businesses.Although the fair value gains can be deemed as exceptional,improving cost management, active management of the largerinvestment base and the start of revenue streams from the newbusinesses will progressively compensate for these exceptionalgains.12Earnings per share improved to GHS 0.148 from GHS 0.145 in2011. Return on assets and equity were 15.6% and 26.1% againstprior year’s 12.5% and 25.3% respectively.Balance SheetThe restructuring of aspects of the Group’s Balance Sheet in2011, has already began yielding dividends, as it has allowed theGroup to create incremental value from idle, low yielding assets.In the process, we continue to grow an
Certificate of Solvency in Respect of the Life Business Resolutions . accounting for 45% of the total inflation basket. Non-food inflation of 11.6% contributed . Director - ELAC & ETL Non-Executive Directors of Subsidiary Companies. ENERPRISE GROP LIMIED 2012 Annual Report 10
