This is the best business I’ve seen in years

Last week, I looked at a really exciting business. In fact, it’s probably the best business and set of accounts I’ve seen, or am likely to see, in years.

But I didn’t tell you about it at the time. Today, I’m going to put that straight.

Now then, when I say best set of accounts, I mean that on two levels. First, it’s a company experiencing fantastic growth, with fantastic profitability. But more than that, I just love the simplicity of its accounts. Heck, the most recently published figures were reported on a single side of A4.

Now, as you’ve probably guessed, you’re not going to find such a business trading on any mainstream bourse. Oh no, this business is African… Ghanaian, to be precise. It’s an insurance specialist called Enterprise Group.

But before you tune out, thinking “what in the hell has this got to do with me?” just bear with me. This particular company could be highly relevant to you. If you’re considering getting into the hugely successful Africa Opportunities Fund (LSE: AOF), you’ll want to know about its biggest holding.

The business that I find so exciting makes up a whopping 19% of AOF. And this company highlights the wonderful investment opportunities to be found off the beaten track in Africa.

You don’t find figures this good at home

First of all, when it comes to getting your head round a set of business accounts there’s no better place to start than the five-year summary. Handily, Enterprise Group publishes this information right on its home page – you can take a look here.

I’ve summarised some key figures for you…

The five-year cheat sheet

Year 2012 2011 2010 2009 2008
Gross premium GH¢132m GH¢96m GH¢68m GH¢50m GH¢35.3m
Profit for the year GH¢30m GH¢23.7m GH¢8.3m GH¢2.2m GH¢4.4m
Return on equity 26.10% 25.30% 14.70% 6.55% 16.42%
Shares in issue 131,210,825 131,210,825 131,210,825 131,083,325 131,083,325


Source: Enterprise Group, Ghana

The insurance industry likes to talk of revenue in terms of premiums; that is, how much insurance they write. And just look at the growth in premiums written. If like me, you’ve got a clever calculator, you can work out the compound growth rate. And that comes in at about 30% over the last five years.

Profit growth over the period is even better – 45% per annum. Remember, that’s year-on-year compound growth. Amazing!

Like I say, you’re not likely to find that in too many UK businesses. Especially not one that’s also best in class. The fact is, Ghana is experiencing fantastic growth: 8.7% GDP growth for 2012.

And this business is making the most of the country’s growing middle class increasingly demanding domestic insurance, pensions and life assurance.

This company treats its shareholders right

You’ll also notice that I’ve included something I wouldn’t normally bother to draw your attention to. And that is the number of shares in issue.

I do so to highlight another fascinating contrast with your average UK-quoted business. What’s so interesting? Well, you’ll see that the number of shares in issue has barely budged over the whole five-year period. In stark contrast, Western shareholders are in a near state of constant dilution.

Every year, more and more shares get printed. Management set themselves lucrative share bonus schemes, they offer loads of shares to incentivise employees as a cheap way of topping up salaries and pensions. If not that, they’ll issue shares as currency for acquisitions.

It’s rare to see a business functioning purely on good old-fashioned cash. And that tends to be better for shareholders – it’s certainly a lot less complicated when it comes to assessing the accounts.

Now, this five-year summary only goes up to 2012. We haven’t had full-year 2013 figures yet, but the latest published report covers the first three-quarters of 2013.

This could be just the beginning for Enterprise

Because this company keeps its financial affairs so simple, it can report the accounts on a single side of A4 – you can download that here. If you’re new to accounts, why not use this as an exercise? I’m sure you’ll be able to get your head round the figures almost immediately.

Of course, these aren’t the final audited, year-end accounts, which will undoubtedly run to a few more pages. But I’m sure you’ll welcome the simplicity of presentation.

Anyway, the real point is, the figures are not only simple, but highlight a fantastic investment.

In the first nine months of 2013, profits came in at 38.7m Ghanaian cedi (about £9m) versus GH¢15.5m last year. Profits look set to grow even faster this year than during the five fantastic years preceding it!

If we project the figures onto the last quarter, then profit will come in something like GH¢50m. At today’s share price of, GH¢2.48 , that puts the stock on a price earnings of around five.

This is a business with a market-leading position, and fantastic profit growth. Surely we want a bit of the action?

Interested? Do yourself two favours

If you like the sound of all this, I highly recommend downloading the accounts for this business. Like I keep saying, it’s so refreshing to see a clear and concise set of accounts. This is something I only ever seem to find with privately-owned businesses these days.

Check them out and see if you agree with me that this is a high-growth business, operating in a country that it would be worthwhile getting some exposure to.

Second, take a good look at the African Opportunities Fund that I wrote about in a Right Side last week. Nearly 20% of this fund is invested in Enterprise. And the other 80% is stuffed full of equally alluring businesses operating on a continent that’s pretty much ignored by mainstream investors.

I’m planning on making Africa one of my big investment areas for 2014. And you can read all about it here in The Right Side.

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  • Ian A

    I saw something about AOF moving away from an AIM listing. Is this going to have an impact?

  • r

    My broker cannot find AOF. Is it the same as 0AO? Can anyone help?



  • Myles42

    same here r. Doesn’t seem to be listed on LSE!!
    can anyone clear this up?

    • Moderator

      r, Myles42 – It’s listed on Aim. Here’s a link to it on the LSE website:

  • Neil

    …and here’s a link to regulatory news of their proposed cancellation of admission to trading on AIM of the Ordinary Shares…

  • DylanB

    Hargreaves Lansdown won’t buy this for me as it’s denominated in $ not £.

    How can I go about buying it?

  • steveH

    td waterhouse sorry tddirectinvesting do it

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