Madison Financial Services Plc operates a close-knit and WELL DIVERSIFIED FINANCIAL SERVICES GROUP of companies, offering various products and services in the following businesses Madison General Insurance, Madison life Insurance, Madison Finance, Madison Asset Management, Madison Capital and Hillview Estate Limited. Madison was the first privately owned insurance company following the liberalization of the insurance industry in 1992 and promptly unbundled its composite insurance company into separate Life and General insurance companies even before legislation took effect. Moreover, Madison pioneered Health insurance, credit-Life insurance and other life insurance and investment products in Zambia hence being the truly owned Zambia-owned insurance services group to be first listed on the Lusaka Stock Exchange (LuSE).
The Group’s performance picked up pace in 2017-2018, in line with the relatively improved economic performance in Zambia, which reported a GDP growth rate of 4.6% from 4.2 percent in 2017. Tremendous recovery was recorded for the total insurance business, which recorded an almost triple jump in profits by 275% over the past few years. The Company recorded a profit after tax of K21.537 million for the period ending 31st December 2018 compared to a profit of K1.848 million recorded as at 31st December 2017. The Company’s increased profit after tax was mainly attributable to an increase in disbursements in the period coupled with the direct cost containment and the Earnings per share increased from 0.009 in 2017 to 0.108 in 2018.
The Group’s financial performance also recorded interest income year to date (YTD) of K124.3 million which was above the budgeted by 18% while the Interest expense YTD recorded K68.5 million below the budgeted by 7.0%. Furthermore, the loans and advances to customers grew by 22% and this was the major asset growth driver. Customers’ deposits also grew by 65% with an improvement in the portfolio mix between corporate and personal deposits. Overall, the total assets and liabilities grew by 20% during the year under review and the loan book was the main driver while the liabilities’ growth was mainly driven by the deposits from customers.
However, this good performance was pulled down by the poor profit performance recorded by some of the businesses in the Group. For instance, the lagging effects of the economic headwinds of 2016 – 2017 had some consequences for Madison in 2018, mainly coming from distressed third party counterparties who had some of the Groups receivables and some SME borrowers whose businesses experiences poor recovery. Moreover, the depressed demand for medium to high cost housing resulted in a large number of unsold housing units on the Groups balance sheet against rising financing costs. An effective analysis that was conducted by the financial insight team highlights that the less mature side of the Madison group was the most affected while the General Insurance business performed exceptionally well. The affected businesses are currently undergoing structural changes to enhance and ensure successful turnaround for the forthcoming performance periods.
Strategically, the Group remains focused on improving the performance of subsidiary companies in order to improve returns for the shareholders by continually improving operating efficiencies by leveraging on robust ICT systems and exploit the low penetration rates of financial services in Zambia. Moreover, the Group will continuously innovate by introducing products that respond to customer needs in a dynamic environment. Moving forward, the Madison Group performance in 2019 is expected to remain robust backed by the expected continued strong disbursement performance, competitive pricing of liabilities to maintain the direct costs within the budget levels and the effective management of their operational costs.
For now, we will await the Annual General Meeting (AGM) for the Madison unit trust holders that will be held at Southern Sun Hotel, Lusaka on 29th April 2019 at 09:00 hrs with the agenda:
- To consider and adopt the minutes of the 10th Annual General Meeting held on 29 April 2018.
- To receive and adopt the funds Audited Financial Statements for the year ended 31 December 2018 together with the reports of the Auditors and Fun Managers.
- To consider and adopt the recommendation for the re-appointment of Auditors of the fund for the financial year ending 31 December 2019 and to authorize the trustees to determine the remuneration of the Auditors
- To transact any other business that may be properly transacted at the Annual General Meeting.