Madison Financial Services at half-year 2020
Finance, Madison Financial Services Plc

Extant financial services company, Madison Financial Services has reported a financial performance at half-year that shows “brand is everything” in financial services.

Despite a difficult economic environment, the Group was able to hold its market position as evidenced by the revenue which remained flat in comparison to 2019” read a statement from its recently published unaudited half-year results which were made available to the public on 1st October 2020. “This was attributed to the strong “Madison” brand name, strategic focus, and the resilient management teams”.

However, in a half year that saw financial services companies grapple with Covid 19, MFS had highs and lows in various segments of its business. “The net result continued to be negative, affected by various factors, all of which are being addressed by the Board and Management”. The factors the Board and Management refer to affected the results of their Insurance, Microfinance, and Asset Management business segments.

Impact on Insurance Business (Zambia)

The insurance business showed improvement in results over the previous period. This was despite the business experiencing increased operating costs in the form of claim costs and management expenses”.

Impact on Microfinance Business

The microfinance business experienced a decline in results as a result of low market liquidity, which was driven by unremitted civil servant microfinance loan deductions by Government. The delays averaged four months of arrears and this had a direct impact on impairment provisions, resulting in a loss for the period”.

Asset Management Business

“The asset management and property development business recorded a continued decline due to delayed payments to the Fixed Income Fund (FIF) creditors. The Securities and Exchange Commission (SEC) took over the management of the Fund in Q1 2020 and in conjunction with management are working to settle the creditor obligations”.

Aside from specific issues that impacted the various business segments, macroeconomic factors such as inflation and Kwacha depreciation against major currencies was also a factor.

Impact of Exchange Losses

The weakening of the local currency brought about exchange losses on foreign currency denominated financial obligations including claims on foreign currency denominated insurance policies”.

Despite the mirage of adversity faced by MFS, “the Board and Management are committed to returning the business to high performance by ensuring that shareholder value is enhanced and have therefore continued to review options regarding the Group’s structure as per resolution made at the May 2020 Extraordinary General”. At the meeting, it was resolved to dispose of some Group assets in order to resolve some liabilities. Companies seek out liquidation of assets options when capital has to be raised partly organically. This means shedding off some fat.

Granted the company also operates in a competitive environment therefore considerations of how it will deal with competition why it re-wires its strategy also have to be considered. “To improve the competitiveness of the Group, a short-term strategic review of all business units is underway including re-engineering our way of doing business in view of the impact caused by the COVID-19 pandemic”.

Through it all, the company believes it will continue to place the customer at the center of their strategic focus. “As always, the Customer is First in each of our subsidiary companies, and therefore, we remain committed to developing a superior customer experience”.

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