We have extracted below the Chairman’s Statement from the 2018 annual report of Enterprise Group Limited (EGL.gh), listed on the Ghana Stock Exchange:
“We successfully concluded the Rights Issue to raise additional capital of $50m to undertake various strategic initiatives.”
It is my pleasure to welcome shareholders to this year’s Annual General Meeting and to present our Annual Report for 2018. There have been challenges during the year, but through it all, we have stuck to our main goal: to do our very best to meet our clients’ needs and create sustainable value for our cherished shareholders. The drive to build our core businesses in the insurance sector was passionately pursued notwithstanding the challenging environment.
The year 2018 was the first full year with our new partners, Black Star Holdings Limited. The partnership started on a very positive note with effective collaboration to improve our offerings, and ensuring that the key risks faced by our businesses are managed in a well-coordinated and holistic manner.
We successfully concluded the Rights Issue to raise additional capital of $50m to undertake various strategic initiatives. I wish to inform you that we have completed the buyback from Black Star Holdings of 9% additional shares in Enterprise Life, 15% additional shares in Enterprise Insurance and 20% additional shares in Enterprise Trustees at a total cost of US$29.9m. Similarly, we concluded the sale to Black Star Holdings of 30% shares in Enterprise Properties at a value of USD$10.9m.
Currently, therefore EGL now has the following shareholding in the operating companies; 60% in Enterprise Life, 80% in Enterprise Trustees, 75% in Enterprise Insurance and 70% in Enterprise Properties. We also started the process to enter the Nigerian financial services market and we expect some positive outcomes in the course of this year. We have also identified a strategic partner for our Health Insurance initiative and now expect to move with more purpose on the project. Let me assure shareholders that the money raised in the rights issue will be used for the purposes set out in our prospectus at the time.
Review of 2018
2018 was expected to build upon the economic gains made in 2017, however the economic environment turned out to be tougher than anticipated. The financial sector was stressed with the continuation of the cleaning of the banking sector by the Central Bank ahead of the 31 December 2018 deadline of meeting the new minimum capital of ₵400m. The Stock Market went southwards in 2018 with the Composite Index declining by 0.29% and the Financial Index following suit at 6.79% decline. Our share price also reflected the general performance of the GSE to close the year at ₵2.24 from a high of about ₵5 per share during the year. The cedi experienced higher depreciation at 9% against the US dollar compared to prior year.
Notwithstanding these difficulties, economic indicators trended positively. GDP for the first three quarters trended positively at a 6.1% average. Inflation ended the year at 9.4% from the 2017 level of 11.8% whilst the Bank of Ghana Policy rate also saw a 300 basis point decline from 20% to 17% in December 2018. Government continued its tight fiscal discipline and pursed initiatives that ensured there were no slippages in policy. Revenue mobilisation was given further impetus during the year with the introduction of some tax interventions like the Luxury Vehicle Levy, the conversion of the NHIL and GETFUND portion of the VAT to a special levy and the increase in PAYE income tax to 35%. Rebasing of the economy also reduce