Lusaka Securities and Exchange-listed Madison Financial Services (MFS) has advised shareholders that the company’s headline earnings per share at half-year 2019 will be approximately 500% lower compared to the previous year.
“In accordance with the Lusaka Securities Exchange Listings Requirements, the Board of Directors of Madison Financial Services PLC hereby advises the Shareholders of the Group that the Earnings per Share and Headline Earnings per Share for the half-year ended 30 June 2019 are expected to be approximately 500% lower than for the half-year ended 30 June 2018”, read a statement issued by Company Secretary Kafula Mwiche on 25th September 2019 on SENS in Lusaka.
At full year 2018, Financial Insight’s Thipa Kamanga had reported that the Group’s financial performance had 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%. However, their performance was pulled down by poor profit performance recorded by some of the businesses in the Group.
At half-year 2019, the net loss attributable to the MFS shareholders increased from the position recorded for the same period on due to the following reasons: –
“A distortion by large technical insurance reserves usually recorded in the first half of the year, which unwind in H2. Accordingly, the results presented have illustrated the position without technical reserves transfers for a clearer assessment and the adjusted result indicates a positive turnout towards year-end”.
Other factors that the company’s management identified as issues that affected the net results, when compared with the same period in 2018 included: –
- Low market liquidity which affected funds flow for on-lending in the microfinance business;
- Arrears of premium income from the civil service schemes increased substantially during the period, and for prudential reasons are delayed to be recorded as premium incomes; and
- Additionally, the asset management business Madison Asset Management Company Limited (MAMCo) took in what are expected to be the last losses from a restructuring which has seen an ongoing disposal of its poorly performing property portfolio against a fixed-income fund deposit portfolio. Its losses amounted to K18.825 million for the period.
MAMCo stands out as the asset that has been most problematic for the group and its turnaround is projected to shore up profitability over the medium term. “The proposed restructuring of MAMCo coupled with the unwinding of insurance reserves to the end of the year-end are expected to result in a positive profit outturn to the end of the year”.